Item
2.01 Completion of Acquisition of Assets
A
s
described in Item 1.01 above, on September 13, 2010, the Company acquired all of
the shares of B6 Sigma from the Shareholders of B6 Sigma in exchange for the
issuance of 1,566,116 (pre-Forward Split split as described below) newly issued
shares of Framewaves common stock. In addition, B6 Sigma acquired 738,000 shares
(pre-Forward) of Framewaves common stock from three shareholders of Framewaves
for the sum of $195,000 and simultaneously cancelled all of such shares. After
issuance of the shares to the B6 Shareholders and cancellation of the shares
acquired by B6 Sigma from the Framewaves shareholders, the Company had 2,087,110
(pre-Forward Split [as hereinafter defined]) shares of common stock issued and
outstanding. Effective October 14, 2010 our common stock was split on a 150 for
1 basis (the “Forward Split”). All references to our stock in this Report take
into account and give effect to the Forward Split unless otherwise
stated
.
John
Furlong and Valerie Vekkos were appointed President and Secretary, respectively,
and each was elected as a Director of the Company, prior to closing of the
Reorganization. Ms. Vekkos was also appointed as the Secretary and elected as a
Director of B6 Sigma prior to closing of the Reorganization. Mr. Furlong
resigned as an officer and director of the Company on the closing of the
Reorganization. The Company is not aware of any material relationship between
Mr. Furlong and Ms. Vekkos or that either of such persons has with the Company
or B6 Sigma, its executive officers and shareholders, except that Ms. Vekkos is
the President of Zephyr Equities, Inc., a consulting firm that entered into a
two year consulting agreement with B6 Sigma on March 1, 2010 and receives
compensation of $3,500 per month under such agreement. Ms. Vekkos, through
Zephyr, assists B6 and the Company with SEC reporting and other regulatory
obligations and provide corporate secretarial and corporate governance services
as required.
FORM
10 INFORMATION
BUSINESS
Corporate
History
Framewaves
is a Nevada corporation that was formed with the stated purpose of engaging in
all lawful transactions permitted under the State of Nevada, including the
acquisition of various business opportunities to provide profit and maximize
shareholder value. In December 2000, the shareholders, at a special meeting,
changed Framewaves’ name from Messidor Limited to Framewaves, Inc. and also
approved the acquisition of Corners, Inc. (“Corners”), a Nevada corporation,
whereby it exchanged 1,000,000 (pre-Forward Split)shares of its common stock for
all of Corner’s issued and outstanding shares of common
stock.
Framewaves
originally intended to use Corners as an operating subsidiary and to actively
pursue the custom framing business. Since its inception, Corners has had limited
operations. Due to other obligations, the Company’s officers and directors have
been unable to devote adequate time to developing the business and have decided
to seek, investigate, and if warranted, acquire an interest in a different
business opportunity.
On
February 24, 2010 the then current officers and directors of Framewaves resigned
in anticipation of the Reorganization and John Furlong was appointed as the
President and a Director of Framewaves and Valerie Vekkos was appointed as the
Secretary and a Director of Framewaves. Mr. Furlong resigned all of his
positions on the closing of the Reorganization and was replaced by officers and
directors appointed by B6 Sigma as further detailed herein. Ms. Vekkos remained
as Secretary and a Director of Framewaves.
B6 Sigma
was founded by a group of scientists, engineers and businessmen to develop and
commercialize novel and unique manufacturing and materials technologies.
It is the belief of Management that some of these technologies will
fundamentally redefine conventional practice by embedding quality assurance into
the manufacturing processes in real time. This technology, “In Process Quality
Assurance” (IPQA
®
), is a
registered trademark of B6 Sigma. In addition, Management is of the belief that
the core competencies of B6 Sigma will allow its clientele to combine advanced
manufacturing with novel materials to achieve breakthrough product potential in
many industries including aerospace, defense, oil and gas, prosthetic implants,
sporting goods, and power generation.
B6 Sigma
is actively pursuing some (but not all) of these areas currently and anticipates
growth in both the breadth and depth of IPQA
®
applications in the future. B6 Sigma intends to generate revenue by providing
engineering services to existing businesses and to early adopters of their
technologies as well as through the development and exploitation of its own
technologies and products. The future focus of B6 Sigma will be in the
implementation of IPQA
®
technology to all appropriate manufacturing technologies, as well as the rapid,
systematic, and widespread commercialization of breakthrough technologies and
innovations in materials, manufacturing, and beyond. Management is of the belief
that B6 Sigma owns all of its proprietary information and technology. To
that extent, B6 Sigma knows of no existing technologies or products that might
otherwise pose a threat or concern to the future development of its technologies
and their representative markets.
Certain
members of B6 Sigma are uniquely qualified scientists with the highest levels of
security clearances issued by the US as well as NATO governments. In the
past, members of B6 Sigma’s Management team have worked with some of the largest
defense contractors in the world, in such varied projects as advanced armor and
anti-armor systems, hypervelocity projectile launch systems, advanced reactive
munitions and nuclear weapons stewardship programs. Members of Management have
also previously worked on commercial, unclassified but highly proprietary
projects such as those in the highly competitive sports equipment
business.
Four
members of B6 Sigma’s Management team (plus one of its consultants) worked
together at TMC Corporation (“TMC”) before forming B6 Sigma. These individuals
left TMC with the intention of exploiting technologies and projects that could
not be handled by TMC. In connection with their departure from TMC, two members
of Management and a consultant sold their TMC equity and options back to TMC and
TMC agreed to sell certain Assets of its Beyond 6 Sigma Division to B6 Sigma. In
connection with these transactions, B6 Sigma took over certain contracts held by
TMC that TMC was unable to fulfill. Additionally, B6 Sigma expects to exploit
existing relationships between its Management and leading National Laboratories’
like Sandia and Los Alamos, as well as forge new affiliations with major US and
European research universities.
Members
of the B6 Sigma Management Team have in the past and intend to on behalf of B6
Sigma bring products and services out of the National Laboratories’ and other
government laboratories into the private sector. B6 Sigma intends to
accomplish this through the transfer of people and technologies matched with
Management’s knowledge of markets and technical business development to find
niche product and service opportunities. B6 Sigma is presently
engaged in a variety of activities which seek to commercialize technologies and
products in the following industry sectors. In addition to these, B6 Sigma
intends to seek government funding to assist with next-generation manufacturing
technology needs of the nuclear weapons and surveillance programs.
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In
process quality assurance for
manufacturing
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Aerospace
and defense manufacturing
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Active
protection systems for defending light armored
vehicles
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Advanced
materials for munitions
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Advanced
materials for sporting goods
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Advanced
Manufacturing Technologies
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B6
Sigma’s consulting operations typically include fixed-price services contracts
that provide engineering support for clients that have needs in developing
next-generation technologies for materials and joining-related projects.
Certain employees of B6 Sigma have been working in the materials and
joining-related fields for more than 30 years. As a result, a large
professional contact base has been developed and from time-to-time these
contacts call upon B6 Sigma personnel for expert advice and consulting.
Notwithstanding the foregoing, even though we have this experience and contact
base, there are numerous larger entities with greater resources with which we
will compete for consulting business. There can be no assurance that we will be
able to convert our contacts into revenue based business.
The
Technical Heritage of Los Alamos National Laboratory
B6 Sigma
has its intellectual and scientific roots at Los Alamos National Laboratory
(LANL). Four of the five members of the B6 Sigma Management Team have
worked at or with LANL over the past 30 years, have over one hundred years of
collective experience in science and technology and have very close and high
level continuing connections to LANL.
Corporate
History
B6 Sigma
was formed by four members of Management, who were former employees of the
Beyond 6 Sigma division of TMC, to pursue its own business plan which does not
compete with TMC Corporation. Beyond 6 Sigma is a name or line used by TMC
Corporation.
Our goal
was to compete for engineering services contracts that are unrelated to TMC
Corporations' core business. While negotiating new contracts, B6 Sigma
contacted TMC and negotiated the assumption of certain contracts that TMC
previously serviced. B6 Sigma did not assume all the contracts of TMC nor
did B6 Sigma employ any employees from TMC (other than the 4 officers who
founded B6 Sigma). TMC still exists and continues in business. B6
Sigma also purchased some property and equipment and software from TMC.
This has been accounted for as an asset purchase as B6 Sigma did not acquire the
operations, receivables or payables and did not hire the employees of TMC.
B6 Sigma does not believe that it is successor to TMC. We do not have access to
the accounting records of TMC to quantify the assets and products of
TMC
In
Process Quality Assurance – IPQA
®
With current manufacturing processes,
it can take up to ten times longer to inspect a product than it takes to make
it. Also, current inspection techniques at best only identify
non-compliant product; they do not assist an operator to determine the cause of
the inspection failure. IPQA
Ò
is a manufacturing tool under development that solves this problem by allowing
manufacturers to identify and determine the cause of manufacturing defects early
in the manufacturing process, thereby reducing labor and materials waste and
assuring product quality with a minimum of costly and time-consuming post
process inspection.
IPQA
®
refers
to B6 Sigma’s proprietary method of product inspection frequency reduction for
cause. B6 Sigma’s IPQA
®
method
observes and interprets process physical behavior during production runs to
accept the largest possible fraction of process output immediately following
processing. This acceptance occurs without further post-process inspection
for product with acceptable in-process physical behavior. This acceptable
behavior is similar to that of known acceptable product (
i.e.
, “nominal” product)
observed and characterized during process qualification and validation.
The remnant fraction of product with rejectable in-process physical behaviors
(
i.e.
, “off-nominal”
product) may be further post-process inspected via default stand-alone
inspection methods. Since IPQA
®
occurs
during processing and reduces post process inspection time and cost while
sorting product, this IPQA
®
method
is superior to stand-alone post-process inspection actions intended to act as
accept/reject gates which only sort product.
Technical
Descriptions of Product Areas
IPQA
Ò
hardware and software (
a.k.a.
, QualitySentinel and
The Frontiersman
™
)
observes and interprets process physical behavior during production runs. This
technology is currently in a development stage.. IPQA hardware and software has
been developed to a Technology Readiness Level (TRL) 6, i.e., system/subsystem
model or prototype demonstration in a relevant environment. A
representative IPQA hardware and software system prototype, has been tested in a
relevant environment. For example, several aircraft manufacturers are
moving towards welded aircraft structures. However the weld quality
will be a critical concern. It is not possible or economical to
inspect millions of welds using 100% post-process inspection. We
believe that IPQA
®
will
therefore be valuable in helping to solve this problem for future commercial
aircraft. B6 Sigma does not currently have any contractual relationship
with any aircraft manufacturer to incorporate its IPQA technology into
production systems for aero-frame manufacturing.
For
21
st
century threats to security worldwide, the USA and its allies need new classes
of weapons with new effects that limit the potential harm to civilian
populations. B6 Sigma is currently developing two technologies to meet
these modern threats:
The first
is BAM – bonded advanced munitions. These are unique combinations of high
density and high reactivity metals that are suitable for air-to-air defense,
missile defense, ship defense, or defending buildings and structures against car
bomb attacks.
The
second technology is ARMS – advanced reactive materials and structures – and is
well-suited to the battlefield of the future which will heavily rely on
drones. This technology would enable drones to carry the same explosive
payload with 50% less weight, or pack twice as much explosive power with the
same weight.
BLAST –
Blast Limiting Advanced Structural Technology. Brain Injury among US
Service Personnel is directly linked to the negative effects of blasts from
roadside bombs. B6 Sigma has proposed a new, simple, and relatively
inexpensive solution to solving this problem that could be utilized currently by
vehicles around the world. This solution may have other applications for
shock absorbing in cars, sporting goods, bio-prosthetics, etc. where extra shock
and vibration protection is desired.
Both of
these technologies are considered to be at a TRL Level 3 stage, i.e., analytical
and experimental critical function and/or characteristic proof of concept has or
are being demonstrated. Specifically, active research and development has
been initiated. This includes analytical studies and laboratory studies to
physically validate analytical predictions of separate elements of the
technology. Examples include components that are not yet integrated or
representative.
B6 Sigma
has developed new materials processing path to achieve large-scale bulk
nano-structured metals: NanoFlow. Nano-metals have the potential for
revolutionizing aerospace, automotive, biomedical, defense, and sporting
goods. This technology is considered to be at a TRL Level 1, i.e.,
basic principles have been observed and reported. Provisional Patents are
being filed, so no additional details are available until filings are in
place.
Intellectual
Property
The Company currently has three utility
patent applications pending. Additionally, the company plans to file an
additional provisional patent application in the next six months covering the
NanoFlow technology. We have also filed a US utility patent application
covering the IPQA technology, application number 00139-50022, on May 14, 2010,
entitled, “Controlled Weld Pool Volume Control Of Welding Processes”, as well as
a provisional application 61/178473, filed May 14, 2009.
B6 Sigma
has developed a control system for EBDM which enables significant reductions
in weight and part costs for titanium aerospace components on both military
and commercial aircraft. Utility patents have been filed for this technology,
including US utility application 00139-50022, filed by May 14, 2010, entitled,
“Controlled Weld Pool Volume Control Of Welding Processes”, as well as a
provisional application 61/178473, filed May 14, 2009.
We have
also developed ARMS™ – Advanced Reactive Materials and Structures –
This system is designed to create a new generation of 21st Century weapons
resulting in up to 50% less weight for missiles and bombs while delivering
more energy on target and reducing collateral damage in the process.
Utility patents have been filed for this technology. We filed Provisional
application 61/159500, on March 12,2009, entitled, “Structurally Sound
Reactive Materials” as well as Utility application 11/379,378 filed April 19,
2006, entitled, “Composite Projectile”.
We
currently own a Registered trademark for IPQA; 77209143 which was filed June 18,
2007; Registration 3479078.
B6
Sigma is unaware of any competitors in the previously mentioned technology
areas and believes the market segments available for possible sales of products
resulting from these technologies includes but is not limited to aerospace,
automotive, heavy industry, oil & gas, medical, and military.
TMC is a
corporation engaged in support of the Nunn-Lugar Act which deals with
non-proliferation work in Eastern Europe. That work remains the
predominate feature of TMC’s operations and B6 Sigma has no connection with that
work.
There can
be no assurance that any of the pending applications will result in the issuance
of patents to the Company.
The
Company’s success in part depends on its ability to maintain the proprietary
nature of its technology and other trade secrets. To do so, the Company will be
required to prosecute and maintain patents, obtain new patents and pursue trade
secret and other intellectual property protection. The Company has obtained one
utility patent-pending and two provisional patents-pending from its Asset
Purchase Agreement with TMC, Inc. Additionally it has two provisional
patents that it seeks to file within 2010, although there can be no assurance
that these applications will be filed or that they will ever result in the
issuance of patents. The Company also must operate without infringing
the proprietary rights of third parties or allowing third parties to infringe
its rights. The Company’s research, development and commercialization
activities may infringe or be claimed to infringe patents owned by third parties
and to which the Company does not hold licenses or other
rights.
We
anticipate that we will expend significant financial and managerial resources in
the defense of our intellectual property rights in the future if we believe that
our rights have been violated. We also anticipate that we will expend
significant financial and managerial resources to defend against claims that our
products and services infringe upon the intellectual property rights of third
parties.
Employees
The
Company and its subsidiaries currently have 7 employees.
RISK
FACTORS
You
should carefully consider the risks described below together with all of the
other information included in this report before making an investment decision
with regard to our securities. The statements contained in or incorporated into
this current report that are not historic facts are forward-looking statements
that are subject to risks and uncertainties that could cause actual results to
differ materially from those set forth in or implied by forward-looking
statements. If any of the following risks actually occurs, our business,
financial condition or results of operations could be harmed. In that case, the
trading price of our common stock could decline, and you may lose all or part of
your investment.
This
report contains forward-looking statements
Information
provided herein may contain forward-looking statements, which reflect
Management’s current view with respect to future events and the viability or
efficacy of B6 Sigma’s future performance. Such forward-looking statements
may include projections with respect to market size and acceptance, revenues and
earnings and marketing and sales strategies.
The
Company intends to operate in a highly competitive and highly regulated business
environment. The Company’s business can be expected to be affected by government
regulation, economic, political and social conditions, government’s response to
new and existing products and services, technological developments and the
ability to obtain and maintain patent and/or other intellectual property
protection for its products and intellectual property. The Company’s
actual results could differ materially from management’s expectations because of
changes both within and outside of the Company’s control. Due to such
uncertainties and the risk factors set forth herein, prospective investors are
cautioned not to place undue reliance upon such forward-looking
statements.
We
expect significant expenses and losses for the foreseeable future
The
Company has recently commenced operations and it can be expected that the
Company will incur significant operating expenses and will experience
significant losses in the foreseeable future. As a result, the Company cannot
predict when, if ever, it might achieve profitability and cannot be certain that
it will be able to sustain profitability, if achieved.
B6
Sigma’s audited financial statements express substantial doubt about its ability
to continue as a going concern, which may hinder its ability to obtain future
financing.
B6 Sigma’s financial statements for the
period ended February 28, 2010 have been prepared assuming that it will continue
as a going concern. B6 Sigma’s ability to continue as a going concern is raised
as a result of no revenues and recurring losses from operations since its
inception and working capital deficiency. B6 Sigma will continue to experience
net operating losses. Its ability to continue as a going concern is subject to
its ability to generate a profit and/or obtain necessary funding from outside
sources, increasing sales or obtaining loans from financial institutions where
possible. B6 Sigma’s continued net operating losses increase the difficulty in
meeting such goals and there can be no assurances that such methods will prove
successful.
If
we fail to hire a separate financial officer, we may become unable to implement
and monitor financial controls sufficient to ensure maximum profitability and
comply with applicable regulatory requirements, including certifications and
practices set forth in the Sarbanes Oxley Act of 2002 and related laws and
regulations governing accounting, financial and auditing standards and practices
designed to ensure accurate and transparent financial information regarding the
financial health and prospects of companies.
We
currently have no Chief Financial Officer (“CFO”) and it is unlikely we will
hire a CFO in the near future due to the expense of employing a CFO and our
current limited capital resources. James Stout, our Chairman and Treasurer, acts
as our principal accounting officer. Our accounting controls may be ineffective
and we may become unable to implement and monitor financial controls sufficient
to ensure maximum profitability and comply with applicable regulatory
requirements, including certifications and practices set forth in the Sarbanes
Oxley Act of 2002 and related laws and regulations governing accounting,
financial and auditing standards and practices designed to ensure accurate and
transparent financial information regarding the financial health and prospects
of companies, unless we obtain the services of a separate Chief Financial
Officer/Chief Accounting Officer.
We have not filed a registration
statement under the Securities Exchange Act of 1934, are not subject to
additional reporting requirements under the federal securities laws, including
the SEC’s proxy and information statement rules, and our officers, directors and
10% stockholders are not required to submit SEC reports on their stock ownership
and stock trading activity; as a result, our shareholders do not have the
ability to exercise a vote regarding material transactions or have the benefit
of reviewing information regarding our officers and directors ownership and
their transactions involving our securities, which could reduce the value of our
shares and the amount of publicly available information about
us.
We are
currently subject to SEC reporting requirements under Section 15(a) of the
Exchange Act. Because we have not filed a registration statement under Section
12 of the Exchange Act, we are not be subject to the proxy statement or other
information requirements of the Exchange Act and our officers, directors and
stockholders owning 10% or more of our outstanding shares are not required to
submit reports to the SEC on their stock ownership and stock trading activity
under Exchange Act Section 16, which provides for timely disclosure of insider
transactions. Our shareholders do not have the benefit of the following
information that would otherwise be important in making an investment decision
and could reduce the value of our shares: (a) voting for certain corporate
actions requiring shareholder approval, such as acquisitions, election or
approval of officers and directors; and (b) reviewing insider reports that
detail our officers and directors’ ownership and their trading
activity.
We have limited
financial resources and current capital and credit market conditions make it
difficult to raise capital
The
Company will require significant financial resources to fund its current and
future business operations. It is possible that our capital resources will be
insufficient to fund all of such requirements and that the Company will be
required to obtain additional capital in the future. As a result, the Company
may seek to access the capital markets to fund its capital needs. Declines and
uncertainties in the equity markets over the past few years have severely
restricted raising new capital and have affected companies’ ability to continue
to expand or fund operations. The general economic and capital market
conditions, both in the United States and worldwide have deteriorated
significantly and will adversely affect the Company’s access to capital and may
increase the cost of capital. If these economic conditions continue or become
worse, the Company’s future cost of equity or debt capital and access to the
capital markets could be adversely affected. As a result of the current volatile
and unpredictable global economic situation, there may also be a disruption or
delay in the performance of the Company’s third-party contractors and suppliers.
If such third-parties are unable to adequately satisfy their contractual
commitments to the Company in a timely manner, the Company’s business could be
adversely affected.
We
could incur damages if we are unable to meet contractual
obligations
Our
failure to comply with contract requirements or to meet our client's performance
expectations when performing a contract could materially and adversely affect
our financial performance and our reputation, which, in turn, would impact our
ability to compete for new contracts. Our failure to meet contractual
obligations could also result in substantial actual and consequential damages.
In addition, our contracts sometimes require us to indemnify clients for our
failure to meet performance standards. Some of our contracts may also contain
liquidated damages provisions and financial penalties related to performance
failures. We do not currently have liability insurance, and even if we do obtain
such insurance in the future, the policy limits may not be adequate to provide
protection against all potential liabilities.
We
have financial exposure for estimates on fixed price contracts since we are
required to complete a project even if the costs of a project exceed the
revenues we generate on the fixed price contract
We
currently have three fixed price contracts and expect to enter into both
fixed-price and performance-based contracts in the future. For fixed-price
contracts, we will receive a specified fee regardless of our cost to perform
under such contract. If we under-estimate the cost to complete a contract, we
will still be required to complete the work specified under such contract, which
could result in a loss to us. For performance-based contracts, we will receive
our fee on a per-transaction basis. To earn a profit on these contracts, we must
accurately estimate costs involved and assess the probability of meeting the
specified objectives, realizing the expected units of work or completing
individual transactions, within the contracted time period. We expect to
recognize revenues on these contracts, including a portion of estimated profit,
as costs are incurred. Therefore, if a contract is cancelled or re-negotiated
after work has been performed, previously recognized revenue would be reversed
and charged to earnings at that time. The reversal of previously recognized
revenue could adversely affect our financial results. In addition, we expect to
review these contracts quarterly and adjust revenues to reflect our current
expectations as to the total anticipated costs of each contract. These
adjustments may affect the timing and amount of revenue recognized and could
adversely affect our financial results.
We
will have to manage growth if we are successful in obtaining
contracts
Since we
are an early stage business with limited capital, management, administrative and
employee resources, any growth we experience will place significant demands on
our management as well as on our administrative, operational and financial
resources. If we do grow our business, we will be required to improve our
operational, financial and management information systems and expand, motivate
and manage our workforce. If our growth comes at the expense of providing
quality service and generating reasonable profits, our ability to successfully
bid for contracts and our profitability will be adversely affected.
Government
entities could terminate our contracts prior to completion, which could result
in revenue shortfalls and reduce profitability or losses on government
contracts
Many
government contracts contain base periods of one or more years, as well as
option periods covering more than half of the contract's potential duration.
Government agencies do not have to exercise these option periods. The
profitability of some of our contracts could be adversely impacted if the option
periods are not exercised. Our contracts will likely contain provisions
permitting a government client to terminate the contract on short notice, with
or without cause. The unexpected termination of significant contracts could
result in significant revenue shortfalls. If revenue shortfalls occur and are
not offset by corresponding reductions in expenses, our business could be
adversely affected. We cannot anticipate if, when or to what extent a client
might terminate its contracts with us.
Unions
may interfere with our ability to obtain contracts
Our
success will depend in part on our ability to win profitable contracts to
administer and manage programs that may have been previously administered by
government employees. Many government employees, however, belong to labor unions
with considerable financial resources and lobbying networks. Unions have in the
past and are likely to continue to apply political pressure on legislators and
other officials seeking to outsource government programs. Union opposition may
result in fewer opportunities for us to service government
agencies.
We are subject to
government audits and our failure to comply with
applicable laws,
regulations and standards that could subject us to civil and criminal penalties
and administrative sanctions, including termination of contracts, forfeitures of
profits, suspension of payments, fines and suspension or disqualification from
doing business with the government
The
government agencies we contract with have the authority to audit and investigate
our contracts with them. As part of that process, the government agency may
review our performance on the contract, our pricing practices, our cost
structure and our compliance with applicable laws, regulations and standards. If
the agency determines that we have improperly allocated costs to a specific
contract, we will not be reimbursed for those costs and we will be required to
refund the amount of any such costs which have been reimbursed. If a government
audit identifies improper activities by us or we otherwise determine that these
activities have occurred, we could be subject to civil and criminal penalties
and administrative sanctions, including termination of contracts, forfeitures of
profits, suspension of payments, fines and suspension or disqualification from
doing business with the government. Any adverse determination could adversely
impact our ability to bid for Requests for Proposals (RFPs) in one or more
jurisdictions.
Government
requests for proposals are time consuming to prepare
A
substantial portion of our clients will be state or local government
authorities. To market our services to government clients, we will likely be
required to respond to “RFP’s”. To do so effectively, we must estimate
accurately our cost structure for servicing a proposed contract, the time
required to establish operations and likely terms of the proposals submitted by
competitors. We must also assemble and submit a large volume of information
within an RFP's rigid timetable. Our ability to respond successfully to RFP’s
will greatly impact our business. We may not be awarded contracts through the
RFP process and our proposals may not result in profitable
contracts.
We
are dependent on our founders, who comprise the key members of our Management
team
The
Company depends on its senior executive officers as well as key scientific and
other personnel. The loss of any of these individuals could harm the Company’s
business and significantly delay or prevent the achievement of business
objectives. Our delivery of services will be labor-intensive. When we are
awarded a government contract, we may need to quickly hire project leaders and
case management personnel. The additional staff may also create a concurrent
demand for increased administrative personnel. The success of our business will
require that we attract, develop, motivate and retain:
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experienced
and innovative executive officers;
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senior
managers who have successfully managed or designed government services
programs in the public sector; and
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Information
technology professionals who have designed or implemented complex
information technology projects.
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Innovative,
experienced and technically proficient individuals are in great demand and are
likely to remain a limited resource. We may be unable to continue to attract and
retain desirable executive officers and senior managers. Our inability to hire
sufficient personnel on a timely basis or the loss of significant numbers of
executive officers and senior managers could adversely affect our
business.
We
rely on our relationship with Government Agencies to obtain
contracts
To
facilitate our ability to prepare bids in response to RFPs, we expect to rely in
part on establishing and maintaining relationships with officials of various
government entities and agencies. These relationships will enable us to provide
informal input and advice to the government entities and agencies prior to the
development of an RFP. We also expect to engage marketing consultants, including
lobbyists, to establish and maintain relationships with elected officials and
appointed members of government agencies. The effectiveness of these consultants
may be reduced or eliminated if a significant political change occurs. We may be
unable to successfully manage our relationships with government entities and
agencies and with elected officials and appointees and any failure to do so may
adversely affect our ability to bid successfully for RFPs.
Our
services are subject to Legislative changes
The
market for our services depends largely on federal and state legislative
programs. These programs can be modified or amended at any time by acts of
federal and state governments. Further, if additional programs are not proposed
or enacted, or if previously enacted programs are challenged, repealed or
invalidated, our growth strategy could be adversely impacted.
We
may make acquisitions in the future that we are unable to effectively manage
given our limited resources
We may
choose to grow our business by acquiring other entities. We may be unable to
manage businesses that we have acquired or integrate them successfully without
incurring substantial expenses, delays or other problems that could negatively
impact our results of operations. Moreover, business combinations involve
additional risks, including:
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·
|
diversion
of management's attention;
|
|
|
·
|
assumption
of unanticipated legal or financial
liabilities;
|
|
|
·
|
our
becoming significantly leveraged as a result of the incurrence of debt to
finance an acquisition;
|
|
|
·
|
unanticipated
operating, accounting or management difficulties in connection with the
acquired entities;
|
|
|
·
|
amortization
of acquired intangible assets, including goodwill;
and
|
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|
·
|
dilution
to existing shareholders and our earnings per
share.
|
Also,
client dissatisfaction or performance problems with an acquired firm could
materially and adversely affect our reputation as a whole. Further, the acquired
businesses may not achieve the revenues and earnings we
anticipated.
Because
we have limited capital resources, we expect to be dependent on cash flow and
payments from customers in order to meet our expense obligations
A number
of factors may cause our revenues, cash flow and operating results to vary from
quarter to quarter, including:
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·
|
the
progression of contracts;
|
|
|
·
|
the
levels of revenues earned on fixed-price and performance-based contracts
(including any adjustments in expectations for revenue recognition on
fixed-price contracts);
|
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·
|
the
commencement, completion or termination of contracts during any particular
quarter;
|
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·
|
the
schedules of government agencies for awarding
contracts;
|
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|
·
|
the
term of awarded contracts; and potential
acquisitions.
|
Changes
in the volume of activity and the number of contracts commenced, completed or
terminated during any quarter may cause significant variations in our cash flow
from operations because a significant portion of our expenses are fixed.
Fixed expenses include, rent, payroll, insurance, employee benefits, taxes
and other administrative costs and overhead. Moreover, we expect to incur
significant operating expenses during the start-up and early stages of large
contracts and typically do not receive corresponding payments in that same
quarter.
We
have significant competition in bidding for government contracts from large
national and international organizations
The
consulting industry and in particular the government contracting industry is
subject to intense competition. Many of our competitors are national and
international in scope and have greater resources than we have. Substantial
resources could enable certain competitors to “low-bid” on contract RFP’s or
take other measures in an effort to gain market share. In addition, we may be
unable to compete for the limited number of large contracts because we may not
be able to meet an RFP's requirement to obtain and post a large cash performance
bond. Also, in some geographic areas, we face competition from smaller
consulting firms with established reputations and political relationships. We
may be unable to compete successfully against our existing or any new
competitors.
The Company must
keep up with new and rapidly evolving technologies
Some of
the Company’s activities involve developing products or processes that are based
upon new, rapidly evolving technologies. The ability to commercialize these
technologies could fail for a variety of reasons, both within and outside of the
Company’s control.
We depend upon our intellectual
property and proprietary rights and are subject to claims for patent
infringement
The
Company’s success in part depends on its ability to maintain the proprietary
nature of its technology and other trade secrets. To do so, the Company will be
required to prosecute and maintain patents, obtain new patents and pursue trade
secret and other intellectual property protection. The Company has obtained one
utility patent-pending and two provisional patents-pending from its Asset
Purchase Agreement with TMC, Inc. Additionally it has two provisional
patents that it seeks to file within 2010. The Company also must operate
without infringing the proprietary rights of third parties or allowing third
parties to infringe its rights. The Company’s research, development and
commercialization activities may infringe or be claimed to infringe patents
owned by third parties and to which the Company does not hold licenses or other
rights. There may be rights that the Company is not aware of, including
applications that have been filed but not published that, when issued, could be
asserted against the Company. These third parties could bring claims against the
Company that would cause it to incur substantial expenses and, if successful,
could cause the Company to pay substantial damages. In addition, Competitors may
infringe the Company’s patents or the patents of its collaborators or licensors.
As a result, the Company may be required to file infringement claims to counter
infringement for unauthorized use. This can be expensive and time-consuming. In
addition, in an infringement proceeding, a court may decide that a patent owned
by the Company is not valid or is unenforceable, or may refuse to stop the other
party from using the technology at issue on the grounds that the Company’s
patents do not cover its technology. An adverse determination of any litigation
or defense proceedings could put one or more of the Company’s patents at risk of
being invalidated or interpreted narrowly and could put the Company’s patent
applications at the risk of not issuing.
Furthermore,
because of the substantial amount of discovery required in connection with
intellectual property litigation, there is a risk that some of the Company‘s
confidential information could be compromised by disclosure during this type of
litigation.
We
do not expect to pay dividends
B6 Sigma
has never paid cash dividends on its common stock and it can be expected that
neither B6 Sigma nor Framewaves will pay any dividends in the foreseeable
future. Earnings, if any, will likely be retained for use in the development of
the Company’s business.
There
are no restrictions on our activities
Neither
the terms of the Common Stock nor any other agreement restricts the activities
of the Company with respect to borrowing for any purpose, use of its assets,
encumbrance of future income to secure Company obligations or debts, or the
acquisition of assets of any kind or nature. In addition, our executive
officers of B6 Sigma will have broad discretion in allocating our capital
resources, which could create uncertainty for shareholders and could adversely
affect the Company’s financial condition and future results of
operations.
The
Company is at risk for uninsured losses
The
Company will attempt to arrange for insurance to protect against losses. In
addition, some or all of the Company’s customers may require insurance as a
requirement to conduct business with the Company. However, there are certain
types of losses that may not be insurable at a cost that the Company can afford,
or at all. The lack of adequate insurance could adversely affect the Company’s
ability to conduct business and could put the Company at risk of loss for any
uninsured loss, which would adversely affect the Company.
O
ur common stock may be
deemed
"Penny Stock" and subject to rules of the SE that could limit the
Market for our stock
The SEC
has adopted Rule 15g-9 which establishes the definition of a “penny stock” as
any equity security that has a market price of less than $5.00 per share or with
an exercise price of less than $5.00 per share, subject to certain exceptions.
For any transaction involving a penny stock, unless exempt, the rules require
that a broker or dealer approve a person’s account for transactions in penny
stocks; and the broker or dealer receive from the investor a written agreement
to the transaction, setting forth the identity and quantity of the penny stock
to be purchased.
In order
to approve a person’s account for transactions in penny stocks, the broker or
dealer must obtain financial information and investment experience objectives of
the person; and make a reasonable determination that the transactions in penny
stocks are suitable for that person and the person has sufficient knowledge and
experience in financial matters to be capable of evaluating the risks of
transactions in penny stocks.
The
broker or dealer must also deliver, prior to any transaction in a penny stock, a
disclosure schedule prescribed by the SEC relating to the penny stock market,
which, in highlight form sets forth the basis on which the broker or dealer made
the suitability determination; and that the broker or dealer received a signed,
written agreement from the investor prior to the transaction. Generally, brokers
may be less willing to execute transactions in securities subject to the “penny
stock” rules.
Disclosure
also has to be made about the risks of investing in penny stocks in both public
offerings and in secondary trading and about the commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and the rights and remedies available to an investor in cases of
fraud in penny stock transactions. Finally, monthly statements have to be sent
disclosing recent price information for the penny stock held in the account and
information on the limited market in penny stocks.
Thus,
even though our securities are quoted on the OTC Bulletin Board, they may not
trade on a regular basis, and may have limited to no daily trading volume. There
can be no assurance that a regular, sustained market will ever develop for our
securities.
Our
securities are considered highly speculative
Our
securities must be considered highly speculative, generally because of the
historic lack of any material business and the current status of our recent
Reorganization. We have neither generated any material revenues nor have
we realized a profit from our operations to date and there is no assurance that
we will operate on a profitable basis. Since we have not generated any
material revenues and have only limited capital, we expect that we will need to
raise additional monies through the sale of our equity securities or debt in
order to effectuate our business plan and continue our business
operations.
FINRA
sales practice requirements may also limit a shareholder’s ability to buy and
sell our stock
In
addition to the “penny stock” rules described above, FINRA has adopted rules
that require that in recommending an investment to a customer, a broker-dealer
must have reasonable grounds for believing that the investment is suitable for
that customer. Prior to recommending speculative low priced securities to
their non-institutional customers, broker-dealers must make reasonable efforts
to obtain information about the customer’s financial status, tax status,
investment objectives and other information. Under interpretations of
these rules, FINRA believes that there is a high probability that speculative
low priced securities will not be suitable for at least some customers.
FINRA’s requirements make it more difficult for broker-dealers to recommend that
their customers buy our common stock, which may limit your ability to buy and
sell our stock and have an adverse effect on the market for our
shares.
Our
common stock has been thinly traded and, as a result, you may be unable to sell
at or near ask prices or at all if you need to liquidate your
shares
The
shares of our common stock have been, and may continue to be, thinly-traded on
the OTC Bulletin Board, meaning that the number of persons interested in
purchasing shares at or near ask prices at any given time may be relatively
small or non-existent. This situation is attributable to a number of
factors, including the fact that we are a small company that is relatively
unknown to stock analysts, stock brokers, institutional investors, and others in
the investment community that generate or influence sales volume and, that even
if we came to the attention of such persons, they tend to be risk-averse and
would be reluctant to follow an unproven company such as ours or purchase or
recommend the purchase of our shares of common stock until such time as we
become more seasoned and viable. As a consequence, there may be periods of
several days or more when trading activity in our shares of common stock is
minimal or non-existent, as compared to a seasoned issuer that has a large and
steady volume of trading activity that will generally support continuous sales
without an adverse effect on Securities price. It is possible that no
active public trading market for our shares of common stock will develop or be
sustained or that any trading levels will be sustained. Due to these
conditions, we cannot provide any assurances that our shareholders will be able
to sell their shares at or near ask prices or at all.
In the
past, following periods of volatility in the market price of a company’s
securities, securities class-action litigation has often been instituted.
Such litigation, if instituted, could result in substantial costs for us and a
diversion of management’s attention and resources.
The
price of our common stock could be highly volatile
It is
likely that our common stock will be subject to price volatility, low volumes of
trades, and large spreads in bid and ask prices quoted by market makers.
Due to the low volume of shares that may be traded on any trading day, persons
buying or selling in relatively small quantities may easily influence prices of
our common stock. This low volume of trades could also cause the price of
our stock to fluctuate greatly, with large percentage changes in price occurring
in any trading day session. Holders of our common stock may also not be
able to liquidate their investment readily or may be forced to sell at depressed
prices due to low volume trading. If high spreads between the bids and ask
prices of our common stock exist at the time of a purchase, the price of the
common stock would need to appreciate substantially on a relative percentage
basis for an investor to recoup an investment in our shares. Broad market
fluctuations and general economic and political conditions may also adversely
affect the market price of our common stock. No assurance can be given
that an orderly and active market in our common stock will develop or be
sustained. If an orderly and active market does not develop, holders of
our common stock may be unable to sell their shares, if at all.
Rule
144 sales in the future may have a depressive effect on the price of our common
stock
A
pproximately 242,718,300
of the approximately 313,667,400 shares of our common stock constitute
“restricted securities” within the meaning of Rule 144 under the Securities Act
of 1933, as amended. As restricted shares, they may be resold only
pursuant to an effective registration statement or under the requirements of
Rule 144 (if and when it is available as a resale exemption for the Shares) or
other applicable exemptions from registration under the Securities Act and as
required under applicable state securities laws. In essence, Rule 144
provides that a person who has held restricted securities for six months may,
under certain conditions, sell restricted securities without any volume
limitations. For our Company, the time period is not less than one
year from the date of this Report on Form 8-K. A sale under Rule 144
or under any other exemption from such Act may have a depressive effect upon the
price of the common stock in any market that may develop
.
Investors’
interests in us will be diluted and investors may suffer dilution in net book
value per share if we issue additional shares or raise funds through the sale of
equity securities
We expect
to be required to issue additional shares or enter into private placements to
raise financing through the sale of equity securities, pursuant to which our
shareholders will be diluted and may suffer dilution in their net book value per
share depending on the price at which such securities are sold. If we
issue any such additional shares, such issuances also will cause a reduction in
the proportionate ownership and voting power of all other shareholders. Further,
any such issuance may result in a change in our control.
Our
Bylaws contain provisions indemnifying our officers and directors against all
costs, charges, and expenses incurred by them
Our
Bylaws contain provisions with respect to the indemnification of our officers
and directors against all costs, charges, and expenses, including an amount paid
to settle an action or satisfy a judgment, actually and reasonably incurred by
an officer or director, including an amount paid to settle an action or satisfy
a judgment in a civil, criminal, or administrative action or proceeding to which
he is made a party by reason of being or having been one of our directors or
officers.
Our
Bylaws do not contain anti-takeover provisions, which could result in a change
of our management and directors if there is a take-over of us
We do not
currently have a shareholder rights plan or any anti-takeover provisions in our
Bylaws. Without any anti-takeover provisions, there is no deterrent for a
take-over of our Company, which may result in a change in our management and
directors.
We
may incur significant costs to ensure compliance with U.S. corporate governance
and accounting requirements
We may
incur significant costs associated with our public company reporting
requirements, costs associated with applicable corporate governance
requirements, including requirements under the Sarbanes-Oxley Act of 2002 and
other rules implemented by the Securities and Exchange Commission. We expect all
of these applicable rules and regulations to significantly increase our legal
and financial compliance costs and to make some activities more time consuming
and costly. We also expect that these applicable rules and regulations may make
it more difficult and more expensive for us to obtain director and officer
liability insurance and we may be required to accept reduced policy limits and
coverage or incur substantially higher costs to obtain the same or similar
coverage. As a result, it may be more difficult for us to attract and retain
qualified individuals to serve on our board of directors or as executive
officers.
MANAGEMENT'S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
Forward-Looking
Statements
The
following discussion may contain certain forward-looking statements. Such
statements are not covered by the safe harbor provisions. These statements
include the plans and objectives of management for future growth of the Company,
including plans and objectives related to the consummation of acquisitions and
future private and public issuances of the Company's equity and debt securities.
The forward-looking statements included herein are based on current expectations
that involve numerous risks and uncertainties. Assumptions relating to the
foregoing involve judgments with respect to, among other things, future
economic, competitive and market conditions and future business decisions, all
of which are difficult or impossible to predict accurately and many of which are
beyond the control of the Company. Although the Company believes that the
assumptions underlying the forward-looking statements are reasonable, any of the
assumptions could be inaccurate and, therefore, there can be no assurance that
the forward-looking statements included in this report will prove to be
accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such information
should not be regarded as a representation by the Company or any other person
that the objectives and plans of the Company will be achieved.
The words
“we,” “us” and “our” refer to the Company. The words or phrases “would be,”
“will allow,” “intends to,” “will likely result,” “are expected to,” “will
continue,” “is anticipated,” “estimate,” “project,” or similar expressions are
intended to identify “forward-looking statements.” Actual results could differ
materially from those projected in the forward looking statements as a result of
a number of risks and uncertainties, including but not limited to: (a) limited
amount of resources devoted to achieving our business plan; (b) our failure to
implement our business plan within the time period we originally planned to
accomplish; (c) our strategies for dealing with negative cash flow; and (d)
other risks that are discussed in this report or included in our previous
filings with the Securities and Exchange Commission.
THE
FOLLOWING PRESENTATION OF OUR MANAGEMENT’S DISCUSSION AND ANALYSIS SHOULD BE
READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND OTHER FINANCIAL
INFORMATION INCLUDED ELSEWHERE IN THIS REPORT.
Overview
B6 Sigma,
Inc. (“B6 Sigma”) was founded to develop and commercialize novel and unique
manufacturing and materials technologies. It is the belief of Management
that this technology will fundamentally redefine conventional manufacturing
practices. This technology is referred to as In Process Quality Assurance
(IPQA
®
hereinafter “IPQA”). IPQA is a dramatic new approach to significantly
increase manufacturing quality worldwide, by providing sensor-based, real-time,
on-machine assessment of part and process quality, to improve throughput and
reduce scrap and the need for time consuming inspections. Provisional and
Utility patents have been filed for this technology.
B6 Sigma
is comprised of leading scientists and engineers formerly employed by the
Los Alamos National Laboratory. All members of the top management
group have high-level security clearances. Management intends to pursue
agreements to aggressively commercialize and develop advanced
sensing, software, materials technologies and other unique manufacturing
processes for the defense, aerospace, and general industries. B6
Sigma employs engineers and technicians with core competencies in the areas of
materials and joining, manufacturing, manufacturing quality assurance, and
software and hardware development.
Richard
Mah, James Stout, Mark Cola and Vivek Dave, four members of B6 Sigma’s
Management Team, worked together at Beyond Six Sigma, Inc. (“Beyond”) prior to
forming B6 Sigma. B6 Sigma purchased the assets of Beyond in April 2010 by
delivery to Beyond of an aggregate of 24,000 shares of Beyond’s common stock and
300,000 vested and unvested options to acquire shares of Beyond’s common stock
owned by Daniel Hartman, Mark Cola and Vivek Dave valued at $81,840 in the
aggregate. B6 Sigma acquired equipment, inventory, prepaid expenses, contracts,
licenses and leases and intellectual property as part of this
transaction.
It is the
intent of management that IPQA technologies are incorporated into, at minimum,
existing and next-generation OEM welding machine tools. In so doing, it is
expected that such machine tools will contain the latest, most advanced quality
inspection technology giving certain OEM’s a competitive advantage over their
competitors. To that extent, management has been in high-level discussions
with several national and international OEM manufacturers to embed IPQA
technology into OEM machine tools, and to represent their current and
next-generation production technologies in the Americas as well as pursue
additional process development and commercialization efforts. Management
has invested in this market segment by initially entering into equipment user
agreements with certain industry-leading machine tool OEM’s to co-evaluate the
merits of IPQA technology for their entire product line. It is expected
that such ventures may lead to the sale of IPQA products and services to both
existing and installed machine tool base as well as product sales for future
machine tools.
The core
competencies that comprise IPQA allow B6 Sigma to also combine advanced
manufacturing techniques with novel materials to achieve breakthrough product
potential in many industries including aerospace, defense, oil and gas,
prosthetic implants, sporting goods, and power generation. Amongst other
programs, a number of proprietary and patent-pending technologies are in
place including:
Electron
Beam Direct Manufacturing (“EBDM”) – B6 Sigma is developing a control system for
EBDM which will enable significant reductions in weight and part costs for
titanium aerospace components on both military and commercial aircraft.
Utility patents have been filed for this technology.
Advanced
Reactive Materials and Structures (“ARMS™ hereinafter “ARMS”) – This system is
being designed to create a new generation of 21st Century weapons resulting
in up to 50 percent less weight for missiles and bombs while delivering
more energy on target and reducing collateral damage in the process.
Utility patents have been filed for this technology.
O
n
September 13 2010, we closed a stock exchange transaction pursuant to which we
acquired all of the common stock interests of B6 Sigma. The purchase
price included (i) a private offering of $1,000,000 of B6 Sigma’s common stock
contemporaneous with the closing of the Framewave (“FWAV”) share exchange, which
included the conversion of $300,000 of previously issued convertible notes by B6
Sigma into the private offering; and (ii) at the closing, B6 Sigma also acquired
and cancelled 738,000 (Pre-Forward Split) shares of FWAV common stock from three
FWAV shareholders
.
Results
of Operations
For
the period February 5, 2010 through June 30, 2010
B6 Sigma was organized on February 5,
2010 and began operations on the same day. On February 19, 2010, B6 Sigma signed
and accepted a new contract from the US Air Force Materials Research Laboratory
for the amount of $749,692. This project involves development and
commercialization of a closed loop process control technology for electron beam
direct manufacturing (“EBDM”).
During this time period, we were in
negotiations with the US Army Development, Engineering and Armament Command
(“ARDEC”) for the receipt of contract funds to develop the ARMS
technology. Subsequently, B6 Sigma received a contract in the amount of
$135,987 to demonstrate proof-of-concept for the basic elements of ARMS
technology. We also received revenues in the amount $30,167 from an engineering
services contract with the Pratt and Whitney Division of United
Technologies. We applied our patent-pending IPQA
technology
to assist in developing a next-generation welding and joining technology for
military aircraft engine repair.
Other contracts involving our IPQA
technology included an engineering services contract in which revenues in the
amount of $14,086 were received from Honeywell for the application of IPQA to
advanced manufacturing for aero-engines. An additional engineering services
contract generated revenues in the amount of $18,414 which involved IPQA
process
development activities for the US Air Force for development of closed-loop
feedback control for gas metal arc welding (“GMAW”) of titanium. These
final revenues successfully completed and closed a contract with a total funding
level of $749,728.
The US
Air Force contract referenced above was a contract performed entirely by the
technical and managerial staff of B6 Sigma, but it was awarded to Technology
Management Company (TMC) and completed before the novation of the contract to B6
Sigma except for the final payment of $18,414. The contract is separate
and distinct from the one referenced above under Results of
Operations.
During the start up and initial
operating phase of the company, we incurred usual and customary expenses of
$216,312 including but not limited to the following costs; lease, utilities,
office expenses and supplies, salaries, benefits, insurance, travel expenses,
equipment rental, consulting and professional fees, computer hardware and
software.
Financial
Condition and Liquidity
A
t June
30, 2010, we had positive working capital of $25,969. We have raised
$1,000,000 through the sale of 50,825,000 shares of our common stock, but this
is not sufficient to meet our current and future cash
requirements. We are continuing to attempt to raise additional funds
through sales of common stock, but there are no assurances that we will raise
sufficient amounts to meet our current needs
.
The initial private placement funding
and accounts receivables are anticipated to sustain the company for
approximately six months. An additional $1,500,000 of funding will be
required to meet its planned and future cash needs. Our specific spending
commitments and funding requirements are geared towards an aggressive expansion
of clients and revenue. Apart from our commitments related to our
contracts, we have ongoing commitments for normal business expenses, including
salaries, benefits, lease costs and alike, and have made no other long term
financial commitments pending receipt of additional funding. Should we not
we receive any additional funds, our priorities will be to complete our existing
contracts including payroll related expenses related to the performance of that
work. Our attempts to expand and develop new products and services will be
performed on a best efforts basis. The intellectual capacity of our
company will remain intact and will support our ongoing efforts to keep the
company viable.
Off-Balance
Sheet Arrangements
We had no off-balance sheet
arrangements at June 30, 2010.
DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The
following table sets forth information regarding directors and executive
officers of the Company, including their ages as of November 5, 2010. All of our
directors will hold office for the remainder of the full term and until their
successors are duly elected and qualified. Executive officers serve at the
request of the Board of Directors.
Management
and Directors
The
Officers and Directors of the Company and B6 Sigma are as follows:
|
Name
|
|
Age
|
|
Position
|
|
Richard
Mah
|
|
62
|
|
CEO
and Director
|
|
James
Stout
|
|
72
|
|
Treasurer
and Chairman of the Board of Directors
|
|
Mark
Cola
|
|
50
|
|
President
and Director
|
|
Vivek
Dave
|
|
42
|
|
Executive
Vice President and Director
|
|
Valerie
Vekkos
|
|
53
|
|
Secretary
and Director
|
Richard
Mah, CEO and Director
Richard
Mah worked as a Vice President for TMC from 2006 to 2010. Prior to working
for TMC until he retired in 2006, Mr. Mah worked for Los Alamos National
Laboratory (“LANL”) as the Associate Laboratory Director for Weapons Engineering
and Manufacturing. Mr. Mah was the senior executive responsible for
overseeing the engineering and manufacturing aspects of the nuclear weapons
program to fulfill the stockpile stewardship mission at LANL. These
organizations were comprised of over 1900 technical and support personnel with
an annual budget exceeding $800M.
In over
30 years at the Laboratory, Mr. Mah managed two non-nuclear materials technology
research groups in metallurgy and in polymers and coatings and has had oversight
of four large research facilities. He directed the Nuclear Weapons Complex
Reconfiguration Program tasked with restructuring the nation’s post-Cold War
weapons complex. He managed the Advanced Technology Assessment Center with
responsibility for the largest conventional ordnance and advanced
armor/anti-armor research program in the country. In various assignments
he also had product engineering responsibility for five nuclear weapons systems
at Los Alamos and, before that, one Livermore system as a senior engineer at
Dow’s Rocky Flats plant. In 2003, Richard successfully led Los Alamos to
manufacture the first certifiable Plutonium “PIT” allowing the US to manufacture
nuclear weapons for the first time since the manufacturing shut down of Rocky
Flats in 1989. From 2004 to 2006, Mr. Mah reported to the University of
California’s office of the President as the Acquisition Manager in the
successful competition for the Los Alamos National Laboratory contract
competition.
Mr. Mah
has received the Federal Laboratory Consortium special award for excellence, the
LANL distinguished Performance Award, the DOE Award of Excellence in
acknowledgement of his management and engineering accomplishments and in 2006
was given a special University of California award for his performance in
winning the Los Alamos National Laboratory contract. He has also been
recognized for his commitment to employees with a Diversity Award and an
Outstanding Mentor Award.
Mr. Mah
received a B.S. in Theoretical and Applied Mechanics and an M.S. in
metallurgical engineering from the University of Illinois. He is a
registered professional engineer through the state of California.
James
Stout, Chairman of the Board of Directors
James Stout served as a Vice President
of TMC from May, 2006 to April, 2010. In his current position, Mr. Stout
remains intimately aware of the major initiatives of the Department of Energy
related to operation of its facilities throughout the United States. His
participation in national security issues also continues. He served as an
advisor to the Strategic Advisory Committee of the Commander, U.S. Strategic
Command for the past decade, with emphasis on global strategic issues including
regional conflicts, nonproliferation and deterrence in the post-soviet era. He
has served for six years (under the past three laboratory directors) as a member
of the Los Alamos Director’s Senior Advisory Group.
Mr. Stout’s career with the Department
of Energy spanned 30 years concluding with his appointment as Chief Counsel,
Albuquerque Operations Office In this capacity, Mr. Stout served in a
variety of roles related to the operation of the Nuclear Weapons Complex
including that of lead negotiator for the contracts for operation of the
Berkeley, Los Alamos, and Livermore National Laboratories, senior advisor
relating to the contracts for operation of the Sandia National Laboratories as
well as those concerning the management and operation of the remainder of the
production complex. Serving as a member of the senior management staff of
the Albuquerque Operations Office, Mr. Stout performed a variety of managerial
and special roles including Acting Manager and Deputy Manager, Special Advisor
to the UK Ministry of Defense in the successful effort to convert from civilian
to contractor operation, member of the US Delegation to the highly successful
Nuclear Testing Talks in Geneva Switzerland, and as Special Assistant (DP3) to
the Assistant Secretary for Defense Programs at the Headquarters of the
DOE.
Mr. Stout recently served on two
system-wide evaluations of Safeguards and Security on behalf of the Secretary of
the U.S. Department of Energy and the Administrator of the National Nuclear
Security Administration, and as an advisor to the Chiles Commission on
Maintaining United States Nuclear Weapons Expertise. Mr. Stout has provided
substantive support for major procurement efforts within the DOE complex
including recent contracts for operation of the Idaho National Engineering
Laboratory, Los Alamos National Laboratory, the Berkeley National Laboratory and
the Pantex nuclear weapons production facility. In 2009, he led a TMC team
engaged in the performance of a security assessment of nuclear sites in the
UAE.
Education
and Professional Licensure:
J.D.,
Drake University, Des Moines, Iowa, 1963
B.S.,
Business Administration, State University of Iowa, Iowa City, IA,
1960
Bar of
the States of New Mexico and Iowa
Military
Service- Judge Advocate, United States Air Force, 1963-1966
Mark Cola,
President, Chief Operating Officer
and Director
Mark Cola
worked as a Director of Operations for Beyond6 Sigma Division of TMC from June
2006 to April 2010. Mr. Cola has over 26 years of experience in the
aerospace and nuclear industries at Rockwell International, SPECO Division of
Kelsey-Hayes Co., Westinghouse in the Naval Nuclear Reactors Program, Houston
Lighting & Power and within the NNSA Weapons Complex at Los Alamos National
Laboratory as well as private consulting and Beyond6 Sigma. He has also worked
as a Research Engineer at Edison Welding Institute and for Stoody Alloys, a
leading manufacturer of wear-resistant materials. Mr. Cola has extensive
aerospace experience having worked on the Rockwell B1-B Strategic bomber
airframe fabrication as a Materials & Process Engineer. At the Beyond6
Sigma, Mr. Cola has worked with a wide range of clients ranging from aerospace
to defense systems. His expertise is in manufacturing process development,
friction welding, light alloys such as titanium and aluminum, mechanical,
physical and welding metallurgy, and nickel-based superalloys for harsh
environments.
Related
Work Experience:
|
|
·
|
Has
developed and deployed adaptive control systems for GMAW, GTAW, and
friction welding
|
|
|
·
|
Metallurgical
engineering development of similar and dissimilar material welds for a
variety of commercial, defense and nuclear
applications.
|
|
|
·
|
Extensive
defense product realization experience ranging from complex gear-trains
for helicopters to nuclear reactors components for subs and aircraft
carriers to airframes for the B-1B to ‘war reserve-WR’ nuclear weapon
stockpile components.
|
|
|
·
|
Co-Organizer
of SLIM II –
Small Lot
Intelligent Manufacturing Conference II
, Sept.
2005.
|
|
|
·
|
Technical
Co-Chairman for the inaugural
NNSA Future Technologies
Conference
, May 2004.
|
|
|
·
|
Member,
Edison Welding Institute—
Industrial Advisory Board of
Directors
.
|
|
|
·
|
Former
Team Leader, Welding and Joining Science and Technology, Los Alamos
National Laboratory.
|
|
|
·
|
Former
Deputy Group Leader, Weapon Component Technology, Los Alamos National
Laboratory.
|
|
|
·
|
Former
Group Leader, Manufacturing Science and Technology, Los Alamos National
Laboratory.
|
Education:
The
Ohio State University
MS
Welding Engineering
BS
Metallurgical Engineering
Vivek
Dave, Executive Vice President and Director
Vivek
Dave worked as Director of Business Development for Beyond6 Sigma Division of
TMC from June 2006 to April 2010. Dr. Dave has extensive aerospace
experience especially in the jet engine business. While at Pratt & Whitney /
United Technologies (UTC), he developed proven on-the-floor troubleshooting
experience working closely with mfg. customers and union employees to resolve
production welding, brazing, and heat treat quality issues. He was on the team
that successfully developed and deployed adaptive process control for welding of
parts for the F-22 Raptor’s engines. He was also selected for the UTC
Advanced Studies Training Program, the United Technologies Corp. flagship
program for training technical leaders. Within the NNSA Weapons Program at LANL,
Dr. Dave held various technical and managerial positions including Group Leader
of a Manufacturing Technology Development Group as well as Director, Los Alamos
Manufacturing Sciences Institute. At Beyond6 Division of TMC, Inc. Dr. Dave has
worked with a wide range of clients ranging from renewable energy to defense
systems. His expertise is in solid state joining, materials engineering, fusion
welding, electron beam processing, reduced order process modeling, and designing
manufacturing processes around the Predictive Process Dynamics
Approach.
Related
Work Experience
|
|
·
|
Extensive
market and client development with proven revenue generation with clients
across the world – North America, Europe, and South
Asia.
|
|
|
·
|
Has
developed adaptive control schemes for fusion and friction welding in the
aerospace industry
|
|
|
·
|
Extensive
production experience with GTAW, GMAW, and brazing in aerospace
mfg.
|
|
|
·
|
Led
first ever Kaizen event in an NNSA Nuclear Facility—documented savings of
$Ms in foundry operations.
|
|
|
·
|
Co-organizer
of first SLIM Conference -
Small Lot Intelligent
Manufacturing
– bringing together industry and government
manufacturing leaders, Sept. 2003.
|
|
|
·
|
Achieved
American Welding Society Award for Best Original Contribution to Brazing
Technology in 2001.
|
Education:
Massachusetts
Institute of Technology
Ph.D.
Materials Engineering, Minor in Mathematics
MS
Materials Engineering
California
Institute of Technology
BS with
Honor, Engineering and Applied Science
Valerie
Vekkos, Secretary and Director
Ms.
Vekkos has been providing consulting services to corporate clients since 1999.
Ms. Vekkos currently provides consulting services to small and start-up
businesses through Zephyr Equities, Inc. a corporation she owns and controls.
Ms. Vekkos is currently the President and a Director of CT Holdings, Inc., a
publically held shell company that is currently seeking an acquisition or merger
candidate. Recent projects that Ms. Vekkos has consulted on are as
follows:
Counterpoint
Software, Inc.
|
|
·
|
Restructured
Office Policies and Procedures.
|
|
|
·
|
Reviewed
legal contracts.
|
|
|
·
|
Handled
employee disputes and devised record keeping procedures to comply with
Department of Labor.
|
|
|
·
|
Worked
closely with CPA to establish an accounting system to include job
costing.
|
Xenonics
Holdings, Inc. 2003-2007
Investor
Relations
Assistant
to the Chairman
|
|
·
|
Assisted
Chairman with day-to-day duties of publically traded
company.
|
|
|
·
|
Responsible
for interaction with shareholders, prospective investors for a publically
traded company.
|
|
|
·
|
Liaison
with CFO and Corporate Counsel on certain SEC
filings.
|
|
|
·
|
Preparation
and management of stock options and
warrants.
|
|
|
·
|
Maintained
and updated AMEX applications.
|
|
|
·
|
Coordinated
Annual Shareholders meeting.
|
|
|
·
|
Lead
contact with the Transfer Agent on all shareholder issues, including 144
and 144k stock.
|
|
|
·
|
Worked
directly with marketing company press
releases.
|
Dismantlement
Consultants, Ltd., Inc. 1990-1998
Vice-President
(1990 – 1996); President (1996 – 1998)
|
|
·
|
Family
owned industrial demolition and asbestos abatement
company.
|
|
|
·
|
Reviewed
legal documents, participated in resolution of legal disputes, and
developed company policies and
procedures.
|
|
|
·
|
Managed
employee/client relations and
negotiations.
|
|
|
·
|
Handled
401K plans, health benefits, Workers’ Compensation training and claims,
as
well as
company-wide liability, automobile, health and disability
insurance.
|
|
|
·
|
Cultivated
public and employee relations, including the coordination of community
functions, and charity events.
|
Education:
University
of San Diego, School of Law,
Juris
Doctor, February 1989
Glassboro
State College, Glassboro, NJ
B.A.,
Economics, 1984
Professional
Licenses
State
Bar of California, admitted 1990
State Bar
of Pennsylvania, admitted 1991
State Bar
of New Jersey, admitted 1992
California
Real Estate Broker’s License
since 2004
Involvement
in Legal Proceedings
During
the past ten years, no officer or director of the Company has:
(1)
Petitioned for bankruptcy or had a bankruptcy petition filed by or against any
business of which such person was a general partner or executive officer either
at the time of the bankruptcy or within two years prior to that
time;
(2) Been
convicted in a criminal proceeding or is currently subject to a pending criminal
proceeding (excluding traffic violations and other minor offenses);
(3) Been
subject to any order, judgment or decree, not subsequently reversed, suspended
or vacated, of any court of competent jurisdiction, permanently or temporarily
enjoining, barring, suspending or otherwise limiting his involvement in any type
of business, securities or banking activities; or
(4) Been
found by a court of competent jurisdiction (in a civil action), the SEC or the
Commodity Futures Trading Commission to have violated a federal or state
securities or commodities law, and the judgment has not been reversed, suspended
or vacated.
Directorships
Compliance
with Section 16(a) of the Exchange Act
Directors
hold office until the next annual meeting of the shareholders of the Company or
until their successors have been elected and qualified. Officers are elected
annually and serve at the pleasure of the Board of Directors. The Company’s
officers and directors are not required to file Reports under Section 16(a) of
the Securities Exchange Act of 1934, as amended.
Code
of Ethics
We have
not yet adopted a code of ethics. We intend to adopt a code of ethics in the
near future.
EXECUTIVE
COMPENSATION
No
officer or director of the Company has received, or was entitled to receive,
compensation from the Company during the fiscal year ended December 31,
2009.
The
Company has no compensatory plans or arrangements whereby any executive officer
would receive payments from the Company or a third party upon his resignation,
retirement or termination of employment, or from a change in control of the
Company or a change in the officer’s responsibilities following a change in
control.
Valerie
Vekkos, our Secretary, is the President of Zephyr Equities, Inc., a consulting
firm that entered into a two year consulting agreement with B6 Sigma on March 1,
2010 and receives compensation of $3,500 per month under such agreement. Ms.
Vekkos, through Zephyr, assists B6 and the Company with SEC reporting and other
regulatory obligations and provide corporate secretarial and corporate
governance services as required.
Compensation
Discussion and Analysis
We have
not yet established a definitive compensation program for our executive
officers. However, we expect to establish a compensation program in the
fourth quarter of 2010 to provide our executive officers with competitive
remuneration and to reward their efforts and contributions to the Company.
Elements of compensation for our executive officers are expected to include base
salary, cash bonuses and the grant of option or stock awards.
Before we
set the base salary for our executive officers each year, we intend to research
the market compensation in New Mexico for executives in similar positions with
similar qualifications and relevant experience. We may decide to add a 10%-15%
premium as an incentive to attract high-level employees. We have not yet
determined whether Company performance will play a significant role in the
determination of base salary.
Cash
bonuses may also be awarded to our executives on a discretionary basis at any
time. Cash bonuses may also be awarded to executive officers upon the
achievement of specified performance targets, including annual revenue targets
for the Company.
Director
Compensation
The
Company did not provide any compensation to its directors in the fiscal year
ended December 31, 2009. The Company may establish certain compensation plans
(e.g. options, cash for attending meetings, etc.) with respect to directors in
the future.
PRINCIPAL
STOCKHOLDERS
Security
Ownership of Certain Beneficial Owners and Management and Related Shareholder
Matters.
The
following table sets forth certain information regarding the shares of common
stock beneficially owned or deemed to be beneficially owned as of October 31,
2010 by: (i) each person known to beneficially own more than 5% of our
common stock, (ii) each of our directors, (iii) each of our executive officers,
and (iv) all such directors and executive officers as a group. The following
takes into account the 150 for 1 Forward Split of our common stock that was
processed by FINRA on October 14, 2010.
Except as
indicated by the footnotes below, management believes, based on the information
furnished to us, that the persons and entities named in the table below have
sole voting and investment power with respect to all shares of our common stock
that they beneficially own, subject to applicable community property
laws.
In
computing the number of shares of common stock beneficially owned by a person
and the percentage ownership of that person, we deemed outstanding shares of
common stock subject to options or warrants held by that person that are
currently exercisable or exercisable within 60 days of September 13, 2010.
We did not deem these shares outstanding, however, for the purpose of computing
the percentage ownership of any other person.
|
Name & Address of
Beneficial Owner
|
|
Office, If Any
|
|
Title of
Class
|
|
Amount and
Nature
of Beneficial
Ownership
(1)
|
|
|
Percent
of
Class
(2)
|
|
|
James
Stout
|
|
Director
- Chairman of the Board of Directors and Treasurer
|
|
Common
stock $0.001 par value
|
|
|
32,016,000
|
|
|
|
10.22
|
%
|
|
Richard
Mah
|
|
Chief
Executive Officer and Director
|
|
Common
stock $0.001 par value
|
|
|
32,016,000
|
|
|
|
10.22
|
%
|
|
Mark
Cola
|
|
President,
Chief Operating Officer and Director
|
|
Common
stock $0.001 par value
|
|
|
32,016,000
|
|
|
|
10.22
|
%
|
|
Vivek
Dave
|
|
Executive
Vice-President and Director
|
|
Common
Stock $0.001 par value
|
|
|
32,016,000
|
|
|
|
10.22
|
%
|
|
Valerie
Vekkos
|
|
Secretary
and Director
|
|
Common
Stock $.001 par value
|
|
|
2,001,000
|
|
|
|
0.64
|
%
|
|
All
officers and directors as a group (5 persons named above)
|
|
|
|
Common
stock $.001 par value
|
|
|
130,065,000
|
|
|
|
41.52
|
%
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
We intend
to present all possible transactions between us and our officers, directors or
5% stockholders, and our affiliates to the Board of Directors for their
consideration and approval. Any such transaction will require approval by a
majority of the disinterested directors and such transactions will be on terms
no more favorable than those available to disinterested third
parties.
On
February 11, 2010 B6 Sigma entered into a Stock Purchase Agreement with Cletha
Walstrand, Esq. as representative of certain Framewaves shareholders (the
“Representative”), pursuant to which B6 Sigma agreed to acquire and the
Representative agreed to sell 738,000 (Pre-Forward Split) shares of Framewaves’
common stock to B6 Sigma for the sum of $195,000. B6 Sigma acquired such shares
at the Closing of the Reorganization and has cancelled all of such
shares.
On or
about February 23, 2010 the Representative, on behalf of certain Framewaves
shareholders, entered into a stock purchase agreement with certain individuals
(the “Selling Shareholders”) wherein the Representative sold an aggregate of
388,000 (Pre-Forward Split)
un-restricted shares of
Framewaves common stock to said individuals for aggregate consideration of
$30,000. The Representative has advised the Company that (i) she is not related
to any of the Selling Shareholders; (ii) there are no related party transactions
or issues; and (iii) the Selling Shareholders asked the Company prior to the
Reorganization if they knew of an attorney to represent them in this transaction
and the Company directed the shareholders to the Representative. The Company has
no knowledge that any of the persons who purchased the 388,000 shares are
related parties.
Valerie
Vekkos, our Secretary, is the President of Zephyr Equities, Inc., a consulting
firm that entered into a two year consulting agreement with B6 Sigma on March 1,
2010 to assist B6 Sigma and the Company with SEC reporting and other regulatory
obligations and provide corporate secretarial and corporate governance services
as required. Ms. Vekkos was the Secretary a Director of the Company and B6 Sigma
prior to the Reorganization. Ms. Vekkos received 2,001,000 shares of the
Company’s common stock in the Reorganization in exchange for her shares of B6
Sigma stock.
DESCRIPTION
OF SECURITIES
Our
authorized capital stock currently consists of 750,000,000
shares of common stock,
par value 0.001 per share, of which there are 313,066,500 issued and outstanding
shares of common stock after issuance of the 234,917,400 shares of common stock
to the shareholders of B6 Sigma in connection with the Reorganization and the
cancellation of 110,700,000 (738,000 Pre-Forward Split)
shares that were
acquired by B6 Sigma from three shareholders of the Company. The following
statements set forth the material terms of our common stock; however, reference
is made to the more detailed provisions of, and these statements are qualified
in their entirety by reference to, our Articles of Incorporation and Bylaws,
copies of which are filed as exhibits to our SEC reports.
Common
Stock
Holders
of shares of our common stock are entitled to one vote for each share on all
matters to be voted on by the stockholders. Holders of common stock do not have
cumulative voting rights. Holders of common stock are entitled to share ratably
in dividends, if any, as may be declared from time to time by the Board in its
discretion from funds legally available therefor. In the event of any
liquidation, dissolution or winding up, the holders of common stock are entitled
to a pro-rata share of all assets remaining after payment in full of all
liabilities and preferential payments, if any, to holders of preferred stock.
All of the outstanding shares of common stock are fully paid and
non-assessable.
Holders
of common stock have no preemptive rights to purchase our common stock. There
are no conversion or redemption rights or sinking fund provisions with respect
to our common stock.
Dividends
Dividends,
if any, will be contingent upon our revenues and earnings, if any, capital
requirements and financial conditions. The payment of dividends, if any, will be
within the discretion of the Board. We presently intend to retain all earnings,
if any, for use in our business operations and accordingly, the Board does not
anticipate declaring any cash dividends for the foreseeable future. We have not
paid any cash dividends on our common stock.
Anti-Takeover
Effects of Provisions of Nevada State Law
We may be
or in the future we may become subject to Nevada’s control share laws. A
corporation is subject to Nevada’s control share law if it has more than 200
stockholders, at least 100 of whom are stockholders of record and residents of
Nevada, and if the corporation does business in Nevada, including through an
affiliated corporation. This control share law may have the effect of
discouraging corporate takeovers. The Company currently has less than 200
stockholders.
The
control share law focuses on the acquisition of a “controlling interest,” which
means the ownership of outstanding voting shares that would be sufficient, but
for the operation of the control share law, to enable the acquiring person to
exercise the following proportions of the voting power of the corporation in the
election of directors: (1) one-fifth or more but less than one-third; (2)
one-third or more but less than a majority; or (3) a majority or more. The
ability to exercise this voting power may be direct or indirect, as well as
individual or in association with others.
The
effect of the control share law is that an acquiring person, and those acting in
association with that person, will obtain only such voting rights in the control
shares as are conferred by a resolution of the stockholders of the corporation,
approved at a special or annual meeting of stockholders. The control share law
contemplates that voting rights will be considered only once by the other
stockholders. Thus, there is no authority to take away voting rights from the
control shares of an acquiring person once those rights have been approved. If
the stockholders do not grant voting rights to the control shares acquired by an
acquiring person, those shares no not become permanent non-voting shares. The
acquiring person is free to sell the shares to others. If the buyer or buyers of
those shares themselves do not acquire a controlling interest, the shares are
not governed by the control share law.
If
control shares are accorded full voting rights and the acquiring person has
acquired control shares with a majority or more of the voting power, and
stockholder of record, other than the acquiring person, who did not vote in
favor of approval of voting rights, is entitled to demand fair value for such
stockholder’s shares.
In
addition to the control share law, Nevada has a business combination law, which
prohibits certain business combinations between Nevada corporations and
“interested stockholders” for three years after the interested stockholder first
becomes an interested stockholder, unless the corporation’s board of directors
approves the combination in advance. For purposes of Nevada law, an interested
stockholder is any person who is: (a) the beneficial owner, directly or
indirectly, of 10% or more of the voting power of the outstanding voting shares
of the corporation, or (b) an affiliate or associate of the corporation and at
any time within the previous three years was the beneficial owner, directly or
indirectly, of 10% or more of the voting power of the then-outstanding shares of
the corporation. The definition of “business combination” contained in the
statute is sufficiently broad to cover virtually any kind of transaction that
would allow a potential acquirer to use the corporation’s assets to finance the
acquisition or otherwise to benefit its own interests rather than the interests
of the corporation and its other stockholders.
The
effect of Nevada’s business combination law is to potentially discourage parties
interested in taking control of the Company from doing so if it cannot obtain
the approval of our board of directors.
Transfer
Agent
Interwest
Stock Transfer, 981 Murray Holladay Road, Suite 100 Salt Lake City, UT
84117 is our stock transfer agent.
MARKET
PRICE OF AND DIVIDENDS ON THE REGISTRANT’S COMMON EQUITY AND OTHER STOCKHOLDER
MATTERS
Market
Information
Our
common stock is listed on the Over the Counter Bulletin Board (“OTCBB”), under
the symbol “SGLB.OB". There was not an active market and no trading volume
during fiscal 2008 and 2009 and insignificant trading volume in
2010.
On
September 13, 2010, after completion of the Reorganization, we had 513
shareholders of record.
We have
never declared or paid any cash dividends on our common stock. For the
foreseeable future, we expect to retain any earnings to finance the operation
and expansion of our business.
When the
trading price of our common stock is below $5.00 per share, the common stock is
considered to be a “penny stock” that is subject to rules promulgated by the SEC
(Rule 15-1 through 15g-9) under the Securities Exchange Act of 1934. These rules
impose significant requirements on brokers under these circumstances, including:
(a) delivering to customers the SEC’s standardized risk disclosure
document; (b) providing customers with current bid and ask prices;
(c) disclosing to customers the brokers-dealer’s and sales representatives
compensation; and (d) providing to customers monthly account
statements.
RECENT
SALES OF UNREGISTERED SECURITIES
As
described in Item 1.01 above, on September 13, 2010, the Company acquired all of
the shares of B6 Sigma from the Shareholders of B6 Sigma in exchange for the
issuance of 234,917,400 (1,566,116 pre-Forward Split) newly issued shares of
Framewaves common stock.
In
connection with its organization, B6 Sigma issued an aggregate of 184,000,000
(after taking into account the fact that (i) each share of B6 Sigma was
exchanged for 6.67 shares of the Company’s (Framewaves’) common stock in the
Reorganization; and (ii) the October 2010 150 for 1 Forward Split of the
Company’s common stock) shares of its common stock to its shareholders for
aggregate consideration of $184.
Between
April 2010 and September 2010 B6 Sigma issued $300,000 principal amount
Convertible Notes for which the holders of such Notes loaned $300,000 to B6
Sigma. All of the Convertible Notes were converted into shares of our common
stock in the B6 Sigma private offering upon the closing of the Reorganization
and private offering.
As a
condition to the closing of the Reorganization, B6 Sigma also closed a private
offering of $1,000,000 of its common stock contemporaneous with the closing of
the Reorganization, which included the conversion of $300,000 of previously
issued convertible notes by B6 Sigma referenced above into the private
offering.
We are of
the belief that the issuance of all of the above shares was exempt from
registration under Section 4(2) of the Act.
LEGAL
PROCEEDINGS
Description
of Property
Our leased executive offices are
located at 3900 Paseo del Sol Santa Fe, NM 87507. Our web site is
www.sigmalabsinc.com.
Legal
Proceedings
From time
to time we may be named in claims arising in the ordinary course of business.
Currently, no legal proceedings, government actions, administrative actions,
investigations or claims are pending against us or involve us that, in the
opinion of our management, could reasonably be expected to have a material
adverse effect on our business and financial condition.
We
anticipate that we will expend significant financial and managerial resources in
the defense of our intellectual property rights in the future if we believe that
our rights have been violated. We also anticipate that we will expend
significant financial and managerial resources to defend against claims that our
products and services infringe upon the intellectual property rights of third
parties.
Available
Information
We are
subject to the reporting requirements of the Securities Exchange Act of 1934
(“
Exchange Act
”).
Reports filed with the SEC pursuant to the Exchange Act, including annual and
quarterly reports, and other reports we file, can be inspected and copied at the
public reference facilities maintained by the SEC at 100 F Street, N.E.,
Washington, D.C. 20549. Investors may obtain information on the operation of the
public reference room by calling the SEC at 1-800-SEC-0330. Investors can
request copies of these documents upon payment of a duplicating fee by writing
to the SEC. The reports we file with the SEC are also available on the SEC’s
website (
http://www.sec.gov
).
INDEMNIFICATION
OF OFFICERS AND DIRECTORS
Nevada
Revised Statutes (“
NRS
”)
Sections 78.7502 and 78.751 provide us with the power to indemnify any of our
directors, officers, employees and agents. The person entitled to
indemnification must have conducted himself in good faith, and must reasonably
believe that his conduct was in, or not opposed to, our best interests. In a
criminal action, the director, officer, employee or agent must not have had
reasonable cause to believe that his conduct was unlawful.
Under NRS
Section 78.751, advances for expenses may be made by agreement if the director
or officer affirms in writing that he has met the standards for indemnification
and will personally repay the expenses if it is determined that such officer or
director did not meet those standards.
Our
bylaws include an indemnification provision under which we have the power to
indemnify our directors, officers, former directors and officers, employees and
other agents (including heirs and personal representatives) against all costs,
charges and expenses actually and reasonably incurred, including an amount paid
to settle an action or satisfy a judgment to which a director or officer is made
a party by reason of being or having been a director or officer of the Company.
Our bylaws further provide for the advancement of all expenses incurred in
connection with a proceeding upon receipt of an undertaking by or on behalf of
such person to repay such amounts if it is determined that the party is not
entitled to be indemnified under our bylaws. No advance will be made by the
Company to a party if it is determined that the party acting in bad faith. These
indemnification rights are contractual, and as such will continue as to a person
who has ceased to be a director, officer, employee or other agent, and will
inure to the benefit of the heirs, executors and administrators of such a
person.
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted for our directors, officers and controlling persons pursuant to the
foregoing provisions, or otherwise, we have been advised that in the opinion of
the SEC such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable.
PART
F/S
Reference
is made to the disclosure set forth under Item 9.01 of this Current Report,
which disclosure is incorporated herein by reference.
