VirExit Technologies (VXIT) Risk Analysis
Risk Overview Q2, 2019
Source: the company's latest filing for the period ended May 31, 2019, filed Jul 19, 2019
Risk Change Over Time
No filing history is available.
- Share Price & Shareholder Rights - Risk 1Being a public company may strain the Company's resources, divert management's attention and affect its ability to attract and retain qualified directors.
The Company is subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The requirements of these laws and the rules and regulations promulgated thereunder entail significant accounting, legal and financial compliance costs, and have made, and will continue to make, some activities more difficult, time consuming or costly and may place significant strain on the Company's personnel, systems and resources.
- Accounting & Financial Operations - Risk 2We have a limited operating history on which to evaluate our potential and determine if we will be able to execute our business plan.
We began operations in September 2013. Through December __, 2017, we have one operational franchise. Consequently, our historical results of operations may not provide an accurate indication of our future operations or prospects. Investment in our securities should be considered in light of the risks and difficulties we will encounter as we attempt to implement and execute our business plan.
- Debt & Financing - Risk 3Our ability to grow and compete in the future will be adversely affected if adequate capital is not available to us or not available on terms favorable to us.
The ability of our business to grow and compete depends on the availability of adequate capital, which in turn depends in large part on our cash flow from operations and the availability of equity and debt financing. We cannot assure you that our cash flow from operations will be sufficient or that we will be able to obtain equity or debt financing on acceptable terms, if at all, to implement our growth strategy. As a result, we cannot assure you that adequate capital will be available to finance our current growth plans, take advantage of business opportunities or respond to competitive pressures, any of which could harm our business.
- Corporate Activity and Growth - Risk 4Our business plan depends on our ability to successfully integrate and manage our future franchise operations.
Our business plan relies on the substantial expansion of our business through franchising. However, we lack prior experience with establishing and managing franchise operations. The success of our franchises depends upon, among other things, the skills and business acumen of our franchisees, the identification of suitable locations for franchises, the effective management of those franchises' locations, and our managerial and administrative resources. Our future success will depend on our ability to operate and oversee a significant number of franchises and franchisees. We will not be able to exercise control over the day-to-day operations of our franchises or franchisees. While we will try to ensure that franchises meet the same operating standards that we demand of Company operated locations, one or more franchises may not do so. Any operational shortcomings of our franchises are likely to be attributed to our system-wide operations and could adversely affect our reputation and have a direct negative impact on the franchised royalty revenues we receive from those franchises.
- Corporate Activity and Growth - Risk 5Our business plan depends on our ability to successfully enter into new markets.
A significant element of our future growth strategy involves the expansion of our business into new geographic markets. Expansion of our operations depends, among other things, on the acceptance of our business model in various geographic locations.
- Corporate Activity and Growth - Risk 6Our franchise business model presents a number of disadvantages and risks.
We intend to have a high percentage of franchises, and we expect the number of franchises to increase as we continue to implement our growth plans. Our franchised business model, especially those owned by others as individuals or through joint development agreements or special purpose vehicles, presents a number of drawbacks, such as our limited influence over franchisees and reliance on franchisees to implement major initiatives, limited ability to facilitate changes in ownership, or unwillingness of franchisees to participate in our strategic initiatives.
- Corporate Activity and Growth - Risk 7Mr. Lowther has limited experience in framing a business incubation company or a third world energy provider. The lack of experience in framing such businesses could limit or eliminate your return on investment.
As a result of our reliance on Mr. Lowther and his lack of experience in developing a business incubation company in the third world as well as energy distribution business, our investors are at risk in losing their entire investment. Mr. Lowther intends to hire personnel in the future, when sufficiently capitalized, who may have the experience required to manage our company; such management is not anticipated until the occurrence of future financing. Since the initial offering was not sufficient to capitalize our Company, future offerings will be necessary to satisfy capital needs. Until such future offering occurs, and until such management is in place, we are reliant upon Mr. Lowther to make the appropriate management decisions.
- Corporate Activity and Growth - Risk 8If we are unable to implement and execute our business plan, our potential for growth and our results of operations could be harmed significantly.
A critical factor in our future viability will be our ability to implement, execute and expand our business incubation and franchising concepts. Our growth plans contemplate deploying a number of businesses for incubation in future months and years, in addition to franchising. If we do not open, operate and/or sell new franchises, our growth and results of operations could be harmed significantly. Our ability to access and open new businesses and franchises in a timely manner and operate them profitably depends upon a number of factors, many of which are beyond our control, including the following: - our ability to generate or raise the capital necessary to operate and grow; - the availability of suitable locations for franchises, our ability to compete effectively for those locations, and enter into agreements or obtain permits for such locations on acceptable terms; - obtaining and maintaining required local, state, federal and international governmental approvals and permits related to the franchises; and - unforeseen engineering problems with our products.
- Corporate Activity and Growth - Risk 9The viability of our business model is dependent on a number of factors that are not within our control.
The viability of our Company-owned and potential franchised operations is, and will continue to be, subject to a number of factors that are not within our control, including: - international, national, regional and local economic conditions; - spending abilities and priorities of market participants; - demographic trends; and - consumer confidence in the venues in which we and our franchisees will operate;
- Corporate Activity and Growth - Risk 10Our inability to manage our growth could impede our ability to generate revenues and profits and to otherwise implement our business plan and growth strategies, which would have a negative impact on our revenues and results of operation.
We intend to quickly increase the number of our franchise programs and intend to expand further the number and diversity of our programs. We may also be required to increase staffing and other expenses as well as expenditures on equipment and property in order to meet the anticipated demand of our customers. Our planned growth will require us to: - significantly improve or replace our existing managerial, operational and financial systems, procedures and controls; - begin compliance with complex rules and regulations relating to franchising; - manage the coordination between our various corporate functions, including accounting, legal, accounts payable and receivable, and marketing and development; - manage, train, motivate and maintain a growing employee base; and - manage our relationships with franchisees. In addition, our expansion plans will likely require us to: - make significant capital investments; - devote significant management time and effort; - develop budgets for, and monitor, costs at levels that will produce profitable operations; and - as applicable, budget and monitor the cost of future capital investments. The time and costs to effectuate these steps may place a significant strain on our management personnel, systems and resources, particularly given the limited amount of financial resources and skilled employees that may be available at the time. As a result, it may become more difficult to both implement more sophisticated managerial, operational and financial systems, procedures and controls and to train and manage the personnel necessary to implement these functions. We cannot assure you that we will institute, in a timely manner or at all, the improvements to our managerial, operational and financial systems, procedures and controls necessary to support our anticipated increased levels of operations and to coordinate our various corporate functions.
- Corporate Activity and Growth - Risk 11Potential strategic alliances may not achieve their objectives, which could lead to wasted effort or involvement in ventures that are not profitable and could harm our company's reputation.
We are currently exploring strategic alliances designed to enhance, develop and deploy our business incubation model and franchises. Any strategic alliances we enter into may not achieve their strategic objectives, and parties to our strategic alliances may not perform as contemplated. As a result, the alliances themselves may run at a loss, which would reduce our profitability, and if the products or customer service provided by such alliances were of inferior quality, our reputation in the marketplace could be harmed, affecting our existing and future customer relationships.
Risk Highlights Q2, 2019
Risk Word Cloud
Risk Factors Full Breakdown - Total Risks 25
- Share Price & Shareholder Rights - Risk 1There is a limited to no market for our common stock, which may make it difficult for you to sell your stock.
We are currently quoted on the OTCQB under the ticker symbol PVDG. However, as of the date of this filing, we have very little trading volume. As a result, investors may be unable to liquidate their investment for any reason.
- Share Price & Shareholder Rights - Risk 2The market price of our common stock may be highly volatile, and you could lose all or part of your investment.
The trading price of our common stock may be volatile. This volatility may prevent an investor from being able to sell its shares at or above the price such investor paid for its shares. Our stock price could be subject to wide fluctuations in response to a variety of factors, which include: - actual or anticipated fluctuations in our quarterly or annual financial results; - additional needs for financing; - failure of industry or securities analysts to establish or maintain coverage of our Company, changes in financial estimates by any industry or securities analysts that follow our Company or our failure to meet such estimates; - market factors, including rumors, whether or not correct, involving our Company, our products, or our competitors; - fluctuations in stock market prices and trading volumes of securities of similar companies; - sales or anticipated sales of large blocks of our stock; - short selling of our common stock by investors; - additions or departures of key personnel; - announcements of new commercial relationships, acquisitions or entry into new markets by us or our competitors; - failure of any of our initiatives to achieve commercial success; - regulatory or political developments; - changes in accounting principles or methodologies; - litigation or governmental investigations; - negative publicity about us in the media and online; - supply shortages for any of our products; and - general financial market conditions or events.
- Share Price & Shareholder Rights - Risk 3Our common stock is considered a "penny stock," and thereby subject to additional sale and trading regulations that may make it more difficult to sell.
Our common stock is considered a low-priced security, or "penny stock," under rules promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Securities and Exchange Commission (the "SEC") has adopted regulations which generally define penny stocks as equity securities with a market price or exercise price of less than $5.00 per share, subject to certain exemptions. Penny stocks include but are not limited to the following: (i) stocks that trade at a price less than $5.00 per share; (ii) stocks that are not traded on a "recognized" national exchange; and (iii) stocks that are issued by a company with net tangible assets less than $2.0 million, if in business more than a continuous three year period, or with average revenues of less than $6.0 million for the past three years. The principal 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 15g-2 through 15g-9 of the Exchange Act. Rules 15g-2 through 15g-9 impose additional sales practice requirements on broker-dealers who sell penny stock securities to anyone other than established customers. For example, unless an exemption applies, broker-dealers are required to determine whether a penny stock transaction is suitable for a particular investor based on his or her financial situation and whether that investor has sufficient knowledge and experience to evaluate the risk of the transaction. Before the transaction, the broker-dealer must also deliver to the investor a written statement that sets forth the basis on which the broker-dealer made the suitability determination. Finally, among other requirements, broker-dealers must also disclose commissions payable to the broker-dealer and other persons associated with the transaction, provide current quotations for the securities, and provide monthly statements disclosing recent price information for penny stocks held in the account. As a result of these regulations, broker-dealers may be less willing to execute penny stock transactions. Compliance with these and other 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.
- Share Price & Shareholder Rights - Risk 4As an issuer of "penny stock", the protection provided by the federal securities laws relating to forward-looking statements does not apply to us.
Although federal securities laws provide a safe harbor for forward-looking statements made by a public company that files reports under the federal securities laws, this safe harbor is not available to issuers of penny stocks. As a result, because our common stock is considered "penny stock," we do not have the benefit of this safe harbor protection in the event of any legal action based upon a claim that the material provided by us contained a material misstatement of fact or was misleading in any material respect because of our failure to include any statements necessary to make the statements not misleading. Such an action could hurt our financial condition.
- Share Price & Shareholder Rights - Risk 5We may take a minority stake in another company or concept as compensation for incubating a business.
If we enter into an incubation agreement with a business other than one of our wholly owned subsidiaries, we may seek a significant minority stake in the target company. Because we would intend to remain a minority stakeholder, we would lack control over the operations, resulting in increased risk of loss of our investment in such an incubated business. Therefore, it will be important to conduct lengthy due diligence on any business that we intend to incubate. Despite a lengthy and thorough due diligence process, we may fail to uncover certain facts or risks related to the incubated business.
- Share Price & Shareholder Rights - Risk 6Because our executive officers and directors are among our largest stockholders, they can exert significant control over our business and affairs and have actual or potential interests that may depart from other stockholders or investors.
As of December 13, 2018, our directors and executive officers collectively beneficially own 30.3% of our outstanding common stock. Additionally, the holdings of our directors and executive officers may increase in the future upon vesting or other maturation of exercise rights under any of the options or warrants they may hold or in the future be granted or if they otherwise acquire additional shares of our common stock. The interests of such persons may differ from the interests of our other stockholders. As a result, in addition to their board seats and offices, such persons will have significant influence over and control all corporate actions requiring stockholder approval, irrespective of how our other stockholders may vote, including the following actions: - to elect or defeat the election of our directors; - to amend or prevent amendment of our Certificate of Incorporation or Bylaws; - to effect or prevent a merger, sale of assets or other corporate transaction; and - to control the outcome of any other matter submitted to our shareholders for vote. Such persons' stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of our Company, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock price.
- Share Price & Shareholder Rights - Risk 7Future issuance of our common stock could dilute the interests of existing stockholders.
We may issue additional shares of our common stock in the future. The issuance of a substantial number of shares of common stock could have the effect of substantially diluting the interests of our existing stockholders and any subsequent sales or resales by our stockholders could have an adverse effect on the market price of our common stock.
- Share Price & Shareholder Rights - Risk 8Our independent auditors have expressed substantial doubt about our ability to continue as a going concern, which may hinder our ability to obtain future financing.
The report of our independent auditors on our consolidated financial statements for the years ended August 31, 2018 and 2017 includes an explanatory paragraph indicating that there is substantial doubt about our ability to continue as a going concern. We have sustained operating losses each year since our inception in 2013. Our net losses for the years ended August 31, 2018 and 2017 were $1,811,740 and $1,540,175, respectively. As of August 31, 2018, we had an accumulated deficit of $11,596,587. Continuing losses may exhaust our capital resources and force us to discontinue our operations. Our ability to continue as a going concern is dependent upon our ability to raise capital and/or generate sufficient operating revenue to support our operations as we execute our business plan. If we are unable to obtain capital when needed, our business and future prospects will be adversely affected and we could be forced to suspend or discontinue operations. We do not believe we currently have the capabilities and available resources to continue for the next twelve months.
- Share Price & Shareholder Rights - Risk 9The Company has never been labeled a public shell. If we are ever determined to be a public shell, our shareholders may no longer be allowed to use the exception under Rule 144 of the Securities Act.
Selling shareholders may not be able to rely upon Rule 144 under the Securities Act to sell their shares in open market transactions if we are determined to be a public shell. Under Rule 144(i), Rule 144 is not available to companies that have no or nominal operations and assets consisting of cash and nominal other assets.
- Share Price & Shareholder Rights - Risk 10Public company compliance may make it difficult to attract and retain officers and directors.
The Sarbanes-Oxley Act of 2002 and other rules subsequently implemented by the SEC have required various changes in corporate governance practices of public companies. As a public company, we expect these rules and regulations to increase our compliance costs and to make certain activities more time consuming and costly. We also expect that these rules and regulations may make it more difficult and expensive for us to obtain director and officer liability insurance in the future, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be difficult for us to attract and retain qualified persons to serve on our board of directors or as executive officers.
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