Company
Overview
Until
January 10, 2019, we were engaged in the development of agents for the prevention and treatment of severe and potentially life-threatening
infectious diseases. On January 10, 2019, we received a notice regarding the immediate termination of a certain license agreement, dated
May 31, 2016 (the “License Agreement”), executed by and between the Company, Hadasit Medical Research Services and Development
Ltd. (“Hadasit”) and the Hong Kong University of Science and Technology R and D Corporation Limited (“RDC”). We
relied primarily on the License Agreement with respect to the development of Artemisone, our lead product candidate. Since the termination
of the License Agreement, the Company no longer has any operating business.
Former
Business
Until
the termination of the License Agreement we were engaged in the development of agents for the prevention and treatment of severe and potentially
life-threatening infectious diseases. Our former lead product candidate, Artemisone, was a clinical-stage synthetic artemisinin derivative
with antiviral and antiparasitic properties.
On
May 31, 2016, we entered into the License Agreement with Hadasit and RDC, pursuant to which we acquired a worldwide, royalty-bearing license
to make any and all use of certain patents and know-how owned by the Hadasit and RDC relating to Artemisone. The License Agreement was
terminated as a result of the non-payment for certain sponsored research fees, patent expenses, patent maintenance fees, and consulting
fees.
We
have sustained significant losses in recent periods, which have resulted in a significant reduction in our cash reserves. As a result
of the termination of the License Agreement, the Company no longer has any operating business. The Company believes that it will continue
to experience losses and increased negative working capital and negative cash flows in the near future and will not be able to return
to positive cash flow without obtaining additional financing in the near term or the completing of a business transaction. The Company
has and will experience difficulties accessing the equity and debt markets and raising such capital, and there can be no assurance that
the Company will be able to raise such additional capital on favorable terms or at all find a suitable business transaction. If additional
funds are raised through the issuance of equity securities or a business transaction is concluded, the Company’s existing stockholders
will experience significant further dilution. In order to conserve the Company’s cash and manage its liquidity, the Company has
implemented cost-cutting initiatives including the reduction of employee headcount and overhead costs.
Present
Business
Since
the termination of the License Agreement, our Board of Directors has been exploring strategic alternatives.
Shell
Company Status
Based
on the lack of Company business activities since the termination of the License Agreement, our Company is classified as a “shell”
company by the Securities and Exchange Commission (the “SEC”). Rule 144(i)(1)(i) Securities Act of 1933, as amended (the “Securities
Act”) defines a shell company as a company that has:
|
(A) |
No
or nominal operations; and |
|
(1) |
No
or nominal assets; |
|
(2) |
Assets
consisting solely of cash and cash equivalents; or |
|
(3) |
Assets
consisting of any amount of cash and cash equivalents and nominal other assets. |
Searching
for Business Combination Candidate
The
Company is undercapitalized. The Company is seeking a business combination candidate that would bring revenue and/or asset value to the
Company. A business combination candidate would most probably be a private company that seeks to become a publicly traded company through
a business combination transaction with a publicly held and quoted company. Often times these business combination transactions are termed
“reverse mergers” or “reverse acquisitions” whereby the private company acquires a controlling interest in the
publicly held company.
Other
Relevant Factors
In
applying the foregoing criteria, no one of which will be controlling, the Company will attempt to analyze all factors and circumstances
and make a determination based upon reasonable investigative measures and available data. Potentially available business opportunities
may occur in many different industries, and at various stages of development, all of which will make the task of comparative investigation
and analysis of such business opportunities extremely difficult and complex. Due to the Company’s limited capital available for
investigation, the Company may not discover or adequately evaluate adverse facts about the opportunity to be acquired.
No
assurances can be given that the Company will be able to enter into a business combination, as to the terms of a business combination,
or as to the nature of the target company. Even if we identify a suitable business combination target, there is no guarantee that we will
succeed in executing an agreement with such target company or be able to close a transaction if such agreement is ever executed.
Employees
As
of December 31, 2021, the Company had no full-time employees and one part-time consultant.
Corporate
Overview
We
were incorporated under the laws of the State of Nevada on April 22, 1997. On July 8, 2003, we effected a reincorporation from Nevada
to Delaware through a merger with and into our wholly-owned subsidiary, InkSure Technologies (Delaware) Inc., which was incorporated on
June 30, 2003. The surviving corporation in the merger was InkSure Technologies (Delaware) Inc., which thereupon renamed itself InkSure
Technologies Inc. In 2014, we changed our name to New York Global Innovations Inc. Upon the closing of the Merger, defined below, Artemis
Subsidiary, defined below, became our wholly-owned subsidiary. The Merger closed on August 23, 2016, and such date is referred to as the
“Effective Time.”
On
August 23, 2016, we consummated a merger with Artemis Therapeutics Inc., a Delaware corporation (“Artemis Subsidiary”) and
Artemis Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of the Company (the “Merger Subsidiary”),
pursuant to which Artemis Subsidiary merged with and into the Merger Subsidiary, with Artemis Subsidiary being the surviving entity (the
“Merger”). Following the Merger, we adopted the business plan of Artemis Subsidiary. Artemis Subsidiary was incorporated
on April 19, 2016, under the laws of the State of Delaware. Between April 19, 2016, and August 23, 2016, Artemis’s business activities
primarily consisted of negotiating and executing the License Agreement.
Pursuant
to the Merger, the Merger Subsidiary merged with and into Artemis Subsidiary in a reverse merger, with Artemis Subsidiary surviving as
our wholly-owned subsidiary. As consideration for the Merger, we issued an aggregate of 460,000 shares of common stock and 2,357.04 shares
of our Series B Preferred Stock to the Artemis Subsidiary shareholders, such that each outstanding share of Artemis Subsidiary common
stock was exchanged for the right to receive 50 shares of our common stock and 0.2562 shares of the Series B Preferred Stock (each share
is convertible into 72,682.814 shares of the Company’s common stock) (collectively, the “Merger Shares”). In addition,
we agreed to reserve for future issuance 40,000 shares of common stock and 204.96 shares of Series B Preferred Stock to Artemis Subsidiary
option holders, including options issued to Dr. Wolf and Hadasit, as set forth in greater detail herein.
As
a condition for the consummation of the Merger, the Company and Artemis Subsidiary agreed to the following covenants and closing conditions:
(i) a requirement that a concurrent financing of not less than $590,000 shall have occurred immediately prior to the Effective Time; (ii)
a requirement that the Company have a cash balance of at least $590,000, exclusive of the concurrent financing at the Effective Time;
(iii) a requirement that Artemis Subsidiary, Hadasit and RDC have entered into and finalized a license agreement with respect to human
cytomegalovirus technology; (iv) the resignation of Roberto Alonso Jimenez Arias, our former director, as a director of the Company at
the Effective Time; (v) the appointment by Artemis Subsidiary of a new director; (vi) the right for Gadi Peleg, or his designee, to continue
serving as a director of the Company for a period of one year from the closing of the Merger; and (vii) for a period of one year from
the closing of the Merger, in the event that the Company desires to enter into a transaction involving the sale of securities at a pre-transaction
valuation of $10,000,000 or less, the approval of Mr. Peleg, or his designee, shall be required prior to the Company entering into such
transaction. The Company and Artemis Subsidiary agreed to waive the requirement that concurrent financing of not less than $590,000 shall
have occurred immediately prior to the Effective Time and that the Company have a cash balance of at least $590,000, exclusive of the
concurrent financing at the Effective Time.
In
addition, on August 23, 2016, the Company closed on a private placement pursuant to a Securities Purchase Agreement (the “Acumen
SPA”) with Acumen Bioventures LLC (“Acumen”) with respect to the sale of an aggregate of $500,000 of 68,321 shares of
the Company’s common stock and 453 shares of Series A Preferred Stock (each share is convertible into 1,453.656 shares of the Company’s
common stock). The Acumen SPA provided that the Company will obtain shareholder approval within 90 days of the date thereof to increase
its authorized capital or conduct a reverse stock split such that the Company will have reserved for issuance at least 200% of the number
of shares issuable upon conversion of all of the Series A Preferred Stock or be subject to liquidated damages (the “Approval”).
The Board of Directors and the stockholders holding a majority of the Company’s voting power approved a 1-for-50 reverse stock split
(the “Reverse Stock Split”) on November 2, 2016, and November 9, 2016, respectively. The Company’s management and its
largest shareholder provided the Company with their irrevocable consent to the Approval.
In
conjunction with the closing of the Merger, on August 23, 2016, Roberto Alonso Jimenez Arias resigned as a director of the Company. At
the effective time of the Merger, the Company’s board of directors and officers were reconstituted by the appointment of Dana Wolf
as our Chief Scientific Officer and Israel Alfassi as a director.
For
financial accounting purposes, the Merger between the Company and Artemis Subsidiary was accounted for as a reverse recapitalization and,
as a result of the Merger, the Company ceased to be a shell company. As the shareholders of Artemis Subsidiary received the largest ownership
interest in the Company, Artemis Subsidiary was determined to be the “accounting acquirer” in the reverse recapitalization.
As a result, the historical financial statements of the Company were replaced with the historical financial statements of Artemis Subsidiary.
Following the Merger, the Company and its subsidiary, Artemis Subsidiary, are collectively referred to as the “Company”.
On
November 2, 2016, the Board of Directors of the Company approved (i) an amendment (the “Amendment”) to its Certificate of
Incorporation to decrease the Company’s authorized Common Stock from 75,000,000 shares, with a par value of $0.01 per share, to
51,000,000 shares with a par value of $0.01 per share, as well as reduce the Company’s authorized Preferred Stock from 10,000,000
shares, with a par value of $0.01 per share, to 200,000 shares with a par value of $0.01 per share, and (ii) a 1-for-50 reverse stock
split of the Company’s issued and outstanding shares of Common Stock, such that each 50 shares of Common Stock held by stockholders
of record on or about December 13, 2016 be combined into one share of Common Stock, except to the extent that the actions described herein
result in any of the Company’s stockholders holding a fractional share of Common Stock (in which instance, because such stockholder’s
number of shares is not evenly divisible by the 50:1 ratio, such stockholder will be automatically entitled to receive an additional fraction
of a share of Common Stock to round up to the next whole share). On November 9, 2016, stockholders holding a majority of the Company’s
voting power approved the Amendment and the Reverse Stock Split by written consent in lieu of a meeting, in accordance with the Delaware
General Corporation Law. The Amendment and Reverse Stock Split took effect on December 20, 2016.
On
October 23, 2017, the Company executed Securities Purchase Agreements (each, a “Securities Purchase Agreement”) with a total
of 6 accredited investors relating to a private placement offering (the “Offering”) of an aggregate of 300,000 shares of the
Company’s Common Stock at a purchase price of $1.00 per share, and of 250 shares of the Company’s newly designated Series
C Convertible Preferred Stock (the “Series C Preferred Stock”), at a purchase price of $1,000.00 per share, with such shares
of Series C Preferred Stock initially convertible into an aggregate of 250,000 shares of Common Stock. In addition, each investor received
a warrant (each, a “Warrant”) to purchase fifty percent of the number of shares of Common Stock effectively purchased in the
Offering, for an aggregate of 275,000 shares of Common Stock. The closing of the Offering took place on October 23, 2017.
Each
Warrant is immediately exercisable at an exercise price of $2.00 per share, expires 5 years from the date of issuance, may be exercised
for cash or on a cashless basis, and contains future price-based and customary stock-based anti-dilution protections.
Pursuant
to the Certificate of Designation of Preferences, Rights and Limitations of the Series C Preferred Stock (the “Certificate of Designation”),
the shares of Series C Preferred Stock are convertible into an aggregate of 250,000 shares of Common Stock based on a conversion price
of $1.00 per share. Such conversion price is subject to future price-based and customary stock- based anti-dilution protections. The holders
of the Series C Preferred Stock do not possess any voting rights but the Series C Preferred Stock does carry a liquidation preference
for each holder equal to the investment made by such holder in the Offering. In addition, the holders of Series C Preferred Stock are
eligible to participate in dividends and other distributions by the Company on an as-converted basis.
As
discussed above, on January 10, 2019, we received a notice regarding the immediate termination of the License Agreement. Since the termination
of the License Agreement, the Company no longer has any operating business.
On
May 15, 2019, the Company issued two unsecured promissory notes (each, a “Note” and collectively the “Notes”)
in the aggregate principal amount of $100,000. In that regard, one Note, with a principal aggregate balance of $50,000, was issued to
KNRY Ltd., an entity related to Nadav Kidron, the natural person with voting and dispositive power over the securities held by Tonak Ltd.,
the Company’s largest shareholder. $20,000 of the funds relating to KNRY Ltd.’s Note were received by the Company on March
22, 2019. The balance of the funds relating to KNRY Ltd.’s Note was received by the Company on April 4, 2019. In addition, one Note,
with an aggregate principal balance of $50,000, was issued to Cutter Mill Capital LLC, an existing shareholder of the Company. Each Note
accrues interest at a rate of 6% per annum until the Note is repaid in full. All payments of principal, interest and other amounts under
each Note are payable by June 30, 2021. The proceeds of the Notes were used by the Company for general working capital purposes.
In
addition, on November 4, 2021, the Company issued two unsecured promissory notes (each, a “Subsequent Note” and collectively
the “Subsequent Notes”) in the aggregate principal amount of $60,000, with original issuance dates of August 15, 2021 and
September 19, 2021. In that regard, one Subsequent Note, with a principal aggregate balance of $30,000, was issued to KNRY Ltd., an entity
related to Nadav Kidron, the natural person with voting and dispositive power over the securities held by Tonak Ltd., the Company’s
largest shareholder and one Subsequent Note, with an aggregate principal balance of $30,000, was issued to Harmony (H.A.) Investments
Ltd. Each Subsequent Note accrues interest at a rate of 10% per annum until the Subsequent Note is repaid in full. All payments of principal,
interest and other amounts under each Subsequent Note are payable by December 19, 2021. The proceeds of the Notes were used by the Company
for general working capital purposes.
The
Company is currently in default on the Notes and Subsequent Notes and intends to negotiate an extension for their repayment, however there
is no guarantee that we will be successful in doing so.
THE
FOLLOWING RISK FACTORS, AMONG OTHERS, COULD AFFECT OUR ACTUAL RESULTS OF OPERATIONS AND COULD CAUSE OUR ACTUAL RESULTS TO DIFFER MATERIALLY
FROM THOSE EXPRESSED IN FORWARD-LOOKING STATEMENTS MADE BY US. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON CURRENT EXPECTATIONS AND
WE ASSUME NO OBLIGATION TO UPDATE THAT INFORMATION. YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW AND ELSEWHERE IN THIS ANNUAL
REPORT ON FORM 10-K BEFORE MAKING AN INVESTMENT DECISION. OUR BUSINESS, FINANCIAL CONDITION OR RESULTS OF OPERATIONS COULD BE MATERIALLY
AND ADVERSELY AFFECTED BY ANY OF THESE RISKS. OUR COMMON STOCK IS CONSIDERED SPECULATIVE AND THE TRADING PRICE OF OUR COMMON STOCK COULD
DECLINE DUE TO ANY OF THESE RISKS, AND YOU MAY LOSE ALL OR PART OF YOUR INVESTMENT. THE FOLLOWING RISK FACTORS ARE NOT THE ONLY RISK FACTORS
FACING US. ADDITIONAL RISKS AND UNCERTAINTIES NOT PRESENTLY KNOWN TO US OR THAT WE CURRENTLY DEEM IMMATERIAL MAY ALSO AFFECT OUR BUSINESS.
IF
WE ARE UNABLE TO OBTAIN FINANCING NECESSARY TO SUPPORT OUR OPERATIONS, OUR CASH RESOURCES MIGHT BE REDUCED TO A LEVEL THAT MAY NOT ENABLE
US TO CONTINUE AS A GOING CONCERN.
Because
we do not currently have any business operations, we believe that our existing cash resources may no longer be sufficient to support us
for the next twelve months. If we are unable to obtain the financing necessary to support us, we may be unable to continue as a going
concern. In that event, we may be forced to cease operations and our stockholders will lose their entire investment in our company. In
order to conserve our cash and manage our liquidity, we implemented cost-cutting initiatives including the reduction of overhead costs.
We are experiencing difficulties accessing the equity and debt markets and raising such capital, and there can be no assurance that we
will be able to raise such additional capital on favorable terms or at all. If additional funds are raised through the issuance of equity
securities, our existing stockholders will experience significant further dilution.
IN
THE EVENT WE CAN NOT FIND A SUITABLE ACQUISITION OR MERGER PARTNER WE MAY BE FORCED TO CEASE OUR EXISTENCE IF OUR CASH IS EXHAUSTED.
In
the event we are unable to find a suitable acquisition or merger partner and our cash is exhausted it may become necessary to either liquidate
the Company or file for bankruptcy.
There
is no assurance that we will be able to find a suitable acquisition or merger partner. Furthermore, a suitable acquisition or merger partner
could cause a change in control of the Company as well as a significant dilution to our shareholders. If our cash is exhausted, we will
not be able to pay our liabilities and obligations.
WE
HAVE HAD NO REVENUES SINCE INCEPTION, AND WE WILL NOT BE PROFITABLE IN THE FUTURE UNLESS WE OBTAIN NEW OPERATIONS.
We
have not been profitable and we cannot predict when we will achieve profitability. We have experienced net losses and have had no revenues
since our inception in April 2016. We do not anticipate generating significant revenues and will not be able to return to positive cash
flow without obtaining additional financing in the near term or the entering into a business transaction. We may experience difficulties
accessing the equity and debt markets and raising such capital, and there can be no assurance that we will be able to raise such additional
capital on favorable terms or at all. If additional funds are raised through the issuance of equity securities, the Company’s existing
stockholders will experience significant dilution. In order to conserve our cash and manage our liquidity, we are implementing cost-cutting
initiatives including the reduction of employee headcount and overhead costs.
THE
NATURE OF PROPOSED OPERATIONS IS SPECULATIVE.
The
success of our proposed plan of operation will depend, to a great extent, on the operations, financial condition and management of the
identified business opportunity. While management intends to seek a business combination with an entity having an established operating
history, there can be no assurance that we will be successful in locating a candidate meeting such criteria. In the event that we complete
a business combination, of which there can be no assurance, the success of our operations may be dependent upon management of the successor
firm or venture partner firm and numerous other factors beyond our control.
WE
HAVE NO EXECUTED AGREEMENT FOR A BUSINESS COMBINATION OR OTHER TRANSACTION AND NO SET STANDARDS FOR ANY SUCH BUSINESS COMBINATION.
We
have no executed agreements with respect to engaging in a merger with, joint venture with or acquisition of, a private entity. There can
be no assurance that we will be successful in identifying and evaluating suitable business opportunities or in concluding a business combination.
There is no assurance that we will be able to negotiate a business combination on terms favorable to us. Even if we identify
a suitable business combination target, there is no guarantee that we will succeed in executing an agreement with such target company
or be able to close a transaction if such agreement is ever executed. We have not established a specific length of operating
history or a specified level of earnings, assets, net worth or other criteria a target business opportunity will be required to have achieved
in order for us to consider a business combination. Accordingly, we may enter into a business combination with a business opportunity
having no significant operating history, losses, limited or no potential for earnings, limited assets, negative net worth or other negative
characteristics.
WE
FACE A SCARCITY OF AND COMPETITION FOR BUSINESS OPPORTUNITIES AND COMBINATIONS.
We
are and will continue to be an insignificant participant in the business of seeking mergers with, joint ventures with and acquisitions
of small private entities. A large number of established and well-financed entities, including venture capital firms, are active in mergers
and acquisitions of companies which may be desirable target candidates for us. Nearly all such entities have significantly greater financial
resources, technical expertise and managerial capabilities than us and, consequently, we will be at a competitive disadvantage in identifying
possible business opportunities and successfully completing a business combination. Moreover, we will also compete in seeking merger or
acquisition candidates with numerous other small public companies.
WE
HAVE NOT DONE MARKET RESEARCH AND DO NOT HAVE A MARKETING ORGANIZATION.
We
have neither conducted nor have others made available to us, results of market research indicating that market demand exists for the transactions
we have contemplated. Even in the event demand is identified for a merger or acquisition contemplated by us, there is no assurance we
will be successful in completing any such business combination.
BECAUSE
WE HAVE NOMINAL ASSETS, WE ARE CONSIDERED A “SHELL COMPANY” AND WILL BE SUBJECT TO MORE STRINGENT REPORTING REQUIREMENTS.
The
SEC adopted Rule 405 under the Securities Act, and Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), which defines a shell company as a company that has no or nominal operations, and either (a) no or nominal assets; (b) assets
consisting solely of cash and cash equivalents; or (c) assets consisting of any amount of cash and cash equivalents and nominal other
assets. The rules applicable to shell companies prohibit them from using a Form S-8 to register securities pursuant to employee compensation
plans.
However,
the rules do not prevent us from registering securities pursuant to registration statements. Additionally, the rules regarding Form 8-K
require shell companies to provide more detailed disclosure upon completion of a transaction that causes it to cease being a shell company.
We must file a current report on Form 8-K containing the information required pursuant to Regulation S-K and in a registration statement
on Form 10, within four business days following completion of the transaction together with financial information of the private operating
company. In order to assist the SEC in the identification of shell companies, we are also required to check a box on Form 10-Q and Form
10-K indicating that we are a shell company. To the extent that we are required to comply with additional disclosure because we are a
shell company, we may be delayed in executing any mergers or acquiring other assets that would cause us to cease being a shell company.
In addition, Rule 144 under the Securities Act makes resales of restricted securities by shareholders of a shell company more difficult.
See discussion under heading “Rule 144” below.
ANY
TRANSACTION WE PURSUE MAY BE SUBJECT TO TAXATION.
Federal
and state tax consequences will, in all likelihood, be major considerations in any business combination we may undertake. Such transactions
may be structured to result in tax- free treatment to both companies, pursuant to various federal and state tax provisions. We intend
to structure any business combination so as to minimize the federal and state tax consequences for us and the target entity; however,
there can be no assurance that such business combination will meet the statutory requirements of a tax-free reorganization or that the
parties will obtain the intended tax-free treatment upon a transfer of stock or assets. A non-qualifying reorganization could result in
the imposition of both federal and state taxes that may have an adverse effect on both parties to the transaction.
THE
REQUIREMENT TO PROVIDE AUDITED FINANCIAL STATEMENTS MAY DISQUALIFY BUSINESS OPPORTUNITIES.
Our
management believes that any potential business opportunity must provide audited financial statements for review, and for the protection
of all parties to the business combination. One or more attractive business opportunities may choose to forego the possibility of a business
combination with us, rather than incur the expenses associated with preparing audited financial statements.
WE
MAY NOT BE ABLE TO CONTINUE AS A GOING CONCERN.
We
had accumulated liabilities of $503,000 at December 31, 2021. These factors raise substantial doubt in the minds of our auditors about
our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome
of the uncertainty regarding our ability to continue as a going concern. If the Company cannot continue as a going concern,
its stockholders may lose their entire investment.
INVESTORS
MAY HAVE DIFFICULTIES ENFORCING A U.S. JUDGMENT, INCLUDING JUDGMENTS BASED UPON THE CIVIL LIABILITY PROVISIONS OF THE U.S. FEDERAL SECURITIES
LAWS, AGAINST US OR OUR EXECUTIVE OFFICERS AND DIRECTOR, OR ASSERTING U.S. SECURITIES LAWS CLAIMS IN ISRAEL.
None
of our directors or officers are residents of the United States. Our directors’ and officers’ assets and most of our assets
are located outside the United States. Service of process upon us or our non-U.S. resident directors and officers and enforcement of judgments
obtained in the United States against us or our non-U.S. directors and executive officers may be difficult to obtain within the United
States. We have been informed by our legal counsel in Israel that it may be difficult to assert claims under U.S. securities laws in original
actions instituted in Israel or obtain a judgment based on the civil liability provisions of U.S. federal securities laws. Israeli courts
may refuse to hear a claim based on a violation of U.S. securities laws against us or our officers and directors because Israel may not
be the most appropriate forum to bring such a claim. In addition, even if an Israeli court agrees to hear a claim, it may determine that
Israeli law and not U.S. law is applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must
be proved as a fact, which can be a time-consuming and costly process. Certain matters of procedure will also be governed by Israeli law.
There is little binding case law in Israel addressing the matters described above. Israeli courts might not enforce judgments rendered
outside Israel, which may make it difficult to collect on judgments rendered against us or our officers and directors.
OUR
CERTIFICATE OF INCORPORATION CONTAINS ANTI-TAKEOVER PROVISIONS WHICH COULD ADVERSELY AFFECT THE VOTING POWER OR OTHER RIGHTS OF THE HOLDERS
OF OUR COMMON STOCK.
Our
certificate of incorporation authorizes the issuance of up to 200,000 shares of preferred stock and our Board of Directors is empowered,
without stockholder approval, to issue a new series of preferred stock with dividend, liquidation, conversion, voting or other rights
which could adversely affect the voting power or other rights of the holders of common stock. Such authority, together with certain provisions
of Delaware law and of our certificate of incorporation and bylaws, may have the effect of delaying, deterring or preventing a change
in control of us, may discourage bids for the common stock at a premium over the market price and may adversely affect the market price,
and the voting and other rights of the holders of the common stock.
Although
we have no present intention to issue any additional shares of our preferred stock, we may do so in the future. The board of directors
of a Delaware corporation may issue rights, options, warrants or other convertible securities, or rights entitling its holders to purchase,
receive or acquire shares or fractions of shares of the corporation or assets or debts or other obligations of the corporation,
upon such terms as are determined by the board of directors. Our Board of Directors is free, subject to their fiduciary duties to stockholders,
to structure the issuance or exercise of the rights in a manner which may exclude significant stockholders from being entitled to receive
such rights or to exercise such rights or in a way which may effectively prevent a takeover of the corporation by persons deemed hostile
to management. Nothing contained in our certificate of incorporation will prohibit our Board of Directors from using these types of rights
in this manner.
CERTAIN
STOCKHOLDERS POSSESS THE MAJORITY OF OUR VOTING POWER, AND THROUGH THIS OWNERSHIP, CONTROL OUR COMPANY AND OUR CORPORATE ACTIONS.
Our
current executive officers and certain large shareholders of the Company hold approximately 52% of the voting power of our outstanding
shares. These persons have a controlling influence in determining the outcome of any corporate transaction or other matters submitted
to our stockholders for approval, including mergers, consolidations and the sale of all or substantially all of our assets,
election of directors, and other significant corporate actions. As such, our executive officers have the power to prevent or cause a change
in control; therefore, without their consent we could be prevented from entering into transactions that could be beneficial to us. The
interests of our executive officers may give rise to a conflict of interest with the Company and the Company’s shareholders.
THERE
IS A SUBSTANTIAL LACK OF LIQUIDITY OF OUR COMMON STOCK AND VOLATILITY RISKS.
Our
common stock is traded on the over-the-counter market with quotations published on the OTCQB tier of the OTC Bulletin Board (the “OTCQB”),
under the symbol “ATMS”. The trading volume of our common stock historically has been limited and sporadic, and the stock
prices have been volatile. As a result of the limited and sporadic trading activity, the quoted price for our common stock on the
over-the-counter market is not necessarily a reliable indicator of its fair market value. The price at which our common stock will trade
in the future may be highly volatile and may fluctuate as a result of a number of factors, including, without limitation, any potential
business combination that we announce, as well as the number of shares available for sale in the market.
The
trading volume of our common stock may be limited and sporadic. This situation is attributable to a number of factors, including the fact
that we are a small company which is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment
community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse
and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time
as we became more seasoned and viable. As a consequence, there may be periods of several days or more when trading activity in our shares
is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally
support continuous sales without an adverse effect on share price. We cannot give you any assurance that a broader
or more active public trading market for our common stock will develop or be sustained, or that current trading levels will be sustained.
As a result of such trading activity, the quoted price for our common stock on the OTCQB may not necessarily be a reliable indicator of
our fair market value. In addition, if our shares of common stock cease to be quoted, holders would find it more difficult to dispose
of or to obtain accurate quotation as to the market value of, our common stock and as a result, the market value of our common stock likely
would decline.
The
market price for our stock may be volatile and subject to fluctuations in response to factors, including the following:
|
• |
The
increased concentration of the ownership of our shares by a limited number of affiliated stockholders following the Merger may limit interest
in our securities; |
|
• |
variations
in quarterly operating results from the expectations of securities analysts or investors; |
|
• |
revisions
in securities analysts’ estimates or reductions in security analysts’ coverage; |
|
• |
announcements
of new products or services by us or our competitors; |
|
• |
reductions
in the market share of our products; |
|
• |
announcements
by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; |
|
• |
general
technological, market or economic trends; |
|
• |
investor
perception of our industry or prospects; |
|
• |
insider
selling or buying; |
|
• |
investors
entering into short sale contracts; |
|
• |
regulatory
developments affecting our industry; and |
|
• |
additions
or departures of key personnel. |
Many
of these factors are beyond our control and may decrease the market price of our common stock, regardless of our operating performance.
We cannot make any predictions or projections as to what the prevailing market price for our common stock will be at any time, including
as to whether our common stock will sustain current market prices, or as to what effect that the sale of shares or the availability of
common stock for sale at any time will have on the prevailing market price.
BECAUSE
WE BECAME PUBLIC BY MEANS OF A “REVERSE MERGER,” WE MAY NOT BE ABLE TO ATTRACT THE ATTENTION OF MAJOR BROKERAGE FIRMS.
There
may be risks associated with us becoming public through a “reverse merger.” Securities analysts of major brokerage firms and
securities institutions may not provide coverage of us because there were no broker-dealers who sold our stock in a public offering that
would be incentivized to follow or recommend the purchase of our common stock. The absence of such research coverage could limit investor
interest in our common stock, resulting in decreased liquidity. No assurance can be given that established brokerage firms will, in the
future, want to cover our securities or conduct any secondary offerings or other financings on our behalf.
OUR
COMMON STOCK MAY NEVER BE LISTED ON A MAJOR STOCK EXCHANGE.
While
we may seek the listing of our common stock on a national or other securities exchange at some time in the future, we currently do not
satisfy the initial listing standards and cannot ensure that we will be able to satisfy such listing standards or that our common stock
will be accepted for listing on any such exchange. Should we fail to satisfy the initial listing standards of such exchanges,
or our common stock is otherwise rejected for listing, the trading price of our common stock could suffer, the trading market for our
common stock may be less liquid, and our common stock price may be subject to increased volatility.
OUR
STOCK PRICE MAY BE VOLATILE.
The
market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many
of which are beyond our control, including the following:
|
• |
changes
in our industry; |
|
• |
our
ability to obtain working capital financing; |
|
• |
additions
or departures of key personnel; |
|
• |
limited
“public float” in the hands of a small number of persons whose sales or lack of sales could result in positive or negative
pricing pressure on the market price for our common stock; |
|
• |
sales
of our common stock; |
|
• |
our
ability to execute our business plan; |
|
• |
operating
results that fall below expectations; |
|
• |
loss
of any strategic relationship; |
|
• |
regulatory
developments; |
|
• |
economic
and other external factors; and |
|
• |
period-to-period
fluctuations in our financial results. |
In
addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the
operating performance of particular companies. These market fluctuations may also materially and adversely affect
the market price of our common stock.
OUR
COMMON STOCK IS SUBJECT TO PRICE VOLATILITY UNRELATED TO OUR OPERATIONS.
The
market price of our common stock could fluctuate substantially due to a variety of factors, including market perception of our ability
to achieve our planned growth, quarterly operating results of other companies in the same industry, trading volume in our common stock,
changes in general conditions in the economy and the financial markets or other developments affecting the Company’s competitors
or the Company itself. In addition, the OTCQB is subject to extreme price and volume fluctuations in general. This volatility has had
a significant effect on the market price of securities issued by many companies for reasons unrelated to their operating performance and
could have the same effect on our common stock.
WE
DO NOT PLAN TO DECLARE OR PAY ANY DIVIDENDS TO OUR STOCKHOLDERS IN THE NEAR FUTURE.
We
have not declared any dividends in the past, and we do not intend to distribute dividends in the near future. The declaration, payment
and amount of any future dividends will be made at the discretion of the board of directors and will depend upon, among other things,
the results of operations, cash flows and financial condition, operating and capital requirements, and other factors as the board of directors
considers relevant. There is no assurance that future dividends will be paid, and if dividends are paid, there is no assurance with
respect to the amount of any such dividend.
THE
REQUIREMENTS OF BEING A PUBLIC COMPANY MAY STRAIN OUR RESOURCES AND DISTRACT MANAGEMENT.
As
a public company, we are subject to the reporting requirements of the Exchange Act and the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley
Act”). These requirements are extensive. The Exchange Act requires that we file annual, quarterly and current reports with respect
to our business and financial condition. The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures
and internal controls over financial reporting.
We
may incur significant costs associated with our public company reporting requirements and costs associated with applicable corporate governance
requirements. We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs
and to make some activities more time consuming and costly. This may divert management’s attention from other business concerns,
which could have a material adverse effect on our business, financial condition and results of operations. We also expect that these applicable
rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may
be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As
a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive
officers. We are currently evaluating and monitoring developments with respect to these rules, and we cannot predict or estimate the amount
of additional costs we may incur or the timing of such costs.
FUTURE
CHANGES IN FINANCIAL ACCOUNTING STANDARDS OR PRACTICES MAY CAUSE ADVERSE UNEXPECTED FINANCIAL REPORTING FLUCTUATIONS AND AFFECT REPORTED
RESULTS OF OPERATIONS.
A
change in accounting standards or practices can have a significant effect on our reported results and may even affect our reporting of
transactions completed before the change is effective. New accounting pronouncements and varying interpretations of accounting pronouncements
have occurred and may occur in the future. Changes to existing rules or the questioning of current practices may adversely affect
our reported financial results or the way we conduct business.
“PENNY
STOCK” RULES MAY MAKE BUYING OR SELLING OUR COMMON STOCK DIFFICULT.
Trading
in our common stock is subject to the “penny stock” rules. The SEC has adopted regulations that generally define a penny stock
to be any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. These rules require
that any broker-dealer that recommends our common stock to persons other than prior customers and accredited investors, must, prior to
the sale, make a special written suitability determination for the purchaser and receive the purchaser’s written agreement to execute
the transaction. Unless an exception is available, the regulations require the delivery, prior to any transaction involving a penny stock,
of a disclosure schedule explaining the penny stock market and the risks associated with trading in the penny stock market. In addition,
broker-dealers must disclose commissions payable to both the broker-dealer and the registered representative and current quotations for
the securities they offer. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from
effecting transactions in our common stock, which could severely limit the market price and liquidity of our common stock.
INEFFECTIVE
INTERNAL CONTROLS COULD IMPACT OUR BUSINESS AND FINANCIAL RESULTS. WE IDENTIFIED MATERIAL WEAKNESSES IN OUR INTERNAL CONTROL OVER FINANCIAL
REPORTING AS OF DECEMBER 31, 2021
Pursuant
to Section 404 of the Sarbanes-Oxley Act of 2002, we are required to furnish an annual report by our management assessing the effectiveness
of our internal control over financial reporting. This assessment must include disclosure of any material weaknesses in our internal control
over financial reporting identified by management. Ineffective internal control over financial reporting can result in errors or other
problems in our financial statements. In addition, our internal control over financial reporting is not required to be audited by our
independent registered public accounting firm. If we are unable to assert that our internal controls are effective, our investors could
lose confidence in the accuracy and completeness of our financial reports, which in turn could cause our stock price to decline. Failure
to maintain effective internal control over financial reporting could also result in investigation or sanctions by regulatory authorities.
Management’s report as of the end of fiscal year 2021 concluded that our internal control over financial reporting were not effective.
As
further described in Item 9A of this Form 10-K, management has concluded that, because of material weaknesses in internal control over
financial reporting, our internal control over financial reporting and our disclosure controls and procedures were not effective as of
December 31, 2021. A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial
reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements would
not be prevented or detected on a timely basis. If we fail to remediate these material weaknesses in our internal controls,
or after having remediated such material weaknesses, thereafter fail to maintain the adequacy of our internal control over financial reporting
or our disclosure controls and procedures, we could be subjected to regulatory scrutiny, civil or criminal penalties or stockholder litigation,
the defense of any of which could cause the diversion of management’s attention and resources, we could incur significant legal
and other expenses, and we could be required to pay damages to settle such actions if any such actions were not resolved in our favor.
Moreover, we may be the subject of negative publicity focusing on these material weaknesses and we may be subject to negative reactions
from stockholders and others with whom we do business.