Risks Specific to Galactic Cap
An investment in the Common Stock being offered by the Company in this Offering is highly speculative and subject to a high degree of risk. Therefore, only those who can bear the risk of losing their entire investment should participate in the Offering. You should carefully read and consider the following risk factors before you decide to participate in the Offering. Also, the risks and uncertainties set forth below are not the only ones that are facing the Company; there may be additional risks and uncertainties not presently known to the Company or that the Company currently considers immaterial.
The actual occurrence or existence of any of the factors or conditions described below, or any other adverse condition or event that may occur or arise, or of which the Company is currently unaware or consider immaterial, could materially and adversely affect our business, financial condition and/or results of operations. This could result in the loss of all or part of your investment
Lack of operating history and risks of operation
The Company is a new company commencing operations in 2013. Although the Management Team of the Company has experience in starting up new businesses, they have no experience in the business of developing and marketing pregnancy prevention devices or similar products. The Company shall be subjectto all of the risks inherent in any new business enterprise. There can be no assurance that the Company will be successful in operating our business, and the Company’s failure to do so could have a material adverse effect on our business, prospects, financial condition and results of operations.
The Company faces competition.
The pregnancy prevention devices industry in the United States is highly competitive. The Company will face competition from the traditional condom manufacturers and distributors like Trojan Condoms and Durex who dominate the condom market in the United States. Many of our competitors have substantially greater financial and marketing resources, larger customer bases, longer operating histories, greater name recognition and more established relationships in the industry than the Company. As a result, these competitors may be able to devote greater resources to marketing and sales than the Company. There can be no assurance that the Company will compete successfully with such competitors.
If the Company is unable to retain our key personnel and consultants, we may be unable to execute on our business plan.
The Company’s success depends in significant part on the continued services of certain members of the Company’s Management Team. Losing one or more of these members, and the Company’s inability to replace these individuals, could seriously impair the Company’s ability to successfully implement our business plan and could have a material adverse effect on our business, results of operations and financial condition and you could lose your investment.
There are no assurances that the Company will successfully raise $1,000,000.
The Company is attempting to raise $1,000,000, but the Company cannot make any assurances that we will raise the entire $1,000,000. If the Company is unable to raise sufficient funds, then the Company may be unable to commence, continue or complete the development, manufacture and marketing of the Product, resulting in the total loss of any investment.
There is no public market for the Common Stock and the Stock will be subject to transfer restrictions.
Transfer ability of the Common Stock is severely restricted. The Common Stock has not been registered under the Securities Act or any applicable state securities laws. As a result, prospective investors should be prepared to hold the Common Stock foran indefinite period. In addition, the Common Stock may not be resold, transferred, pledged or otherwise disposed of unless they are (i) subsequently registered under the Securities Act and any applicable state securities laws or the Stockholder delivers an acceptable legal opinion to us that an exemption from such laws exist, and (ii) sold in compliance with the Subscription Agreement and Documents. Currently, there is no public market for any of our securities.Therefore, the transfer ability of the Common Stock under both the Securities Act and applicable state laws is severely restricted.
The Company may finance a portion of the amounts required to develop the Product through debt financing.
The Company may finance a portion of the funds required to develop the Product through debt financing. The Company’s interest and other debt service obligations would have priority over distributions to the Stockholders, and could reduce the amount of cash available for distribution to the Stockholders on a relative basis.
The Company may need additional financing, and the Company’s inability to obtain such financing would have an adverse impact on our business.
Even if this Offering is fully subscribed, the proceeds may not be sufficient to finance the entire development, manufacturing and marketing of the Product, in which case the Company may need additional capital. In addition, the income from operations may not be sufficient to enable the Company to timely satisfy all of our obligations, in which case the Company would need additional capital. There can be no assurance that additional capital will be available to the Company on commercially reasonable or acceptable terms or at all. If the Company is required to borrow such additional funds and incur debt, the risks associated with our business and with owning the Common Stock could increase. In addition, any lender could impose restrictions on the amount, if any, that may be distributed to the Stockholders prior to the repayment or significant reduction of such indebtedness. If the Company raises such capital through the sale of additional Common Stock, all of the existing Stockholder's ownership interests would be diluted, if such Stockholder does not subscribe to purchase such Stockholder's pro rata share of any additional Common Stock sold.
No independent valuation of the Company has been performed in determining the terms of this Offering.
No independent valuation of the Company has been performed in determining theterms of this Offering. Accordingly, our valuation estimates do not necessarily reflect the Company’s assets, book value or potential earnings or any other recognized criteria of value.
Delays in marketing the Product.
The proceeds of this Offering will be used primarily to develop, manufacture and market the final commercial version of the Product. The Company’s revenues will arise from the marketing and sales of the Product. We do not anticipate receiving any income until the sales of the Product has started generating revenue. Therefore, anything that delays the marketing of the Product or results in the cessation of the sales for a period of time, will adversely affect the Company’s profitability.
An economic downturn or a decrease in business growth in the United States could significantly harm the Company’s business.
National, regional and local economic conditions, such as recessionary economic cycles, a protracted economic slowdown or a worsening economy could adversely affect disposable consumer income, and business growth in the United States. Although the Company believes we have an affordable and unique product offering, unfavorable changes in these factors or in other business and economic conditions affecting our customers could reduce customer purchases of the Product, impose limits on pricing and increase costs,any of which could lower profit margins and have a material adverse effect on our results of operations.
The Company’s failure to comply with governmental regulations could adversely affect the Company’s business.
The pregnancy prevention devices business is subject to extensive federal, state,local and foreign laws and treaties, including, but not limited to, those related to:
• Food and Drug Administration Laws, Rules and Regulations.
• Federal Trade Commission Laws, Rules and Regulations.
• Federal, State and Local Health and Safety Codes.
• Preparation, labeling and sale of medical devices.
While the Company believes we can operate in substantial compliance with these laws, they are complex. As a result, regulatory risks are inherent in our operation. Although the Company believes that compliance with these laws will not have a material effect on our operations, there can be no assurance that the Company will not experience material difficulties or failures with respect to compliance. The Company’s failure to comply with these laws could result in required changes in the design of the Product, fines,penalties, judgments or other sanctions, including the temporary suspension of operations or a delay in the marketing and sales of the Product, any of which could adversely affect the Company’s business, operations and our reputation.
The Company maybe come subject to complaints and litigation that could have an adverse effect on our business.
In the ordinary course of the Company’s business we may become subject to complaints and litigation alleging that the Company is responsible for a product defect or other product liability claim. In addition, the Company maybecome subject to litigation by employees. Any litigation, regardless of whether the allegations are valid or whether or not we are found liable, may result in decreasing sales and profitability, divert financial and management resources and result in adverse publicity which could harm our brand and our sales. A judgment significantly in excess of the Company’s insurance coverage for any claims could materially and adversely affect our financial condition or results of operations.
The Company does not own the Patent.
The patent for the Galactic Gap technology is owned by Founder Charles Powell and not the company. The company currently does not pay royalties for the use of the patent, but this could potentially change in the future.