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Risk Factors · Filing comparison
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We have a limited operating history, and may never be profitable.
Since we have only limited operations and have an unproven business plan, it is difficult for potential investors to evaluate our business. There can be no assurance that we will be profitable or that our securities will have any value.
Any forecasts we make concerning our operations may prove to be inaccurate. Our prospects must be considered in light of the risks, expenses, and difficulties frequently encountered by companies in the early stage of development.
We need additional capital to implement our business plan.
We will need to obtain additional capital to implement our business plan from the sale of our securities, through loans from third parties, or from the sale of CocoLove water. We do not know what the terms of any future capital raising may be but any future sale of our equity securities will dilute the ownership of our existing stockholders, may be at prices substantially below the market price of our common stock and may cause the market price of common stock to decline, should a market for our common stock develop in the future. Our failure to obtain the capital which we require may result in the slower implementation of our business plan.
The Companys license to sell CocoLove water is not exclusive.
The Companys license with Monarch Media to sell CocoLove water in France provides that Monarch Media may sell CocoLove water in France using its own sales channels with no obligation to compensate the Company. Although, to the Companys knowledge, Monarch Media is not selling CocoLove water in France, if Monarch Media later decides to sell CocoLove water in France, Monarch Medias efforts at present may result in the Companys loss of sales.
Conducting business in France exposes us to uncertain conditions and other risks.
We do not have any experience operating in France and it may be costly to promote CocoLove water in France. We face substantial risks associated with the sale of CocoLove water, including economic or political instability in France; fluctuations in foreign currency exchange rates; restrictions on or costs relating to the repatriation of foreign profits to the U.S., including possible taxes or withholding obligations on any repatriations; and tariffs or trade restrictions. Also, the distribution and sale of products outside of the U.S. are subject to risks relating to appropriate compliance with legal and regulatory requirements in local jurisdictions and potentially adverse tax consequences.
We rely on our management team and other key personnel.
We depend on the skills, experience, relationships, and continued services of key personnel, including our management team. In addition, our ability to achieve our operating goals also depends on our ability to recruit, train, and retain qualified individuals. We compete with other companies both within and outside of our industry for talented personnel, and we may lose key personnel or fail to attract and retain additional talented personnel. Any such loss or failure could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
At present, we anticipate we will derive all of our revenues from sale of CocoLove water, and competitive pressure in the functional beverage product category could adversely affect our business and operating results.
The functional beverage product industry is highly competitive. The principal areas of competition are pricing, packaging, distribution channel penetration, development of new products and flavors and marketing campaigns. Our products compete with a wide range of beverages produced by a relatively large number of manufacturers, many of which have substantially greater financial, marketing and distribution resources and name recognition than we do.
6 The increasing number of competitive products and limited amount of shelf space, including in coolers, in retail stores may adversely impact our ability to gain or maintain our share of sales in the marketplace. In addition, certain actions of our competitors, including unsubstantiated or misleading claims, false advertising claims and tortious interference in our business, as well as competitors selling misbranded products, could impact our sales. Competitive pressures in the functional beverage category as well as competition from the supplement category could impact our revenues, cause price erosion or lower market share, any of which could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
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The following may limit the growth of the flavored water market . market.
Bottled flavored water contributes to plastic waste, raising concerns about the environment. The growing emphasis on sustainability, as well as increased awareness of plastic pollution, might influence consumer choices and urge them to choose environment-friendly options.
Due to worries about artificial flavors, sweeteners, and additives, some consumers view flavored water to be less healthy or natural than plain water. This notion may discourage health-conscious consumers from seeking out flavored water.
Flavored water is frequently more expensive than plain water, which can limit its uptake, particularly in price-sensitive markets. Consumers may be hesitant to spend more for flavored water when they may flavor ordinary water for less money or choose other less expensive beverage options.
As of the date of this 10-K there was no is a limited market for our common stock.
As a result, you may be unable to sell your shares of our common stock.
Going Concern
We identified conditions and events that raise substantial doubt about our ability to continue as a going concern. Primarily as a result of our expected continued future losses, management has identified conditions and events that raise substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is contingent upon, among other factors, obtaining additional financing. In addition, in their report on our financial statements, our independent public accounting firm has included an explanatory paragraph concerning our ability to continue as a going concern.
Our Directors have the authority, without stockholder approval, to issue preferred stock with terms that may not be beneficial to common stockholders and with the ability to affect adversely stockholder voting power and perpetuate control.
Our Articles of Incorporation allows our Directors to issue shares of preferred stock without any vote or further action by our stockholders. Joseph Henn, as our sole director, has the authority to fix and determine the relative rights and preferences of any preferred stock we may issue. As a result, Mr. Henn could authorize the issuance of a series of preferred stock that would grant to holders multiple votes per share, the preferred right to our assets upon liquidation, the right to receive dividend payments before dividends are distributed to the holders of common stock and the right to the redemption of the shares, together with a premium, prior to the redemption of our common stock. The issuance of preferred stock with these rights may make the removal of management difficult even if the removal would be considered beneficial to shareholders generally, and will have the effect of limiting shareholder participation in transactions such as mergers or tender offers if these transactions are not favored by our management.
We do not expect to pay cash dividends on our common stock in the foreseeable future.
We have never paid cash dividends on our common stock. We do not expect to pay cash dividends on our common stock at any time in the foreseeable future. The future payment of dividends on our common stock directly depends upon our future earnings, capital requirements, financial requirements and other factors that our Directors will consider. Since we do not anticipate paying cash dividends on our common stock, return on your investment, if any, will depend solely on an increase, if any, in the value of our common stock.
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Disclosure requirements pertaining to penny stocks may reduce the level of trading activity for our common stock if and when it is publicly-traded. T rades stock.
Trades of t he the Companys common stock, should a market ever develop, may be subject to Rule 15g-9 of the Securities and Exchange Commission, which rule imposes certain requirements on broker/dealers who sell securities subject to the rule to persons other than established customers and accredited investors. For transactions covered by the rule, brokers/dealers must make a special suitability determination for purchasers of the securities and receive the purchasers written agreement to the transaction prior to sale. The Securities and Exchange Commission also has rules that regulate broker/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 that security is provided by the exchange or system). The penny stock rules require a broker/ 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 Commission that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker/dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker/dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customers account. The bid and offer quotations, and the broker/dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customers confirmation.
You may have difficulty depositing your shares with a broker, if a market for our common stock ever develops, or selling shares of our common stock.
Many securities brokers will not accept securities for deposits and will not sell securities which:
are considered penny stocks or
trade in the over-the-counter market
Further, for a securities broker which will, under certain circumstances, sell securities which fall under any or all of the categories listed above, the customer, before the securities broker will accept the shares for deposit, must often complete a questionnaire detailing how the customer acquired the shares, provide the securities broker with an opinion of an attorney concerning the ability of the shares to be sold in the public market, and pay a legal review fee which in some cases can exceed $1,000.
For these reasons, investors may have difficulty selling shares of our common stock.
Risks associated with being an emerging growth company
As long as we remain an Emerging Growth Company, we may take advantage of certain exemptions from various reporting and regulatory requirements that are applicable to other public companies that are not emerging growth companies. We cannot predict if investors will find our common stock less attractive if we choose to rely on these exemptions. If some investors find our common stock less attractive as a result of any choices to reduce future disclosure, there may be a less active trading market for our common stock and our stock price may be more volatile.
We have limited internal controls and possible material weaknesses.
With a sole officer, we have limited segregation of duties and rely on outside professionals; these limitations could result in errors in our financial reporting.