As filed with the Securities and Exchange Commission on January 7, 2015September 3, 2020
SEC File No. 333-
Registration No. 333-194975UNITED STATES
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, WASHINGTON, D.C. 20549
AMENDMENT NO. 3
to
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
FAIRWIND ENERGY INC.
(Exact name of registrant as specified in its charter)
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(Exact name of registrant as specified in its charter) |
Nevada | 2821 | 46-2876282 | ||
(State or incorporation or organization) | (Primary Standard Industrial Classification Code Number) | ( Identification No.) |
Rudy Mazzocchi President and Chief Executive Officer 32932 Pacific Coast Highway, #14-254 Dana Point, California 92629 (949) 933-5411 | ||
including area code, of registrant’s principal executive offices) |
112 North Curry Street Carson City, Nevada 89703 (775) 882-1013 | |
including area code, of agent for service) |
FairWind Energy Inc.
14 Monarch Beach Plaza, Suite 254
Monarch Beach, California 92629
(949) 933-5411
(Address,Copies of all communications, including zip code, and telephone number, including area code, of registrant’s principal executive offices)communications sent to agent for service, should be sent to:
Michael WinterhalterJeffrey M. Quick, Esq.
PresidentQuick Law Group, P.C.
FairWind Energy Inc.1035 Pearl Street, Suite 403
14 Monarch Beach Plaza, Suite 254Boulder, CO 80302
Monarch Beach, California 92629Tel. (720) 259-3393
(949) 933-5411
(Address, including zip code, and telephone number, including area code, of agent for service)Fax. (303) 845-7315
Copies to:
Thomas E. Puzzo, Esq.
Law OfficesApproximate date of Thomas E. Puzzo, PLLC
3823 44th Ave. NE
Seattle, Washington 98105
Telephone No.: (206) 522-2256
Facsimile No.: (206) 260-0111
Approximate datecommencement of proposed sale to the public: As soon as practicable and from time to time after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. x☒
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨☐
If this Form is a post-effective amendment filed pursuant to ruleRule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”filer,” “smaller reporting company,” and “smaller reporting“emerging growth company” in Rule 12b-212b–2 of the Exchange Act. (Check
(Check one):
Large accelerated filer |
| Accelerated filer |
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Non-accelerated filer |
| Smaller reporting company |
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| Emerging growth company | ☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
Calculation of Registration Fee
Title of Each Class of Securities to be Registered |
| Amount to be Registered(1) |
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| Proposed Maximum Offering Price per Share |
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| Proposed Maximum Aggregate Offering Price |
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| Amount of Registration Fee |
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Total |
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| 2,750,721 |
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| $ | 2.99 | (2) |
| $ | 8,224,656 |
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| $ | 1,068 |
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CALCULATION OF REGISTRATION FEE________
Title of Each Class of Securities to be Registered | Amount to Be Registered (1) | Proposed Maximum Offering Price per Share | Proposed Maximum Aggregate Offering Price | Amount of Registration Fee | ||||||||||||
Common Stock, par value $0.001 per share | 750,000 | (2) | $ | 1.00 | (2) | $ | 750,000 | $ | 96.60 | |||||||
Common Stock, par value $0.001 per share | 695,856 | (3) | $ | 1.00 | (4) | $ | 695,856 | $ | 129.60 | |||||||
TOTAL | 1,756,250 | $ | 1.00 | $ | 1,756,250 | $ | 226.20 |
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(1) In the event of a stock split, stock dividend or similar transaction involving our common stock, the number of shares registered shall automatically be increased to cover the additional shares of common stock issuable pursuant
(1) | Pursuant to Rule 416 under the Securities Act of 1933, as amended (the “Securities Act”), the shares of common stock offered hereby also include an indeterminate number of additional shares of common stock as may from time to time become issuable by reason of stock splits, stock dividends, recapitalizations or other similar transactions. |
(2) | Estimated solely for purposes of calculating the registration fee pursuant to Rule 457(c) under the Securities Act of 1933, as amended, based upon the average of the high and low bid price of the common stock on September 1, 2020 as reported on the OTC Markets. |
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended.
(2) The registration fee for securities to be offered by the Registrant is based on an estimate of the proposed maximum aggregate offering price of the securities, and such estimate is solely for the purpose of calculatingamended, or until the registration feestatement shall become effective on such date as the Commission acting pursuant to Rule 457(o).said Section 8(a), may determine.
(3) This registration statement also covers the resale under a separate resale prospectus (the “Resale Prospectus”) by the selling stockholders of the Registrant of up to 695,856 shares of common stock, $0.001 par value per share (the “Common Stock”).
(4) The offering price has been estimated solely for the purpose of computing the amount of the registration fee in accordance with Rule 457(o). Our common stock is not traded on any national exchange and in accordance with Rule 457, the offering price was determined by the price of the shares that were sold to our shareholders in a private placement pursuant to an exemption from registration under the Securities Act. The price of $1.00 is a fixed price at which the selling stockholders may sell their shares until our common stock is quoted on the OTC Bulletin Board, at which time the shares may be sold at prevailing market prices or privately negotiated prices.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY DETERMINE.
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The information in this preliminary prospectus is not complete and may be changed. These securitiesWe may not be soldsell these securities until the registration statement filed with the U.S. Securities Andand Exchange Commission (“SEC”) is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdictionstate where the offer or sale is not permitted.
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED JANUARY 7, 2015
750,000 OF COMMON STOCK OFFERED BY FAIRWIND ENERGY INC.SEPTEMBER 3, 2020
695,856SHARES OF COMMON STOCK OFFERED BY SELLING STOCKHOLDERSPRELIMINARY PROSPECTUS
AGENTIX CORP.
Up to2,750,721 Shares of Common Stock
This prospectus relates to both (i) the initial public offering of our common stock, in which we are offering a maximum of 750,000 of our common stock, and (ii) the resale by certain selling stockholders of FairWind Energy Inc. of up to 695,8562,750,721 shares of common stock heldto be offered by the selling stockholdersstockholders.
Our common stock trades in the over-the-counter market and is quoted on the OTC Pink tier of FairWind Energythe OTC Markets Group, Inc. Nounder the symbol “AGTX.” Only a limited public market currently exists for our common stock. On September 1, 2020, the securities being offered. While we will receive proceeds from our ownlast reported sale price of our shares of common stock weon the OTC Markets was $2.99 per share.
We will not receive any of the proceeds from the sale of the sharescommon stock by the selling stockholders. WeAll expenses of registration incurred in connection with this offering are an “emerging growth company” under applicable Securities and Exchange Commission rules and will be subject to reduced public company reporting requirements. Any purchaser of common stock in the offerings may be the only purchaser, given the lack of a minimum offering amount.
In our initial public offering, we are offering for sale a total of 750,000 shares of common stock at a fixed price of $1.00 per share for the duration of the offering. There is no minimum number of shares that must be soldbeing borne by us, for the offering to proceed,but all selling and we will retain the proceeds from the sale of any of the offered shares. The offering is being conducted on a self-underwritten, best efforts basis, which means our management, will attempt to sell the shares. This Prospectus will permit our President, Michael Winterhalter to sell the shares directly to the public, with no commission or other remuneration payable to them for any shares he may sell. Mr. Winterhalter will sell the shares and intends to offer them to friends, family members and business acquaintances. Mr. Winterhalter will not sell any of his respective shares until the Company sells all of the 750,000 shares in its offering. In offering the securities on our behalf, Mr. Winterhalter will rely on the safe harbor from broker-dealer registration set out in Rule 3a4-1 under the Securities and Exchange Act of 1934. The shares will be offered at a fixed price of $1.00 per share for the duration of the offering, which is a period of 16 months from the effective date of this prospectus.
We have not made any arrangements to place funds received from share subscriptions in an escrow, trust or similar account. Any funds raised from the offering will be immediately available to us for our immediate use. Accordingly, if we file for bankruptcy protection or a petition for involuntary bankruptcy is filedexpenses incurred by creditors against us, your funds will become part of the bankruptcy estate and administered according to the bankruptcy laws. If a creditor sues us and obtains a judgment against us, the creditor could garnish the bank account and take possession of the subscriptions. As such, it is possible that a creditor could attach your subscription. If that happens, you will lose your investment and your funds will be used to pay creditors.
In the resale by certain selling stockholders, the selling stockholders will be offering our shares of common stock at a fixed price of $1.00 per share, for the duration of the offering, until our shares are quoted on the OTC Bulletin Board and thereafter at prevailing market prices or privately negotiated prices. Each of the selling stockholders may be deemed to be an “underwriter” as such term is defined in the Securities Act of 1933, as amended (the “Securities Act”). The net proceeds to be receivedborne by the selling stockholders is $695,856, assuming that the selling shareholders sell all 695,856 shares they are collectively offering.stockholders.
NeitherInvesting in our common stock is highly speculative and involves a high degree of risk. You should carefully consider the Securitiesrisks and Exchange Commission noruncertainties in the section entitled “Risk Factors” beginning on page 3 of this prospectus before making a decision to purchase our stock.
Wemayamendorsupplementthisprospectusfromtimetotimebyfilingamendmentsorsupplementsasrequired.Youshouldreadthe entire prospectus and any state securities commission has approvedamendments or supplements carefully before you make your investmentdecision.
NeithertheSecuritiesandExchangeCommissionnoranystatesecuritiescommissionhasapprovedordisapprovedofthesesecuritiesor passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminaloffense.
The date of this prospectus is ________, 2020
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Management’s Discussion and Analysis of Financial Condition and Results of Operation | 12 | ||
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Security Ownership of Certain Beneficial Owners and Management | 23 | ||
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F-1 |
You should rely only on the information contained in this prospectus. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not making an offer to sell these securities in any jurisdiction where offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus. Our business, financial condition, results of operations and prospects may have changed since that date.
Information contained on our website is not part of this prospectus.
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The following summary highlights information contained elsewhere in this prospectus. It may not contain all the information that may be important to you. You should read this entire prospectus carefully, including the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our historical financial statements and related notes included elsewhere in this prospectus, or any accompanying prospectus supplement before making an investment decision. In this prospectus, unless the context requires otherwise, all references to “we,” “our,” “us” and the “Company” refer to Agentix Corp.
Overview
Agentix is a biopharmaceutical development company that includes the recently combined proprietary assets of GSL Healthcare Inc. is currently focused on the development and commercialization of novel therapeutics to treat metabolic diseases, peripheral neuropathy, progressive lung disease and ischemic reperfusion injury. Our principal business objective is to develop both science-driven synthetic and natural cannabinoid therapeutics that address unmet medical needs and continue to drive innovations in the endocannabinoid space.
Agentix has identified a targeted collection of wellness and pharmaceutical product opportunities, the majority of which will be designed to offer a more sophisticated and intelligent product offering in the multibillion dollar global biopharmaceutical industry.
· | The first category shall consist of a series of health and wellness products that incorporate a proprietary and proven nano-technology similar to liposomal delivery systems, known as a cellular biocomplex, for the health & wellness markets. Further advancements of these biocomplexes will be used in the development and production of pharma-grade products for more specific clinical (non-prescription and prescription) applications, such as arthritic joint pain, acne vulgaris and onychomycosis. | |
· | A second category of developments will focus on pharmaceutical applications that target the human endocannabinoid system for treatments ranging from epilepsy, Type 2 diabetes, and acute kidney Injury. These identified programs are already under development, ranging from design and discovery to pre-clinical and biological testing with leading universities and research institutions. |
Agentix was incorporated on April 18, 2013 under the laws of the State of Nevada. Effective June 17, 2019, we changed our name from FairWind Energy, Inc. to better reflect the new focus of our business.
Our principal executive offices are located at 32932 Pacific Coast Highway, #14-254, Dana Point, California 92629, telephone number (949) 933-5411. Our website address is www.agentixcorp.com. Information accessed through our website is not incorporated into this prospectus and is not a part of this prospectus.
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Table of Contents |
The Offering
Common stock offered by the selling stockholders: | Up to 2,750,721 shares of our common stock to be offered by the selling stockholders. | |
Common stock outstanding prior to the offering: | 34,489,605. We currently have no options, convertible notes or warrants to purchase shares of our equity outstanding. | |
Common stock outstanding after this offering: | 34,489,605. We currently have no options, convertible notes or warrants to purchase shares of our equity outstanding. | |
Use of proceeds: | We will not receive any proceeds from the sale of the common stock offered by the selling stockholders. | |
OTCQB trading symbol: | “AGTX” | |
Risk factors: | You should carefully consider the information set forth in this prospectus and, in particular, the specific factors set forth in the “Risk Factors” section beginning on page 3 of this prospectus before deciding whether or not to invest in shares of our common stock. |
Summary of Financial Data
The following information represents selected audited financial information for our company for the years ended August 31, 2019 and 2018 and selected unaudited financial information for our Company for the nine-month periods ended May 31, 2020 and 2019. The summarized financial information presented below is derived from and should be read in conjunction with our audited and unaudited financial statements, as applicable, including the notes to those financial statements which are included elsewhere in this prospectus along with the section entitled Management’s Discussion and Analysis of Financial Condition and Results of Operations of this prospectus.
Statements of Operations Data |
| Year Ended August 31, 2019 |
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| Year Ended August 31, 2018 |
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| Nine Months Ended May 31, 2020 |
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| Nine Months Ended May 31, 2019 |
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Total Operating Expenses |
| $ | 121,317 |
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| $ | 134,376 |
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| $ | 1,306,186 |
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| $ | 109,283 |
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Loss from Operations |
| $ | (121,317 | ) |
| $ | (134,376 | ) |
| $ | 1,306,186 |
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| $ | 109,283 |
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Interest Expense, net |
| $ | 11,335 |
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| $ | 24,824 |
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| $ | 4,524 |
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| $ | 6,741 |
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Loss on Extinguishment of Debt |
| $ | - |
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| $ | 42,629,753 |
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| $ | - |
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| $ | - |
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Other Expense, net |
| $ | 11,335 |
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| $ | 42,788,953 |
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| $ | 4,524 |
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| $ | 6,741 |
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Net Loss |
| $ | (132,652 | ) |
| $ | (42,788,953 | ) |
| $ | (1,310,710 | ) |
| $ | (116,024 | ) |
Basic and Diluted Net Loss per Share |
| $ | (6.45 | ) |
| $ | (3,875.40 | ) |
| $ | (0.46 | ) |
| $ | (0.11 | ) |
Balance Sheets Data |
| As of August 31, 2019 |
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| As of August 31, 2018 |
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| As of May 31, 2020 |
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Cash |
| $ | 93 |
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| $ | 2,125 |
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| $ | 17 |
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Total Assets |
| $ | 93 |
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| $ | 2,265 |
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| $ | 17 |
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Total Liabilities |
| $ | 125,878 |
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| $ | 55,398 |
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| $ | 43,704 |
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Total Stockholders’ Equity Deficit |
| $ | (125,785 | ) |
| $ | (53,133 | ) |
| $ | (43,687 | ) |
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Table of Contents |
Investing in our common stock involves a high degree of risk. Before buying any shares, youYou should carefully readconsider the discussionfollowing risk factors, aswellas the other information in this offering memorandum, before deciding whether to invest in shares of materialour common stock. If any of the following risks actually occur, our business, financial condition and results of investing inoperations would suffer. In that case, the tradingpriceof our common stock wouldlikelydeclineandyoumightloseallorpartofyourinvestmentinourcommonstock.Therisksdescribedbelowarenot theonlyoneswe face.Additionalrisksthatwecurrentlydonotknowaboutorthatwecurrentlybelievetobeimmaterialmayalsoimpairourbusiness,financial conditions and results ofoperations.
Business Risk Factors
Risks Related to Financing and the Need for Capital
We are a pre-clinical stage pharmaceutical company with a limited operating history.
We are a pre-clinical stage pharmaceutical company with a limited operating history. The Company needs to complete design, development and additional pre-clinical studies of its product programs before submitting for authorization to initiate human clinical trials under an IND (Investigational New Drug) to eventually support a New Drug Application, or NDA, in “Risk Factors” beginning on page 6order to commercialization can commence. The likelihood of this prospectus.success of our business plan must be considered in light of the problems, substantial expenses, difficulties, complications and delays frequently encountered in connection with developing and expanding early-stage businesses and the regulatory and competitive environment in which we operate. Pharmaceutical product development is a highly speculative undertaking, involves a substantial degree of risk and is a capital-intensive business.
Accordingly, potential investors should consider our prospects in light of the costs, uncertainties, delays and difficulties frequently encountered by companies in the early stages of development, especially clinical pharmaceutical companies such as ours. Investors should carefully consider the risks and uncertainties that a company with a limited operating history will face. In particular, potential investors should consider that the Company cannot assure that it will be able to:
· | successfully implement or execute the current business plan, and we cannot assure that the business plan is sound; | |
· | successfully manufacture our clinical product and establish commercial drug supply; | |
· | obtain Drug Enforcement Administration, or DEA, licenses necessary for the manufacturing of several of the proposed products for evaluation in clinical trials; | |
· | successfully complete the clinical trials necessary to obtain regulatory approval for the commercial release of the Company’s products; | |
· | secure market exclusivity and/or adequate intellectual property protection for the proposed products; | |
· | attract and retain an experienced management and advisory team; | |
· | secure adoption of the Company products in the medical community and with third party payors and consumers; | |
· | launch commercial sales of the Company products, whether alone or in collaboration with other strategic partners and/or distributors; and | |
· | raise sufficient funds in the capital markets to effectuate our business plan. |
If we cannot successfully execute any one of the foregoing, the business may not succeed and investor capital will be adversely affected.
We have incurred operating losses in each year since our inception and expect to continue to incur substantial losses for the foreseeable future. We may never become profitable or, if we achieve profitability, be able to sustain profitability.
Furthermore, the Company has incurred operating losses in the prior year(s) since our inception and expect to continue to incur substantial losses for the foreseeable future. We may never become profitable or, if we achieve profitability, be able to sustain profitability.
The following table of contents has been designed to help you find information contained in this prospectus. We encourage you to read the entire prospectus.
TABLE OF CONTENTS
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A CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements which relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors,” that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
PROSPECTUS SUMMARY
As used in this prospectus, references to the “Company”, “we”, “our”, “us”, “FairWind Energy” refer to FairWind Energy Inc. unless the context otherwise indicates.
The following summary highlights selected information contained in this prospectus. Before making an investment decision, you should read the entire prospectus carefully, including the “Risk Factors” section, the financial statements, and the notes to the financial statements.
OUR COMPANY
Corporate Background and Business Overview
FairWind Energy Inc. is a development stage company. Our executive offices are located at 14 Monarch Beach Plaza, Suite 254, Monarch Beach, California, and our telephone number is (949) 933-5411. We were incorporated under the laws of the state of Nevada on April 18, 2013. We are involved in the design, engineering and manufacturing of composite products. The initial thrust of our business will be to supply products to the oil and gas industry. These products will include upstream production products such as sucker rods, fracking plugs, casings and other products where high temperature resistance, chemical resistance and a low weight to strength ratio products offer advantages to traditional materials (e.g. , steel). If we are able to supply products to the oil and gas industry, then we plan to continue the development and sales of wind and solar hybrid energy systems. These systems also benefit from the use of higher performance materials (composites) and we will intend to incorporate them in product design and development.
Through its proprietary use of materials and manufacturing technique, FairWind Energy is developing power sources drawing from renewable energy supply. We also use our trade secrets and composite industry know-how to cross-market products into the oil & gas extraction industry. Providing a reliable power source based on renewable energies required us to address shortcomings of existing technologies ranging from availability of supply (i.e., solar power at night) to quality of componentry available (blades, stanchions, magnets). The hybridization of power sources (solar and wind) and manufacturing with next generation composite materials is our solution. Our fiscal year end is August 31, and we have no subsidiaries. Our business offices are currently located at 14 Monarch Beach Plaza, Suite 254, Monarch Beach, California 92629.
In a priority project, we are currently near developmental completion of a high strength, high Tg (high temperature use) composite designed and intended to be used in the oil & gas industry. Intended for use in the exploration and production sector, we have manufactured nearly 5,000 feet of “sucker rod” used to be use in connection with the extraction of oil and gas from underground. The employed design uses proprietary resin systems that exceed typical temperature use limits of competing thermosetting systems. Additionally, utilizing higher tensile strength reinforcements, our parts can achieve higher operating loads, allowing for superior performance. New designs for mechanical joints in the rod string have also been completed. Significant testing has been completed on the final design (and will be continuing). We believe that the testing marks we have achieved to date are a result of the high performance materials and architecture of the product.
Our intended business operations will be to make use of our proprietary resin systems and unique composite architecture and apply that to other areas. With proof of concept via physical and field trial testing in hand, we will proceed to apply the proven benefits (see above) in other infrastructure projects. Two examples that are currently in the examination stage, include pultruded power poles suitable for supporting high voltage electrical transmission lines. Another early stage endeavor is second generation composite strength members for cable and conductor. As a replacement to more typical construction materials (e.g., steel, aluminum, concrete and even lower performing FRP) – we believe that our composite parts mix the benefits of strength, weight, corrosion resistance, non-conductivity and high temperature operation.
Another project in current development is a hybrid power generating system, incorporating both solar and wind power. Initially, we have purchased wind turbines and are in the process of combining them with solar panels. The first planned demonstration project will be to power street/parking lot lighting. The potential to independently operate off battery stored power, or to back-feed into the grid is possible. After vetting the POC prototypes, we intend to combine already-established supply chain lines for componentry with in-house manufactured composite elements (e.g., see power poles above). This hybrid power project gives us some business diversity, as well as a secondary market for our composite metrics.
Certain Information about this Offering
Offering Price Per Share | Commissions | Proceeds to Company Before Expenses if 10% of the shares are sold | Proceeds to Company Before Expenses if 50% of the shares are sold | Proceeds to Company Before Expenses if 100% of the shares are sold | |||||||||||||
Common Stock | $ | 1.00 | Not Applicable | $ | 75,000 | $ | 562,500 | $ | 750,000 | ||||||||
Totals | $ | 1.00 | Not Applicable | $ | 75,000 | $ | 562,500 | $ | 750,000 |
In the resale by certain selling stockholders, the selling stockholders will be offering our shares of common stock at a fixed price of $1.00 per share, for the duration of the offering, until our shares are quoted on the OTC Bulletin Board and thereafter at prevailing market prices or privately negotiated prices. Each of the selling stockholders may be deemed to be an “underwriter” as such term is defined in the Securities Act of 1933, as amended (the “Securities Act”). The net proceeds to be received by the selling stockholders is $695,856 assuming that the selling shareholders sell all 695,856 shares they are collectively offering.
There has been no market for our securities and a public market may never develop, or, if any market does develop, it may not be sustained. Our common stock is not traded on any exchange or on the over-the-counter market. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with the Financial Industry Regulatory Authority for our common stock to be eligible for trading on the Over-the-Counter Bulletin Board. We do not yet have a market maker who has agreed to file such application. There can be no assurance that our common stock will ever be quoted on a stock exchange or a quotation service or that any market for our stock will develop.
Emerging Growth Company
We are an ‘‘emerging growth company’’ within the meaning of the federal securities laws. For as long as we are an emerging growth company, we will not be required to comply with the requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, the reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and the exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We intend to take advantage of these reporting exemptions until we are no longer an emerging growth company. For a description of the qualifications and other requirements applicable to emerging growth companies and certain elections that we have made due to our status as an emerging growth company, see “Risk Factors—Risks Related to this Offering and our Common Stock – We are an ‘emerging growth company’ and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors” on page 10 of this prospectus.
Michael Winterhalter serves as our President and Chairman of the Board of Directors. Our other members of the board of directors are Eric Krogius, Robert Drust and Scott Thomas. We are a development stage company that has generated no revenues and has had limited operations to date. For the fiscal year ended August 31, 2014 we have incurred net losses of 208,878. As of August 31, 2014 we had total assets of $139,528 and total liabilities of $19,551. We have sold and issued an aggregate of 5,927,106 shares of our common stock since our inception through the date of this Prospectus. 4,000,000, or 67.49%, of the 5,927,106 shares are held by our President and Chairman, Michael Winterhalter.
Due to the uncertainty of our ability to meet our current operating and capital expenses, our independent auditors have included a going concern opinion in their report on our audited financial statements as of August 31, 2014. The notes to our financial statements contain additional disclosure describing the circumstances leading to the issuance of a going concern opinion by our auditors.
THE OFFERING
The Offering
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SUMMARY FINANCIAL INFORMATION
The tables and information below are derived from our audited financial statements for the period from April 18, 2013 (Inception) through August 31, 2014, and our audited financial statements for the fiscal year ended August 31, 2014. Our working capital as at August 31, 2014 was $115,264.
August 31, 2014 | ||||
Financial Summary | ||||
Cash and Deposits | $ | 134,815 | ||
Total Assets | 139,528 | |||
Total Liabilities | 19,551 | |||
Total Stockholder’s Equity | $ | 119,997 |
For the Fiscal Year Ended August 31, 2014 | ||||
Consolidated Statements of Operations | ||||
Total Operating Expenses | $ | 208,878 | ||
Net Loss for the Period | $ | (208,878 | ) |
RISK FACTORS
An investment in our common stock involves a number of very significant risks. You should carefully consider the following known material risks and uncertainties in addition to other information in this prospectus in evaluating our company and its business before purchasing shares of our company’s common stock. You could lose all or part of your investment due to any of these risks.
RISKS RELATING TO OUR COMPANY
Our auditors have expressed substantial doubt about our ability to continue as a going concern.
Our audited financial statements for the year ended August 31, 2014 were prepared assuming that we will continue our operations as a going concern. We were incorporated on April 18, 2013 and do not have a history of earnings. As a result, our independent accountants in their audit report have expressed substantial doubt about our ability to continue as a going concern. Continued operations are dependent on our ability to complete equity or debt financings or generate profitable operations. Such financings may not be available or may not be available on reasonable terms. Our financial statements do not include any adjustments that may result from the outcome of this uncertainty.
The proceeds of this offering, if any, may not be sufficient to fund planned operations and may not even cover the costs of the offering and you may lose your entire investment.
We are offering a maximum of 750,000 shares of our common stock at $1.00 per share, however there is no minimum to our offering. Funds we raise in this offering, if any, may not be sufficient to fund our planned operations and may not even cover the costs of this offering. If we are not able to raise any funds in this offering, our company will be in a worse financial position then prior to commencement of the offering as we will still incur the costs of this offering. If we do not raise sufficient funds in this offering to fund our operations or even cover the costs of this offering, you may lose your entire investment.
There is uncertainty regarding our ability to continue as a going concern, indicating the possibility that we may be required to curtail or discontinue our operations in the future. If we discontinue our operations, you may lose all of your investment.
We have incurred net losses of $208,878 from our inception on April 18, 2013 to August 31, 2014 and have completed only the preliminary stages of our business plan. We anticipate incurring additional losses before realizing any revenues and will depend on additional financing in order to meet our continuing obligations and ultimately, to attain profitability. We anticipate that our current cash assets will be extinguished by December 31, 2014. The financial statements do not include any adjustments that might result from the uncertainty about our ability to continue our business. If we are unable to obtain additional financing from outside sources and eventually produce enough revenues, we may be forced to sell our assets, or curtail or discontinue our operations. If this happens, you could lose all or part of your investment.
We are in an early stage of development. If we are not able to develop out business as anticipated, we may not be able to generate revenues or achieve profitability and you may lose your investment.
We were incorporated on April 18, 2013. We have no customers, and we have not earned any revenues to date. Our business prospects are difficult to predict because of our limited operating history, early stage of development, and unproven business strategy. Our primary business activities will be focused on the development of our composite materials. Although we believe that our business plan has significant profit potential, we may not attain profitable operations and our management may not succeed in realizing our business objectives. If we are not able to develop out business as anticipated, we may not be able to generate revenues or achieve profitability and you may lose your investment.
We expect to suffer losses in the immediate future that may cause us to curtail or discontinue our operations.
We expect to incur operating losses in future periods. These losses will occur because we do not yet have anysubstantial expenses without corresponding revenues to offset the expenses associated with the development of our composite materialsunless and our business operations, generally. We cannot guarantee that we will ever be successful in generating revenues in the future. We recognize that ifuntil we are unableable to generate revenues, we will notobtain regulatory approval and successfully commercialize the proposed products.
We may never be able to earn profitsobtain regulatory approval for one or continue operations. Theremore of the products in any indication in the United States or internationally. Even if our regulatory process is no history upon which to base any assumption as to the likelihood that we will prove successful and wewith one or more of our product candidates, there can provide investors withbe no assurance that we will generate any operatingsignificant revenues or ever achieve profitable operations. If we are unsuccessful in addressing these risks, our business will almost certainly fail.profitability.
WeThe ongoing COVID-19 pandemic may notadversely affect our business.
In December 2019, a strain of coronavirus was reported to have surfaced in Wuhan, China, and has spread globally, and on March 12, 2020, the WHO declared COVID-19 to be a pandemic. In an effort to contain and mitigate the spread of COVID-19, many countries, including the United States, have imposed unprecedented restrictions on travel, quarantines, and other public health safety measures. Such government-imposed precautionary measures may have been relaxed in certain countries or states, but there is no assurance that more strict measures will be put in place again due to a resurgence in COVID-19 cases. The rapidly evolving nature of the circumstances is such that it is impossible, at this stage, to determine the full and overall impact the COVID-19 pandemic may have, but it could disrupt production and cause delays in the supply and delivery of products used in our research and development efforts, adversely affect our employees, and disrupt our operations, all of which may have a material adverse effect on our business. In addition, the pandemic may have an adverse effect on the ability of regulatory bodies to grant approvals or supervise our candidates and products, may further divert the attention and efforts of the medical community to coping with the coronavirus and disrupt the marketplace in which we operate and may have a material adverse effects on our operations.
Moreover, the COVID-19 pandemic has created significant economic uncertainty and volatility in the credit and capital markets. Management plans to secure the necessary financing through the issue of new equity and/or the entering into of strategic partnership arrangements; however, there is no assurance that our management will be able to execute our business plan or stay in business without additional funding.
Our ability to generate future operating revenues depends in part on whether we can obtain the financing necessary to implement our business plan. We will likely require additional financing through the issuance of debt and/or equity in order to establish profitable operations, and such financing may not be forthcoming. As widely reported,on reasonable terms or at all. A continuation or worsening of the globallevels of market disruption and domestic financial markets have been extremely volatilevolatility seen in the recent months. If such conditions and constraints continue or if there is no investor appetite to finance our specific business, we may not be able to acquire additional financing through credit markets or equity markets. Even if additional financing is available, it may not be available on terms favorable to us. At this time, we have not identified or secured sources of additional financing. Our failure to secure additional financing when it becomes required willpast could have an adverse effect on our ability to remain in business.
The composites materials industry is extremely competitive,access capital and ifon the market price of our common stock, and we are not able to compete successfully against other manufacturers and suppliers of light weight and strong fiber, both large and small, we willmay not be able operate our business and investors will lose their entire investment.
The market forto successfully raise capital through the composites materials industry is extremely competitive and rapidly changing. We currently and in the future face competitive pressures from numerous actual and potential competitors. Manysale of our current and potential competitors in the composites materials business have substantial competitive advantages than we have, including:
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Our competitors may be able to respond more quickly to new or emerging technologies and changes in the composites materials industry and devote greater resources to identify, develop and market new products, and distribute and sell their products than we can.
The loss of the services of Michael Winterhalter, our President and Chairman, or our failure to timely identify and retain competent personnel could negatively impact our ability to develop our website and sell our services.
The development of our composites business and the marketing of our prospective products will continue to place a significant strain on our limited personnel, management, and other resources. Our future success depends upon the continued services of our executive officers who are developing our business, and on our ability to identify and retain competent consultants and employees with the skills required to execute our business objectives. The loss of the services of Michael Winterhalter or our failure to timely identify and retain competent personnel could negatively impact our ability to develop our website and sell our services, which could adversely affect our financial results and impair our growth.
We are a development stage, independent composites materials company, with no experience in the market, and failure to successfully compensate for this inexperience may adversely impact our operations and financial position.
We operate as development stage, materials production company, with few substantial tangible assets in a highly competitive industry. We have little operating history, no customer base and little revenue to date. This makes it difficult to evaluate our future performance and prospects. Our prospectus must be considered in light of the risks, expenses, delays and difficulties frequently encountered in establishing a new business in an emerging and evolving industry characterized by intense competition, including:
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We cannot be sure that we will be successful in meeting these challenges and addressing these risks and uncertainties.securities. If we are unableunsuccessful in commercializing our products or raising capital, we may need to do so, our business will not be successful and the value of your investment in our company will decline.
Our failure to protect our intellectual property and proprietary technology may significantly impair our competitive advantage.
Our success and ability to compete depend in large part upon protecting our proprietary technology. We rely on a combination of patent, trademark and trade secret protection, nondisclosure and nonuse agreements to protect our proprietary rights. The steps we have taken may not be sufficient to prevent the misappropriation of our intellectual property, particularly in foreign countries where the laws may not protect our proprietary rights as fully as in the United States. The patent and trademark law and trade secret protection may not be adequate to deter third party infringementreduce activities, curtail or misappropriation of our patents, trademarks and similar proprietary rights.cease operations.
In addition, patents issued to us may be challenged, invalidateda significant outbreak of COVID-19 or circumvented. Our rights granted under those patents may not provide competitive advantages to us, and the claims under our patent applications may not be allowed. We may be subject to or may initiate interference proceedings in the United States Patent and Trademark Office, which can demand significant financial and management resources. The process of seeking patent protection can be time consuming and expensive and patents may not be issued from currently pending or future applications. Moreover, our existing patents or any new patents that may be issued may not be sufficient in scope or strength to provide meaningful protection or any commercial advantage to us.
We may in the future initiate claims or litigation against third parties for infringement of our proprietary rights in order to determine the scope and validity of our proprietary rights or the proprietary rights of our competitors. These claimsother infectious diseases could result in costly litigationa widespread health crisis that could adversely affect the economies and the diversion of our technical and management personnel.
We may face costly intellectual property infringement claims, the result of which would decrease the amount of cash we would anticipate to operate and complete our business plan.
We anticipatefinancial markets worldwide, resulting in an economic downturn that from time to time we will receive communications from third parties asserting that we are infringing certain patents and other intellectual property rights of others or seeking indemnification against alleged infringement. If anticipated claims arise, we will evaluate their merits. Any claims of infringement brought of third parties could result in protracted and costly litigation, damages for infringement, and the necessity of obtaining a license relating to one or more of our products or current or future technologies, which may not be available on commercially reasonable terms or at all. Litigation, which could result in substantial cost to us and diversion of our resources, may be necessary to enforce our patents or other intellectual property rights or to defend us against claimed infringement of the rights of others. Any intellectual property litigation and the failure to obtain necessary licenses or other rights could have a material adverse effect onimpact our business, financial condition and results of operations.
The failureRisks Related to obtain export licenses could harmProduct Development, Regulatory Approval, Manufacturing and Commercialization
We will depend heavily on the success of our business.proposed products. If we are unable to generate revenues from our products, we will likely need to cease operations.
We must complywill depend entirely on the success of our proposed products. If we are unable to generate revenues, our ability to create stockholder value will be limited.
Despite the attempt to develop a diversified series of product opportunities to mitigate the risks associated with U.S. Departmentany single development effort, we will be required to complete Phase 1 safety studies before evaluating efficacy in subsequent clinical studies. There is no guarantee that our clinical trials will be successful or that we will continue with clinical studies to support any approvals from the FDA for any indication. We acknowledges that most drug candidates never reach the clinical development stage and even those that do have only a small chance of Commerce regulations in shipping exporting technologies outsidesuccessfully completing clinical development and gaining regulatory approval. Therefore, our business currently depends entirely on the United States. Any significant future difficulty in complying with such regulations couldsuccessful development, regulatory approval and commercialization of the proposed products, which may never occur.
Our clinical trials may be unsuccessful, which would materially harm our business, financial conditionbusiness. Even if our ongoing clinical trials are successful, we will be required to conduct additional clinical trials to establish safety and long-term efficacy, before a New Drug Application, or NDA, can be filed with the FDA for marketing approval.
If we are not able to obtain any required regulatory approvals for our drug candidates, we will not be able to commercialize our product candidates and our ability to generate revenue will be limited.
Clinical testing is expensive, is difficult to design and implement, can take many years to complete and is uncertain as to outcome. Success in early phases of pre-clinical and clinical trials does not ensure that later clinical trials will be successful, and interim results of operations.
We are dependent on our sole officer and director, without whose services company business operations could cease.
At this time, Michael Winterhalter, is primarily responsible for the development and executiona clinical trial do not necessarily predict final results. A failure of one or more of our business plan. Michael Winterhalter is under no contractual obligation to remain employed by us, although he has no present intention to leave. If he should choose to leave us forclinical trials can occur at any reason before we have hired additional personnel our operationsstage of testing. We may fail. Even if we are able to find additional personnel, it is uncertain whether we could find qualified management who could develop our business as described hereinexperience numerous unforeseen events during, or would be willing to work for compensation the Company could afford. Without such management, the Company could be forced to cease operations and investors in our common stock or other securities could lose their entire investment.
We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.
We are an “emerging growth company,” as defined in the Jumpstart our Business Startups Act of 2012, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we will rely on these exemptions. If some investors find our common stock less attractive as a result there may beof, the clinical trial process that could delay or prevent our ability to receive regulatory approval or product commercialization. The research, testing, manufacturing, labeling, packaging, storage, approval, sale, marketing, advertising and promotion, pricing, export, import and distribution of drug products are subject to extensive regulation by the FDA and other regulatory authorities in the United States and other countries, which regulations differ from country to country. We are not permitted to market these products as a less active trading marketprescription pharmaceutical product in the United States until we receive approval of an NDA from the FDA or comparable regulatory agencies for our common stocksales in foreign markets until we receive the requisite approval from such countries. In the United States, the FDA generally requires the completion of clinical trials of each drug to establish its safety and our stock price may be more volatile.
Underefficacy and extensive pharmaceutical development to ensure its quality before an NDA is approved. Regulatory authorities in other jurisdictions impose similar requirements. Of the Jumpstart Our Business Startups Act, “emerging growth companies” can delay adopting new or revised accounting standards until such time as those standards applylarge number of drugs in development, only a small percentage result in the submission of an NDA to private companies.the FDA and even fewer are eventually approved for commercialization. We have irrevocably electednever submitted an NDA to the FDA or comparable applications to other regulatory authorities. If our development efforts for these product candidates, including regulatory approval, are not to avail ourselves to this exemption from newsuccessful for its planned indications, or revised accounting standards and, therefore, weif adequate demand for these products is not generated, our business will be subject to the same new or revised accounting standards as other public companies that are not “emerging growth companies.”harmed.
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We incur costs associated with SEC reporting compliance, which may significantly affect our financial condition.Receipt of necessary regulatory approval is subject to a number of risks, including the following:
· | the FDA or comparable foreign regulatory authorities or institutional review boards, or IRBs, may disagree with the design or implementation of the Company’s proposed clinical trials; | |
· | we may not be able to provide acceptable evidence of these products’ safety and efficacy; | |
· | the results of our clinical trials may not be satisfactory or may not meet the level of statistical or clinical significance required by the FDA, European Medicines Agency, or EMA, or other comparable foreign regulatory authorities for marketing approval; | |
· | the proposed dosing studies in a particular clinical trial may not be at an optimal level; | |
· | patients in clinical trials may suffer adverse effects for reasons that may or may not be related to the products; | |
· | the data collected from clinical trials may not be sufficient to support the submission of an NDA or other submission or to obtain regulatory approval in the United States or elsewhere; | |
· | the FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes or facilities of third-party manufacturers with which we contract for clinical and commercial supplies; and | |
· | the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval. |
The Company made
Failure to obtain regulatory approval for the decision to become an SEC “reporting company” in order to comply with applicable laws and regulations. We incur certain costs of compliance with applicable SEC reporting rules and regulations including, but not limited to attorneys’ fees, accounting and auditing fees,foregoing or any other professional fees, financial printing costs and Sarbanes-Oxley compliance costs in an amount estimated at approximately $25,000 per year. On balance,reasons will prevent the Company determined that the incurrence of such costsfrom commercializing this product candidate as a prescription product, and expenses was preferableour ability to the Company being in a position where it had very limited access to additional capital funding.
However, for as long as we remain an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, we intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We intend to take advantage of these reporting exemptions until we are no longer an “emerging growth company.”
We will remain an “emerging growth company” for up to five years, although if the market value of our common stock that is held by non-affiliates exceeds $700 million as of any June 30 before that time, we would cease to be an “emerging growth company” as of the following August 31.
After, and if ever, we are no longer an “emerging growth company,” we expect to incur significant additional expenses and devote substantial management effort toward ensuring compliance with those requirements applicable to companies that are not “emerging growth companies,” including Section 404 of the Sarbanes-Oxley Act.
RISKS ASSOCIATED WITH OUR SECURITIES
Due to the lack of a trading market for our securities, you may have difficulty selling any shares you purchase in this offering.
Our shares of common stock do not trade on any exchange and are not quoted over-the-counter.. There is presently no demand for our common stock and no public market exists for the shares being offered in this prospectus. We plan to contact a market maker immediately following the completion of the offering and apply to have the shares quoted on the Over-the-Counter Bulletin Board (“OTCBB”). The OTCBB is a regulated quotation service that displays real-time quotes, last sale prices and volume information in over-the-counter securities. The OTCBB is not an issuer listing service, market or exchange. Although the OTCBB does not have any listing requirements per se, to be eligible for quotation on the OTCBB, issuers must remain current in their filings with the SEC or applicable regulatory authority. Market makers are not permitted to begin quotation of a security whose issuer does not meet this filing requirement. Securities already quoted on the OTCBB that become delinquent in their required filingsgenerate revenue will be removed following a 30 to 60 day grace period if they do not make their required filing during that time.materially impaired. We cannot guarantee that regulators will agree with the assessment of the results of our applicationclinical trials or that such trials will be acceptedconsidered by regulators to have shown safety or approvedefficacy of our product candidates. The FDA, EMA and other regulators have substantial discretion in the approval process and may refuse to accept any application or may decide that our data is insufficient for approval and require additional clinical trials, or pre-clinical or other studies. In addition, varying interpretations of the data obtained from pre-clinical and clinical testing could delay, limit or prevent regulatory approval of a product candidate.
We have only limited experience in filing the applications necessary to gain regulatory approvals and expect to rely on consultants and third party contract research organizations, or CROs, with expertise in this area to assist us in this process. Securing FDA approval requires the submission of pre-clinical, clinical and/or pharmacokinetic data, information about product manufacturing processes and inspection of facilities and supporting information to the FDA for each therapeutic indication to establish a product candidate’s safety and efficacy for each indication. One or more of the proposed product candidates may prove to have undesirable or unintended side effects, toxicities or other characteristics that may preclude our obtaining regulatory approval or prevent or limit commercial use with respect to one or all intended indications.
The process of obtaining regulatory approvals is expensive, often takes many years, if approval is obtained at all, and can vary substantially based upon, among other things, the type, complexity and novelty of the product candidates involved, the jurisdiction in which regulatory approval is sought and the substantial discretion of the regulatory authorities. Changes in the regulatory approval policy during the development period, changes in or the enactment of additional statutes or regulations, or changes in regulatory review for a submitted product application may cause delays in the approval or rejection of an application. Regulatory approval obtained in one jurisdiction does not necessarily mean that a product candidate will receive regulatory approval in all jurisdictions in which we may seek approval, but the failure to obtain approval in one jurisdiction may negatively impact our ability to seek approval in a different jurisdiction. Failure to obtain regulatory marketing approval for these proposed products in any indication will prevent us from commercializing the product candidate, and our stock listed and quoted for sale. As of the date of this filing, there have been no discussions or understandings between the Company and anyone acting on our behalf, with any market maker regarding participation in a future trading market for our securities. If no market is ever developed for our common stock, itability to generate revenue will be difficult for you to sell any shares you purchase in this offering. In such a case, you may find that you are unable to achieve any benefit from your investment or liquidate your shares without considerable delay, if at all. In addition, if we fail to have our common stock quoted on a public trading market, your common stock will not have a quantifiable value and it may be difficult, if not impossible, to ever resell your shares, resulting in an inability to realize any value from your investment.
Because there is no escrow, trust or similar account, the offering proceeds could be seized by creditors or by a trustee in bankruptcy, in which case investors would lose their entire investment.
Any funds that we raise from our offering of 750,000 shares of common stock will be immediately available for our use and will not be returned to investors. We do not have any arrangements to place the funds received from our offering of 750,000 shares of common stock in an escrow, trust or similar account. Accordingly, if we file for bankruptcy protection or a petition for involuntary bankruptcy is filed by creditors against us, your funds will become part of the bankruptcy estate and administered according to the bankruptcy laws. If a creditor sues us and obtains a judgment against us, the creditor could garnish the bank account and take possession of the subscription funds. As such, it is possible that a creditor could attach your subscription funds. If that happens, you will lose your investment and your funds will be used to pay creditors.materially impaired.
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Clinical drug development involves a lengthy and expensive process with an uncertain outcome, and results of earlier studies and trials may not be predictive of future trial results.
Clinical drug development involves a lengthy and expensive process with an uncertain outcome, and results of earlier studies and trials may not be predictive of future trial results. Failure can occur at any time during the clinical trial process. The results of pre-clinical studies and early clinical trials may not be predictive of the results of later-stage clinical trials. The Company cannot assure how the FDA will view the results or that any future trials of the proposed products will achieve positive results. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy traits despite having progressed through pre-clinical studies and initial clinical trials. A number of companies in the pharmaceutical industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy or adverse safety profiles, notwithstanding promising results in earlier trials. Any future clinical trial results may not be successful.
In addition, a number of factors could contribute to a lack of favorable safety and efficacy results for the products. For example, such trials could result in increased variability due to varying site characteristics, such as local standards of care, differences in evaluation period and surgical technique, and due to varying patient characteristics, including demographic factors and health status.
Even if we receive regulatory approval for our drug candidates, we still may not be able to successfully commercialize any of our products, and the revenue that we generate from sales, if any, may be limited.
Even if regulatory approvals are received, we still may not be able to successfully commercialize these products, and the revenue that we generate from sales, if any, may be limited. If approved for marketing, the commercial success will depend upon its acceptance by the medical community, including physicians, patients and health care payors. The degree of market acceptance will depend on a number of factors, including:
· | demonstration of clinical safety and efficacy; | |
· | relative convenience, pill burden and ease of administration; | |
· | the prevalence and severity of any adverse effects; | |
· | the willingness of physicians to prescribe the products and of the target patient population to try new alternative therapies; | |
· | safety, tolerability and efficacy compared to competing products; | |
· | the introduction of any new products that may in the future become available to treat indications for which the proposed products may be approved; | |
· | new procedures or methods of treatment that may reduce the incidences of any of the indications in which these products may show utility; | |
· | pricing and cost-effectiveness; | |
· | the effectiveness of our or any future collaborators’ sales and marketing strategies; | |
· | limitations or warnings contained in FDA-approved labeling; | |
· | our ability to obtain and maintain sufficient third-party coverage or reimbursement from government health care programs, including Medicare and Medicaid, private health insurers and other third-party payors; and | |
· | the willingness of patients to pay out-of-pocket in the absence of third-party coverage or reimbursement. |
If one or more of the proposed products are approved, but does not achieve an adequate level of acceptance by physicians, health care payors and patients, we may not generate sufficient revenue and we may not be able to achieve or sustain profitability. Our common stockefforts to educate the medical community and third-party payors on the benefits of the products may require significant resources and may never be successful.
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In addition, even if we obtain regulatory approvals, the timing or scope of any approvals may prohibit or reduce our ability to successfully commercialize these products. For example, if the approval process takes too long, the Company may miss market opportunities and give other companies the ability to develop competing products or establish market dominance. Any regulatory approval we ultimately obtain may be limited or subject to restrictions or post-approval commitments that render one or more products not commercially viable. For example, regulatory authorities may approve a product for fewer or more limited indications than requested, may not approve the price we intend to charge, may grant approval contingent on the performance of costly post-marketing clinical trials, or may approve a product with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that indication. Further, the FDA or comparable foreign regulatory authorities may place conditions on approvals, such as risk management plans and a Risk Evaluation and Mitigation Strategy, or REMS, to assure the safe use of the drug. If the FDA concludes a REMS is needed, the sponsor of the NDA must submit a proposed REMS; the FDA will not approve the NDA without an approved REMS, if required. A REMS could include medication guides, physician communication plans, or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. The FDA may also require a REMS for an approved product when new safety information emerges. Any of these limitations on approval or marketing could restrict the commercial promotion, distribution, prescription or dispensing of our products. Moreover, product approvals may be withdrawn for non-compliance with regulatory standards or if problems occur following the initial marketing of the product. Any of the foregoing scenarios could materially harm the commercial success of the proposed products
Even once marketing approval is obtained, we will be subject to ongoing obligations and continued regulatory review, which may result in significant additional expense. Additionally, these products could be subject to labeling and other restrictions and withdrawal from the market and we may be subject to penalties if we fail to comply with regulatory requirements or if we experience unanticipated problems with the proposed products.
Even if we obtain marketing approval for our drug candidates, we will be subject to ongoing obligations and continued regulatory review, which may result in significant additional expense. Additionally, our drug candidates could be subject to labeling and other restrictions and withdrawal from the market and we may be subject to penalties if we fail to comply with regulatory requirements or if we experience unanticipated problems with our drug candidates.
Even if we obtain United States regulatory approval of for a specific indication, the FDA may still impose significant restrictions on indicated uses or marketing or the conditions of approval, or impose ongoing requirements for potentially costly and time-consuming post-approval studies, including Phase 4 clinical trials, and post-market surveillance to monitor safety and efficacy. The proposed products will also be subject to ongoing regulatory requirements governing the manufacturing, labeling, packaging, storage, distribution, safety surveillance, advertising, promotion, recordkeeping and reporting of adverse events and other post-market information. These requirements include registration with the FDA, continued compliance with current Good Clinical Practices regulations, or cGCPs, for any clinical trials that we conduct post-approval, continued compliance with the CSA and ongoing review by the DEA. In addition, manufacturers of drug products and their facilities are subject to continual review and periodic inspections by the FDA and other regulatory authorities for compliance with current Good Manufacturing Practices, or cGMP, requirements relating to quality control, quality assurance and corresponding maintenance of records and documents.
With respect to sales and marketing activities by us or any future partner, advertising and promotional materials must comply with FDA rules in addition to other applicable federal, state and local laws in the United States and similar legal requirements in other countries. In the United States, the distribution of product samples to physicians must comply with the requirements of the U.S. Prescription Drug Marketing Act. Application holders must obtain FDA approval for product and manufacturing changes, depending on the nature of the change. We may also be subject, directly or indirectly through our customers and partners, to various fraud and abuse laws, including, without limitation, the U.S. Anti-Kickback Statute, U.S. False Claims Act, and similar state laws, which impact, among other things, our proposed sales, marketing, and scientific/educational grant programs. If we participate in the U.S. Medicaid Drug Rebate Program, the Federal Supply Schedule of the U.S. Department of Veterans Affairs, or other government drug programs, we will be subject to complex laws and regulations regarding reporting and payment obligations. All of these activities are also potentially subject to U.S. federal and state consumer protection and unfair competition laws. Similar requirements exist in many of these areas in other countries.
In addition, if the product(s) are approved for an indication, our product labeling, advertising and promotion would be subject to regulatory requirements and continuing regulatory review. The FDA strictly regulates the promotional claims that may be made about prescription products. In particular, a product may not be promoted for uses that are not approved by the FDA as reflected in the product’s approved labeling. If we receive marketing approval for a specific product, physicians may nevertheless legally prescribe our products to their patients in a manner that is inconsistent with the approved label. However, if we are found to have promoted such off-label uses, we may become subject to significant liability and government fines. The federal government has levied large civil and criminal fines against companies for alleged improper promotion and has enjoined several companies from engaging in off-label promotion. The FDA has also requested that companies enter into consent decrees of permanent injunctions under which specified promotional conduct is changed or curtailed.
If we or a regulatory agency discover previously unknown problems with a product, such as adverse events of unanticipated severity or frequency or problems with the facility where the product is manufactured, or if we or our manufacturers fail to comply with applicable regulatory requirements, we may be subject to the “penny stock” rulesfollowing administrative or judicial sanctions:
· | restrictions on the marketing or manufacturing of the product, withdrawal of the product from the market, or voluntary or mandatory product recalls; | |
· | issuance of warning letters or untitled letters; | |
· | injunctions or the imposition of civil or criminal penalties or monetary fines; | |
· | suspension of any ongoing clinical trials; |
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· | refusal to approve pending applications or supplements to approved applications filed by us, or suspension or revocation of product license approvals; | |
· | suspension of, or imposition of restrictions on, operations, including costly new manufacturing requirements; or | |
· | product seizure or detention or refusal to permit the import or export of product. |
The occurrence of any event or penalty described above may inhibit our ability to commercialize these products and generate revenue. Adverse regulatory action, whether pre- or post-approval, can also potentially lead to product liability claims and increase our product liability exposure.
We currently have no sales and marketing organization. If we are unable to secure a sales and marketing partner or establish satisfactory sales and marketing capabilities, we may not successfully commercialize our drug candidates.
We currently have no sales and marketing organization. If we are unable to secure a sales and marketing partner or establish satisfactory sales and marketing capabilities, we may not successfully commercialize the proposed products.
The Company may not be able to enter into collaboration agreements on terms acceptable to us or at all. In addition, even if we enter into such relationships, we may have limited or no control over the sales, marketing and distribution activities of these third parties. Our future revenues may depend heavily on the success of the secefforts of these third parties. If we elect to establish a sales and marketing infrastructure we may not realize a positive return on this investment. In addition, we will have to compete with established and well-funded pharmaceutical and biotechnology companies to recruit, hire, train and retain sales and marketing personnel. Factors that may inhibit our efforts to commercialize the trading marketproducts without strategic partners or licensees include:
· | our inability to recruit and retain adequate numbers of effective sales and marketing personnel; | |
· | the inability of sales personnel to obtain access to or persuade adequate numbers of physicians to prescribe the products; | |
· | the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines; and | |
· | unforeseen costs and expenses associated with creating an independent sales and marketing organization. |
The Company faces competition from other biotechnology and pharmaceutical companies and our operating results will suffer if we fail to compete effectively.
The biotechnology and pharmaceutical industries are intensely competitive and subject to rapid and significant technological change. We have competitors in a number of jurisdictions, many of which have substantially greater name recognition, commercial infrastructures and financial, technical and personnel resources than we have. Established competitors may invest heavily to quickly discover and develop novel compounds that could make these product candidates obsolete or uneconomical. Any new product that competes with an approved product may need to demonstrate compelling advantages in efficacy, cost, convenience, tolerability and safety to be commercially successful. Other competitive factors, including generic competition, could force us to lower prices or could result in reduced sales. In addition, new products developed by others could emerge as competitors. If we are not able to compete effectively against our current and future competitors, our business will not grow and our financial condition and operations will suffer.
We may be involved in legal proceedings that may result in adverse outcomes.
We may be involved in claims, suits, government investigations, and proceedings arising in the ordinary course of our business, including actions with respect to intellectual property claims, privacy, data protection or law enforcement matters, tax matters, labor and employment claims, commercial claims, as well as stockholder derivative actions, class action lawsuits, and other matters. Such claims, suits, government investigations, and proceedings are inherently uncertain and their results cannot be predicted with certainty. Regardless of their outcomes, such legal proceedings can have an adverse impact on us because of legal costs, diversion of management and other personnel, and other factors. In addition, it is possible that a resolution of one or more such proceedings could result in liability, penalties, or sanctions, as well as judgments, consent decrees, or orders preventing us from offering certain features, functionalities, products, or services, or requiring a change in our securities is limited,business practices, products or technologies, which makes transactionscould in the future materially and adversely affect our stock cumbersomebusiness, operating results, and may reduce the value of an investment in our stock.financial condition.
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Financial and Other Risk Factors
Under U.S. federal securities legislation,Any market that develops in shares of our common stock will constitutebe subject to the penny stock regulations and restrictions pertaining to low priced stocks that will create a lack of liquidity and make trading difficult or impossible.
The trading of our securities, if any, will be in the over-the-counter market which is commonly referred to as the “OTC”. As a result, an investor may find it difficult to dispose of, or to obtain accurate quotations as to the price of our securities.
Broker-dealer practices in connection with transactions in “penny stock”. Pennystocks” are regulated by penny stock rules adopted by the SEC. The term “penny stock” is any equity security that hasdefined in Exchange Act Rule 3a51-1 as, among other things, as having a market price of less than $5.00 per share subject to certain exceptions. For any transaction involving aas set forth in Exchange Act Rule 3a51-(1)(d). The penny stock unless exempt, the rules require that a broker or dealer approve a potential investor’s account for transactions in penny stocks, and the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve an investor’s account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience objectives of the person, and make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver,broker-dealer, prior to anya transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure schedule prepared bydocument that provides information about penny stocks and the Commission relatingnature 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, if the broker-dealer is the sole market maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market, and monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, broker-dealers who sell these securities to persons other than established customers and “accredited investors” must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. Consequently, these requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security subject to the penny stock market, which,rules, and investors in highlight form sets forth the basis on which the broker or dealer made the suitability determination. Brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock. may find it difficult to sell their shares.
Disclosure also has to be made about the risks of investing in penny stocksstock in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally,Additionally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
WeBecause of these regulations, broker-dealers may not wish to engage in the future, issue additional commonabove-referenced necessary paperwork and disclosures and/or may encounter difficulties in their attempt to sell shares which would reduce investors’ percent of ownership and may dilute our share value.
Our Articles of Incorporation authorize the issuance of 50,000,000 shares of common stock and 25,000,000 shares of “blank check” preferred stock. As of the date of this prospectus, the Company had 5,927,106 shares of common stock, and no shares of preferred stock, issued and outstanding. Accordingly, we may issue up to an additional 44,072,894 shares of common stock and 25,000,000 shares of preferred stock. The future issuance of common stock or preferred stock may result in substantial dilution in the percentage of our common stock, held by our then existing shareholders. Wewhich may value any common stock issued inaffect the future on an arbitrary basis. The issuanceability of common stock for future services or acquisitionsselling shareholders or other corporate actions mayholders to sell their shares in any secondary market and have the effect of dilutingreducing the valuelevel of trading activity in any secondary market. These additional sales practice and disclosure requirements could impede the sale of our securities, if and when our securities become publicly traded. In addition, the liquidity for our securities may decrease, with a corresponding decrease in the price of our securities. Our shares, in all probability, will be subject to such penny stock rules for the foreseeable future and our shareholders will in all likelihood find it difficult to sell their securities.
The interests of our principal stockholders, who collectively hold 81% of our stock, may not coincide with yours and such controlling stockholder may make decisions with which you may disagree.
As of September 1, 2020, our principal stockholders, Applied Biosciences Corp. and Green Sky Labs, beneficially own 81% of our common stock. As a result, our principal stockholders control substantially all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. In addition, this concentration of ownership may delay or prevent a change in control of our company and make some future transactions more difficult or impossible without the support of our controlling stockholders. The interests of our controlling stockholders may not coincide with our interests or the interests of other stockholders.
Because we are not subject to compliance with rules requiring the adoption of certain corporate governance measures, our stockholders have limited protection against interested director transactions, conflicts of interest and similar matters.
The Sarbanes-Oxley Act of 2002, as well as rule changes proposed and enacted by the SEC, the New York and American Stock Exchanges and the Nasdaq Stock Market (as a result of Sarbanes-Oxley), require the implementation of various measures relating to corporate governance. These measures are designed to enhance the integrity of corporate management and the securities markets and apply to securities that are listed on those exchanges or the Nasdaq Stock Market. Because we are not presently required to comply with many of the shares heldcorporate governance provisions and because we chose to avoid incurring the substantial additional costs associated with such compliance any sooner than legally required, we have not yet adopted these measures. Until we comply with such corporate governance measures, regardless of whether such compliance is required, the absence of such standards of corporate governance may leave our stockholders without protections against interested director transactions, conflicts of interest, if any, and similar matters and investors may be reluctant to provide us with funds necessary to expand our operations.
We may find it very difficult or be unable to attract and retain qualified officers, directors and members of board committees required to provide for our effective management as a result of Sarbanes-Oxley Act of 2002. The enactment of the Sarbanes-Oxley Act of 2002 has resulted in a series of rules and regulations by the SEC that increase responsibilities and liabilities of directors and executive officers. The perceived increased personal risk associated with these recent changes may make it more costly or deter qualified individuals from accepting these roles.
If securities or industry analysts do not publish research about our investors,business, or publish negative reports about our business, our share price and might have an adverse effect on anytrading volume could decline.
The trading market for our common stock.stock, to some extent, may at some point depend on the research and reports that securities or industry analysts publish about our business. We do not have any control over these analysts. If one or more of the analysts elect to cover us downgrade our shares or lower their opinion of our shares, our share price would likely decline. If one or more of these analysts elect to cover us and subsequently cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline.
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As of the date of this prospectus, our officers and directors beneficially own 5,187,500 sharesFuture sales or potential sales of our common stock in the aggregate, or 87.52%public market could cause our share price to decline.
If the existing holders of our issuedcommon stock particularly our directors and outstandingofficers, sell a large number of shares, ofthey could adversely affect the market price for our common stock. Additionally, one stockholder, Michael Winterhalter, our President and Chairman, holds 4,000,000 sharesSales of substantial amounts of our common stock in the aggregate, or 67.49% of our issued and outstanding shares of common stock. As a result, our President and Chairman alone, will have significant influence to:
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Moreover, because of the significant ownership position held by our insiders, new investors may not be able to effect a change in our business or management, and therefore, shareholders would have no recourse as a result of decisions made by management.
In addition, sales of significant amounts of shares held by our sole officer and director,public market, or the prospect ofperception that these sales could adversely affectoccur, could cause the market price of our common stock. Management’s stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock price.decline.
WeIf we are selling this offering without an underwriterunable to implement and maintain effective internal control over financial reporting in the future, the accuracy and timeliness of our financial reporting may be unable to sell any shares.adversely affected.
This offering is self-underwritten, that is,If we are not goingunable to engage the services of an underwriter to sell the shares; we intend to sell our shares through our sole officer and director, Michael Winterhalter, who will receive no commissions. He will offer the shares to friends, family members, and business associates, however, there is no guarantee that he will be able to sell any of the shares. Unless he is successful in selling all of the shares and we receive the proceeds from this offering, we may have to seek alternative financing to implement our business plan.
State securities laws may limit secondary trading, which may restrict the states in which and conditions under which you can sell the shares offered by this prospectus.
Secondary trading in common stock sold in this offering will not be possible in any state until the common stock is qualifiedmaintain adequate internal controls for sale under the applicable securities laws of the state or there is confirmation that an exemption, such as listing in certain recognized securities manuals, is available for secondary tradingfinancial reporting in the state. If we fail to registerfuture, investor confidence in the accuracy of our financial reports may be impacted or qualify, or to obtain or verify an exemption for the secondary tradingmarket price of the common stock in any particular state, the common stock could not be offered or sold to, or purchased by, a resident of that state. In the event that a significant number of states refuse to permit secondary trading in our common stock, the liquidity for the common stock could be significantly impacted thus causing you to realize a loss on your investment.negatively impacted.
The Company doesWe do not intend to seek registrationpay dividends for the foreseeable future.
We have never declared or qualification of its shares ofpaid any cash dividends on our common stock the subject of this offering in any State or territory of the United States. Aside from a “secondary trading” exemption, other exemptions under state law and the laws of US territories may be available to purchasers of the shares of common stock sold in this offering,
Anti-takeover effects of certain provisions of Nevada state law hinder a potential takeover of our company.
Though not now, in the future we may become subject to Nevada’s control share law. A corporation is subject to Nevada’s control share law if it has more than 200 stockholders, at least 100 of whom are stockholders of record and residents of Nevada, and it does business in Nevada or through an affiliated corporation. The law focuses on the acquisition of a “controlling interest” which means the ownership of outstanding voting shares sufficient, but for the control share law, to enable the acquiring person to exercise the following proportions of the voting power of the corporation in the election of directors:
(i) one-fifth or more but less than one-third, (ii) one-third or more but less than a majority, or (iii) a majority or more. The ability to exercise such voting power may be direct or indirect, as well as individual or in association with others.
The effect of the control share law is that the acquiring person, and those acting in association with it, obtains only such voting rights in the control shares as are conferred by a resolution of the stockholders of the corporation, approved at a special or annual meeting of stockholders. The control share law contemplates that voting rights will be considered only once by the other stockholders. Thus, there is no authority to strip voting rights from the control shares of an acquiring person once those rights have been approved. If the stockholders do not grant voting rights to the control shares acquired by an acquiring person, those shares do not become permanent non-voting shares. The acquiring person is free to sell its shares to others. If the buyers of those shares themselves do not acquire a controlling interest, their shares do not become governed by the control share law.
If control shares are accorded full voting rights and the acquiring person has acquired control shares with a majority or more of the voting power, any stockholder of record, other than an acquiring person, who has not voted in favor of approval of voting rights is entitled to demand fair value for such stockholder’s shares.
Nevada’s control share law may have the effect of discouraging takeovers of the corporation.
In addition to the control share law, Nevada has a business combination law which prohibits certain business combinations between Nevada corporations and “interested stockholders” for three years after the “interested stockholder” first becomes an “interested stockholder,” unless the corporation’s board of directors approves the combination in advance. For purposes of Nevada law, an “interested stockholder” is any person who is (i) the beneficial owner, directly or indirectly, of ten percent or more of the voting power of the outstanding voting shares of the corporation, or (ii) an affiliate or associate of the corporation and at any time within the three previous years was the beneficial owner, directly or indirectly, of ten percent or more of the voting power of the then outstanding shares of the corporation. The definition of the term “business combination” is sufficiently broad to cover virtually any kind of transaction that would allow a potential acquirer to use the corporation’s assets to finance the acquisition or otherwise to benefit its own interests rather than the interests of the corporation and its other stockholders.
The effect of Nevada’s business combination law is to potentially discourage parties interested in taking control of our company from doing so if it cannot obtain the approval of our board of directors.
Because we do not intend to pay any cash dividends on our common stock, our stockholders will not be able to receive a return on their shares unless they sell them.
We intend to retain any future earnings to finance the development and expansion of our business. We do not anticipate paying any cash dividends on our common stock in the foreseeable future. Unless weAny determination to pay dividends in the future will be at the discretion of our stockholders will not be ableboard of directors. Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to receive a returnrealize any future gains on their investments.
Prospective investors need to conduct an independent investment analysis and due diligence review.
No independent legal, accounting or business advisors have been appointed to represent the interests of prospective investors in the Company. Neither the Company nor any of its officers, directors, employees or agents makes any representation or expresses any opinion with respect to the merits of an investment in the shares unless they sell them. Stockholdersof the Company, including, without limitation, the proposed value of the Company or the shares. Each prospective investor is therefore encouraged to engage independent accountants, appraisers, attorneys and other advisors to (i) conduct such due diligence review as such prospective investor may never be abledeem necessary and advisable, and (ii) provide such opinions with respect to sell shares when desired. Before you investthe merits of an investment in our securities, you should be aware that there are various risks. You should consider carefully thesethe Company and applicable risk factors togetheras such prospective investor may deem necessary and advisable. The Company will cooperate fully with any prospective investor who desires to conduct such an independent analysis, so long as the Company determines, in its sole discretion, that such cooperation is not unduly burdensome.
Prospective investors need to review individual tax consequences of an investment in the Company.
An investment in the Company will have certain tax consequences that will be unique to each investor, depending upon his/her/its personal tax situation, his/her/its nationality and/or place of domicile, and other unique personal circumstances. The Company cannot and does not make any representations or assurances as to individual tax consequences. Investors are encouraged to consult with their own tax advisors in connection with any investment decision with respect to the shares.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward looking statements reflecting our current expectations that involve risks and uncertainties. These forward-looking statements include, but are not limited to, statements related to industry prospects, our future economic performance including anticipated revenues and expenditures, results of operations or financial position, and other financial items, our business plans and objectives, including our growth strategies and intended product releases, and may include certain assumptions that underlie the forward-looking statements. Forward-looking statements often include words such as “outlook,” “projected,” “intends,” “will,” “anticipate,” “believe,” “target,” “expect,” and statements in the future tense are generally forward-looking.
We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. The achievement or success of the matters covered by such forward-looking statements involves significant risks, uncertainties and assumptions, including those described in “Risk Factors” beginning on page 3 of this prospectus. Moreover, we operate in a very competitive and rapidly changing environment and industry. New risks may also emerge from time to time. It is not possible for our management to predict all of the other information includedrisks related to our business and operations, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this annual report before you decide to purchase our securities. If anyprospectus may not occur and actual results could differ materially and adversely from those anticipated, predicted or implied in the forward-looking statements.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the followingforward-looking statements will be achieved or occur, and reported results should not be considered as an indication of future performance. Given these risks and uncertainties, develop into actual events, our business, financial condition or results of operations could be materially adversely affected.readers are cautioned not to place undue reliance on such forward-looking statements.
Except as required by law, we undertake no obligation to update any forward-looking statements for any reason to conform these statements to actual results or to changes in our expectations.
Our public offeringAll shares of 750,000 isour common stock offered by this prospectus are being made on a self-underwritten basis: no minimum number of shares must be sold in orderregistered for the offering to proceed. The net proceeds to us from the sale of up to 750,000 shares offered at a public offering price of $1.00 per share will vary depending upon the total number of shares sold. Regardlessaccounts of the number of shares sold,selling stockholders and we expect to incur offering expenses estimated at $4,726 for legal, accounting, printing and other costs in connection with this offering (see “Other Expenses of Issuance and Distribution” in Part II). We will not receive any proceeds from the sale of shares by the selling shareholders. We will not maintain an escrow account for the receipt of proceeds from the sale of ourthese shares.
The following table sets forth the uses of proceeds from the primary offering would be used assuming the sale of 25%, 50%, 75% and 100%, respectively, of the securities offered for sale by the Company. There is no assurance that we will raise the full $750,000 as anticipated.
25% of | 50% of | 75% of | 100% of | |||||||||||||
shares sold | shares sold | shares sold | shares sold | |||||||||||||
Gross Proceeds from this Offering (1)(2): | $ | 187,500 | $ | 375,000 | $ | 562,500 | $ | 750,000 | ||||||||
General and Administrative | $ | 5,000 | $ | 18,000 | $ | 18,000 | $ | 18,000 | ||||||||
Legal and Accounting | $ | 45,000 | $ | 45,000 | $ | 45,000 | $ | 45,000 | ||||||||
Facilities | $ | 15,000 | $ | 48,000 | $ | 48,000 | $ | 48,000 | ||||||||
Retention | $ | 25,000 | $ | 36,000 | $ | 36,000 | $ | 36,000 | ||||||||
Sales, Marketing, Travel | $ | 22,500 | $ | 50,000 | $ | 61,250 | $ | 120,000 | ||||||||
Materials Purchases | $ | 20,000 | $ | 40,000 | $ | 108,000 | $ | 108,000 | ||||||||
Contract Labor | $ | 10,000 | $ | 28,000 | $ | 60,000 | $ | 60,000 | ||||||||
Salary and Consultant | $ | 40,000 | $ | 100,000 | $ | 141,250 | $ | 225,000 | ||||||||
R&D, engineering, testing | $ | 5,000 | $ | 10,000 | $ | 45,000 | $ | 90,000 | ||||||||
Totals | $ | 187,500 | $ | 375,000 | $ | 562,500 | $ | 750,000 |
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The above figures represent only estimated costs. All proceeds will be deposited into our corporate bank account. Any funds that we raise from our offering of 750,000 shares will be deposited in a Company bank account in the United States immediately available for our use and will not be returned to investors. We do not have any arrangements to place the funds received from our offering of $750,000 in an escrow, trust or similar account. Accordingly, if we file for bankruptcy protection or a petition for involuntary bankruptcy is filed by creditors against us, your funds will become part of the bankruptcy estate and administered according to the bankruptcy laws. If a creditor sues us and obtains a judgment against us, the creditor could garnish the bank account and take possession of the subscriptions. As such, it is possible that a creditor could attach your subscription. If that happens, you will lose your investment and your funds will be used to pay creditors.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
DETERMINATION OF THE OFFERING PRICE
The offering price of the 750,000 shares being offered has been determined arbitrarily by us. The price does not bear any relationship to our assets, book value, earnings, or other established criteria for valuing a privately held company. In determining the number of shares to be offered and the offering price, we took into consideration our cash on hand and the amount of money we would need to implement our business plan. Accordingly, the offering price should not be considered an indication of the actual value of the securities. We will not receive any of the proceeds from the sale of the 695,856 common shares being offered for sale by the selling stockholders, which 695,856 shares of our common stock may be offered and sold from time to time by the selling stockholders. The selling shareholders will sell our shares at $1.00 per share until our shares are quoted on the OTCBB, and thereafter at prevailing market prices or privately negotiated prices. This price was arbitrarily determined by us.
SELLING STOCKHOLDERS
The common shares being offered for resale by the 9 selling stockholders consists of 695,856 of our common stock, $0.001 par value. The following table sets forth the shares beneficially owned, as of the date of this prospectus, by the selling stockholders prior to the offering by existing stockholders contemplated by this prospectus, the number of shares each selling stockholder is offering by this prospectus and the number of shares which each would own beneficially if all such offered shares are sold.
Beneficial ownership is determined in accordance with Securities and Exchange Commission rules. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power.
The percentages below are calculated based on 5,927,106 shares of our common stock issued and outstanding as of the date of this prospectus. We do not have any outstanding options, warrants or other securities exercisable for or convertible into shares of our common stock.
Name of Selling Shareholder | Shares Owned Before the Offering | Total Number of Shares to be Offered for the Security Holder’s Account | Total Shares Owned After the Offering is complete | Percentage of Shares Owned After the Offering is complete | ||||||||||||
Michael Winterhalter (1) | 4,000,000 | 400,000 | 3,600,000 | 53.92 | % | |||||||||||
Eric Krogius (2) | 1,000,000 | 100,000 | 900,000 | 13.48 | % | |||||||||||
Han Bao Dong (3) | 625,000 | 62,500 | 562,500 | 8.42 | % | |||||||||||
Robert Drust (4) | 187,500 | 18,750 | 168,750 | 2.53 | % | |||||||||||
Michael Leichtner | 62,500 | 62,500 | 0 | 0.00 | % | |||||||||||
Brian Emmer & Alyson Emmer | 25,000 | 25,000 | 0 | 0.00 | % | |||||||||||
William Winterhalter (5) | 25,000 | 25,000 | 0 | 0.00 | % | |||||||||||
Ray Winterhalter (6) | 2,106 | 2,106 | 0 | 0.00 | % | |||||||||||
TOTALS | 5,927,106 | 695,856 | 5,231,250 |
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None of the selling stockholders is a broker-dealer or an affiliate of a broker-dealer.
DILUTION
The price of our offering our offering of 750,000 shares is fixed at $1.00 per share. This price is significantly higher than the average approximately $0.10 price per share paid by the selling stockholders for the 695,856 shares of common stock they are reselling.
Dilution represents the difference between the offering price and the net tangible book value per share immediately after completion of this offering. Net tangible book value is the amount that results from subtracting total liabilities and intangible assets from total assets. Dilution arises mainly as a result of our arbitrary determination of the offering price of the shares being offered. Dilution of the value of the shares you purchase is also a result of the lower book value of the shares held by our existing stockholders. The following tables compare the differences of your investment in our shares with the investment of our existing stockholders.
As of AugustSince July 31, 2014, the net tangible book value of2019, our shares of common stock was $115,264 or $0.019have been quoted on the OTC Pink tier of the OTC Markets Group, Inc. (“OTC Markets”) under the stock symbol “AGTX”. From August 4, 2015, until July 30, 2019, our shares of common stock have been quoted on the OTC Pink tier of the OTC Markets under the stock symbol “FWDR”. The following table shows the reported high and low closing bid prices per share for our common stock based upon 5,927,106on information provided by the OTC Markets Group, Inc. The over-the-counter market quotations set forth for our common stock reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.
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Financial Quarter Ended |
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August 31, 2020 |
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| 5.00 |
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| 1.80 |
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May 31, 2020 |
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| 2.40 |
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| 1.01 |
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February 28, 2020 |
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| 24.00 |
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| 2.40 |
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November 30, 2019 |
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| 24.00 |
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| 2.40 |
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August 31, 2019 |
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| 24.00 |
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| 24.00 |
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May 31, 2019 |
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| 10.50 |
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| 10.50 |
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February 28, 2019 |
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| 10.50 |
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| 10.50 |
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November 30, 2018 |
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| 31.25 |
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| 11.50 |
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(1) All prices reflect a 1-for-1,000 reverse split of its issued and outstanding common stock effective July 3, 2019 and a 100-for-1 forward split of its issued and outstanding shares outstanding.of common stock effective February 25, 2020.
Existing Stockholders if all of the Shares are Sold
Price per share | $ | 1.00 | ||
Net tangible book value per share before offering | $ | 0.01 | ||
Potential gain to existing shareholders | $ | 750,000 | ||
Potential gain to existing shareholders net of offering expenses | $ | 739,151 | ||
Net tangible book value per share after offering | $ | 0.14 | ||
Increase to present stockholders in net tangible book value per share after offering | $ | 0.13 | ||
Capital contributions | $ | 225,000 | ||
Number of shares outstanding before the offering | 5,927,106 | |||
Number of shares after offering held by existing stockholders | 5,231,250 | |||
Percentage of ownership after offering | 78.35 | % |
Purchasers of Shares in this Offering if all Shares Sold
Price per share | $ | 1.00 | ||
Book value per share after offering | $ | 0.14 | ||
Dilution per share | $ | 0.86 | ||
Capital contributions | $ | 750,000 | ||
Percentage of capital contributions | 76.0 | % | ||
Number of shares after offering held by public investors | 750,000 | |||
Percentage of ownership after offering | 11.2 | % |
Purchasers of Shares in this Offering if 75% of Shares Sold
Price per share | $ | 1.00 | ||
Book value per share after offering | $ | 0.10 | ||
Dilution per share | $ | 0.90 | ||
Capital contributions | $ | 562,500 | ||
Percentage of capital contributions | 71.4 | % | ||
Number of shares after offering held by public investors | 562,500 | |||
Percentage of ownership after offering | 8.6 | % |
Purchasers of Shares in this Offering if 50% of Shares Sold
Price per share | $ | 1.00 | ||
Book value per share after offering | $ | 0.07 | ||
Dilution per share | $ | 0.93 | ||
Capital contributions | $ | 375,000 | ||
Percentage of capital contributions | 62.5 | % | ||
Number of shares after offering held by public investors | 375,000 | |||
Percentage of ownership after offering | 5.9 | % |
Purchasers of Shares in this Offering if 25% of Shares Sold
Price per share | $ | 1.00 | ||
Book value per share after offering | $ | 0.04 | ||
Dilution per share | $ | 0.96 | ||
Capital contributions | $ | 187,500 | ||
Percentage of capital contributions | 45.5 | % | ||
Number of shares after offering held by public investors | 187,500 | |||
Percentage of ownership after offering | 3.0 | % |
PLAN OF DISTRIBUTIONHOLDERS
PlanOn July 3, 2019, the Company effected a 1-for-1,000 reverse split of Distribution forits issued and outstanding common stock and, on February 25, 2020, the Company’s Initial Public OfferingCompany effected a 100-for-1 forward split of 750,000 Sharesits issued and outstanding common stock. As of Common Stock
FairWind Energy Inc. has 5,927,106 commonSeptember 1, 2020 the Company had 34,489,605 shares of common stock issued and outstanding asheld by approximately 66 holders of the date of this prospectus. The Company is registering an additional 750,000 shares of its common stock for sale at the price of $1.00 per share. There is no arrangement to address the possible effect of the offering on the price of the stock.record.
In connection with the Company’s selling efforts in the offering, Michael Winterhalter will not register as a broker-dealer pursuant to Section 15 of the Exchange Act, but rather will rely upon the “safe harbor” provisions of SEC Rule 3a4-1, promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Generally speaking, Rule 3a4-1 provides an exemption from the broker-dealer registration requirements of the Exchange Act for persons associated with an issuer that participate in an offering of the issuer’s securities. Mr. Winterhalter is not subject to any statutory disqualification, as that term is defined in Section 3(a)(39) of the Exchange Act.
Mr. Winterhalter will sell the 750,000 shares of its common stock and intends to offer them to friends, family members and business acquaintances. Mr. Winterhalter will not be compensated in connection with their participation in the offering by the payment of commissions or other remuneration based either directly or indirectly on transactions in our securities. Mr. Winterhalter is not, nor has been, within the past 12 months, a broker or dealer, and he is not, nor has he been within the past 12 months, an associated person of a broker or dealer. At the end of the offering, Mr. Winterhalter will continue to primarily perform substantial duties for the Company or on its behalf otherwise than in connection with transactions in securities. .Mr. Winterhalter will not participate in selling an offering of securities for any issuer more than once every 12 months other than in reliance on Exchange Act Rule 3a4-1(a)(4)(i) or (iii).DIVIDENDS
FairWind Energy Inc. will receive all proceeds from the sale of the 750,000 shares being offered. The price per share is fixed at $1.00 for the duration of this offering. Although our common stock isHistorically, we have not listed on a public exchange or quoted over-the-counter, we intend to seek to have our shares of common stock quoted on the OTC Bulletin Board. In order to be quoted on the OTC Bulletin Board, a market maker must file an application on our behalf in order to make a market for our common stock. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, nor can there bepaid any assurance that such an application for quotation will be approved.
The Company’s shares may be sold to purchasers from time to time directly by and subjectdividends to the discretion of the Company. Further, the Company will not offer its shares for sale through underwriters, dealers, agents or anyone who may receive compensation in the form of underwriting discounts, concessions or commissions from the Company and/or the purchasers of the shares for whom they may act as agents. The shares of common stock sold by the Company may be occasionally sold in one or more transactions; all shares sold under this prospectus will be sold at a fixed price of $1.00 per share.
In order to comply with the applicable securities laws of certain states, the securities will be offered or sold in those only if they have been registered or qualified for sale; an exemption from such registration or if qualification requirement is available and with which FairWind Energy Inc. has complied. In addition and without limiting the foregoing, the Company will be subject to applicable provisions, rules and regulations under the Exchange Act with regard to security transactions during the period of time when this Registration Statement is effective.
FairWind Energy Inc. will pay all expenses incidental to the registration of the shares (including registration pursuant to the securities laws of certain states).
Pursuant to a letter agreement dated April 30, 2014,by and between Mr. Winterhalter and us, we pay Mr. Winterhalter $5,000 per month for serving as President of the Company until October 9, 2015. We may unilaterally decide to not pay Winterhalter at any time without any liability or debt accruing to the Company.
Pursuant to a letter agreement dated April 30,2014, by and between Mr. Krogius and us, we pay Mr. Krogius $5,000 per quarter for serving as a non-employee Director until April 18, 2015. We may unilaterally decide to not pay Krogius at any time without any liability or debt accruing to the Company.
Pursuant to an Employment Contract dated May 15, 2014, by and between Martin Wang and us, we pay Mr. Wang $5,000 per month for serving as Vice President of the Company until October 9, 2015.
Plan of Distribution for the Offering of695,856Shares by the Selling Stockholders
As of the date of this prospectus, there is no market for our securities. After the date of this prospectus, we expect to have an application filed with the Financial Industry Regulatory Authority for our common stock to be eligible for trading on the OTC Bulletin Board. Until our common stock becomes eligible for trading on the OTC Bulletin Board, the selling stockholders will be offering our shares of common stock at a fixed price of $1.00 per common share. After our common stock becomes eligible for trading on the OTC Bulletin Board, the selling stockholders may, from time to time, sell all or a portion of the shares of common stock on OTC Bulletin Board, in privately negotiated transactions or otherwise. After our common stock becomes eligible for trading on the OTC Bulletin Board, such sales may be at fixed prices prevailing at the time of sale, at prices related to the market prices or at negotiated prices.
After our common stock becomes eligible for trading on the OTC Bulletin Board, the shares of common stock being offered for resale by this prospectus may be sold by the selling stockholders by one or more of the following methods, without limitation:
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In the event of the transfer by any of the selling stockholders of its shares of common stock to any pledgee, donee or other transferee, we will amend this prospectus and the registration statement of which this prospectus forms a part by the filing of a post-effective amendment in order to have the pledgee, donee or other transferee in place of the selling stockholder who has transferred his, her or its shares.
In effecting sales, brokers and dealers engaged by the selling stockholders may arrange for other brokers or dealers to participate. Brokers or dealers may receive commissions or discounts from a selling stockholder or, if any of the broker-dealers act as an agent for the purchaser of such shares, from a purchaser in amounts to be negotiated which are not expected to exceed those customary in the types of transactions involved. Before our common stock becomes eligible for trading on the OTC Bulletin Board, broker-dealers may agree with a selling stockholder to sell a specified number of the shares of common stock at a price per share of $1.00 After our common stock becomes eligible for trading on the OTC Bulletin Board, broker-dealers may agree with a selling stockholder to sell a specified number of the shares of common stock at a stipulated price per share. Such an agreement may also require the broker-dealer to purchase as principal any unsold shares of common stock at the price required to fulfill the broker-dealer commitment to the selling stockholder if such broker-dealer is unable to sell the shares on behalf of the selling stockholder. Broker-dealers who acquire shares of common stock as principal may thereafter resell the shares of common stock from time to time in transactions which may involve block transactions and sales to and through other broker-dealers, including transactions of the nature described above. After our common stock becomes eligible for trading on the OTC Bulletin Board, such sales by a broker-dealer could be at prices and on terms then prevailing at the time of sale, at prices related to the then-current market price or in negotiated transactions. In connection with such re-sales, the broker-dealer may pay to or receive from the purchasers of the shares commissions as described above. The selling stockholders and any broker-dealers or agents that participate with the selling stockholders in the sale of the shares of common stock may be deemed to be “underwriters” within the meaning of the Securities Act in connection with these sales. In that event, any commissions received by the broker-dealers or agents and any profit on the resale of the shares of common stock purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.
From time to time, any of the selling stockholders may pledge shares of common stock pursuant to the margin provisions of customer agreements with brokers. Upon a default by a selling stockholder, their broker may offer and sell the pledged shares of common stock from time to time. After our common stock becomes eligible for trading on the OTC Bulletin Board, upon a sale of the shares of common stock, the selling stockholders intend to comply with the prospectus delivery requirements under the Securities Act by delivering a prospectus to each purchaser in the transaction. We intend to file any amendments or other necessary documents in compliance with the Securities Act that may be required in the event any of the selling stockholders defaults under any customer agreement with brokers.
To the extent required under the Securities Act, a post-effective amendment to this registration statement will be filed disclosing the name of any broker-dealers, the number of shares of common stock involved, the price at which the shares of common stock is to be sold, the commissions paid or discounts or concessions allowed to such broker-dealers, where applicable, that such broker-dealers did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus and other facts material to the transaction.
We and the selling stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations under it, including, without limitation, Rule 10b-5 and, insofar as a selling stockholder is a distribution participant and we, under certain circumstances, may be a distribution participant, under Regulation M. All of the foregoing may affect the marketability of the shares of common stock.
All expenses of the registration statement including, but not limited to, legal, accounting, printing and mailing fees are and will be borne by us. Any commissions, discounts or other fees payable to brokers or dealers in connection with any sale of the shares of common stock will be borne by the selling stockholders, the purchasers participating in such transaction, or both.
Any shares of common stock covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act, as amended, may be sold under Rule 144 rather than pursuant to this prospectus.
Penny Stock Rules
The Securities Exchange Commission has also adopted rules that regulate broker-dealer practices in connection with transactions in “penny stocks” as such term is defined by Rule 15g-9. Penny stocks are generally 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 or system).
The shares offered by this prospectus constitute penny stock under the Securities and Exchange Act. The shares will remain penny stock for the foreseeable future. The classification of penny stock makes it more difficult for a broker-dealer to sell the stock into a secondary market, which makes it more difficult for a purchaser to liquidate his or her investment. Any broker-dealer engaged by the purchaser for the purpose of selling his or her shares in our company will be subject to the penny stock rules.
The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, deliver a standardized risk disclosure document prepared by the Commission, which: (i) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (ii) contains a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of Securities’ laws; (iii) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and significance of the spread between the bid and ask price; (iv) contains a toll-free telephone number for inquiries on disciplinary actions; (v) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and (vi) contains such other information and is in such form as the Commission shall require by rule or regulation. The broker-dealer also must provide to the customer, prior to effecting any transaction in a penny stock, (i) bid and offer quotations for the penny stock; (ii) the compensation of the broker-dealer and its salesperson in the transaction; (iii) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (iv) monthly account statements showing the market value of each penny stock held in the customer’s account.
In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements will have the effect of reducing the trading activity in the secondary market for our stock because it will be subject to these penny stock rules. Therefore, stockholders may have difficulty selling those securities.
REGULATION M
During such time as we may be engaged in a distribution of any of the shares we are registering by this registration statement, we are required to comply with Regulation M. In general, Regulation M precludes any selling security holder, any affiliated purchasers and any broker-dealer or other person who participates in a distribution from bidding for or purchasing, or attempting to induce any person to bid for or purchase, any security which is the subject of the distribution until the entire distribution is complete. Regulation M defines a “distribution” as an offering of securities that is distinguished from ordinary trading activities by the magnitude of the offering and the presence of special selling efforts and selling methods. Regulation M also defines a “distribution participant” as an underwriter, prospective underwriter, broker, dealer, or other person who has agreed to participate or who is participating in a distribution.
Regulation M under the Exchange Act prohibits, with certain exceptions, participants in a distribution from bidding for or purchasing, for an account in which the participant has a beneficial interest, any of the securities that are the subject of the distribution. Regulation M also governs bids and purchases made in order to stabilize the price of a security in connection with a distribution of the security. We have informed the selling shareholders that the anti-manipulation provisions of Regulation M may apply to the sales of their shares offered by this prospectus, and we have also advised the selling shareholders of the requirements for delivery of this prospectus in connection with any sales of the common stock offered by this prospectus.
Pursuant to the our Articles of Incorporation, as amended, our authorized capital stock consists of (i) 50,000,000 shares of common stock, no par value per share, of which 5,927,106 shares are issued and outstanding as of the date of hereof, and (ii) 25,000,000 shares of “blank check” preferred stock, no par value per share, of which no shares are issued or outstanding as of the date hereof.
DESCRIPTION OF SECURITIES
Common Stock
On the date hereof, there were 5,927,106 shares of common stock issued and outstanding. Each share of common stock entitles the holder to one (1) vote on each matter submitted to a vote of our shareholders, including the election of Directors. There is no cumulative voting. Subject to preferences that may be applicable to any outstanding preferred stock, our Shareholders are entitled to receive ratably such dividends, if any, as may be declared from time to time by the Board of Directors. Shareholders have no preemptive, conversion or other subscription rights. There are no redemption or sinking fund provisions related to the common stock. In the event of liquidation, dissolution or winding up of the Company, our Shareholders are entitled to share ratably in all assets remaining after payment of liabilities, subject to prior distribution rights of preferred stock, if any, then outstanding.
Preferred Stock
We are authorized to issue up to 25,000,000 shares of our preferred stock. As of the date hereof, the Company had no shares of its preferred stock issued or outstanding. Preferred Stock may be issued from time to time in one or more series as determined by the Board of Directors in its sole discretion.
Our Board of Directors is authorized to determine or alter any or all of the rights, preferences, privileges and restrictions granted to or imposed upon any wholly unissued series of preferred stock and, within the limitations or restrictions stated in any resolution or resolutions of the Board of Directors originally fixing the number of shares constituting any series, to increase or decrease (but not below the number of shares of any such series then outstanding) the number of shares comprising any such series subsequent to the issue of shares of that series, to set the designation of any series, and to provide for rights and terms of redemption, conversion, dividends, voting rights, and liquidation preferences of the shares of any such series.
Options
We have no options to purchase sharesholders of our common stock orand we do not expect to pay any other of our securities outstanding as of the date of this Prospectus.
Warrants
We have no warrants to purchase shares of our common stock or any other of our securities outstanding as of the date of this Prospectus.
Registration Rights Agreements
We have orally agreed with each of the stockholders selling stockholders reselling an aggregate of 695,856 shares of common stock under this prospectus to register each selling stockholder’s shares of common stock under the Registration Statement under Securities and Exchange Commission Form S-1 of which this prospectus forms a part.
Dividends
Dividends, if any, will be contingent upon our revenues and earnings, if any, capital requirements and financial conditions. The payment of dividends, if any, will be within the discretion of our board of directors. We intend to retain earnings, if any, for use in its business operations and accordingly, the board of directors does not anticipate declaring anysuch dividends in the foreseeable future.
Transfer Agentfuture as we expect to retain our future earnings for use in the operation and Registrarexpansion of our business.
TheTRANSFER AGENT
Our transfer agent for our common stock is West Coast Stock Transfer, located atInc. (“West Coast Stock Transfer”), whose address 721 N. Vulcan Ave., Suite 205,Ave, Encinitas, California 92024. The agent’sWest Coast Stock Transfer’s telephone number is (619) 664-4780.
Indemnification of Officers and Directors
Subsection 7 of Section 78.138 of the Nevada Revised Statutes (the “Nevada Law”) provides that, subject to certain very limited statutory exceptions, a director or officer is not individually liable to the corporation or its stockholders or creditors for any damages as a result of any act or failure to act in his or her capacity as a director or officer, unless it is proven that the act or failure to act constituted a breach of his or her fiduciary duties as a director or officer and such breach of those duties involved intentional misconduct, fraud or a knowing violation of law. The statutory standard of liability established by Section 78.138 controls even if there is a provision in the corporation’s articles of incorporation unless a provision in the Company’s Articles of Incorporation provides for greater individual liability.
Subsection 1 of Section 78.7502 of the Nevada Law empowers a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he or she is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise (any such person, a “Covered Person”), against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the Covered Person in connection with such action, suit or proceeding if the Covered Person is not liable pursuant to Section 78.138 of the Nevada Law or the Covered Person acted in good faith and in a manner the Covered Person reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceedings, had no reasonable cause to believe the Covered Person’s conduct was unlawful.
Subsection 2 of Section 78.7502 of the Nevada Law empowers a corporation to indemnify any Covered Person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that such person acted in the capacity of a Covered Person against expenses, including amounts paid in settlement and attorneys’ fees actually and reasonably incurred by the Covered Person in connection with the defense or settlement of such action or suit, if the Covered Person is not liable pursuant to Section 78.138 of the Nevada Law or the Covered Person acted in good faith and in a manner the Covered Person reasonably believed to be in or not opposed to the best interests of the Company. However, no indemnification may be made in respect of any claim, issue or matter as to which the Covered Person shall have been adjudged by a court of competent jurisdiction (after exhaustion of all appeals) to be liable to the corporation or for amounts paid in settlement to the corporation unless and only to the extent that the court in which such action or suit was brought or other court of competent jurisdiction determines upon application that in view of all the circumstances the Covered Person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper.
Section 78.7502 of the Nevada Law further provides that to the extent a Covered Person has been successful on the merits or otherwise in the defense of any action, suit or proceeding referred to in Subsection 1 or 2, as described above, or in the defense of any claim, issue or matter therein, the corporation shall indemnify the Covered Person against expenses (including attorneys’ fees) actually and reasonably incurred by the Covered Person in connection with the defense.
Subsection 1 of Section 78.751 of the Nevada Law provides that any discretionary indemnification pursuant to Section 78.7502 of the Nevada Law, unless ordered by a court or advanced pursuant to Subsection 2 of Section 78.751, may be made by a corporation only as authorized in the specific case upon a determination that indemnification of the Covered Person is proper in the circumstances. Such determination must be made (a) by the stockholders, (b) by the board of directors of the corporation by majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding, (c) if a majority vote of a quorum of such non-party directors so orders, by independent legal counsel in a written opinion, or (d) by independent legal counsel in a written opinion if a quorum of such non-party directors cannot be obtained.
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Subsection 2 of Section 78.751 of the Nevada Law provides that a corporation’s articles of incorporation or bylaws or an agreement made by the corporation may require the corporation to pay as incurred and in advance of the final disposition of a criminal or civil action, suit or proceeding, the expenses of officers and directors in defending such action, suit or proceeding upon receipt by the corporation of an undertaking by or on behalf of the officer or director to repay the amount if it is ultimately determined by a court of competent jurisdiction that he or she is not entitled to be indemnified by the corporation. Subsection 2 of Section 78.751 further provides that its provisions do not affect any rights to advancement of expenses to which corporate personnel other than officers and directors may be entitled under contract or otherwise by law.MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Subsection 3You should read the following discussion and analysis of Section 78.751our financial condition and results of operations in conjunction with our financial statements and the Nevada Law providesrelated notes thereto that indemnification pursuantare included in this prospectus. In addition to Section 78.7502 ofhistorical information, the Nevada Lawfollowing discussion and advancement of expenses authorizedanalysis includes forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or ordered by a court pursuantcontribute to Section 78.751 does not exclude any other rights to whichthese differences include those discussed below and elsewhere in this prospectus, particularly in the Covered Person may besection entitled under the articles of incorporation or any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, for either an action in his or her official capacity or in another capacity while holding his or her office. However, indemnification, unless ordered by a court pursuant to Section 78.7502 or for the advancement of expenses under Subsection 2 of Section 78.751 of the Nevada Law, may not be made to or on behalf of any director or officer of the corporation if a final adjudication establishes that his or her acts or omissions involved intentional misconduct, fraud or a knowing violation of the law and were material to the cause of action. Additionally, the scope of such indemnification and advancement of expenses shall continue for a Covered Person who has ceased to be a director, officer, employee or agent of the corporation, and shall inure to the benefit of his or her heirs, exe“Risk Factors.” See “Special Note Regarding Forward-Looking Statements.”
Section 78.752 of the Nevada Law empowers a corporation to purchase and maintain insurance or make other financial arrangements on behalf of a Covered Person for any liability asserted against such person and liabilities and expenses incurred by such person in his or her capacity as a Covered Person or arising out of such person’s status as a Covered Person whether or not the corporation has the authority to indemnify such person against such liability and expenses.Overview
The BylawsCompany was incorporated in the State of the Company provide for indemnification of Covered Persons substantially identical in scope to that permitted under the Nevada Law. Such Bylaws provide that the expenses of directors and officers of the Company incurred in defending any action, suit or proceeding, whether civil, criminal, administrative or investigative, must be paid by the Company as they are incurred and in advance of the final disposition of the action, suit or proceeding, upon receipt of an undertaking by or on behalf of such director or officer to repay all amounts so advanced if it is ultimately determined by a court of competent jurisdiction that the director or officer is not entitled to be indemnified by the Company.
DESCRIPTION OF BUSINESS
ORGANIZATION WITHIN THE LAST FIVE YEARS
FairWind Energy was incorporated on April 18, 2013. Through its proprietary use of materials2013 and manufacturing technique, FairWind Energy is developing power sources drawing from renewable energy supply. We also use our trade secrets and composite industry know-how to cross-market products into the oil & gas extraction industry. Providingestablished a reliable power source based on renewable energies required us to address shortcomings of existing technologies ranging from availability of supply (e.g., solar power at night) to quality of componentry available (blades, stanchions, magnets). The hybridization of power sources (solar and wind) and manufacturing with next generation composite materials is our solution. Our fiscal year end isof August 31, and we have no subsidiaries. Our business offices are currently located at 14 Monarch Beach Plaza, Suite 254, Monarch Beach, California 92629.
We are not a blank check registrant as that term is defined in Rule 419(a)(2) of Regulation C of the Securities Act of 1933, since we have a specific business plan or purpose. We have not had preliminary contact or discussions with, nor do we have any present plans, proposals, arrangements or understandings with, any representatives of the owners of any business or company regarding the possibility of an acquisition or merger following this offering.
We are a development stage company and currently have no revenues or significant assets. At August 31, 2014, our total current assets were $134,815 and our total current liabilities were $19,551. Our net loss for the fiscal year ended August 31, 2014 was $208,878.
OVERVIEW
Through proprietary use of materials and manufacturing technique, FairWind Energy is developing power sources drawing from renewable energy supply. We also use trade secrets and composite industry know-how to cross-market products into the oil & gas extraction industry.
31. We are a development stage corporation and have not yet generated or realized anymeaningful revenues from our business. We are involved in
Until recently, our business plan focused on the design, engineering and manufacturing of composite products. The initial thrust of our business will be toproducts, specifically the supply products to the oil and gas industry. These products will include upstream production products such as sucker rods, fracking plugs, casings and other products where high temperature resistance, chemical resistance and a low weight to strength ratio products offer advantages to traditional materials (e.g., steel). If we are able to supply products to the oil and gas industry, then we plan to continue the development and sales of wind and solar hybrid energy systems. These systems also benefit from the use of higher performance materials (composites) and we will intend to incorporate them in product design and development.
Providing a reliable power source basedHowever, on renewable energies required us to address shortcomings of existing technologies ranging from availability of supply (i.e., solar at night) to quality of componentry available (blades, stanchions, magnets). The hybridization of power sources (solar and wind) and manufacturing with next generation composite materials was the obvious solution.
From years of experience in the composite industry, our principals have refined the use of toughened resin systems ideal for the manufacture of structural and exposed components. An example would be the turbine blade. A leading cause of failure in wind turbines is the damage caused to the blades (even atop 100 meter towers) from blowing debris and rocks. We use toughened resin systems and reinforcements to eliminate this problem. The stanchion that supports the turbine and solar panels is typically galvanized steel. Again, using composites materials, our composite pole is stronger, lighter and non-conductive. Equally important, the composite needs no galvanization to protect against corrosion, eliminating hazardous waste products spent to the land, water and air.
A by-product of the use of toughened high-strength composites was the development of high-tensile products for infrastructure. Our composite products can prove good alternatives to steel and lower strength fiberglass/resin parts used in down-well drilling and pumping. An investment in superior materials and manufacturing technology allows for cross-marketing of these energy related products and from a business strategy perspective provides some security against fluctuating markets or reliance on single product lines.
The importance of the use of high quality material in the construction of composite parts cannot be overstated. Of equal importance (with respect to wind power) is the quality and design of the generator itself. Currently China supplies 95% of rare earth magnets – the key component of turbine generators. We have already established relationships and have tested generator prototypes of high quality from China. We are positioned to benefit from superior supply lines of essential materials almost exclusively available offshore. This supply challenge is now a Company asset.
Our offices are located at 14 Monarch Beach Plaza, Suite 254, Monarch Beach, California 92629.
Joint Venture in China
On October 26, 2013,May 28, 2020, we entered into a Joint Venture Contract for Sino-Foreign Composites CompanyShare Exchange Agreement (the “Share Exchange Agreement”) with Xingcheng Haibao Advanced Materials Industrial Park Co., Ltd.GSL Healthcare, Inc., a Chinese entity (the “Joint Venture Partner”Nevada corporation (“GSL Healthcare”)., and the holders of common stock of GSL Healthcare, which consisted of two stockholders. The Joint Venture Partner is a composites manufacturer based in Huludao City, Liaoning Province, in China. closing date occurred on June 1, 2020.
Under the Joint Ventureterms and conditions of the Share Exchange Agreement, we have contributed technology to the joint venture enterprise. Our Joint Venture Partner is obligated, among other things, to arrange for the local government to contribute the use of approximately 63 acres of land, the purpose of which is to construct a manufacturing facility to build composite products using our technology. FairWind Energy has a 25% interest in the joint ventureCompany offered and the Joint Venture Partner has a 75% interest.
We presently have outstanding to Han Bao Dong, an affiliate of our Joint venture Partner, a private offering ofsold 27,932,271 shares of common stock of the Company in consideration for 1,325,000all of the issued and outstanding shares of common stock at an offering price of $0.40 per share, for aggregate offering proceedsGSL Healthcare. The effect of $530,000. On December 3, 2013, we closed on a salethe issuance is that former two GSL Healthcare shareholders now hold approximately 88.0% of 375,000the issued shares of common stock of the Company, and GSL Healthcare is now a wholly-owned subsidiary of the Company. GSL Healthcare has a general plan to Han Bao Dong, atbe a purchase price of $0.40 per share, for aggregate proceeds of $150,000. Closing forhealth and wellness business. Until such time as the sale of an additional 250,000 shares occurred on August 14, 2014 at a purchase price of $0.40 per share for aggregate proceeds of $100,000. We doCompany can formulate GSL Healthcare’s general business plan, the Company is not know whether Mr. Han will purchase the remaining portion of 950,000 of shares offered.changing its current business.
On October 26, 2013,As a result of the Share Exchange Agreement, we verbally agreed withplan to focus our Joint Venture Partnerbusiness plan on the development and commercialization of novel therapeutics to treat metabolic diseases, peripheral neuropathy, progressive lung disease and ischemic reperfusion injury. Our principal business objective is to develop both science-driven synthetic and natural cannabinoid therapeutics that it may designate 1 directoraddress unmet medical needs and continue to drive innovations in the endocannabinoid space.
Specifically, we have identified a targeted collection of wellness and pharmaceutical product opportunities, the majority of which will be designed to offer a more sophisticated and intelligent product offering in the multibillion dollar global biopharmaceutical industry.
· | The first category shall consist of a series of health and wellness products that incorporate a proprietary and proven nano-technology similar to liposomal delivery systems, known as a cellular biocomplex, for the health & wellness markets. Further advancements of these biocomplexes will be used in the development and production of pharma-grade products for more specific clinical (non-prescription and prescription) applications, such as arthritic joint pain, acne vulgaris and onychomycosis. | |
· | A second category of developments will focus on pharmaceutical applications that target the human endocannabinoid system for treatments ranging from epilepsy, Type 2 diabetes, and acute kidney Injury. These identified programs are already under development, ranging from design and discovery to pre-clinical and biological testing with leading universities and research institutions. |
Going Concern
To date the Company has little operations or revenues and consequently has incurred recurring losses from operations. No revenues are anticipated until we implement our initial business plan as described herein. The ability of the Company to continue as a going concern is dependent on raising capital to fund our business plan and ultimately to attain profitable operations. Accordingly, these factors raise substantial doubt as to the boardCompany’s ability to continue as a going concern.
The Company plans to raise additional funds through debt or equity offerings. There is no guarantee that the Company will be able to raise any capital through this or any other offerings.
Critical Accounting Policies
The discussion and analysis of directorsour financial condition and results of FairWind Energy upon completionoperations are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”). The preparation of these financial statements requires us to make estimates and judgments that affect the purchasereported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the 950,000 shares offered. Our Joint Venture Partner has yetcircumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We have identified the policies below as critical to designate a director.our business operations and to the understanding of our financial results:
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Potential Customers
While the opportunity for our products is global in scope, the main initial thrustBasis of the company will be towards sales in North America. Several reasons exist for this strategy.
We believe that of paramount importance is the manufacture and delivery of quality products in a consistent and businesslike manner. We will have management in place domestically to insure an efficient business model. Additionally, the primary designs and specifications for the turbine/solar power generation will come domestically from us. With regards to high tensile products for infrastructure, the design, chemistry and raw materials all have R&D history in the U.S. And with burgeoning opportunities existing for prototyping, field trials, testing and sales to domestic energy companies (i.e., oil & gas) the initial focus will be to North American customers.
For wind and solar power generation, the likely end users are the biggest promoters of green energy – the government. Obvious choices include municipalities, transit authorities and other government agencies. Private construction projects seeking LEED Certification (Leadership in Energy & Environmental Design) are also likely targets. The benefits of solar/wind powered LED (light emitting diodes) lights are beyond media green energy hype. The benefits to being off-grid include hundreds of dollars per light due to elimination of trenching, wiring and purchased electricity cost. Off-grid eliminates landscaping issues and the LED lights further save in yearly maintenance. Finally, and something surely government entities can understand, this green energy often qualifies for rebates and subsidies.Presentation
The requirementCompany’s financial statements and related notes for toughened resin systemsthree and high strength parts for wind & solar systems has uncovered extraordinary potentialnine months ended May 31, 2020 and May 31, 2019 have been prepared in US energy markets. Specifically, the high strength reinforcements combinedaccordance with high temperature / high shear resin for use in oil and gas extraction is a tremendous opportunity. New technology in this industry has allowed for discovery of new and large fields of gas and oil. Much of these energy finds require deeper more sophisticated drilling and pumping and that is precisely where these new high temperature resistance, high strength and chemical resistant composites perform best (superior to existing technology).
Hydraulic fracturing (fracking), which is a method of extraction that is not new, but is now pressing pumpers to extreme limits, is a technology that is in search of higher performing tooling and equipment. We believe that we could be well positioned to deal with the current and future high growth rates forecast for this high margin domestic industry. Forbes Magazine reports (Schlumberger Fattens Margins With Enhanced Fracking Technology – 09/26/2012) that the company is counting on new technology to drive growth – fracking capacity grew last year at 42% and is forecast to rise again by 28% this year.
We believe that we are in a unique position to make use of its know-how in composites to bring to market sought after high-technology composite products for oil & gas extraction and to service wind & solar power generation products.
Our Operations
We are an early stage company developing composite products for use in industries that require higher material properties than might be had from typical composite parts. Additionally, we are designing a small scale hybrid power source for low energy use.
In a priority project, we are currently near developmental completion of a high strength, high Tg(high temperature use) composite designed and intended to be usedaccounting principles generally accepted in the oil & gas industry. Intended for use in the explorationUnited States of America (“U.S. GAAP”), and production sector, we have manufactured nearly 5,000 feet of “sucker rod” used to be use in connection with the extraction of oil and gas from underground. The employed design uses proprietary resin systems that exceed typical temperature use limits of competing thermosetting systems. Additionally, utilizing higher tensile strength reinforcements, our parts can achieve higher operating loads, allowing for superior performance. New designs for mechanical joints in the rod string have also been completed. Significant testing has been completed on the final design (and will be continuing). We believe that the testing marks we have achieved to date are a result of the high performance materials and architecture of the product.
Our intended business operations will be to make use of our proprietary resin systems and unique composite architecture and apply that to other areas. With proof of concept via physical and field trial testing in hand, we will proceed to apply the proven benefits (see above) in other infrastructure projects. Two examples that are currently in the examination stage, include pultruded power poles suitable for supporting high voltage electrical transmission lines. Another early stage endeavor is second generation composite strength members for cable and conductor. As a replacement to more typical construction materials(e.g., steel, aluminum, concrete and even lower performing FRP) – we believe that our composite parts mix the benefits of strength, weight, corrosion resistance, non-conductivity and high temperature operation.
Another project in current development is a hybrid power generating system, incorporating both solar and wind power. Initially, we have purchased wind turbines and are in the process of combining them with solar panels. The first planned demonstration project will be to power street/parking lot lighting. The potential to independently operate off battery stored power, or to back-feed into the grid is possible. After vetting the POC prototypes, we intend to combine already-established supply chain lines for componentry with in-house manufactured composite elements(e.g., see power poles above). This hybrid power project gives us some business diversity, as well as a secondary market for our composite metrics.
A streamlined operation will initially support R&D and final development of both product lines (hybrid solar/wind power generation products & oil and gas pumping products and tooling). It is anticipated a facility of less than 10,000 SF for initial years’ development, production and assembly will adequately suffice. Composite blade prototyping and production and then assembly with imported generators and solar panels would occupy approximately 4,000 SF of space. The method of manufacturing high strength lineal strength members (sucker rods and down-well tubes) is referred to as “pultrusion”. This automated continuous process requires relatively little manpower, produces little waste and is considered the most efficient process in composite manufacturing. The initial machinery requirement would occupy a similar 4,000 SF. Within 2 years and upon completion of prototyping and early sales of both product lines, it will be our goal to expand domestically, as well as to consider foreign markets and lower cost manufacturing sites.
Marketing and Sales
We believe that consumer interest in green energy continues to grow. Finding viable uses that make sense on a sustainable business model will be a priority for FairWind Energy. Final development of hybrid wind/solar power supply will show a feasible low-cost, no direct subsidy product that can be taken to the consumer and light industrial market. “Becoming known” will be the marketing challenge. And to take this on will call for an aggressive presence at trade shows, well designed internet visibility and frequent participation in field trials. Equally important will be cultivating industry alliances and leveraging existing relationships.
The prove out for success in the oil and gas industry will be a combination of successful testing (lab and field trial) and strategically aligning with current successful and industry known operations. More focus on developing alliances and strategic partners will be the theme for growing the business. And more typical trade show, internet and media placement will also be utilized.
COMPETITION AND COMPETITIVE STRATEGY
Certainly competition exists in the market place for our product lines. The difference in our thrust will be that our products are technology driven and materially improved over earlier generation alternatives.
In the case of wind/solar lighting products, no domestic product has the established tie-in to direct sources of rare-earth magnets and quality low cost generators. The advanced blade design and high-tech material use will set the company apart from lesser quality poor designs. The package of low cost components / high-tech material and superior design is the bat to beat the competition with.
Specifically for down-hole pump products, such as, sucker rods, tubing, and fracking balls, we will have a strength, cost and survivability advantage over steel and first generation composite products. The depths that pumping equipment go to now almost preclude the use of steel (it does not have the strength to support its weight at these super long lengths). Capturing market share based on a superior product is the focus, but the capacity constraints of suppliers to the pumpers will enhance our position to a quicker entry and a larger presence.
PATENTS, TRADEMARKS, LICENSES, FRANCHISE RESTRICTIONS AND CONTRACTUAL OBLIGATIONS & CONCESSIONS
We rely on a combination of trademark laws, trade secrets, confidentiality provisions and other contractual provisions to protect our proprietary rights, which are primarily our brand names, product designs and marks. We own three patents issued by the State Intellectual Property Office in China. The first patent (CN 102345406), related to composite poles is titled, “Poles for Supporting Electric Transmission Lines and a Method for Forming Such Poles is Provided” and expires July 18, 2030. The second patent (CN 202209068), related to composite material pole towers, is titled, “The Utility Model Discloses a Composite Material Pole Tower” and expires July 18, 2020. The third patent (CN 202111438), related to electrical transmission hardware, is titled, “Termination Hardware for Overhead Conductors” and expires February 3, 2022.
COMPLIANCE WITH GOVERNMENT REGULATION
We will be required to comply with all regulations, rules and directives of governmental authorities and agencies applicable to the construction and operation of any facility in any jurisdiction which we would conduct activities.
We do not believe that government regulation will have a material impact on the way we conduct our business, however, any government regulation imposing greater fees for Internet use or restricting information exchange over the Internet could result in a decline in the use of the Internet and the viability of Internet-based services, which could harm our business and operating results.
RESEARCH AND DEVELOPMENT ACTIVITIES AND COSTS
We incurred $61,747 and $11,660 in research and development costs for the fiscal year ended August 31, 2014 and for the period from April 18, 2013 (inception) through August 31, 2013, respectively.
EMPLOYEES AND EMPLOYMENT AGREEMENTS
Michael Winterhalter, along with Eric Krogius (directors and officers) and Martin Wang, are our only 3 employees. Mr. Winterhalter currently works full time on Company matters.
FACILITIES
We currently do not rent any real property or offices. Our current business address is 14 Monarch Beach Plaza, Suite 254, Monarch Beach, California 92629.
REPORTS TO SECURITY HOLDERS
We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and accordingly, file current and periodic reports, proxy statements and other information with the SEC. We have also filed with the Commission a Registration Statement on Form S-1, under the Securities Act of 1933, as amended, with respect to the securities offered by this prospectus. This prospectus, which forms a part of the registration statement, does not contain all the information set forth in the registration statement, as permitted by the rules and regulations of the Commission. You may obtain copiesSEC and Article 8 of our reports from the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549, on official business days during the hours of 10 A.M. to 3 P.M. or on the SEC’s website, at www.sec.gov. You may obtain information on the operationRegulation S-X. Accordingly, they do not include all of the Public Reference Roominformation and footnotes required by callingU.S. GAAP for complete financial statements. The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the SEC at 1-800-SEC-0330.
OUR EXECUTIVE OFFICES
Our corporate headquarters is located at 14 Monarch Beach Plaza, Suite 254, Monarch Beach, California 92629 and our telephone number is (949) 933-5411.
LEGAL PROCEEDINGS
There are no pending legal proceedingsopinion of management, necessary to which the Company is a party or in which any director, officer or affiliatefair statement of the Company, any owner of record or beneficially of more than 5% of any class of voting securitiesresults for the interim periods presented. Unaudited interim results are not necessarily indicative of the Company, or security holder is a party adverse toresults for the Company or has a material interest adverse to the Company.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
ADMISSION TO QUOTATION ON THE OTC BULLETIN BOARD OR OTHER US TRADING EXCHANGE
We intend to have our common stock be quoted on the OTC Bulletin Board. If our securities are not quoted on the OTC Bulletin Board, a security holder may find it more difficult to dispose of, or to obtain accurate quotations as to the market value of our securities. The OTC Bulletin Board differs from national and regional stock exchanges in that it: (i) is not situated in a single location but operates through communication of bids, offers and confirmations between broker-dealers, and (ii) securities admitted to quotation are offered by one or more Broker-dealers rather than the “specialist” common to stock exchanges.
To qualify for quotation on the OTC Bulletin Board, an equity security must have one registered broker-dealer, known as the market maker, willing to list bid or sale quotations and to sponsor the company listing. We do not yet have an agreement with a registered broker-dealer, as the market maker, willing to list bid or sale quotations and to sponsor the Company listing. If the Company meets the qualifications for trading securities on the OTC Bulletin Board our securities will trade on the OTC Bulletin Board until a future time, if at all, that we apply and qualify for admission to quotation on the NASDAQ Capital Market. We may not now and it may never qualify for quotation on the OTC Bulletin Board or be accepted for listing of our securities on the NASDAQ Capital Market.
TRANSFER AGENT
The transfer agent for our common stock is West Coast Stock Transfer located at 721 Vulcan Ave., Suite 205, Encinitas, California 92024. The agent’s telephone number is (619) 664-4780.
HOLDERS
As of the date of this prospectus, the Company had 5,927,106 shares of our common stock issued and outstanding held by 11 holders of record.
The selling stockholders are offering hereby up to 695,856 shares of common stock at fixed price of $1.00 per share.
DIVIDEND POLICY
We have not declared or paid dividends on our common stock since our formation, and we do not anticipate paying dividends in the foreseeable future. Declaration or payment of dividends, if any, in the future, will be at the discretion of our Board of Directors and will depend on our then current financial condition, results of operations, capital requirements and other factors deemed relevant by the Board of Directors. There are no contractual restrictions on our ability to declare or pay dividends. See the Risk Factor entitled “BECAUSE WE DO NOT INTEND TO PAY ANY CASH DIVIDENDS ON OUR COMMON STOCK, OURSTOCKHOLDERS WILL NOT BE ABLE TO RECEIVE A RETURN ON THEIR SHARES UNLESS THEY SELL THEM.”
SECURITIES AUTHORIZED UNDER EQUITY COMPENSATION PLANS
We have no equity compensation or stock option plans. We may in the future adopt a stock option plan as our mineral exploration activities progress.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONAND RESULTS OF OPERATION
Certain statements contained in this prospectus, including statements regarding the anticipated development and expansion of our business, our intent, belief or current expectations, primarily with respect to the future operating performance of the Company and the products we expect to offer and other statements contained herein regarding matters that are not historical facts, are “forward-looking” statements. Future filings with the Securities and Exchange Commission, future press releases and future oral or written statements made by us or with our approval, which are not statements of historical fact, may contain forward-looking statements, because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements.
All forward-looking statements speak only as of the date on which they are made. We undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made.
PLAN OF OPERATION
We are a development stage corporation and have not yet generated or realized any revenues from our business. We are involved in the design, engineering and manufacturing of composite products. The initial thrust of our business will be to supply products to the oil and gas industry. These products will include upstream production products such as sucker rods, fracking plugs, casings and other products where high temperature resistance, chemical resistance and a low weight to strength ratio products offer advantages to traditional materials (e. g., steel). If we are able to supply products to the oil and gas industry, then we plan to continue the development and sales of wind and solar hybrid energy systems. These systems also benefit from the use of higher performance materials (composites) and we will intend to incorporate them in product design and development.full fiscal year.
The Company believesaccounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it can satisfy its cash requirements throughis more likely than not that the fiscal year ending August 31, 2015, from its cashassets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of $134,815 at August 31, 2014. However, if we fail to completea change in tax rates is recognized in the offering, even atstatements of operations in the minimum subscription level, we may have to cease our operations. As of August 31, 2014, we had a working capital of $115,264.period that includes the enactment date.
The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”). Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.
Results of Operations
The Period from April 18, 2013 (Inception) through the year ended AugustThree- and Nine-Month Periods Ended May 31, 2014.2020 and May 31, 2019
We recorded no revenues for the period from April 18, 2013 (Inception) through the yearthree and nine months ended AugustMay 31, 2014 .2020 and May 31, 2019.
For the period ended Augustthree months ending May 31, 2014 ,2020, we incurred total operating expenses of 208,878,$1,289,355, consisting of $94,504 in salariesnon-cash stock based compensation of $1,275,000 and wages paid to officers and directors , $12,693 of professional fees $61,747 of research$12,858, and development costs, and $39,934 of general and administrative expenses.
Forexpenses of $1,497. By comparison, for the period ended Augustthree months ending May 31, 2013,2019, we incurred total operating expenses of $48,246,$30,446, consisting of $20,000 inprofessional fees of $8,441, salaries and wages paid to officers and directors, $15,570 of professional fees, $11,660the Company of research$20,000, and development costs, and $1,016 of general and administrative expenses.expenses of $2,005. The increase in expenses from May 31, 2019 to May 31, 2020, was due primarily to non-cash stock based compensation of $1,275,000.
For the fiscal yearnine months ending May 31, 2020, we incurred total operating expenses of $1,306,186, consisting of non-cash stock based compensation of $1,275,000 and professional fees of $29,609, and general and administrative expenses of $1,577. By comparison, for the nine months ending May 31, 2019, we incurred total operating expenses of $109,283, consisting of professional fees of $44,943, salaries and wages to officers of the Company of $60,000, and general and administrative expenses of $4,340. The increase in expenses from May 31, 2019 to May 31, 2020, was due primarily to non-cash stock based compensation of $1,275,000.
For the three months ended AugustMay 31, 2014,2020, we incurredhad a net loss before income taxes of $ 208,878.
Limited Business History; Need$1,289,355, while for Additional Capitalthe three months ended May 31, 2019, we had a net loss of $31,927. For the nine months ended May 31, 2020, we had a net loss of $1,310,710 while for the nine months ended May 31, 2019, we had a net loss of $116,024.
There is no historical financial information about the Company upon which to base an evaluation of our performance. We are a development stage corporation and have not generated any revenues from our business. We cannot guarantee we will be successful in our business plans. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in the exploration and/or development, and possible cost overruns due to price and cost increases in services. We have no intention of entering into a merger or acquisition within the next twelve months and we have a specific business plan and timetable to complete our 12-month plan of operation based on the success of the primary offering.
We anticipate that additional funding, if required, will be in the form of equity financing from the sale of our common stock. However, we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of shares to fund additional expenditures. We do not currently have any arrangements in place for any future equity financing. Our limited operating history and our lack of significant tangible capital assets makes it unlikely that we will be able to obtain significant debt financing in the near future. If such financing is not available on satisfactory terms, we may be unable to continue or expand our business. Equity financing could result in additional dilution to existing shareholders.
If we raise the $750,000 gross, in the primary offering, we believe that we can pay for our offering expenses and satisfy our cash requirements to complete our 12-month plan of operation without having to raise additional funds for the next twelve months.
Liquidity and Capital Resources
At AugustMay 31, 2014,2020, we had a cash balance of $ 134,815 .$17, and our working capital deficit was $43,687. We do not have sufficient cash on hand to commencecomplete our 12-month plan of operation or to fund our ongoing operational expenses beyond December 31, 2014.for the next 12 months. We will need to raise funds to commencecomplete our 12-month plan of operation and fund our ongoing operational expenses.expenses for the next 12 months. Additional funding will likely come from equity financing from the sale of our common stock. If we are successful in completing an equity financing, existing shareholders will experience dilution of their interest in our Company. We do not have any financing arranged and we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock to fund our 12-month plan of operationdevelopment activities and ongoing operational expenses. In the absence of such financing, our business will likely fail. There are no assurances that we will be able to achieve further sales of our common stock or any other form of additional financing. If we are unable to achieve the financing necessary to continue our plan of operations, then we will not be able to continue our 12-monthdevelopment to complete our plan of operation and our business will fail.
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Emerging Growth CompanyResults of Operations
Year Ended Periods Ended August 31, 2019 and August 31, 2018
For the year ended August 31, 2019, we generated revenues of $0. For the year ended August 31, 2018, we generated revenues of $0.
For the year ended August 31, 2019, we incurred operating expenses of $121,317, consisting of professional fees of $57,322, salary and wages of $60,000, and general and administrative expenses of $3,995. By way of comparison, for the year ended August 31, 2018, we incurred operating expenses of $134,376, consisting of professional fees of $45,593, salary and wages of $80,000, and general and administrative expenses of $8,783.
We incurred net losses of $132,652 and $42,788,953 for the years ended August 31, 2019 and 2018, respectively. The JOBS Act permits an “emerging growth company” such asfollowing table provides selected financial data about our company at August 31, 2019 and 2018.
Balance Sheet Data |
| August 31, 2019 |
|
| August 31, 2018 |
| ||
Cash and Cash Equivalents |
| $ | 93 |
|
| $ | 2,125 |
|
Total Assets |
| $ | 93 |
|
| $ | 2,265 |
|
Total Liabilities |
| $ | 125,878 |
|
| $ | 55,398 |
|
Shareholders’ Deficit |
| $ | (125,785 | ) |
| $ | (53,133 | ) |
Liquidity and Capital Resources
At August 31, 2019, we had a cash balance of $93, total current liabilities of approximately $40,878. Total expenditures over the next 12 months are expected to be approximately $350,000, in order to complete our 12-month plan of operation, more fully described in the paragraph below. If we experience a shortage of funds prior to generating revenues from operations we may utilize funds from our director, who has informally agreed to advance funds to allow us to take advantage of an extended transition periodpay for operating costs, however they have no formal commitment, arrangement or legal obligation to comply with newadvance or revised accounting standards applicableloan funds to public companies. We are choosingus. Management believes our current cash balance will not be sufficient to “opt out” of this provision and, as a result, we will comply with new or revised accounting standards as required when they are adopted. This decision to opt out offund our operations for the extended transition period is irrevocable.next twelve months.
Summary of Significant Accounting Policies
Cash and Cash EquivalentsOff-Balance Sheet Arrangements
The Company considers all highly liquid instruments purchased with maturitieshas no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the financial condition, changes in financial condition, revenues or expenses, results of one yearoperations, liquidity, capital expenditures or lesscapital resources that is material to be cash equivalents.stockholders.
Property and EquipmentBUSINESS
Property and equipment are stated at cost. Major repairs and betterments are capitalized and normal maintenance and repairs are charged to expense as incurred. Depreciation is computed by the straight-line method over the estimated useful lives of the related assets. Upon retirement or sale of an asset, the cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in operations.
Fair Value of Financial Instruments
The fair value of cash and cash equivalents and accounts receivable and accounts payable approximates their carrying amount.
Recent Accounting PronouncementsHistory
The Company doeswas incorporated in the State of Nevada on April 18, 2013 and established a fiscal year end of August 31.Effective June 17, 2019, we changed our name from FairWind Energy, Inc. to better reflect the new focus of our business. We are a development stage corporation and have not expectyet generated or realized meaningful revenues from our business.
Until recently, our business plan focused on the adoptiondesign, engineering and manufacturing of recentlycomposite products, specifically the supply products to the oil and gas industry. However, on May 28, 2020, entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with GSL Healthcare, Inc., a Nevada corporation (“GSL Healthcare”), and the holders of common stock of GSL Healthcare, which consisted of two stockholders. The closing date occurred on June 1, 2020.
Under the terms and conditions of the Share Exchange Agreement, the Company offered and sold 27,932,271 shares of common stock of the Company in consideration for all of the issued accounting pronouncementsand outstanding shares of common stock of GSL Healthcare. The effect of the issuance is that former two GSL Healthcare shareholders now hold approximately 88.0% of the issued shares of common stock of the Company, and GSL Healthcare is now a wholly-owned subsidiary of the Company. GSL Healthcare has a general plan to be a health and wellness business.
Overview
As a result of the Share Exchange Agreement, we plan to focus our business plan on the development and commercialization of novel therapeutics to treat metabolic diseases, peripheral neuropathy, progressive lung disease and ischemic reperfusion injury. Our principal business objective is to develop both science-driven synthetic and natural cannabinoid therapeutics that address unmet medical needs and continue to drive innovations in the endocannabinoid space.
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Specifically, we have identified a targeted collection of wellness and pharmaceutical product opportunities, the majority of which will be designed to offer a more sophisticated and intelligent product offering in the multibillion dollar global biopharmaceutical industry.
· | The first category shall consist of a series of health and wellness products that incorporate a proprietary and proven nano-technology similar to liposomal delivery systems, known as a cellular biocomplex, for the health & wellness markets. Further advancements of these biocomplexes will be used in the development and production of pharma-grade products for more specific clinical (non-prescription and prescription) applications, such as arthritic joint pain, acne vulgaris and onychomycosis. | |
· | A second category of developments will focus on pharmaceutical applications that target the human endocannabinoid system for treatments ranging from epilepsy, Type 2 diabetes, and acute kidney Injury. These identified programs are already under development, ranging from design and discovery to pre-clinical and biological testing with leading universities and research institutions. |
Additionally, as a result of a Mater Development, License and Supply Agreement dated March 26, 2020, we have an exclusive partnership agreement with BIONOVA Labs, Inc., located in Long Island City, NY, surrounding the co-development and commercialization of a proprietary nanotechnology based on BIONOVA’s NuCell Technology.This technology was first developed by Dr. Michael Danielov (CEO and Founder) at the Institute of Experimental Morphology Academy of Science located in Georgia, Tbilisi of the USSR. This award-winning development was identified as a new scientific “Concept of Biological Information Transfer” which reshaped conventional approaches in medicine. With government funding, he recruited top scientists, engineers, mathematicians, physiologists, and biochemists to develop a new science and methodology surrounding the nano-structuring of bioactive substances. Dr. Danielov published a series of articles related to this proprietary Scientific Concept of “Biological Information Transfer” and to Life Science Nanotechnology in “Critical Care & Catastrope Medicine” magazines which can be found at http://www.cccm.ge/index_en.htm.
The bioactive ingredients, called NANO-COMPLEXES™, are delivered in ‘Nano’ quantities to be effectively utilized by the body; (http://www.bionovalab.com/bionova/Customer/bionovaAndNanotechnology.ms).Based on fundamental scientific research Dr. Danielov and his team of scientists developed several proprietary nanotechnologies for Life Science Industries, which currently are in use as a technological platform for creating multiple products oriented toward enhancement of self-healing processes. This technological platform is based on the development of Bioactive Complexes Modeling, which gives the ability to manipulate not only with Nano (10-9), but also with Pico (10-12) quantities of active substances, targeting the problem-specific biochemical pathway.
The ingredients in BIONOVA’s products are called NANO-COMPLEXES™ and include replicas of bioactive ingredients either existing in the human body or known to biologically react with natural receptors in the body that are vital for reestablishing or regulating cellular communication. These NANOCOMPLEXES ™ are easily recognized, absorbed and metabolized. Each BIONOVA product is composed of 150 to 300 ingredients that are specially selected for each individual’s personalized profile. The NANO-COMPLEXES™ are delivered into the targeted place with proprietary NuCell Direct™ Delivery System, a trademarked imitation of a human cell membrane, and based on molecular structure and densities, can be designed for a timed-controlled-release.
BIONOVA approach differs from the industrial nanotechnology, as well as from nanotechnological approach in health care industry, which is focusing today its attention only to the particle sizes of matter. BIONOVA products do not contain any engineered nanomaterials but include a combination of many ingredients (most ordinarily produced by the human body).These ingredients are presented in “nano and pico-amounts” (physiological amounts) - at a level that is most efficient for metabolic uptake in the tissue(s). This is the distinctive technology that is utilized only by BIONOVA.
This partnership with BIONOVA’s includes the development of novel Cannabinoid-Biocomplexes that shall include customized formulations for targeted delivery of bio-pharmacological elements for a variety of clinical indications identified in our business plan.
Biopharma Industry
The global demand for biopharmaceuticals is driven by a number of factors like increase in the elderly population, an increase in the prevalence of chronic diseases like cancer and diabetes, and an increase in the global acceptance of biopharmaceuticals. In addition, an increase in strategic partnerships between biopharmaceutical companies is also expected to complement the growth of the biopharmaceuticals industry. Furthermore, clearance for newer biopharmaceutical products and continuous R&D is also expected to improve this market positively. However, the high costs of these medications are one of the main constraints on this industry and, in order to make them economically viable, the cost needs to be reduced greatly.
The global market for the biopharma is segmented into product, therapeutic area, application, and region. Based on product, the market is for biopharma is segmented into recombinant growth factors, monoclonal antibodies, recombinant proteins, vaccines, purified proteins, recombinant hormones, and other product types. The monoclonal antibodies market is further divided into anti-inflammatory monoclonal antibodies, anti-cancer monoclonal antibodies, and other monoclonal antibodies. The purified proteins market is further bifurcated into P38 protein, leukemia inhibitory factor, P53 protein, and other purified proteins. The recombinant proteins market is further divided into serum albumin, defensin, amyloid protein, and transferrin. Vaccines are further divided into conventional vaccines, recombinant vaccines, and recombinant enzymes. The recombinant growth factors are further divided into granulocyte colony stimulating factors, and erythropoietin. The recombinant hormones market is further divided into recombinant human growth hormones, recombinant insulin, and other recombinant hormones. The market for monoclonal antibodies held almost 28% share of the market in 2019. Monoclonal antibodies are used in cancer treatment areas. Their usage is becoming increasingly widespread in developed countries like the U.S. and the U.K. Contrary, the recombinant proteins segment is expected to show rapid growth over the forecast period.
Segmentation Analysis
Based on therapeutic application, the market is categorized into oncology, inflammatory and infectious diseases, neurological diseases, infectious diseases, cardiovascular diseases, metabolic disorders, hormonal disorders, and other diseases. The oncology segment held almost 25% share of the market in 2019. According to the International Agency for Cancer Research (IARC), there were almost 18 million new cases of cancer and 10 million deaths in 2018. In fact, the United Nations Program on HIV and AIDS (UNAIDS) estimated that 37 million people were living with HIV in 2017. Such disquieting statistics has raised an urgent need to change the situation by innovating new and successful medicines that can cure such deadly diseases consequently raising the number of deaths. Apparently, biopharmaceutical drugs are considered to be effective in curing these chronic diseases rather than merely treating the same symptoms.
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Regional Analysis
Regionally, the market is divided into Asia Pacific, Europe, Latin America, North America, and Middle East & Africa. North America held almost 37% in 2019 due to the presence of sophisticated healthcare facilities, increasing geriatric population base, and increased healthcare expenditure in the country. Asia Pacific is likely to grow at high CAGR in the forecast period. Increased investment in R&D, increased acceptance and availability of biopharmaceuticals for disease treatment and increased understanding of disease diagnosis are some of the factors of market growth in this region. Moreover, this area offers tremendous prospects for venture capitalists and investors as developed markets are largely saturated.
Competition
The biopharma industry is characterized by fierce competition, is growing rapidly, evolving constantly, and the possibility for innovative companies to succeed within it is significant. The biopharma industry is, in all respects, global and Agentix will have competitors around the world, including but not limited to the following: Novo Nordisk A/S (Denmark), Johnson & Johnson (U.S.), Pfizer, Inc., (U.S.), Hoffmann-La Roche (Switzerland), Eli Lilly and Company, Ltd. (U.K.), Biogen, Inc. (U.S.), Merck & Co., Inc. (U.S.), Sanofi (France), Bristol Myers Squibb Company (U.S.), and Bayer AG (Germany) among others.
Intellectual Property
We will rely on a combination of trademark laws, trade secrets, confidentiality provisions and other contractual provisions to protect our proprietary rights, which are primarily our brand names, product designs and marks. We do not own any patents, although we may apply for some in the future based on the success of our business plan.
Government Regulation
The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources. Failure to comply with the applicable requirements at any time during the product development process, approval process or after approval, may subject an applicant to administrative or judicial sanctions. These sanctions could include the US FDA’s refusal to approve pending applications, withdrawal of an approval, a clinical hold, warning letters, product recalls or withdrawals from the market, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement, or civil or criminal penalties. Any agency or judicial enforcement action could have a significant impactmaterial adverse effect on its results of operations, financial position or cash flow.us.
DIRECTORS, Any product development activities related to Agentix or products that we may develop or acquire in the future will be subject to extensive regulation by various government authorities, including the FDA, other federal, state and local agencies and comparable regulatory authorities in other countries, which regulate the design, research, clinical and non-clinical development, testing, manufacturing, storage, distribution, import, export, labeling, advertising and marketing of pharmaceutical products and devices. Generally, before a new drug can be sold, considerable data demonstrating its quality, safety and efficacy must be obtained, organized into a format specific to each regulatory authority, submitted for review and approved by the regulatory authority. The data are often generated in two distinct development states: pre-clinical and clinical.
The products that Agentix may develop or acquire in the future must be approved by the FDA before they may be legally marketed in the United States. For new chemical entities, the pre-clinical development stage generally involves synthesizing the active component, developing the formulation and determining the manufacturing process, as well as carrying out non-human toxicology, pharmacology and drug metabolism studies that support subsequent clinical testing. These pre-clinical laboratory and animal tests are often performed under the FDA’s Good Laboratory Practices regulations. A drug’s sponsor must submit the result of the pre-clinical tests, together with manufacturing information, analytical data and any available clinical data or literature and a proposed clinical protocol to the FDA as part of an IND application, which is a request for authorization from the FDA to administer an investigational drug or biological product to humans. Similar filings are required in other countries.
Post-Marketing Requirements
Following approval of a new product, a pharmaceutical company and the approved product are subject to continuing regulation by the FDA and other federal and state regulatory authorities, including, among other things, monitoring and recordkeeping activities, reporting to applicable regulatory authorities of adverse experiences with the product, providing the regulatory authorities with updated safety and efficacy information, product sampling and distribution requirements, and complying with promotion and advertising requirements, which include, among others, standards for direct-to-consumer advertising, restrictions on promoting drugs for uses or in patient populations not described in the drug’s approved labeling (known as “off-label use”), and limitations on industry-sponsored scientific and educational activities. Although physicians may prescribe legally available drugs for off-label uses, manufacturers may not market or promote such off-label uses. Modifications or enhancements to the products or labeling or changes of site of manufacture are often subject to the approval of the FDA and other regulators, which may or may not be received or may result in a lengthy review process. The FDA regulations require the products be manufactured in specific approved facilities and in accordance with current good manufacturing practices, and NDA holders must list their products and register their manufacturing establishments with the FDA. These regulations also impose certain organizational, procedural and documentation requirements with respect to manufacturing and quality assurance activities. Drug manufacturers and other entities involved in the manufacture and distribution of approved drugs are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with current good manufacturing practice and other laws. NDA holders using contract manufacturers, laboratories or packagers are responsible for the selection and monitoring of qualified firms. These firms are subject to inspections by the FDA at any time, and the discovery of violative conditions could result in enforcement actions that interrupt the operation of any such facilities or the ability to distribute products manufactured, processed or tested by them.
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Other Regulatory Matters
Manufacturing, sales, promotion and other activities following product approval are also subject to regulation by numerous regulatory authorities in addition to the FDA, including, in the United States, the Centers for Medicare & Medicaid Services, or CMS, other divisions of the Department of Health and Human Services, the Drug Enforcement Administration, the Consumer Product Safety Commission, the Federal Trade Commission, the Occupational Safety & Health Administration, the Environmental Protection Agency, and state and local governments. These regulations include:
· | the federal healthcare program anti-kickback law which prohibits, among other things, persons from soliciting, receiving or providing remuneration, directly or indirectly, to induce either the referral of an individual, for an item or service or the purchasing or ordering of a good or service, for which payment may be made under federal healthcare programs such as the Medicare and Medicaid programs; | |
· | federal false claims laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other government reimbursement programs that are false or fraudulent. The government may assert that a claim including items or services resulting from a violation of the federal healthcare program anti-kickback law or related to off-label promotion constitutes a false or fraudulent claim for purposes of the federal false claims laws; | |
· | the Federal Physician Payments Sunshine Act within the ACA, and its implementing regulations, require that certain manufacturers of drugs, devices, biological and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report information related to certain payments or other transfers of value made or distributed to physicians and teaching hospitals, or to entities or individuals at the request of, or designated on behalf of, the physicians and teaching hospitals and to report annually certain ownership and investment interests held by physicians and their immediate family members; and | |
· | the Health Insurance Portability and Accountability Act, or HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and its implementing regulations, imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information. Among other things, HITECH makes HIPAA’s privacy and security standards directly applicable to “business associates”—independent contractors or agents of covered entities that receive or obtain protected health information in connection with providing a service on behalf of a covered entity. HITECH also created four new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates and possibly other persons, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys’ fees and costs associated with pursuing federal civil actions. | |
· | applicable child-resistant packaging requirements under the U.S. Poison Prevention Packaging Act; | |
· | The Lanham Act and federal antitrust laws; | |
· | state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws, which may apply to items or services reimbursed by any third party payer, including commercial insurers, and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by federal laws, thus complicating compliance efforts. |
Distribution of pharmaceutical products is subject to additional requirements and regulations, including extensive record-keeping, licensing, traceability, and storage and security requirements intended to prevent the unauthorized sale of pharmaceutical products.
The handling of any controlled substances must comply with the U.S. Controlled Substances Act and the Controlled Substances Import and Export Act. In the U.S., many of our product candidates are currently classified as Schedule I controlled substance as defined in the Controlled Substance Act (“CSA”). This designation is based on many of AGENTIX’s chemical structures and pharmacology.
Schedule I controlled substances are pharmaceutical products subject to specific regulations under the CSA, that establishes, among other things, certain registration, manufacturing quotas, security, recordkeeping, reporting, import, export and other requirements administered by the DEA. All parties responsible for the manufacturing, distribution and testing the drug in clinical studies must apply for and obtain a license from the DEA before they are permitted to perform these activities with AGENTIX. Furthermore, these parties must have the security, control, recordkeeping, reporting and inventory mechanisms required by the DEA to prevent drug loss and diversion. All licensed facilities are required to renew their registrations annually if they intend to continue to work with our drug. The DEA conducts periodic inspections of certain registered establishments that handle controlled substances. We are planning to work with our manufacturers, distributors, exporters and clinical sites to obtain the necessary licenses.
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Individual states have also established controlled substance laws and regulations. Though state-controlled substances laws often mirror federal law, because the states are separate jurisdictions, they may separately schedule drugs, as well. While some states automatically schedule a drug based on federal action, other states schedule drugs through rulemaking or a legislative action. The requirement for state registrations could also result in delay of the manufacturing, distribution of AGENTIX products or in the completion of the planned clinical studies. We and our manufacturing vendors and clinical sites must also obtain separate state registrations, permits or licenses in order to be able to obtain, handle, and distribute controlled substances for clinical trials or commercial sale, and failure to meet applicable regulatory requirements could lead to enforcement and sanctions by the states in addition to those from the DEA or otherwise arising under federal law.
Employees
As of September 1, 2020, we had no full-time or part-time employees but do have a total of three individuals devoting substantially full-time services to the Company under consultancy arrangement, including our Chief Executive Officer, Rudy Mazzocchi.
Properties
We currently do not rent any real property or offices. Our current business address is 32932 Pacific Coast Highway, #14-254, Dana Point, California 92629.
Legal Proceedings
From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. Except as noted below, we are currently not aware of any such legal proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating result.
There are no material proceedings in which any of our directors, officers or affiliates or any registered or beneficial shareholder of more than 5% of our common stock is an adverse party or has a material interest adverse to our interest.
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EXECUTIVE OFFICERS PROMOTERS AND CONTROL PERSONSDIRECTORS
The following table sets forth information regarding our executive officers and the names and agesmembers of our current directors and executive officers, the principal offices and positions held by each person:board of directors.
Name |
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| ||
Rudy Mazzocchi | 61 | Chief Executive Officer, Director | ||
Michael Winterhalter |
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| ||
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| Director | ||
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| Director |
Michael Winterhalter,Directors are elected by our stockholders and hold office until their successors are elected and qualified or until their earlier resignation or removal. Officers are appointed by our board of directors and serve at the discretion of the board of directors.
Biographical Information
Rudy Mazzocchi
Mr. Mazzocchi, age 61, has served as our President, Chief Executive Officer Treasurerand director of the Company since Jul7 2, 2020. Mr. Mazzocchi most recently served as Executive Chairman of Establishment Labs (Nasdaq: ESTA), a leading manufacturer of implantable medical devices in San Jose, Costa Rica, a position he held from 2014 until 2017. Mr. Mazzocchi was also a Co-Founder and served as Chief Executive Officer of BioMedX Group from 2017 until 2020, and is a Co-Founder, Chairman of OptiSTENT and was previously Chief Executive Officer of ELENZA, Inc., a company developing the world’s first electronic “AutoFocal” Intraocular Lens, a position he held from 2010 until 2018. From 2008 to 2010, he was Interim-President and Chief Executive Officer of NovaVision, Inc., a neuro-ophthalmology device company specializing in noninvasive photic-neurostimulation to restore vision. He has been the Acting-Chief Executive Officer of Berkshire Biomedical, a position he has held since 2019, and Chairman of the BoardMy Next Health, a position he has held since 2020. From 2005 to 2008, Mr. Mazzocchi served as Managing Director of Directors since April 18, 2013.Accuitive Medical Ventures, a venture capital fund established to finance and develop early and expansion stage medical device and technology companies. He also served as President and Chief Executive Officer of Image-Guided NEUROLOGICS from 1998 to 2005. Prior to that, Mr. Mazzocchi was the cofounder and Director of Vascular Science and founding Chief Executive Officer of MICROVENA Corporation, eventually known as eV3, and served in numerous management and operations roles at Cook Critical Care, an operating division of COOK, Inc. He also previously served as Founding Chairman of Cytogenesis in 2000 to 2003, as well as Independent Director of Greatbatch, Inc. from 2012 to 2014. Mr. Mazzocchi received his B.S. in Life Sciences / Biochemistry from the University of Pittsburgh and completed graduate studies in Biophysics at the University of California, Los Angeles. Mazzocchi brings more than 30 years of experience in the med-tech/biotech industry in operations and general management roles and has extensive background and experience in the medical device industry. Mr. Mazzocchi’s experience in life sciences and the medical device industry led to our conclusion that he should also be serving as a member of our Board of Directors in light of our business and structure.
Michael Winterhalter
Mr. Winterhalter, age 59, has served as our Principal Accounting and Financial Officer, Secretary from April 18, 2013 until June 2, 2013. Mr.and Treasurer since May 8, 2020.Mr. Winterhalter has over 25 years’ experience in the composites industry with notable tenures that include President of AmpStar, LLC (Harbor City, CA) California), from November 2008 until July 2014. From June 2001 until January 2004, Mr. Winterhalter was employed at W. Brandt Goldsworthy & Associates in Los Angeles, where became Vice President of Business Development in January 2002 .2002. Since August 2008, he has been a member of Winter Composites, LLC. He holds 2 patents (with an additional 1 in pending status); one for design of high voltage overhead transmission conductors utilizing a high strength composite central strength member and another for a novel manufacturing method for composite power poles. Mr. Winterhalter graduated from the University of California, Santa Barbara and also served as a Congressional Intern in the US House of Representatives. Mr. Winterhalter’s prior experience with the Company, his entrepreneurial desire evidenced by his ideas which led to the establishment of our business, and his experience in the compositedcomposites industry, led to our conclusion that Mr. Winterhalter should be serving as a member of our Board of Directors in light of our business and structure.
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Scott Thomas
Rehan Huda
Rehan Huda, age 50, has served as a director of the Company since July 2, 2020. Since January 2016, Mr. Huda has served as Chief Executive Officer of Green Sky Labs Inc, a Canada-based technology incubation company focused on the proprietary processing technologies (e.g. extraction, isolation and purification) and the healthcare industries. Mr. Huda has held various positions within the federal government of Canada, including Senior Economist for the Department of Finance and Senior Analyst for the Natural Resources and Industry Departments. He is a recipient of the Canadian government’s Public Service Award of Excellence for his financial and economic analysis related to the awarding of operating licenses to wireless telecommunication service providers.
Mr. Thomas has served as our Vice President, Secretary and a Director since June 2, 2013. Mr. ThomasHuda has over 25 years’20 years of experience in industrial/technical salesinvestment banking, entrepreneurship, and product development. Since August 1994,corporate finance. He obtained a Bachelor of Arts and Masters of Arts (Economics and Psychology) from the University of Manitoba, which he attended from 1987 to 1994. Mr. Thomas has been a Regional Director of Donaldson Company Inc., an S&P Midcap-400 corporation that specializesHuda’s experience in engineered filtration productsfinance and ‘green’ solutions for industry. Mr. Thomas graduated from California Polytechnic State University (Cal Poly) San Luis Obispo. Mr. Thomas’s sales experienceeconomics led to our conclusion that Mr. ThomasHuda should be serving as a member of our Boardboard of Directorsdirectors in light of our business and structure.
Eric KrogiusScott Stevens
Mr. KrogiusScott Stevens, age 44, has served as a Directordirector of the Company since July 2, 2020, and he was previously our President and a member of the board of directors from June 2, 2013.10, 2019 to May 8, 2020. Since 2014, Mr. Krogius has over 18 years’ experience in the equity investment and securities industry. Mr. KrogiusStevens has been a Senior Vice PresidentPartner at Global Hunter Securities since July 2013. In the mid-1990s, he was Managing Director, DirectorGrays Peak Capital, a global investment firm located in New York. Mr. Stevens has over twenty years of Trading for Roth Capital Partners. Most recently, heglobal investment experience in finance, technology, consulting and M&A. Prior to Grays Peak, Mr. Stevens was a partnerPortfolio Manager for Los Angeles-based Crowell Weedonsixteen years in public and Company from January 2001 until May 2013. Prior to his securities career he owned and operated a string of retail storesprivate market investing. Before joining the buy-side, Mr. Stevens was an Analyst at Merrill Lynch & Co. in the Los Angeles area.Mergers & Acquisitions Group where he completed over $20 billion of transactions in various sectors including aerospace/defense, media, healthcare, and energy. Mr. KrogiusStevens graduated from the University of California Los Angeles.Michigan (BA Economics) in 1998. Mr. Krogius’ backgroundStevens’ experience in the broker-dealer industryfinance and M&A led to our conclusion that Mr. ThomasStevens should be serving as a member of our Boardboard of Directorsdirectors in light of our business and structure.
Robert Drust
Mr. Drust has served as a Director since June 2, 2013. Mr. Drust has over 20 years’ experience in the equity investment and trading industry. Mr. Drust has been a Senior Equity Trader at B. Riley & Co. since August 2013. Starting in the early 1990s, he worked at Wertheim Schroder, Prudential Securities and later at Wellington Management. Most recently, Mr. Drust was a partner at Crowell Weedon, where he was in charge of the Institutional Equity Trading Department and dealt with some of the largest Mutual funds and Hedge funds in the country , from November 2005 until June 2013. Mr. Drust graduated from Rider University and holds a MBA from Pepperdine.
Agreement with Xingcheng Haibao Advanced Materials Industrial Park Co., Ltd. to Designate a Director
On October 26, 2013, we verbally agreed with our Joint Venture Partner (Xingcheng Haibao Advanced Materials Industrial Park Co., Ltd.) that it may designate 1 director of FairWind Energy upon completion of its agreed upon purchase of 950,000 shares. Our Joint Venture Partner has yet to designate a director of the Company.
TERM OF OFFICE
Our directors are appointed to hold office until the next annual general meeting of our stockholders or until removed from office in accordance with our bylaws. Our officers are appointed by our Board of Directors and hold office until removed by the Board, absent an employment agreement.
DIRECTOR INDEPENDENCE
Our board of directors is currently composed of four members, Scott Thomas and Robert Drust of whom qualify as independent directors in accordance with the published listing requirements of the NASDAQ Global Market (the Company has no plans to list on the NASDAQ Global Market). The NASDAQ independence definition includes a series of objective tests, such as that the director is not, and has not been for at least three years, one of our employees and that neither the director, nor any of his family members has engaged in various types of business dealings with us. In addition, our board of directors has not made a subjective determination as to our director that no relationships exist which, in the opinion of our board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, though such subjective determination is required by the NASDAQ rules. Had our board of directors made these determinations, our board of directors would have reviewed and discussed information provided by our director and us with regard to our director’s business and personal activities and relationships as they may relate to us and our management.
FAMILY RELATIONSHIPSFamily Relationships
There are no family relationships betweenamong any of our directors or executive officers and any other directors or executive officers.
SIGNIFICANT EMPLOYEES AND CONSULTANTSIndependent Directors
AsWe currently do not have any independent directors within the meaning of Rule 5605(a)(2) of the date hereof,NASDAQ Listing Rules and the Company has no significant employees.rules and regulations promulgated by the Securities and Exchange Commission.
CONFLICTS OF INTERESTCommittees of the Board of Directors
Since weWe do not have an audit or compensation committee comprised of independent directors, therefor the functions that would have been performed by such committees are performed by our director.directors. The Board of Directors has not established an audit committee and does not have an audit committee financial expert, nor has the Board of Directors established a nominating committee. The Board is of the opinion that such committees are not necessary since the Company is an early development stage company and has only two directors, and to date, such director hasdirectors have been performing the functions of such committees. Thus, there is a potential conflict of interest in that our directordirectors and officer hasofficers have the authority to determine issues concerning management compensation, nominations, and audit issues that may affect management decisions.
Other than as described above, we are not awareCode of any other conflicts of interest of our executive officer and director.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
No director, person nominated to become a director, executive officer, promoter or control person of our company has, during the last ten years: (i) been convicted in or is currently subject to a pending a criminal proceeding (excluding traffic violations and other minor offenses); (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to any federal or state securities or banking or commodities laws including, without limitation, in any way limiting involvement in any business activity, or finding any violation with respect to such law, nor (iii) any bankruptcy petition been filed by or against the business of which such person was an executive officer or a general partner, whether at the time of the bankruptcy or for the two years prior thereto.
CODE OF ETHICSEthics
We currently have not adopted a Codecode of Ethics.business conduct and ethics that applies to our officers, directors and employees, including our principal executive officer, principal financial officer and principal accounting officer.
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SUMMARY COMPENSATION TABLESummary Compensation Table
Name and Principal Position | Year | Salary | Bonus | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Nonqualified Deferred Compensation ($) | All Other Compensation ($) | Total ($) | |||||||||||||||||||||||||
Michael Winterhalter (1) | 2014 | 60,000 | 0 | 0 | 0 | 0 | 0 | 0 | 60,000 | |||||||||||||||||||||||||
Scott Thomas (2) | 2014 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
______________The table below summarizes all compensation awarded to, earned by, or paid to our officers for all services rendered in all capacities to us as of the August 31 fiscal years ended as indicated.
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Rudy Mazzocchi (1) |
| 2020 |
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| -0- |
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| -0- |
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| -0- |
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| -0- |
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| 2019 |
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| -0- |
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| -0- |
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| -0- |
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|
Scott Stevens (2) |
| 2020 |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
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| -0- |
|
|
| -0- |
|
|
| 2019 |
|
|
| -0- |
|
|
| -0- |
|
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| -0- |
|
|
| -0- |
|
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| -0- |
|
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| -0- |
|
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| -0- |
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| -0- |
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|
Michael Winterhalter (3) |
| 2020 |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
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| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| 2019 |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
________
(1) | Appointed |
(2) | Appointed |
STOCK OPTION GRANTS
We had no outstanding equity awards as of the end of the fiscal periods ended August 31, 2013 or through the date of filing of this prospectus. The following table sets forth certain information concerning outstanding stock awards held by our officers and our directors as of the fiscal year ended August 31, 2013:
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | |||||||||||||||||||||||||||
Michael Winterhalter (1) | -0- | -0- | -0- | -0- | N/A | -0- | -0- | -0- | -0- | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||
Scott Thomas (2) | -0- | -0- | -0- | -0- | N/A | -0- | -0- | -0- | -0- |
__________________
|
|
|
|
EMPLOYMENT AGREEMENTS
Pursuant to a letter agreement dated April 30, 2014, by and between Michael Winterhalter and us, we pay Mr. Winterhalter $5,000 per month for serving as President of the Company until October 9, 2015. Under the terms of the Agreement, we paid Mr. Winterhalter retroactively for the performance of his duties as President beginning April 18, 2013, and we may unilaterally decide to not pay Winterhalter at any time without any liability or debt accruing to the Company.
Pursuant to a letter agreement dated April 30, 2014, by and between Eric Krogius and us, we pay Mr. Krogius $5,000 every three months for serving as a non-employee director of the Company until April 18, 2015. Under the terms of the Agreement, we paid Mr. Krogius retroactively for the performance of his duties as President beginning January 18, 2014, and we may unilaterally decide to not pay Krogius at any time without any liability or debt accruing to the Company.
Pursuant to an Employment Contract dated May 15, 2014, by and between Martin Wang and us, we pay Mr. Wang $5,000 per month for serving as Vice President of the Company until October 9, 2015. Under the terms of the Agreement, Mr. Wang has a probation period of six months and can terminated only for “just cause at common law,” or “without just cause” if the Company provides Mr. Wang one month and two weeks’ notice.
DIRECTOR COMPENSATION
The following table sets forth director compensation as of November 30, 2014:
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | |||||||||||||||||||||
Michael Winterhalter (1) | -0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
Scott Thomas (2) | -0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
Eric Krogius (3) | 10,000 | -0- | -0- | -0- | -0- | -0- | 10,000 | |||||||||||||||||||||
Robert Drust (4) | -0- | -0- | -0- | -0- | -0- | -0- | -0- |
______________
|
|
|
|
|
|
|
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table lists, as of the date of this prospectus, the number of shares of common stock of our Company that are beneficially owned by (i) each person or entity known to our Company to be the beneficial owner of more than 5% of the outstanding common stock; (ii) each officer and director of our Company; and (iii) all officers and directors as a group. Information relating to beneficial ownership of common stock by our principal shareholders and management is based upon information furnished by each person using “beneficial ownership” concepts under the rules of the Securities and Exchange Commission. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power.
The percentages below are calculated based on 5,927,106 shares of our common stock issued and outstanding as of the date of this prospectus. We do not have any outstanding warrant, options or other securities exercisable for or convertible into shares of our common stock.
Title of Class | Name and Address of Beneficial Owner (2) | Amount and Nature of Beneficial Ownership | Percent of Common Stock | |||||||
Common Stock | Michael Winterhalter (3) | 4,000,000 | 67.49 | % | ||||||
Common Stock | Han Bao Dong | 625.000 | 10.55 | % | ||||||
Common Stock | Eric Krogius (4) | 1,000,000 | 16.87 | % | ||||||
Common Stock | Robert Drust (5) | 187,500 | 3.16 | % | ||||||
Common Stock | Scott Thomas (6) | -0- | * | |||||||
All directors and executive officers as a group (4 persons) | 5,187,500 | 91.3 | % |
_______________
|
|
|
|
(3) | Appointed President and Chief Executive Officer, Treasurer and Chairman of the Board of Directors, on April 18, 2013. Appointed Secretary on April 18, 2013 and resigned as Secretary on June 2, 2013. Appointed Secretary on November 14, 2018. Resigned as President and Chief Executive Officer, Treasurer, Secretary and Chairman of the Board of Directors on July 10, 2019.Appointed President, Principal Accounting and Financial Officer, Secretary and Treasurer and a director of the Company on May 8, 2020 and resigned as President and a director of the Company on July 2, 2020. |
STOCK OPTION GRANTS
The following table sets forth certain information concerning outstanding stock awards held by our officers and our directors as of the fiscal year ended August 31, 2020:
|
|
|
| Option Awards |
|
| Stock Awards |
| ||||||||||||||||||||||||||||||
Name |
| Year |
| Number of Securities Underlying Unexercised Options (#) Exercisable |
|
| Number of Securities Underlying Unexercised Options (#) Exercisable |
|
| Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options |
|
| Option Exercise Price |
|
| Option Expiration Date |
|
| Number of Shares or Units of Stock That Have Not Vested |
|
| Market Value of Shares or Units of Stock That Have Not Vested |
|
| Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested |
|
| Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested |
| |||||||||
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|
|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Rudy Mazzocchi (1) |
| 2020 |
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| N/A |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
|
|
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|
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|
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|
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|
|
|
|
|
|
|
|
|
Rehan Huda (2) |
| 2020 |
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| N/A |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
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|
|
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|
|
|
|
|
|
|
|
Scott Stevens (3) |
| 2020 |
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| N/A |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
|
|
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|
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|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Winter halter (4) |
| 2020 |
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| N/A |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
________
(1) | Appointed Chief Executive Officer and a director of the Company on July 2, 2020. |
(2) | Appointed a director of the Company on July 2, 2020. |
(3) | Appointed President and director on June 10, 2019 and resigned as President and director on May 8, 2020 but was reappointed as a director on July 2, 2020. Appointed President and director on June 10, 2019 and resigned as President and director on May 8, 2020 but was reappointed as a director on July 2, 2020. |
(4) | Appointed |
21 |
Table of Contents |
EMPLOYMENT AGREEMENTS
We have no employment agreements with any person.
The following table sets forth director compensation as of August 31, 2020:
Name |
| Fees Earned or Paid in Cash |
|
| Stock |
|
| Option |
|
| Non-Equity Incentive Plan Compensation ($) |
|
| Nonqualified Deferred Compensation Earnings |
|
| All Other Compensation |
|
| Total |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Rudy Mazzocchi (1) |
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
Rehan Huda(2) |
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
Scott Stevens (3) |
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
Michael Winterhalter (4) |
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
________
(1) | Appointed Chief Executive Officer and a director of the Company on July 2, 2020. |
(2) | Appointed a director of the Company on July 2, 2020. |
(3) | Appointed President and director on June 10, 2019 and resigned as President and director on May 8, 2020 but was reappointed as a director on July 2, 2020. Appointed President and director on June 10, 2019 and resigned as President and director on May 8, 2020 but was reappointed as a director on July 2, 2020. |
(4) | Appointed President and Chief Executive Officer, Treasurer and Chairman of the Board of Directors, on April 18, 2013. Appointed Secretary on April 18, 2013 and resigned as Secretary on June 2, 2013. Appointed Secretary on November 14, 2018. Resigned as President and Chief Executive Officer, Treasurer, Secretary and Chairman of the Board of Directors on July 10, 2019.Appointed President, Principal Accounting and Financial Officer, Secretary and Treasurer and a director of the Company on May 8, 2020 and resigned as President and a director of the Company on July 2, 2020. |
22 |
Table of Contents |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Common Stock
The following table sets forth information with respect to the beneficial ownership of our common stock as of September 1, 2020:
● | by each person who is known by us to beneficially own more than 5.0% of our common stock; |
● | by each of our named executive officers and directors; and |
● | by all of our named executive officers and directors as a group. |
The percentages of common stock beneficially owned are reported on the basis of regulations of the Securities and Exchange Commission governing the determination of beneficial ownership of securities. Under the rules of the Securities and Exchange Commission, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or to direct the voting of the security, or investment power, which includes the power to dispose of or to direct the disposition of the security. With respect to the Series B Preferred Stock held by the beneficial owners listed below, there exist contractual provisions limiting conversion and exercise to the extent such conversion or exercise would cause such beneficial owner, together with its affiliates or members of a “group,” to beneficially own a number of shares of common stock which would exceed 9.99% of our then outstanding shares of common stock following such conversion or exercise. The shares and percentage ownership of our outstanding shares indicated in the table below do not give effect to these limitations. Except as indicated in the footnotes to this table, to our knowledge and subject to community property laws where applicable, each beneficial owner named in the table below has sole voting and sole investment power with respect to all shares beneficially owned and each person’s address is c/o Agentix Corp., 32932 Pacific Coast Highway, #14-254, Dana Point, California 92629.
Name of Beneficial Owner |
| Number of Shares Beneficially Owned (1) |
|
| Percentage of Common Stock Owned (1)(2) |
| ||
5% Owners: |
|
|
|
|
|
| ||
Applied Biosciences Corp. |
|
| 19,552,590 | (3) |
|
| 56.7 | % |
Green Sky Lab |
|
| 8,39,681 | (4) |
|
| 24.3 | % |
|
|
|
|
|
|
|
|
|
Officers and Directors: |
|
|
|
|
|
|
|
|
Rudy Mazzocchi |
|
| 0 |
|
|
| 0.0 | % |
Rehan Huda |
|
| 0 |
|
|
| 0.0 | % |
Scott Stevens |
|
| 2,188,070 | (5) |
|
| 6.3 | % |
Michael Winterhalter |
|
| 152,020 |
|
|
| 0.5 | % |
All current officer and directors as a group (4 persons) |
|
| 2,340,090 |
|
|
| 6.8 | % |
________
(1) | Shares of common stock beneficially owned and the respective percentages of beneficial ownership of common stock assume the exercise of all options and other securities convertible into common stock beneficially owned by such person or entity currently exercisable or exercisable within 60 days of September 1, 2020, except as otherwise noted. Shares issuable pursuant to the exercise of stock options and other securities convertible into common stock exercisable within 60 days are deemed outstanding and held by the holder of such options or other securities for computing the percentage of outstanding common stock beneficially owned by such person, but are not deemed outstanding for computing the percentage of outstanding common stock beneficially owned by any other person. |
(2) | These percentages have been calculated based on 34,489,605 shares of common stock outstanding as of September 1, 2020. |
(3) | Chris Bridges has sole voting and dispositive power over the securities held for these securities. |
(4) | Rehan Huda has sole voting and dispositive power over the securities held for these securities |
(5) |
|
|
|
23 |
Table of Contents |
Up to 2,750,721shares of our common stock are currently being offered by the selling stockholders under this prospectus. These shares are being offered as a result of common stock and warrants purchased by selling stockholders in two private placement closings in July 2020 (the “Private Placement”).
The shares of common stock referred to above are being registered to permit public sales of the shares, and the selling stockholders may offer the shares for resale from time to time pursuant to this prospectus. The selling stockholders may also sell, transfer or otherwise dispose of all or a portion of their shares in transactions exempt from the registration requirements of the Securities Act of 1933, as amended, or pursuant to another effective registration statement covering those shares.
The table below sets forth certain information regarding the selling stockholders and the shares of our common stock offered by them in this prospectus. The selling stockholders have not had a material relationship with us within the past three years other than as described in the footnotes to the table below or as a result of their acquisition of our shares or other securities. To our knowledge, subject to community property laws where applicable, each person named in the table has sole voting and investment power with respect to the shares of common stock set forth opposite such person’s name. None of the selling stockholders are broker-dealers or affiliates of broker-dealers, unless otherwise noted.
Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission. With respect to the warrants held by the selling stockholders, there exist contractual provisions limiting conversion and exercise to the extent such conversion or exercise would cause such selling stockholder, together with its affiliates or members of a “group,” to beneficially own a number of shares of common stock which would exceed from 4.99% to 9.99% of our then outstanding shares of common stock following such conversion or exercise. The shares and percentage ownership of our outstanding shares indicated in the table below do not give effect to these limitations.
|
| Ownership Before Offering |
|
| Ownership After Offering | ||||||||||
Selling Stockholder |
| Number of shares of common stock beneficially owned (1) |
|
| Number of shares offered |
|
| Number of shares of common stock beneficially owned (1) |
|
| Percentage of common stock beneficially owned (1) | ||||
|
|
|
|
|
|
|
|
|
|
|
| ||||
Tim J. Alper |
|
| 200,00 |
|
|
| 200,00 |
|
|
| - |
|
| * | |
Barry & Peggy Maas Trust (2) |
|
| 100,000 |
|
|
| 100,000 |
|
|
| - |
|
| * | |
Nate Bohn |
|
| 25,000 |
|
|
| 25,000 |
|
|
| - |
|
| * | |
Nicholas Carosi |
|
| 400,000 |
|
|
| 400,000 |
|
|
| - |
|
| * | |
David Colodner |
|
| 232,389 |
|
|
| 232,389 |
|
|
| - |
|
| * | |
Kenneth DeAngelis |
|
| 50,000 |
|
|
| 50,000 |
|
|
| - |
|
| * | |
Charles Gaskins |
|
| 133,332 |
|
|
| 133,332 |
|
|
| - |
|
| * | |
Horberg Industries LP (3) |
|
| 100,000 |
|
|
| 100,000 |
|
|
| - |
|
| * | |
Paul Marx |
|
| 10,000 |
|
|
| 10,000 |
|
|
| - |
|
| * | |
Lawrence Pabst |
|
| 300,000 |
|
|
| 300,000 |
|
|
| - |
|
| * | |
H. Leigh Severance |
|
| 800,000 |
|
|
| 800,000 |
|
|
| - |
|
| * | |
Francis Smith Jr. |
|
| 400,000 |
|
|
| 800,000 |
|
|
| - |
|
| * |
________
* | Less than 1% |
(1) | This calculation is based on a number of shares of common stock outstanding comprised of 34,489,605 shares of common stock outstanding as of September 1, 2020. |
(2) | Barry Maas has sole voting and dispositive power over the securities held for the account of this selling stockholder. |
(3) | Howard Todd Horberg has sole voting and dispositive power over the securities held for the account of this selling stockholder. Includes 766,667 shares of common stock issuable upon the exercise of warrants. |
24 |
Table of Contents |
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
On April 18, 2013, we offered and sold 4,000,000None.
We have authorized 75,000,000 shares of capital stock, par value $0.001 per share, of which 50,000,000 are shares of common stock to Michael Winterhalter, our President and Chief Executive Officer, then-Secretary, Treasurer and Chairman25,000,000 are shares of the Board of Directors at a purchase price of $0.001 per share, for aggregate consideration of $4,000.
“blank check” preferred stock. On April 18, 2013, we offered and sold 1,000,000September 1, 2020, there were 34,489,605 shares of common stock to Eric Krogius, who became a Director on June 2, 2103, at a purchase priceissued and outstanding and no shares of $0.001 per share, for aggregate consideration of $1,000.preferred stock issued and outstanding.
On May 15, 2013,Holders of Capital Stock
As of September 1, 2020, there were approximately 66 holders of our common stock, as determined by counting our record holders and the number of participants reflected in a security position listing provided to us by the Depository Trust Company. Because the “DTC participants” are brokers and other institutions holding shares of our common stock on behalf of their customers, we offered and sold 187,500do not know the actual number of unique shareholders represented by these record holders.
Common Stock
Voting Rights
For all matters submitted to a vote of stockholders, each holder of the Company’s common stock is entitled to one vote for each share registered in his, her, or its name. Holders of common stock vote together as a single class.
Dividend Rights
Subject to preferential dividend rights of any other class or series of stock, the holders of shares of common stock are entitled to Robert Drust, who became a Director on June 2, 2013, at $0.40 per share, or $100,000 in aggregate for cash.receive dividends, including dividends of equity, as and when declared by the Company’s board of directors, subject to any limitations applicable by law and to the rights of the holders, if any, of the Company’s preferred stock.
On October 26, 2013,Liquidation
In the event the Company is liquidated, dissolved or its affairs are wound up, after we entered into a Joint Venture Contractpay or make adequate provision for Sino-Foreign Composites Company with Xingcheng Haibao Advanced Materials Industrial Park Co., Ltd. (the “Joint Venture Partner”). The Chinese Joint Venture Partner is a composites manufacturer basedall of the Company’s debts and liabilities, each holder of common stock will be entitled to share ratably in Huludao City, Liaoning Province, in China. Under the Joint Venture Agreement, we have contributed technology proprietaryall assets that remain, subject to any rights that are granted to the joint venture enterprise. Our Joint Venture Partner is obligated, among other things, to arrange for the local government to contribute the useholders of approximately 63 acresany class or series of land, the purpose of which is to construct a manufacturing facility to build composite products using our technology. FairWind Energy has a 25% interest in the joint venture and the Joint Venture Partner has a 75% interest.preferred stock.
On October 26, 2013, we verbally agreed with our Joint Venture Partner that it may designate 1 director of FairWind Energy. Our Joint Venture Partner has yet to designate a director of the Company.Other Rights and Preferences
On December 3, 2013, we offered 1,325,000 and sold 375,000Subject to the preferential rights of any other class or series of stock, all shares of common stock have equal dividend, distribution, liquidation and other rights, and have no preference, appraisal or exchange rights, except for any appraisal rights provided by Nevada law. Furthermore, holders of common stock have no conversion, sinking fund or redemption rights, or preemptive rights to Han Bao Dong, atsubscribe for any of the Company’s securities.
The rights, powers, preferences and privileges of holders of common stock are subject to, and may be adversely affected by, the rights of holders of shares of any series of preferred stock which we may designate and issue in the future.
Preferred Stock
As of September 1, 2020, we had no shares of preferred stock designated or outstanding. Our board of directors is authorized, subject to limitations prescribed by Nevada law, to issue preferred stock in one or more series, to establish from time to time the number of shares to be included in each series, and to fix the designation, powers, preferences, and rights of the shares of each series and any of its qualifications, limitations, or restrictions, in each case without further vote or action by our stockholders. Our board of directors can also increase or decrease the number of shares of any series of preferred stock, but not below the number of shares of that series then outstanding, without any further vote or action by our stockholders. Our board of directors may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of our common stock. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deferring, or preventing a purchasechange in control of our company and might adversely affect the market price of $0.40 per share, for aggregate proceedsour common stock and the voting and other rights of $150,000. On August 14, 2014 Han Bao Dong completedthe holders of our common stock. We have no current plan to issue any shares of preferred stock.
Options and Warrants
As of September 1, 2020, we had no options, convertible notes or warrants to purchase shares of another 250,000 for $100,000. Han Bao Dong is an affiliate of Xingcheng Haibao Advanced Materials Industrial Park Co., Ltd.our equity outstanding.
Table of Contents |
INTEREST OF NAMED EXPERTS AND COUNSEL
No expert or counsel named in this Prospectus as having prepared or certified any partIndemnification of this Prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest exceeding $25,000, directly or indirectly, in the Company or any of its parents or subsidiaries. Nor was any such person connected with the Company or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.
EXPERTS
The financial statements included in this Prospectus for the years ended August 31, 2014 have been audited by LiDirectors and Company, PC, and are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.
The Law Offices of Thomas E. Puzzo, PLLC, 3823 44th Ave. NE, Seattle, Washington 98105, has acted as special counsel to the Company in connection with the registration and proposed sale and/or resale of the 1,445,856 shares of common stock at $1.00 per share.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATIONFOR SECURITIES ACT LIABILITIESOfficers
Our Bylawsamended and restated bylaws provide that we will indemnify our directors, officers and employees to the fullest extent permitted by law thatthe Nevada Revised Statutes (“NRS”).
If the NRS are amended to authorize corporate action further eliminating or limiting the personal liability of a director, then the liability of our directors will be eliminated or officers, formerlimited to the fullest extent permitted by the NRS, as so amended. Our articles of incorporation do not eliminate a director’s duty of care and, in appropriate circumstances, equitable remedies, such as injunctive or other forms of non-monetary relief, will remain available under the NRS. This provision also does not affect a director’s responsibilities under any other laws, such as the federal securities laws or other state or federal laws. Under our bylaws, we are empowered to enter into indemnification agreements with our directors, and officers and persons who act at our request as a director or officeremployees to purchase insurance on behalf of a body corporate of whichany person whom we are a shareholderrequired or creditor shall be indemnified by us. permitted to indemnify.
We believe that the indemnificationthese bylaw provisions in our By-laws are necessary to attract and retain qualified persons as directors, officers and officers.employees. We also maintain directors’ and officers’ liability insurance.
The limitation of liability and indemnification provisions in our bylaws may discourage shareholders from bringing a lawsuit against our directors and officers for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against directors and officers, even though an action, if successful, might benefit us and our stockholders. Further, a stockholder’s investment may be adversely affected to the extent that we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers or persons controlling the Companyand certain employees pursuant to the foregoing provisions, of the State of Nevada, the Company hasor otherwise, we have been informedadvised that, in the opinion of the Securities and Exchange Commission,SEC, such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable.
There is no pending litigation or proceeding naming any of our directors or officers as to which indemnification is being sought, nor are we aware of any pending or threatened litigation that may result in claims for indemnification
26 |
Table of Contents |
Each Selling Stockholder (the “Selling Stockholders”) of the securities and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their securities covered hereby on the OTC Markets or any other stock exchange, market or trading facility on which the securities are traded or in private transactions. These sales may be at fixed or negotiated prices. A Selling Stockholder may use any one or more of the following methods when selling securities:
● | ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; | |
● | block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction; | |
● | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; | |
● | an exchange distribution in accordance with the rules of the applicable exchange; | |
● | privately negotiated transactions; | |
● | settlement of short sales; | |
● | in transactions through broker-dealers that agree with the Selling Stockholders to sell a specified number of such securities at a stipulated price per security; | |
● | through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; | |
● | a combination of any such methods of sale; or | |
● | any other method permitted pursuant to applicable law. |
The Selling Stockholders may also sell securities under Rule 144 or any other exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”), if available, rather than under this prospectus.
Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with FINRA IM-2440.
In connection with the sale of the securities or interests therein, the Selling Stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions they assume. The Selling Stockholders may also sell securities short and deliver these securities to close out their short positions, or loan or pledge the securities to broker-dealers that in turn may sell these securities. The Selling Stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
The Selling Stockholders and any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each Selling Stockholder has informed the Company that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the securities.
The Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the securities. The Company has agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.
We agreed to keep this prospectus effective until the earlier of (i) the date on which the securities may be resold by the Selling Stockholders without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for the Company to be in compliance with the current public information under Rule 144 under the Securities Act or any other rule of similar effect or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The resale securities will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the Selling Stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of the common stock by the Selling Stockholders or any other person. We will make copies of this prospectus available to the Selling Stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).
27 |
Table of Contents |
Quick Law Group P.C. will pass upon the validity of the shares of our common stock offered by the selling stockholders under this prospectus.
There have been no material changes to us since August 31, 2019 that have not been described in this prospectus that should be included.
Our financial statements as of August 31, 2019 and for the year then ended included in this prospectus have been audited by Fruci & Associates, II PLLC an independent registered public accounting firm, as stated in its report appearing in the registration statement, and are included in reliance upon the report of such firm given upon its authority as experts in accounting and auditing. Our financial statements as of August 31, 2018 and for the year then ended included in this prospectus have been audited by MaloneBailey, LLP an independent registered public accounting firm, as stated in its report appearing in the registration statement, and are included in reliance upon the report of such firm given upon its authority as experts in accounting and auditing.
WHERE YOU CAN FIND MOREADDITIONAL INFORMATION
We have filed with the Securities and Exchange Commission a Registration Statementregistration statement on Form S-1, together with any amendments and related exhibits, under the Securities Act of 1933, as amended, with respect to the securitiesour shares of common stock offered by this prospectus. This prospectus, which forms a part of theThe registration statement does not contain all thecontains additional information set forth in the registration statement, as permitted by the rules and regulations of the Commission. For further information with respect toabout us and our shares of common stock that the securities offered byselling stockholders are offering in this prospectus, reference is madeprospectus.
Following this offering, we will be required to the registration statement. We do not file annual, quarterly and current reports and other information with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended. Our Securities and we will not otherwise be subjectExchange Commission filings are available to the proxy rules. The registration statementpublic over the Internet at the Securities and other informationExchange Commission’s website at http://www.sec.gov. You may bealso read and copiedcopy any document we file at the Securities and Exchange Commission’s Public Reference Roompublic reference room located at 100 F Street, N.E., Washington, D.C. 20549. The public may obtainPlease call the Securities and Exchange Commission at 1-800-SEC-0330 for further information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. The Commission maintains a web site at http://www.sec.gov that contains reportspublic reference rooms and other information regarding issuers that file electronicallytheir copy charges. Access to those electronic filings is available as soon as practicable after filing with the Securities and Exchange Commission.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ONACCOUNTING AND FINANCIAL DISCLOSURE
None. You may also request a copy of those filings, excluding exhibits, from us at no cost. Any such request should be addressed to us at: 32932 Pacific Coast Highway, #14-254, Dana Point, California 9262932932 Pacific Coast Highway, #14-254, Dana Point, California 92629, Attention: Rudy Mazzocchi, Chief Executive Officer.
Table of Contents |
FAIRWIND ENERGY INC.AGENTIX CORP.
INDEX TO FINANCIAL STATEMENTSFinancial Statements
AugustMay 31, 20142020 and 2013May 31, 2019 (Unaudited)
Table of Contents |
| |||
| ||||
Balance sheets at May 31, 2020 (Unaudited) and August 31, 2019. | F-2 | |||
|
| |||
| ||||
| ||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
F-7 |
Table of Contents |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMAgentix Corp.
Balance Sheets
To the Board of Directors and Stockholders of
Fair Wind Energy, Inc.
|
| May 31, 2020 |
|
| August 31, 2019 |
| ||
|
| (Unaudited) |
|
|
| |||
|
|
|
|
|
|
| ||
Assets |
|
|
|
|
|
| ||
Current Assets |
|
|
|
|
|
| ||
Cash |
| $ | 17 |
|
| $ | 93 |
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
| 17 |
|
|
| 93 |
|
|
|
|
|
|
|
|
|
|
Computer Equipment |
|
|
|
|
|
|
|
|
Computer equipment |
|
| 1,328 |
|
|
| 1,328 |
|
Accumulated depreciation |
|
| (1,328 | ) |
|
| (1,328 | ) |
|
|
|
|
|
|
|
|
|
Computer equipment, net |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
Total assets |
| $ | 17 |
|
| $ | 93 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Deficit |
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
Accounts payable |
| $ | 15,734 |
|
| $ | 7,245 |
|
Accounts payable - related party |
|
| - |
|
|
| 5,250 |
|
Accrued expenses - related party |
|
| 27,970 |
|
|
| 3,712 |
|
Convertible note payable, related party, net of unamortized discount |
|
| - |
|
|
| 24,671 |
|
Total current liabilities |
|
| 43,704 |
|
|
| 40,878 |
|
|
|
|
|
|
|
|
|
|
Long Term Liabilities |
|
|
|
|
|
|
|
|
Convertible note payable, related-party |
|
| - |
|
|
| 85,000 |
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
| 43,704 |
|
|
| 125,878 |
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
Stockholders’ Deficit |
|
|
|
|
|
|
|
|
Preferred stock par value $0.001: 25,000,000 shares authorized; no shares issued or outstanding |
|
| - |
|
|
| - |
|
Common stock par value $0.001: 50,000,000 shares authorized; 3,806,613 shares issued and outstanding as of May 31, 2020 (unaudited) and 2,551,901 shares issued and outstanding as of August 31, 2019 |
|
| 3,807 |
|
|
| 2,552 |
|
Additional paid-in capital |
|
| 45,296,340 |
|
|
| 43,904,787 |
|
Accumulated deficit |
|
| (45,343,834 | ) |
|
| (44,033,124 | ) |
|
|
|
|
|
|
|
|
|
Total stockholders’ deficit |
|
| (43,687 | ) |
|
| (125,785 | ) |
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ deficit |
| $ | 17 |
|
| $ | 93 |
|
We have audited the accompanying balance sheets of FairWind Energy, Inc. (the “Company”) as of August 31, 2014 and 2013, and the related statements of operations, changes in stockholders’ equity and cash flows for the fiscal year ended August 31, 2014 and for the period from April 18, 2013 (inception) through August 31, 2013. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining on a test basis, evidence supporting the amount and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of August 31, 2014 and 2013, and the results of its operations and its cash flows for the fiscal year ended August 31, 2014 and for the period from April 18, 2013 (inception) through August 31, 2013 in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company had an accumulated deficit at August 31, 2014, a net loss and net cash used in operating activities for the reporting period then ended. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regards to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/Li and Company, PC
Li and Company, PC
Skillman, New Jersey
October 30, 2014
FairWind Energy, Inc.
Balance Sheets
August 31, 2014 | August 31, 2013 | |||||||
Assets | ||||||||
Current Assets | ||||||||
Cash | $ | 134,815 | $ | 81,854 | ||||
Total current assets | 134,815 | 81,854 | ||||||
Computer Equipment | ||||||||
Computer equipment | 1,328 | - | ||||||
Accumulated depreciation | (198 | ) | - | |||||
Computer Equipment, net | 1,130 | - | ||||||
Patent | ||||||||
Patent | 3,814 | - | ||||||
Accumulated depreciation | (231 | ) | - | |||||
Patent, net | 3,583 | - | ||||||
Investment - Xingcheng Sheng Kun | - | - | ||||||
Total assets | $ | 139,528 | $ | 81,854 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current Liabilities | ||||||||
Accounts payable | $ | 5,741 | $ | - | ||||
Accrued payroll - officer | 9,053 | 5,000 | ||||||
Payroll liabilities | 4,757 | - | ||||||
Total current liabilities | 19,551 | 5,000 | ||||||
Commitments and Contingent Liabilities | ||||||||
Stockholders' Equity | ||||||||
Preferred stock par value $0.001: 25,000,000 shares authorized; none issued or outstanding | - | - | ||||||
Common stock par value $0.001: 50,000,000 shares authorized; 5,927,106 and 5,300,000 shares issued and outstanding, respectively | 5,927 | 5,300 | ||||||
Additional paid-in capital | 371,174 | 119,800 | ||||||
Accumulated deficit | (257,124 | ) | (48,246 | ) | ||||
Total stockholders' equity | 119,977 | 76,854 | ||||||
Total liabilities and stockholders' equity | $ | 139,528 | $ | 81,854 |
See accompanying notes to the unaudited financial statements.statements
Table of Contents |
FairWind Energy, Inc.Agentix Corp.
Statements of Operations
|
| For the Three |
| For the Three |
| For the Nine |
| For the Nine |
| |||||||||||||||
|
| Months Ended |
| Months Ended |
| Months Ended |
| Months Ended |
| |||||||||||||||
|
| May 31, 2020 |
|
| May 31, 2019 |
|
| May 31, 2020 |
|
| May 31, 2019 |
| ||||||||||||
For Fiscal Year Ended August 31, 2014 | For the Period from April 18, 2013 (inception) through August 31, 2013 |
| (Unaudited) |
| (Unaudited) |
| (Unaudited) |
| (Unaudited) |
| ||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||
Revenue | $ | - | $ | - |
| $ | - |
| $ | - |
| $ | - |
| $ | - |
| |||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||
Operating Expenses |
|
|
|
|
|
|
|
|
| |||||||||||||||
Professional fees | 12,693 | 15,570 |
| 1,287,858 |
| 8,441 |
| 1,304,609 |
| 44,943 |
| |||||||||||||
Research and development | 61,747 | 11,660 | ||||||||||||||||||||||
Salary and wages - officers | 94,504 | 20,000 |
| - |
| 20,000 |
| - |
| 60,000 |
| |||||||||||||
General and administrative expenses | 39,934 | 1,016 |
|
| 1,497 |
|
|
| 2,005 |
|
|
| 1,577 |
|
|
| 4,340 |
| ||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||
Total operating expenses | 208,878 | 48,246 |
|
| 1,289,355 |
|
|
| 30,446 |
|
|
| 1,306,186 |
|
|
| 109,283 |
| ||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Loss from Operations |
| (1,289,355 | ) |
| (30,446 | ) |
| (1,306,186 | ) |
| (109,283 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Other Expense |
|
|
|
|
|
|
|
|
| |||||||||||||||
Interest expense, net |
|
| - |
|
|
| 1,481 |
|
|
| 4,524 |
|
|
| 6,741 |
| ||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Other expense, net |
|
| - |
|
|
| 1,481 |
|
|
| 4,524 |
|
|
| 6,741 |
| ||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||
Loss before Income Tax Provision | (208,878 | ) | (48,246 | ) |
|
| (1,289,355 | ) |
|
| (31,927 | ) |
|
| (1,310,710 | ) |
|
| (116,024 | ) | ||||
|
|
|
|
|
|
|
|
| ||||||||||||||||
Income Tax Provision | - | - |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
| ||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||
Net Loss | $ | (208,878 | ) | $ | (48,246 | ) |
| $ | (1,289,355 | ) |
| $ | (31,927 | ) |
| $ | (1,310,710 | ) |
| $ | (116,024 | ) | ||
|
|
|
|
|
|
|
|
| ||||||||||||||||
Earnings per share | ||||||||||||||||||||||||
Loss per share |
|
|
|
|
|
|
|
|
| |||||||||||||||
- Basic and Diluted | $ | (0.04 | ) | $ | (0.01 | ) |
| $ | (0.38 | ) |
| $ | (0.03 | ) |
| $ | (0.46 | ) |
| $ | (0.11 | ) | ||
|
|
|
|
|
|
|
|
| ||||||||||||||||
Weighted average common shares outstanding |
|
|
|
|
|
|
|
|
| |||||||||||||||
- Basic and Diluted | 5,490,110 | 5,218,889 |
|
| 3,421,998 |
|
|
| 1,104,100 |
|
|
| 2,844,160 |
|
|
| 1,104,100 |
|
See accompanying notes to the unaudited financial statements.
Table of Contents |
FairWind Energy, Inc.Agentix Corp.
StatementStatements of Changes in Stockholders' EquityStockholders’ (Deficit)
For the period from April 18, 2013 (inception) through August 31,2014nine months ended May 31, 2020 (Unaudited)
Common stock par value $0.001 | Additional | Total | ||||||||||||||||||
Number of Shares | Amount | Paid-in Capital | Accumulated Deficit | Stockholders' Equity | ||||||||||||||||
April 18, 2013 (inception) | - | $ | - | $ | - | $ | - | $ | - | |||||||||||
Issuance of common shares for cash at $0.001 per share upon formation | 5,000,000 | 5,000 | 5,000 | |||||||||||||||||
Capital contribution | 100 | 100 | ||||||||||||||||||
Issuance of common shares for cash at $0.40 per share in May, 2013 | 250,000 | 250 | 99,750 | 100,000 | ||||||||||||||||
Issuance of common shares for cash at $0.40 per share in July, 2013 | 50,000 | 50 | 19,950 | 20,000 | ||||||||||||||||
Net loss | (48,246 | ) | (48,246 | ) | ||||||||||||||||
Balance, August 31, 2013 | 5,300,000 | 5,300 | 119,800 | (48,246 | ) | 76,854 | ||||||||||||||
Issuance of common shares for cash at $0.40 per share in December 31, 2013 | 375,000 | 375 | 149,625 | 150,000 | ||||||||||||||||
Issuance of common shares for cash at $0.95 per share on January 27, 2014 | 2,106 | 2 | 1,999 | 2,001 | ||||||||||||||||
Issuance of common shares for cash at $0.40 per share on August 14, 2014 | 250,000 | 250 | 99,750 | 100,000 | ||||||||||||||||
Net loss | - | (208,878 | ) | (208,878 | ) | |||||||||||||||
Balance, August 31, 2014 | 5,927,106 | $ | 5,927 | $ | 371,174 | $ | (257,124 | ) | $ | 119,977 |
|
| Common stock par value $0.001 |
|
| Additional |
|
|
|
| Total |
| |||||||||
|
| Number of Shares |
|
| Amount |
|
| Paid-in Capital |
|
| Accumulated Deficit |
|
| Stockholders’ Deficit |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Balance, August 31, 2019 |
|
| 2,551,901 |
|
| $ | 2,552 |
|
| $ | 43,904,787 |
|
| $ | (44,033,124 | ) |
| $ | (125,785 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for conversion of debt |
|
| 4,712 |
|
|
| 5 |
|
|
| 117,803 |
|
|
| - |
|
|
| 117,808 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (9,556 | ) |
|
| (9,556 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, November 30, 2019 |
|
| 2,556,613 |
|
|
| 2,557 |
|
|
| 44,022,590 |
|
|
| (44,042,680 | ) |
|
| (17,533 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (11,799 | ) |
|
| (11,799 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, February 29, 2020 |
|
| 2,556,613 |
|
|
| 2,557 |
|
|
| 44,022,590 |
|
|
| (44,054,479 | ) |
|
| (29,332 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for legal services |
|
| 333,000 |
|
|
| 333 |
|
|
| 339,327 |
|
|
|
|
|
|
| 339,660 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued to director and officer |
|
| 917,000 |
|
|
| 917 |
|
|
| 934,423 |
|
|
|
|
|
|
| 935,340 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1,289,355 | ) |
|
| (1,289,355 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, May 31, 2020 |
|
| 3,806,613 |
|
| $ | 3,807 |
|
| $ | 45,296,340 |
|
| $ | (45,343,834 | ) |
| $ | (43,687 | ) |
See accompanying notes to the unaudited financial statements.
Table of Contents |
FairWind Energy, Inc.Agentix Corp.
Statements of Cash FlowsChanges in Stockholders’ (Deficit)
For the nine months ended May 31, 2019 (Unaudited)
For Fiscal Year Ended August 31, 2014 | For the Period from April 18, 2013 (inception) through August 31, 2013 | |||||||
Cash Flows from Operating Activities | ||||||||
Net loss | $ | (208,878 | ) | $ | (48,246 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation expense | 198 | - | ||||||
Amortization expense | 231 | - | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts payable | 5,741 | - | ||||||
Accrued payroll - officer | 4,053 | 5,000 | ||||||
Payroll liabilities | 4,757 | - | ||||||
Net Cash Used in Operating Activities | (193,898 | ) | (43,246 | ) | ||||
Cash Flows from Investing Activities | ||||||||
Purchase of property and equipment | (1,328 | ) | - | |||||
Patent application costs | (3,814 | ) | - | |||||
Net Cash Used in Investing Activities | (5,142 | ) | - | |||||
Cash Flows from Financing Activities | ||||||||
Proceeds from sale of common shares | 252,001 | 125,000 | ||||||
Capital contribution | - | 100 | ||||||
Net Cash Provided by Financing Activities | 252,001 | 125,100 | ||||||
Net Change in Cash | 52,961 | 81,854 | ||||||
Cash - beginning of period | 81,854 | - | ||||||
Cash - end of period | $ | 134,815 | $ | 81,854 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Interest paid | $ | - | $ | - | ||||
Income tax paid | $ | - | $ | - |
|
| Common stock par value $0.001 |
|
| Additional |
|
|
|
|
| Total |
| ||||||||
|
| Number of Shares |
|
| Amount |
|
| Paid-in Capital |
|
| Accumulated Deficit |
|
| Stockholders’ Deficit |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Balance, August 31, 2018 |
|
| 2,551,901 |
|
| $ | 2,552 |
|
| $ | 43,844,787 |
|
| $ | (43,900,472 | ) |
| $ | (53,133 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution to capital |
|
|
|
|
|
|
|
|
|
| 20,000 |
|
|
|
|
|
|
| 20,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (45,324 | ) |
|
| (45,324 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, November 30, 2018 |
|
| 2,551,901 |
|
|
| 2,552 |
|
|
| 43,864,787 |
|
|
| (43,945,796 | ) |
|
| (78,457 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution to capital |
|
|
|
|
|
|
|
|
|
| 20,000 |
|
|
|
|
|
|
| 20,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (38,773 | ) |
|
| (38,773 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, February 29, 2019 |
|
| 2,551,901 |
|
|
| 2,552 |
|
|
| 43,884,787 |
|
|
| (43,984,569 | ) |
|
| (97,230 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution to capital |
|
|
|
|
|
|
|
|
|
| 20,000 |
|
|
|
|
|
|
| 20,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (31,927 | ) |
|
| (31,927 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, May 31, 2019 |
|
| 2,551,901 |
|
| $ | 2,552 |
|
| $ | 43,904,787 |
|
| $ | (44,016,496 | ) |
| $ | (109,157 | ) |
See accompanying notes to the unaudited financial statements.
Table of Contents |
FairWind Energy, Inc.Agentix Corp.
AugustStatements of Cash Flows
|
| For the Nine |
|
| For the Nine |
| ||
|
| Months Ended |
|
| Months Ended |
| ||
|
| May 31, 2020 |
|
| May 31, 2019 |
| ||
|
| (Unaudited) |
|
| (Unaudited) |
| ||
|
|
|
|
|
|
| ||
Cash Flows from Operating Activities |
|
|
|
|
|
| ||
Net loss |
| $ | (1,310,710 | ) |
| $ | (116,024 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Depreciation expense |
|
| - |
|
|
| 140 |
|
Amortization of discount on derivative liabilities |
|
| 329 |
|
|
| 2,943 |
|
Stock issued for services |
|
| 1,275,000 |
|
|
|
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts payable and accounts payable - related party |
|
| 22,608 |
|
|
| (7,711 | ) |
Accrued expenses |
|
| 12,697 |
|
|
| 58,591 |
|
|
|
|
|
|
|
|
|
|
Net Cash Used in Operating Activities |
|
| (76 | ) |
|
| (62,061 | ) |
|
|
|
|
|
|
|
|
|
Net Cash Used in Investing Activities |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities |
|
|
|
|
|
|
|
|
Proceeds from convertible notes payable, related parties |
|
| - |
|
|
| 60,000 |
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Financing Activities |
|
| - |
|
|
| 60,000 |
|
|
|
|
|
|
|
|
|
|
Net Change in Cash |
|
| (76 | ) |
|
| (2,061 | ) |
|
|
|
|
|
|
|
|
|
Cash - beginning of reporting period |
|
| 93 |
|
|
| 2,125 |
|
|
|
|
|
|
|
|
|
|
Cash - end of reporting period |
| $ | 17 |
|
| $ | 64 |
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
|
Interest paid |
| $ | - |
|
| $ | 3,798 |
|
Income tax paid |
| $ | - |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
Non Cash Financing and Investing Activities |
|
|
|
|
|
|
|
|
Exercise of conversion of debt and accrued interest - related party |
| $ | 117,808 |
|
| $ | - |
|
Issuance of stock split effected in the form of a dividend |
| $ | 2,531 |
|
| $ | - |
|
Capital contribution related to salaries waived |
| $ | - |
|
| $ | 60,000 |
|
See accompanying notes to the unaudited financial statements
F-6 |
Table of Contents |
May 31, 20142020 and 20132019
Notes to the Financial Statements
(Unaudited)
Note 1 - Organization and Operations
FairWind Energy, Inc.Agentix Corp.
FairWind Energy, Inc. (the “Company”, “Fairwind Energy”) was incorporated on April 18, 2013 under the laws of the State of Nevada. The Company engages in composite design, engineering and manufacturing to be used in solar/wind hybrid power systems, oil and gas industry pumping and civil engineering and infrastructure products. Effective June 17, 2019, the Company changed its name to Agentix Corp.
Formation of a 25% Equity Interest Entity
On October 26, 2013, the Company entered into a Joint Venture Contract with Xingcheng Haibao Advanced Materials Industrial Park Co., Ltd., a Chinese entity (the “Joint Venture Partner”) and on February 25, 2014 formed Xingcheng Sheng Kun Composite Co., Ltd. (“Sheng Kun” or “Joint Venture”), a corporation organized under the laws of the People’s Republic of China. The Joint Venture Partner is a composites manufacturer based in Huludao City, Liaoning Province, in China. Under the Joint Venture Agreement, the Company contributed technology to the Joint Venture. The Joint Venture Partner is obligated, among other things, to arrange for the local government to contribute the use of approximately 100 acres of land, the purpose of which is to construct a manufacturing facility to build composite products using the Company’s technology. The Company holds a 25% equity interest in the joint venture and the Joint Venture Partner holds the remaining 75% equity interest.
The Joint Venture is currently inactive.
Note 2 - Significant and Critical Accounting Policies and Practices
The Managementmanagement of the Company is responsible for the selection and use of appropriate accounting policies and the appropriateness of accounting policies and their application. Critical accounting policies and practices are those that are both most important to the portrayal of the Company’s financial condition and results and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. The Company’s significant and critical accounting policies and practices are disclosed below as required by generally accepted accounting principles.
Basis of Presentation
The accompanying consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”)., and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Unaudited interim results are not necessarily indicative of the results for the full fiscal year. These financial statements should be read in conjunction with the audited financial statements of the Company for the reporting period ended August 31, 2019 and notes thereto contained in the Company’s Annual Report on Form 10-K.
Development Stage CompanyDeferred Tax Assets and Income Tax Provision
The Company is a development stage company as defined by section 915-10-20accounts for income taxes under Section 740-10-30 of the FinancialFASB Accounting Standards Board (“FASB”) Accounting Standards Codification .Codification. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Companyeffect on deferred tax assets and liabilities of a change in tax rates is still devoting substantially allrecognized in the statements of its efforts on establishingoperations in the business and still qualifies as a development stage company. All losses accumulated since inception have been considered as part ofperiod that includes the Company’s development stage activities.enactment date.
The Company has elected to adopt early applicationadopted section 740-10-25 of the FASB Accounting Standards Update No. 2014-10, Development Stage Entities (Topic 915): EliminationCodification (“Section 740-10-25”). Section 740-10-25 addresses the determination of Certain Financial Reporting Requirements. Upon adoption,whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, the Company no longer presents or discloses inception-to-date informationmay recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and other remaining disclosure requirementspenalties on income taxes, accounting in interim periods and requires increased disclosures.
Note 3 – Going Concern
The Company’s financial statements have been prepared assuming that it will continue as a going concern, which contemplates continuity of Topic 915.operations, realization of assets, and liquidation of liabilities in the normal course of business.
As reflected in the financial statements, the Company had an accumulated deficit at May 31, 2020, a net loss, and net cash used in operating activities for the nine months then ended. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
Table of Contents |
The Company is attempting to commence operations and generate sufficient revenue; however, the Company’s cash position is not sufficient to support its daily operations. While the Company believes in the viability of its strategy to commence operations and generate sufficient revenue and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon its ability to further implement its business plan and generate sufficient revenue and its ability to raise additional funds by way of a public or private offering.
The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Note 4 – Related Party Transactions
Free Office Space
The Company has been provided office space by Michael Winterhalter, President, Secretary, and Treasurer and a Director and former Chief Executive Officer of the Company, at no cost. Management determined that such cost is nominal and did not recognize the rent expense in its financial statement.
Convertible Note Payable
Effective October 9, 2019, Grays Peak Ventures LLC, an entity controlled by Scott Stevens (a former President and a Director of the Company), purchased all convertible promissory notes from Michael Winterhalter in the principal amount of $110,000 and $7,808 of accrued interest.
Effective October 24, 2019, Grays Peak Ventures LLC converted all promissory notes and accrued interest for 4,712 shares of common stock. The conversion rate under the Convertible Promissory Notes was the 10-day VWAP of shares of common stock on the OTC Markets, which was $25.00 per share on the date of conversion.
Note 5 – Equity
Stock Split
Effective June 17, 2019, the Company proceeded with a reverse stock split of 1,000 for 1 share of common stock. All figures have been updated to reflect the reverse stock split.
Effective December 3, 2019, the Company effected a 100-for-1 stock split effected in the form of a dividend of its shares of common stock. This stock split was recorded retroactively with a reclassification between retained earnings and common stock in the accompanying financial statements. This stock split was effective February 25, 2020. Accordingly, each holder of one share of common stock of the Company received 100 shares of common stock from the Company for such one share held. The record date with FINRA was December 3, 2019 and 2,531,331 shares were issued. The retained earnings and common stock amounts were affected by this transaction in the accompanying financial statements in the amount of $2,531.
Shares Issued for Past Services
On March 29, 2020, the Company issued 767,000 shares of common stock to Grays Peak Ventures LLC, a company controlled by Scott Stevens, the Company’s former sole director and officer, in exchange and as compensation for Mr. Stevens serving and performing duties as a director of the Company from June 10, 2019 to March 27, 2020. Such issuance amounted to approximately 30% of the issued and outstanding shares of common stock of the Company on the date of issuance. The shares were issued at a price of $1.02 per share for a total cost of $782,340, which represented the market price of the shares as of the date of issuance.
On March 29, 2020, the Company issued 333,000 shares of common stock to Thomas Puzzo in exchange and as compensation for Mr. Puzzo providing legal services to the Company from June 10, 2019 to March 27, 2020. Such issuance amounted to approximately 13% of the issued and outstanding shares of common stock of the Company on the date of issuance. The shares were issued at a price of $1.02 per share for a total cost of $339,660, which represented the market price of the shares as of the date of issuance.
On March 29, 2020, the Company issued 150,000 shares of common stock to Michael Winterhalter, the Company’s President, Secretary, and treasure and a Director of the Company, in exchange and as compensation for Mr. Winterhalter providing bookkeeping, record keeping and accounting services to the Company from June 10, 2019 to March 27, 2020. Such issuance amounted to approximately 5.8% of the issued and outstanding shares of common stock of the Company on the date of issuance. The shares were issued at a price of $1.02 per share for a total cost of $153,000, which represented the market price of the shares as of the date of issuance.
The Company issued the above shares of common stock in reliance upon the exemption from the registration provided by Section 4(a)(2) of the Securities Act, as a sale by an issuer not involving any public offering, to a sophisticated purchaser who had access to registration-type information about the issuer.
F-8 |
Table of Contents |
Note 6 – Subsequent Events
On May 28, 2020, the Company, entered into a Share Exchange Agreement (the “Share Exchange Agreement”), by and among the Company, and GSL Healthcare, Inc., a Nevada corporation (“GSL Healthcare”), and the holders of common stock of GSL Healthcare, which consisted of two stockholders. The closing date occurred on June 1, 2020.
Under the terms and conditions of the Share Exchange Agreement, the Company offered and sold 27,932,271 shares of common stock of the Company in consideration for all of the issued and outstanding shares of common stock of GSL Healthcare. The effect of the issuance is that former two GSL Healthcare shareholders now hold approximately 88.0% of the issued shares of common stock of the Company, and GSL Healthcare is now a wholly-owned subsidiary of the Company. GSL Healthcare has a general plan to be a health and wellness business. Until such time as the Company can formulate GSL Healthcare’s general business plan, the Company is not changing its current business.
In accordance with ASC 855, the Company has analyzed its operations subsequent to March 31, 2020 through the date these financial statements were issued, and has determined that it does not have any other material subsequent events to disclose in these financial statements.
F-9 |
Table of Contents |
August 31, 2019 and August 31, 2018
Index to the Financial Statements
Contents | Page(s) | ||
F-11 | |||
F-13 | |||
Statements of operations for the years ended August 31, 2019 and August 31, 2018 | F-14 | ||
F-15 | |||
Statements of cash flows for the years ended August 31, 2019 and August 31, 2018 | F-16 | ||
F-17 |
F-10 |
Table of Contents |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Agentix Corp.
Opinion on the Financial Statements
We have audited the accompanying balance sheet of Agentix Corp. (“the Company”) as of August 31, 2019, and the related statements of operations, changes in stockholders’ equity (deficit), and cash flows for the year then ended, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of August 31, 2019, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has an accumulated deficit, net losses, and negative cash flows from operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
We have served as the Company’s auditor since 2018.
Spokane, Washington
November 22, 2019
F-11 |
Table of Contents |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of
FairWind Energy, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheet of FairWind Energy, Inc. (the “Company”) as of August 31, 2018, and the related statements of operations, changes in stockholders’ deficit, and cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of August 31, 2018, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
Going Concern Matter
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ MaloneBailey, LLP
www.malonebailey.com
We have served as the Company's auditor from 2015 through 2018.
Houston, Texas
November 13, 2018
F-12 |
Table of Contents |
(fka FairWind Energy, Inc.) |
Balance Sheets |
|
| August 31, 2019 |
|
| August 31, 2018 |
| ||
|
|
|
|
|
|
| ||
Assets |
|
|
|
|
|
| ||
Current Assets |
|
|
|
|
|
| ||
Cash |
| $ | 93 |
|
| $ | 2,125 |
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
| 93 |
|
|
| 2,125 |
|
|
|
|
|
|
|
|
|
|
Computer Equipment |
|
|
|
|
|
|
|
|
Computer equipment |
|
| 1,328 |
|
|
| 1,328 |
|
Accumulated depreciation |
|
| (1,328 | ) |
|
| (1,188 | ) |
|
|
|
|
|
|
|
|
|
Computer equipment, net |
|
| - |
|
|
| 140 |
|
|
|
|
|
|
|
|
|
|
Total assets |
| $ | 93 |
|
| $ | 2,265 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Deficit |
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
Accounts payable |
| $ | 7,245 |
|
| $ | - |
|
Accounts payable - related party |
|
| 5,250 |
|
|
| 7,711 |
|
Accrued expenses |
|
| 3,712 |
|
|
| 1,940 |
|
Convertible note payable, related party, net of unamortized discount |
|
| 24,671 |
|
|
| - |
|
Total current liabilities |
|
| 40,878 |
|
|
| 9,651 |
|
|
|
|
|
|
|
|
|
|
Long Term Liabilities |
|
|
|
|
|
|
|
|
Convertible note payable, related-party, net of unamortized discount |
|
| 85,000 |
|
|
| 25,000 |
|
Convertible note payable, net of unamortized discount |
|
| - |
|
|
| 20,747 |
|
Total long term liabilities |
|
| 85,000 |
|
|
| 45,747 |
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
| 125,878 |
|
|
| 55,398 |
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
Stockholders' Deficit |
|
|
|
|
|
|
|
|
Preferred stock par value $0.001: 25,000,000 shares authorized; 0 shares issued or outstanding |
|
| - |
|
|
| - |
|
Common stock par value $0.001: 50,000,000 shares authorized; 20,570 shares issued and outstanding as of August 31, 2019 and 2018 |
|
| 21 |
|
|
| 21 |
|
Additional paid-in capital |
|
| 43,904,787 |
|
|
| 43,844,787 |
|
Accumulated deficit |
|
| (44,030,593 | ) |
|
| (43,897,941 | ) |
|
|
|
|
|
|
|
|
|
Total stockholders' deficit |
|
| (125,785 | ) |
|
| (53,133 | ) |
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' deficit |
| $ | 93 |
|
| $ | 2,265 |
|
See accompanying notes to the audited financial statements.
F-13 |
Table of Contents |
(fka FairWind Energy, Inc.) |
Statements of Operations |
|
| For the Year |
|
| For the Year |
| ||
|
| Ended |
|
| Ended |
| ||
|
| August 31, 2019 |
|
| August 31, 2018 |
| ||
|
|
|
|
|
|
| ||
Operating Expenses |
|
|
|
|
|
| ||
Professional fees |
| $ | 57,322 |
|
| $ | 45,593 |
|
Salary and wages - officers |
|
| 60,000 |
|
|
| 80,000 |
|
General and administrative expenses |
|
| 3,995 |
|
|
| 8,783 |
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
| 121,317 |
|
|
| 134,376 |
|
|
|
|
|
|
|
|
|
|
Loss from Operations |
|
| (121,317 | ) |
|
| (134,376 | ) |
|
|
|
|
|
|
|
|
|
Other Expense |
|
|
|
|
|
|
|
|
Interest expense, net |
|
| 11,335 |
|
|
| 24,824 |
|
Loss on extinguishment of debt |
|
| - |
|
|
| 42,629,753 |
|
|
|
|
|
|
|
|
|
|
Other expense, net |
|
| 11,335 |
|
|
| 42,654,577 |
|
|
|
|
|
|
|
|
|
|
Loss before Income Tax Provision |
|
| (132,652 | ) |
|
| (42,788,953 | ) |
|
|
|
|
|
|
|
|
|
Income Tax Provision |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
Net Loss |
| $ | (132,652 | ) |
| $ | (42,788,953 | ) |
|
|
|
|
|
|
|
|
|
Loss per share |
|
|
|
|
|
|
|
|
- Basic and Diluted |
| $ | (6.45 | ) |
| $ | (3,875.40 | ) |
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding |
|
|
|
|
|
|
|
|
- Basic and Diluted |
|
| 20,570 |
|
|
| 11,041 |
|
See accompanying notes to the audited financial statements.
F-14 |
Table of Contents |
(fka FairWind Energy, Inc.) |
Statements of Changes in Stockholders' Equity (Deficit) |
For the years ended August 31, 2019 and 2018 |
|
| Common Stock per value $0.01 |
|
| Additional |
|
|
|
| Total |
| |||||||||
|
| Number of Shares |
|
| Amount |
|
| Paid-in Capital |
|
| Accumulated Deficit |
|
| Stockholders' Deficit |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Balance, August 31, 2017 |
|
| 6,017 |
|
| $ | 6 |
|
| $ | 1,043,901 |
|
| $ | (1,108,988 | ) |
| $ | (65,081 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of debt |
|
| 14,553 |
|
|
| 15 |
|
|
| 42,720,886 |
|
|
|
|
|
|
| 42,720,901 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution to capital |
|
|
|
|
|
|
|
|
|
| 80,000 |
|
|
|
|
|
|
| 80,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (42,788,953 | ) |
|
| (42,788,953 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, August 31, 2018 |
|
| 20,570 |
|
| $ | 21 |
|
| $ | 43,844,787 |
|
| $ | (43,897,941 | ) |
| $ | (53,133 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution to capital |
|
|
|
|
|
|
|
|
|
| 60,000 |
|
|
|
|
|
|
| 60,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (132,652 | ) |
|
| (132,652 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, August 31, 2019 |
|
| 20,570 |
|
| $ | 21 |
|
| $ | 43,904,787 |
|
| $ | (44,030,593 | ) |
| $ | (125,785 | ) |
See accompanying notes to the audited financial statements.
F-15 |
Table of Contents |
(fka FairWind Energy, Inc.) |
Statements of Cash Flows |
|
| For the Year |
|
| For the Year |
| ||
|
| Ended |
|
| Ended |
| ||
|
| August 31, 2019 |
|
| August 31, 2018 |
| ||
|
|
|
|
|
|
| ||
Cash Flows from Operating Activities |
|
|
|
|
|
| ||
Net loss |
| $ | (132,652 | ) |
| $ | (42,788,953 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Depreciation expense |
|
| 140 |
|
|
| 264 |
|
Bad debt expense |
|
| - |
|
|
| 3,000 |
|
Amortization of discount on derivative liabilities |
|
| 3,924 |
|
|
| 17,317 |
|
Loss on extinguishment of debt - related party |
|
| - |
|
|
| 42,629,753 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts payable and accounts payable - related party |
|
| 4,784 |
|
|
| 4,574 |
|
Accrued expenses |
|
| 61,772 |
|
|
| 82,482 |
|
|
|
|
|
|
|
|
|
|
Net Cash Used in Operating Activities |
|
| (62,032 | ) |
|
| (51,563 | ) |
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities |
|
|
|
|
|
|
|
|
Proceeds from convertible notes payable, related parties |
|
| 60,000 |
|
|
| 50,000 |
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Financing Activities |
|
| 60,000 |
|
|
| 50,000 |
|
|
|
|
|
|
|
|
|
|
Net Change in Cash |
|
| (2,032 | ) |
|
| (1,563 | ) |
|
|
|
|
|
|
|
|
|
Cash - beginning of reporting period |
|
| 2,125 |
|
|
| 3,688 |
|
|
|
|
|
|
|
|
|
|
Cash - end of reporting period |
| $ | 93 |
|
| $ | 2,125 |
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
|
Interest paid |
| $ | 3,798 |
|
| $ | 5,024 |
|
|
|
|
|
|
|
|
|
|
Non Cash Financing and Investing Activities |
|
|
|
|
|
|
|
|
Exercise of conversion of debt and accrued interest - related party |
| $ | - |
|
| $ | 91,148 |
|
Capital contribution related to salaries waived |
| $ | 60,000 |
|
| $ | 80,000 |
|
See accompanying notes to the audited financial statements.
F-16 |
Table of Contents |
(fka FairWind Energy, Inc.)
August 31, 2019 and 2018
Notes to the Financial Statements
Note 1 - Organization and Operations
Agentix Corp.
FairWind Energy, Inc. (the “Company”, “Fairwind Energy”) was incorporated on April 18, 2013 under the laws of the State of Nevada. The Company engages in composite design, engineering and manufacturing to be used in solar/wind hybrid power systems, oil and gas industry pumping and civil engineering and infrastructure products. Effective June 17, 2019, the Company changed its name to Agentix Corp.
Note 2 - Significant and Critical Accounting Policies and Practices
The management of the Company is responsible for the selection and use of appropriate accounting policies and the appropriateness of accounting policies and their application. Critical accounting policies and practices are those that are both most important to the portrayal of the Company’s financial condition and results and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. The Company’s significant and critical accounting policies and practices are disclosed below as required by generally accepted accounting principles.
Basis of Presentation
The accompanying financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) to Form 10-K and Article 8 of Regulation S-X. These financial statements should be read in conjunction with the notes herein.
Recently Issued Accounting Pronouncements
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), aimed at making leasing activities more transparent and comparable. Topic 842 requires substantially all leases, including leases currently classified as operating leases, to be recognized by lessees on their balance sheet as a right-of-use asset and corresponding lease liability. This update is effective for financial statements issued for annual periods beginning after December 15, 2018, with transition requiring lessees to recognize and measure leases existing at, or entered into after, the beginning of the earliest period presented using a modified retrospective approach. Early adoption is permitted. The Company is currently evaluating the impact of this accounting standard on its financial statements and related disclosures.
Fiscal Year-End
The Company elected August 31st as its fiscal year ending date.
Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date(s) of the financial statements and the reported amounts of revenues and expenses during the reporting period(s).
Critical accounting estimates are estimates for which (a) the nature of the estimate is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and (b) the impact of the estimate on financial condition or operating performance is material. The Company’s critical accounting estimates and assumptions affecting the financial statements were:
| (i) | Assumption as a going |
| ||
| (ii) | Fair value of long-lived |
| (iii) | Valuation allowance for deferred tax |
F-17 |
Table of Contents |
`
These significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to these estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.
Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly.
Actual results could differ from those estimates.
Fair Value of Financial Instruments
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
Level 1 | Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. | |
Level 2 | Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. | |
Level 3 | Pricing inputs that are generally |
Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.
The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts payable, accrued payroll – officerexpenses, and payroll liabilities approximate their fair values because of the short maturity of these instruments. The long-term borrowings approximate fair value since the related rates of interest approximate current market rates.
F-18 |
Table of Contents |
Transactions involving related parties cannot be presumed to be carried out on an arm's-lengtharm’s-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-lengtharm’s-length transactions unless such representations can be substantiated.
Carrying Value, Recoverability and Impairment of Long-Lived Assets
The Company has adopted Section 360-10-35 of the FASB Accounting Standards Codification for its long-lived assets. Pursuant to ASC Paragraph 360-10-35-17 an impairment loss shall be recognized only if the carrying amount of a long-lived asset (asset group) is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset (asset group) is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset (asset group). That assessment shall be based on the carrying amount of the asset (asset group) at the date it is tested for recoverability. An impairment loss shall be measured as the amount by which the carrying amount of a long-lived asset (asset group) exceeds its fair value. Pursuant to ASC Paragraph 360-10-35-20 if an impairment loss is recognized, the adjusted carrying amount of a long-lived asset shall be its new cost basis. For a depreciable long-lived asset, the new cost basis shall be depreciated (amortized) over the remaining useful life of that asset. Restoration of a previously recognized impairment loss is prohibited.
Pursuant to ASC Paragraph 360-10-35-21 the Company’s long-lived asset (asset group) is tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. The Company considers the following to be some examples of such events or changes in circumstances that may trigger an impairment review: (a) significant decrease in the market price of a long-lived asset (asset group); (b) A significant adverse change in the extent or manner in which a long-lived asset (asset group) is being used or in its physical condition; (c) A significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset (asset group), including an adverse action or assessment by a regulator; (d) An accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset (asset group); (e) A current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset (asset group); and (f) A current expectation that, more likely than not, a long-lived asset (asset group) will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. The Company tests its long-lived assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events.
Pursuant to ASC Paragraphs 360-10-45-4 and 360-10-45-5 an impairment loss recognized for a long-lived asset (asset group) to be held and used shall be included in income from continuing operations before income taxes in the income statement of a business entity. If a subtotal such as income from operations is presented, it shall include the amount of that loss. A gain or loss recognized on the sale of a long-lived asset (disposal group) that is not a component of an entity shall be included in income from continuing operations before income taxes in the income statement of a business entity. If a subtotal such as income from operations is presented, it shall include the amounts of those gains or losses.
Cash Equivalents
The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.
Investments - Equity Method and Joint Ventures
The Company accounts for investments in common stock or in-substance common stock (or both common stock and in-substance common stock) of an investee of which the Company has significant influence (see paragraph 323-10-15-6) in the operating or financial policies even though the Company holds 50% or less of the common stock or in-substance common stock, in accordance with sub-topic 323-10 of the FASB Accounting Standards Codification (“Sub-topic 323-10”).
Method of Accounting
Investments held in stock of entities other than subsidiaries, namely corporate joint ventures and other non-controlled entities usually are accounted for by one of three methods (i) the fair value method (addressed in Topic 320), (ii) the equity method (addressed in Topic 323), or (iii) the cost method (addressed in Subtopic 325-20). Pursuant to paragraph 323-10-05-5 the equity method tends to be most appropriate if an investment enables the investor to influence the operating or financial policies of the investee.
The Ability to Exercise Significant Influence
Pursuant to paragraph 323-10-15-6 the ability to exercise significant influence over operating and financial policies of an investee may be indicated in several ways, including but limited to the following: a. Representation on the board of directors, b. Participation in policy-making processes, c. Material intra-entity transactions, d. Interchange of managerial personnel, and e. Technological dependency . Pursuant to paragraph 323-10-15-8 an investment (direct or indirect) of 20 percent or more of the voting stock of an investee shall lead to a presumption that in the absence of predominant evidence to the contrary an investor has the ability to exercise significant influence over an investee. Conversely, an investment of less than 20 percent of the voting stock of an investee shall lead to a presumption that an investor does not have the ability to exercise significant influence unless such ability can be demonstrated.
Initial and Subsequent Measurement
Pursuant to Paragraph 323-10-30-2 an investor shall measure an investment in the common stock of an investee (including a joint venture) initially at cost in accordance with the guidance in Section 805-50-30. An investor shall initially measure, at fair value, a retained investment in the common stock of an investee (including a joint venture) in a deconsolidation transaction in accordance with paragraphs 810-10-40-3A through 40-5.
Pursuant to Section 323-10-35 under the equity method, an investor shall recognize its share of the earnings or losses of an investee in the periods for which they are reported by the investee in its financial statements rather than in the period in which an investee declares a dividend. An investor shall adjust the carrying amount of an investment for its share of the earnings or losses of the investee after the date of investment including adjustments similar to those made in preparing consolidated financial statements and shall report the recognized earnings or losses in income. An investor's share of losses of an investee may equal or exceed the carrying amount of an investment accounted for by the equity method plus advances made by the investor. An equity method investor shall continue to report losses up to the investor's investment carrying amount, including any additional financial support made or committed to by the investor and the investor ordinarily shall discontinue applying the equity method if the investment (and net advances) is reduced to zero and shall not provide for additional losses unless the investor has guaranteed obligations of the investee or is otherwise committed to provide further financial support for the investee. If the investee subsequently reports net income, the investor shall resume applying the equity method only after its share of that net income equals the share of net losses not recognized during the period the equity method was suspended. If a series of operating losses of an investee or other factors indicate that a decrease in value of the investment has occurred that is other than temporary the loss in value of an investment that is other than a temporary decline shall be recognized. Evidence of a loss in value might include, but would not necessarily be limited to, absence of an ability to recover the carrying amount of the investment or inability of the investee to sustain an earnings capacity that would justify the carrying amount of the investment. A current fair value of an investment that is less than its carrying amount may indicate a loss in value of the investment. However, a decline in the quoted market price below the carrying amount or the existence of operating losses alone is not necessarily indicative of a loss in value that is other than temporary.
Disclosure
Pursuant to paragraph 323-10-50-3 all of the following disclosures generally shall apply to the equity method of accounting for investments in common stock:
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Computer Equipment
Computer equipment is recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation is computed by the straight-line method (after taking into account their respective estimated residual values) over the estimated useful lives of five (5) years.
Upon sale or retirement, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the statements of operations.
Patents
The Company follows the guidelines as set out in paragraph 350-30-25-3 and paragraph 350-30-35-6 of the FASB Accounting Standards Codification for patents. For acquired patents the Company records the costs to acquire patents as patents and amortizes the patent acquisition costs over their remaining legal lives, or estimated useful lives, or the term of the contracts, whichever is shorter. For internalinternally developed patents, all costs incurred to the point when a patent application is to be filed are expended as incurred as research and development expense; patent application costs, generally legal costs, thereafter incurred are capitalized, which are to be amortized once the patents are granted or expensed if the patent application is rejected. The Company amortizes the internalinternally developed patents over the shorter of the expected useful lives or the legal lives of the patents, which are generally 17 to 20 years for domestic patents and 5 to 20 years for foreign patents from the date when the patents are granted. The costs of defending and maintaining patents are expended as incurred.
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Upon becoming fully amortized, the related cost and accumulated amortization are removed from the accounts.
Related Parties
The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.
Pursuant to Section 850-10-20 the related parties include a. affiliates of the Company (“Affiliate” means, with respect to any specified Person, any other Person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such Person, as such terms are used in and construed under Rule 405 under the Securities Act); of the Company; b. entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; c. trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d. principal owners of the Company; e. management of the Company; f. other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g. other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a. the nature of the relationship(s) involved; b. a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c. the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d. amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
Commitment and Contingencies
The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does
Revenue Recognition
In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which outlines a single, comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. The accounting standard was originally effective for reporting periods beginning after December 15, 2017, with early adoption permitted for reporting periods beginning after December 15, 2016. ASU No. 2015-14 simply defers the effective date of ASU No. 2014-09 to reporting periods beginning after December 15, 2018, with early adoption permitted for reporting periods after December 15, 2016. Prior period amounts have not believe, based upon information available at this time, that these matters will have abeen adjusted and continue to be reported in accordance with the Company’s historic accounting under ASC 605, Revenue Recognition. The adoption had no material adverse effectimpact on the Company’s financial position, resultsstatements and there were no adjustments to revenue as a result of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.adoption.
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Revenue RecognitionUnder ASC 606, revenue is recognized when control of the promised goods and services is transferred to the Company’s customers, in an amount that reflects the consideration that the Company expects to be entitled to in exchange for those goods and services, net of value-added tax. The Company determines revenue recognition through the following steps:
The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.
· | Identify the contract with a customer; | |
· | Identify the performance obligations in the contract; | |
· | Determine the transaction price; | |
· | Allocate the transaction price to the performance obligations in the contract; and | |
· | Recognize revenue when (or as) the entity satisfies a performance obligation. |
Research and Development
The Company follows paragraph 730-10-25-1 of the FASB Accounting Standards Codification (formerly Statement of Financial Accounting Standards No. 2 “Accounting for Research and Development Costs”) and paragraph 730-20-25-11 of the FASB Accounting Standards Codification (formerly Statement of Financial Accounting Standards No. 68 “Research and Development Arrangements”) for research and development costs. Research and development costs are charged to expense as incurred. Research and development costs consist primarily of remuneration for material and testing costs for research and development.
Deferred Tax Assets and Income Tax Provision
The Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of operations in the period that includes the enactment date.
The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”). Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.
The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its balance sheets and provides valuation allowances as management deems necessary.
Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.
On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate tax rate from 35 percent to 21 percent; (2) requiring companies to pay a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries; (3) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; (4) requiring a current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations; (5) eliminating the corporate alternative minimum tax (“AMT”) and changing how existing AMT credits can be realized; (6) creating a base erosion anti-abuse tax, a new minimum tax; (7) creating a new limitation on deductible interest expense; and (8) changing rules related to uses and limitations of net operating loss carryforwards created in tax years that remain subject to examination by major tax jurisdictionsbeginning after December 31, 2017.
The Company disclosesAct reduces the corporate tax years that remain subjectrate to examination by major tax jurisdictions pursuant21 percent, effective January 1, 2018.
Reclassification
Certain amounts have been reclassified to conform to the ASC Paragraph 740-10-50-15.current year’s presentation.
Earnings per Share
Earnings per share ("EPS"(“EPS”) isare the amount of earnings attributable to each share of common stock. For convenience, the term is used to refer to either earnings or loss per share. EPS is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Pursuant to ASC Paragraphs 260-10-45-10 through 260-10-45-16, Basicbasic EPS shall be computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. Income available to common stockholders shall be computed by deducting both the dividends declared in the period on preferred stock (whether or not paid) and the dividends accumulated for the period on cumulative preferred stock (whether or not earned) from income from continuing operations (if that amount appears in the income statement) and also from net income. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants.
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Pursuant to ASC Paragraphs 260-10-45- 45-21260-10-45-45-21 through 260-10-45-45-23 Diluted EPS shall be based on the most advantageous conversion rate or exercise price from the standpoint of the security holder. The dilutive effect of outstanding call options and warrants (and their equivalents) issued by the reporting entity shall be reflected in diluted EPS by application of the treasury stock method unless the provisions of paragraphs 260-10-45-35 through 45-36 and 260-10-55-8 through 55-11 require that another method be applied. Equivalents of options and warrants include non-vested stock granted to employees, stock purchase contracts, and partially paid stock subscriptions (see paragraph 260–10–55–23). Anti-dilutive contracts, such as purchased put options and purchased call options, shall be excluded from diluted EPS. Under the treasury stock method: a. Exercise of options and warrants shall be assumed at the beginning of the period (or at time of issuance, if later) and common shares shall be assumed to be issued. b. The proceeds from exercise shall be assumed to be used to purchase common stock at the average market price during the period. (See paragraphs 260-10-45-29 and 260-10-55-4 through 55-5.) c. The incremental shares (the difference between the number of shares assumed issued and the number of shares assumed purchased) shall be included in the denominator of the diluted EPS computation.
There were no potentially dilutive common shares outstanding for the reporting periodyears ended August 31, 2014 or 2013.2019 and 2018. The convertible notes payable were excluded from the EPS calculation as they would have been anti-dilutive. As of August 31, 2019, the aggregate shares excluded from the EPS calculation, as they would have been anti-dilutive, was 1.1 million shares.
Cash Flows Reporting
The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification.
Subsequent EventsStock-Based Payments
The Company followsrecognizes all employee stock-based payments as a cost in the guidance in Section 855-10-50financial statements. Equity classified awards are measured at the grant date fair value of the FASB Accounting Standards Codificationaward. The Company estimates grant date fair value for stock options using the Black-Scholes option-pricing model.
No warrants were issued or outstanding for the disclosure of subsequent events. years ended August 31, 2019 and 2018.
Derivative Liabilities
The Company will evaluate subsequent events throughevaluates its financial instruments and other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with ASC 815. The result of this accounting treatment is that the date when the financial statements were issued. Pursuant to ASU 2010-09fair value of the FASB Accounting Standards Codification,embedded derivative is marked- to-market at each balance sheet date and recorded as a liability and the change in fair value is recorded in the statements of operations as other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity.
The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Derivative instruments that become subject to reclassification are reclassified at the fair value of the instrument on the reclassification date. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not settlement of the derivative instrument is expected within 12 months of the balance sheet date.
From time to time, certain of the Company’s embedded conversion features on debt and outstanding warrants are treated as derivative liabilities for accounting purposes under ASC 815 due to insufficient authorized shares to fully settle conversion features of the instruments if exercised. These contracts were recognized at fair value with changes in fair value recognized in earnings until such time as the conditions giving rise to such derivative liability classification were settled.
These derivative instruments did not trade in an active securities market. The Company as an SEC filer considers its financial statements issued when they are widely distributedused Black Scholes option pricing model to users, such as through filing them on EDGAR.value derivative liabilities. This model used Level 3 inputs in the fair value hierarchy established by ASC 820 Fair Value Measurement.
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Recently Issued Accounting Pronouncements
In April 2014, the FASB issued ASU No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. The amendments in this Update change the requirements for reporting discontinued operations in Subtopic 205-20.
Under the new guidance, a discontinued operation is defined as a disposal of a component or group of components that is disposed of or is classified as held for sale and “represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results.” The ASU states that a strategic shift could include a disposal of (i) a major geographical area of operations, (ii) a major line of business, (iii) a major equity method investment, or (iv) other major parts of an entity. Although “major” is not defined, the standard provides examples of when a disposal qualifies as a discontinued operation.
The ASU also requires additional disclosures about discontinued operations that will provide more information about the assets, liabilities, income and expenses of discontinued operations. In addition, the ASU requires disclosure of the pre-tax profit or loss attributable to a disposal of an individually significant component of an entity that does not qualify for discontinued operations presentation in the financial statements.
The ASU is effective for public business entities for annual periods beginning on or after December 15, 2014, and interim periods within those years.
In May 2014, the FASB issued the FASB Accounting Standards Update No. 2014-09 “ Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”)
This guidance amends the existing FASB Accounting Standards Codification, creating a new Topic 606, Revenue from Contracts with Customer. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
To achieve that core principle, an entity should apply the following steps:
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The ASU also provides guidance on disclosures that should be provided to enable financial statement users to understand the nature, amount, timing, and uncertainty of revenue recognition and cash flows arising from contracts with customers. Qualitative and quantitative information is required about the following:
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ASU 2014-09 is effective for periods beginning after December 15, 2016, including interim reporting periods within that reporting period for all public entities. Early application is not permitted.
In June 2014, the FASB issued ASU No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation.
The amendments in this Update remove the definition of a development stage entity from the Master Glossary of the Accounting Standards Codification, thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage.
The amendments also clarify that the guidance in Topic 275, Risks and Uncertainties, is applicable to entities that have not commenced planned principal operations.
Finally, the amendments remove paragraph 810-10-15-16. Paragraph 810-10-15-16 states that a development stage entity does not meet the condition in paragraph 810-10-15-14(a) to be a variable interest entity if (1) the entity can demonstrate that the equity invested in the legal entity is sufficient to permit it to finance the activities that it is currently engaged in and (2) the entity’s governing documents and contractual arrangements allow additional equity investments.
The amendments in this Update also eliminate an exception provided to development stage entities in Topic 810, Consolidation, for determining whether an entity is a variable interest entity on the basis of the amount of investment equity that is at risk. The amendments to eliminate that exception simplify U.S. GAAP by reducing avoidable complexity in existing accounting literature and improve the relevance of information provided to financial statement users by requiring the application of the same consolidation guidance by all reporting entities. The elimination of the exception may change the consolidation analysis, consolidation decision, and disclosure requirements for a reporting entity that has an interest in an entity in the development stage.
The amendments related to the elimination of inception-to-date information and the other remaining disclosure requirements of Topic 915 should be applied retrospectively except for the clarification to Topic 275, which shall be applied prospectively. For public business entities, those amendments are effective for annual reporting periods beginning after December 15, 2014, and interim periods therein.
Early application of each of the amendments is permitted for any annual reporting period or interim period for which the entity’s financial statements have not yet been issued (public business entities) or made available for issuance (other entities). Upon adoption, entities will no longer present or disclose any information required by Topic 915.
In August 2014, the FASB issued the FASB Accounting Standards Update No. 2014-15 “Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”).
In connection with preparing financial statements for each annual and interim reporting period, an entity’s management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued (or at the date that the financial statements are available to be issued when applicable). Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued (or available to be issued). The term probable is used consistently with its use in Topic 450, Contingencies.
When management identifies conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern, management should consider whether its plans that are intended to mitigate those relevant conditions or events will alleviate the substantial doubt. The mitigating effect of management’s plans should be considered only to the extent that (1) it is probable that the plans will be effectively implemented and, if so, (2) it is probable that the plans will mitigate the conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern.
If conditions or events raise substantial doubt about an entity’s ability to continue as a going concern, but the substantial doubt is alleviated as a result of consideration of management’s plans, the entity should disclose information that enables users of the financial statements to understand all of the following (or refer to similar information disclosed elsewhere in the footnotes):
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If conditions or events raise substantial doubt about an entity’s ability to continue as a going concern, and substantial doubt is not alleviated after consideration of management’s plans, an entity should include a statement in the footnotes indicating that there is substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or available to be issued). Additionally, the entity should disclose information that enables users of the financial statements to understand all of the following:
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The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted.
Management does not believe that any recently issued, but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying financial statements.
Note 3 – Going Concern
The Company has elected to adopt early application of Accounting Standards Update No. 2014-15, “Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”) .
The Company’s financial statements have been prepared assuming that it will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.
As reflected in the financial statements, the Company had an accumulated deficit at August 31, 2014,2019, a net loss, and net cash used in operating activities for the reporting periodyear then ended .ended. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
The Company is attempting to commence operations and generate sufficient revenue; however, the Company’s cash position may not be sufficient to support its daily operations. While the Company believes in the viability of its strategy to commence operations and generate sufficient revenue and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon its ability to further implement its business plan and generate sufficient revenue and its ability to raise additional funds by way of a public or private offering.
The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Note 4 – Investment in a Non-consolidated EntityRelated Party Transactions and Balances
On October 26, 2013, the Company entered into a Joint Venture Contract for a Sino-Foreign Composites Company with Xingcheng Haibao Advanced Materials Industrial Park Co., Ltd., a Chinese entity (the “Joint Venture Partner”). The Joint Venture Partner is a composites manufacturer based in Huludao City, Liaoning Province, in China. Under the Joint Venture Agreement, the Company contributed its technology to the joint venture enterprise. Its Joint Venture Partner is obligated, among other things, to arrange for the local government to contribute the use of approximately 100 acres of land, the purpose of which is to construct a manufacturing facility to build composite products using the Company’s technology. The Company holds a 25% equity interest in the joint venture and the Joint Venture Partner holds the remaining 75% equity interest.Accounts Payable
The Company initially measured its investment in the common stockhas a balance of $5,250 and $7,711 as of August 31, 2019 and 2018, respectively. The $5,250 payable is due to Gray’s Peak Ventures (one of the joint venture at zero,new principal’s companies) for expenses paid on behalf of the costCompany. The $7,711 payable is due to Michael Winterhalter, former Chief Executive Officer, for expenses paid on behalf of its contributed technology, in accordance with the guidance in ASC Section 805-50-30.Company.
The Joint Venture is devoting all of its efforts on establishing the business with minimal activities for the reporting period ended August 31, 2014. The Company discontinued applying the equity method as the investment (and net advances) is reduced to zero and the Company did not guarantee obligations of the investee or otherwise commit to provide further financial support for the investee.
Note 5 – Computer Equipment
Computer equipment, stated at cost, less accumulated depreciation, consisted of the following:
August 31, 2014 | August 31, 2013 | |||||||
Computer equipment | $ | 1,328 | $ | - | ||||
Accumulated depreciation | (198 | ) | (- | ) | ||||
$ | 1,130 | $ | - |
(i)Impairment
The Company completed its annual impairment testing of computer equipment and determined that there was no impairment as the fair value of property and equipment, exceeded their carrying values at August 31, 2014 .
(ii) Depreciation Expense
The Company acquired computer equipment on November 29, 2013 and started to depreciate as of December 1, 2013.
Depreciation expense was $198 for the reporting period ended August 31, 2014.
Note 6 – Patent
The Company started its Chinese patent application process on May 7, 2013 and obtained the China patent on September 11, 2013. Patent application costs of $3,814, primarily legal costs, incurred during the patent application process were capitalized and are being amortized over the expected useful life of 15 years from the date of grant of the patent.
Patent, stated at cost, less accumulated amortization, consisted of the following:
August 31, 2014 | August 31, 2013 | |||||||
Patent | $ | 3,814 | $ | - | ||||
Accumulated amortization | (231 | ) | - | |||||
$ | 3,583 | $ | - |
(i)Impairment
The Company completed its annual impairment testing of patent and determined that there was no impairment as the fair value of patent, exceeded its carrying value at August 31, 2014 .
(ii) Amortization Expense
Amortization expense was $231 for the reporting period ended August 31, 2014.
Note 7 – Related Party Transactions
Related Parties
Related parties with whom the Company had transactions are:
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Free Office Space
The Company has been provided office space by itsMichael Winterhalter, former Chief Executive Officer, at no cost. Management determined that such cost is nominal and did not recognize the rent expense in its financial statement.statements.
Note 8 – Commitments and contingent liabilities
Employment AgreementsConvertible Notes Payable
Employment Agreement – Michael Winterhalter, CEO
On April 30, 2014, the Company entered into an employment agreement with Michael Winterhalter (“the Employee”). The Employee and the Company hereby agree as follows:
Term
The employmentCompany issued a convertible promissory note on September 23, 2016 to William C. Winterhalter, Michael Winterhalter’s father, in the amount of $20,000. The interest rate is 8% and the maturity date is September 23, 2019 in which all outstanding principal together with interest on this note shall be due. The outstanding note and accrued interest convert at the option of the Employee shall commenceholder or the Company at the volume weighted average price of the common stock for the preceding 10 days (10-day VWAP). On March 1, 2017 this note was amended to introduce a conversion floor of $100 on the 10-day VWAP. This amendment extinguished the conditions that generated derivative liabilities related to this note. The debt under this agreement remains as the agreement did not qualify for debt extinguishment.
A derivative liability related to the embedded conversion option of $13,932 was recognized as a debt discount at the date hereofof issuance of the note. As discussed in the preceding paragraph and continuein Note 6, the conditions that generated the derivative liability related to the related party note was extinguished on March 1, 2017 and $12,160 was transferred to “Loss on fair value of derivative instruments”. Amortization of the discount on related party convertible note payable was $3,924 and $9,581 for an indefinite term until terminatedthe years ended August 31, 2019 and August 31, 2018, respectively, and is included in accordance with“interest expense” in the provisionsaccompanying statements of this agreement .operations.
CompensationThe Company issued a convertible promissory note on November 1, 2017 for $10,000 to Michael Winterhalter. The note matures on its third anniversary with interest payable at 8% per annum. The outstanding note and accrued interest convert at the option of the holder or the Company at the volume weighted average price of the common stock for the preceding 10 days, with a conversion floor of $100 on the 10-day Volume Weighted Average Price (“VWAP”). The Company evaluated the conversion option of the convertible promissory note for embedded derivatives and beneficial conversion features determining the conversion option to contain neither.
In considerationThe Company issued a convertible promissory note on February 13, 2018 for $15,000 to Michael Winterhalter. The note matures on its third anniversary with interest payable at 8% per annum. The outstanding note and accrued interest convert at the option of the servicesholder or the Company at the volume weighted average price of the common stock for the preceding 10 days, with a conversion floor of $100 on the 10-day Volume Weighted Average Price (“VWAP”). The Company evaluated the conversion option of the convertible promissory note for embedded derivatives and beneficial conversion features determining the conversion option to be provided by him hereunder,contain neither.
The Company also issued convertible promissory notes on September 12, 2018, December 1, 2018, February 25, 2019 and April 30, 2019 in amounts of $20,000, $20,000, $10,000 and $10,000 respectively, to Michael Winterhalter. All four notes mature on their third anniversary with interest payable at 8% per annum. The outstanding notes and accrued interest convert at the Employee, duringoption of the termholder or the Company at the volume weighted average price of his employment, shall be paidthe common stock for the preceding 10 days, with a base salaryconversion floor of $60,000$100 on the 10-day VWAP. The Company evaluated the conversion options of the convertible promissory notes for embedded derivatives and beneficial conversion features determining the conversion options to contain neither.
Effective April 27, 2018, the Company converted all of Michael Winterhalter’s and William Winterhalter’s outstanding debt, which was an aggregate amount of $89,000. Prior to the conversion, all debt was assigned to Michael Winterhalter. Accrued interest expense through the date of conversion amounted to $2,148 and the unamortized discount amounted to $4,925. The debt was converted into 14,553 shares at approximately $6.00 per yearshare. Per the agreement, the shares should have been converted at the floor price of $100 per share. Excess shares received amounted to 13,642. The NASDAQ price per share as of the conversion date was $3,125 and therefore, the related expense amounted to $42,629,753, which is included in equal quarterly installments, in arrears, less applicable statutory deductions. In addition, the Employee is entitledfinancial statements as a loss on extinguishment of debt.
The Company issued a convertible promissory note on June 12, 2018 for $25,000 to receive benefits in accordanceMichael Winterhalter. The note matures on its third anniversary with interest payable at 8% per annum. The outstanding note and accrued interest convert at the Employer's standard benefit package, as amended from timeoption of the holder or the Company at the volume weighted average price of the common stock for the preceding 10 days, with a conversion floor of $100 on the 10-day Volume Weighted Average Price (“VWAP”). The Company evaluated the conversion option of the convertible promissory note for embedded derivatives and beneficial conversion features determining the conversion option to time.contain neither.
Table of Contents |
TerminationNote 5 – Equity
Subsequent to completion of the probationary term of employment referred to in paragraph 2 herein, the Employer may terminate the employment of the Employee at any time:
|
| |
|
|
The Employee may terminate his employment at any time by providing the Employer with at least eight (8) weeks advance notice of his intention to resign.Reverse Stock Split
Employment Agreement – Martin Wang, Vice PresidentEffective June 17, 2019, the Company issued a one for one thousand reverse stock split. One share of common stock, par value $0.001 per share, was issued in exchange for one thousand issued shares of common stock, par value $0.001 per share. The amount reallocated to additional paid-in capital from common stock was $20,549. The financial statements were retroactively restated to reflect the reverse stock split.
On May 15, 2014, the Company entered into an employment agreement with Martin Wang (“the Employee”) with the same terms and conditions of the Employment Agreement with Michael Winterhalter.
Employment Agreement – Eric Krogius, Director
On April 30, 2014, the Company entered into an employment agreement with Eric Krogius (“the Director”) with the same terms and conditions of the Employment Agreement with Michael Winterhalter except the following:
Compensation
In consideration of the services to be provided by him hereunder, the Employee, during the term of his employment, shall be paid a base salary of $20,000 per year in equal quarterly installments, in arrears, less applicable statutory deductions. In addition, the Employee is entitled to receive benefits in accordance with the Employer's standard benefit package, as amended from time to time.
Note 9 – Stockholders’ Equity
Shares Authorized
Upon formation the total number of shares of all classes of stock which the Company is authorized to issue is Seventy-Five Million (75,000,000) shares of which Twenty Five Million (25,000,000) shares shall be Preferred Stock, par value $0.001 per share, and Fifty Million (50,000,000) shares shall be Common Stock, par value $0.001 per share.
Common Stock Options Plan
On April 18, 2013, upon formation,In February 2016, the Company sold 5,000,000Board of Directors approved the 2016 Stock Options Plan ("Plan") that provides for the granting of stock options to certain key employees. The Plan reserves 2,000,000 shares of common stock for this purpose. There is no provision for shares to be specifically granted to the foundersCEO under his employment arrangement, either in the stock option plan or the employment agreement.
Options under the Plan are to be granted at no less than fair market value of the Companyshares at $0.001 per share, or $5,000 in aggregate for cash.the date of grant. As of August 31, 2019 and 2018 no options under this plan have been granted.
Consulting Agreement
On May 15, 2013, the Company sold 250,000 shares of common stock to three (3) investors at $0.40 per share, or $100,000 in aggregate for cash.
On July 11, 2013, the Company sold 50,000 shares of common stock to two (2) investors at $0.40 per share, or $20,000 in aggregate for cash.
On December 30, 2013 (“Closing Date”),March 14, 2016, the Company entered into a stock subscriptionconsulting agreement with Mr. Bao Dong Han, an affiliateSteve Moore for consulting services related to develop business and advise management of technology, products and services used in the oil and gas exploration and production. This agreement combines commissions payable on gross profit, as well as a warrant of company stock. The cost of these benefits is estimated at $250,000 over 2 years. As of August 31, 2018, there were no warrants of company stock outstanding under this agreement. Costs associated with the warrant issuances are included in “Professional fees” in the accompanying statements of operations in the amount of $0 for the years ended August 31, 2019 and 2018.
Effective February 15, 2018, the Company and consultant mutually agreed to cancel all warrants related to this consulting agreement as a result of unsatisfactory performance. There was no cost to the Company associated with the warrant cancellation due to the nonperformance. The weighted average exercise price of the warrants at cancellation was $0.001.
Following is a summary of warrant activity during 2018:
Options Outstanding |
| Options |
|
| Weighted average exercise price |
|
| Weighted average remaining contractual life (in years) |
| |||
|
|
|
|
|
|
|
|
|
| |||
Balance, August 31, 2017 |
|
| 125 |
|
| $ | 1.00 |
|
|
| 2.30 |
|
Granted |
|
| - |
|
|
| - |
|
|
| - |
|
Exercised |
|
| - |
|
|
| - |
|
|
| - |
|
Cancelled |
|
| (125 | ) |
|
| 1.00 |
|
|
| - |
|
Balance, August 31, 2018 |
|
| - |
|
| $ | - |
|
|
| - |
|
The fair market value of stock warrants is determined using the Black-Scholes valuation model, and the company uses the following methods to determine its underlying assumptions: expected volatilities are based on the historical volatility of the Company’s Joint venture Partner, wherebycommon stock; the Company sold 375,000 sharesexpected term of its common stockwarrants granted are based on the simplified method; and the risk-free interest rate is based on the U.S. Treasury implied yield on zero-coupon issues (with a remaining term equal to Bao Dong Han, at $0.40 per share, for $150,000 in cash.the expected term of the warrant).
On January 27, 2014, the Company sold 2,106 sharesAs of commonAugust 31, 2019, there was no unrecognized stock warrant cost related to one investor at $0.95 per share for $2,000.70.unvested stock warrant awards as all awards have fully vested.
OnThere were no warrants outstanding as of August 14, 2014,31, 2019.
Waived Compensation
The Company and Michael Winterhalter collectively waived payment in the company entered into a stock subscription agreement with Mr. Bao Dong Han, an affiliatedamount of $45,000 and $60,000 for the Company’s Joint venture Partner, wherebyyears ended August 31, 2019 and 2018, respectively. Waived compensation expense is included in payroll expense in the Company sold 250,000 sharesaccompanying Statements of its common stock to Bao Dong Han, at $0.40 per share, for $100,000 in cash.Operations.
Table of Contents |
The Company and Eric Krogius collectively waived payment in the amount of $15,000 and $20,000 for the years ended August 31, 2019 and 2018, respectively. Waived compensation expense is included in payroll expense in the accompanying Statements of Operations. These amounts are treated as capital contributions in the accompanying consolidated Statements of Cash Flow.
Note 6 – Notes Receivable and Convertible Notes Payable
The Company issued a note receivable on September 28, 2016 in the amount of $10,000 to Black Diamond Bits, LLC. The interest rate is 8% and the principal and interest will be due in its entirety on January 1, 2017 for a total amount of $10,710. As of August 31, 2017 Black Diamond has not consummated the sale of their business, which had been the trigger for Black Diamond Bits, LLC to fully pay their obligation. Two interest payments have been made to date of $291 and $193 in April and June 2017, respectively. During the year ended August 31, 2017, Fairwind Energy has sent this note to collections and has reserved against credit losses on the note in the amount of $7,226. This is based on the collection agency’s historically collects rate, average of 85% collections, weighted against management’s estimate. During the year ended August 31, 2018, FairWind Energy considers the note uncollectible and the note of $3,000 has been written off to bad debt expense.
The Company issued a convertible promissory note on October 1, 2016 to Julie Cameron Down Revocable Trust in the amount of $25,000. The interest rate is 8% and the maturity date is September 30, 2019 in which all outstanding principal together with interest on this note shall be due. The outstanding note and accrued interest convert at the option of the holder or the Company at the volume weighted average price of the common stock for the preceding 10 days (10-day VWAP). On March 1, 2017 this note was amended to introduce a conversion floor of $100 on the 10-day VWAP. This amendment extinguished the conditions that generated derivative liabilities related to this note. Effective April 30, 2019, Michael Winterhalter purchased Julie Cameron Down Revocable Trust’s convertible promissory note in the principal amount of $25,000.
A derivative liability related to the embedded conversion option of $17,258 was recognized as a debt discount at the date of issuance of the note. As discussed in the preceding paragraph and in Note 4, the conditions that generated the derivative liability related to the related party note were extinguished on March 1, 2017. Amortization of the discount on convertible note payable was $3,925 and $7,736 for the years ended August 31, 2019 and 2018, respectively, and is included in “interest expense” in the accompanying statements of operations. The debt under this agreement remains as the agreement did not qualify for debt extinguishment.
Convertible Notes Payable consist of the following as of August 31, 2019 and 2018:
|
| August 31, 2019 |
| |
Related Party Notes: |
|
|
| |
Mike Winterhalter |
|
| 25,000 |
|
Mike Winterhalter |
|
| 25,000 |
|
Mike Winterhalter |
|
| 20,000 |
|
Mike Winterhalter |
|
| 20,000 |
|
Mike Winterhalter |
|
| 10,000 |
|
Mike Winterhalter |
|
| 10,000 |
|
Less current maturities |
|
| (25,000 | ) |
Long-term maturities |
|
| 85,000 |
|
Unamortized Discount |
|
| (329 | ) |
|
| $ | 84,671 |
|
|
| August 31, 2018 |
| |
Julie Cameron Down Revocable Trust |
| $ | 25,000 |
|
Related Party Notes: Mike Winterhalter |
|
| 25,000 |
|
Less current maturities |
|
| - |
|
Long-term maturities |
|
| 50,000 |
|
Unamortized Discount |
|
| (4,253 | ) |
|
| $ | 45,747 |
|
The Company’s amortization expense related to the unamortized discount for years ended August 31, 2019 and 2018 was $3,925 and $17,317, respectively.
Maturities of convertible notes payable for each of the fiscal years subsequent to August 31, 2019 are as follows:
2020 |
| $ | 25,000 |
|
2021 |
|
| 25,000 |
|
2022 |
|
| 60,000 |
|
|
| $ | 110,000 |
|
F-25 |
Table of Contents |
Note 7 – Commitments and contingent liabilities
Employment Agreements
Employment Agreement – Michael Winterhalter, CEO
On April 30, 2014, the Company entered into an employment agreement with Michael Winterhalter (“the Employee”). Key terms of the agreement are as follows:
Term
The employment of the Employee shall commence on and continue for an indefinite term until terminated in accordance with the provisions of the agreement.
Compensation
In consideration of the services to be provided, the Employee, during the term of his employment, shall be paid a base salary of $60,000 per year in equal monthly installments, in arrears, less applicable statutory deductions. In addition, the Employee is entitled to receive benefits in accordance with the Employer’s standard benefit package, as amended from time to time. During the fiscal year ended August 31, 2019, no payments have been made. The Company and the Employee collectively waived payment above in the amount of $45,000 and 60,000 for the years ended August 31, 2019 and 2018, respectively. Waived compensation expense (see Note 5) is included in payroll expense in the accompanying Statement of Operations.
Termination
Subsequent to completion of the probationary term of employment, the Employer may terminate the employment of the Employee at any time: | ||
a. | for just cause at common law, in which case the Employee is not entitled to any advance notice of termination or compensation in lieu of notice; | |
b. | without just cause, in which case the Employer shall provide the Employee with advance notice of termination or compensation in lieu of notice equal to: 1 month plus 2 weeks per year of completed service with the Employer, to a maximum of fifteen (15) months. |
Effective June 10, 2019, Michael Winterhalter resigned as a director
Employment Agreement – Eric Krogius, Director
On April 30, 2014, the Company entered into an employment agreement with Eric Krogius (“the Director”) with the same terms and conditions of the Employment Agreement with Michael Winterhalter except the following:
Compensation
In consideration of the services to be provided, the Director, during the term of his employment, shall be paid a base salary of $20,000 per year in equal monthly installments, in arrears, less applicable statutory deductions. In addition, the Director is entitled to receive benefits in accordance with the Employer’s standard benefit package, as amended from time to time. During the fiscal year ended August 31, 2019, no payments have been made. The Company and the Director collectively waived payment above in the amount of $15,000 and $20,000 for the years ended August 31, 2019 and 2018, respectively. Waived compensation expense (see Note 5) is included in payroll expense in the accompanying Statement of Operations.
Effective June 10, 2019, Eric Krogius and Michael Winterhalter have resigned. Scott Stevens has been elected as the President and Director and Robert Whalen has been elected as the Secretary, Treasurer, and Director.
Note 8 – Concentrations and Credit Risk
Customers and Credit Concentrations
There was no revenue for the years ended August 31, 2019 and 2018.
F-26 |
Table of Contents |
Note 9 – Deferred Tax Assets and Income Tax Provision
Deferred Tax Assets
At August 31, 2014,2019, the Company had net operating loss (“NOL”) carry–forwards for Federal income tax purposes of $257,124$640,523 that may be offset against future taxable income through 2034.2039. No tax benefit has been recorded with respect to these net operating loss carry-forwards in the accompanying consolidated financial statements as the management of the Company believes that the realization of the Company’s net deferred tax assets of approximately $87,422$134,500 was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are offset by the full valuation allowance.
Deferred tax assets consist primarily of the tax effect of NOL carry-forwards. The Company has provided a full valuation allowance on the deferred tax assets because of the uncertainty regarding its realization. The valuation allowance increaseddecreased by $71,018$4,500 and $16,404$77,200 for the reporting periodyears ended August 31, 20142019 and 2013,2018, respectively.
Components of deferred tax assets are as follows:
August 14, 2014 | August 31, 2013 |
| August 31, 2019 |
|
| August 31, 2018 |
| |||||||||
Net deferred tax assets – Non-current: |
|
|
|
|
| |||||||||||
|
|
|
|
| ||||||||||||
Expected income tax benefit from NOL carry-forwards | $ | 87,422 | $ | 16,404 |
| $ | 134,500 |
| $ | 139,000 |
| |||||
|
|
|
|
| ||||||||||||
Less valuation allowance | (87,422 | ) | (16,404 | ) |
|
| (134,500 | ) |
|
| (139,000 | ) | ||||
|
|
|
|
| ||||||||||||
Deferred tax assets, net of valuation allowance | $ | - | $ | - |
| $ | - |
|
| $ | - |
|
Income Tax Provision in the Statements of Operations
A reconciliation of the federal statutory income tax rate and the effective income tax rate as a percentage of incomeloss before income taxes is as follows:
For the reporting period ended August 31, 2014 | For the reporting period ended August 31, 2013 | |||||||
Federal statutory income tax rate | 34.0 | % | 34.0 | % | ||||
Increase (reduction) in income tax provision resulting from: | ||||||||
Net operating loss (“NOL”) carry-forwards | (34.0 | ) | (34.0 | ) | ||||
Effective income tax rate | 0.0 | % | 0.0 | % |
Tax years that remain subject to examination by major tax jurisdictions
|
| For the year ended August 31, 2019 |
|
| For the year ended August 31, 2018 |
| ||
|
|
|
|
|
|
| ||
Blended federal statutory income tax rate |
|
| 21.00 | % |
|
| 25.33 | % |
|
|
|
|
|
|
|
|
|
Increase (reduction) in income tax provision resulting from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating loss (“NOL”) carry-forwards |
|
| (21.00 | ) |
|
| (25.33 | ) |
|
|
|
|
|
|
|
|
|
Effective income tax rate |
|
| 0.0 | % |
|
| 0.0 | % |
The Company's corporationCompany’s income tax returnsfilings are subject to audit underby various taxing authorities. The Company’s open audit periods are August 31, 2018 to the statute of limitations by the Internal Revenue Service and the State of California for a period of three (3) years from the date they are filed. The table below summarizes thecurrent tax years for which the Company's corporation income tax returns remain subject to audit under the statute of limitations by the Internal Revenue Service and the State of California:year.
| |||||||
|
|
| |||||
|
|
Note 1110 – Subsequent Events
On October 24, 2019, we issued 4,712 shares of common stock to Grays Peak Ventures LLC, an entity controlled by Scott Stevens, our President and a Director, pursuant to a Notice of Conversion dated October 24, 2019, of $110,000 of Convertible Promissory Notes and $7,808.22 of accrued interest thereon. The Company has evaluated all events that occur afterconversion rate under the balance sheet date throughConvertible Promissory Notes was the 10-day VWAP of shares of common stock on the OTC Markets, which was $25.00 per share on the date when the financial statements were issued to determine if they must be reported. The Management of the Company determined that there were no reportable subsequent event(s) to be disclosed.conversion.
Table of Contents |
[OUTSIDE BACK COVER PAGE]GSL Healthcare, Inc.
PROSPECTUSMay 31, 2020
FAIRWIND ENERGY INC.Index to the Financial Statements
F-28 |
Table of Contents |
750,000 SHARESREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
COMMON STOCK
TO BE SOLD BY FAIRWIND ENERGY INC.To the Board of Directors and Stockholders of GSL Healthcare, Inc.
695,856 SHARES OF
COMMON STOCK
TO BE SOLD BY CURRENT SHAREHOLDERSOpinion on the Financial Statements
We have audited the accompanying balance sheet of GSL Healthcare, Inc. (“the Company”) as of May 31, 2020, and the related statements of operations, changes in stockholders’ equity (deficit), and cash flows for the period from April 15, 2020 ended May 31, 2020, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has an accumulated deficit, net losses, and negative cash flows from operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not authorizedinclude any dealer, salespersonadjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or other person to give you written information other than this prospectus or to make representations as to matters not stated in this prospectus. You must not rely on unauthorized information. This prospectusfraud. The Company is not required to have, nor were we engaged to perform, an offeraudit of its internal control over financial reporting. As part of our audit, we are required to sellobtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
We have served as the Company’s auditor since 2020.
Spokane, Washington
September 3, 2020
F-29 |
Table of Contents |
BALANCE SHEET (FROM INCEPTION (APRIL 15, 2020) TO MAY 31, 2020)
|
| May 31, 2020 |
| |
ASSETS |
|
|
| |
Current Assets |
|
|
| |
Total Current Assets |
| $ | - |
|
|
|
|
|
|
Equity investments |
|
| 19,553 |
|
TOTAL ASSETS |
| $ | 19,553 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
Total Current Liabilities |
| $ | - |
|
Total Liabilities |
|
| - |
|
Commitments and Contingencies |
|
|
|
|
Stockholders' Equity |
|
|
|
|
Common stock; $0.001 par value; 50,000,000 shares authorized: 27,932,271 issued and outstanding at May 31, 2020 |
|
| 27,932 |
|
Additional paid in capital |
|
| (8,380 | ) |
Retained earnings |
|
| - |
|
Total Stockholders' Equity |
|
| 19,553 |
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
| $ | 19,553 |
|
The accompanying notes are an integral part of these securities orfinancial statements.
F-30 |
Table of Contents |
STATEMENT OF OPERATIONS
From Inception (April 15, 2020) to May 31, 2020 | ||||
REVENUE, NET | $ | - | ||
TOTAL OPERATING EXPENSES | - | |||
NET LOSS | $ | - |
The accompanying notes are an integral part of these financial statements.
F-31 |
Table of Contents |
STATEMENT OF STOCHOLDERS’ DEFICIT
FROM INCEPTION (APRIL 15, 2020) TO MAY 31, 2020
|
|
|
|
|
| Additional |
|
|
|
|
| |||||||||
|
| Common Stock $0.001 Par |
|
| Paid In |
|
| Retained |
|
| Stockholders' |
| ||||||||
|
| Number |
|
| Amount |
|
| Capital |
|
| Earnings |
|
| Equity |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Balance, April 15, 2020 (inception) |
|
| - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued to founder |
|
| 8,379,684 |
|
|
| 8,380 |
|
|
| (8,380 | ) |
|
|
|
|
|
| - |
|
Shares issued per Securities Purchase Agreement |
|
| 19,552,587 |
|
|
| 19,553 |
|
|
| - |
|
|
| - |
|
|
| 19,553 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, May 31, 2020 |
|
| 27,932,271 |
|
| $ | 27,932 |
|
| $ | (8,380 | ) |
| $ | - |
|
| $ | 19,553 |
|
The accompanying notes are an integral part of these financial statements.
F-32 |
Table of Contents |
STATEMENT OF CASH FLOWS
|
| From Inception (April 15, 2020) to May 31, 2020 |
| |
|
|
|
| |
CASH FLOWS FROM OPERATING ACTIVITIES |
| $ | - |
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
| - |
|
|
|
|
|
|
CASH FLOW FROM FINANCING ACTIVITIES |
|
| - |
|
|
|
|
|
|
NET CHANGE IN CASH |
|
| - |
|
|
|
|
|
|
CASH, BEGINNING OF PERIOD |
|
| - |
|
|
|
|
|
|
CASH, END OF PERIOD |
| $ | - |
|
|
|
|
|
|
NON-CASH INVESTING AND FINANCING ACTIVITIES |
|
|
|
|
Shares issued to founders |
| $ | 8,380 |
|
Shares issued per Securities Purchase Agreement |
| $ | 19,553 |
|
The accompanying notes are an integral part of these financial statements.
F-33 |
Table of Contents |
NOTES TO FINANCIAL STATEMENTS
FROM INCEPTION (APRIL 15, 2020) TO MAY 31, 2020
NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION
Description of the Company
GSL Healthcare, Inc. (the “Company”) was incorporated in the State of Nevada on April 15, 2020 and established a solicitationfiscal year end of your offerAugust 31. The Company has a general plan to buybe a health and wellness business.
Going concern
These financial statements have been prepared on a going concern basis which assumes the securitiesCompany will be able to realize its assets and discharge its liabilities in any jurisdiction where that would not be permitted or legal. Neither the deliverynormal course of this prospectus nor any sales made hereunderbusiness for the foreseeable future. The Company is in the process of establishing its business plan and operations and will need to obtain financing. These and other factors raise substantial doubt about the Company's ability to continue as a going concern within one year after the date of this prospectus shall create an implicationfiling. The financial statements do not include any adjustments that might be necessary should the information contained herein nor the affairs of the Issuer have not changed since the date hereof.Company be unable to continue as a going concern.
Until ___________, 2015 (90 days afterThe Company’s ability to continue as a going concern is dependent upon its ability to raise additional capital and to ultimately achieve sustainable revenues and income from operations. The Company will need and is currently working on obtaining additional funds to operate its business through and beyond the date of this prospectus)filing. There can be no assurance that such funds will be available or at terms acceptable to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions and covenants on its operations, in the case of debt financing or cause substantial dilution for its stockholders in the case of convertible debt and equity financing.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The management of the Company is responsible for the selection and use of appropriate accounting policies and the appropriateness of accounting policies and their application. Critical accounting policies and practices are those that are both most important to the portrayal of the Company’s financial condition and results and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. The Company’s significant and critical accounting policies and practices are disclosed below as required by generally accepted accounting principles.
Use of Estimates and Assumptions
Preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Among other things, management estimates include the valuation of its equity investment. These estimates generally involve complex issues and require judgments, involve analysis of historical information and the prediction of future trends, and are subject to change from period to period. Actual amounts could differ significantly from these estimates.
F-34 |
Table of Contents |
GSL HEALTHCARE, INC.
NOTES TO FINANCIAL STATEMENTS
FROM INCEPTION (APRIL 15, 2020) TO MAY 31, 2020
Fair Value of Financial Instruments
The Company follows paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments and paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
Level 1 | Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. | |
Level 2 | Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. | |
Level 3 | Pricing inputs that are generally observable inputs and not corroborated by market data. |
Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.
The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
The carrying amounts of the Company’s financial assets and liabilities approximate their fair values because of the short maturity of these instruments.
Investments
The Company follows ASU 2016-01, Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 primarily affects equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. Among other things, this guidance requires certain equity investments to be measured at fair value with changes in fair value recognized in net income. As such, the Company measures its equity investments at their fair value at end of each reporting period.
Investments accounted for under the equity method or cost method of accounting above are included in the caption "Equity investments" on the Balance Sheet. Management uses Level 3 inputs, as defined in paragraph 820-10-35-37 of the FASB Accounting Standards Codification, to measure the fair value of its financial instruments.
The changes in carrying amount of the equity investment was as follows:
|
| From April 15, 2020 (Inception) to May 31, 2020 |
| |
Beginning balance |
| $ | - |
|
Acquisitions |
|
| 19,553 |
|
Dispositions |
|
| - |
|
Net changes in valuation |
|
| - |
|
Ending balance |
| $ | 19,553 |
|
Recent Accounting Pronouncements
Recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants did not or are not believed by management to have a material impact on the Company’s present or future financial statements.
F-35 |
Table of Contents |
GSL HEALTHCARE, INC.
NOTES TO FINANCIAL STATEMENTS
FROM INCEPTION (APRIL 15, 2020) TO MAY 31 2020
NOTE 3 – SECURITIES PURCHASE AGREEMENT
On May 8, 2020, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) by and among the Company, and Applied BioSciences Corp, a Nevada corporation (“Applied”), and the holders of common stock of Applied. This transaction closed on May 31, 2020.
Per the Securities Purchase Agreement, in exchange for the issuance of 19,552,587 shares of the Company’s common stock or 70% of the Company, Applied sold and transferred 100% of the limited liability interests of its wholly owned subsidiaries Applied Biopharma LLC and Applied Products LLC along with trade names, domain names and certain agreements held by these LLCs, and a 10% limited liability interest in API Holdings LLC, a wholly owned subsidiary of Applied that holds less than 5% equity investments in certain private companies. As a result of the Securities Purchase Agreement, Applied BioPharma LLC and Applied Products LLC are now wholly-owned subsidiaries of the Company and shareholders of Applied own 70% of the Company.
The Securities Purchase Agreement was treated as an asset purchase and the fair value of the shares issued was determined by management to be the par value of the Company’s common stock given no activity occurred in the Company from inception (April 15, 2020) to May 31, 2020 other than entering into this Securities Purchase Agreement. The fair value of the assets obtained from Applied was determined to be $57,091, which represented 10% of the fair value of the equity investments held by Applied and no value was attributed to the intangibles obtained from Applied given Applied has an accumulated deficit related to these intangibles. As such, the fair value of the assets obtained was determined by management to be $37,538 in excess of the value of the shares issued of $19,553, which resulted in negative goodwill. Given this, the Company reduced the value of the equity investment obtained to the value of the shares issued by the Company. As such, the assets purchased represented the interest obtained in equity investments held by Applied reduced by $19,553 related to negative goodwill.
NOTE 4 – SHARE EXCHANGE AGREEMENT
On May 28, 2020, Agentix Corp., a Nevada corporation (“Agentix”), entered into a Share Exchange Agreement (the “Share Exchange Agreement”), by and among Agentix, and the Company, and the holders of common stock of the Company, which consisted of two stockholders.
Under the terms and conditions of the Share Exchange Agreement, Agentix offered and sold 27,932,271 shares of its common stock in consideration for all dealers that effect transactions in theseof the issued and outstanding shares of common stock may be required to deliverof the Company. The effect of the issuance is that two shareholders of the Company now hold approximately 88.0% of the issued shares of common stock of Agentix, and the Company is now a prospectus. This is in addition to the dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to their unsold allotments or subscriptions.wholly-owned subsidiary of Agentix.
THE DATE OF THIS NOTE 5 – SHARES ISSUED TO FOUNDER
In conjunction with the formation of the Company on April 15, 2020, the Company issued 8,379,684 shares of its common stock at no cost.
NOTE 6 – SUBSEQUENT EVENTS
In accordance with ASC 855, the Company has analyzed its operations subsequent to May 31, 2020 through the date these financial statements were issued and has determined that it does not have any other material subsequent events to disclose in these financial statements.
F-36 |
Table of Contents |
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The Unaudited Pro Forma Financial Information reflects financial information that gives effect to the acquisition of GSL Healthcare, Inc., a Nevada corporation formed on April 15, 2020 (GSL), by Agentix Corp., a Nevada corporation (the “Company”), per a Share Exchange Agreement (the “Share Exchange Agreement”) entered into on May 28, 2020, by and among the Company, GSL, and the holders of the common stock of GSL.
Under the terms and conditions of the Share Exchange Agreement, the Company offered and sold 27,932,271 shares of common stock of the Company in consideration for all of the issued and outstanding shares of common stock of GSL. The effect of the issuance is that former two GSL shareholders now hold approximately 88.0% of the issued shares of common stock of the Company, and GSL is now a wholly-owned subsidiary of the Company.
The Unaudited Pro Forma Financial Information appearing below is presented for illustrative purposes only, is based upon a number of assumptions and estimates, is subject to uncertainties, and the data does not purport to be indicative of the actual results of the operations or financial condition that would have occurred had the transactions described above in fact occurred on the dates indicated, nor does it purport to be indicative of the results of operations or financial condition that the combined company may achieve in the future.
The Unaudited Pro Forma Financial Information appearing below also does not consider any potential effects of changes in market conditions on revenues or expense efficiencies, among other factors.
The Unaudited Pro Forma Balance Sheet gives effect to the transaction as if it had occurred on May 31, 2020. The Unaudited Pro Forma Consolidated Income Statement gives effect to the transaction as if it had occurred at the beginning of the earliest period presented, combining the results of the Company and GSL for the fiscal year ended August 31, 2019 and the nine months ended May 31, 2020.
F-37 |
Table of Contents |
Agentix Corp. & GSL Healthcare, Inc.
Unaudited Pro Forma Consolidated Income Statement
For the Nine Months Ended May 31, 2020
|
| Agentix Corp. |
|
| GSL Healthcare, Inc. |
|
| Pro Forma Adjustments |
|
| Pro Forma |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
| ||||
General and administrative |
| $ | 1,577 |
|
| $ | - |
|
| $ | - |
|
| $ | 1,577 |
|
Professional Fees |
|
| 1,304,609 |
|
|
| - |
|
|
|
|
|
|
| 1,304,609 |
|
TOTAL OPERATING EXPENSES |
|
| 1,306,186 |
|
|
| - |
|
|
| - |
|
|
| 1,306,186 |
|
OPERATING LOSS |
|
| (1,306,186 | ) |
|
| - |
|
|
| - |
|
|
| (1,306,186 | ) |
Other Income (Expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
| (4,524 | ) |
|
| - |
|
|
| - |
|
|
| (4,524 | ) |
Total other (expense), net |
|
| (4,525 | ) |
|
| - |
|
|
| - |
|
|
| (4,525 | ) |
NET LOSS |
| $ | (1,310,710 | ) |
| $ | - |
|
| $ | - |
|
| $ | (1,310,710 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS PER COMMON SHARE |
| $ | (0.46 | ) |
|
| - |
|
|
|
|
|
| $ | (0.04 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE SHARES OUTSTANDING |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
| 2,844,160 |
|
|
| - |
|
|
|
|
|
|
| 30,776,431 |
|
See notes to unaudited pro forma financial information
F-38 |
Table of Contents |
Agentix Corp. & GSL Healthcare, Inc.
Unaudited Pro Forma Consolidated Income Statement
For the Fiscal Year Ended August 31, 2019
|
| Agentix Corp. |
|
| GSL Healthcare, Inc. |
|
| Pro Forma Adjustments |
|
| Pro Forma |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
| ||||
General and administrative |
|
| 3,995 |
|
|
| - |
|
|
| - |
|
|
| 3,995 |
|
Professional Fees |
|
| 57,322 |
|
|
| - |
|
|
|
|
|
|
| 57,322 |
|
Salary and wages - officers |
|
| 60,000 |
|
|
| - |
|
|
| - |
|
|
| 60,000 |
|
TOTAL OPERATING EXPENSES |
|
| 121,317 |
|
|
| - |
|
|
| - |
|
|
| 121,317 |
|
OPERATING LOSS |
|
| (121,317 | ) |
|
| - |
|
|
| - |
|
|
| (121,317 | ) |
Other Income (Expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
| (11,335 | ) |
|
| - |
|
|
| - |
|
|
| (11,335 | ) |
Total other (expense), net |
|
| (11,335 | ) |
|
| - |
|
|
| - |
|
|
| (11,335 | ) |
NET LOSS |
| $ | (132,652 | ) |
| $ | - |
|
| $ | - |
|
| $ | (132,652 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS PER COMMON SHARE |
| $ | (0.06 | ) |
|
| - |
|
|
| - |
|
| $ | (0.06 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE SHARES OUTSTANDING |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
| 2,057,000 |
|
|
| - |
|
|
| - |
|
|
| 2,057,000 |
|
See notes to unaudited pro form financial information
F-39 |
Table of Contents |
Agentix Corp. & GSL Healthcare, Inc.
Unaudited Pro Forma Consolidated Balance Sheet
As of May 31, 2020
|
| Agentix Corp. |
|
| GSL Healthcare, Inc. |
|
| Pro Forma Adjustments |
|
| Pro Forma |
| ||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Current Assets |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cash |
| $ | 17 |
|
| $ | - |
|
| $ | - |
|
| $ | 17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Current Assets |
|
| 17 |
|
|
| - |
|
|
| - |
|
|
| 17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity investment |
|
| - |
|
|
| 19,553 |
|
|
| - |
|
|
| 19,553 |
|
Goodwill |
|
| - |
|
|
| - |
|
|
| 678,754 | (1) |
|
| 678,754 |
|
TOTAL ASSETS |
| $ | 17 |
|
| $ | 19,553 |
|
| $ | 678,754 |
|
| $ | 698,324 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable |
| $ | 15,734 |
|
| $ | - |
|
| $ | - |
|
| $ | 15,734 |
|
Accrued expenses - related party |
|
| 27,970 |
|
|
| - |
|
|
| - |
|
|
| 27,970 |
|
Total Current Liabilities |
|
| 43,704 |
|
|
| - |
|
|
| - |
|
|
| 43,704 |
|
Total Liabilities |
|
| 43,704 |
|
|
| - |
|
|
| - |
|
|
| 43,704 |
|
Commitments and Contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Deficit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock |
|
| 3,807 |
|
|
| 27,932 |
|
|
| - | (2) |
|
| 31,739 |
|
Additional paid in capital |
|
| 45,296,340 |
|
|
| (8,380 | ) |
|
| 678,754 | (3) |
|
| 45,966,715 |
|
Accumulated deficit |
|
| (45,343,834 | ) |
|
| - |
|
|
| - |
|
|
| (45,343,834 | ) |
Total Stockholders’ (Deficit) Equity |
|
| (43,687 | ) |
|
| 19,553 |
|
|
| 678,754 |
|
|
| 654,620 |
|
TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY |
| $ | 17 |
|
| $ | 19,553 |
|
| $ | 678,754 |
|
| $ | 698,324 |
|
See notes to unaudited pro forma financial information
F-40 |
Table of Contents |
Notes to Unaudited Pro Forma Financial Information
Note 1 – Basis of Presentation
The Unaudited Pro Forma Financial Information and explanatory notes have been prepared to illustrate the effects of the acquisition under the acquisition method of accounting with the Company as the acquirer. The Unaudited Pro Forma Financial Information is presented for illustrative purposes only and does not necessarily indicate the financial results of the combined companies had the companies actually been combined at the beginning of the periods presented, nor does it necessarily indicate the results of operations in future periods or the future financial position of the combined entities. Under the acquisition method of accounting, the assets and liabilities of GSL, as of the effective date of the acquisition, will be recorded by the Company at their respective fair values and the excess of the consideration over the fair value of GSL’s net assets will be allocated to goodwill.
Note 2 – Preliminary Purchase Price Allocation
The acquisition price consists of the issuance of 27,932,271 shares of the Company’s common stock with an estimated value of $698,307. The estimated allocation of the purchase price on the closing date of acquisition (May 31, 2020) consisted of equity investment interest held by GSL of $19,553 and goodwill of $678,754.
The pro forma allocation of the purchase price reflected in the Unaudited Pro Forma Financial Information is subject to adjustment and may vary from the actual purchase price allocation once completed. Adjustments may include, but not limited to, adjustments of GSL’s balance sheet through the effective date of the acquisition; the value of the shares issued to GSL; and any revisions to estimated fair value of assets and intangible assets acquired, if any, and liabilities assumed. Accordingly, the preliminary estimated fair values of these assets and liabilities are subject to change pending additional information that may be developed by the Company and GSL. Further, the accounting policies of GSL are in the process of being reviewed in detail. Upon completion of such review, conforming adjustments of financial statement reclassifications may be determined.
Note 3 – Pro Forma Adjustments
The following adjustments were made to reflect the combination of GSL and Agentix.
(1) Estimated amount of goodwill once the purchase price allocation is completed (see Note 2).
(2) 27,932,271 shares issued at a par value of $0.001 less book value of the common stock of GSL.
(3) Purchase price paid of $698,307 less GSLs net assets of $19,553.
F-41 |
Table of Contents |
AGENTIX CORP.
Up to 2,750,721 Shares of Common Stock
PROSPECTUS IS ____________, 2015
, 2020
Table of Contents |
PART II -
INFORMATION NOT REQUIRED IN PROSPECTUS
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTIONItem13.Other Expenses of Issuance and Distribution.
We are paying all of the selling stockholders’ expenses related to this offering, except that the selling stockholders will pay any applicable underwriting discounts and commissions. The fees and expenses payable by us in connection with this Registration Statement are estimated as follows:
Securities and Exchange Commission Registration Fee |
| $ | 1,068 |
|
Accounting Fees and Expenses |
| $ | 10,000 |
|
Legal Fees and Expenses |
| $ | 25,000 |
|
Printing Expenses |
| $ | None |
|
Miscellaneous Fees and Expenses |
| $ | None |
|
Total |
| $ | 36,068 |
|
Item 14.Indemnification of Directors and Officers.
Our amended and restated bylaws provide that we will indemnify our directors, officers and employees to the fullest extent permitted by the Nevada Revised Statutes (“NRS”).
If the NRS are amended to authorize corporate action further eliminating or limiting the personal liability of a director, then the liability of our directors will be eliminated or limited to the fullest extent permitted by the NRS, as so amended. Our articles of incorporation do not eliminate a director’s duty of care and, in appropriate circumstances, equitable remedies, such as injunctive or other forms of non-monetary relief, will remain available under the NRS. This provision also does not affect a director’s responsibilities under any other laws, such as the federal securities laws or other state or federal laws. Under our bylaws, we are empowered to enter into indemnification agreements with our directors, officers and employees to purchase insurance on behalf of any person whom we are required or permitted to indemnify.
We believe that these bylaw provisions are necessary to attract and retain qualified persons as directors, officers and employees. We also maintain directors’ and officers’ liability insurance.
The limitation of liability and indemnification provisions in our bylaws may discourage shareholders from bringing a lawsuit against our directors and officers for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against directors and officers, even though an action, if successful, might benefit us and our stockholders. Further, a stockholder’s investment may be adversely affected to the extent that we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and certain employees pursuant to the foregoing provisions, or otherwise, we have been advised that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable.
There is no pending litigation or proceeding naming any of our directors or officers as to which indemnification is being sought, nor are we aware of any pending or threatened litigation that may result in claims for indemnification
Item 15.Recent Sales of Unregistered Securities.
On October 24, 2019, we issued 4,712 shares of common stock to Grays Peak Ventures LLC, an entity controlled by Scott Stevens, a director, pursuant to a Notice of Conversion dated October 24, 2019, of $110,000 of Convertible Promissory Notes and $7,808.22 of accrued interest thereon. The conversion rate under the Convertible Promissory Notes was the 10-day VWAP of shares of common stock on the OTC Markets, which was $25.00 per share on the date of conversion.
On May 28, 2020, we entered into a Share Exchange Agreement (the “Share Exchange Agreement”), by and among the Company, and GSL Healthcare, Inc., a Nevada corporation (“GSL Healthcare”), and the holders of common stock of GSL Healthcare, which consisted of two stockholders. Under the terms and conditions of the Share Exchange Agreement, the Company offered and sold 27,932,271 shares of common stock of the Company in consideration for all of the issued and outstanding shares of common stock of GSL Healthcare. We made the offer and sale of the 27,932,271 shares of common stock of the Company pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, in a non-public offering to two sophisticated persons who had access to registration-type of information about the Company.
On June 15, 2020, the Company sold 317,389 shares of common stock to 4 accredited investors, at a purchase price of $0.01 per share, for aggregate offering proceeds of $3,174. The offer and sale was made pursuant to the exemptions for registration afforded by Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D, promulgated under the Securities Act.
On July 22, 2020, the Company sold 2,433,332 shares of common stock to 8 accredited investors, at a purchase price of $0.25 per share, for aggregate offering proceeds of $608,333. The offer and sale was made pursuant to the exemptions for registration afforded by Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D, promulgated under the Securities Act.
II-1 |
Table of Contents |
Item 16. Exhibits and Financial Statement Schedules.
(a) The following table setsExhibits, as required by Item 601 of Regulation SK, are attached or incorporated by reference, as stated below.
Number | Description | |
23.3* | Consent of Quick Law Group PC (included in Exhibit 5.1) | |
24.1 | Power of Attorney (included as part of signature page to this registration statement) |
________
(1) | Incorporated by reference to the Registrant’s Form 8-K (File No. 333-194975), filed with the SEC on May 28, 2020. |
(2) | Incorporated by reference to the Registrant’s Form S-1 (File No. 333-194975), filed with the SEC on April 1, 2014. |
(3) | Incorporated by reference to the Registrant’s Form 8-K (File No. 000-55383), filed with the SEC on July 11, 2019. |
* Filed herewith.
II-2 |
Table of Contents |
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated expensesmaximum offering range may be reflected in connectionthe form of prospectus filed with the issuanceCommission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement.
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
provided, however , that subparagraphs (i), (ii) and (iii) above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Securities and Exchange Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement;
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered hereby. All such expenses will be borne bythat remain unsold at the Company; nonetermination of the offering.
(4) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A (§230.430A of this chapter), shall be bornedeemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any selling security holders.statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
Item | Amount ($) | |||
SEC Registration Fee | $ | 226 | ||
Accounting Fees | 3,000 | |||
Printing Costs | 1,000 | |||
Transfer Agent fees | 500 | |||
TOTAL | $ | 4,726 |
INDEMNIFICATION OF DIRECTORS AND OFFICERS(5) That, for the purpose of determining liability of the undersigned registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities:
The Company’s Bylaws and Articlesundersigned registrant undertakes that in a primary offering of Incorporation provide that we shall,securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the full extent permittedpurchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the Nevada General Business Corporation Law, as amended from timeundersigned registrant;
(iii) The portion of any other free writing prospectus relating to time (the “Nevada Corporate Law”), indemnify all of our directors and officers. Section 78.7502the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the Nevada Corporate Law providesundersigned registrant; and
(iv) Any other communication that is an offer in partthe offering made by the undersigned registrant to the purchaser.
(6) That, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that a corporationis incorporated by reference in the registration statement shall have the power to indemnify any person who was or is a party or is threatenedbe deemed to be made a partynew registration statement relating to any threatened, pending or completed action, suit or proceeding (other than an action by or in the rightsecurities offered therein, and the offering of the corporation) by reason of the factsuch securities at that such person is or was a director, officer, employee or agent of another corporation or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believedtime shall be deemed to be in or not opposed to the best interests of the corporation, and with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.initial bona fide offering thereof.
Similar indemnity is authorized for such persons against expenses (including attorneys’ fees) actually and reasonably incurred in defense or settlement of any threatened, pending or completed action or suit by or in the right of the corporation, if such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and provided further that (unless a court of competent jurisdiction otherwise provides) such person shall not have been adjudged liable to the corporation. Any such indemnification may be made only as authorized in each specific case upon a determination by the stockholders or disinterested directors that indemnification is proper because the indemnitee has met the applicable standard of conduct. Under our Bylaws and Articles of Incorporation, the indemnitee is presumed to be entitled to indemnification and we have the burden of proof to overcome that presumption. Where an officer or a director is successful on the merits or otherwise in the defense of any action referred to above, we must indemnify him against the expenses which such offer or director actually or reasonably incurred. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
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RECENT SALES OF UNREGISTERED SECURITIES
On April 18, 2013, we offered and sold 4,000,000 shares of common stock to Michael Winterhalter, our President and Chief Executive Officer, then-Secretary, Treasurer and Chairman of the Board of Directors at a purchase price of $0.001 per share, for aggregate consideration of $4,000. The offer and sale was made in a non-public offering pursuant to the exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended.
On April 18, 2013, we offered and sold 1,000,000 shares of common stock to Eric Krogius, who became a Director on June 2, 2103, at a purchase price of $0.001 per share, for aggregate consideration of $1,000. The offer and sale was made in a non-public offering pursuant to the exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended.
Between May 15, 2013 and July 11, 2013, we offered and sold an aggregate of 300,000 shares of common stock for a purchase price of $0.40 per shares to four purchasers for aggregate proceeds of $120,000. The offer of 300,000 shares was made solely to “accredited investors” in a non-public offering pursuant to the exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 of Regulation D, promulgated pursuant to the Securities Act of 1933, as amended.
On December 3, 2013, we offered and sold 375,000 shares of common stock to Han Bao Dong, at a purchase price of $0.40 per share, for aggregate proceeds of $150,000. The offering was made offshore of the U.S., to a non-U.S. person, , with no directed selling efforts in the U.S., where offering restrictions were implemented in a transaction pursuant to the exclusion from registration provided by Rule 903(b)(3) of Regulation S, promulgated pursuant to the Securities Act of 1933, as amended.
On January 14, 2014, we offered and sold 2,106 shares of common stock to one purchaser at a purchase price of $0.95 per share for aggregate proceeds of $2,000.70. The offer and sale was made in a non-public offering pursuant to the exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended.
On August 14, 2014 we sold 250,000 shares of common stock to Han Bao Dong, at a purchase price of $0.40 per share, for aggregate proceeds of $100,000. The offering was made offshore of the U.S., to a non-U.S. person, , with no directed selling efforts in the U.S., where offering restrictions were implemented in a transaction pursuant to the exclusion from registration provided by Rule 903(b)(3) of Regulation S, promulgated pursuant to the Securities Act of 1933, as amended. The offer was made on December 3, 2013.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following exhibits are filed as part of this registration statement:
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(1) Incorporated by reference to the Registrant’s Form S-1 (File No. 333-194975), filed with the Commission on April 1, 2014.
(2) Incorporated by reference to the Registrant’s Amendment No. 1 to Form S-1 (File No. 333-194975), filed with the Commission on October 31, 2014.
(3) Incorporated by reference to the Registrant’s Amendment No. 2 to Form S-1 (File No. 333-194975), filed with the Commission on December 17, 2014.
UNDERTAKINGS
The undersigned Registrant hereby undertakes:
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Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the “Act”) may be permitted to our directors, officers and controlling persons pursuant to the provisions above, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities, other than the payment by us of expenses incurred or paid by one of our directors, officers, or controlling persons in the successful defense of any action, suit or proceeding, is asserted by one of our directors, officers, or controlling persons in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification is against public policy as expressed in the Securities Act, and we will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Monarch Beach,the City of Coral Spring, State of California,Florida on January 7, 2015.September 3, 2020.
AGENTIX CORP. |
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By: | /s/ | |||
Name: |
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POWER OF ATTORNEY
KNOW ALL PERSONSMEN BY THESE PRESENTS, that each person whose signature appears below constituteswe, the undersigned officers and appoints Michael Winterhalter,directors of Agentix Corp., a Nevada corporation, do hereby constitute and appoint Rudy Mazzocchi as his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution,re-substitution, for him and in his name, place, and stead, in any and all capacities, to sign any orand all amendments (including post-effective amendments)amendments, exhibits thereto and other documents in connection therewith) to this Registration Statement on Form S-1and any subsequent registration statement filed by the registrant pursuant to Rule 462(b) of FairWind Energy Inc.,the Securities Act of 1933, as amended, which relates to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, grantgranting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the foregoing,connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
In accordance withPursuant to the requirements of the Securities Act of 1933, as amended, this registration statement washas been signed by the following persons in the capacities and on the dates stated.indicated.
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September 3, 2020 | |||||
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| September 3, 2020 | ||
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/s/ Rehan Huda | Director |
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Rehan Huda |
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/s/ Scott Stevens |
| Director | September 3, 2020 | ||
Scott Steven |
Exhibit Index
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(1) Incorporated by reference to the Registrant’s Form S-1 (File No. 333-194975), filed with the Commission on April 1, 2014.
(2) Incorporated by reference to the Registrant’s Amendment No. 1 to Form S-1 (File No. 333-194975), filed with the Commission on October 31, 2014.
(3) Incorporated by reference to the Registrant’s Amendment No. 2 to Form S-1 (File No. 333-194975), filed with the Commission on December 17, 2014.
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