Electro Power System Ipo Underwriter

Electro power system ipo underwriter

 

Table of Contents

As filed with the Securities and Exchange Commission on August 29, 2019

 

Registration No. 333-_______

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM S-1

 

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

 

BIOLARGO, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

  

2800

  

65-0159115

(State or other jurisdiction of

  

(Primary Standard Industrial

  

(I.R.S.

Employer

incorporation or organization)

  

Classification Code Number)

  

Identification No.)

 

BioLargo, Inc.

14921 Chestnut St.

Westminster, CA 92683

 

(888) 400-2863

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

Copy to:

Christopher A.

Electro power system ipo underwriter

Wilson, Esq. 

Wilson Bradshaw & Cao, LLP

18818 Teller Avenue, Suite 115

Irvine, CA 92612

Tel: (949) 752-1100

[email protected]

 

Agents and Corporations, Inc.

1201 Orange Street, Suite 600

Wilmington, DE 19801

(302) 575-0877

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

Approximate date of commencement of proposed sale to the public:

From time to time after this registration statement is declared effective.

 

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: ☐

 

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) 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(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,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer: ☐

 

Smaller reporting company: ☒

Accelerated filer: ☐

 

Emerging growth company ☐

Non-accelerated filer: ☒

  

 

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 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 

Proposed Maximum

Offering Price Per

Share(1)

Proposed Maximum

Aggregate Offering 

Price(1)

Amount of

Registration

Fee(2)

Shares of Common Stock, par value $0.00067 per share, to be sold by the Selling Stockholders

26,118,179 

$0.279

$7,311,336

$886.13

 

 

(1)

Estimated solely for purposes of calculating the registration fee in accordance with Rule 457(c) and (g) under the Securities Act of 1933, as amended.

 

(2)

The registration fee has been paid.

 

 

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 Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

The information in this prospectus is not complete and may be changed.

These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

 

PROSPECTUS (Subject to Completion)

Dated: August 29, 2019

 

PROSPECTUS 

 

26,118,179shares of common stock

 

This prospectus relates to the offer and sale of up to 26,118,179 shares of common stock, par value $0.00067, of BioLargo, Inc., a Delaware corporation, by the selling stockholders identified herein (referred to collectively herein as the “selling stockholders,” or individually as a “selling stockholder”).

The shares are all issuable upon exercise of warrants granted to the selling stockholders at various times. The exercise price and other terms of the warrants vary and are described in more detail in this prospectus.

 

The warrants were issued between December 16, 2014 and August 16, 2019, at exercise prices ranging from $0.25 to $0.70 per share. The warrants expire on various dates ranging from December 16, 2019 through August 16, 2024. The warrants were issued pursuant to various warrant agreements, all of which are listed as Exhibits to the registration statement of which this prospectus is part.

 

We are not selling any securities under this prospectus and will not receive any of the proceeds from the sale of shares by the selling stockholders.

We may receive up to approximately $7,311,336 aggregate gross proceeds in the event the warrants are exercised.

 

After exercise of the warrants, the selling stockholders may sell the shares of common stock described in this prospectus in a number of different ways and at varying prices. See “Plan of Distribution” for more information about how the selling stockholders may sell the shares of common stock being registered pursuant to this prospectus.

In Re Initial Public Offering Securities Lit., 241 F. Supp. 2d 281 (S.D.N.Y. 2003)

Each selling stockholder may be considered “underwriter” within the meaning of Section 2(a)(11) of the Securities Act of 1933, as amended.

 

We will pay the expenses incurred in registering the shares, including legal and accounting fees.

See “Plan of Distribution”.

 

Since January 23, 2008, our common stock has been quoted on the OTC Markets “OTCQB” marketplace (formerly known as the “OTC Bulletin Board”, and referred to in this prospectus as the “OTC Markets”) under the trading symbol “BLGO.” On August 23, 2019, the last reported sale price of our common stock on the OTC Markets was $0.25.

 

The securities offered in this prospectus involve a high degree of risk.

You should consider the risk factors beginning on page 3 before purchasing our common stock.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus.

Any representation to the contrary is a criminal offense.

 

The date of this prospectus is August 29, 2019

 

 

TABLE OF CONTENTS

 

 

 

 

 

Unless otherwise specified, the information in this prospectus is set forth as of August 23, 2019, and we anticipate that changes in our affairs will occur after such date.

We have not authorized any person to give any information or to make any representations, other than as contained in this prospectus, in connection with the offer contained in this prospectus.

Electro power system ipo underwriter

If any person gives you any information or makes representations in connection with this offer, do not rely on it as information we have authorized. This prospectus is not an offer to sell our common stock in any state or other jurisdiction to any person to whom it is unlawful to make such offer.

 

 

PROSPECTUS SUMMARY

 

The following summary highlights selected information from this prospectus and may not contain all the information that is important to you.

You should read this entire prospectus, including the section titled “Risk Factors,” and our financial statements and the notes included in the Annual Report on Form 10-K for year ended December 31, 2018, incorporated herein by reference, before deciding to invest in our Common Stock, and the financial statements and notes included in the Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2019 and June 30, 2019.  When we refer in this prospectus to “BioLargo,” the “company,” “our company,” “we,” “us” and “our,” we mean BioLargo, Inc., a Delaware corporation, and its wholly owned subsidiaries, BioLargo Life Technologies, Inc., a California corporation, Odor-No-More, Inc., a California corporation, BioLargo Water Investment Group, Inc., a California corporation and its subsidiary BioLargo Water, Inc., a Canadian corporation, BioLargo Development Corp., a California corporation, BioLargo Engineering, Science & Technologies, LLC, Tennessee limited liability company, and our partially owned subsidiary Clyra Medical Technologies, Inc., a California corporation.

This prospectus contains forward-looking statements and information relating to BioLargo. See “Cautionary Note Regarding Forward Looking Statements” on page 15.

 

Our Company

 

BioLargo, Inc. is a Delaware corporation.

 

Our principal executive offices are located at 14921 Chestnut St., Westminster, California 92683.

Our telephone number is (888) 400-2863.

 

The Offering

 

This prospectus covers 26,118,179 shares of stock, all of which are offered for sale by the selling stockholders. The shares offered hereby are not yet issued and outstanding but will be issued upon exercise of warrants issued to the selling stockholders.

 

Securities Offered

 

Common stock to be offered by the selling stockholder

 

26,118,179 shares issuable upon the exercise of outstanding warrants.

 

 

 

Common stock outstanding prior to this offering

 

157,380,022 shares, as of August 23, 2019.

 

 

Common stock to be outstanding after giving effect to the issuance of 26,118,179 additional shares registered hereunder

 

Assuming all warrants are exercised, 183,498,201shares. 

   

Use of Proceeds

 

We will receive no proceeds from the sale of shares of common stock by the selling stockholders in this offering.

We will receive up to $7,311,336 in aggregate gross proceeds upon exercise of the warrants. Any proceeds that we receive from the selling stockholders upon exercise of the warrants will be used for working capital requirements of the Company’s business divisions and for the repayment of debt.

What Does an IPO Underwriter Do?

See “Use of Proceeds.”

 

 

 

Risk factors

 

This investment involves a high degree of risk. See “Risk Factors” for a discussion of factors you should consider carefully before making an investment decision.

   

Symbol on the OTC Markets

 

“BLGO”

 

 

RISK FACTORS

 

An investment in our common stock is highly speculative, involves a high degree of risk and should be made only by investors who can afford a complete loss.

You should carefully consider the following risk factors, together with the other information in this prospectus, including our financial statements and the related notes, before you decide to buy our common stock. If any of the following risks actually occurs, then our business, financial condition or results of operations could be materially adversely affected, the trading of our common stock could decline, and you may lose all or part of your investment therein.

 

Risks Relating to our Business 

 

Our limited operating history makes evaluation of our business difficult. 

 

We have limited and only nominal historical financial data upon which to base planned operating expenses or forecast accurately our future operating results. Because our operations are not yet sufficient to fund our operational expenses, we rely on investor capital to fund operations.

When will uber ipo be available

Our limited operational history make it difficult to forecast the need for future financing activities. Further, our limited operating history will make it difficult for investors and securities analysts to evaluate our business and prospects. Our failure to address these risks and difficulties successfully could seriously harm us. 

 

We have never generated any significant revenues, have a history of losses, and cannot assure you that we will ever become or remain profitable. 

 

We have not yet generated any significant revenue from operations, and, accordingly, we have incurred net losses every year since our inception.

To date, we have dedicated most of our financial resources to research and development, general and administrative expenses, and initial sales and marketing activities. We have funded the majority of our activities through the issuance of convertible debt or equity securities. Although sale of our CupriDyne Clean products are increasing, and we are devoting more energy and money to our sales and marketing activities, we continue to anticipate net losses and negative cash flow for the foreseeable future.

Ferrari IPO Case Study

Our ability to reach positive cash flow depends on many factors, including our ability to fund sales and marketing activities, and the rate of client adoption. There can be no assurance that our revenues will be sufficient for us to become profitable in 2019 or future years, or thereafter maintain profitability.

We may also face unforeseen problems, difficulties, expenses or delays in implementing our business plan, including generally the need for odor control products in solid waste handling operations, which we may not fully understand or be able to predict.

 

Our cash requirements are significant. We will require additional financing to sustain our operations and without it we may not be able to continue operations. 

 

Our cash requirements and expenses will continue to be significant.

Our net cash used in continuing operations for the year ended December 31, 2018 was almost $4,000,000, over $300,000 per month, and this trend has continued in 2019.

During calendar year 2018, we generated only $1,364,000 in total gross revenues, and in the first six months of 2019, only $790,000. In order to become profitable, we must significantly increase our revenues and reduce our expenses.

Forex factory arrow forexpops

Although our revenues are increasing through sales of our products and from our engineering division, we expect to continue to use cash in 2019 as it becomes available.  

 

At December 31, 2018 and June 30, 2019, we had working capital deficits of approximately $1,536,000 and $3,473,000.

Our auditor’s report for the year ended December 31, 2018 includes an explanatory paragraph to their audit opinion stating that our recurring losses from operations and working capital deficiency raise substantial doubt about our ability to continue as a going concern. We do not currently have sufficient financial resources to fund our operations or those of our subsidiaries.

Electro power system ipo underwriter

Therefore, we need additional financing to continue these operations.   

 

During 2019, we have raised over $4.0 million through the issuance of promissory notes and stock purchase warrants.

These funds have been used to refinance existing debt (which was approximately $3.5 million as of December 31, 2018), and for working capital.

 

We have one long-term financing instrument in place.

In August 2017, we entered into a three-year purchase agreement with Lincoln Park Capital Fund LLC (“Lincoln Park”) through which we may direct Lincoln Park to purchase shares of our common stock at prices that depend on the market price of our stock (the “LPC Agreement”).

Over time, and subject to multiple limitations, we may direct Lincoln Park to purchase up to $10,000,000 of our common stock. Since inception of the LPC Agreement, through December 31, 2018, we directed Lincoln Park to purchase 4,025,733 shares of our common stock, and received $1,349,969 in proceeds. During the year ended December 31, 2018, we directed Lincoln Park to purchase 2,850,733 shares of our common stock, and received $838,884 in proceeds.

As of the date of this prospectus, we have not used this financing instrument in 2019. The extent to which we rely on Lincoln Park as a source of funding in 2019 will depend on a number of factors, including the prevailing market price of our common stock, and the extent to which we are able to secure working capital from other sources.

If obtaining sufficient funding from Lincoln Park were to prove unavailable or prohibitively dilutive, we will need to secure another source of funding in order to satisfy our working capital needs.  Even if we were receive the full maximum commitment of $10,000,000 in aggregate gross proceeds from sales of our common stock to Lincoln Park during the three year term of the LPC Agreement, we may still need additional capital to fully implement our business, operating and development plans.  Should the financing we require to sustain our working capital needs be unavailable or prohibitively expensive when we require it, the consequences could be a material adverse effect on our business, operating results, financial condition and prospects. 

 

 

From time to time, we issue stock, instead of cash, to pay some of our operating expenses.

These issuances are dilutive to our existing stockholders.  

 

We are party to agreements that provide for the payment of, or permit us to pay at our option, securities rather than cash in consideration for services provided to us. We include these provisions in agreements to allow us to preserve cash. When we pay employees, vendors and consultants in stock or stock options, we do so at a premium. We anticipate that we will continue to do so in the future.

Forex grid strategy money management

All such issuances are dilutive to our stockholders because they increase (and will increase in the future) the total number of shares of our common stock issued and outstanding, even though such arrangements assist us with managing our cash flow. These issuances also increase the expense amount recorded. 

 

Our stockholders face further potential dilution in any new financing.  

 

Our private securities offerings typically provide for convertible securities, including notes and warrants. Any additional capital that we raise would dilute the interest of the current stockholders and any persons who may become stockholders before such financing.

Given the low price of our common stock, such dilution in any financing of a significant amount could be substantial. 

 

Our stockholders face further potential adverse effects from the terms of any preferred stock that may be issued in the future.  

 

Our certificate of incorporation authorizes 50 million shares of preferred stock.

Farmers Insurance Group

None are outstanding as of the date of this prospectus. In order to raise capital to meet expenses or to acquire a business, our board of directors may issue additional stock, including preferred stock.

Any preferred stock that we may issue may have voting rights, liquidation preferences, redemption rights and other rights, preferences and privileges. The rights of the holders of our common stock will be subject to, and in many respects subordinate to, the rights of the holders of any such preferred stock. Furthermore, such preferred stock may have other rights, including economic rights, senior to our common stock that could have a material adverse effect on the value of our common stock.

What Does an IPO Underwriter Do, Task No. 1: Give Advice

Preferred stock, while providing desirable flexibility in connection with possible acquisitions and other corporate purposes, can also have the effect of making it more difficult for a third party to acquire a majority of our outstanding voting stock, thereby delaying, deferring or preventing a change in control of our company.  

 

There are several specific business opportunities we are considering in further development of our business.

None of these opportunities is yet the subject of a definitive agreement, and most or all of these opportunities will require additional funding obligations on our part, for which funding is not currently in place. 

 

In furtherance of our business plan, we are presently considering a number of opportunities to promote our business, to further develop and broaden, and to license, our technology with third parties.

While discussions are underway with respect to such opportunities, there are no definitive agreements in place with respect to any of such opportunities at this time. There can be no assurance that any of such opportunities being discussed will result in definitive agreements or, if definitive agreements are entered into, that they will be on terms that are favorable to us.  

 

Moreover, should any of these opportunities result in definitive agreements being executed or consummated, we may be required to expend additional monies above and beyond our current operating budget to promote such endeavors.

No such financing is in place at this time for such endeavors, and we cannot assure you that any such financing will be available, or if it is available, whether it will be on terms that are favorable to our company. 

 

We expect to incur future losses and may not be able to achieve profitability. 

 

Although we are generating limited revenue from the sale of our products, and we expect to generate revenue from new products we are introducing, and eventually from other license or supply agreements, we anticipate net losses and negative cash flow to continue for the foreseeable future until our products are expanded in the marketplace and they gain broader acceptance by resellers and customers.

Electro power system ipo underwriter

Our current level of sales is not sufficient to support the financial needs of our business. We cannot predict when or if sales volumes will be sufficiently large to cover our operating expenses.

Electro power system ipo underwriter

We intend to expand our marketing efforts of our products as financial resources are available, and we intend to continue to expand our research and development efforts. Consequently, we will need to generate significant additional revenue or seek additional financings to fund our operations.

This has put a proportionate corresponding demand on capital. Our ability to achieve profitability is dependent upon our efforts to deliver a viable product and our ability to successfully bring it to market, which we are currently pursuing.

Although our management is optimistic that we will succeed in licensing our technology, we cannot be certain as to timing or whether we will generate sufficient revenue to be able to operate profitably.

What is the future for underwriting? Insurance experts discuss

If we cannot achieve or sustain profitability, then we may not be able to fund our expected cash needs or continue our operations.

If we are not able to devote adequate resources to promote commercialization of our technology, then our business plans will suffer and may fail.  

 

 

Because we have limited resources to devote to sales, marketing and licensing efforts with respect to our technology, any delay in such efforts may jeopardize future research and development of technologies and commercialization of our technology.

Although our management believes that it can finance commercialization efforts through sales of our securities and possibly other capital sources, if we do not successfully bring our technology to market, our ability to generate revenues will be adversely affected.  

 

Our internal controls are not effective. 

 

We have determined that our disclosure controls and procedures and our internal control over financial reporting are currently not effective.

The lack of effective internal controls could materially adversely affect our financial condition and ability to carry out our business plan. 

 

Our management team for financial reporting, under the supervision and with the participation of our chief executive officer and our chief financial officer, conducted an evaluation of the effectiveness of the design and operation of our internal controls.

Recognizing the dynamic nature and growth of the Company’s business in the past two years, including the growth of the core operations and the increase in the number of employees, management has recognized the strain on the overall internal control environment.

As a result, management has concluded that its internal controls over financial reporting are not effective. Management identified a material weakness with respect to deficiencies in its financial closing and reporting procedures. Management believes this is due to a lack of resources. Management intends to add accounting personnel and operating staff and more sophisticated systems in order to improve its reporting procedures and internal controls, subject to available capital.

Until we have adequate resources to increase address these issues, any material weaknesses may materially adversely affect our ability to report accurately our financial condition and results of operations in the future in a timely and reliable manner.

In addition, although we continually review and evaluate internal control systems to allow management to report on the sufficiency of our internal controls, we cannot assure you that we will not discover additional weaknesses in our internal control over financial reporting. Any such additional weakness or failure to remediate the existing weakness could materially adversely affect our financial condition or ability to comply with applicable financial reporting requirements and the requirements of the Company’s various financing agreements. 

 

If we are not able to manage our anticipated growth effectively, we may not become profitable. 

 

We anticipate that expansion will continue to be required to address potential market opportunities for our technology and our products.

Our existing infrastructure is limited. While we believe our current manufacturing processes as well as our office and warehousing provide the basic resources to expand as we grow sales of CupriDyne Clean to more than $2 million per month, our infrastructure will need more staffing to support manufacturing, customer service, administration as well as sales/account executive functions.

There can be no assurance that we will have the financial resources to create new infrastructure, or that any such infrastructure will be sufficiently scalable to manage future growth, if any. There also can be no assurance that, if we invest in additional infrastructure, we will be effective in expanding our operations or that our systems, procedures or controls will be adequate to support such expansion. In addition, we will need to provide additional sales and support services to our partners if we achieve our anticipated growth with respect to the sale of our technology for various applications.

Failure to properly manage an increase in customer demands could result in a material adverse effect on customer satisfaction, our ability to meet our contractual obligations, and our operating results.  

 

Some of the products incorporating our technology will require regulatory approval. 

 

The products in which our technology may be incorporated have both regulated and non-regulated applications.

The regulatory approvals for certain applications may be difficult, impossible, time consuming and/or expensive to obtain.

ex_156706.htm

While our management believes such approvals can be obtained for the applications contemplated, until those approvals from the FDA or the EPA or other regulatory bodies, at the federal and state levels, as may be required are obtained, we may not be able to generate commercial revenues for regulated products.

Certain specific regulated applications and their use require highly technical analysis and additional third-party validation and will require regulatory approvals from organizations like the FDA. Certain applications may also be subject to additional state and local agency regulations, increasing the cost and time associated with commercial strategies.

Additionally, most products incorporating our technology that may be sold in the European Union (“EU”) will require EU and possibly also individual country regulatory approval.

All such approvals, including additional testing, are time-consuming, expensive and do not have assured outcomes of ultimate regulatory approval. 

 

 

We need to outsource and rely on third parties for the manufacture of the chemicals, material components or delivery apparatus used in our technology, and part of our future success will be dependent on the timeliness and effectiveness of the efforts of these third parties.  

 

We do not have the required financial and human resources or capability to manufacture the chemicals necessary to make our odor control products.

Our business model calls for the outsourcing of the manufacture of these chemicals in order to reduce our capital and infrastructure costs as a means of potentially improving our financial position and the profitability of our business.

General form for registration of securities under the Securities Act of 1933

Accordingly, we must enter agreements with other companies that can assist us and provide certain capabilities, including sourcing and manufacturing, which we do not possess. We may not be successful in entering into such alliances on favorable terms or at all.

Even if we do succeed in securing such agreements, we may not be able to maintain them. Furthermore, any delay in entering into agreements could delay the development and commercialization of our technology or reduce its competitiveness even if it reaches the market. Any such delay related to such future agreements could adversely affect our business. 

 

If any party to which we have outsourced certain functions fails to perform its obligations under agreements with us, the commercialization of our technology could be delayed or curtailed. 

 

To the extent that we rely on other companies to manufacture the chemicals used in our technology, or sell or market products incorporating our technology, we will be dependent on the timeliness and effectiveness of their efforts.

If any of these parties does not perform its obligations in a timely and effective manner, the commercialization of our technology could be delayed or curtailed because we may not have sufficient financial resources or capabilities to continue such efforts on our own. 

 

We rely on a small number of key supply ingredients in order to manufacture our products. 

 

All of the supply ingredients used to manufacture our products are readily available from multiple suppliers.

However, commodity prices for these ingredients can vary significantly, and the margins that we are able to generate could decline if prices rise. If our manufacturing costs rise significantly, we may be forced to raise the prices for our products, which may reduce their acceptance in the marketplace. 

 

If our technology or products incorporating our technology do not gain market acceptance, it is unlikely that we will become profitable. 

 

The potential markets for products into which our technology can be incorporated are rapidly evolving, and we have many successful competitors including some of the largest and most well-established companies in the world. (see, herein: “Description At this time, our technology is unproven in all but one industry – waste management – and the use of our technology by others, and the sales of our products, is relatively nominal.

The commercial success of products incorporating our technology will depend on the adoption of our technology by commercial and consumer end users in various fields.  

 

 Market acceptance may depend on many factors, including:  

 

●   the willingness and ability of consumers and industry partners to adopt new technologies from a company with little or no history in the industry; 

●   our ability to convince potential industry partners and consumers that our technology is an attractive alternative to other competing technologies; 

●   our ability to license our technology in a commercially effective manner; 

●   our ability to continue to fund operations while our products move through the process of gaining acceptance, before the time in which we are able to scale up production to obtain economies of scale; and 

●   our ability to overcome brand loyalties.

 

If products incorporating our technology do not achieve a significant level of market acceptance, then demand for our technology itself may not develop as expected, and, in such event, it is unlikely that we will become profitable.  

 

Any revenues that we may earn in the future are unpredictable, and our operating results are likely to fluctuate from quarter to quarter. 

 

We believe that our future operating results will fluctuate due to a variety of factors, including:  

 

●   delays in product development by us or third parties;  

●   market acceptance of products incorporating our technology;  

●   changes in the demand for, and pricing of, products incorporating our technology;  

●   competition and pricing pressure from competitive products; and  

●   expenses related to, and the results of, proceedings relating to our intellectual property.

 

 

We expect our operating expenses will continue to fluctuate significantly in 2019 and beyond, as we continue our research and development and increase our marketing and licensing activities.

Although we expect to generate revenues from licensing our technology in the future, revenues may decline or not grow as anticipated, and our operating results could be substantially harmed for a particular fiscal period. Moreover, our operating results in some quarters may not meet the expectations of stock market analysts and investors.

In that case, our stock price most likely would decline. 

 

Some of our revenue is dependent on the award of new contracts from the U.S. government, which we do not directly control. 

 

A substantial portion of our revenue and is generated from sales to the U.S.

Electro power system ipo underwriter

defense logistics agency through a bid process in response to request for bids. The timing and size of requests for bids is unpredictable and outside of our control. The number of other companies competing for these bids is also unpredictable and outside of our control. In the event of more competition for these awards, we may have to reduce our margins.

These variables make it difficult to predict when or if we will sell more products to the US government, which in turns makes it difficult to stock inventory and purchase raw materials. 

 

We have limited product distribution experience, and we rely in part on third parties who may not successfully sell our products. 

 

We have limited product distribution experience and rely in part on product distribution arrangements with third parties.

ex_128223.htm

In our future product offerings, we may rely solely on third parties for product sales and distribution. We also plan to license our technology to certain third parties for commercialization of certain applications.

We expect to enter into additional distribution agreements and licensing agreements in the future, and we may not be able to enter into these additional agreements on terms that are favorable to us, if at all. In addition, we may have limited or no control over the distribution activities of these third parties. These third parties could sell competing products and may devote insufficient sales efforts to our products. As a result, our future revenues from sales of our products, if any, will depend on the success of the efforts of these third parties. 

 

We may not be able to attract or retain qualified senior personnel. 

 

We believe we are currently able to manage our current business with our existing management team.

However, as we expand the scope of our operations, we will need to obtain the full-time services of additional senior management and other personnel.

Competition for highly-skilled personnel is intense, and there can be no assurance that we will be able to attract or retain qualified senior personnel. Our failure to do so could have an adverse effect on our ability to implement our business plan. As we add full-time senior personnel, our overhead expenses for salaries and related items will increase from current levels and, depending upon the number of personnel we hire and their compensation packages, these increases could be substantial. 

 

If we lose our key personnel or are unable to attract and retain additional personnel, we may be unable to achieve profitability. 

 

Our future success is substantially dependent on the efforts of our senior management, particularly Dennis P.

Calvert, our president and chief executive officer. The loss of the services of Mr. Calvert or other members of our senior management may significantly delay or prevent the achievement of product development and other business objectives.

Because of the scientific nature of our business, we depend substantially on our ability to attract and retain qualified marketing, scientific and technical personnel. There is intense competition among specialized and technologically-oriented companies for qualified personnel in the areas of our activities.

If we lose the services of, or do not successfully recruit, key marketing, scientific and technical personnel, then the growth of our business could be substantially impaired. At present, we do not maintain key man insurance for any of our senior management, although management is evaluating the potential of securing this type of insurance in the future as may be available. 

 

Nondisclosure agreements with employees and others may not adequately prevent disclosure of trade secrets and other proprietary information. 

 

In order to protect our proprietary technology and processes, we rely in part on nondisclosure agreements with our employees, potential licensing partners, potential manufacturing partners, testing facilities, universities, consultants, agents and other organizations to which we disclose our proprietary information.

These agreements may not effectively prevent disclosure of confidential information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. In addition, others may independently discover trade secrets and proprietary information, and in such cases we could not assert any trade secret rights against such parties.

Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect our competitive business position.

Since we rely on trade secrets and nondisclosure agreements, in addition to patents, to protect some of our intellectual property, there is a risk that third parties may obtain and improperly utilize our proprietary information to our competitive disadvantage. We may not be able to detect unauthorized use or take appropriate and timely steps to enforce our intellectual property rights. 

 

 

We may become subject to product liability claims. 

 

As a business that manufactures and markets products for use by consumers and institutions, we may become liable for any damage caused by our products, whether used in the manner intended or not.

Any such claim of liability, whether meritorious or not, could be time-consuming and/or result in costly litigation. Although we maintain general liability insurance, our insurance may not cover potential claims of the types described above and may not be adequate to indemnify for all liabilities that may be imposed. Any imposition of liability that is not covered by insurance or is in excess of insurance coverage could harm our business and operating results, and you may lose some or all of any investment you have made, or may make, in our company. 

 

Litigation or the actions of regulatory authorities may harm our business or otherwise distract our management.