CalEthos (GEDC) Risk Analysis
Risk Overview Q3, 2018
Source: the company's latest filing for the period ended Sep 30, 2018, filed Nov 14, 2018
Risk Change Over Time
No filing history is available.
- Share Price & Shareholder Rights - Risk 1Due to our status as a former "shell company", there may be significant restrictions on your ability to sell shares of our common stock.
If a company is a "shell company" as defined under applicable SEC rules, restricted shares cannot be sold in reliance on SEC Rule 144 until the shareholder has satisfied a one-year holding period (as opposed to a six month holding period for non-shell companies). Since we were a "shell company", holders of restricted shares in our company may be required to hold their common stock for a full year from acquisition, which would preclude them from selling such shares in the open market and otherwise significantly impair your ability to sell such shares. As such, such holders may be unable to react to movements in the price of our shares.
- Accounting & Financial Operations - Risk 2We have identified material weakness weaknesses related to our internal control over financial reporting and concluded that our internal control over financial reporting and disclosure controls and procedures were ineffective as of December 31, 2016. 2017. These material weaknesses remain unremedied, which could continue to impact our ability to report results of operations and financial condition accurately and in a timely manner.
We have identified a number of material weaknesses in our internal control over financial reporting. Our management assessed the effectiveness of our internal control over financial reporting and disclosure controls and procedures as at December 31, 2017 pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 and the related SEC rules and concluded that our internal control over financial reporting and disclosure controls and procedures were ineffective. We have concluded that four material weaknesses existed as at December 31, 2017 which are set out in Item 9A under the heading "Controls and Procedures". Although we intend to remediate such material weaknesses as set out in Item 9A, we have not yet been able to address these material weaknesses and they may continue to remain unremedied for some time, which could adversely impact the accuracy and timeliness of future reports and filings we make to the SEC and could have a material adverse effect on our business, results of operations, financial condition and liquidity.
Risk Highlights Q3, 2018
Risk Word Cloud
Risk Factors Full Breakdown - Total Risks 18
- Share Price & Shareholder Rights - Risk 1Our officers, directors and affiliates are now, and all of them may in the future become, affiliated with entities engaged in business activities similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in allocating to which entity a particular business opportunity should be presented.
Our executive officers, directors and affiliates are, or may in the future become, affiliated with entities (including The RealSource Group of companies) that are engaged in a similar business to ours. Our officers and directors also may become aware of business opportunities which may be appropriate for presentation to us and the other entities to which they owe certain fiduciary duties. As a result, our executive officers, directors and affiliates may have conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts may not be resolved in our favor and as a result, a potential business opportunity may be presented to another entity prior to its presentation to us.
- Share Price & Shareholder Rights - Risk 2There has been a very limited market for our common stock, and an active trading market for our common stock may not develop.
To date, there has been a very limited public market for our common stock, and there is a risk that no active trading market will develop or be sustained. In addition, the market value of our common stock could be substantially affected by the nature of any assets or businesses we may acquire and general market conditions, all of which investors have little or no control over. There is a significant risk that a limited market for our common stock will continue for the foreseeable future, which could adversely impact the
- Share Price & Shareholder Rights - Risk 3Even if an active market for our common stock develops, the market price and trading volume of our common stock may be volatile.
Even if an active trading market develops for our common stock, the per share trading price of our common stock may be volatile. In addition, the trading volume in our common stock may fluctuate and cause significant price variations to occur. If the per share trading price of our common stock declines significantly, you may be unable to resell your shares. There is a risk that the per share trading price of our common stock will fluctuate or decline significantly in the future. Some of the factors that could negatively affect our share price or result in fluctuations in the price or trading volume of our common stock include: - actual or anticipated variations in our operating results or dividends; - changes in our funds from operations or earnings estimates; - publication of research reports about us or our industry; - increases in market interest rates that lead purchasers of our shares to demand a higher yield; - changes in market valuations of similar companies; - adverse market reaction to any additional debt we incur in the future; - actions by institutional stockholders; - speculation in the press or investment community; - the extent of investor interest in our securities; - changes in tax and other real estate related laws; - our underlying asset value; - future equity or equity linked issuances by us; - failure to meet earnings estimates; - general market and economic conditions In addition, the market price for our common stock may also be affected by our ability to meet or exceed expectations of analysts or investors. Any failure to meet these expectations, even if minor, may have a material adverse effect on the market price of our common stock.
- Share Price & Shareholder Rights - Risk 4Ownership may become diluted if we issue new shares of stock or other securities.
To raise necessary capital to maintain and grow our business, we expect to conduct financings in the future through the issuance of additional shares of stock or other securities. We may issue common stock, convertible debt or preferred stock pursuant to a subsequent public offerings or private placements, or to sellers of properties we directly or indirectly acquire instead of, or in addition to, cash consideration. If you do not participate in any future stock issuances, you will experience dilution in your ownership.
- Share Price & Shareholder Rights - Risk 5Due to our status as a "shell company", there may be significant restrictions on your ability to sell shares of our common stock.
If a company is a "shell company" as defined under applicable SEC rules, restricted shares cannot be sold in reliance on SEC Rule 144 until the shareholder has satisfied a one-year holding period (as opposed to a six month holding period for non-shell companies). Since we were a "shell company", holders of restricted shares in our company may be required to hold their common stock for a full year from acquisition, which would preclude them from selling such shares in the open market and otherwise significantly impair your ability to sell such shares. As such, such holders may be unable to react to movements in the price of our shares.
- Share Price & Shareholder Rights - Risk 6Our officers and directors will control our company for the foreseeable future, including the outcome of matters requiring shareholder approval.
Our officers and directors directly or indirectly own approximately 75% of our outstanding shares of common stock. Consequently, they will have the ability, acting alone, to control the election of our directors and the outcome of corporate actions requiring shareholder approval, such as: (i) a merger or a sale of our company, (ii) a sale of all or substantially all of our assets, and (iii) amendments to our articles of incorporation and bylaws. This concentration of voting power and control could have a significant effect in delaying, deferring or preventing an action that might otherwise be beneficial to our other shareholders and be disadvantageous to our shareholders with interests different from those of our officers and directors.
- Share Price & Shareholder Rights - Risk 7Our common stock may be considered a "penny stock," and thereby be subject to additional sale and trading regulations that may make it more difficult to sell.
Our common stock, which is currently and will be for the foreseeable future quoted for trading on the OTC Bulletin Board and/or The OTC Pink Market operated by OTC Markets Group, Inc., may be considered to be a "penny stock" if it does not qualify for one of the exemptions from the definition of "penny stock" under applicable SEC rules. Our common stock may be a "penny stock" if it meets one or more of the following conditions: (i) the stock trades at a price less than $5.00 per share; (ii) it is not traded on a "recognized" national exchange; or (iii) is issued by a company that has been in business less than three years with net tangible assets less than $5 million. The principal result or effect of being designated a "penny stock" is that securities broker-dealers participating in sales of our common stock will be subject to the "penny stock" regulations set forth in Rules 15-2 through 15g-9 promulgated under the Exchange Act. For example, Rule 15g-2 requires broker-dealers dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document at least two business days before effecting any transaction in a penny stock for the investor's account. Moreover, Rule 15g-9 requires broker-dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny stock to that investor. This procedure requires the broker-dealer to: (i) obtain from the investor information concerning his or her financial situation, investment experience and investment objectives; (ii) reasonably determine, based on that information, that transactions in penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement setting forth the basis on which the broker-dealer made the determination in (ii) above; and (iv) receive a signed and dated copy of such statement from the investor, confirming that it accurately reflects the investor's financial situation, investment experience and investment objectives. Compliance with these requirements may make it more difficult and time consuming for holders of our common stock to resell their shares to third parties or to otherwise dispose of them in the market or otherwise.
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.