EXHIBIT 99.1
RISK FACTORS
An investment in the common stock of Paragon Polaris Strategies.com Inc. ("We"
or the "Company") is highly speculative and subject to a high degree of risk.
Only those persons who can bear the risk of the entire loss of their investment
should purchase shares of the Company's common stock. An investor should
carefully consider the risks described below and the information contained in
the Company's filings with the Securities and Exchange Commission before
investing in the Company's common stock. The risks described below are not the
only ones faced. Additional risks that we are aware of or that we currently
believe are immaterial may become important factors that affect our business.
If any of the following risks occur, or if others occur, our business, operating
results and financial condition could be seriously harmed and the investor may
lose all of their investment.
If we are not able to secure future financings, then we may not be able to carry
out our business plan for the expansion of Icoworks.
Our business plan calls for the increased expansion of the business of Icoworks.
The amount required to achieve this business plan will be in excess of our
current financial resources. Accordingly, we will be required to raise
substantial funds in order pursue our business plan. There is no assurance that
we will be able to raise the additional funds required. In addition, future
capital financings may result in dilution to current holders of our common stock
and may require the issuance of preferred stock that have rights and priority to
our common stock. There is no assurance that financings will be available to us
on terms that are attractive to us. In the event that we are unable to secure
additional financing, then we may be forced to scale back the business plan of
Icoworks and to reduce the business activities of Icoworks. These measures
could adversely impact on the ability of Icoworks to achieve profitability and
the liquidity and financial condition of Icoworks.
As the Icoworks merger is subject to approval of the shareholders of the Company
and Icoworks, there is no assurance that this merger will proceed.
We have agreed to merge with Icoworks. Upon completion of this merger, we will
issue approximately 5,814,236 shares of our common stock to acquire the
additional 44% interest in Icoworks that we do not own. In addition, we will
grant options and share purchase warrants to the option and warrant holders of
Icoworks. The issuance of these securities will result in dilution to the
holders of the Company's common stock. There is no assurance that the
shareholders of the Company and Icoworks will each approve these mergers. In
addition, the merger will be subject to dissent and appraisal rights in favor of
both the shareholders of the Company and Icoworks. If a substantial number of
these shareholders exercise their dissent rights, then we may be forced to
abandon the merger due to the high cost of purchasing the shares of the
dissenting shareholders.
If the expansion strategy of Icoworks is not successful, then the Company may
not achieve profitability.
The business plan of Icoworks involves the expansion of the traditional markets
of Icoworks, the introduction of new technology to Icoworks' auction business
and the entering into of "bought deals". In the event that these expansion
strategies are not successful in generating revenues that exceed the costs of
the expansions, then Icoworks will not generate sufficient revenues for the
Company to achieve profitability. In this event, the Company's liquidity and
financial condition will be adversely affected.
If Icoworks' customers do not accept the introduction of new technology to the
traditional auction process, then the profitability of Icoworks will be
adversely impacted.
Icoworks plans to continue to integrate technology into its traditional auction
business. Examples include incorporating state of the art auction software,
online auction participation and online auctions into the auction business. The
objective of these strategies is to increase the efficiency of the Icoworks
auctions by expanding the number of potential bidders. If the strategy is not
successful, then Icoworks may not be able to recover its investment in these new
technologies with the result that its business and financial condition would
adversely impacted.
If the acquisition of strategy of Icoworks is not successful, then its business
and financial condition will be adversely impacted.
Icoworks' plans on acquiring traditional auction businesses in order to expand
the geographic scope of its business. This strategy is part of an overall plan
to increase the number of bidders for equipment offered for sale by Icoworks.
The acquisition of new businesses is subject to various risks, including the
ability of Icoworks to integrate these new businesses into its current business,
the presence of competitors in new markets, the ability of Icoworks to retain
personnel from businesses that are acquired and the ability of newly acquired
businesses to generate adequate revenues. If Icoworks is not able to
successfully integrate new businesses into its current business, or if these new
businesses are not successful independently, then the business and financial
condition of Icoworks would be adversely affected.
There is no assurance that Icoworks will be successful in expanding its market
beyond its traditional territory.
The business of Icoworks was founded and is currently based in Calgary, Alberta,
Canada. The Company's base in this market is built on its years of experience
in this market and the experience of the Company's key employees in this market.
As Icoworks expands the geographic scope of its operations, there is no
assurance that it will be able to translate its experience and the experience of
its key employees to new markets. The business formula employed by Icoworks in
its current markets may not prove to be successful in new territories due to a
variety of factors, including different business environments, different
equipment markets and the presence of competitors in new markets. If the
business strategy used by Icoworks to date is not successful in new geographic
markets, then the business and financial condition of Icoworks will be adversely
impacted.
If Icoworks is not successful in attracting additional personnel with the
necessary experience, Icoworks may not be successful in its expansion efforts.
In order to employ its business expansion strategy, Icoworks will be required to
hire new employees that have expertise in the auction industry and that are able
to enable the Company to implement its business strategy. There is no assurance
that the Company will be able to hire new employees that have the necessary
experience and qualifications. In addition, management may have difficulty in
training and retaining personnel in different geographic locations. There is no
assurance that the persons hired by Icoworks will enable Icoworks to achieve its
expansion strategy.
If the customers and bidders of Icoworks do not accept new auction formats
introduced by Icoworks, then the business and financial condition of Icoworks
will be adversely impacted.
Icoworks plans on introducing new technologies to its traditional auction
process. These new technologies include online auctions, such as auctions on
Icoworks' e-Bay store, and online participation in live auctions, such as the
services offered by Icoworks in conjunction with BidSpotter.com. The objective
behind these new formats it to broaden the base of bidders that
view and bid on the equipment offered by Icoworks on behalf of its customers. If
these new formats are not accepted, then Icoworks may not be able to recover the
cost of its time and investment in these new formats, with the result that the
business and financial condition of Icoworks may be adversely impacted.
If Icoworks enters into bought deals, then the capital of Icoworks will be at
risk.
Icoworks plans to enter into bought deals whereby the capital of Icoworks will
be placed at risk due to the requirement that Icoworks purchase the equipment to
be auctioned. The success of this business venture will be largely based on the
ability of Icoworks to successfully appraise and value equipment offered for
sale, to be able to enter into attractive purchase agreements from customers and
to resell the purchased equipment at prices which generate a successful return
on investment for Icoworks. The inability of Icoworks to achieve any of these
objectives could result in Icoworks in losing money on "bought deal" auctions.
In this case, the capital of Icoworks would be at risk. This risk is a
significantly greater risk that the traditional auction process where Icoworks
earns revenues on a commission basis.
If Icoworks loses any of its key employees, then its business and financial
condition could be adversely impacted.
The success of Icoworks is largely dependent on its key employees, including Mr.
Bill Wigley and Mr. Darrell McGrath and Graham Douglas. Mr. Wigley and Mr.
McGrath joined Icoworks through business acquisitions. Mr. Douglas has been
involved in funding Icoworks since the acquisition of Icoworks Services Ltd. In
the event that either of these individuals leaves the Company for any reason,
then the ability of Icoworks to continue the acquired businesses, to retain the
business goodwill of Icoworks and to achieve profitable operations will be
adversely impacted.
As Icoworks implements its business strategy, then its reliance on third parties
will increase.
Various components of the business strategy of Icoworks require the outsourcing
of certain services to third parties. Examples include the integration of
computer technologies, the hosting of online auctions by e-Bay and the offering
of online auctions by BidSpotter.com. To the extent that these parties are not
able to deliver the services required by Icoworks, then the ability of Icoworks
to satisfy its customers and to operate profitably may be adversely affected.
Competition may adversely impact on the ability of Icoworks to achieve
profitability and to achieve its expansion strategy.
Icoworks is currently subject to competition in its traditional markets.
Competitors include direct competitors, such as competing auction houses and
indirect competitors, such as equipment manufacturers, rental companies,
distributors and dealers that sell new or used products. The principal factors
in the industrial equipment market are reputation, customer service, commission
amounts, transaction structure, real time information access and the ability to
attract the bidders of products that are necessary to generate the best possible
prices for products. The inability of Icoworks to compete on any of these
factors with competitors in its traditional markets will impact adversely on the
business of Icoworks. In addition, Icoworks will have to compete on these
factors in new markets in the event that it expands into new geographic markets
as it completes its business strategy.
Icoworks will compete against competitors that have greater financial resources
and greater customer recognition as it enters new markets. There is no
assurance that Icoworks will be able to acquire market share from these
competitors as it attempts to expands its geographic scope.
Icoworks will encounter competition on the online market from competitors that
are focused on Internet auctions. In addition, new companies that have focused
their traditional businesses on
Internet auctions may expand their businesses to include traditional auction
processes that compete with the auctions provided by Icoworks.
If A Market For Our Common Stock Does Not Develop, Our Investors Will Be Unable
To Sell their Shares
There is currently a limited market for our common stock and we can provide no
assurance to investors that a market will develop. We cannot provide investors
with any assurance that a public market will materialize. If a market for our
common stock does not develop, then investors may not be able to re-sell the
shares of our common stock that they have purchased and may lose all of their
investment.
Because Our Stock Is Penny Stock, Shareholders Will Be Limited In Their Ability
To Sell The Stock
Our shares of common stock constitute penny stock under the Securities and
Exchange Act. The shares will remain penny stock for the foreseeable future.
The classification of penny stock makes it more difficult for a broker-dealer to
sell the stock into a secondary market, which makes it more difficult for a
purchaser to liquidate his or her investment. Any broker-dealer engaged by the
purchaser for the purpose of selling his or her shares in the Company will be
subject to rules 15g-1 through 15g-10 of the Securities and Exchange Act.
Rather than complying with those rules, some broker-dealers will refuse to
attempt to sell penny stock.
FOR ALL OF THE AFORESAID REASONS AND OTHERS SET-FORTH AND NOT SET-FORTH HEREIN,
AN INVESTMENT IN THE COMPANY'S COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. ANY
PERSON CONSIDERING THE PURCHASE OF THESE THE COMPANY'S COMMON STOCK SHOULD BE
AWARE OF THESE AND OTHER FACTORS SET-FORTH IN COMPANY'S FILINGS WITH THE
SECURITIES AND EXCHANGE COMMISSION AND SHOULD CONSULT WITH HIS/HER LEGAL, TAX
AND FINANCIAL ADVISORS PRIOR TO MAKING AN INVESTMENT IN THE COMPANY. THE
COMPANY'S COMMON STOCK SHOULD ONLY BE PURCHASED BY PERSONS WHO CAN AFFORD TO
LOSE ALL OF THEIR TOTAL INVESTMENT.