We have had negative cash flows from operations since
inception. We will require significant additional financing, the availability of
which cannot be assured, and if our company is unable to obtain such financing,
our business may fail.
To date, we have had negative cash flows from operations and
have depended on sales of our equity securities and debt financing to meet our
cash requirements. Our ability to develop and, if warranted, commercialize our
technologies, will be dependent upon our ability to raise significant additional
financing. If we are unable to obtain such financing, we will not be able to
fully develop our business. Specifically, we will need to raise additional funds
to:
-
support our planned growth and carry out our business
plan;
-
continue scientific progress in our research and
development programs;
-
address costs and timing of conducting clinical trials
and seek regulatory approvals and patent prosecutions;
-
address competing technological and market developments;
-
establish additional collaborative relationships; and
-
market and develop our technologies.
[/TABLE]
We may not be able to obtain additional equity or debt
financing on acceptable terms as required. Even if financing is available, it
may not be available on terms that are favorable to us or in sufficient amounts
to satisfy our requirements. If we require, but are unable to obtain, additional
financing in the future, we may be unable to implement our business plan and our
growth strategies, respond to changing business or economic conditions,
withstand adverse operating results and compete effectively. More importantly,
if we are unable to raise further financing when required, we may be forced to
scale down our operations and our ability to generate revenues may be negatively
affected.
We have a history of losses and nominal operating results,
which raise substantial doubt about our ability to continue as a going concern.
Since inception through the transition period ended September
30, 2006, we have incurred aggregate net losses of $1,778,217 from operations.
We can offer no assurance that we will operate profitably or that we will generate
positive cash flow in the future. In addition, our operating results in the
future may be subject to significant
- 6 -
fluctuations due to many factors not within our control, such
as the level of competition and general economic conditions.
Our companys operations will be subject to all the risks
inherent in the establishment of a developing enterprise and the uncertainties
arising from the absence of a significant operating history. No assurance can be
given that we may be able to operate on a profitable basis.
Due to the nature of our business and the early stage of our
development, our securities must be considered highly speculative. We are
engaged in the business of developing and commercializing genetic biomarkers,
which technology is in the development stage and we have not commenced the
regulatory approval process for our technology. We have not realized a profit
from our operations to date and there is little likelihood that we will realize
any profits in the short or medium term. Any profitability in the future from
our business will be dependent upon the successful commercialization or
licensing of our core technology, which itself is subject to numerous risk
factors as set forth herein.
We expect to continue to incur development costs and operating
costs. Consequently, we expect to incur operating losses and negative cash flows
until our technology gains market acceptance sufficient to generate a sustainable
level of income from the commercialization or licensing of our technology. Our
history of losses and nominal operating results raise substantial doubt about
our ability to continue as a going concern, as described in the explanatory
paragraph in our companys independent registered public accounting firms
audit report dated December 14, 2006.
We currently hold no patents on our proprietary technology
and if we are not able to protect our proprietary technology, our company will
suffer a material adverse effect.
We currently have five provisional patent applications of our
technologies. We currently rely on the provisional patent applications and trade
secrets to protect our proprietary intellectual property.
The departure of any of our management or any significant
technical personnel or consultants we hire in the future, the breach of their
confidentiality and non-disclosure obligations, or the failure to achieve our
intellectual property objectives may have a material adverse effect on our
business, financial condition and results of operations. We believe our success
depends upon the knowledge and experience of our management and our ability to
market our existing technology and to develop new technologies.
While we believe that we have adequately protected our
proprietary technology, and we intend to take all appropriate and reasonable
legal measures to protect it in the future, the use of our technology by a
competitor could have a material adverse effect on our business, financial
condition and results of operations. Our ability to compete successfully and
achieve future revenue growth will depend, in part, on our ability to protect
our proprietary technology and operate without infringing upon the rights of
others. We may not be able to successfully protect our proprietary technology,
and our proprietary technology may otherwise become known or similar technology
may be independently developed by competitors. Competitors may discover novel
uses, develop similar or more marketable technologies or offer services similar
to our company at lower prices. We cannot predict whether our technologies and
services will compete successfully with the technologies and services of
existing or emerging competitors.
Our inability to complete our product development activities
successfully may severely limit our ability to operate and finance
operations.
Commercialization of our core technology will require
significant additional research and development as well as substantial clinical
trials. We believe that the United States will be the principal market for our
technology, although we may elect to expand into Japan and Western Europe. We
may not be able to successfully complete development of our core technology, or
successfully market our technology. We, and any of our potential collaborators,
may encounter problems and delays relating to research and development,
regulatory approval and intellectual property rights of our technology. Our
research and development programs may not be successful. Our core technology may
not prove to be safe and efficacious in clinical trials, and we may not obtain
the intended regulatory approvals for our core technology. Whether or not any of
these events occur, we may not have adequate
- 7 -
resources to continue operations for the period required to
resolve the issue delaying commercialization and we may not be able to raise
capital to finance our continued operation during the period required for
resolution of that issue.
We may lose our competitiveness if we are not able to
protect our proprietary technology and intellectual property rights against
infringement, and any related litigation may be time-consuming and costly .
Our success and ability to compete depends to a significant
degree on our proprietary technology. If any of our competitors copy or
otherwise gain access to our proprietary technology or develop similar
technologies independently, we may not be able to compete as effectively. The
measures we have implemented to protect our proprietary technology and other
intellectual property rights are currently based upon a combination of
provisional patent applications and trade secrets. This, however, may not be
adequate to prevent the unauthorized use of our proprietary technology and our
other intellectual property rights. Further, the laws of foreign countries may
provide inadequate protection of such intellectual property rights. We may need
to bring legal claims to enforce or protect such intellectual property rights.
Any litigation, whether successful or unsuccessful, may result in substantial
costs and a diversion of our companys resources. In addition, notwithstanding
our rights to our intellectual property, other persons may bring claims against
us alleging that we have infringed on their intellectual property rights or
claims that our intellectual property rights are not valid. Any claims against
us, with or without merit, could be time consuming and costly to defend or
litigate, divert our attention and resources, result in the loss of goodwill
associated with our business or require us to make changes to our technology.
If our provisional patent applications and proprietary
rights do not provide substantial protection, then our business and competitive
position will suffer.
Our success depends in large part on our ability to develop,
commercialize and protect our proprietary technology. However, patents may not
be granted on any of our provisional or future patent applications. Also, the
scope of any future patent may not be sufficiently broad to offer meaningful
protection. In addition, any patents granted to us in the future may be
successfully challenged, invalidated or circumvented so that such patent rights
may not create an effective competitive barrier.
Our company may become subject to intellectual property
litigation which may harm our business.
Our success depends in part on our ability to develop
commercially viable products without infringing the proprietary rights of
others. Although we have not been subject to any filed infringement claims,
other patents could exist or could be filed which may prohibit or limit our
ability to market our products or maintain a competitive position. In the event
of an intellectual property dispute, we may be forced to litigate. Intellectual
property litigation may divert managements attention from developing our
technology and may force us to incur substantial costs regardless of whether we
are successful. An adverse outcome could subject us to significant liabilities
to third parties, and force us to curtail or cease the development and
commercialization of our technology.
If our company commercializes or tests our technology, our
company will be subject to potential product liability claims which may affect
our earnings and financial condition.
We face an inherent business risk of exposure to product
liability claims in the event that the use of our core technology during
research and development efforts, including clinical trials, or after
commercialization, results in adverse affects. As a result, we may incur
significant product liability exposure, which may exceed any insurance coverage
that we obtain in the future. Even if we elect to purchase such issuance in the
future, we may not be able to maintain adequate levels of insurance at
reasonable cost and/or reasonable terms. Excessive insurance costs or uninsured
claims may increase our operating loss and affect our financial condition.
We have not generated any revenues from operations and if we
are unable to develop market share and generate significant revenues from the
commercialization or licensing of our technology, then our business may fail.
We operate in a highly competitive industry and our failure to
compete effectively and generate income through the commercialization or
licensing of our technology may adversely affect our ability to generate
revenue. The business of developing genetic biomarkers is highly competitive and
subject to frequent technological innovation with
- 8 -
improved price and/or performance characteristics. There can be
no assurance that our new or existing technologies will gain market acceptance.
Management is aware of similar technologies which our technology, when developed
to a stage of commercialization, will compete directly against. Many of our
competitors have greater financial, technical, sales and marketing resources,
better name recognition and a larger customer base than ours. In addition, many
of our large competitors may offer customers a broader or superior range of
services and technologies. Some of our competitors may conduct more extensive
promotional activities and offer lower commercialization and licensing costs to
customers than we do, which could allow them to gain greater market share or
prevent us from establishing and increasing our market share. Increased
competition in the genetic biomarker industry may result in significant price
competition, reduced profit margins or loss of market share, any of which may
have a material adverse effect on our ability to generate revenues and
successfully operate our business. Our competitors may develop technologies
superior to those that our company is currently developing. In the future, we
may need to decrease our prices if our competitors lower their prices. Our
competitors may be able to respond more quickly to new or changing
opportunities, technologies and customer requirements. Such competition will
potentially affect our chances of achieving profitability, and ultimately affect
our ability to continue as a going concern.
Rapid technological changes in our industry may render our
technology non-competitive or obsolete and consequently affect our ability to
generate future revenues.
The genetic biomarker industry is characterized by rapidly
changing technology, evolving industry standards and varying customer demand. We
believe that our success will depend on our ability to generate income through
the commercialization and licensing of our technology and that it will require
us to continuously develop and enhance our technology that is currently being
developed and introduce new and more technologically advanced technologies
promptly into the market. We can make no assurance that our technology will not
become obsolete due to the introduction of alternative technologies. If we are
unable to continue to develop and introduce new genetic biomarkers to meet
technological changes and changes in market demands, our business and operating
results, including our ability to generate revenues, may be adversely affected.
If we fail to effectively manage the growth of our company
and the commercialization or licensing of our technology, our future business
results could be harmed and our managerial and operational resources may be
strained.
As we proceed with the development of our technology and the
expansion of our marketing and commercialization efforts, we expect to
experience significant growth in the scope and complexity of our business. We
will need to add staff to market our services, manage operations, handle sales
and marketing efforts and perform finance and accounting functions. We
anticipate that we will be required to hire a broad range of additional
personnel in order to successfully advance our operations. This growth is likely
to place a strain on our management and operational resources. The failure to
develop and implement effective systems, or to hire and retain sufficient
personnel for the performance of all of the functions necessary to effectively
service and manage our potential business, or the failure to manage growth
effectively, could have a material adverse effect on our business and financial
condition.
Failure to obtain and maintain required regulatory approvals
will severely limit our ability to commercialize our technology.
We believe that it is important for the success of our business
to obtain the approval of the Food and Drug Administration in the United States
(FDA) before we commence commercialization of our technology in the United
States, the principal market for our technology. We may also be required to
obtain additional approvals from foreign regulatory authorities to apply for any
sales activities we may carry out in those jurisdictions. If we cannot
demonstrate the safety, reliability and efficacy of our technology, the FDA or
other regulatory authorities could delay or withhold regulatory approval of our
technology.
Even if we obtain regulatory approval of our technology, that
approval may be subject to limitations on the indicated uses for which it may be
marketed. Even after granting regulatory approval, the FDA and other regulatory
agencies and governments in other countries will continue to review and inspect
any future marketed products as well as any manufacturing facilities that we may
establish in the future. Later discovery of previously unknown problems with a
product or facility may result in restrictions on the product, including a
withdrawal of the product from the market.
- 9 -
Further, governmental regulatory agencies may establish
additional regulations which could prevent or delay regulatory approval of our
technology.
Even if we obtain regulatory approval to commercialize our
technology, lack of commercial acceptance may impair our business.
Our product development efforts are primarily directed toward
obtaining regulatory approval to market genetic diagnostic markers. Diagnostic
markers for cancer have been widely available for a number of years, and our
technology may not be accepted by the marketplace as readily as these or other
competing products, processes and methodologies. Additionally, our technology
may not be employed in all potential applications being investigated, and any
reduction in applications may limit the market acceptance of our technology and
our potential revenues. As a result, even if our technology is developed into a
marketable technology and we obtain all required regulatory approvals, we cannot
be certain that our technology will be adopted at a level that would allow us to
operate profitably.
If we do not keep pace with our competitors, technological
advancements and market changes, our technology may become obsolete and our
business may suffer.
The market for our technology is very competitive, is subject
to rapid technological changes and varies for different individual products. We
believe that there are potentially many competitive approaches being pursued
that compete with our technology, including some by private companies for which
information is difficult to obtain.
Many of our competitors have significantly greater resources
and have developed products and processes that directly compete with our
technology. Our competitors may develop, or may in the future develop, new
technologies that directly compete with our technology or even render our
technology obsolete. Our technology is designed to develop diagnostic products.
Even if we are able to demonstrate improved or equivalent results from our
technology, researchers and practitioners may not use our technology and we may
suffer a competitive disadvantage. Finally, to the extent that others develop
new technologies that address the targeted application for our current
technology, our business will suffer.
Our ability to hire and retain key personnel will be an
important factor in the success of our business and a failure to hire and retain
key personnel may result in our inability to manage and implement our business
plan.
We are highly dependent upon our management personnel such Joel
Bellenson and Dexster Smith because of their experience developing genetic
diagnostic markers. The loss of the services of one or more of these individuals
may impair managements ability to operate our company. We have not purchased
key man insurance on any of these individuals, which insurance would provide us
with insurance proceeds in the event of their death. Without key man insurance,
we may not have the financial resources to develop or maintain our business
until we could replace the individual or to replace any business lost by the
death of that person. The competition for qualified personnel in the markets in
which we operate is intense. In addition, in order to manage growth effectively,
we must implement management systems and recruit and train new employees. We may
not be able to attract and retain the necessary qualified personnel. If we are
unable to retain or to hire qualified personnel as required, we may not be able
to adequately manage and implement our business.
We will depend upon the establishment of relationships with
third parties to test our technologies and any relationship may require our
company to share revenues and technology.
Management anticipates that it will be crucial to identify the
degree of elevated or reduced risk of a particular disease or medication based
on a particular variation or combination of variations. To do so will require
access to samples of patients who have had the diseases in question as well as
normal populations. And for each of these collections of samples, it will be
important to note the demographic and epidemiological ranges covered by the
collection. This would entail establishing relationships with clinics,
hospitals, universities and companies that have repositories of biological
samples with carefully curated patient disease and demographic information.
These relationships have various confidentiality provisions that require
negotiations that can span several months. In addition, some of these
institutions have national or provincial mandates for providing access to these
samples that
- 10 -
may require us to make our test results publicly available for
these jurisdictions or institutions at a reduced rate and could also require us
to provide a flow back of intellectual property licensing for their further
research process. Any such requirement may reduce our revenues.
Our company will be dependent on various outsourcing
activities for testing our technology and failure to outsource certain
activities will have a material adverse effect on our company.
We intend to establish relationships with various vendors of
biological laboratory services. Such laboratory services may include DNA SNP
profiling, gene expression profiling, cell culturing, recombinant techniques for
inserting reporter genes into artificial constructs for testing purposes,
profiling of transcription factors active in different disease states, and other
laboratory and analytical services depending upon the outcome of the results at
various stages. Our ability to secure and maintain these future relationships
will be critical to the success of our business objectives, and conversely the
inability to secure these future relationships on reasonable commercial terms
represents a risk and could have a material adverse effect on our operations or
financial condition.
Most of our assets and all of our directors and officers are
outside the United States, with the result that it may be difficult for
investors to enforce within the United States any judgments obtained against us
or any of our directors or officers.
Although we are organized under the laws of the State of
Nevada, United States, our principal business office is located in Vancouver,
British Columbia, Canada. Outside the United States, it may be difficult for
investors to enforce judgements against us that are obtained in the United
States in any action, including actions predicated upon civil liability
provisions of federal securities laws. In addition, all of our directors and
officers reside outside the United States, and nearly all of the assets of these
persons and our assets are located outside of the United States. As a result, it
may not be possible for investors to effect service of process within the United
States upon such persons or to enforce against us or such persons judgements
predicated upon the liability provisions of United States securities laws. There
is substantial doubt as to the enforceability against us or any of our directors
and officers located outside the United States in original actions or in actions
of enforcement of judgments of United States courts or liabilities predicated on
the civil liability provisions of United States federal securities laws. In
addition, as the majority of our assets are located outside of the United
States, it may be difficult to enforce United States bankruptcy proceedings
against us. Under bankruptcy laws in the United States, courts typically have
jurisdiction over a debtors property, wherever it is located, including
property situated in other countries. Courts outside of the United States may
not recognize the United States bankruptcy courts jurisdiction. Accordingly,
you may have trouble administering a United States bankruptcy case involving a
Nevada company as debtor with most of its property located outside the United
States. Any orders or judgements of a bankruptcy court obtained by you in the
United States may not be enforceable.
Our business is subject to comprehensive government
regulation and any change in such regulation may have a material adverse effect
on our company.
There is no assurance that the laws, regulations, policies or
current administrative practices of any government body, organization or
regulatory agency in the United States or any other jurisdiction, will not be
changed, applied or interpreted in a manner which will fundamentally alter the
ability of our company to carry on our business. The actions, policies or
regulations, or changes thereto, of any government body or regulatory agency, or
other special interest groups, may have a detrimental effect on our company. Any
or all of these situations may have a negative impact on our operations.
RISKS RELATED TO OUR COMMON STOCK
A decline in the price of our common stock could affect our
ability to raise further working capital and adversely impact our ability to
continue operations .
A prolonged decline in the price of our common stock could
result in a reduction in the liquidity of our common stock and a reduction in
our ability to raise capital. Because a significant portion of our operations
has been and will be financed through the sale of equity securities, a decline
in the price of our common stock could be especially
- 11 -
detrimental to our liquidity and our operations. Such
reductions may force us to reallocate funds from other planned uses and may have
a significant negative effect on our business plans and operations, including
our ability to develop new products and continue our current operations. If our
stock price declines, we can offer no assurance that we will be able to raise
additional capital or generate funds from operations sufficient to meet our
obligations. If we are unable to raise sufficient capital in the future, we may
not be able to have the resources to continue our normal operations.
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.
If we issue additional shares in the future, it will result
in the dilution of our existing shareholders.
Our certificate of incorporation authorizes the issuance of up
to 750,000,000 shares of common stock with a $0.001 par value and 100,000,000
preferred shares with a par value of $0.001, of which 44,847,077 common shares
were issued as of September 30, 2006. Our board of directors may fix and
determine the designations, rights, preferences or other variations of each
class or series within each class. Our board of directors may choose to issue
some or all of such shares to acquire one or more businesses or to provide
additional financing in the future. The issuance of any such shares will result
in a reduction of the book value and market price of the outstanding shares of
our common stock. If we issue any such additional shares, such issuance will
cause a reduction in the proportionate ownership and voting power of all current
shareholders. Further, such issuance may result in a change of control of our
corporation.
Trading of our stock may be restricted by the Securities
Exchange Commissions penny stock regulations, which may limit a stockholders
ability to buy and sell our stock.
The Securities and Exchange Commission has adopted regulations
which generally define penny stock to be any equity security that has a market
price (as defined) less than $5.00 per share or an exercise price of less than
$5.00 per share, subject to certain exceptions. Our securities are covered by
the penny stock rules, which impose additional sales practice requirements on
broker-dealers who sell to persons other than established customers and
accredited investors. The term accredited investor refers generally to
institutions with assets in excess of $5,000,000 or individuals with a net worth
in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly
with their spouse. The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document in a form prepared by the Securities and
Exchange Commission, which provides information about penny stocks and the
nature and level of risks in the penny stock market. The broker-dealer also must
provide the customer with current bid and offer quotations for the penny stock,
the compensation of the broker-dealer and its salesperson in the transaction and
monthly account statements showing the market value of each penny stock held in
the customers account. The bid and offer quotations, and the broker-dealer and
salesperson compensation information, must be given to the customer orally or in
writing prior to effecting the transaction and must be given to the customer in
writing before or with the customers confirmation. In addition, the penny stock
rules require that prior to a transaction in a penny stock not otherwise exempt
from these rules, the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the
purchasers written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in and limit the marketability of our common stock.
NASD sales practice requirements may also limit a
stockholders ability to buy and sell our stock.
In addition to the penny stock rules described above, the
National Association of Securities Dealers (NASD) has adopted rules that require
that in recommending an investment to a customer, a broker-dealer must have
reasonable grounds for believing that the investment is suitable for that
customer. Prior to recommending speculative low priced securities to their
non-institutional customers, broker-dealers must make reasonable efforts to
obtain information about the customers financial status, tax status, investment
objectives and other information. Under interpretations of these rules, the NASD
believes that there is a high probability that speculative low priced
- 12 -
securities will not be suitable for at least some customers.
The NASD requirements make it more difficult for broker-dealers to recommend
that their customers buy our common stock, which may limit your ability to buy
and sell our stock and have an adverse effect on the market for our shares.
Our common stock is illiquid and the price of our common
stock may be negatively impacted by factors which are unrelated to our
operations .
Our common stock is currently quoted on the OTC Bulletin Board.
Trading of our stock through the OTC Bulletin Board is frequently thin and
highly volatile. There is no assurance that a sufficient market will develop in
the stock, in which case it could be difficult for shareholders to sell their
stock. The market price of our common stock could fluctuate substantially due to
a variety of factors, including market perception of our ability to achieve our
planned growth, quarterly operating results of our competitors, trading volume
in our common stock, changes in general conditions in the economy and the
financial markets or other developments affecting our competitors or us. In
addition, the stock market is subject to extreme price and volume fluctuations.
This volatility has had a significant effect on the market price of securities
issued by many companies for reasons unrelated to their operating performance
and could have the same effect on our common stock.
Upstream Biosciences (UPBS) - Description of business
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Research Report
Description
Level 2 quotes
Charts
News
Profile
Balance Sheet
Income Statement
Cash Flow Statement
Insiders
SEC Filings
Analyst Recommendation
Earnings Report
Historical Prices
Recent Material Events
Key executives
Comments


