RADIX MARINE INC (RDXM) - Description of business

Company Description
History Radix Marine, Inc. (RDXM) was initially formed under the laws of the State of Colorado as Modern MFG Services, Inc. on September 30, 1958. We subsequently entered into a migratory merger and whereby we were reincorporated in the State of Nevada. Our name was changed from Modern MFG Services, Inc. in March of 2003 to Radix Marine, Inc. in keeping with our new focus on the marine industry and we acquired our wholly-owned subsidiary, Integrated Maritime Platforms International, Inc. ("Integrated"), a Washington Corporation. The current Articles of Incorporation of the Company authorize it to issue 250,000,000 shares of common stock and 25,000,000 shares of "blank check preferred stock". Pursuant to our definitive proxy statement filed with the SEC on June 28, 2004, our shareholders approved an amendment to the company's Certificate of Incorporation to increase the number of authorized shares from 75,000,000 to 250,000,000 as required by a Securities Purchase Agreement we entered into with an accredited investor on March 17, 2004, for the sale of $300,000 in convertible debentures and warrants to buy 3,000,000 shares of our common stock. RDXM had approximately 2020 shareholders and 65,895,149 shares of common stock issued and outstanding as of June 30, 2004. The RDXM common stock is traded on the NASDAQ Bulletin Board under the symbol "RDXM". The Company has a June 30th fiscal year end.GENERAL We are a development stage company that focuses, through our wholly-owned subsidiary, on the research, design, engineering and construction of maritime craft for port and homeland security as well as recreational purposes. We presently offer manned patrol and recreational craft and are part of a consortium that is developing an unmanned surface vehicle for the United Stated Navy.UNMANNED CRAFT As part of the Unmanned Surface Vehicle Consortium, we have entered into an agreement with the Naval Undersea Warfare Center, a division of the United States Government, for the research and development of a undersea warfare combat vehicle prototype. The consortium also includes Northrop Grumman Corporation and Raytheon Company. The Consortium, through the Spartan Undersea Warfare Combat Vehicle Program, has agreed to commence the research and development of a deployable, off board under water warfare combat vehicle. The aspects of this agreement require that the vehicle be able to operate on an unmanned basis, is reconfigurable for several uses and has minimal impact on its host ship. We are entitled to patent all inventions developed by our company, subject to various restrictions, and we are also entitled to a non-exclusive royalty-free,worldwide license for all patents developed by the government in connection with this project. In consideration for our services pursuant to this agreement, we are entitled to a fee as well as to paid expenses. To date, we have developed the Odyssey 11 Meter Unmanned Surface Vehicle. The Odyssey is designed to perform intelligence, surveillance and reconnaissance missions by providing data for force protection, force security and advanced reconnaissance. The Odyssey is 35 feet long and has a maximum speed of 40 knots on a flat surface. The Odyssey minimizes manpower requirements while incorporating stealth technologies. We have also entered into an agreement with Science Applications Corporation, a company engaged in telecommunications and systems integration, in connection with the development of the Unmanned Harbor Security Vehicle. The Unmanned Harbor Security Vehicle has several capabilities including: o all weather surveillance; o covert craft and swimmer detection; o mine detection; o port security; and o non-lethal response.MANNED CRAFT We presently have developed several types of manned marine craft for use in port and homeland security. One of our principal products is the GB-Challenger Class, which is a modular-concept high-speed work craft built on an aluminum, stainless steel, and rubber platform. Challenger is fast, maneuverable, and competent in coastal waters, rivers, and open seas. A variety of drop-in modules allow Challenger to adapt to a wide range of military and commercial missions. All of the GB-Challenger craft have been designed to be reconfigurable platforms which will accept mission modules that plug into the front deck section of the basic craft. Available mission modules range from dive salvage, drug interdiction, environmental response, and firefighting, to mine countermeasures and weapons deployment. The Challenger's drop-in modules can be installed in minutes with a simple dock-side lift. The GB-Challenger used two 660 HP model 3196 DITA Caterpillar engines, supported by a worldwide parts and maintenance network and twin 20-inch North American Marine Jet water propulsion units In connection with the potential sale of our manned craft, in August 2003, we have entered into a Co-Marketing Agreement with Norsco Marine whereby we shall sell and lease certain products to customers provided as a result of Norsco Marine's marketing and sales efforts. Together with Norsco Marine, we currently are offering the following products: o Fisheries Patrol Craft - this craft is 32' by 11' and is optimal for local enforcement officials. This vessel can be used for diving with easy access over the stern or side and is powered by twin Volvo gas inboard/outboards. o Landing Craft - this craft is 29' by 10' and is utilized in remote areas that lack docks or floats for beach access. It is powered by twin Yamaha 225hp four stroke engines. o Military/Patrol Craft - this is a 32' by 10' aluminum patrol craft that is powered by twin 420hp tourbocharged caterpillar engines. o Sportfishing Craft - We offer a variety of sportfishing craft. The first type is a 28' recreational vehicle that seats six inside its cabin that is generally used for sportfishing or charter operations. This vessel can either be build with a diesel or gas inboard/outboard engine or outboard engine. We also offer a 28' V-berth sportfishing craft that is built to specific designs. In addition, we offer a 22' center consol sportfishing craft that is constructed of aluminum. Finally, we are presently developing a 25' V-berth sportfishing that can be customized to various needs and is powered by an inboard/outboard gas engine.PLAN OF OPERATION It is our intent to develop and market a complete line of manned and unmanned marine craft for the domestic and international market. In addition, we plan to seek out the acquisition of new business opportunities and/or related technologies which will enhance shareholder value. We intend to seek business opportunities demonstrating the potential of long-term growth as opposed to short-term earnings. We have limited funds with which to pursue the acquisition of new business opportunities, as we have generated losses since our inception. In our pursuit of acquiring new business opportunities, we anticipate needing additional funding to cover legal and accounting expenses, in addition to the general business and operating expenses we incur as a result of maintaining our business. Given our current financial situation, the acquisition and development of the stated marine technologies cannot be achieved without an influx of capital. Sufficient funds cannot be generated from the existing contracts at this time. Any additional funding that we need to acquire a new business opportunity may come through private placements, public offerings and/or bank financing.COMPETITION We are faced with significant competition in the marine industry for manned craft and competition in the unmanned craft area is starting to develop. Recent emphasis on Homeland Security initiatives, coupled with our unique position on the Spartan program, has provided new opportunities for our company in the unmanned craft area. However, despite our position in the Spartan program, the market for marine products for homeland security has recently started to develop and has become intensely competitive, rapidly evolving and subject to rapid technological change. We expect competition to persist, intensify and increase in the future. Such competition could materially adversely affect our business, operating results or financial condition.POTENTIAL ACQUISITION In July 2003, we signed a Letter of Intent for the partial acquisition of The Radix Ortega Group, a marine and environmental engineering firm based out of Seattle, Washington. Radix Ortega currently has contracts with Washington State's Department of Transportation, the Port of Seattle, and the U.S. Navy Engineering Field Activity Northwest. Our work with the Navy involves environmental assessments for marine facility construction projects at Naval Shipyard Puget Sound in Bremerton, Washington. Radix Ortega also has a broad base of existing commercial customers including the Bechtel Corporation, Bank of America and the Puget Sound Energy Under the proposed terms of the acquisition, we will acquire up to 40% of Radix Ortega. We will operate as a separate business unit, with our own rate structure. This approach positions our company to be more competitive on service contracts, while leaving Integrated Maritime Platforms International, Inc., our wholly-owned subsidiary, to conduct the higher-cost research and development tasks. This acquisition remains pending until financing is available to close under the terms of the Letter of Intent.EMPLOYEES As of October 15, 2004, we have 8 full-time employees and 5 part-time employees. As we expand, additional engineering, technical, and management staff will be required.SUBSIDIARIES Integrated Maritime Platforms International, Inc., a Washington corporation, is a wholly-owned subsidiary of Radix Marine, Inc.PATENTS AND TRADEMARKS We do not own any patent or trademark. RISK FACTORS Radix Marine is a development stage company with a high degree of risk. If any of the following risks actually occur, our business, operating results and financial condition could be harmed and the value of our stock could go down.RISKS RELATING TO OUR BUSINESS:WE HAVE A HISTORY OF LOSSES WHICH MAY CONTINUE, REQUIRING US TO SEEK ADDITIONAL SOURCES OF CAPITAL WHICH MAY NOT BE AVAILABLE, REQUIRING US TO CURTAIL OR CEASE OPERATIONS. We incurred net losses of $1,727,335 for the year ended June 30, 2004 and $1,229,796 for the year ended June 30, 2003. We cannot assure you that we can achieve or sustain profitability on a quarterly or annual basis in the future. If revenues grow more slowly than we anticipate, or if operating expenses exceed our expectations or cannot be adjusted accordingly, we will continue to incur losses. We will continue to incur losses until we are able to establish significant sales of our marine craft. Our possible success is dependent upon the successful development and marketing of our services and products, as to which there is no assurance. Any future success that we might enjoy will depend upon many factors, including factors out of our control or which cannot be predicted at this time. These factors may include changes in or increased levels of competition, including the entry of additional competitors and increased success by existing competitors, changes in general economic conditions, increases in operating costs, including costs of supplies, personnel and equipment, reduced margins caused by competitive pressures and other factors. These conditions may have a materially adverse effect upon us or may force us to reduce or curtail operations. In addition, we will require additional funds to sustain and expand our sales and marketing activities, particularly if a well-financed competitor emerges. Based on our current funding arrangement with La Jolla, we do not anticipate that we will require additional funds to continue our operations for the next twelve months. In the event that our financing arrangement with La Jolla is terminated or if we need additional financing, there can be no assurance that financing will be available in amounts or on terms acceptable to us, if at all. The inability to obtain sufficient funds from operations or external sources would require us to curtail or cease operations.IF WE ARE UNABLE TO OBTAIN ADDITIONAL FUNDING OUR BUSINESS OPERATIONS WILL BE HARMED AND IF WE DO OBTAIN ADDITIONAL FINANCING OUR THEN EXISTING SHAREHOLDERS MAY SUFFER SUBSTANTIAL DILUTION. Additional capital may be required to effectively support the operations and to otherwise implement our overall business strategy. However, there can be no assurance that financing will be available when needed on terms that are acceptable to us. The inability to obtain additional capital will restrict our ability to grow and may reduce our ability to continue to conduct business operations. If we are unable to obtain additional financing, we will likely be required to curtail our marketing and development plans and possibly cease our operations. Any additional equity financing may involve substantial dilution to our then existing shareholders.OUR INDEPENDENT AUDITORS HAVE EXPRESSED SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN, WHICH MAY HINDER OUR ABILITY TO OBTAIN FUTURE FINANCING. In their report dated October 12, 2004, our independent auditors stated that our financial statements for the year ended June 30, 2004 were prepared assuming that we would continue as a going concern. Our ability to continue as a going concern is an issue raised as a result of a loss for the year ended June 30, 2004 in the amount of $1,727,335 and stockholders deficit of $76,779 as of June 30, 2004. We continue to experience net losses. Our ability to continue asa going concern is subject to our ability to generate a profit and/or obtain necessary funding from outside sources, including obtaining additional funding from the sale of our securities, increasing sales or obtaining loans and grants from various financial institutions where possible. Our continued net losses and stockholders' deficit increases the difficulty in meeting such goals and there can be no assurances that such methods will prove successful.THE EFFECT OF INTEREST RATES AND FUEL PRICES MAY HAVE A NEGATIVE IMPACT ON DEMAND FOR MARINE PRODUCTS AND, AS A RESULT, A NEGATIVE IMPACT ON OUR OPERATIONS. Marine craft in general are often financed, and higher interest rates may retard demand for these products. In addition, marine businesses are somewhat fuel-cost-sensitive, and higher fuel costs can also hurt demand. If interest rates and fuel costs continue to rise, then our operations may be negatively impacted.IF WE ARE UNABLE TO COMPETITIVELY PRICE OUR PRODUCTS, THEN OUR RESULTS FROM OPERATIONS WILL BE NEGATIVELY IMPACTED. Introduction of lower-cost alternatives by other companies can hurt our competitive position. We hope that our efforts toward cost-containment, commitment to quality products, and excellence in operational effectiveness and customer service are designed in part to offset this risk. If we are unable to control costs or if are competitors are better able to control costs, then our results from operations will be negatively impacted.AS PART OF AN INDUSTRY CONSORTIUM, WE HAVE ENTERED INTO AN AGREEMENT WITH THE UNITED STATES GOVERNMENT THROUGH THE NAVAL UNDERSEA WARFARE CENTER TO RESEARCH AND DEVELOP, AS PART OF THE CONSORTIUM AN UNMANNED SURFACE VEHICLE AND, IF THIS AGREEMENT WERE TO BE TERMINATED FOR ANY REASON, OUR RESULTS OF OPERATIONS MAY BE SEVERALLY IMPACTED AND WE MAY BE FORCED TO CEASE OUR OPERATIONS. As part of the Unmanned Surface Vehicle Consortium, we have entered into an agreement with the Naval Undersea Warfare Center, a division of the United States Government, for the research and development of a undersea warfare combat vehicle prototype. The consortium also includes Northrop Grumman Corporation and Raytheon Company. The Consortium, through the Spartan Undersea Warfare Combat Vehicle Program, has agreed to commence the research and development of a deployable, off board under water warfare combat vehicle. The aspects of this agreement require that the vehicle be able to operate on an unmanned basis, is reconfigurable for several uses and has minimal impact on its host ship. If the consortium is unable to develop the unmanned surface vehicle for use by the United States Navy, then the expected source of our revenues, if any, may not materialize. If sales of the unmanned surface vehicle do not develop then our results of operations may be negatively impacted and we may be forced to cease operations.IF WE ARE NOT ABLE TO MANAGE THE GROWTH OF OUR COMPANY WE MAY NEVER ACHIEVE PROFITABILITY. Our success will depend on our ability to expand and manage our operations and facilities. There can be no assurance that we will be able to manage our growth, meet the staffing requirements of manufacturing scale-up or for current or additional collaborative relationships or successfully assimilate and train our new employees. In addition, to manage our growth effectively, we will be required to expand our management base and enhance our operating and financial systems. If we continue to grow, there can be no assurance that the management skills and systems currently in place will be adequate or that we will be able to manage any additional growth effectively. Failure to achieve any of these goals could have a material adverse effect on our business, financial condition or results of operations.RISKS RELATING TO OUR CURRENT FINANCING ARRANGEMENT:THERE ARE A LARGE NUMBER OF SHARES UNDERLYING OUR CONVERTIBLE DEBENTURES, AND WARRANTS THAT MAY BE AVAILABLE FOR FUTURE SALE AND THE SALE OF THESE SHARES MAY DEPRESS THE MARKET PRICE OF OUR COMMON STOCK. As of June 30, 2004, we had 65,895,149 shares of common stock issued and outstanding and convertible debentures outstanding that may be converted into an estimated 38,250,000 shares of common stock at current market prices, and outstanding warrants to purchase 1,000,000 shares of common stock. In addition, the number of shares of common stock issuable upon conversion of the outstanding convertible debentures may increase if the market price of our stock declines. All of the shares, including all of the shares issuable upon conversion of the debentures and upon exercise of our warrants, may be sold without restriction. The sale of these shares may adversely affect the market price of our common stock.THE CONTINUOUSLY ADJUSTABLE CONVERSION PRICE FEATURE OF OUR CONVERTIBLE DEBENTURES COULD REQUIRE US TO ISSUE A SUBSTANTIALLY GREATER NUMBER OF SHARES, WHICH WILL CAUSE DILUTION TO OUR EXISTING STOCKHOLDERS. Our obligation to issue shares upon conversion of our convertible debentures is essentially limitless. The following is an example of the amount of shares of our common stock that are issuable, upon conversion of our convertible debentures (excluding accrued interest), based on market prices 25%, 50% and 75% below the market price, as of October 12, 2004 of $0.02. Number of Shares % Below Price Per With Discount Outstanding % of Market Share at 20% Issuable Stock ------ ----- ------ -------- -----25% $.015 $.012 251,600,000 80.86% 50% $.010 $.008 378,787,500 86.41% 75% $.005 $.004 760,350,000 92.73% As illustrated, the number of shares of common stock issuable upon conversion of our convertible debentures will increase if the market price of our stock declines, which will cause dilution to our existing stockholders.THE CONTINUOUSLY ADJUSTABLE CONVERSION PRICE FEATURE OF OUR CONVERTIBLE DEBENTURES MAY ENCOURAGE INVESTORS TO MAKE SHORT SALES IN OUR COMMON STOCK, WHICH COULD HAVE A DEPRESSIVE EFFECT ON THE PRICE OF OUR COMMON STOCK. The convertible debentures are convertible into shares of our common stock at a 20% discount to the trading price of the common stock prior to the conversion. The significant downward pressure on the price of the common stock as the selling stockholder converts and sells material amounts of common stock could encourage short sales by investors. This could place further downward pressure on the price of the common stock. The selling stockholder could sell common stock into the market in anticipation of covering the short sale by converting their securities, which could cause the further downward pressure on the stock price. In addition, not only the sale of shares issued upon conversion or exercise of debentures, warrants and options, but also the mere perception that these sales could occur, may adversely affect the market price of the common stock.THE ISSUANCE OF SHARES UPON CONVERSION OF THE CONVERTIBLE DEBENTURES AND EXERCISE OF OUTSTANDING WARRANTS MAY CAUSE IMMEDIATE AND SUBSTANTIAL DILUTION TO OUR EXISTING STOCKHOLDERS. The issuance of shares upon conversion of the convertible debentures and exercise of warrants may result in substantial dilution to the interests of other stockholders since the selling stockholders may ultimately convert and sell the full amount issuable on conversion. Although the selling stockholders may not convert their convertible debentures and/or exercise their warrants ifsuch conversion or exercise would cause them to own more than 4.9% of our outstanding common stock, this restriction does not prevent the selling stockholders from converting and/or exercising some of their holdings and then converting the rest of their holdings. In this way, the selling stockholders could sell more than this limit while never holding more than this limit. There is no upper limit on the number of shares that may be issued which will have the effect of further diluting the proportionate equity interest and voting power of holders of our common stock, including investors in this offering.IN THE EVENT THAT OUR STOCK PRICE DECLINES, THE SHARES OF COMMON STOCK ALLOCATED FOR CONVERSION OF THE CONVERTIBLE DEBENTURES AND REGISTERED PURSUANT TO THE PROSPECTUS MAY NOT BE ADEQUATE AND WE MAY BE REQUIRED TO FILE A SUBSEQUENT REGISTRATION STATEMENT COVERING ADDITIONAL SHARES. IF THE SHARES WE HAVE ALLOCATED AND ARE REGISTERING HEREWITH ARE NOT ADEQUATE AND WE ARE REQUIRED TO FILE AN ADDITIONAL REGISTRATION STATEMENT, WE MAY INCUR SUBSTANTIAL COSTS IN CONNECTION THEREWITH. Based on our current market price and the potential decrease in our market price as a result of the issuance of shares upon conversion of the convertible debentures, we have made a good faith estimate as to the amount of shares of common stock that we are required to register and allocate for conversion of the convertible debentures. Accordingly, subject to obtaining an increase in our authorized shares of common stock, we will allocate and register approximately 38,250,000 shares to cover the conversion of the convertible debentures. In the event that our stock price decreases, the shares of common stock we have allocated for conversion of the convertible debentures and are registering hereunder may not be adequate. If the shares we have allocated to the registration statement are not adequate and we are required to file an additional registration statement, we may incur substantial costs in connection with the preparation and filing of such registration statement.IF WE ARE REQUIRED FOR ANY REASON TO REPAY OUR OUTSTANDING CONVERTIBLE DEBENTURES, WE WOULD BE REQUIRED TO DEPLETE OUR WORKING CAPITAL, IF AVAILABLE, OR RAISE ADDITIONAL FUNDS. OUR FAILURE TO REPAY THE CONVERTIBLE DEBENTURES, IF REQUIRED, COULD RESULT IN LEGAL ACTION AGAINST US, WHICH COULD REQUIRE THE SALE OF SUBSTANTIAL ASSETS. In March 2004, we entered into a Securities Purchase Agreement for the sale of an aggregate of $300,000 principal amount of convertible debentures. As of October 13, 2004, the total debenture outstanding is $277,500. The convertible debentures are due and payable, with 7 3/4% interest, two years from the date of issuance, unless sooner converted into shares of our common stock. In addition, any event of default could require the early repayment of the convertible debentures at a price equal to 125% of the amount due under the debentures. We anticipate that the full amount of the convertible debentures, together with accrued interest, will be converted into shares of our common stock, in accordance with the terms of the convertible debentures. If we are required to repay the convertible debentures, we would be required to use our limited working capital and raise additional funds. If we were unable to repay the debentures when required, the debenture holders could commence legal action against us and foreclose on all of our assets to recover the amounts due. Any such action would require us to curtail or cease operations.RISKS RELATING TO OUR COMMON STOCK:IF WE FAIL TO REMAIN CURRENT ON OUR REPORTING REQUIREMENTS, WE COULD BE REMOVED FROM THE OTC BULLETIN BOARD WHICH WOULD LIMIT THE ABILITY OF BROKER-DEALERS TO SELL OUR SECURITIES AND THE ABILITY OF STOCKHOLDERS TO SELL THEIR SECURITIES IN THE SECONDARY MARKET. Companies trading on the OTC Bulletin Board, such as us, must be reporting issuers under Section 12 of the Securities Exchange Act of 1934, as amended, and must be current in their reports under Section 13, in order to maintain price quotation privileges on the OTC Bulletin Board. If we fail to remain current on our reporting requirements, we could be removed from the OTC Bulletin Board. As a result, the market liquidity for our securities could be severely adversely affected by limiting the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.OUR DIRECTORS AND EXECUTIVE OFFICERS BENEFICIALLY OWN APPROXIMATELY 10.5% OF OUR STOCK; THEIR INTERESTS COULD CONFLICT WITH SHAREHOLDERS; SIGNIFICANT SALES OF STOCK HELD BY THEM COULD HAVE A NEGATIVE EFFECT ON OUR STOCK PRICE; STOCKHOLDERS MAY BE UNABLE TO EXERCISE CONTROL. As of June 30, 2004, our executive officers, directors and affiliated persons beneficially owned approximately 10.5% of our common stock. As a result, our executive officers, directors and affiliated persons will have significant influence to: o elect or defeat the election of our directors; o amend or prevent amendment of our articles of incorporation or bylaws; o effect or prevent a merger, sale of assets or other corporate transaction; and o control the outcome of any other matter submitted to the stockholders for vote. As a result of their ownership and positions, our directors and executive officers collectively are able to significantly influence all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. In addition, sales of significant amounts of shares held by our directors and executive officers, or the prospect of these sales, could adversely affect the market price of our common stock. 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.OUR COMMON STOCK IS 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: o that a broker or dealer approve a person's account for transactions in penny stocks; and o 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: o obtain financial information and investment experience objectives of the person; and o 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: o sets forth the basis on which the broker or dealer made the suitability determination; and o 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 stock 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.