MMMM Quad M Solutions Inc (CE)

ITEM 1A. RISK FACTORS

Investing in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all the other information in this Annual Report, including “Management’s Discussion and Analysis of the Financial Condition and Results of Operations” and the consolidated financial statements and the related notes included elsewhere in this Annual Report, before deciding whether to invest in shares of our common stock. If any of the following risks actually occurs, our business, reputation, financial condition, results of operations, revenue, and future prospects could be seriously harmed. Unless otherwise indicated, references to our business being seriously harmed in these risk factors will include harm to our business, reputation, financial condition, results of operations, revenue, and future prospects. In that event, the market price of our common stock could decline, and you could lose part or all of your investment.

Risks Related to our Business

We never generated profits from our former mining operations and lack any significant operating history in our new business operations. During our fiscal year ended September 30, 2019 we have had no revenues. As such we don’t know if we will ever generate revenues Investment in our securities may result in the total loss of your investment.

The Company, f/k/a Mineral Mountain Mining and Milling Company, was formerly engaged, without success, in identifying and investing in mining properties. The Company was not successful in its efforts to engage in mining operations and, as a result, determined to diversify its business operations. On April 16, 2019, the Company completed an exchange of shares for 100% of the capital stock of NuAxess 2 and PR345 and changed Mineral Mountain’s business focus from mining to business services principally related to offering self-insured health insurance, reinsurance medical stop-loss, supplemental insurance, financial services, and employee benefits and retirement services to the small group employer market. In connection with the closing of the share exchange agreements (SEA), the Company divested 75% of its equity in its former wholly-owned mining subsidiaries to an entity controlled by its former chairman and CEO.

As a result of the divestiture of control of its former mining subsidiaries and the recent commencement of business activities of the Company’s new wholly-owned subsidiaries, NuAxess and PR345, there have been no recent profitable operating history upon which an evaluation of our future success or failure can be made.

 Our ability to achieve and maintain profitability and positive cash flow depends on:

Based on current business plans, we expect to incur operating losses and negative cash flows from consolidated operations in future periods until such time as our new agreements in the staffing and PEO businesses can start to utilize the Company’s self-funded health insurance programs and employee benefit operations to generate revenues. The expenses associated with SG&A will continue to rise faster than we can generate revenue from sales. The costs and expenses associated with developing any new business in new markets are likely to continue to stretch our limited resources including management until we can determine the right business market that will quickly utilize our programs and see the opportunity to innovate their faulty unsustainable programs._ As a result, we may not generate sufficient revenues, profits or positive net cash flows in the near future, and failure to generate significant revenues or positive cash flows from operating activities could cause us to suspend or cease operations.

We will be dependent on our ability to raise debt, equity and generate revenues from our new operations as well as find alternate sources of capital, during our transition to find, develop, sell and support our small group employer customers with our ERISA based self- funded health insurance program and employee benefits services that must also encourage providers to accept the change to a consumer driven healthcare market where patients negotiate and pay their providers directly and supported by a new company with no track record.

We anticipate that our operating expenses will increase substantially in the foreseeable future as we devote all of our efforts and resources to establishing our new staffing business and self-funded health insurance and employee benefits operations. The Company is not able to use marketing and branding in any meaningful way to compete with a state dominated market monopoly of well financed large insurance carriers. Once finding the markets to disrupt we must still finance how to broaden our end-customer base, expand our operations, hire additional employees in order to implement our comprehensive business plan, and support members. There can be no assurance that funding will be obtained and be available to operate after we complete sales. . Since our change in control and commencement of new business operations, we have been dependent upon proceeds from convertible notes at terms acceptable to the Company and there can be no assurance that we will be able to continue to raise funds in adequate amounts from convertible notes to finance our operations until we generate positive cash flow from operations, of which there can be no assurance. These efforts may prove more expensive than we currently anticipate, and we may not succeed in establishing and increasing our revenues sufficiently, or at all, to offset these higher expenses.

If the market does not adopt our self-funding of employer sponsored health insurance and benefits in a large enough manner to absorb the costs both past and future, we will not grow as quickly as anticipated, or at all, and our business, results of operations and financial conditions, would be detrimentally harmed.

The Company may find that the new and innovative health insurance and employee benefits programs, including self-funded plans offered and to be offered by the Company may not readily find acceptance from its target small and mid-sized employer market. As a result, we must be able to adjust our products and services in order to achieve and maintain market acceptance, of which there can be no assurance. Further, if we achieve market acceptance, there can be no assurance that we will be able to fulfill demand if such demand exceeds our staffing capabilities. In fact, there can be no assurance that demand for our self-funding of employer sponsored health insurance and benefits will ever develop. We expect that we will be dependent on third party staffing for the foreseeable future but at present have no firm arrangements to fund our own staffing, notwithstanding our plans. If we are unable to provide enhancements and new features for our self-funding of employer sponsored health insurance and benefits and any future insurance and employee benefits products and services, our business could be adversely affected.

We are subject to all of the risks inherent in the highly competitive health insurance and employee benefit services sectors, including, without limitation, the following:

If we fail to manage growth, if any, effectively, our business would be harmed.

Our operating structure and plan of operations has been altered completely during the 2019 fiscal year, from unsuccessful mining operations to entry into the highly competitive health insurance and employee services sectors, and any changes or future growth will place significant demands on our management, employees, infrastructure and other limited and stretched resources. We will also need to continue to improve our financial and management controls and reporting systems and procedures which require additional new personnel and platforms. We may encounter delays or difficulties in implementing our business plans and manage our growth, of which there can be no assurance. Additionally, to manage any future change, we will need to hire, train, integrate and retain a number of highly skilled and motivated employees, the failure of which could materially adversely impact our financial conditions and potential to succeed, of which there can be no assurance. If we do not effectively hire, train, integrate and retain sufficient highly qualified personnel to support any future growth, and if we do not effectively manage the associated increases in expenses, our business, results of operations and financial condition would be harmed.

Our growth will be affected by many factors, including our success in implementing our business strategy, which is subject to many risks and uncertainties over which we may have little or no control.

We may acquire or enter into other businesses or joint venture agreements which could require significant management attention, disrupt our business and potentially adversely affect our operating results.

As part of our business strategy, we may enter into or make investments in complementary companies, products, or technologies and/or enter into agreement with third parties related to our staffing, health insurance and employee benefits businesses. We are a small organization and our ability to acquire and integrate other companies or implement joint ventures and third-party arrangements in a successful manner is unproven. If we are unable to complete acquisitions or enter into other business ventures, we may not ultimately strengthen our competitive position or achieve our goals. Furthermore, there can be no assurance that we shall have adequate resources to properly integrate and manage these new businesses and operations successfully or at terms and conditions satisfactory to the Company. We may have to pay cash, incur debt or issue convertible securities to fund any such acquisitions or joint ventures, each of which could adversely affect our financial condition or the value of our common stock. The sale of equity or issuance of convertible debt to finance any such efforts could result in dilution to our stockholders. The incurrence of indebtedness would result in increased fixed obligations and could also include covenants or other restrictions that would impede our ability to manage our operations.

Our revenue will be dependent upon acceptance of our innovative health insurance and employee benefit services and products by small and mid-sized U.S. businesses.

The use of partially self-funded health insurance plans, while not necessarily new, has not been actively marketed to the small group employer (SGE). The SGE has been historically dominated by fully-insured BUCA carrier plans. Despite the fact that the price of insurance premiums has increased by approximately 100% since 2010, combined with reduced benefits and higher deductibles, approximately 83% of small employers still do not self-insure, notwithstanding the fact that approximately 90% of large employers self-insure. There can be no assurance that the innovations offered by the Company’s plans, including elimination of middleman brokers and other factors that increase premium costs, will result in acceptance or profitability. Nor can there be any assurance that our plan to offer a transparent program showing small employers all the costs incurred and, at the same time seeking to share with providers profits that are achieved by lowering claim losses will result in the success of our business model.

The failure of such acceptance will adversely affect our ability to generate significant revenues and develop a presence in these competitive markets.

We are uncertain whether our health insurance and employee benefits programs, services and products will be accepted by our target market of small and mid-sized business employers in the U.S. and become commercial success. A number of factors may limit the market acceptance of our services and products, including:

We may not be able to realize substantial streams of revenue from our health insurance and employee benefit services and products if we cannot gain a market share from the currently dominant market forces.

At present and historically, the health insurance and employee benefits industries have been dominated by major companies including Blue Cross, Cigna, Aetna, Anthem, United Health Group and regional insurance carriers who use major selling brokerages and have significant impact on federal and state insurance law and regulations. Our future activities in the areas of developing our own staffing company, joint venturing with or acquiring staffing companies and developing self-funded health insurance and employee benefits could be subject to laws and regulations which may materially adversely affect our future operations. Notwithstanding the Company’s belief that its group employer health insurance programs are not dependent on any new laws or regulations to succeed, there can be no assurance new laws and regulations will not be established or that the Company will be successful in offering its self-funded programs to small group employers.

We have three full-time employees and are dependent on our directors, officers and third-party contractors.

We have three full-time employee and rely heavily and are wholly dependent upon the personal efforts and abilities of our officers and directors, each of whom devotes less than all of his time and efforts to our operations. The loss of any one of these individuals could adversely affect our business. We do not have written employment agreements with any of our officers or directors or maintain insurance on any of them. We may not be able to hire and retain such personnel in the future.

We depend on key personnel who would be difficult to replace, and our business plans will likely be harmed if we lose their services or cannot hire additional qualified personnel.

Our success depends substantially on the efforts and abilities of our senior management, including Pat Dileo, our CEO, Chairman and controlling shareholder, and certain key personnel. The competition for qualified management and key personnel is intense. The loss of services of one or more of our key employees, or the inability to hire, train, and retain key personnel, could delay the development and sale of our services and products, disrupt our business, and interfere with our ability to execute our intended business plan.

We plan to grant stock options or other forms of equity awards in the future as a method of attracting and retaining employees, motivating performance and aligning the interests of employees with those of our stockholders. There are currently no options and/or equity awards outstanding. If we are unable to adopt, implement and maintain equity compensation arrangements that provide sufficient incentives, we may be unable to retain our existing employees and attract additional qualified personnel. If we are unable to retain our existing employees, including qualified technical personnel, and attract additional qualified candidates, our business and results of operations could be adversely affected.

We will need to raise capital in order to realize our business plan, the failure of which could adversely impact our operations.

We are currently not profitable. For the fiscal year ended September 30, 2019 and as of the date of this report, we assessed our financial condition and concluded that we will need to raise additional capital to fund business operations for the next 12 months from the date of the report. Our auditor’s report for the year ended September 30, 2019, includes a going concern opinion on the matter. We had a net loss of $3,883,874 for the year ended September 30, 2019 compared to a net loss of $463,334 for the same period of the prior year. However, these net loss results are not comparable because during the year-ended September 30, 2018, our operations were limited to very inactive mining operations and principally represented limited general and administrative expenses and officers’ fees, while our general and administrative expense, professional fees, interest expense and loss on the issuance of convertible debt, largely incurred during the period from the change in control in April 2019 through September 30, 2019, represented a significant portion of the increase in net loss. Management is unable to predict if and when we will be able to generate significant positive cash flow or achieve profitability. Until we generate positive cash flow from operations, we will continue to be dependent upon our ability to raise funds through the issuance of convertible notes, of which there can be no assurance. Without adequate funding or significant revenue from operations, which have only recently commenced subsequent to the end of the September 30, 2019 fiscal year, we may not be able to fully-implement our plan of operations and expand business development efforts and other strategic initiatives.

We expect to continue to finance our operations, acquisitions and develop strategic relationships, primarily by issuing equity or convertible debt securities, which could significantly reduce the percentage ownership of our existing stockholders. Furthermore, any newly issued securities could have rights, preferences and privileges senior to those of our existing common stock. Moreover, any issuances by us of equity securities may be at or below the prevailing market price of our common stock and in any event may have a dilutive impact on existing stockholders’ ownership interest, which could cause the market price of our common stock to decline. We may also issue securities in our subsidiaries, and these securities may have rights or privileges senior to those of our common stock.

We may have difficulty obtaining additional funds as and when needed, and we may have to accept terms that would adversely affect our stockholders. In addition, any adverse conditions in the credit and equity markets may adversely affect our ability to raise funds when needed. Any failure to achieve adequate funding will delay our business plan executions and could lead to abandonment of one or more of our initiatives, as well as prevent us from responding to competitive pressures or take advantage of unanticipated acquisition opportunities. Any additional equity financing will likely be dilutive to stockholders, and certain types of equity financing, if available, may involve restrictive covenants or other provisions that would limit how we conduct our business or finance our operations.

The Company, as a reporting company under the Exchange Act, continues to require resources and management’s attention to fulfill its obligations under the Exchange Act.

As a reporting company, the Company is subject to the reporting requirements of the Securities Exchange Act of 1934 (the “Exchange Act”) and the rules and regulations promulgated by the United States Securities and Exchange Commission (“SEC”) thereunder, which entail significant accounting, legal and financial compliance costs at the same time the Company seeks to develop and implement its new business plan involving innovative health insurance and employee benefits programs. These costs have made, and will continue to make, some activities more difficult, time consuming or costly and may place significant strain on its personnel, systems and resources

Risks Related to the Ownership of our Stock

If we issue additional shares in the future, it will result in the dilution of our existing stockholders.

Our articles of incorporation authorize the issuance of up to 900,000,000 shares of common stock, par value of $0.001 (“Common Stock”). As of January 13, 2020, we had approximately 70,357,650 shares of Common Stock outstanding, excluding shares reserved for issuance underlying convertible notes. Our Board of Directors may choose to issue some or all of such shares for business acquisition and for funding of operations without stockholder approval. The issuance of any such shares will reduce the book value per share and may contribute to a reduction in the market price of the outstanding shares of our common stock. If we issue any such additional shares, such issuance will reduce the proportionate ownership and voting power of all current stockholders. Further, such issuance may result in a change of control of our company.

Our articles of incorporation authorize the issuance of up to 10,000,000 shares of our preferred stock with a par value of $0.10 per share. The board of directors is authorized to provide for the issuance of these unissued shares of preferred stock in one or more series, and to fix the number of shares and to determine the rights, preferences and privileges thereof. Accordingly, the board of directors may issue preferred stock which may convert into large numbers of shares of Common Stock and consequently lead to further dilution of other shareholders.

We may experience volatility in our stock price, which could negatively affect your investment, and you may not be able to resell your shares at or above the offering or current market prices.

The price of our common stock may vary substantially from time-to-time and the liquidity in our trading market cannot be assured. You may not be able to readily sell shares of our common stock. The market price of our common stock may fluctuate significantly in response to a number of factors, some of which are beyond our control, including:

In addition, the stock market has experienced volatility that has often been unrelated to the performance of particular companies. These market fluctuations may cause our stock price to fall regardless of our performance.

Because our securities trade on the OTC Market, your ability to sell your shares in the secondary market may be limited.

The shares of our common stock are subject to quotation on the OTC Market. Because our securities currently trade on the OTC, they are subject to the rules promulgated under the Exchange Act, which impose additional sales practice requirements on broker-dealers that sell securities governed by these rules to persons other than established customers and “accredited investors” (generally, individuals with a net worth in excess of $1,000,000 or annual individual income exceeding $200,000 or $300,000 jointly with their spouses). For such transactions, the broker-dealer must determine whether persons that are not established customers or accredited investors qualify under the rule for purchasing such securities and must receive that person’s written consent to the transaction prior to sale. Consequently, these rules may adversely affect the ability of purchasers to sell our securities and otherwise affect the trading market in our securities.

Because our shares are deemed “penny stocks,” you may have difficulty selling them in the secondary trading market.

The Securities and Exchange Commission has adopted regulations which generally define a “penny stock” to be any equity security that has a market price (as therein defined) less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. Additionally, if the equity security is not registered or authorized on a national securities exchange or NASDAQ, the equity security also would constitute a “penny stock.” As our common stock falls within the definition of penny stock, the ability of broker/dealers to sell our common stock and the ability of shareholders to sell our common stock in the secondary market would be limited. As a result, the market liquidity for our common stock would be severely and adversely affected. Trading in our common stock may be subject to these or other regulations in the future, which would negatively affect the market for our common stock.

A large number of shares will be eligible for future sale and may depress our stock price.

Our shares that are eligible for future sale, principally as a result of the conversion of outstanding convertible notes, may have an adverse effect on the price of our stock. Sales of substantial amounts of common stock, or a perception that such sales could occur, and the conversion of convertible notes and exercise of options or warrants to purchase shares of common stock at prices that are or may be below the then current market price of the common stock, could adversely affect the market price of our common stock and could impair our ability to raise capital through the sale of our equity securities.

We do not have cumulative voting, one person owns super-voting preferred stock and, as a result, can control our Company, which could limit your ability to influence the outcome of shareholder votes.

Our shareholders do not have the right to cumulative votes in the election of our directors. Cumulative voting, in some cases, could allow a minority group to elect at least one director to our board. Because there is no provision for cumulative voting, and as a result of the fact that our CEO and Chairman own the one outstanding share of Series B Preferred Stock that have super-voting rights entitling him to that number of votes equal to 51% of the total number of votes that all issued and outstanding shares of Common Stock and all other securities of the Company are entitled to, as of any such date of determination, on a fully diluted basis. Accordingly, our CEO and Chairman, as the holder of the super-voting Series B Preferred Stock, is able to elect all of the members of our board of directors.

Our Articles of Incorporation contain provisions that discourage a change of control.

Our articles of incorporation contain provisions that could discourage an acquisition or change of control without our board of directors’ approval. Our articles of incorporation authorize our board of directors to issue common or preferred stock without shareholder approval. Pursuant to resolutions of the board of directors dated November 5, 2018, authorized and approved the Certificate of Designation for the Series B Preferred Stock entitled to that number of votes equal to 51% of the total number of votes that all issued and outstanding shares of Common Stock and all other securities of the Company are entitled to, as of any such date of determination, on a fully diluted basis. On March 21, 2019, the Company’s board of directors approved the issuance of the Series B Preferred Stock to Sheldon Karasik and in April 2019, the Series B Super Voting Preferred Stock were transferred and assigned to Pat Dileo, our CEO and Chairman in connection with the change in control transaction.

We are a smaller reporting company, and any decision on our part to comply only with certain reduced or scaled reporting and disclosure requirements applicable to smaller companies could make our common stock less attractive to investors.

We are a smaller reporting company, and, for as long as we continue to be a smaller reporting company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to “smaller reporting companies,” including but not limited to:

Risks Related to the Equity Financing Agreement

Pursuant to the terms of the Equity Purchase Agreement, a large number of shares may be eligible for future sale and may depress our stock price or dilute the value of outstanding shares.

The Company anticipates receiving proceeds from our initial sale of shares to CBP pursuant to the Equity Financing Agreement. The Company may sell shares to CBP at a price equal to 75% of the lesser of (1) the lowest traded price of our Common Stock during the fifteen (15) consecutive trading day period beginning on the date on which we deliver a put notice to CBP (the “Market Price”) or (2) the lowest traded price of our Common Stock during the fifteen (15) consecutive trading day period following the Clearing Date of the put notice (“Valuation Price”). To the extent that the shares are sold at a discount of 25% to the fair market value, the use of the equity line could result in the dilution of the value of the outstanding common shares or in the depression of the stock price.

Pursuant to the terms of the Equity Purchase Agreement, the Company may not have the capacity to draw the full amount of $5 million from the equity line.

The Company anticipates receiving proceeds from our initial sale of shares to CBP pursuant to the Equity Financing Agreement. The Company may sell shares to CBP at a price equal to 75% of the lesser of (1) the lowest traded price of our Common Stock during the fifteen (15) consecutive trading day period beginning on the date on which we deliver a put notice to CBP (the “Market Price”) or (2) the lowest traded price of our Common Stock during the fifteen (15) consecutive trading day period following the Clearing Date of the put notice (“Valuation Price”). There is a minimum of twenty (20) trading days between purchases. Furthermore, there is a cap of the lesser of $100,000 or 150% average daily trading value (the average trading volume during the fifteen (15) trading days preceding the date of the put notice multiplied by the lowest trading price during this period) for each equity line draw down. Over the 24-month term of the equity line, the Company may not have the ability to fully draw and utilize the entire $5 million credit line due to the terms, conditions and limitations in the Equity Purchase Agreement.

We have broad discretion in how we may use the net proceeds from the equity credit line, and we may not entirely use them for mining activities.

The Company has received numerous inquiries relating to mineral and non-mineral business opportunities, including but not limited to mergers and acquisitions. The Company investigates and evaluates all such inquiries. The net proceeds of the revolving credit line from the sale of the Securities to CBP which this Annual Report relates is intended by the Company to be used for, among other things, general corporate purposes, which may include: (i) acquisitions; (ii) refinancing or repayment of indebtedness; (iii) capital expenditures and working capital; (iv) investing in equipment and property development (which may include funding associated with exploration); and (v) pursuing other business opportunities, both related and unrelated to our existing mining activities. In the event that we seek to pursue new business opportunities unrelated to our existing activities using proceeds from the Equity Purchase Agreement, or from other sources, whether through debt or equity, of which there can be no assurance, we may be required to engage the services of third-parties to assist us in pursuing any potential new opportunities. Any such efforts will be undertaken with a view toward generating cash flow from new operations.