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OUR STOCK SALES MAY BE LIMITED BECAUSE OF PENNY STOCK RULES
Our Common Stock is subject to Rule 15g-9 under the Exchange Act of 1934, which
imposes sales practice requirements on any broker-dealers who wants sell our
Common Stock, including requirements pertaining to the suitability of the
investment for the purchaser and delivery of specific disclosure materials and
monthly statements. This rule may limit the ability of broker-dealers to sell
our securities and may adversely affect your ability to sell any of the Shares
in the secondary market, if one is created.
These "penny stock" restrictions will not apply to our securities if they become
listed on the NASDAQ SmallCap Market and have certain price and volume
information provided on a current and continuing basis or meet certain minimum
net tangible assets or average revenue criteria. We have not yet applied for
listing of our Shares on the NASDAQ SmallCap Market and because of this we will
be subject to the penny stock sales restrictions in the event that a
broker-dealer wants sell our securities. We cannot assure that our securities
will qualify for exemption from these restrictions.
WE RELY HEAVILY ON LICENSE AGREEMENTS GRANTED BY LARGE COMPANIES
Our products and services are based in part on proprietary rights to software
which is licensed to us by larger companies. Our loss of any of these licenses
would require major programming efforts in order to develop replacement software
and would have a material adverse affect on us.
THE SECURITIES AND EXCHANGE COMMISSION INVESTIGATED US AND WE SETTLED THE
INVESTIGATION BY AGREEING TO DO CERTAIN THINGS
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The Company, Alex Kanakaris, CEO of the Company, and David Valenti, a sales
manager for us and a former Director, have signed consent decrees with the
United States Securities and Exchange Commission without admitting or denying
guilt to violations cited in the decrees and have agreed to pay administrative
fines totaling $50,000.00. We have cooperated fully with the SEC's informal
investigation. Under the consent decree order, we and the above-referenced
individuals have agreed to desist from violating federal securities laws in
connection with the offer, purchase or sale of securities. The consent decree
and order may adversely effect our ability to raise additional working capital
through future registered or exempt offerings of our securities.
THE PRICE OF THE SHARES MAY BE DIFFERENT FROM THE MARKET PRICE OF THE COMMON
STOCK
The Shares have been offered by us to certain individuals at a significantly
lower price than the current Offering price in recent financing transactions.
Shares of our Common Stock were issued in connection with such financing. In
addition, our Shares currently trade on the NASDAQ OTC Bulletin Board at prices
that may currently exceed the Offering price contemplated herein.
OUR PRIOR OFFERINGS MAY HAVE EXPOSED US TO LIABILITY
In past offerings, we have issued unregistered securities to certain individuals
based on exemptions from registration under federal and state laws. Although we
believe that all such transactions were made in compliance with applicable laws,
there is a risk that such transactions may have violated Section 5 of the
Securities Act or similar state laws. If a violation occurred, the investors in
the prior financing transactions may be entitled to rescission rights and
various other remedies. In the event that any of the purchasers involved in the
financing want their money back, we could be liable for up to the total amount
of funds obtained the prior offerings plus penalties and interest. Such
liability, if imposed, could have a material adverse impact on our financial
condition.
WE LACK A HISTORY OF OPERATIONS AND EXPERIENCE
We have no significant revenues from our Internet operations and no other
significant assets. As a result, we cannot assure that we will generate revenues
in the future and we cannot assure that we will operate at a profitable level at
any time in the foreseeable future.
WE ARE EXTREMELY DEPENDENT ON THE INTERNET INDUSTRY
Our business is influenced by the rate of use and expansion of the Internet and
computer industry. Declines in the industry may negatively impact our ability to
generate revenues.
OUR SUCCESS DEPENDS ON THE SUCCESS OF MANAGEMENT
Any potential investor is strongly cautioned that the purchase of the Shares
should be evaluated on the basis of: (i) the limited diversification of the
venture capital opportunities afforded to us, (ii) the high risk nature and
limited liquidity of the Company, and (iii) our ability to utilize funds for the
successful development and distribution of revenues as derived by the revenues
received by our yet undeveloped portfolio of clients, and any new potentially
profitable ventures, among other things. We cannot assure that any particular
client and/or property under a management contract will become successful. Nor
can we be sure that Management will be successful in getting new clientele.
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OUR PRODUCTS AND SERVICES ARE NOT DIVERSIFIED
Because we are a small business, it is unlikely that we will be able to acquire
major accounts until we have a proven track record, and we may not be able to
achieve the same level of diversification as larger companies in this type of
business.
WE HAVE NOT PAID DIVIDENDS ON OUR COMMON STOCK
The Board of Directors does not anticipate paying cash dividends on the Common
Stock for the foreseeable future and intends to retain any future earnings to
finance our growth. Payment of dividends, if any, will depend, among other
factors, on our earnings, capital requirements and the general operating and
financial conditions as well as legal limitations on the payment of dividends
out of paid-in capital. (See "Dividends")
THE INVESTMENT IN THE SHARES IS RISKY AND YOU COULD LOSE ALL OF YOUR MONEY
The Shares offered hereby are highly speculative and involve a high degree of
risk and should not be purchased by any person who cannot afford the loss of his
entire investment. Our Common Stock has been extremely volatile and may continue
to be so. A purchase of our stock in this Offering would be "unsuitable" for a
person who cannot afford to lose his entire investment.
WE ARE NOT YET A REPORTING COMPANY UNDER THE SECURITIES EXCHANGE ACT OF 1934
We are not currently subject to the reporting requirements of the Securities
Exchange Act of 1934 (the "Exchange Act"). After this Offering, we will be
required to file with the Securities and Exchange Commission, quarterly and
annual reports on forms 10-QSB and 10-KSB in accordance with the provisions of
the Exchange Act and will be subject to the regulations promulgated by the
Securities and Exchange Commission pursuant to the Exchange Act.
WE HAVE A LIMITED PUBLIC MARKET FOR OUR STOCK
Our Common Stock trades on the NASDAQ OTC Bulletin Board under the symbol
"KKRS." Prior to the Offering, there has been a limited public market for the
Common Stock being offered. We cannot predict that an active trading market will
be sustained or that you will be able to resell the Shares at prices equal to or
greater than the Offering price which you paid for the Shares. The market price
of the Common Stock has been extremely volatile and may be significantly
affected by factors such as announcements by us or our competitors, as well as
variations in our results of operations and market conditions in the industries
in general. The market price may also be affected by movements in prices of
stock in general. As a result of these factors, purchasers of the Shares in this
Offering may not be able to sell the Shares quickly or at all.
THE COMMON STOCK DOES NOT CARRY CUMULATIVE VOTING
Holders of the Common Stock are not entitled to accumulate their votes for the
election of directors or otherwise. Accordingly, the holders of a majority of
the shares present at a meeting of shareholders will be able to elect all of our
directors, and the minority shareholders will not be able to elect a
representative to our board of directors.
OUR ISSUED CLASS A CONVERTIBLE PREFERRED STOCK HAS SPECIAL VOTING RIGHTS AND IS
ENTIRELY HELD BY OUR CEO, ALEX KANAKARIS |
