Company Description
BUSINESS HISTORY AND DEVELOPMENTKolorfusion International, Inc. was incorporated under the laws of the State of Colorado on May 17, 1995. In this Annual Report, the terms “Company”, “us”, “we”, “our” and “its” are used as references to Kolorfusion International, Inc. We develop and market a patented system for transferring colors and patterns into coatings on metal, wood, glass and directly into plastic products. Our “Kolorfusion” process is a technological process that allows this transfer of colors and patterns into coated metal, wood and glass and directly into a plastic surface that can be any shape or size.BUSINESS OPERATIONSGeneralWe are a developer and provider of technology, products and services for surface enhancement to various manufacturers in different industries. Our proprietary process “Kolorfusion” allows our customer to transfer colors and patterns to coated metal, wood, glass and directly into plastic products that can be any shape or size. We believe that the “Kolorfusion” proprietary process is a compelling value proposition for the manufacturer and its consumer. We believe we have achieved the only major breakthrough in surface finishing which allows manufacturers and end users to create any design or pattern on their respective products. Users are able to determine the nature of the pattern and the end product. The creation of a pattern to be a part of a product’s surface is designed to enhance consumer appeal, create demand for mature products, achieve product differentiation and customization and used as a promotional vehicle. Manufacturers can achieve looks on existing mature products like granite, Southwestern, oriental, floral or any other finish, resulting in a newly revitalized product.We have obtained patent protection for our proprietary process “Kolorfusion” within the United States and Canada. We own the web site www.kolorfusion.com .Industry OverviewThe surface finishing industry is considered to be a low to medium technology industry because technology changes and advances have arrived slowly. Products continue to be coated in much the same way as they have been for many decades. Furthermore, plastic products are still molded with equipment that may be as old as thirty years. There is and has been over the last few years a significant demand for a breakthrough in surface finishing. Many products become mature in their classification since the manufacturer has no way to readily revise the appearance or function of their respective products. Every manufacturer competes to sell their products in many ways, including price, quality, features-benefits, and appearance. In many markets or productcategories, it is the final appearance that may be deciding factor for the final purchase decision. Very few consumer products are sold without some form of surface decoration or treatment, whether it is in the packaging or on the product itself. The “Kolorfusion” process can assist the manufacturer in some of the following areas:   (i)   Product differentiation is a significant attribute that every manufacturer seeks to achieve. For instance, in a market as mature as elevators, the manufacturers of elevators still want to differentiate themselves from their competition by providing distinctive interior designs and coverings to satisfy the very diverse desires of architects and interior designers. If an architect/designer wants the interior of an elevator to have a granite look and feel, the designer and owner is constrained by weight and cost. Utilizing our Kolorfusion process removes such constraints as an alternate material, such as a coated resin or metal, can look and feel like granite with our Kolorfusion process. Additionally, the granite look provided will be at a fraction of the weight and at a fraction of the cost than previously could be provided by other materials.   (ii)   Adding new life to a mature product category is also a defined need. A typical electric toaster has an average life usage of 7-10 years. The consumer does not usually replace a toaster until it fails, as toasters have been looking the same for almost 10-20 years now. Using our Kolorfusion process, a manufacturer of toasters can now provide new finishes that may coordinate with the kitchen décor and prompt or facilitate the consumer to replace the toaster prior to it actually failing to work. This planned product obsolescence already occurs in products such as snow skis where new designs are introduced every year, yet little to no significant improvement in performance has been added for the recreational skier.     (iii)   Durability and consistency of a process and the ease of implementation of the process are additional considerations when defining the need within a manufacturing organization. We have developed consistent print systems and can provide processing for those manufacturers, which are not ready to license. The cost to implement is relatively low, as the process requires an oven to handle projected volumes and the installation of a vacuum.     (iv)   Shelf appeal is an attribute manufacturers are constantly seeking. Marketing needs to identify the desires of the purchaser, which include functions, price points, size and design. Manufacturers need to identify how to achieve the costing and production output required by marketing for their sales plan. Our Kolorfusion process adds value to the product through better shelf appeal of the product. However, functionality and cost of the surface enhancement remains to be evaluated by manufacturers and engineers. Marketing StrategyWe believe we are in a good position to expand our base of operations into many market segments and also into strategic geographic locations with proper funding. We have established two licensees in China one is in Shenzhen and another in Shanghai. We believe these new facilities will assist us in securing more accounts for our process in Asia. A critical bridge was achieved during 2004 with the development of the digital print capability and the significant endorsement and validation of our Kolorfusion process by the Polaris license. Current targeted markets include the gaming and computer markets.We utilize an inside sales force to handle new accounts and service existing accounts. The manufacturers typically visit our facility to see and understand the process. Additionally, we have entered into a strategic marketing alliance with Dupont’s Engineered Polymer Division (“Dupont”), wherein Dupont promotes the process on its resins it supplies to various customers. Projects done using the DuPont approach include K2, Burton and Flow International for snowboard bindings. Also, the sales team at RealTree and Mossy Oak who promote copyright camouflage designs assist us in our marketing. We also attend various trade shows (e.g. S.H.O.T. SEMA, Inter-bike, SGIA Home Builder Show) and do specific targeted outbound callingWe believe the agreement with Anhua Zhouli in Shenzhen, China, and Chesta, Inc. with facilities located in Shanghai, China will allow our Kolorfusion process to be promoted to North American based companies providing products to consumers seeking additional surface enhancement. Current projects include Daisy, Stan Sports, and Browning.Material AgreementsAssignment AgreementOn approximately October 17, 1995, we entered into an assignment agreement (the “Assignment Agreement”) with Mr. Jean-Noel Claveau, the holder and owner of the process patent (“Claveau”). Pursuant to the terms and provisions of the Assignment Agreement: (i) Claveau assigned to us his right, title and interest in and to the process patent; and (ii) we will pay an aggregate price of 25,000,000 French Francs, with 2,500,000 French Francs paid upon execution of the Assignment Agreement and the balance payable over a two year period. We did not make the required payments to Claveau under the terms and provisions of the License Agreement.During June 2001, we re-negotiated the Assignment Agreement and subsequently entered into a new agreement with Claveau (the “Agreement”). Pursuant to the terms and provisions of the Agreement: (i) we would pay Claveau 1,000,000 French Francs; (ii) we would issue 1,000,000 shares of our restricted Common Stock; and (iii) Claveau will provide consulting services to us for a five-year period in consideration of monthly payments by us to Claveau in the amount of 58,333 French Francs. As of the date of this Annual Report, we have paid an aggregate of 1,000,000 French Francs to Claveau. In related matters, on March 31 st 2006, the Company entered a Preferred Stock purchaseagreement; wherein the purchaser acquired 1,076,923 Series C-1 Preferred Stock, which can convert on a 5:1 basis into the Company’s common shares for a total amount of 5,384,615. The investment included $600,000 in cash payment and the assumption of $655,238 in debt due by the Company to Claveau. The Company has confirmed to the Preferred purchaser that Claveau would agree to receive $100,000 or less to resolve this debt shown on the Company’s balance sheet. The Company has also confirmed to the Preferred purchaser that the Company would assume any liabilities in excess of the $100,000. Management fully expects that the individual will not attempt or be successful in claiming any more than $100,000 for the full settlement of the debt as previously recorded by the Company. We believe this to be true since Claveau has not performed the consulting services as previously agreed. Accordingly, the remaining balance of the $555,238 balance has been classified as long-term debt.Significant License AgreementOn August 1, 2002, we entered into a license agreement (the “License Agreement”) with Polaris Industries, Inc., a Minnesota corporation (“Polaris”). Pursuant to the terms and provisions of the License Agreement: (i) we granted to Polaris an exclusive, non-transferable, royalty-bearing, worldwide license to use, manufacture, have manufactured and sell Polaris manufactured parts, service parts and accessory parts used in ATVs, utility vehicles, snowmobiles, motorcycles, and personal watercraft sold under a brand name owned by Polaris, which incorporates our licensed patents and licensed know-how until June 30, 2007; and (ii) Polaris paid to us a non-refundable unit royalty prepayment of $750,000 upon execution of the License Agreement. Polaris also purchases its Kolortex from us and pays an annual license fee to us for up to a period of twenty years.China License AgreementsOn April 15, 2004, we entered into a license agreement (the “China License Agreement”) with Anhua Zhouli Industry Development (Shenzhen) Co. Ltd., a corporation organized under the laws of Shenzhen, China (“AZID”) and on March 2, 2006 we entered a License Agreement with Chesta, Inc. (“Chesta”) with facilities in Shanghai, China. Pursuant to the terms and provisions of the China License Agreements, we granted to AZID and Chesta a non-exclusive, non-transferable license to practice our patented process of decoration by sublimation (the “Licensed Process”) for decorating of our approved customers and their approved products. AZID and Chesta will pay to us a royalty or shall subcontract to us the processing.Intellectual PropertyPatents and other proprietary rights are vital to our business operations. Our Kolorfusion process and other products have or may have varying degrees of protection from issuance of patents and trademarks. We protect our technology through patents and a trademark that we own and can license. Our policy is to seek appropriate protection both in the United States and abroad for our Kolorfusion process and other products. We have acquired protection, which is described as follows relating to our material patents and trademarks.PatentMr. Jean Noel Claveau (“Claveau”) filed a patent application with the United States Patent and Trademark Office for patent protection of the “Process of Decoration by Sublimation”. On May 3, 1994, the United States Patent and Trademark Office issued to Claveau a patent, patent no. 5,308,426 (the “Patent”). On October 9, 2001, the United States Patent and Trademark Office re-examined the Patent regarding the patentability of the “Process of Decoration by Sublimation: and issued to us as assignee a Reexamination Certificate confirming the validity of the claims issued under the original patent to Claveau.We may consider filing additional patent applications with respect to our technologies and any novel aspects of our technology to protect our intellectual property. Future patents, if issued, may be challenged, invalidated or circumvented. Thus, any patent that we own or license from third parties may not provide adequate protection against competitors. The patent applications that we may file in the future may not result in issued patents. Also, patents may not provide us with adequate proprietary protection or advantages against competitors with similar or competing technologies. As a result of potential conflicts with the proprietary rights of others, we may in the future have to prove that we are not infringing the patent rights of others or be required to obtain a license to the patent. We do not know whether such a license would be available on commercially reasonable terms, or at all.Trademark and Know-HowWe have received trademark registration. In general, a “trademark” is a distinctive word, phrase, logo, graphic symbol or other device that is used to identify the source of a product and to distinguish a product from anyone else’s. As a general rule, trademark law confers legal protection to names, logos and other marketing devices that are distinctive. We have registered and sought trademark protection of “Kolorfusion” in order to identify our patented processes and products in the marketplace to prevent consumer confusion and to protect the means we chose to identify our product against use by competitors.On January 20, 1998, the United States Patent and Trademark Office issued a service mark of registration, registration no. 2,131,107, to us for protection of our exclusive use of the trademark “Kolorfusion”. The certificate of registration for “Kolorfusion” was issued under Class 100, 103 and 106 and shall remain in force and effect for ten years from the date of issuance.We also rely on trade secrets and un-patentable know-how that we seek to protect, in part, by confidentiality agreements. However, it is possible that parties may breach those agreements, and we may not have adequate remedies for any breach. It is also possible that our trade secrets or un-patentable know-how will otherwise become known or be independently developed by competitors. There can be no assurance that thirdparties will not assert infringement or other claims against us with respect to any existing or future products, or that licenses would be available if our technology were successfully challenged by a third party, or if it became desirable to use any third-party technology to enhance our products. Litigation to protect our proprietary information or to determine the validity of any third-party claims could result in significant expense to us and divert the efforts of our technical and management personnel, whether or not we are successful in such litigation.While we have no knowledge that we are infringing the proprietary rights of any third party, there can be no assurance that such claims will not be asserted in the future with respect to our Kolorfusion process or future products. Any such assertion by a third party could require us to pay royalties, to participate in costly litigation and defend licensees in any such suit pursuant to indemnification agreements, or to refrain from selling an alleged infringing product or service.COMPETITIONWe believe that there is no direct competition to our patented process that is as unique in the market. However, there are companies that are near direct competition.Cubic PrintingThe most direct competition is “cubic printing”, also known as hydro-graphics or the “dip” process, a technology from Japan that has over sixty-five licensees in twenty-two countries. Cubic printing uses a film of patterns and colors floating on a water bath so that when a product is dipped through the bath, the film attaches to the product’s surface, which is then over-coated with a spray on coating. Typical examples of parts decorated with the “cubic printing” method are plastic molded parts in automobiles with a wood grain finish or camouflage decorated parts for archery. Companies currently utilizing cubic type printing in the United States include The Colorworks, Inc., Immersion Graphics, Oakley Inc, Designer Molding, Plastic Dress-up Co., Revolution Technologies, Inc. and Spectrum Cubic Inc.In Mold DecorationIn mold decoration (“IMD”) covers all decoration technologies that are applied to injection molded plastic parts, as part of the molding process. IMD surfaces being decorated are highly constrained in shape. Only plastics injection molded parts can utilize IMD. Alignment is easy in IMD and therefore functional decoration is possible. One common example of IMD is the changeable face-plates for cellular telephones. Many injection molding job shops utilize IMD.Paper SublimationPaper sublimation is a “heat transfer” process wherein a paper carrier, with the design printed on it, is pressed against the object to be decorated and heated. The design transfers from the paper to the object. Objects with curves in two directions, such as a simple sphere, cannot be decorated without tearing the paper. Companies utilizing paper sublimation include Holt Sublimation, Inc., Quality Spray, Inc. and most ski and snowboard manufacturers.Indirect competitionIndirect competition can be defined very broadly to include pad printing, screen- printing, hot stamping, specialty paints and coatings. All such methods have limitations to the shape and variant of colors available.RISK FACTORSAn investment in our common stock involves a number of very significant risks. You should carefully consider the following risks and uncertainties in addition to other information in evaluating our company and its business before purchasing shares of our common stock. Our business, operating results and financial condition could be seriously harmed due to any of the following risks. The risks described below are all of the material risks that we are currently aware of that are facing our company. Additional risks not presently known to us may also impair our business operations. You could lose all or part of your investment due to any of these risks.Risks Related to Our BusinessWe Have a History of Operating Losses and There Can Be No Assurance We Will Be Profitable in the Future; Need to Raise Capital to Continue Our Growth.We have a history of operating losses, expect to continue to incur losses, may never be profitable, and must be considered to be in the development stage. Further, we have also been dependent on sales of our equity securities and debt financing to meet our cash requirements. We have incurred net losses totaling ($292,378) for fiscal year ended June 30, 2006. Our accumulated deficit at June 30, 2006 is $11,777,090. As of June 30, 2006, there exists a working capital deficit of $606,178. Further, we do not know if positive cash flow from operations can be expected in the near term. There is no assurance that actual cash requirements will not exceed our estimates. In particular, additional capital may be required in the event that we encounter greater costs associated with general and administrative expenses or offering costs. In the event we are unable to obtain additional financing, the Company would continue to reduce operating expenses, as we have done these past fiscal years. If the business gross profits were to decline and the market opportunities not forthcoming, then operations would have to cease.We May Need to Raise Capital to Continue Our Growth.We will require additional funding in the future. If we cannot obtain capital through financings or otherwise, our ability to execute our development plans and achieve profitable operational levels will be greatly limited. Historically, we have funded our operations through the issuance of equity and short-term debt financing arrangements. We may not be able to obtain additional financing on favorable terms, if at all. Our future cash flows and the availability of financing will be subject to a number of variables, including potential production and the market prices of our products. Further, debt financing could lead to a diversion of cash flow to satisfy debt-servicing obligations and create restrictions on business operations. If we are unable to raise additional funds, it would have a material adverse effect upon our operations.Our Success Depends on the Ability of Our Licensees With Whom We Have Business Arrangements.We depend on a number of key licensees, which license and utilize our “Kolorfusion” process. Failure to maintain continuous positive contractual relations with these licensees may have a materially adverse affect on our business. Such licensees may experience business failures and product sale interruptions, of which we have no control, which could adversely affect customer confidence, our business operations and our reputation. Moreover, we may have to indirectly compete with other companies for the use of our Kolorfusion process technology. Because we are a small enterprise and many of these companies with whom we may indirectly compete may have greater financial and other resources than we have, they may have an advantage in the competition. If we experience a significant increase in demand for our Kolorfusion process, we may have to expand our third party licensees. We cannot be assured that additional licensees will be available on terms that are acceptable to us. If we cannot utilize our Kolorfusion process sufficiently to meet demand or delivery schedules, our customers might reduce demand, reduce the price they are willing to pay for our technology or replace our technology with the technology of a competitor, any of which could have a material adverse effect on our financial condition and operations.Our Continued Operations Depend on the Successful Marketing of our Kolorfusion Process.Our business plan is based on the marketing, utilization and licensing of our Kolorfusion process. This entails circumstances currently prevailing and the bases and assumptions that certain circumstances will or will not occur, as well as the inherent risks and uncertainties involved in the marketing, utilization and licensing of our Kolorfusion process. There is no assurance that we will be successful in implementing our marketing strategies or that our marketing strategies, even if implemented, will lead to the successful achievement of our objectives. If we are not able to successfully implement our marketing strategies, our business operations and financial performance may be adversely affected. The novelty and the design of our Kolorfusion process is important to our success and competitive position, and if we are unable to continue to develop andoffer such a unique patented technological process to our customers, our business could suffer. We cannot be certain that our Kolorfusion process will be or continue to be in demand. Should the competitive demand steer away from our Kolorfusion process, our business could be adversely affected. To date, our business line has consisted primarily of our Kolorfusion process. There can be no assurance that we can successfully sell or license our Kolorfusion process or that we can successfully develop, introduce, or sell any additional technological processes.Loss of Key Management Personnel.The loss of Mr. Stephen Nagel or any of our key management personnel would have an adverse impact on our future development and could impair our ability to succeed. Our performance is substantially dependent upon the expertise of our President/Chief Executive Officer, Mr. Stephen Nagel, and other key management personnel and our ability to continue to hire and retain such personnel. Mr. Nagel spends substantially all of his working time with us. It may be difficult to find sufficiently qualified individuals to replace Mr. Nagel or other key management personnel if we were to lose any one or more of them. The loss of Mr. Nagel or any of our other key management personnel could have a material adverse effect on our business, development, financial condition, and operating results. We do maintain “key person” life insurance on Mr. Nagel.Many of Our Indirect Competitors May be Larger and Have Greater Financial and Other Resources Than We Do.The product surface enhancement technology industry, in general, is intensely competitive. Our Kolorfusion process competes with other product surface enhancement based products. Such based products are currently marketed by well-established, successful companies that may possess greater financial, marketing, distribution, personnel and other resources than us. Using these resources, these companies may implement extensive advertising and promotional campaigns, both generally and in response to specific marketing efforts by competitors, to enter into new markets rapidly and to introduce their products. Competitors with greater financial resources also may be able to enter the market in direct competition with us, offering attractive marketing tools to encourage the sale of products that may compete with our technological processes or products or present cost features which consumers may find attractive.If Our Competitors Misappropriate Proprietary Know-How and Our Trade Secrets, it Could Have a Material Adverse Affect on our Business.The loss of or inability to enforce our patents, trademarks and other proprietary know-how and trade secrets could adversely affect our business. We depend heavily on our patented technology and trade secrets and the technological expertise of our employees. If any of our competitors copy or otherwise gains access to our trade secrets or develops similar technological processes independently, we would not be able to compete as effectively. The measures we take to protect our patents and trade secrets and design expertise may not be adequate to prevent their unauthorized use. Further, the lawsof 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, could result in substantial costs and diversions of resources. In addition, notwithstanding the rights we have secured in our intellectual property, other persons may bring claims against us that we have infringed on their intellectual property rights or claims that our intellectual property right interests are not valid. Any claims against us, with or without merit, could be time consuming and costly to defend or litigate and therefore could have an adverse affect on our business.RISKS RELATED TO OUR COMMON STOCKSale of Restricted Common Stock.As of June 30, 2006, there are 24,309,540 outstanding shares of our common stock, of which 19,148,505 are restricted securities as that term is defined in Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”). Although the Securities Act and Rule 144 place certain prohibitions on the sale of restricted securities, restricted securities may be sold into the public market under certain conditions. Further, as of June 30, 2006, there are no warrants outstanding. As of June 30, 2006, there are 2,780,000 stock options granted which, if exercised, would result in the issuance of an additional 2,630,000 shares of common stock.Any significant downward pressure on the price of our common stock as certain stockholders sell their shares of our common stock may encourage short sales. Any such short sales could place further downward pressure on the price of our common stock.The Trading Price of Our Common Stock on the OTC Bulletin Board Has Been and May Continue to Fluctuate Significantly and Stockholders May Have Difficulty Reselling Their Shares.Our common stock has traded as low as $0.07 and as high as $1.70. In addition to volatility associated with Bulletin Board securities in general, the value of your investment could decline due to the impact of any of the following factors upon the market price of our common stock: (i) changes in the demand for our Kolorfusion process; (ii) disappointing results from our marketing and sales efforts; (iii) failure to meet our revenue or profit goals or operating budget; (iv) decline in demand for our common stock; (v) downward revisions in securities analysts’ estimates or changes in general market conditions; (vi) lack of funding generated for operations; (vii) investor perception of our industry or our business prospects; and (viii) general economic trends.In addition, stock markets have experienced extreme price and volume fluctuations and the market prices of securities have been highly volatile. These fluctuations are often unrelated to operating performance and may adversely affect the market price of our common stock. As a result, investors may be unable to sell their shares at a fair price and you may lose all or part of your investment.Additional Issuances of Equity Securities May Result in Dilution to Our Existing Shareholders.Our Articles of Incorporation authorize the issuance of 100,000,000 shares of common stock and 10,000,000 shares of preferred stock. The Board of Directors have the authority to issue additional shares of our capital stock to provide additional financing in the future and the issuance of any such shares may result in a reduction of the book value or market price of the outstanding shares of our common stock. On March 31 st 2006 the Company entered a Preferred Stock purchase agreement; wherein the purchaser acquired 1,076,923 Series C-1 Preferred Stock, which can convert on a basis of 5:1 into the Company’s common shares for a total amount of 5,384,615. If we do issue any such additional shares, such issuance also will cause a reduction in the proportionate ownership and voting power of all other stockholders. As a result of such dilution, if you acquire shares of our common stock, your proportionate ownership interest and voting power could be decreased. Further, any such issuances could result in a change of control.We are authorized to issue shares of preferred stock. Our board of directors, without shareholder approval, may issue shares of preferred stock with rights superior to the rights of the holders of shares of common stock. As a result, shares of preferred stock could be issued quickly and easily, adversely affecting the rights of holders of shares of common stock and could be issued with terms calculated to delay or prevent a change in control or make removal of management more difficult. Although we have no present plans to issue any additional shares of preferred stock, the issuance of preferred stock in the future could adversely affect the rights of the holders of common stock and reduce the value of the common stock.Our Common Stock is Classified as a “Penny Stock” under SEC Rules Which Limits the Market for Our Common Stock.Because our stock is not traded on a stock exchange or on the NASDAQ National Market or the NASDAQ Small Cap Market, and because the market price of the common stock is less than $5 per share, the common stock is classified as a “penny stock.” Our stock has not traded above $5 per share. SEC Rule 15g-9 under the Exchange Act imposes additional sales practice requirements on broker-dealers that recommend the purchase or sale of penny stocks to persons other than those who qualify as an “established customer” or an “accredited investor.” This includes the requirement that a broker-dealer must make a determination that investments in penny stocks are suitable for the customer and must make special disclosures to the customers concerning the risk of penny stocks. Many broker-dealers decline to participate in penny stock transactions because of the extra requirements imposed on penny stock transactions. Application of the penny stock rules to our common stock reduces the market liquidity of our shares, which in turn affects the ability of holders of our common stock to resell the shares they purchase, and they may not be able to resell at prices at or above the prices they paid.A Decline in the Price of Our Common Stock Could Affect Our Ability to Raise Further Working Capital and Adversely Impact Our Operations.A 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 additional capital for our operations. Because our operations to date have been principally financed through the sale of equity securities, a decline in the price of our common stock could have an adverse effect upon our liquidity and our continued operations. A reduction in our ability to raise equity capital in the future would have a material adverse effect upon our business plan and operations, including our ability to continue our current operations. If our stock price declines, we may not be able to raise additional capital or generate funds from operations sufficient to meet our obligations.EMPLOYEESWe currently employ nine full-time employees, and we have employed up to an additional twenty-five employees for processing services when required.REPORTS TO STOCKHOLDERSWe are currently a reporting issuer in the U.S. and are subject to reporting requirements under section 13 or 15(d) of the U.S. Securities Exchange Act of 1934 , as amended. We are required to file the following with the U.S. Securities and Exchange Commission (the “SEC”): (i) quarterly reports on Form 10-QSB; (ii) an annual report on Form 10-KSB; (iii) a Form 8-K to report the occurrence of certain reportable events; (iv) Forms 3, 4 and 5 to report insider sales and acquisition of our securities; and (v) proxy statements. We are required to deliver an annual report to our stockholders prior to or with the distribution of proxy materials relating to annual stockholder meetings.