Entia Biosciences (ERGO) Risk Analysis
Risk Overview Q4, 2016
Source: the company's latest filing for the period ended Dec 31, 2016, filed May 19, 2017
Risk Change Over Time
No filing history is available.
Risk Highlights Q4, 2016
Risk Word Cloud
Risk Factors Full Breakdown - Total Risks 22
- Share Price & Shareholder Rights - Risk 1We may issue shares of preferred stock in the future that may adversely impact rights of holders of our existing classes of common and preferred stock.
Our articles of incorporation, as consented to and ratified by our recently completed consent solicitation, authorize us to issue up to 5,000,000 shares of preferred stock. To date, we have issued an aggregate of 306,969 shares of Series A Preferred Stock, of which 188,563 shares remain unconverted and outstanding, with each preferred share convertible into 50 shares of common stock. Our board of directors has the authority to fix and determine the relative rights and preferences of preferred shares, as well as the authority to issue such shares, without further stockholder approval. As a result, our board of directors could authorize the issuance of additional series of preferred stock that would grant to holders of such preferred shares preferred rights to our assets upon liquidation, the right to receive dividends before dividends are declared to holders of other classes of our stock, and the right to the redemption of such preferred shares, together with a premium, prior to the redemption of other classes of our stock. To the extent that we do issue such additional shares of preferred stock, rights of holders of other classes of our stock could be impaired thereby, including, without limitation, dilution of ownership interests in the Company. In addition, shares of preferred stock could be issued with terms calculated to delay or prevent a change in control or make removal of management more difficult, which may not be in the interests of holders of other classes of our stock.
- Share Price & Shareholder Rights - Risk 2We may, in the future, issue additional common shares, which would reduce investors' percent of ownership and may dilute our share value.
Our Articles of Incorporation authorize the issuance of 150,000,000 shares of common stock. The future issuance of common stock may result in substantial dilution in the percentage of our common stock held by our then existing shareholders. We may value any common stock issued in the future on an arbitrary basis. The issuance of common stock for future services or acquisitions or other corporate actions may have the effect of diluting the value of the shares held by our investors, and might have an adverse effect on any trading market for our common stock.
- Share Price & Shareholder Rights - Risk 3Our officers/directors own a significant interest in our voting stock which could limit the ability of the other shareholders to express their voice and result in decisions adverse to the interests of our general shareholders.
Through their beneficial ownership, our officers and directors, in the aggregate, have the right to vote approximately 36% of our outstanding common stock. As a result of potential future bonuses and other equity awards, these officers and directors could, in the aggregate, beneficially own or have the right to vote even more of our outstanding common stock. As a result, these stockholders, acting together, could influence matters submitted to our stockholders for approval including: - election of our board of directors;- removal of any of our directors;- significant corporate transactions;- amendment of our Articles of Incorporation or bylaws; and - adoption of measures that could delay or prevent a change in control or impede a merger, takeover or other business combination involving us. In addition, the future prospect of sales of significant amounts of shares held by our directors and executive officers could affect the market price of our common stock if the marketplace does not orderly adjust to the increase in shares in the market and the value of your investment in the Company may decrease. 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. Additionally, our officers/directors, in the aggregate, beneficially own a significant amount of our outstanding preferred stock. As a result, these preferred stockholders, acting together, could influence matters related to our preferred stock including, but not limited to the following: - Rights and privileges of the preferred class, including anti-dilution provisions; and - Existence of the class itself, in the case of mandatory or forced conversion to our common shares.
- Share Price & Shareholder Rights - Risk 4There is a limited public market for our common stock. Historically, the market value for our company has been difficult to determine.
There is a limited public market for our common stock. We cannot assure our investors that a robust public market for our shares will develop in the future. As a result, investors may not be able to realize any return on their investment for a considerable period of time, if ever. Therefore, any investment in our securities should be considered a long-term investment and may be illiquid for an indefinite period of time. Rule 144 under the Securities Act of 1933, as amended (the "Securities Act") currently requires that the Shares must be held a minimum of six months, and there is no assurance that the Shares will be available for resale under Rule 144 in six months or ever. To effect a sale, all certificates evidencing the common shares that bear a legend restricting transfer, except upon registration under the Securities Act or pursuant to a valid exemption from such registration, must be supported by an opinion of counsel to the Company or a no-action letter issued by the Commission. If it can at all be determined, the market value of our company and its securities could be subject to wide valuation fluctuations in response to various factors, many of which are beyond our control. The factors include: - Periodic variations in our results of operations and liquidity;- Speculation in the press or investment community concerning our business and results of operations;- Strategic actions by our competitors, such as product announcements or acquisitions;- Announcements of technological innovations or new products by us, our customers or competitors; and - General economic market conditions. In addition, the stock market in general, and the market for healthcare companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated to or disproportionate to the operating performance of those companies. Although only a limited public market for our common stock currently exists, these broad market and industry factors may seriously harm the market value of our company in a private financing or sale, regardless of our operating performance.
- Share Price & Shareholder Rights - Risk 5Our common shares are subject to the "Penny Stock" Rules of the SEC and the trading market in our securities is limited, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.
The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a "penny stock," for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (a) that a broker or dealer approve a person's account for transactions in penny stocks; and (b) 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 a person's account for transactions in penny stocks, the broker or dealer must: (a) obtain financial information and investment experience objectives of the person; and (b) 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, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form: (a) sets forth the basis on which the broker or dealer made the suitability determination; and (b) that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Generally, 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 shares and cause a decline in the market value of our stock. Disclosure also has to be made about the risks of investing in penny stocks 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, 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.
See a full breakdown of risk according to category and subcategory. The list starts with the category with the most risk. Click on subcategories to read relevant extracts from the most recent report.