THE SECURITIES TO WHICH THIS AGREEMENT RELATES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”) AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER AND MAY NOT BE OFFERED OR SOLD DIRECTLY OR...
Exhibit
3.5
|
THE
SECURITIES TO WHICH THIS AGREEMENT RELATES HAVE NOT BEEN REGISTERED
UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”) AND
THE RULES AND REGULATIONS PROMULGATED THEREUNDER AND MAY NOT BE OFFERED
OR
SOLD DIRECTLY OR INDIRECTLY (A) WITHIN THE UNITED STATES OR TO OR
FOR THE
ACCOUNT OR BENEFIT OF U.S. PERSONS (AS DEFINED IN REGULATION S) EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AS TO SUCH SECURITIES
UNDER, OR AN EXEMPTION FROM, THE PROSPECTUS AND REGISTRATION REQUIREMENTS
OF THE 1933 ACT, OR (B) IN THE REPUBLIC OF HUNGARY OR TO RESIDENTS
OF
REPUBLIC OF HUNGARY EXCEPT PURSUANT TO THE APPLICABLE SECURITIES
LAWS AND
REGULATIONS OR PURSUANT TO AN EXEMPTION ORDER MADE BY THE APPROPRIATE
GOVERNMENTAL SECURITIES REGULATOR(S).
|
||
DATED ,
2007 FOR REFERENCE
BY
AND BETWEEN
A. POWER
OF THE
DREAM VENTURES, INC., a Delaware corporation having its principal office
at 1095 Budapest, Soroksari ut 94-96, Hungary (the
“Company”);
AND
B.
The undersigned subscriber [£
a natural
person, £
a trust, £
a corporation,
£
a
partnership, £
other (please specify)
______________________] having an office or residential
address, as the case may be, set forth on the Signature Page hereto
(the “Subscriber”).
RECITALS
WHEREAS,
the Company is offering on a no minimum basis (the “Offering”)
up to an aggregate of 9,600,000 shares (the
“Offered Shares”) of its common stock
(the “Common Stock”) in
1,200 units (the “Units”) of 8,000 Offered
Shares each at a price of $20,000 per Unit ($2.50
per Offered Share), or $24,000,000
in
the aggregate.
WHEREAS,
the Company will offer and sell Offered Shares only to investors (i) who are
not
“U.S. Persons” as defined in Regulation S as promulgated under the Securities
Act of 1933, as amended (the “1933 Act”) and (ii) who otherwise
satisfy any applicable criteria established by the laws of the jurisdiction
in
which they reside.
Power
of
the Dream Ventures, Inc.
Subscription
Agreement
9,600,000
Share Offering at $2.50 per Offered Share
WHEREAS,
the Subscriber desires to purchase from the Company and the Company desires
to
sell to the Subscriber the number of Units set forth on the Signature Page
hereof (the “Subscribed for Units”), subject to the terms and
conditions set forth herein.
NOW
THEREFORE, in consideration of the recitals and the mutual covenants
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as
follows:
AGREEMENTS
1.
Subscription and Purchase of Shares; Closing.
1.1 Definitions.
“1933
Act” shall have the meaning ascribed thereto in the recitals to this
Agreement.
“1934
Act” shall mean the United States Securities Exchange Act of 1934, as
amended.
“Affiliate”
means, with respect to any Person, any other Person that directly or indirectly
controls or is controlled by or under common control with such
Person. For the purposes of this definition, "control," when used
with respect to any Person, means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms of "affiliated," "controlling" and "controlled" have
meanings correlative to the foregoing.
“Agreement”
means this Subscription Agreement.
“Business
Day” means any day except Saturday, Sunday and any day which shall be
a
legal holiday or a day on which banking institutions in the State of New York
generally are closed.
“Closing
Date” shall have the meaning ascribed thereto in Section
1.4 hereof.
“Commission”
means the Securities and Exchange Commission.
“Common
Sock” means shares of the Company's common stock, $0.001 par value, or
such securities that such stock shall hereafter be reclassified
into.
“Company,”
shall have the meaning ascribed thereto in the preamble.
“Offered
Shares” shall have the meaning ascribed thereto in the recitals to this
Agreement.
“Offering”
means the offering of Offered Shares.
Page
2 of 38
Power
of
the Dream Ventures, Inc.
Subscription
Agreement
9,600,000
Share Offering at $2.50 per Offered Share
“Person”
means an individual or a corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or political subdivision thereof) or
other entity of any kind.
“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
“Purchase
Price” shall have the meaning ascribed thereto in Section
1.2 hereof.
“SEC
Filings” shall have the meaning ascribed thereto in Section
4.5 hereof.
“Subscribed
for Units” shall have the meaning ascribed thereto in recitals to this
Agreement.
“US
Person” shall have the meaning ascribed thereto in Section
1.5 hereto.
1.2 Subscription
and Purchase of Shares.
Subject
to the terms and conditions herein set forth, the Subscriber hereby subscribes
for and agrees to purchase from the Company the Subscribed for
Units, at a price per Unit of $20,000, or $2.50 per Offered Share, (the
“Purchase Price”).
1.3 Payment
of Purchase Price.
Simultaneously
with the execution and delivery of this Agreement by the Subscriber, the
Subscriber shall deliver the Purchase Price by check payable to the Company
or
by wire transfer of funds pursuant to wiring instructions provided by the
Company and as set forth on Exhibit 1.3
hereto.
1.4 Closing.
The
closing of the purchase and sale of the Subscribed for Units (the
“Closing”) shall take place at the offices of the Company
simultaneously with the execution and delivery of this Agreement by the Company,
or at such other time and place or on such other business day thereafter as
the
parties hereto may agree (the “Closing Date”). As soon as
practicable following the Closing Date, the Company will deliver or cause to
be
delivered a certificate(s) representing the Offered Shares constituting the
Subscribed for Units to the Subscriber against confirmation of collection of
the
Purchase Price.
1.5 Limitations
of Offering.
The
Subscriber acknowledges that the Company is offering and selling the Offered
Shares only to investors (the “Qualified Subscribers”) who are
(a) who are not “US Persons” as that term is defined in Rule
902(o) of the Regulations as promulgated under the 1933 Act and
Page
3 of 38
Power
of
the Dream Ventures, Inc.
Subscription
Agreement
9,600,000
Share Offering at $2.50 per Offered Share
(b)
who
otherwise satisfy any applicable criteria established by the laws of the
jurisdiction in which they reside.
1.6 No
Minimum Number of Offered Shares Need be Sold.
The
Subscriber acknowledges that the Company is offering and selling the Offered
Shares on a no minimum basis, and further acknowledges and understands that
since there is no minimum number of Units to be sold, no proceeds will be held
in an escrow account and all funds will be immediately available to, and for
use
by, the Company. Subscriber further acknowledges that he may be the only
investor in the Offering.
2.
Subscriber’s Conditions of
Closing.
The
Subscriber’s obligation to purchase and pay for the Subscribed for Units is
subject to the satisfaction or waiver of the condition that the representations,
warranties and covenants of the Company set forth in Section 4
hereof shall be true in all material respects on and as of the Closing Date,
except to the extent of changes caused by the transactions herein contemplated;
and, if the Closing Date is other than the date hereof, the Company shall
deliver to Subscriber a certificate of a duly authorized officer of the Company,
dated the Closing Date, to such effect.
3.
Company’s Conditions of
Closing.
The
Company’s obligation to sell the Subscribed for Units is subject to the
satisfaction or waiver, on or before the Closing Date, of the conditions
contained in this Section 3.
3.1 Representations,
Warranties and Covenants.
The
representations, warranties and covenants of the Subscriber set forth in
Section 5 hereof shall be true in all material respects on and
as of the Closing Date.
3.2 Payment
of Purchase Price.
The
Subscriber shall have purchased and paid for the Subscribed for Units by
delivery of the Purchase Price.
3.3 No
Adverse Action or Decision.
There
shall be no action, suit, investigation or proceeding pending, or to the
Company’s knowledge, threatened, against or affecting the Company or any of its
properties or rights, or any of its affiliates, associates, officers or
directors, before any court, arbitrator, or administrative or governmental
body
that (i) seeks to restrain, enjoin, prevent the consummation of or otherwise
adversely affect the transactions contemplated by this Agreement, or (ii)
questions the validity or legality of any such transaction or seeks to recover
damages or to obtain other relief in connection with any such
transaction.
Page
4 of 38
Power
of
the Dream Ventures, Inc.
Subscription
Agreement
9,600,000
Share Offering at $2.50 per Offered Share
3.4 Compliance
with Securities Laws.
The
offer
and sale of the Subscribed for Units under this Agreement shall have complied
with, and shall not be prohibited by, all applicable requirements of the 1933
Act or applicable Hungarian Securities Laws (as hereinafter
defined).
4.
Representations and Warranties of the
Company.
The
Company represents, warrants and covenants to the Subscriber that:
4.1 Corporate
Existence and Business.
The
Company is a Company duly organized, legally existing, and in good standing
under the laws of the State of Delaware with the requisite corporate power
and
authority to own and use its properties and assets and to carry on its business
as currently conducted. The Company is currently a development stage start-up
technology company focused on the acquisition and development of intellectual
property and technologies
in the Republic of Hungary for commercialization in international markets.
The
Company seeks to acquire rights to and interests in intellectual property and
technologies through a variety of methods including, but not limited to, the
direct investment in entities owning or developing the intellectual property,
licensing of the intellectual property or technology, or a joint venture
arrangement to mutually develop and commercialize the intellectual property
or
technologies.
4.2 Authorization;
Enforcement.
The
Company has the requisite corporate power and authority to enter into and to
consummate the transactions contemplated by this Agreement, and otherwise to
carry out its obligations hereunder. The execution and delivery of this
Agreement by the Company and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary action on the
part of the Company. When executed and delivered in accordance with the terms
hereof, this Agreement shall constitute the legal, valid and binding obligation
of the Company enforceable against the Company in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating
to,
or affecting generally the enforcement of, creditors’ rights and remedies or by
other equitable principles of general application. Anything herein to the
contrary notwithstanding, this Agreement shall not become a binding obligation
of the Company until it has been accepted by the Company as evidenced by its
execution by a duly authorized officer.
4.3 Agreement
Not in Conflict.
The
execution and delivery of this Agreement by the Company and the completion
of
the transactions contemplated hereby do not and will not conflict with or result
in a breach or violation of any of the terms or provisions of, or constitute
a
default under (whether after notice or lapse of time or both): (A) any statute,
rule or regulation applicable to the Company; (B) the charter documents, by-laws
or resolutions of the Company which are in effect at the date hereof; (C) any
mortgage, note, indenture, contract, agreement, instrument, lease or other
document to which the Company is a party or by which it is bound; or (D) any
judgment, decree or order binding the Company or, to the best of its knowledge,
information and belief, the property or assets of the Company.
Page
5 of 38
Power
of
the Dream Ventures, Inc.
Subscription
Agreement
9,600,000
Share Offering at $2.50 per Offered Share
4.4 Authorized
and Outstanding Capital Stock.
The
Company’s authorized capital stock of consists of consists of 250,000,000 shares
of Common Stock, and 10,000,000 preferred shares, $0.001 par value. As of the
Reference Date there were 40,025,000 shares of our common stock issued and
outstanding and no shares of preferred stock issued and
outstanding. If all of the Offered Shares are sold there will be an
aggregate of 49,625,000 shares of Common Stock issued and
outstanding.
4.5 Reporting
Issuer Status.
The
Company has a reporting obligation under Section 12(g) of the 1934 Act and
is
required to file current, quarterly and annual reports with the Commission
on
forms 8-K, 10-QSB and 10-KSB (collectively, the “SEC Filings”).
The filed material may be inspected and copied at the Public Reference Room
maintained by the Commission at 000 X Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000.
You can obtain information about operation of the Public Reference Room by
calling the Commission at 1-800-U.S. The Commission also maintains an Internet
site that contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the
U.S. Securities & Exchange Commission at xxxx://xxx.xxx.xxx.
Copies of such material can be obtained from the public reference section of
the
U.S. Securities & Exchange Commission at prescribed rates. The
Company is current in its filings with the Commission.
4.6 Market
for the Company’s Common Stock.
There
currently is no trading market for the Company’s securities and no assurance can
be given that a trading market for such securities will develop.
5. Representations,
Warranties and Acknowledgements of Subscriber.
The
Subscriber represents, warrants and covenants to the Company that:
5.1 Organization;
Authority.
The
Subscriber has the requisite power and authority to enter into and to consummate
the transactions contemplated hereby and to carry out its obligations
hereunder. The Subscriber:
(a) if
a company, trust, partnership, qualified plan or other entity, further warrants
and represents that it is duly incorporated or formed, validly existing and
in
good standing under the laws of the jurisdiction of its organization and is
authorized and qualified to become a holder of the Subscribed for Units, the
person signing this Agreement on behalf of such entity has been duly authorized
to execute and deliver this agreement, and the acquisition of the Subscribed
for
Units by the Subscriber and the consummation by the Subscriber of the
transactions contemplated hereby have been duly authorized by all necessary
action to be taken on the part of the Subscriber;
Page
6 of 38
Power
of
the Dream Ventures, Inc.
Subscription
Agreement
9,600,000
Share Offering at $2.50 per Offered Share
(b) if
not an individual, further warrants and represents that it has the requisite
power, authority and legal capacity to execute and deliver this Subscription
Agreement, to perform all of its obligations hereunder and to undertake all
actions required of the Subscriber hereunder, and all necessary approvals of
its
directors, partners, shareholders, trustees or otherwise (as the case may be)
with respect to such matters have been given or obtained; and
(c) in
any case, represents and warrants that this Agreement has been duly executed
and
delivered by the Subscriber and constitutes a valid and legally binding
obligation of the Subscriber, enforceable against the Subscriber, in accordance
with its terms, subject to applicable bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors’ rights generally and to general principles
of equity. The entering into of this Agreement and the transactions contemplated
hereby will not result in a violation of any of the terms or provisions of
any
law applicable to the Subscriber, or any of the Subscriber’s charter documents,
or of any agreement to which the Subscriber is a party or by which it is
bound.
5.2 Acquisition
of Offered Shares for Investment.
The
Subscriber is acquiring the Subscribed for Units as principal for its own
account for investment purposes only and not with a view to or for distributing
or reselling the Subscribed for Units or any part thereof or interest therein.
Except as otherwise disclosed in writing to the Company, the Subscriber is
not
acting jointly or in concert with any other person or company for the purposes
of acquiring any of the Offered Shares.
5.3 Experience
of Subscriber.
The
Subscriber either alone or together with its representatives, has such
knowledge, sophistication and experience in business and financial matters
so as
to be capable of evaluating and assessing the merits and risks of the
prospective investment in the Subscribed for Units, and has so evaluated the
merits and risks of such investment and has determined that the Subscribed
for
Units are suitable to investment for him.
5.4 Ability
of Subscriber to Bear Risk of Investment.
The
Subscriber acknowledges that the purchase of the Subscribed for Units is a
highly speculative investment, involving a high degree of risk and the
Subscriber is able to bear the economic risk of an investment in the Subscribed
for Units; and, at the present time, is able to afford a complete loss of such
investment.
5.5 No
Conflict or Violation.
The
execution, delivery, and performance of this Agreement by Subscriber and the
consummation by Subscriber of the transactions contemplated hereby will not
conflict with or result in a default under the terms of any material contract,
agreement, obligation or commitment applicable to Subscriber. The execution,
delivery and performance by the Subscriber of this Subscription Agreement and
the completion of the transaction contemplated hereby do not and will not result
in a violation of any law, regulation, order or ruling applicable to the
Subscriber, and do not and will not constitute a breach of or default under
any
of the Subscriber’s charter documents (if the Subscriber is not a natural
person) or any agreement to which the Subscriber is a party or by which it
is
bound.
Page
7 of 38
Power
of
the Dream Ventures, Inc.
Subscription
Agreement
9,600,000
Share Offering at $2.50 per Offered Share
5.6 Regulation
S Representations, Acknowledgements and Warranties.
The
Subscriber represents, warrants, acknowledges, and covenants to the Company,
that:
(a) he
is not a “US Person” as that term is defined in Rule 902 of
Regulation S, as more fully set forth in Exhibit 1.5
hereto;
(b) the
Subscribed for Units are being offered and sold in reliance on the exemptions
from the registration requirements of the 1933 Act provided by the provisions
of
Regulation S as promulgated under the 1933 Act, and that the Subscribed for
Units may not be resold in the United States or to a US Person as defined in
Regulation S, except pursuant to an effective registration statement or an
exemption from the registration provisions of the 1933 Act as evidenced by
an
opinion of counsel acceptable to the Company, and that in the absence of an
effective registration statement covering the Subscribed for Units or an
available exemption from registration under the 1933 Act, the Subscribed for
Units must be held indefinitely. The Subscriber further acknowledges that this
Agreement is not intended as a plan or scheme to evade the registration
requirements of the 1933 Act;
(c) he
is a resident of the country set forth on the signature page
hereto;
(d) he
is not, and on the Closing Date will not be, an affiliate of the
Company;
(e) all
offers and sales of the Subscribed for Units shall be made in compliance with
all applicable laws of any applicable jurisdiction and, particularly, in
accordance with Rules 903 and 904, as applicable, of Regulation S or pursuant
to
registration of the Subscribed for Units under the 1933 Act or pursuant to
an
exemption from registration. In any case, none of the Subscribed for
Units have been and will be offered or sold by the Subscriber to, or for the
account or benefit of a U.S. Person or within the United States until after
the
end of a one year period commencing on the date on which this Agreement is
accepted by the Company (the “Distribution Compliance Period”),
except pursuant to an effective registration statement as to the Subscribed
for
Units or an applicable exemption from the registration requirements of the
1933
Act;
(f) the
Subscribed for Units have not been offered to the Subscriber in the United
States and the individuals making the decision to purchase the Subscribed for
Units and executing and delivering this Agreement on behalf of the Subscriber
were not in the United States when the decision was made and this Agreement
was
executed and delivered;
Page
8 of 38
Power
of
the Dream Ventures, Inc.
Subscription
Agreement
9,600,000
Share Offering at $2.50 per Offered Share
(g) he
will not engage in any activity for the purpose of, or that could reasonably
be
expected to have the effect of, conditioning the market in the United States
for
any of the Shares;
(h) neither
the Subscriber nor any of his affiliates will directly or indirectly maintain
any short position, purchase or sell put or call options or otherwise engage
in
any hedging activities in any of the Subscribed for Units or any other
securities of the Company until after the end of the Distribution Compliance
Period, and acknowledges that such activities are prohibited by Regulation
S.
5.7 Transfer
Restrictions.
(a) The
Subscriber acknowledges that the certificates representing the Offered Shares,
shall bear a legend substantially as follows:
“THE
SECURITIES TO WHICH THIS CERTIFICATE RELATES HAVE NOT BEEN REGISTERED UNDER
THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”) AND THE RULES
AND REGULATIONS PROMULGATED THEREUNDER AND MAY NOT BE OFFERED OR SOLD DIRECTLY
OR INDIRECTLY (A) WITHIN THE UNITED STATES OR TO OR FOR THE ACCOUNT OR BENEFIT
OF U.S. PERSONS (AS DEFINED IN REGULATION S) EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AS TO SUCH SECURITIES UNDER, IN COMPLIANCE WITH
REGULATION S AND/OR OTHER APPLICABLE EXEMPTION FROM, THE REGISTRATION
REQUIREMENTS OF THE 1933 ACT, OR (B) IN REPUBLIC OF HUNGARY OR TO RESIDENTS
OF
REPUBLIC OF HUNGARY EXCEPT PURSUANT TO APPLICABLE SECURITIES LAWS AND
REGULATIONS IN EACH CASE AS EVIDENCED BY AN OPINION OF COUNSEL ACCEPTABLE TO
THE
COMPANY.”
(b) The
Subscriber understands and acknowledges that the Company has the right not
to
record a purported transfer of the Subscribed for Units, without the Company
being satisfied that such transfer is exempt from or not subject to (a)
registration under the U.S. 1933 Act and any applicable state securities laws,
and (b) the registration and prospectus requirements under Hungarian Securities
Laws.
(c) In
addition to resale restrictions imposed under U.S. federal securities law,
there
are additional restrictions on the Subscriber’s ability to resell the Subscribed
for Units under applicable Hungarian Securities Law.
(d) The
Subscriber understands and acknowledges that the Company is not obligated to
file and, except as provided in a registration rights agreements of even date
herewith between the Subscriber and the Company, has no present intention of
filing any registration statement or prospectus in respect of re-sales of the
Subscribed for Units with the SEC in the United States or with any of the
provincial securities regulatory authorities in Republic of
Hungary.
(e) The
Subscriber confirms that it has been advised to consult its own legal and
financial advisors with respect to the suitability of the Subscribed for
Units
as an investment for the Subscriber and the resale restrictions (including
“hold periods”) to which the Subscribed for Units will be
subject under applicable securities legislation and confirms that no
representation has been made to the Subscriber by or on behalf of the Company
with respect thereto.
Page
9 of 38
Power
of
the Dream Ventures, Inc.
Subscription
Agreement
9,600,000
Share Offering at $2.50 per Offered Share
(f) The
Subscriber will not resell any Subscribed for Units except in accordance with
the provisions of applicable securities legislation and stock exchange
rules.
5.8 No
Offering Memorandum.
(a) The
Subscriber acknowledges that it has reviewed the description of the Company’s
business attached to this Subscription Agreement as Exhibit
5.8.
(b) The
Subscriber acknowledges that the offering is being conducted without delivery
of
an offering memorandum and that it has not relied on any oral representation,
warranty or information in connection with the offering of the Subscribed for
Units by the Company, or any officer, employee, agent, affiliate or subsidiary
of the Company.
5.9 No
Approval by Regulatory Authority.
The
Subscriber understands that no securities commission, stock exchange,
governmental agency, regulatory body or similar authority has made any finding
or determination or expressed any opinion with respect to the merits of an
investment in Offered Shares of which the Subscribed for Units are a
part.
5.10 No
Representation as to Value of Offered Shares.
The
Subscriber confirms that neither the Company nor any of its directors,
employees, officers, consultants, agents or affiliates, has made any
representations (written or oral) to the Subscriber regarding the future value
of the Offered Shares and acknowledges and confirms that no representation
has
been made to the Subscriber with respect to the listing of the Offered Shares
on
any exchange or that application has been or will be made be made for such
listing. In making its investment decision with respect to the Subscribed for
Units, the Subscriber has relied solely upon publicly available information
relating to the Company and the written representation made by or on behalf
of
the Company herein.
5.11 No
Advertisement.
The
Subscriber is not and has not become aware of any advertisement in printed
public media or on radio, television or other form of communication (including
electronic display such as the Internet) with respect to the
Offering.
5.12 Conditional
Sale.
The
Subscriber understands that the sale and delivery of the Subscribed for Units
is
conditional upon such sale being exempt from the registration and prospectus
requirements under applicable securities legislation or upon the issuance of
such orders, consents or approvals as may be required to permit such sale and
delivery without complying with such requirements. If required under applicable
securities legislation or regulatory policy, or by any securities commission,
stock exchange or other regulatory authority, the Subscriber will execute,
deliver, file and otherwise assist the Company in filing such reports,
undertakings and other documents with respect to the issue of the Subscribed
for
Units.
Page
10 of 38
Power
of
the Dream Ventures, Inc.
Subscription
Agreement
9,600,000
Share Offering at $2.50 per Offered Share
5.13 No
Joint Action.
Except
as
disclosed in writing to the Company, the Subscriber does not act jointly or
in
concert with any other person or company for the purposes of acquiring the
Subscribed for Units.
5.14 Tax
Consequences.
The
Subscriber understands that the investment in the Subscribed for Units may
have
tax consequences under applicable taxation laws, that it is the sole
responsibility of the Subscriber to determine and assess such tax consequences
as may apply to its particular circumstances, and the Subscriber has not
received and is not relying on the Company for any tax advice
whatsoever.
5.15 Legal
Advice.
The
Subscriber understands that he, she or it is responsible for obtaining such
legal advice as he, she or it considers appropriate in connection with the
execution and delivery of this Subscription Agreement and the purchase of the
Subscribed for Units.
5.16 Risk
Acknowledgement.
The
Subscriber acknowledges that he, she or it has reviewed the Risk Factors
attached to this Subscription Agreement as Exhibit 5.16 and
that the purchase of the Shares is a speculative investment involving
substantial business and market risks.
6. Reliance
and Indemnification.
6.1 Reliance
and Timeliness.
The
Subscriber understands and acknowledges that (i) the Offered Shares are being
offered and sold to the Subscriber without registration under the Securities
Act or applicable Hungarian securities laws in a private placement that is
exempt from the registration provisions of the Securities Act and/or
the requirements of applicable Hungarian securities laws and (ii) the
availability of such exemption, depends in part on, and the Company will rely
upon, the accuracy and truthfulness of, the foregoing representations and
warranties and the Subscriber hereby consents to such reliance. The Subscriber
agrees that the representations, warranties and covenants of the Subscriber
contained herein (or in any Representation Letter executed and delivered by
the
Subscriber pursuant to the provisions hereof) shall be true and correct both
as
of the execution of this Subscription Agreement and as of the Closing Date,
and
shall survive the completion of the distribution of the Offered
Shares. The Subscriber hereby agrees to notify the Company
immediately of any change in any representation, warranty, covenant or other
information relating to the Subscriber contained in this Agreement which takes
place prior to Closing.
Page
11 of 38
Power
of
the Dream Ventures, Inc.
Subscription
Agreement
9,600,000
Share Offering at $2.50 per Offered Share
6.2 Indemnification.
The
Subscriber agrees to indemnify the Company, and each of its officers, directors,
employees, consultants and agents from and against all losses, claims, costs,
expenses, damages or liabilities that any of them they may suffer or incur
as a
result of or in connection with their reliance on such representations,
warranties and covenants. The Subscriber acknowledges and agrees that
the Company acts as trustee of the Subscriber’s covenants hereunder for each of
its officers, directors, employees, consultants and agents entitled to indemnity
hereunder and shall be entitled to enforce such covenants on behalf of such
persons.
7. Miscellaneous.
7.1 Amendment;
Waivers.
No
provision of this Agreement may be waived or amended except in a written
instrument signed, in the case of an amendment, by both the Company and the
Subscriber; or, in the case of a waiver, by the party against whom enforcement
of any such waiver is sought. No waiver of any default with respect
to any provision, condition or requirement of this Agreement shall be deemed
to
be a continuing waiver in the future or a waiver of any other provision,
condition or requirement hereof, nor shall any delay or omission of either
party
to exercise any right hereunder in any manner impair the exercise of any such
right accruing to it thereafter.
7.2 Survival
of Representations and Warranties.
All
representations, warranties and agreements contained herein or made in writing
by or on behalf of any party to this Agreement in connection herewith shall
survive the execution and delivery of this Agreement.
7.3 Successors
and Assigns; No Third Party.
All
covenants and agreements in this Agreement contained by or on behalf of the
parties hereto shall be binding upon and inure to the benefit of the parties
and
their respective successors and assigns and, to the extent provided in this
Agreement.
7.4 Notices.
Any
and
all notices or other communications or deliveries required or permitted to
be
provided hereunder shall be in writing and shall be deemed given and effective
on the earliest of (i) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile telephone number specified in this
Section prior to 4:30 p.m. (New York Time) on a business day, (ii) the business
day after the date of transmission, if such notice or communication is delivered
via facsimile at the facsimile telephone number specified in the this Agreement
later than 4:30 p.m. (New York Time) on any date and earlier than 11:59 p.m.
(New York Time) on such date, (iii) the business day following the date of
mailing, if sent by nationally recognized overnight courier service, or (iv)
upon actual receipt by the party to whom such notice is required to be given.
The address for such notices and communications shall be as
follows:
Page
12 of 38
Power
of
the Dream Ventures, Inc.
Subscription
Agreement
9,600,000
Share Offering at $2.50 per Offered Share
|
If
to the Company:
|
Power
of the Dream Ventures, Inc.
|
|
1095
Budapest
|
|
|
Soroksari
ut 00-00
|
|
|
Xxxxxxx
|
|
|
Telephone:
x00-0-000-0000
|
|
|
Facsimile:
x00-0-000-0000
|
If
to the Subscriber: At the address set forth below the
Subscriber’s name on the signature page hereto; or, such other address as may be
designated in writing hereafter, in the same manner, by such party.
7.5 Headings.
The
headings herein are inserted for convenience only and do not constitute a part
of this Agreement. Whenever the context requires, the gender of any
word used in this Agreement includes the masculine, feminine or neuter, and
the
number of any word includes the singular or plural. Unless the context otherwise
requires, all references to articles and sections refer to articles and sections
of this Agreement, and all references to schedules are to schedules attached
hereto, each of which is made a part hereof for all purposes. The descriptive
headings of the several articles and sections of this Agreement are inserted
for
purposes of reference only, and shall not affect the meaning or construction
of
any of the provisions hereof.
7.6 Governing
Law; Consent to Jurisdiction.
The
corporate laws of the State of Delaware shall govern all issues concerning
the
relative rights of the Company and its shareholders. All other questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or
rule
(whether of the State of New York or any other jurisdictions) that would cause
the application of the laws of any jurisdictions other than the State of New
York. Each party hereby irrevocably submits to the exclusive jurisdiction of
the
state and federal courts sitting in the City of New York, for the adjudication
of any dispute hereunder or in connection herewith or therewith, or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that
the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to
such
party at the address for such notices to it under this Agreement and agrees
that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH
OR
ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
Page
13 of 38
Power
of
the Dream Ventures, Inc.
Subscription
Agreement
9,600,000
Share Offering at $2.50 per Offered Share
7.7 Remedies.
In
addition to being entitled to exercise all rights provided herein or granted
by
law, including recovery of damages, the Subscriber will be entitled to specific
performance of the obligations of the Company hereunder. The Company and the
Subscriber agree that monetary damages would not be adequate compensation for
any loss incurred by reason of any breach of its obligations described in the
foregoing sentence and hereby agrees to waive in any action for specific
performance of any such obligation the defense that a remedy at law would be
adequate.
7.8 Entire
Agreement.
This
Agreement and the other writings referred to herein or delivered pursuant hereto
contain the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior and contemporaneous arrangements or
understandings with respect thereto.
7.9 Severability.
Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and the parties will attempt to agree upon a valid and
enforceable provision which shall be a reasonable substitute therefore, and
upon
so agreeing, shall incorporate such substitute provision in this
Agreement. Any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in
any
other jurisdiction.
7.10 Counterparts.
This
Agreement may be executed in any number of counterparts, all of which when
taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to
the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission or by e-mail delivery of a “.pdf” format data file, such signature
shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such
facsimile or “.pdf” signature page were an original thereof.
7.11 Fees
and Expenses.
Except
as
otherwise provided herein, each of the parties hereto shall pay its own fees
and
expenses, including attorney fees, in connection with the transactions
contemplated by this Agreement.
Page
14 of 38
Power
of
the Dream Ventures, Inc.
Subscription
Agreement
9,600,000
Share Offering at $2.50 per Offered Share
7.12 English
Language.
The
Subscriber acknowledges that it has consented to and requested that all
documents evidencing or relating in any way to the sale of the Offered Shares,
of which the Subscribed for Units are part, be drawn up in the English language
only.
7.13 Knowledge.
As
used
in this Agreement, the term “knowledge” of any person or entity shall mean and
include (i) actual knowledge and (ii) that knowledge which a reasonably prudent
business person could have obtained in the management of his or her business
affairs after making due inquiry and exercising due diligence which a prudent
business person should have made or exercised, as applicable, with respect
thereto.
7.14 Currency.
All
dollar references herein are to U.S. dollars unless otherwise
indicated.
The
remainder of this page is left intentionally blank.
Page
15 of 38
Power
of
the Dream Ventures, Inc.
Subscription
Agreement
9,600,000
Share Offering at $2.50 per Offered Share
IN
WITNESS WHEREOF, the parties hereto caused this Agreement to be duly
executed as of the dates set forth below.
|
Date
the
Subscription: ,
2007
|
|||||
|
Number
Of Subscribed for Units:
|
|||||
|
(Name
of Subscriber – please print)
|
|||||
|
Price
Per Unit: $20,000
|
|||||
|
Aggregate
Consideration:
|
$ | ||||
|
By:
|
|||||
|
|
Authorized Signature |
Paid
by □ Check □ Wire
Transfer
|
|||
|
(Official
Capacity or Title – please print)
|
|||||
|
(Subscriber’s
Address including Country of
|
|||||
|
(Please
print name of individual whose
|
Residence)
|
||||
|
Signature
appears above if different than the
|
|||||
|
Name
of the subscriber printed above.)
|
|||||
|
(Telephone
Number)/(Facsimile Number)
|
|||||
|
Tax
Identification Number:
|
Email
Address:
|
||||
ACCEPTANCE
The
Company hereby accepts the above subscription for the Subscribed for Units
effective the ____________day of ________________, 2007.
|
Power
of the Dream Ventures, Inc.
|
Address:
|
Power of the Dream Ventures, Inc. | ||
|
|
0000 Xxxxxxxx | |||
|
By:
|
Soroksari ut 94-96 | |||
|
Name:
Viktor Rozsnyay
|
Hungary | |||
|
Title:
President
|
Telephone: x00-0-000-0000 | |||
Page
16 of 38
Power
of
the Dream Ventures, Inc.
Subscription
Agreement
9,600,000
Share Offering at $2.50 per Offered Share
Exhibit
1.3
WIRE
TRANSFER INFORMATION
Remit
U.S. Dollar Wire Payments to:
|
Name
of the acct:
|
|
|
Acct
no:
|
|
|
Name
of the Bank:
|
|
|
|
|
|
|
|
|
Bank
Swift no:
|
|
Page
17 of 38
Power
of
the Dream Ventures, Inc.
Subscription
Agreement
9,600,000
Share Offering at $2.50 per Offered Share
Exhibit
5.8
BUSINESS
DESCRIPTION
Overview
We
were
incorporated in Delaware on August 17, 2006 under the name Tia V, Inc. Since
inception, and prior to our acquisition of Vidatech, Kft (also know as Vidatech
Technological Research and Development LLC), a limited liability company formed
under the laws of the Republic of Hungary, on April 10, 2007, we were engaged
solely in organizational efforts and obtaining initial financing. Our sole
business purpose was to identify, evaluate and complete a business combination
with an operating company.
On
April
10, 2007 we completed our acquisition of Vidatech, Kft. Vidatech is a company
formed for the purpose of investing in, acquiring, developing, licensing, and
commercializing technologies developed in Hungary. In furtherance of its
business, Vidatech provides research and development services to the companies
from whom it acquires technologies or participation interests in such
technologies. Prior to December 31, 2006 Vidatech was primarily focused on
organizational and capital raising activities. To date, it has had only limited
operations and has acquired rights or interests in six
technologies.
Capital
Resources and Liquidity
On
August
21, 2007, we completed a private placement of 2,250,000 shares of our common
stock at a price of $.34 per share or $765,000.00 in the
aggregate. The private placement was effected pursuant to Regulation
S as promulgated under the Securities Act. On June 30, 2007, we had working
capital of $ 313,212.
With
the
proceeds from that offering, we believe that our cash position is sufficient
to
maintain operations for the next twelve months including a budget and plan
of
spending approximately $250,000 on general administrative expenses, $120,000
on
legal, accounting and compliance related expenses, $130,000 on continued
development of our RiverPower technology, $25,000 on Xxxx Telescope marketing,
$160,000 on iGlue technology and $80,000 on reserves and additional technology
acquisitions.
To
date
all of our funding has been generated from sale of shares of our common stock
and loans from our officers and directors. During the next twelve months we
anticipate that we will have sufficient funds to proceed only with basic
administrative operations and incremental operations with respect to RiverPower
technology, iGlue technology and the Xxxx Telescope; in addition to these we
only have limited funds available to continue acquiring and developing the
diverse number of technologies available to us, to continue research and
development efforts with respect to our current technologies and to fully
implement our business plan. If we do not obtain the funds necessary for us
to
continue our business activities we may need to curtail or cease our operations
until such time as we have sufficient funds.
We
currently have no arrangements for such financings and can give you no assurance
that such financings will be available to us on terms that we deem acceptable
or
at all. We believe that should our securities commence trading on the
over-the-counter marketplace, our ability to raise funds will be enhanced but
this in itself will not guarantee that we will in fact be able to raise the
capital required to implement our business strategy fully.
Power
of
the Dream Ventures, Inc.
Subscription
Agreement
9,600,000
Share Offering at $2.50 per Offered Share
Critical
Accounting Policies
Note
2 to
the 2006 audited financial statements sets forth a summary of our significant
accounting policies. Implicit in the preparation of financial statements is
the
fact that materially different amounts could be recorded if the estimates and
judgments used in preparing the financial statements change or if the actual
results differ from these estimates and judgments. Critical accounting policies
are those that may have a material impact on our financial statements and also
require management to exercise significant judgment due to a high degree of
uncertainty at the time the estimate is made. We consider the following to
be
its most critical accounting policies and estimates that involve the judgment
for the preparation of our financial statements.
Asset
Impairments
We
assess
the impairment of property and equipment each year and when circumstances arise
where it becomes apparent that the carrying value may not be
recoverable.
Recent
Accounting Pronouncements
In
September 2006, the FASB issued SFAS 157, Fair Value Measurement. The
new standard applies whenever other standards require or permit assets or
liabilities to be measured at fair value. This Statement defines fair value,
establishes a framework for measuring fair value, and expands disclosures about
fair value measurements. This statement is effective for financial statements
issued for fiscal years beginning after November 15, 2007. The Company does
not
believe that the adoption of SFAS 157 will have a material impact on its
financial position, results of operation or cash flows.
In
July
2006, the FASB issued Interpretation (FIN) No. 48, Accounting for
Uncertainty in Income Taxes -- an interpretation of FASB
Statement No. 109, which clarifies the accounting for uncertainty in income
taxes recognized in a company's financial statements in accordance with
SFAS No. 109. FIN No. 48 prescribes a recognition threshold and
measurement attribute for financial statement disclosure of tax positions taken
or expected to be taken on a tax return. FIN No. 48 is effective for the
Company beginning in January 1, 2007. The Company does not believe that the
adoption of FIN No. 48 will have a material impact on its financial position,
results of operation or cash flows.
In
May
2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections.
This statement applies to all voluntary changes in accounting principle and
to
changes required by an accounting pronouncement if the pronouncement does not
include specific transition provisions, and it changes the requirements for
accounting for and reporting them. Unless it is impractical, the statement
requires retrospective application of the changes to prior periods' financial
statements. This statement is effective for accounting changes and correction
of
errors made in fiscal years beginning after December 15, 2005.
In
December 2004, the Financial Accounting Standards Board (FASB) issued FASB
Statement No. 123 (revised 2004), Share-Based Payment
(“Statement 123(R))”, a revision of FASB
Statement No. 123, Accounting for Stock-Based Compensation .
Statement 123(R) supersedes APB Opinion No. 25, Accounting for Stock Issued
to Employees, and amends FASB Statement No. 95, Statement of Cash
Flows. Statement 123(R), which we expect to adopt in the first
quarter of 2006, is generally similar to Statement 123; however, it will require
all share-based payments to employees, including grants of employee stock
options, to be recognized in the financial statements based on their fair
values. Thus, pro forma disclosure will no longer be an alternative to financial
statement recognition. We do not believe the adoption of Statement 123(R)
will have a material impact on our results of operations or financial
position.
Page
2 of 38
Power
of
the Dream Ventures, Inc.
Subscription
Agreement
9,600,000
Share Offering at $2.50 per Offered Share
Description
of our Business and Properties
Through
Vidatech, we aim to provide pro-active support for idea, research, start-up
and
expansion-stage technology companies having rights to technologies or
intellectual properties which we believe to be potentially commercially viable,
by offering a range of services designed to encourage and protect the continuing
development and eventual commercialization of those technologies.
Our
focus
will be on technologies and technology companies based in the Republic of
Hungary. We believe that the availability of technologies for purchase or
license, coupled with the lack of sufficient investment capital for such
technologies in Hungary, present us with an opportunity to acquire technologies
on terms and conditions which we deem advantageous.
Our
strategy is to acquire majority interests in technologies through, among other
things, direct investment in start-up and expansion stage technologies and
technology companies; cooperative research and development agreements with
such
companies; direct licensing agreements; joint venture arrangements; or, direct
acquisition of technologies and intellectual properties.
We
also
intend to provide services to assist in:
|
|
·
|
The
design of, research of, building of and testing of
prototypes;
|
|
|
·
|
facilitation
of preparation of filing and prosecution of patent applications
with Hungarian and international patent
attorneys;
|
|
|
·
|
business
structuring;
|
|
|
·
|
financing
of research and development
activities;
|
|
|
·
|
the
exposure of the technology to international markets;
and
|
|
|
·
|
the
commercialization and/or sale of the subject
technology.
|
We
expect
to obtain a majority participation interest in any given transaction involving
idea, research, seed, start-up, and early stage technologies.
Acquisition
Criteria
We
currently have rights to six technologies and expect to acquire rights in and
to
additional technologies. The evaluation and identification of technology
acquisition will be done using the following characteristics:
Nature
of the Technology
One
of
the most important factors in our determination of whether to seek to acquire
any particular technology, in the assessment by our management, is the quality
of the technology being offered; in making this determination our management
will consider among other things:
|
|
·
|
whether
the technology may be capable of being marketed
internationally;
|
|
|
·
|
whether
the technology is patentable (or is already
patented);
|
|
|
·
|
the
particular technologies’ stage of development (preliminary, laboratory
scale prototype, etc.);
|
|
|
·
|
the
estimated cost of development and commercialization;
and
|
Page
3 of 38
Power
of
the Dream Ventures, Inc.
Subscription
Agreement
9,600,000
Share Offering at $2.50 per Offered Share
|
|
·
|
whether the
technology is one which cannot be readily replaced, replicated or
circumvented.
|
Capabilities
and Historical Results of Management and Scientific Development
Team
Our
assessment of the management and or scientific team which initiated or which
is
currently developing the technologies.
Strength
of the technology
The
rapid
development of technologies in today's markets makes it increasingly difficult
to predict market affects on any particular technology. Therefore, we will
focus
on technologies that we believe can better sustain and survive market and
technological changes. In this respect we will seek to acquire technologies
which can not be readily replicated or circumvented and which have a high level
of proprietary protection.
Current
Technologies/Products
The
TothTelescope
Pursuant
to an exclusive distributorship agreement dated June 15, 2006 by and between
Vidatech and XXXX Xxxxxx, an individual residing at 1237 Budapest, Nyír u. 30.
1/12., Hungary, Vidatech obtained the exclusive worldwide distribution rights
to
the TothTelescope. The Agreement covers all methods and extents of utilization
of the TothTelescope and underlying technology for an initial one year period
commencing on July 15, 2006. Vidatech is entitled to receive sixty (60%) of
the
revenues generated from the utilization of the technology. On June 15, 2007
we
entered into an amendment of this agreement granting Vidatech rights to the
exclusive distributorship of the TothTelescope for an additional period of
two
years.
The
TothTelescope is an ultra-small, portable, yet high magnification monocular
telescope that is equally suitable for microscopic, terrestrial and astronomical
observations. Usable magnification ranges from 16x to 250x, with optional
accessories 500x magnification is achievable for microscopy work. Because of
its
compact size (only 14 centimeters in length x 8 centimeters in diameter) and
light weight portability (less than 500 grams) it can be used for a number
of
strategic applications such as military reconnaissance, wildlife observation
from great distances, emergency observation, closed circuit security at great
distances, and common every day tasks such as microscopy of up to 500x
magnification, digital photography, bird spotting, hunting or even star
gazing.
It
is
anticipated that the TothTelescope will also be available in infrared versions,
a binocular version and a super high resolution version (expected to be
available within 3 years).
The
Xxxx
Telescope became available directly through the official e-commerce enabled
company website (xxxx://xxx.xxxxxxxxxxxxx.xxx ) on September 1st, 2006 for
$1199
retail or from $800 to $1,000 for distributors, depending on order
size.
Since
June 15, 2006, and through the period ending June 30, 2007, we have sold and
distributed 8 Xxxx Telescopes and various accessories for an aggregate of
$8,818. Since this period, the telescope has not been available, as design
revisions and manufacturing difficulties had to be resolved. During the next
twelve (12) months, it is our plan to order enough components from our suppliers
to assemble, at first, fifty (50) additional Xxxx Telescopes for resale, update
the Xxxx Telescope e-commerce website to include additional functionality
including customer feedback potential, and solicit additional resellers and
design and implement an ongoing marketing campaign. We also intend to send
sample products to a number of offline resellers worldwide where potential
customers can inspect and try the benefits of the TothTelescope first hand.
We
believe this personal experience will be instrumental in driving sales over
the
next twelve to twenty four months.
Page
4 of 38
Power
of
the Dream Ventures, Inc.
Subscription
Agreement
9,600,000
Share Offering at $2.50 per Offered Share
In
addition, we are also planning on providing test instruments to independent
reviewers and trade publications for testing and expert review. These
independent appraisals are crucial for the establishment of an optical
instrument such as the TothTelescope. While we are confident that these
independent reviews will be favorable there can not be any assurance that the
people testing the instrument will in fact like the product and provide positive
feedback. Review results can affect sales either in a positive or negative
manner.
Market
for the Xxxx Telescope.
According
to a market study published by the ICON Group Ltd., the
estimated
world market for binoculars, monocular, optical telescopes and astronomical
instruments, application fields in which the TothTelescope can be used, was
approximately $921 million in 2007. China leads the list of producers
(with exports worth $384 million) followed by Germany (with $93 million) and
the
United States (with $90 million). Hungary resided in 16th place with
yearly
sales of $8.6 million, beating such countries as Italy, Switzerland, and Spain.
On the importers side the US lead with yearly imports of $304 million. Hungary
placed 28th
with $4.4 million, suggesting a $4,2 million surplus. Within that global
marketplace, it is our intention to market, distribute and sell the
TothTelescope internationally through our own e-commerce enabled website
(xxxx://xxx.xxxxxxxxxxxx.xxx), through domestic and international distributors
and through special linked merchandising arrangements.
Competition.
Competitors
for the TothTelescope are fragmented into specific areas, depending on the
application field. For astronomical observations well known names like Xxxxx
(USA), Celestron (USA), TeleVue (USA) and Orion (USA) exist. Our monocular
and
binoculars competitors include Nikon (Japanese), Bushnell (German), Swarovski
(German) and Zeiss (USA); for microscopy use competitors include Olympus
(Japanese), Zeiss (USA), Nikon (Japanese) Leica (USA) and others. Each of these
competitors has greater operational, financial and managerial resources than
we
do and we may not be able to compete effectively with any one or more of
them.
The
advantage of the TothTelescope, as compared to the above listed instruments
that
operate in only one, or maybe two specific fields (a monocular can be used
for
terrestrial imaging and astronomy work but not for microscopy) is its
multi-function use. An incredibly small and light weight high-precision
instrument that can be used for both astronomical, terrestrial and microscopy
applications. This unique attribute sets the TothTelescope apart from the
competitors and distinguishes it as a singular instrument in the market
place.
RiverPower
Technology
Pursuant
to an exclusive utilization agreement dated May 24, 2007 by and between Vidatech
and Xxxxx Xxxxx, an individual residing at 1014 Budapest, Uri u. 18. Fsz/2.,
Hungary, and Xxxxxx Xxxxx, an individual residing at 1014 Budapest, Uri u.
18.
Fsz/2., Hungary, collectively the inventors, Vidatech submitted two patent
applications as assignee of the inventor’s invention for the exclusive
utilization of said patents. The two patent applications submitted by Vidatech
in Hungary cover the modular generation units of the RiverPower technology
and
the electrical generator itself, that coverts slow rotational movement into
electrical power. Prior to submission of the applications, a thorough due
diligence review was completed by Xxxxx and Co., our patent counsel, to
establish the uniqueness and patentability of the technology.
Page
5 of 38
Power
of
the Dream Ventures, Inc.
Subscription
Agreement
9,600,000
Share Offering at $2.50 per Offered Share
The
exclusive utilization agreement covers all methods and extents of utilization
of
the inventions, collectively referred to as RiverPower, and all aspects of
the
underlying technology. Upon successful deployment and commercialization of
the
technology Vidatech is entitled to receive fifty (50) percent of all revenues
generated while the inventors will receive the remaining fifty (50) percent
as
inventors fees. As part of the agreement Xxxxx Xxxxx and Xxxxxx Xxxxx each
received 50,000 shares of Power of the Dream Ventures, Inc. common stock. These
shares are included in the shares being offered pursuant to this
prospectus.
RiverPower
is a proprietary, renewable, green power-generation technology aimed at
converting the flow of rivers into electricity without the need of expensive,
environmentally degrading dam construction. In order to generate
electricity, RiverPower generators are simply submerged into rivers and anchored
at specific distances under the riverbed. As long as the river flow exceeds
one
meter per second, the RiverPower machine will generate electrical power
economically (installations for slower moving rivers can also be custom
designed). RiverPower technology differs from other hydropower generation
techniques in that we believe that it has the ability to use the flow of the
entire river, capable of achieving greater efficiency and increased power
production than in traditional turbine-based systems, without dams.
RiverPower
generators are built of standardized modules that are approximately 2 meters
in
height by 2 meters in width by 4.5 meters in length, with four (4) vertically
mounted wheels rotating at approximately 5 rpm (revolutions per minute). All
wheels in the modules are interconnected and transfer rotational movement to
a
single axle, on which a custom, slow speed, 1800 pole generator sits for the
conversion of rotational movement into electricity. Each RiverPower assembly,
made of six (6) standard interlocked units, is rated at 50kWh in generating
capacity. Several of these modules can be networked together for larger output,
creating generator farms. Custom designed generators can also be constructed
with larger or smaller output.
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The
following is an illustration of a 50kWh RiverPower assembly, illustrating the
modular design of the assembly, the 1800 pole generator, and an enlargement
of a
single wheel.
Renewable
Energy Sources, Generally, And Hydroelectric Power
Hydroelectric
power is electricity produced by the movement of water (i.e., from the release
of water from a dam; from water flowing down a waterfall, through a river,
or in
and out with the tide, etc.). It is created when water is fed through
a channel to a turbine where it strikes and turns turbine blades. The
rotating turbine blades cause the turbine shaft to turn, which turning motion
is
converted into electrical energy by means of a generator connected to the
turbine shaft.
Hydroelectric
power is one of several green, renewable energy sources, and is currently the
largest renewable energy source, accounting for 19% of electrical generation
–
715,000 mWe. Other means for producing electrical power
include solar, wind, and geothermal production methods, accounting for
approximately 4 % of all alternative renewable electrical energy
market. Alternative renewable electrical energy production, itself,
accounts for approximately 10-12% of global electrical energy production.
Nevertheless, with daily world consumption increasing and hydrocarbon supplies
decreasing, there is considerable incentive for companies to develop low-cost
alternative, renewable electrical energy production means, including
hydroelectric power. This is especially true when viewed against the current
geopolitical climate.
Hydroelectric
power projects are under construction in approximately 80 countries, most of
which are traditional dam based hydroelectric projects. Most of the remaining
hydropotential in these dam-based hydro projects is in developing countries,
particularly in South and Central Asia, Latin America and Africa. Our
RiverPower technology changes this competitive landscape in that it can
introduce a means whereby rivers can become power generating sites, without
the
need for expensive and prolonged dam construction. In addition because
RiverPower technology supplies continuous power 24 hours a day (because
RiverPower generators are in a constant flow environment, a river) turnover
(return of invested capital) is faster than with solar or wind
installations.
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Small
Hydro Technology Markets.
Small
hydro is the application of hydroelectric power on a commercial scale serving
a
small community or medium sized industry. During 2005 small hydro installations
grew by 8% to raise the total world small hydro capacity to 66 GW. Over 50%
of
this was in China (with 38.5 GW), followed by Japan (3.5 GW) and the United
States (3 GW). China plans to electrify a further 10,000 villages by 2010
under
their China Village Electrification Program using renewable energy, including
further investments in small hydro.
A
generating capacity of up to 10 megawatts (MW) is becoming generally accepted
as
the upper limit of what can be termed small hydro, although this may be
stretched to 25 MW and 30 MW in Canada and the USA. In contrast many
hydroelectric projects are of enormous size, such as the generating plant
at the
Xxxxxx Dam (2,074 megawatts) or the vast multiple projects of the Tennessee
Valley Authority.
Small
hydro can be further subdivided into mini hydro, usually defined as less
than
1,000 kW, and micro hydro which is less than 100 kW. Micro hydro is usually
the
application of hydroelectric power sized for small communities, single families
or small enterprise. We believe RiverPower technology to be equally suited
for
micro hydro, mini hydro and small hydro installations.
In
2005,
the most recent year for which we have statistical data available, small hydro
installations increased by 5 GW to a total of 66 GW worldwide, with 38.5 GW
existing in China alone as the boom in small hydro investment there continued.
Based on our own assessments, we believe that each of the following countries
has the following respective potential small hydro capacity, some of which
we
hope to capture with our RiverPower technology: (i) Europe has a potential
exploitable small hydro capacity of over 400GW; (ii) the US has over 400GW;
(iii) Central and South America have over 350GW; and (iv) Asia of over
500GW. We have commissioned Gabor Kolossvary, a consultant to the
company, and Xxxxx Xxxxxxxxxx, an independent water management expert, to
conduct a full study to thoroughly explore and map the available RiverPower
generating capacity throughout the world. This study is expected to be completed
in the first half of 2008.
We
believe China to have great potential for hydroelectric power production and
therefore present a potential market opportunity for us. In 1949, Hydroelectric
power made up only 8.8% of China’s total power output. It then increased to
23.9% in 2002. By the end of 2002, China's installed capacity of hydropower
was
84.55GW, accounting for 24% of the country's total installed capacity. According
to statistics, installed capacity of exploitable water energy resources in
China
tops 378 million kW, and the current utilization rate of the energy is only
22.36%, far below the 50-70% utilization rate in developed countries. Hydropower
output was 271 billion kWh in 2002, accounting for only 16.5% of the country's
total power output in the year.
The
hydropower sector was in the initial stages before 2003. With the Three Gorges
Project going into operation in 2003, the industry entered the development
period, demonstrated by power plants energetically exploring the hydropower
market; a number of hydropower projects starting one after another, and rapid
development of the hydropower sector for about 20 years. By 2020, the
exploitation rate of water energy resources in China will top 68%, which means
development of the sector will be in the later stages.
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Marketing
We
will
seek to commercialize RiverPower initially, in Hungary, and then internationally
in Europe, the US, Central and South America and China through large scale
power
plant(s) facilities construction, licensing and/or joint operation of
plants. Towards that end, and during the next twelve (12) months, it
is our plan to: (i) expand our Hungarian patent application to PCT status with
respect to the RiverPower technology covering the following countries: all
EU
member states, US, Canada, Japan, China, India, Brazil, Egypt, Congo,
Afghanistan, Tajikistan, Turkmenistan, Uzbekistan, Russia, Mongolia, Argentina,
Chile, Peru, Ukraine, Belarus, Turkey, Iraq, Israel, Jordan, Niger, Nigeria,
Mali, Venezuela, ; (ii) build two, one quarter scale laboratory prototypes
for
testing and evaluation purposes (construction of these testing prototypes has
been completed as of September 7, 2007 and testing has commenced at Vituki
-
Water Resources Research Centre); (iii) initiate engineering of
a new electrical generator that is to be used on final RiverPower machines
(this
engineering has been started with a one forth scale version of the final
generator being built initially); (iv) build a full scale prototype of the
technology for river testing; and (v) install first fully functional 50kWh
RiverPower machine.
The
marketing of our RiverPower technology will follow different methods based
on
the application area and partner/customer requirements.
Our
preferred method of marketing is the establishment of co-generation sites that
are co-financed with development partners, in which case revenues realized
from
the sale of electrical power are split in proportion to funds provided for
the
establishment of the site. This method is optimal in Hungary and other EU member
countries for example, where an abundance of “river close” cities exists that
are interested in utilizing the technology but lack the financial strength
to
establish larger installations on their own. In EU territories power utilities
are obligated to purchase green power from producers at regulated prices
(currently at approximately 10 Euro cent per kWh). Based on these prices, and
our preliminary estimate of RiverPower manufacturing, installation and
maintenance costs, we anticipate return of invested capital in 3-4 years for
each site.
In
addition to co-generation site we will also offer equipment purchase options
for
individual or small scale users, and will also pursue country or regional scale
licensing agreements. These agreements may or may not include revenue sharing
arrangements.
Technological
Competitors of RiverPower Technology
The
following technologies compete with RiverPower technology:
|
·
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Tidal
Power: Harnessing the tides in a bay or estuary has been achieved
in France (since 1966), Canada and Russia, and could be achieved
in other
areas with a large tidal range. The trapped water turns turbines
as it is
released through the tidal barrage in either direction. A perceived
drawback to this technology is that the system would generate electricity
most efficiently in bursts every six hours (once every tide), thus
limiting practical
applications.
|
|
·
|
Tidal
Stream Power: A relatively new technology, tidal stream
generators draw energy from currents in much the same way that
wind
generators do. The higher density of water means that a single
generator
can provide significant power. This technology is at the early
stages of
development and will require more research before it becomes a
significant
contributor. Several prototypes have shown promise. In the UK in
2003, a
300 kW Period flow marine current propeller type turbine was tested
off
the coast of Devon, and a 150 kW oscillating hydroplane device,
the
Stingray, was tested off the Scottish coast. Another British device,
the
Hydro Ventura, is to be tested in San Francisco Bay. The Canadian
company
Blue Energy has plans for installing very large arrays tidal current
devices mounted in what they call a 'tidal fence' in various locations
around the world, based on a vertical axis turbine
design.
|
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Wave
Power: Harnessing power from ocean surface wave motion might
yield much more energy than tides. The feasibility of this has
been
investigated, particularly in Scotland in the UK. Generators either
coupled to floating devices or turned by air displaced by waves
in a
hollow concrete structure would produce electricity. Numerous technical
problems have frustrated progress. A prototype shore based wave
power
generator is being constructed at Port Kombi in Australia and is
expected
to generate up to 500 MHz annually. The Wave Energy Converter has
been
constructed (as of July 2005) and initial results have exceeded
expectations of energy production during times of low wave energy.
Wave
energy is captured by an air driven generator and converted to
electricity. For countries with large coastlines and rough sea
conditions,
the energy of waves offers the possibility of generating electricity
in
utility volumes. Excess power during rough seas could be used to
produce
hydrogen.
|
Direct
Principal Competitor.
One
of
our known direct principal competitors is Verdant Power, located in New York,
NY. Verdant is deploying a device that is essentially an underwater
wind-mill with a low-speed flexible coupling / speed increaser gearbox for
operation. This means that the slowly rotating blades are connected to the
generators via a mechanical device that increase rotational speed. This
rotational speed increasing device is necessary, but inefficient, because
traditional generators must spin at about 3,000 rpm.
Although
Versant’s device is designed to produce electric energy from river flow, like
ours, we believe RiverPower technology to be superior. Our device does not
require a mechanism to increase rotational speed. Our device’s interlinked
wheels are directly connected to a slow turning generator (from 2-10 rpm as
opposed to the Verdant generator’s 3,000 rpm), yet produce the same three phase
output. RiverPower is designed to better translate rotational
movement – from a number of interconnected wheels – into high torque. The torque
is what drives the slow speed generator, a unique device on which we have also
filed patent applications. In addition, because RiverPower technology does
not
require substantial water current speed, it is capable of being installed in
95%
of rivers and man-made canals world-wide. Since Verdant Power’s device requires
a minimum of 2 meters per second in flow speed to operate (2 times RiverPower’s
requirement of 1 meter per second), it is not capable of being installed in
nearly as many locations. In addition, RiverPower can be custom designed for
rivers that are slower then one meter per second, increasing the
potential exploitable capacity even further.
Other
Competitors
The
following entities are other competitors of RiverPower in the small hydro
markets, as well as the names of our principal technological competitors: Xxxxxx
Hydroelectric (USA), Hydro West Group, Inc. (USA), Village Renewable Energy
Systems P Ltd (India), Xxxxx Engineering Ltd (UK), XXXXXX Water Turbines
GmbH (Austria), Ocean Power Delivery Ltd. (UK). All of
these companies have more experience and financial resources than we do, placing
us at a competitive disadvantage. Despite our efforts to try and do so, we
may
not be able to compete effectively with these competitors.
iGlue
technology via equity purchase in ‘in4 Kft’.
On
August
2, 2007 Vidatech Kft., our wholly owned Hungarian subsidiary, entered into
a
joint development agreement with the inventors/creators of iGlue, an online
content organization and search application based on semantic web technology.
In
the transaction Vidatech received a 30% equity position in the newly formed
in4
Kft (xxxx://xxx.xx0.xx), the owner and exclusive developer of iGlue technology,
for HUF 3 million (approximately USD $15,000). Over the course of the next
twelve months Vidatech will provide up to HUF 26 million (approximately USD
$140,000) in member loan payments to finance full development and the commercial
rollout of iGlue. In addition to Vidatech the new company has two other equity
holders, Xxxxx Xxxxx (56% ownership) and Xxxxx Xxxx (14% ownership), both
of
whom are Hungarian natives.
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As
part
of the agreement, Vidatech has the option of converting its HUF 26 million
member loan into an additional 10% equity in in4 Kft. at the end of the twelve
month period. Over the course of the next four months final development work
(programming) will be accomplished and a public beta website established for
the
testing and evaluation of iGlue technology. It is anticipated that the final
product will become available starting in the second quarter of
2008.
Fallowing
full deployment ‘In4 Kft.’ will aim to provide free and value added services of
its iGlue product, generating revenue from subscribers, advertising fees and
technology licenses. It is anticipated that the final product will be fully
deployed in two to three years.
iGlue
technology is composed of the fallowing main building blocks:
Integrated
content management
The
single greatest value of iGlue is that all content it has been used to create,
or make accessible, can be reused in any environment (e.g. at another site),
custom-tailored to user requirements. The semantic added value provided by
the
data structure enables a more versatile use of the created content than is
possible with content management and search methods based on simple string
matching.
Collaborative
database building, community intelligence
The
use
of collaborative database building enhances the application with a relevance
factor that relies on community intelligence; this in turn provides self-repair
capability and also makes the suggestion function more efficient.
Modular
structure
Owing
to
its modular structure, iGlue can be used to replace multiple data entry
utilities, and users can even use its API (application programming interface)
to
develop program components themselves. This greatly improves the efficiency
of
data management and storage.
Purely
online application, no installation needed
In
contrast to traditional desktop applications, iGlue represents a new generation
of programs that are used purely online. Accordingly, there is no need for
updates, upgrades, or maintenance – the program is always available for use in
its latest version. This results in significant cost savings in delivery,
packaging, and distribution.
Platform-independent
and browser-agnostic
The
platform, developed using the JAVA programming language and the XML markup
language, is platform-independent and browser-agnostic, can be run on any
operating system, and is built on open standards. The fact that the application
is completely independent from the program environment makes for cost-efficient
operation.
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Asynchronous
data handling (AJAX)
Thanks
to
the integrated AJAX functions that use the latest technology, parts of the
page
can also be refreshed separately, users don’t need to download full pages while
using the site, so this online application is as feature-rich as a desktop
program while it also eliminates the slow response times frequently experienced
with online applications. Compared to traditional (synchronous) methods that
use
full page downloads, this approach saves time and provides ease of use, which
translates into significant savings in terms of work time.
Cross-domain
web services using AJAX
One
of
iGlue’s highlights is that using plug-ins, users can call the application
through external sites, which empowers any site with the search and content
management capabilities of the source site. The integration of web service
and
AJAX technologies resulting in such a rich functionality is currently an
unrivaled feature of this program.
Accurately
targeted ads
Semantic
data entry allows a more efficient use of ad space, avoiding the “banner
graveyard” effect caused by untargeted ads. Ads based on the users’ activities
significantly enhance ad efficiency, making the selling of these ad spaces
more
profitable.
The
goal
of the project is to provide a working, online version of iGlue before the
end
of 2006. Revenues will be realized starting next year. Since semantic web is
a
relatively new application of online technology the ‘marketplace’ is currently
in its development stage. To our knowledge no real applications are in service
and several startups are pursuing development work including Radar Networks,
Garlik, Metaweb Technologies, Powerset, and ZoomInfo.
Semantic
web represents disruptive technology with the power to unseat today's Internet
titans. In4 Kft., in close working relationship with Vidatech, aims to be the
premier developer and operator of next generation intelligent web
sites.
Firelock,
Hardcrete and Pothole filler
Pursuant
to an invention transfer agreement dated August 13, 2007 by and between Vidatech
and Xxxx Xxxxxx Xxxx, the inventor, an individual residing at 1022 Budapest,
Xxxxxxxxxxxxx xx 00., Xxxxxxx, Vidatech acquired worldwide rights to three
technologies, as developed by the Inventor, for HUF 5 million (approximately
USD
25,000). The inventions are Firelock, a biodegradable fire fighting solution
that is capable of fireproofing objects to 3,500 degrees centigrade; HardCrete,
a concrete additive that allows communal waste to be mixed into concrete; and
a
pothole filler product that utilizes a special mix of recycled plastic to
produce a pourable solution for repairing potholes.
Of
the
three inventions Firelock has been establish to be patentable by the patent
firm
of Xxxxx and Co, via an international patent search. Patenting of this product
is currently under way with the Hungarian patent office, with filing expected
to
be completed by September 30 with Vidatech as the patent holder. HardCrete
and
the pothole filler technology are currently going through a patent search,
which
is expected to be completed by September 15. Upon favorable search results
these
two technologies will also be patented immediately, identifying Vidatech as
the
holder of patents.
Upon
the
establishment of the patentability and the filing of all three patent
applications, Vidatech has agreed to pay the inventor an additional HUF 5
million (approximately USD 25,000), thereby raising the total acquisition price
of the three inventions to HUF 10 million (approximately USD
50,000.)
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The
Agreement covers all methods and extents of utilization of the inventions and
all aspects of the underlying technology. Upon successful deployment and
commercialization of any and all three technologies, Vidatech is entitled to
receive sixty (60%) of the revenues generated, while the Inventor will receive
fourthly (40) percent as Inventor’s fee.
FireLock
is an
environmentally safe, biodegradable liquid that is especially suited at
preventing and if need be stopping natural fires that are exceedingly hard,
or
impossible to contain with water or other fire fighting methods. This category
includes forest-, xxxx- and other natural fires, whether man or nature
made. In the European Union region, according to the European Commission,
the five Mediterranean States – France, Greece, Italy, Portugal and Spain –
suffer burnt areas of between 200 000 and 600 000 hectares per year as a result
of the 20 000 to 60 000 forest fires that have occurred annually in the period
1980 to 2003, causing billions of dollars in damage yearly. In Spain and
Portugal alone, the total area razed during 2003 was more than 450 000 hectares.
In
the
US, Large forest fires have occurred more frequently in the western United
States since the mid-1980s as spring temperatures increased, mountain snows
melted earlier and xxxxxxx got hotter. Almost seven times more forested federal
land burned during the 1987-2003 period than during the prior 17 years. In
addition, large fires occurred about four times more often during the latter
period. In recent years, wildfires in the western United States have burned
hundreds of homes annually and caused extreme and sometimes irreversible damage
to natural resources. Fire-fighting expenditures for wildfires now regularly
exceed one billion dollars per year.
We
indent
to market FireLock to the natural fire prevention and control organizations
on a
State and Federal government level at first. Large scale demonstrations of
the
product’s immediate beneficial effects can be undertaken at a number of site
world-wide at hard to contain fires site. We believe that these demonstrations
will be instrumental, along with appropriate laboratory test results, to
initiate the commercialization activities of FireLock. We intend to complete
these tasks in the next six to twelve months.
HardCrete
and the pothole filler product will enter business development once the
patentability of those technologies has been established.
In
general, world demand for cement and concrete additives is forecast to rise
6.8
percent per year through 2010 to US$11 billion, a significant improvement over
the performance of the 1995-2005 period. Fuelling gains will be an improving
construction outlook that will bode favourably for the global cement market.
In
addition, higher performance requirements for concrete will prompt greater
loading factors for additives.
The
smaller fiber additive sector will register the strongest gains, continuing
the
trend of the past decade. However, 90 percent of overall demand will remain
concentrated in the chemical and mineral additive sectors. These and other
trends are presented in World Cement & Concrete Additives, a new study from
The Freedonia Group, Inc., a Cleveland-based market research firm. Developing
countries will register the healthiest gains, averaging over nine percent per
year through 2008. A number of developing countries in the Asia/Pacific region,
such as China, India and Vietnam, will exhibit particularly healthy
growth.
Developed
markets will generally post weaker -- but still respectable -- overall gains
that will average around six percent per year through 2008. Demand for cement
and concrete additives in the US will register gains matching the world average,
an impressive performance considering the highly mature US economy and
construction sector. The penetration of a number of key cement additive products
such as superplasticizers and set retarders in the US market has yet to approach
the intensity seen in Western Europe and Japan. The West European cement and
concrete additive market will register gains lagging the world average through
2008. The region will remain the most important cement and concrete additive
market in the world in 2008.
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Globally,
mineral additives such as fly ash and blast furnace slag are being increasingly
used to partially replace portland cement, the most expensive component of
concrete. In doing so, producers of concrete are realizing significant cost
benefits as well as performance and durability improvements.
In
general the market for Pothole patching and small-area asphalt repair is a
niche
of the asphalt paving market. The need for patching and repair is
everywhere, obvious and ongoing. The demand for repair work exceeds
the supply of repair services.
Potholes
are the normal and unending result as asphalt pavements deteriorate from age,
weather and wear. The need for pothole repair is increasing with the
amount of paved surfaces and from increasing utility work resulting from aging
utilities under roadways. Potholes are highly visible, detract from the
perceived value of a property, and reflect poorly on the quality of property
management. Potholes present a tangible hazard to traffic and a potential
liability.
Left
unattended, potholes increase in size, damage and cost to
repair. Potholes have to be repaired or ultimately, the entire
pavement must be replaced. Few contractors provide pothole repair services
because, a, The work is labour intensive and does not benefit from
mechanization; b, Hot-mix asphalt, in small quantities, is expensive and
difficult to work with; and c, There is an abundance of easier and more
profitable work. All three of these reasons would be solved with our plastic
pothole filler, while at the same time removing millions of tons of scrap
plastic from landfills.
The
typical quality of 'patching' makes it temporary. Patching materials
(cold-mix, sprayed aggregate and tar) have been developed to repair
potholes. These materials are available in a wide range of cost and
performance. None perform to the standard our poroposed plastic
pothole filler, whose lifetime is expected to top that of the asphalt road
it
was used to repair. Typically, potholes are patched repeatedly until the
surrounding pavement fails to such an extent that it is justified economically
to repave the entire surface or until complaints, surface problems or liability
risks force a repair of the site regardless of the cost.
Repairs
are also needed at excavations made to access utility services such as water
mains, gas lines, TV-cable, telephone lines and other infrastructure. Typically,
these excavations are small, require immediate attention and are located far
enough apart to be expensive to repair using traditional methods dependent
on
asphalt obtained from local asphalt plants. Typically, these repairs are made
with temporary materials until a sufficient number of sites have accumulated
to
allow for economical repair.
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Exhibit
5.16
RISK
FACTORS
You
should carefully consider the risks described below before
purchasing shares of our common stock. Our most significant risks and
uncertainties are described below; if any of the following risks actually occur,
our business, financial condition, trading market, if any, of our common stock,
or results of operations could be materially adversely affected, the trading
of
our common stock could decline, and you may lose all or part of your investment
therein. You should acquire shares of our common stock only if you can afford
to
lose your entire investment.
We
have a limited operating history which makes your evaluation of our business
difficult. We have incurred losses in recent periods for start-up efforts and
may incur losses in the future.
We
were
recently organized and only recently completed our acquisition of Vidatech,
which itself has had limited operations. Our future is dependent upon our
ability to obtain financing and upon future profitable operations from the
commercial exploitation of the technologies which we invest in, acquire or
license. These factors raise substantial doubt that we will be able to continue
as a going concern. From April 26, 2006 (inception) through June 30, 2007,
we
incurred aggregate losses of $419,710 and anticipate occurring additional losses
for at least the next twelve (12) months.
We
will require additional financing to sustain our operations and without it
we
will not be able to continue operations.
Our
independent auditors have added an explanatory paragraph to their audit opinion
issued in connection with the financial statements for the year ended 2006,
relative to our ability to continue as a going concern. Our ability to obtain
additional funding will determine our ability to continue as a going concern.
Our financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
We
believe that we have sufficient financial resources and commitments to sustain
our current level of research and development activities through the end of
December 2007, any expansion, acceleration or continuation (beyond December
2007) of such activities will require additional capital which may not be
available to us, if at all, on terms and conditions that we find
acceptable.
Although
we are paying the expenses related to this registration statement, we will
not
receive any of the proceeds from the sale of the shares by the Selling
Shareholders; our future is dependent upon our ability to obtain financing.
If
we do not obtain such financing, we may have to cease research activities and
investors could lose their entire investment. We have no arrangements
or agreements with any person regarding any potential future
financings.
Other
than our right to market, sell and distribute the Xxxx Telescope, from which
we
have not derived any significant revenues, we currently do not have, and may
never develop or acquire any commercialized products for distribution
and sale.
Other
than the right to sell and distribute the Xxxx Telescope product, from which
we
have not derived any meaningful revenues, we currently do not have any other
commercialized products or any significant source of revenue. We have invested
substantially all of our time and resources over the last two years in
identification, research and development of technologies. The technologies,
which are the subject of our ongoing research programs, will require additional
development, clinical evaluation, regulatory approval, significant marketing
efforts and substantial additional investment before they can provide us with
any revenue. We cannot currently estimate with any accuracy the
amount of these funds because it may vary significantly depending on the results
of our current research and development activities, product testing, costs
of
acquiring licenses, changes in the focus and direction of our research and
development programs, competitive and technological advances, the cost of
filing, prosecuting, defending and enforcing patent claims, the regulatory
process, manufacturing, marketing and other costs associated with the
commercialization of products following receipt of approval, if required, from
regulatory bodies and other factors.
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Our
efforts may not lead to commercially successful products for a number of
reasons, including:
|
|
·
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we
may not be able to obtain regulatory approvals, if required, or the
approved indication may be narrower than we
seek;
|
|
|
·
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our
technologies or products, if any, derived from our research and
development efforts may not prove to be safe and effective in clinical
trials or testing;
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·
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any
products that may be approved may not be accepted in the
marketplace;
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we
may not have adequate financial or other resources to complete the
development and commercialization of products derived from our research
and development efforts;
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we
may not be able to manufacture our products in commercial quantities
or at
an acceptable cost; and
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rapid
technological change may make our technologies and products derived
from
those technologies obsolete.
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We
expect to operate in a highly competitive market; we may face competition from
large, well-established companies with significant resources, and against which
we may not be able to compete effectively.
Our
commercial success will depend on our ability and the ability of our
sublicensees, if any, to compete effectively in product development, customer
compliance, price, marketing and distribution. There can be no assurance that
competitors will not succeed in developing products that are more effective
than
any products derived from our research and development efforts or that would
render such products obsolete and non-competitive.
The
technology sector is characterized by intense competition, rapid product
development and technological change. We expect that most of the competition
that we will encounter will come from companies, research institutions and
universities who are researching and developing technologies and products
similar to or competitive with any we may develop.
These
companies may enjoy numerous competitive advantages, including:
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significantly
greater name recognition;
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established
distribution networks;
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additional
lines of products, and the ability to offer rebates, higher discounts
or
incentives to gain a competitive
advantage;
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greater
experience in conducting research and development, manufacturing,
obtaining regulatory approval for products, and marketing approved
products; and
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greater
financial and human resources for product development, sales and
marketing, and patent litigation.
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Page
2 of 38
Power
of
the Dream Ventures, Inc.
Subscription
Agreement
9,600,000
Share Offering at $2.50 per Offered Share
As
a
result, we may not be able to compete effectively against these companies or
their products.
The
success of our research and development effort is uncertain and we expect to
be
engaged in research and development efforts for a considerable period of time
before we will be in a position, if ever, to develop and commercialize products
derived from our technologies.
We
expect
to continue our current research and development programs through at least
the
first six months of 2008. Research and development activities, by their nature,
preclude definitive statements as to the time required and costs involved in
reaching certain objectives. Actual costs may exceed the amounts we have
budgeted and actual time may exceed our expectations. If our research and
development requires more funding or time than we anticipate, then we may have
to reduce technological development efforts or seek additional financing. There
can be no assurance that we will be able to secure any necessary additional
financing or that such financing would be available to us on favorable terms.
Additional financings could result in substantial dilution to existing
shareholders. Even if we are able to fully fund our research and development
program, there is no assurance that, even upon successful completion of our
program, we will ever be able to commercialize products, if any, derived from
our research efforts or that we will be able to generate any revenues from
operations.
Our
research and development programs are in the preliminary development stage
and
the results we attain may not prove to be adequate for purposes of developing
and commercializing any products or otherwise to support a profitable business
venture.
Our
research and development programs are in the preliminary development
stage. We will require significant further research, development,
testing and regulatory approvals and significant additional investment before
we
will be in a position to attempt to commercialize products derived from our
research and development programs. We cannot currently estimate with
any accuracy the amount of these funds because it may vary significantly
depending on the results of our current research and development activities,
product testing, costs of acquiring licenses, changes in the focus and direction
of our research and development programs, competitive and technological
advances, the cost of filing, prosecuting, defending and enforcing patent
claims, the regulatory process, manufacturing, marketing and other costs
associated with commercialization of products following receipt of approval
from
regulatory bodies and other factors.
There
can
be no assurances that our early stage research will be successful. The ultimate
results of our ongoing research programs may demonstrate that the technologies
being researched by us may be ineffective, unsafe or unlikely to receive
necessary regulatory approvals, if ever. If such results are obtained, we will
be unable to create marketable products or generate revenues and we may have
to
cease operations.
Currently,
we do not directly conduct any of our research and development activities and
therefore we will have minimal control over such
research.
We
rely
primarily on third parties to conduct, monitor and assess our
research. We will have minimal control over the specifics of and
possible direction that the research may take. Accordingly, there can
be no assurance that such parties will conduct our research in a manner that
will lead to the commercial development of any products.
Page
3 of 38
Power
of
the Dream Ventures, Inc.
Subscription
Agreement
9,600,000
Share Offering at $2.50 per Offered Share
We
are
also dependent upon the services of certain key scientific personnel who are
not
employed by us. The loss of the services provided by such persons could have
a
materially adverse effect on us, unless qualified replacements could be found.
We have no control over whether our principal investigators or other scientific
personnel will choose to remain involved with our projects. Since these
individuals are not bound by contract to us nor employed by us directly, they
might move on to other research or positions.
We
intend to conduct sales and marketing efforts internally, but lack sales and
marketing experience. Additionally, we may rely on third party
marketers, in which case, we will be dependent on their
efforts.
We
expect
to market and sell or otherwise commercialize our technologies (or any products
derived from the technologies) ourselves as well as through distribution,
co-marketing, co-promotion or licensing arrangements with third parties. We
have
no experience in sales, marketing or distribution of such technologies or
products and our current management and staff is not trained in these
areas. Accordingly, we may be adversely affected to the extent that
we attempt to market any products directly. To the extent that we enter into
distribution, co-marketing, co-promotion or licensing arrangements for the
marketing or sale of our technologies (or any products derived from the
technologies) any revenues received by us will be dependent on the efforts
of
third parties. If any such parties were to breach or terminate its agreement
with us or otherwise fail to conduct marketing activities successfully and
in a
timely manner, the commercialization of our technologies (or any products
derived from the technologies) would be delayed or terminated.
There
are risks associated with our proposed operations in
Hungary.
Special
risks may be associated with our efforts to undertake operations in the Republic
of Hungary. Such operations will be subject to political, economic and other
uncertainties, including among other things, import, export and transportation
regulations, tariffs, taxation policy, including royalty and tax increases
and
retroactive tax claims, exchange controls, currency fluctuations and other
uncertainties arising out of the Republic of Hungary's sovereignty over our
operations.
Our
management team does not have extensive experience in public company matters,
which could impair our ability to comply with legal and regulatory
requirements.
Our
management team has had limited U.S. public company management experience or
responsibilities, which could impair our ability to comply with legal and
regulatory requirements, such as the Xxxxxxxx-Xxxxx Act of 2002 and applicable
federal securities laws including filing on a timely basis required reports
and
other required information. Our management may not be able to implement and
affect programs and policies in an effective and timely manner that adequately
respond to increased legal or regulatory compliance and reporting requirements
imposed by such laws and regulations. Our failure to comply with such laws
and
regulations could lead to the imposition of fines and penalties and further
result in the deterioration of our business.
Concentration
of ownership among our directors, executive officers, and principal shareholders
may prevent new investors from influencing significant corporate
decisions.
Based
upon beneficial ownership as of July 31, 2007, our directors, executive
officers, holders of more than 5% of our common stock, alone or together
with
their affiliates own, in the aggregate, approximately 77.6 % of our outstanding
common stock. As a result, these shareholders, will be able to exercise a
controlling influence over matters requiring stockholder approval, including
the
election of directors and approval of significant corporate transactions,
and
will have significant control over our management and policies. Some of
these persons or entities may have interests that are different from yours.
For
example, these shareholders may support proposals and actions with which
you may
disagree or which are not in your interests. The concentration of ownership
could delay or prevent a change in control of our company or otherwise
discourage a potential acquirer from attempting to obtain control of our
company, which in turn could reduce the price of our common stock. In addition,
these shareholders, some of whom have representatives sitting on our board
of
directors, could use their voting influence to maintain our existing management
and directors in office, delay or prevent changes of control of our company,
or
support or reject other management and board proposals that are subject to
stockholder approval, such as amendments to our employee stock plans and
approvals of significant financing transactions.
Page
4 of 38
Power
of
the Dream Ventures, Inc.
Subscription
Agreement
9,600,000
Share Offering at $2.50 per Offered Share
We
currently have no employment agreements with any of our officers and
directors.
We
currently have no employment agreements with any of our officers and directors
imposing any specific condition on our officers and directors regarding their
continued employment by us.
We
will need to hire additional employees as the number of technologies in which
we
have an interest increases.
We
anticipate that it will be necessary for us to add employees with technology
and
management experience as well as support staff to accommodate the increasing
number of technologies we acquire. We may need to provide additional scientific,
business, accounting, legal or investment training for our hires. There is
competition for highly qualified personnel, and we may not be successful in
our
efforts to recruit and retain highly qualified personnel.
There
is no trading market for our common stock and if a market for our common stock
does not develop, you may be unable to resell any of the shares acquired by
you
in this Offering.
There
is
currently no trading market for our common stock and such a market may not
develop or be sustained. Our common stock must be acquired for investment
purposes only and not with a view to resale or distribution. In offering our
common stock, the Company is relying upon one or more exemptions from
registration. Accordingly, there is no assurance that investors will ever be
able to liquidate their investment in the Company.
The
offering price has been arbitrarily determined.
The
offering price of our common stock was established by the Company and does
not
necessarily bear any relationship to the value of the Company’s assets, its net
worth, the results of its operation, or any other established criteria of
value.
We
do not intend to pay dividends for the foreseeable
future.
We
currently intend to retain future
earnings, if any, to support the development and expansion of our business
and
do not anticipate paying cash dividends in the foreseeable future. Our payment
of any future dividends will be at the discretion of our board of directors
after taking into account various factors, including but not limited to our
financial condition, operating results, cash needs, growth plans and the terms
of any credit agreements that we may be a party to at the time. Accordingly,
investors must rely on sales of their common stock after price appreciation,
which may never occur, as the only way to realize their investment. Investors
seeking cash dividends should not purchase the shares offered by the Selling
Shareholders pursuant to this prospectus.
Page
5 of 38
Power
of
the Dream Ventures, Inc.
Subscription
Agreement
9,600,000
Share Offering at $2.50 per Offered Share
We
may conduct further offerings in the future in which case your shareholdings
will be diluted.
Since
our
inception, we have relied on such equity sales of our common stock to fund
our
operations. We may conduct further equity offerings in the future to finance
our
current projects or to finance subsequent projects that we decide to undertake.
If common stock is issued in return for additional funds, the price per share
could be lower than that paid by our current shareholders. We anticipate
continuing to rely on equity sales of our common stock in order to fund our
business operations. If we issue additional stock, your percentage interest
in
us will be diluted. The result of this could reduce the value of your
stock.
We
may issue preferred stock which may have greater rights than our common
stock.
We
are
permitted in our charter to issue up to 10,000,000 shares of preferred stock.
Currently no preferred shares are issued and outstanding; however, we can issue
shares of our preferred stock in one or more series and can set the terms of
the
preferred stock without seeking any further approval from our common
shareholders. Any preferred stock that we issue may rank ahead of our common
stock in terms of dividend priority or liquidation premiums and may have greater
voting rights than our common stock. In addition, such preferred stock may
contain provisions allowing it to be converted into shares of common stock,
which could dilute the value of common stock to current shareholders and could
adversely affect the market price, if any, of our common stock.
As
our business assets, directors, and officers are located outside of the United
States, our shareholders may be limited in their ability to enforce civil
actions against our assets or our directors and
officers.
We
are a
company incorporated under the laws of Delaware but because we are a company
headquartered in Hungary and all of our officers and directors are residents
of
Hungary our shareholders may have difficulty enforcing civil liabilities under
the U.S. federal securities laws against our officers and directors, especially
because some of our directors and officers reside in Hungary. Because some
of
our assets are located outside the U.S., it may be difficult for an investor
to
succeed in an action, for any reason, against us or any of our directors or
officers through U.S. jurisdictions. If an investor was able to obtain a
judgment against us or any of our directors or officers in a U.S. court based
on
U.S. securities laws or other reasons, it may be difficult to enforce such
judgment in Hungary. We are uncertain as to the enforceability, in original
actions in Hungarian courts, of liability based upon the U.S. federal securities
laws and as to the enforceability in Hungarian courts of judgments of U.S.
courts obtained in actions based upon the civil liability provisions of the
U.S.
federal securities laws.
Our
compliance with changing laws and rules regarding corporate governance and
public disclosure may result in additional expenses to us which, in turn, may
adversely affect our ability to continue our
operations.
Keeping
abreast of, and in compliance with, changing laws, regulations and standards
relating to corporate governance and public disclosure, including the
Xxxxxxxx-Xxxxx Act of 2002, new SEC regulations and, in the event we are ever
approved for listing on either NASDAQ or a registered exchange, NASDAQ and
stock
exchange rules, will require an increased amount of management attention and
external resources. We intend to continue to invest all reasonably necessary
resources to comply with evolving standards, which may result in increased
general and administrative expenses and a diversion of management time and
attention from revenue-generating activities to compliance activities. This
could have an adverse impact on our ongoing operations.
Page
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