Business Description

1 Inter-corporate Relationships 2 Recent History 2 Description of Business 3 ITEM 1A. RISK FACTORS 6 Risks Related to the Financial Position and Capital Requirements of the Company 6 Risks Related to the Business of the Company 9 Risks Related to Industry 12 Risks Related to the Common Stock of the Company 14 ITEM 1B. UNRESOLVED STAFF COMMENTS. 17 ITEM 1C. CYBERSECURITY 17 ITEM 2. PROPERTIES. 17 ITEM 3. LEGAL PROCEEDINGS. 17 ITEM 4. MINE SAFETY DISCLOSURES. 17 PART II 18 ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. 18 Market Information 18 Holders 18 Dividends 18 Exchange Rates 19 ITEM 6. [RESERVED] 19 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION. 19 Background and Overview 19 Results of Operation 20 Liquidity and Capital Resources 21 Off Balance Sheet Arrangements 23 Proceeds from issuance of promissory notes ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. 43 ITEM 9A. CONTROLS AND PROCEDURES. 43 Management’s Annual Report on Controls and Procedures 43 Management’s Annual Report on Internal Control Over Financial Reporting 43 Material Weaknesses Identified 44 Plan for Remediation of Material Weaknesses 44 ITEM 9B. OTHER INFORMATION. 44 PART III 45 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE. 45 Directors and Executive Officers 45 Business Experience 45 Family Relationships 46 Significant Employees 46 Involvement in Certain Legal Proceedings 46 Directorships 46 Compliance with Section 16(a) of the Exchange Act 46 Code of Ethics 46 Nomination of Directors 47 Audit Committee and Audit Committee Financial Expert 47 ITEM 11. EXECUTIVE COMPENSATION. 47 Compensation Discussion and Analysis 47 Executive Compensation 48 Employment Agreements 48 Outstanding Equity Awards at Fiscal Year-End 48 Equity Compensation Plan Information 48 Pension, Retirement or Similar Benefit Plans 48 Potential Payments Upon Termination or Change-in-Control 49 Director Compensation 49 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. 49 Security Ownership of Certain Beneficial Owners, Directors, Officers and Management 49 Changes of Control 50 Securities Authorized for Issuance Under Equity Compensation Plans 50 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. 50 Related Party Transactions 50 Corporate Governance 51 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES. 51 Audit Fees 51 Audit Related Fees 51 Tax Fees 51 All Other Fees 51 Audit Committee’s Pre-approval Policies and Procedures 51 PART IV 52 ITEM 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES. 52 SIGNATURES 53 Table of Contents PART I SPECIAL NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS CERTAIN STATEMENTS IN THIS REPORT, INCLUDING STATEMENTS IN THE FOLLOWING DISCUSSION, ARE WHAT ARE KNOWN AS "FORWARD LOOKING STATEMENTS", WHICH ARE BASICALLY STATEMENTS ABOUT THE FUTURE. FOR THAT REASON, THESE STATEMENTS INVOLVE RISK AND UNCERTAINTY SINCE NO ONE CAN ACCURATELY PREDICT THE FUTURE. WORDS SUCH AS "PLANS," "INTENDS," "WILL," "HOPES," "SEEKS," "ANTICIPATES," "EXPECTS "AND THE LIKE OFTEN IDENTIFY SUCH FORWARD LOOKING STATEMENTS BUT ARE NOT THE ONLY INDICATION THAT A STATEMENT IS A FORWARD LOOKING STATEMENT. SUCH FORWARD LOOKING STATEMENTS INCLUDE STATEMENTS CONCERNING THE PLANS AND OBJECTIVES OF THE COMPANY WITH RESPECT TO THE PRESENT AND FUTURE OPERATIONS OF THE COMPANY, AND STATEMENTS WHICH EXPRESS OR IMPLY THAT SUCH PRESENT AND FUTURE OPERATIONS WILL OR MAY PRODUCE REVENUES, INCOME OR PROFITS. NUMEROUS FACTORS AND FUTURE EVENTS COULD CAUSE THE COMPANY TO CHANGE SUCH PLANS AND OBJECTIVES OR FAIL TO SUCCESSFULLY IMPLEMENT SUCH PLANS OR ACHIEVE SUCH OBJECTIVES OR CAUSE SUCH PRESENT AND FUTURE OPERATIONS TO FAIL TO PRODUCE REVENUES, INCOME OR PROFITS. THEREFORE, THE READER IS ADVISED THAT THE FOLLOWING DISCUSSION SHOULD BE CONSIDERED IN LIGHT OF THE DISCUSSION OF RISKS AND OTHER FACTORS CONTAINED IN THIS REPORT ON FORM 10-K AND IN THE COMPANY'S OTHER FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. NO STATEMENTS CONTAINED IN THE FOLLOWING DISCUSSION SHOULD BE CONSTRUED AS A GUARANTEE OR ASSURANCE OF FUTURE PERFORMANCE OR FUTURE RESULTS. ITEM 1. BUSINESS .…