Business
of Company
We are
engaged in the business of developing, manufacturing, and selling mechanical
chalkboard erasers with built-in micro vacuums specifically for office and
school supply retailers and teachers in the Philippines and other Asian
countries as end users. Such a product will allow teachers to efficiently and
thoroughly clean chalkboards without the detrimental health effects that often
result from breathing chalk dust propelled into the air and lungs by chalkboard
erasers presently in use in the Asian market. We are currently in the process of
designing and developing our Product, and we are continually refining this
design through experiments, testing different engine speeds and brush lengths in
order to determine optimum features for maximum cleaning performance and
chalk-dust absorption. When we are satisfied that our Product will compete
effectively in the School Supply Industry by being the most practical and
effective chalkboard eraser, we will begin the manufacture and distribution of
the Product to stationery retailers.
Our
offices are located at 137 4th Street, Riverside Vill. Sta Lucia, Pasig City,
the Philippines.
Chalkboards
and Erasers
Chalkboards
have long been a standard school supply in the Asian educational system, and
they are also used in many establishments as a form of advertising upcoming
events and menus. Chalkboard erasers are important supplements to chalkboards.
They make chalkboards reusable and provide an easy means of cleaning up writings
made on the board.
Chalkboard
erasers typically consist of a block of wood covered by a felt pad, or felt
strips that are bound together with sticky paper or cardboard that also serves
as a handle. The felt strips are used to wipe off chalk dust. However,
chalkboard erasers get dirty very quickly, and once this happens they no longer
remove chalk from a board. They require high maintenance to prevent too much
accumulation of dust particles that prevent them from working and can make
allergies and breathing a problem. The most common way of cleaning traditional
chalkboard erasers is by repeatedly pounding the eraser against a metal filter
or the side of a wall, a process that forces the chalk dust into the surrounding
air.
Chalk
Dust Hazards
Chalk
dust is the natural by-product of using a chalk crayon on a chalkboard. As the
chalk is scraped across the rough surface of the chalkboard or erased with a
traditional eraser, particles of chalk dust are sent out into the surrounding
air. Some of this chalk dust settles to the ground or is ventilated outside, but
much of it falls on clothing, furniture, electronic equipment and shelves.
Teachers and students also inhale a portion of this chalk dust, which usually
becomes trapped in the mucus layers of the throat and upper lungs.
While the
main ingredients of chalk dust are considered to be
non-toxic
, which simply means
they do not pose a threat when ingested, chalk dust can and does accumulate in
the human respiratory system and can create long-term health problems due to
overexposure. So while swallowing a piece of white chalkboard chalk
won't kill you, breathing in chalk dust for a number of years can create or
trigger respiratory problems. A small amount of inhaled chalk dust is
not considered harmful. Those with healthy respiratory systems can expel the
chalk dust through coughing, and the remaining material should be absorbed
safely into the body. For those with allergies and chronic breathing issues such
as asthma, however, exposure to chalk dust can trigger a reaction. In fact, many
school systems strongly urge teachers to move students with respiratory problems
away from the chalkboard area. Chalkboards, trays and erasers filled with chalk
dust should also be cleaned regularly.
Standard
chalk for classroom use is generally made from gypsum or calcium carbonate, a
processed form of natural limestone. The traditional method of creating white
chalk was to form a clay-like paste with the calcium carbonate and allow it to
cure in chalk-shaped molds. This chalk worked well with slate chalkboards, but
it also generated a significant amount of chalk dust that floated into the
surrounding air. Teachers who used traditional chalk for a number of years often
developed respiratory problems, although they were not generally considered
severe.
There is
now a product called
dustless
chalk
, designed to address the chalk dust issue. Instead of forming chalk
crayons through individual molds, the new chalk mixture is extruded into ropes,
then cut to size and allowed to dry. This dustless chalk does generate a form of
chalk dust, but the particles are much heavier and tend to fall directly to the
floor instead of floating in the air. Exposure to airborne chalk dust has been
reduced, but the accumulation of chalk dust elsewhere is still
problematic.
Beyond
the human health aspects of chalk dust exposure, there are also potential
electronic hazards. Devices such as computers and digital versatile disc (DVD)
players stored inside classrooms can suffer damage from accumulated chalk dust.
As the dust particles circulate throughout the room, cooling fans may draw them
into the computers' inner workings. As dust builds up on the
motherboard
and other
heat-sensitive parts, the risk of overheating increases. Chalk dust can also
cause severe damage to sensitive electronics, such as the laser reader of a DVD
player or the playback heads of a video cassette recorder (VCR).
Chalk
dust is considered an irritant and an occupational hazard by a number of
occupational safety organizations around the world. Many safety experts suggest
using a filtered mask over the mouth and nose and taking a number of breaks in a
fresh air environment for those who work around chalk dust for extended periods
of time.
While
some chalkboards have been replaced by whiteboards, there are many advantages to
using the chalkboard. Whiteboards produce their own kind of "dust": particles of
the dried marker fluid. This dust is much darker in color than chalk dust and is
heavier, so it doesn't travel as far, but it stains the walls and floors
underneath the whiteboards. Expensive solvents may remove some but not all
stains. Erasers and chalk trays are obviously intended to capture and confine
dust. While essential, they do not solve the entire problem. Chalk in bulk costs
less than five cents a stick; marker pens are ten times as expensive. Chalk is
seldom stolen; marker pens are frequently taken from classrooms. Chalk breaks if
you drop it, but marker pens dry out quickly if left uncapped. You can look at a
piece of chalk and see how much of it is left. Looking at a marker pen reveals
nothing. Marker pens can be a budget drain for a school or
university. Chalkboards can still work fine after 30-50 years of use,
while whiteboards require solvents to return them to their like-new condition as
they age. Solvent is expensive and the cleaning process is laborious. Thus,
financial constraints often lead to chalkboards being utilized over whiteboards
in the Philippines and other Asian countries.
Our
Product
The
rising demand in the Philippines and other Asian countries for chalkboards and
chalkboard erasers in conjunction with an increasing awareness of the
detrimental effects of chalk dust have resulted in what we anticipate will be a
highly receptive potential market for our Product. Teachers and
students are seeking a product that will efficiently and thoroughly clean a
chalkboard without the negative effects of propelled chalk dust. The health
risks of inhaling chalk dust in addition to the damage it inflicts on electronic
equipment in the classroom highlight the necessity of a chalkboard eraser that
cleans effectively and absorbs chalk dust instead of forcing it into the
air.
We are in
the process of developing a chalkboard eraser (see figure 1 below) that contains
a micro-engine system that works like a vacuum to collect the chalk dust as it
cleans the chalkboard. Our Product is designed specifically for school and
office supply retailers and teachers as end users in the Philippines and other
Asian countries. Our product is operated by a simple on/off switch (1), which
activates the micro engine (2). As the brush (3) wipes the chalk from the
chalkboard, the vacuum created by the micro engine draws the chalk dust through
the powder vents (4) located in parallel with the brush sections and into the
powder collecting room (5). The micro engine is powered by two replaceable AA
batteries (6), and there is a removable cover (7) to allow the disposal of the
powder collected.
Figure
1
We are in
the process of refining the design for our Product, which will be integral to
its success. We are designing and developing our Product by conducting
experiments to improve on quality and cost. These experiments include testing
different engine speeds and brush lengths in order to determine optimum features
for maximum cleaning performance and chalk-dust absorption. We are also
experimenting with our Product’s use near electronic devices, including the
examination of these devices to determine if any chalk dust accumulates on them
following the use of our Product. We are searching for the lowest
priced components available in the market in our efforts to reduce cost. We are
researching the benefits of adding more components to further improve our
Product. We are also improving our Product's essential qualities, such as
cleaning ability, chalk-dust absorption, and endurance over time with repeated
use. Refining these qualities will ensure that our Product is practicable,
affordable, and beneficial.
Competition
We
compete with a number of established manufacturers, importers, and distributors
who sell chalkboard erasers and related items. These companies enjoy brand
recognition which exceeds that of our brand name. We compete with several
manufacturers, importers, and distributors who have significantly greater
financial, distribution, advertising, and marketing resources than we do,
including:
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The
StikkiWorks Co. makes a Dust Muncher Chalkboard Eraser/Screen Cleaner that
they state is made from a “revolutionary super absorbent
material.” StikkiWorks Co. claims this product “is the fastest,
safest & most efficient way to clean chalkboards” and is “also
exceptional for cleaning computer screens and all electronic
equipment.” They assert that it “absorbs dust instead of
pushing it around…can be used over and over before washing… won’t scratch
surfaces’” and can be “used dry.”
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Beijing Haur Ming
Stationery Enterprise Co., Ltd.
makes a Self Cleaning Chalk
Board
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that
the company claims features: “no more chalk dust” and a push button
remote-control operation with auto timer to set the cleaning
times. It is also touted as “easy to maintain and
install.”
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Taiwan
Innovative sells a vacuum product that is designed to sit near chalkboards
and vacuum the chalk dust off standard chalkboard erasers. While this
solves the problem of cleaning erasers without releasing dust into the
air, it fails to address the problem of chalk dust being propelled into
the air as chalkboards are erased.
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There are
also several companies that sell what is referred to as “dustless chalk,” which
purportedly reduces the amount of inhaled chalk dust, though, as mentioned
earlier, dust accumulation elsewhere is still problematic with use of this
chalk. These companies include:
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Quartet
Manufacturing Company makes an Omega Nontoxic Low Dust Chalk in
assorted colors, as well as a Quartet Deluxe Chalkboard Eraser/Cleaner
made with laminated felt and a “special material” on the reverse side of
the eraser that completes board
cleaning.
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Crayola
sells Anti-Dust Chalkboard Chalk they claim “keeps dust to a
minimum.” It is also certified non-toxic and recommended for
ages 4 and up.
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We
compete primarily on the basis of quality, brand name recognition, and price. We
believe that our success will depend upon our ability to remain competitive in
our product area. The failure to compete successfully in the future could result
in a material deterioration of customer loyalty and our image and could have a
material adverse effect on our business.
Regulatory
Matters
We are
unaware of and do not anticipate having to expend significant resources to
comply with any governmental regulations of the stationery industry. We are
subject to the laws and regulations of those jurisdictions in which we plan to
sell our product, which are generally applicable to business operations, such as
business licensing requirements, income taxes and payroll taxes. In general, the
development, manufacture, and sale of our Product in the Philippines and other
Asian countries is not subject to special regulatory and/or supervisory
requirements.
Employees
We have
no other employees other than our officers and directors. Our President oversees
all responsibilities in the areas of corporate administration, business
development, and research. We intend to expand our current management to retain
skilled directors, officers, and employees with experience relevant to our
business focus. Our current management team is highly skilled in technical areas
such as researching and developing our product, but not skilled in areas such as
marketing our product and business management. Obtaining the assistance of
individuals with and in-depth knowledge of operations and markets will allow us
to build market share more effectively. We intend on employing sales
representatives in the Philippines when our product is ready for production and
shipping and in various provinces of China when we are ready to expand
internationally.
Environmental
Laws
We have
not incurred and do not anticipate incurring any expenses associated with
environmental laws.
Description
of Property
We
maintain our corporate office at 137 4th Street, Riverside Vill. Sta Lucia,
Pasig City, the Philippines.
Plan
of Operation
Historical
results and trends should not be taken as indicative of future operations.
Management's statements contained in this report that are not historical facts
are forward-looking statements. Forward-looking statements, which are based on
certain assumptions and describe future plans, strategies and expectations of
the Company, are generally identifiable by use of the words "believe," "expect,"
"intend," "anticipate," "estimate," "project," "prospects," or similar
expressions. The Company's ability to predict results or the actual effect of
future plans or strategies is inherently uncertain. Factors which could have a
material adverse affect on the operations and future prospects of the Company on
a consolidated basis include, but are not limited to: changes in economic
conditions, legislative/regulatory changes, availability of capital, interest
rates, competition, and generally accepted accounting principles. These risks
and uncertainties should be considered in evaluating forward-looking statements
and undue reliance should not be placed on such statements.
Product
Development
We intend
to continue the development and refinement of our Product over the coming
months. We will first focus on our experiments to improve the quality of our
Product to increase its appeal to teachers. We feel our final Product will
compete effectively in the marketplace due to its highly functional performance
and beneficial health qualities relative to similar products in the
marketplace.
Locate
Suitable Manufacturing
We do not
currently have any manufacturing facilities. Our management has contacted
several general manufacturers in the Philippines and other Asian countries, and
have begun negotiations for the manufacture of our Product on a contract basis.
We are currently negotiating price, payment, customer guarantee, shipping,
inventory, delivery schedule and returns. We plan to pursue this further upon
the final development and commercialization of our Product. Production of our
chalkboard eraser doesn't require any facilities or equipment beyond what is
available to any general manufacturer. We could contract with any general
manufacturer to produce our Product by following our instructions. We do not
anticipate renting a warehouse at this stage of our business. The general
manufacturer that will work with us will provide packaging, storage, and
shipping service for us as part of our agreement. All of the raw materials
necessary to produce our Product are available in the public marketplace. We
will only accept wholesale orders from wholesale distributors. Once we receive
wholesale orders, we will hold the order until certain quantities, which will be
pre-negotiated with our general manufacturer, are attained. Then we will
contract with our general manufacturer to produce our Product for us at
pre-negotiated prices. Typically the
order
will be shipped within five business days after we place the order.
Sales
and Distribution Strategy
Our goal
is for our chalkboard eraser to become a leading product in the marketplace in
the Philippines. In order to achieve our goal, we intend to increase awareness
of our Product with potential customers, who we anticipate will be major office
and school supply chains as wholesale customers and teachers as end users. We
intend to do this by engaging in the following:
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Attending national and
regional
school
supply
promotional events and
conferences
. There are events and conferences managed by regional
and central institutions and organizations to promote school and office
related products. We plan to attend a number of events attended by school
and office supply merchants and stationery chain representatives in the
order to further expose our product. These events will include trade
meetings, promotional events, seminars, and conferences, such as the
International Stationery and Office Products Fair Tokyo ("ISOT"), which
are heavily attended by stationery products wholesalers and chain
representatives, in order to further expose our
Product.
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Developing direct marketing
programs to attract retailers
. In addition to attending the
foregoing conferences and seminars, we intend to market directly to
wholesalers and major school and office supply chains. Our marketing will
include conducting seminars and the use of online and traditional
advertising media such as newspapers and trade
publications.
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Promoting to the public
through internet-based and traditional media advertising
. We intend
to use Internet-based and traditional media to promote our product
directly to the public to raise public awareness of our product. A
health-conscious public could pull our Product through the supply chain if
they are properly educated regarding our
Product.
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We will
also mail our brochure to wholesale distributors, and, initially, we will do
special promotions providing small amounts of our Product to a few major stores,
while allowing them to pay us after three months. If the market shows an
interest in our Product, they will then begin to order from us regularly. We
will begin marketing from the Philippines, where our directors have many
contacts, and we will then move forward in marketing our Product in China and
other Asian countries.
Intellectual
Property Protection
We intend
to aggressively assert our rights under trade secret, unfair competition,
trademark and copyright laws to protect our intellectual property, including
product formulas, proprietary manufacturing processes and technologies, product
research and concepts, and recognized trademarks. These rights are
protected through the acquisition of patents and trademark registrations, the
maintenance of trade secrets, the development of trade dress, and, where
appropriate, litigation against those who are, in our opinion, infringing these
rights.
We are
currently consulting with law firms to protect our brand name and product
design. While there can be no assurance that registered trademarks will
protect our proprietary information, we
intend to
assert our intellectual property rights against any infringer. Although any
assertion of our rights can result in a substantial cost to, and diversion of
effort by, our company, management believes that the protection of our
intellectual property rights is a key component of our operating
strategy.
Sales
Personnel
We do not
currently employ any sales personnel. In the short term, we intend to use the
services of our management to sell our Product. As our Product approaches the
manufacturing stage, however, we plan to employ sales representatives in the
Philippines to promote and sell our product to wholesalers, retailers, and
end-user teachers. These sales representatives will be responsible for
soliciting, selecting and securing accounts within a particular regional
territory. We expect to pay such sales representatives on a commission basis. In
addition, we may decide to pay each sales representative a base salary. We
expect to provide service and support to our sales representatives, including
advertising and sales materials. When we determine to expand our sales
internationally, we will employ sales personnel in various provinces of China
and other Asian nations.
In the
event we hire sales personnel, we do not intend to do so in the next twelve
months unless our revenues are enough to absorb the cost of these
personnel.
Expenses
We
estimate the costs to implement our business strategy over the following twelve
months to be:
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Travel
and Related expenses, which will consist primarily of our executive
officer and directors visiting school supply merchants and resellers in
their sales efforts. We estimate travel and related expenses for the next
twelve months will be approximately
$4,000;
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Initial
Marketing, which will consist of the marketing efforts discussed above,
including direct marketing and attendance at trade shows. We estimate
initial marketing expenses for the next twelve months will be
approximately $6,000;
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Research
and Development costs consist of developing and testing our Product and
determining the best combination of materials and suppliers for
production. We estimate that research and development costs for the next
twelve months will be approximately
$10,000.
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We intend
to obtain business capital through the use of private equity fundraising or
shareholders loans. We anticipate that, in time, the primary source of revenues
for our business model will be the sale of our Product.
Significant
Equipment
We do not
intend to purchase any significant equipment for the next twelve
months.
Results
of Operations for the Period from February 29, 2008 (Date of Inception) until
March 31, 2008
We
generated no revenue for the period from February 29, 2008 (Date of Inception)
until March 31, 2008. Our Operating Expenses during this period equaled $4,000,
consisting entirely of Professional Fees. We, therefore, recorded a net loss of
$4,000 for the period from February 29, 2008 (Date of Inception) until March 31,
2008. Our operating expenses are wholly attributable to professional fees
associated with the initial development of our business, legal expenses, and
consulting fees.
We
anticipate our operating expenses will increase as we implement our business
plan. The increase will be attributable to expenses to implement our business
plan, and the professional fees to be incurred in connection with the filing of
a registration statement with the Securities Exchange Commission under the
Securities Act of 1933. We anticipate our ongoing operating expenses will also
increase once we become a reporting company under the Securities Exchange Act of
1934.
Liquidity
and Capital Resources
As of
March 31, 2008, we had total current assets of $39,000, consisting of Cash in
the amount of $35,000 and Prepaid Expenses in the amount of $4,000. We had no
current liabilities as of March 31, 2008. Thus, we have working
capital of $39,000 as of March 31, 2008.
Operating
activities used $8,000 in cash for the period from February 29, 2008 (Date of
Inception) until March 31, 2008. Our net loss of $4,000 represented half our
negative operating cash flow while our Prepaid Expenses of $4,000 represented
the other half. Financing Activities during the period from February 29, 2008
(Date of Inception) until March 31, 2008 generated $43,000 in cash during the
period.
As
demonstrated above, we expect to spend approximately $20,000 to implement our
business plan over the coming year. Our accounting, legal and
administrative expenses for the next twelve months are anticipated to be
$30,000. As of March 31, 2008, we had $35,000 in cash.
As of
March 31, 2008, we have insufficient cash to operate our business at the current
level for the next twelve months and insufficient cash to achieve our business
goals. The success of our business plan beyond the next 12 months is
contingent upon us obtaining additional financing. We intend to fund operations
through debt and/or equity financing arrangements, which may be insufficient to
fund our capital expenditures, working capital, or other cash requirements. We
do not have any formal commitments or arrangements for the sales of stock or the
advancement or loan of funds at this time. There can be no assurance that such
additional financing will be available to us on acceptable terms, or at
all.
Going
Concern
We have
limited working capital and have not yet received revenues from sales of
products. These factors have caused our accountants to express
substantial doubt about our ability to continue as a going concern. The
financial statements do not include any adjustment that might be necessary if we
are unable to continue as a going concern.
Our
ability to continue as a going concern is dependent on our generating cash from
the sale of our common stock and/or obtaining debt financing and attaining
future profitable operations. Management’s plans include selling our
equity securities and obtaining debt financing to fund our capital requirement
and ongoing operations; however, there can be no assurance we will be successful
in these efforts.
Off
Balance Sheet Arrangements
As of
March 31, 2008, there were no off balance sheet
arrangements.