EXHIBIT 99.1
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
SAFE HARBOR COMPLIANCE STATEMENT
FOR FORWARD-LOOKING STATEMENTS
In passing the Private Securities Litigation Reform Act of 1995 (the
"Reform Act"), 15 U.S.C.A. Sections 77z-2 and 78u-5 (Supp. 1996), Congress
encouraged public companies to make "forward-looking statements" by creating a
safe harbor to protect companies from securities law liability in connection
with forward-looking statements. PVAXX Corporation "PVAXX" or the "Company")
intends to qualify both its written and oral forward-looking statements for
protection under the Reform Act and any other similar safe
harbor provisions.
"Forward-looking statements" are defined by the Reform Act. Generally,
forward-looking statements include expressed expectations of future events and
the assumptions on which the expressed expectations are based. All
forward-looking statements are inherently uncertain as they are based on
various expectations and assumptions concerning future events and they are
subject to numerous known and unknown risks and uncertainties which could
cause actual events or results to differ materially from those projected. Due
to those uncertainties and risks, the investment community is urged not to
place undue reliance on written or oral forward-looking statements of PVAXX.
The Company undertakes no obligation to update or revise this Safe Harbor
Compliance Statement for Forward-Looking Statements (the "Safe Harbor
Statement") to reflect future developments. In addition, PVAXX undertakes no
obligation to update or revise forward-looking statements to reflect changed
assumptions, the occurrence of unanticipated events or changes to future
operating results over time.
RISK FACTORS
A HIGHLY COMPETITIVE MARKET MAY NEGATIVELY IMPACT THE COMPANY'S BUSINESS,
PROSPECTS, FINANCIAL CONDITION AND RESULTS OF THE COMPANY
The biodegradable plastics industry in which the Company operates is highly
competitive. Some of the company's principal competitors in certain business
lines are substantially larger and better capitalized than the Company.
Because of these resources, these companies may be better able than the
Company to obtain new customers and to pursue new business opportunities or to
survive periods of industry consolidation. There can be no assurance that
these threats of competition will not negatively impact the operations and
results of the Company.
POTENTIAL FLUCTUATIONS IN QUARTERLY OPERATING RESULTS COULD HAVE A MATERIAL
ADVERSE EFFECT ON THE COMPANY'S BUSINESS, PROSPECTS, FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The Company's business and prospects must be considered along with the risks,
expenses and difficulties frequently encountered by companies in their early
stages of development. The risks the Company faces include, but are not
limited to, an evolving and unpredictable business and industry, management of
growth, the Company's ability to anticipate and adapt to a developing market
and unforeseen changes and developments in the Company's strategic partners'
activities and direction. To address these risks, the Company must, among
other things, implement and successfully execute its business strategy,
continue to develop and upgrade its products and technology, provide superior
customer service, respond to competitive developments and attract, retain and
motivate qualified personnel and meet the expectations of its strategic
partners. There can be no assurance that the Company will be successful in
addressing such risks, and the failure to do so could have a material adverse
effect on the Company's business, prospects, financial condition and results
of operations.
THE COMPANY'S LIMITED OPERATING HISTORY MAY NEGATIVELY EFFECT ITS
ABILITY TO ACCURATELY PREDICT REVENUES AND FORECASTS
The Company has a limited operating history. In addition, the Company competes
in emerging markets. As such, the Company may not be able to accurately
predict its revenues. The Company expects to experience significant
fluctuations in its future quarterly operating results due to a variety of
factors, many of which are outside the Company's control. Factors that may
adversely affect the Company's quarterly operating results include:
(a) the Company's ability to retain and attract customers;
(b) the level of competition in the biodegradable plastics industry;
(c) the Company's ability to upgrade and develop its products and
infrastructure and attract new personnel in a timely and effective manner;
(d) the amount and timing of operating costs and capital expenditures
relating to expansion of the Company's business, operations and
infrastructure;
(e) governmental regulation; and
(f) general economic conditions and economic conditions specific to the
biodegradable plastics industry.
THERE CAN BE NO ASSURANCE THAT THE COMPANY WILL SECURE, OR BE ABLE TO PROTECT
ANY PATENTS, TRADEMARKS OR INTELLECTUAL PROPERTY
The Company may apply for United States patents related to its business,
but has not yet commenced the process. The Company may also apply for
trademark protection in the United States for the name PVAXX CORPORATION.
There can be no assurance that existing or future patents or trademarks, if
any, will adequately protect the Company. Also, there can be no assurances
that any patent or trademark applications will result in issued patents or
trademarks. In addition, there can be no assurances that the Company's
patents or trademarks will be upheld, if challenged. The Company also faces
the risk that competitors will develop similar or superior methods or products
outside the protection of any patent issued to the Company. Although the
Company believes that its CURRENT European patents and trademarks, potential
United States patent and trademarks, as well as the Company's products, do
not and will not infringe patents or trademarks or violate the proprietary
rights of others, it is possible that the Company's existing patent or
trademark rights may not be valid or that infringement of existing or future
patents, trademarks or proprietary rights may occur. Failure to do any of the
foregoing could have a material adverse effect upon the Company.
In addition, there can be no assurance that the Company will have the
financial or other resources necessary to enforce or defend a patent or
trademark infringement or proprietary rights violation action which may be
brought against it. Moreover, if the Company's products infringe patents,
trademarks or proprietary rights of others, the Company could, under certain
circumstances, become liable for damages, which also could have a material
adverse effect on the Company.
POTENTIALLY RAPID OPERATIONAL EXPANSION MAY NOT BE EFFECTIVELY
MANAGED OR MAINTAINED BY THE COMPANY
The Company's proposed expansion will also require the company to enhance
its operational and financial systems. Expansion will also require
additional management, operational and financial resources. If the Company
cannot make the necessary changes to its systems and resources, it is possible
that the Company's results of operations and financial condition could be
materially adversely affected. There can be no assurance that the Company will
be able to manage its expanding operations effectively or that it will be able
to maintain or accelerate its growth. In addition, there can be no assurance
of the viability of the Company's products in new geographic regions or
particular local markets.
GOVERNMENT REGULATION MAY IMPEDE THE PROGRESS OF THE COMPANY
In running its business, the Company must comply with state laws and a wide
range of other state and local rules and regulations. It is essential and
costly to make sure the Company complies with federal, state and local
regulations. The failure to comply could have a material adverse effect on the
Company. If the Company were to violate any of the federal and/or state laws
and regulations governing its business in a particular state, the Company and
its affiliates could be forced to make rescission offers, pay monetary
damages and/or penalties, face imprisonment and/or face injunctive
proceedings.
THE COMPANY'S DEPENDENCE ON KEY PERSONNEL COULD NEGATIVELY
IMPACT THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company's future success depends in large on part of the continued
service of its key marketing, engineering and management personnel. The
Company must also be able to continue to attract an retain qualified
employees. The competition for such personnel is intense, and the loss of key
employees could have a material effect on the Company's financial condition
and results of operations.
THE CONTROL OF THE COMPANY BY PRINCIPAL SHAREHOLDERS, OFFICERS AND DIRECTORS
COULD IMPEDE ITS SHAREHOLDERS FROM HAVING ANY ABILITY TO DIRECT AFFAIRS AND
BUSINESS
Our principal shareholders, officers and directors will beneficially own
approximately eighty percent (80%) of our company's common stock. As a
result, such persons will have the ability to control our company and direct
its affairs and business. Such concentration of ownership may also have the
effect of delaying, deferring or preventing change in control of our company.
ISSUANCE OF PREFERRED STOCK MAY ADVERSELY AFFECT HOLDERS OF
COMMON STOCK OR DELAY OR PREVENT CORPORATE TAKE-OVER
The Company's Articles of Incorporation provide that the Company may, from
time to time, issue preferred stock in one or more series. The Articles of
Incorporation authorize the Board of Directors of the Company to determine
the rights, preferences, privileges and restrictions granted to and imposed
upon any wholly unissued series of preferred stock and the designation of any
such shares, without any vote or action by the Company's shareholders. The
Board of Directors may authorize and issue Preferred stock with voting power
or other rights that could adversely affect the voting power or other
rights of the holders of common stock. In addition, the issuance of preferred
stock could delay, defer or prevent a change in control of the Company,
because the terms of preferred stock that might be issued could potentially
prohibit the Company's consummation of any merger, reorganization, sale of
substantially all of its assets, liquidation or other extraordinary corporate
transaction without the approval of the holders of the outstanding shares
of the preferred stock.
THE COMPANY'S STOCK PRICE WILL BE POTENTIALLY VOLATILE
There has been no public market for the Company's common stock. There can be
no assurance that an active trading market will develop or be sustained. At a
future date, provided a public market for the stock does develop, the market
price of the shares of common stock is likely to be highly volatile and may
be significantly affected by factors such as fluctuations in the Company's
operating results, announcements of technological innovations or new products
and/or services by the Company or its competitors, governmental regulatory
action, developments with respect to patents or proprietary rights and
general market conditions. In addition, the stock market has, from time to
time, experienced significant price and volume fluctuations that are
unrelated to the operating performance of particular companies.
THE POSSIBLE NEED FOR ADDITIONAL FINANCING MAY IMPEDE THE COMPANY'S ABILITY
TO MANAGE OPERATIONS AT AN OPTIMAL LEVEL
The ultimate success of the Company may depend upon its ability to raise
additional capital. The Company has not investigated the availability, source,
or terms that might govern the acquisition of additional capital. The Company
will not investigate these issues until it determines a need for additional
financing. If additional capital is needed, there is no assurance that funds
will be available from any source. Also, if additional capital is available,
there can be no assurance that additional capital can be obtained on terms
acceptable to the Company. If additional capital is not available, the
Company's operations will be limited to those that can be financed with its
modest capital.
THE COMPANY'S INDEMNIFICATION OF OFFICERS AND DIRECTORS MAY RESULT IN
SUBSTANTIAL EXPENDITURES
The Company's Articles of Incorporation provide for the indemnification of its
directors, officers, employees, and agents, under certain circumstances,
against attorney's fees and other expenses incurred by them in any
litigation to which they become a party arising from their association with or
activities on behalf of the Company. The Company will also bear the expenses
of such litigation for any of its directors, officers, employees, or agents,
upon such person's promise to repay the Company therefor if it is ultimately
determined that any such person shall not have been entitled to
indemnification. This indemnification policy could result in substantial
expenditures by the Company which it will be unable to recoup.
THE COMPANY'S DEPENDENCE UPON OUTSIDE ADVISORS MAY LIMIT THE
ABILITY TO GROW OPERATIONS AT AN OPTIMAL RATE
To supplement the business experience of its officers and directors, the
Company may be required to employ consultants or advisors. It is anticipated
that such persons may be engaged on an "as needed" basis without a continuing
fiduciary or other obligation to the Company. There can be no assurances that
the Company will locate adequate outside advisors, or that they will be
available at affordable rates. Provided such persons are not located, the
Company's operations may be negatively impacted.
RULE 144 SALES MAY HAVE A DEPRESSIVE IMPACT ON THE COMPANY'S STOCK
Certain of the outstanding shares of common stock held by present stockholders
are "restricted securities" within the meaning of Rule 144 under the
Securities Act of 1933, as amended.
As restricted shares, these shares may be resold only pursuant to an effective
registration statement or under the requirements of Rule 144 or other
applicable exemptions from registration under the Act and as required under
applicable state securities laws. Rule 144 provides in essence that a person
who has held restricted securities for a prescribed period may, under certain
conditions, sell every three months, in brokerage transactions, a number of
shares that does not exceed the greater of 1.0% of a company's outstanding
common stock or the average weekly trading volume during the four calendar
weeks prior to the sale. As a result of revisions to Rule 144 which became
effective on or about April 29, 1997, there will be no limit on the amount
of restricted securities that may be sold by a nonaffiliate after the
restricted securities have been held by the owner for a period of two years.
A sale under Rule 144 or under any other exemption from the Act, if available,
or pursuant to subsequent registrations of shares of common stock of present
stockholders, may have a depressive effect upon the price of the common stock
in any market that may develop.
REQUIRED REGULATORY DISCLOSURE RELATING TO LOW-PRICED STOCKS MAY NEGATIVELY
IMPACT LIQUIDITY IN THE COMPANY'S STOCK
As long as the trading price of the common stock is less than US$5.00 per
share, trading in the common stock in the US secondary market is subject to
certain rules promulgated under the Securities Exchange Act of 1934, which
rules require additional disclosure by broker-dealers in connection with
any trades involving a stock defined as a "penny stock" (generally, any
non-NASDAQ equity security that has a market price of less than US$5.00 per
share, subject to certain exceptions). Such rules require the delivery,
prior to any penny stock transaction, of a disclosure schedule explaining the
penny stock market and the risks associated therewith, and impose various
sales practice requirements on broker-dealers who sell penny stocks to persons
other than established customers and accredited investors. For these types
of transactions, the broker-dealer must make a special suitability
determination for the purchaser and have received the purchaser's written
consent to the transactions prior to sale.
The additional burdens imposed upon broker-dealers by such requirements may
discourage broker-dealers from effecting transactions in the common stock,
which could severely limit the market liquidity of the common stock and the
ability of stockholders to sell the common stock in the US secondary market.
CURRENT PROSPECTUS AND STATE BLUE SKY REQUIREMENTS MAY IMPEDE THE COMPANY'S
ABILITY TO OFFER ITS COMMON STOCK IN CERTAIN JURISDICTIONS
The Company will be able to issue shares of its common stock only if there is
then a current prospectus relating to such common stock and only if such
common stock is qualified for sale or exempt from qualification under
applicable state securities laws of the jurisdictions in which the various
holders of the common stock reside. The Company has undertaken and intends to
file and keep current a prospectus which will permit the purchase and sale of
the common stock, but there can be no assurance that the Company will be able
to do so. Although the Company intends to seek to qualify for sale the shares
of Common Stock in those states in which the securities are to be offered, no
assurance can be given that such qualification will occur. The common stock
may be deprived of any value and the market for such shares may be limited if
a current prospectus covering the common stock is not kept effective or if
such common stock is not qualified or exempt from qualification in the
jurisdictions in which the holders then reside.
