UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURTIES
OF SMALL BUSINESS ISSUERS
Pursuant to Section 12(b) or (g) of the Securities and Exchange
Act of 1934
FUJI ELECTROCELL CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 33-0199082
(State of organization) (I.R.S. Employer Identification No.)
1839 S.E. Port Saint Lucie Blvd., Port Saint Lucie, FL 34952
(Address of principal executive offices)
Registrant's telephone number, including area code (561) 879-9999
Registrant's Attorney: Daniel G. Chapman, Esq., 2080 E. Flamingo
Rd., Suite 112, Las Vegas, NV 89119 (702) 650-5660
Securities to be registered pursuant to Section 12(b) of the Act:
None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 par value per share
PART I
ITEM 1. BUSINESS
Background
Fuji Electrocell Corporation (the "Company") is a Nevada
corporation formed on September 11, 1981 as the "Controlled
Combustion Corp." Its original purpose was to design, develop,
and build a pyrolitic plant, using and licensing the technology
specified in US Patent 3,838,013, rights to which were owned by
one of the founders. Because of the enormous costs involved in
developing the plant, the Company abandoned its original purpose
in October, 1992. The Company's name was changed to Fuji
Electrocell Corporation on June 25, 1986 in connection with the
company receiving an assignment of the right to market the Fuji
brand of batteries in the United States. This assignment
terminated on July 31, 1996 and was not renewed. It is believed
that the Company did distribute batteries under this contract.
The Company's principal place of business is located at 1839 SE
Port Saint Lucie Blvd., Port Saint Lucie, FL 34952.
The Company originally issued 22,500 shares of its common stock
to the three founders, then issued an additional 4,500 shares to
eleven investors. By April, 1983, these fourteen shareholders, by
gift or sale, transferred certain of their shares to
approximately 90 additional persons, in reliance upon the
exemption from the registration requirements provided by Section
4(2) of the Securities Act of 1933 as amended (the "Securities
Act"). On June 25, 1986, the Company's Articles were amended to
increase the authorized capital stock to Fifty Million Shares
from Fifty Thousand. The Company then authorized a 100:1 forward
stock split. On July 29, 1986, the Company issued 6,300,000
shares of its common stock for the interests in the Fuji
Electrocell Battery. In April, 1987, the Board issued 15,000,000
restricted shares to a then-director to be used as collateral for
a loan to be obtained by that director for the benefit of the
Company. Additional restricted shares were issued by previous
board members through 1992. Current management has not been able
to locate records concerning those issues, but it is believed
that previous management relied upon exemptions provided by
Section 4(2) of the Securities Act.
The Company is filing this registration statement on a voluntary
basis, pursuant to section 12(g) of the Securities Exchange Act
of 1934 (the "Exchange Act"), in order to ensure that public
information is readily accessible to all shareholders and
potential investors, and to increase the Company's access to
financial markets. In the event the Company's obligation to file
periodic reports is suspended pursuant to the Exchange Act, the
Company anticipates that it will continue to voluntarily file
such reports.
The primary activity of the Company currently involves seeking a
company or companies that it can acquire or with whom it can
merge. The Company has not selected any company for acquisition
or merger and does not intend to limit potential acquisition
candidates to any particular field or industry, but does retain
the right to limit acquisition or merger candidates, if it so
chooses, to a particular field or industry. The Company's plans
are in the conceptual stage only.
Risk Factors
The proposed business activities described herein classify the
Company as a "blank check" company. Many states have enacted
statutes, rules, and regulations limiting the sale of securities
of "blank check" companies in their respective jurisdictions.
Management does not intend to undertake any efforts to cause a
market to develop in the Company's securities until such time as
the Company has successfully implemented its business plan.
The Company's business is subject to numerous risk factors,
including the following:
NO OPERATING HISTORY OR REVENUE AND MINIMAL ASSETS. The Company
has had no operating history and has received no revenues or
earnings from operations. The Company has no significant assets
or financial resources. The Company will, in all likelihood,
sustain operating expenses without corresponding revenues, at
least until it completes a business combination. This may result
in the Company incurring a net operating loss which will increase
continuously until the Company completes a business combination
with a profitable target company. There is no assurance that the
Company will identify a target company or complete a business
combination.
SPECULATIVE NATURE OF COMPANY'S PROPOSED OPERATIONS. The success
of the Company's proposed plan of operation will depend to a
great extent on the operations, financial condition, and
management of the identified target company. While management
intends to seek business combinations with entities having
established operating histories, it cannot assure that the
Company will successfully locate candidates meeting such
criteria. In the event the Company completes a business
combination, the success of the Company's operations may be
dependent upon management of the successor firm or venture
partner firm together with numerous other factors beyond the
Company's control.
SCARCITY OF AND COMPETITION FOR BUSINESS OPPORTUNITIES AND
COMBINATIONS. The Company is, and will continue to be, an
insignificant participant in the business of seeking mergers and
joint ventures with, and acquisitions of small private entities.
A large number of established and well-financed entities,
including venture capital firms, are active in mergers and
acquisitions of companies which may also be desirable target
candidates for the Company. Nearly all such entities have
significantly greater financial resources, technical expertise,
and managerial capabilities than the Company. The Company is,
consequently, at a competitive disadvantage in identifying
possible target companies and successfully completing a business
combination. Moreover, the Company will also compete with
numerous other small public companies in seeking merger or
acquisition candidates.
NO AGREEMENT FOR BUSINESS COMBINATION OR OTHER TRANSACTION - NO
STANDARDS FOR BUSINESS COMBINATION. The Company has no
arrangement, agreement, or understanding with respect to engaging
in a business combination with any private entity. There can be
no assurance that the Company will successfully identify and
evaluate suitable business opportunities or conclude a business
combination. Management has not identified any particular
industry or specific business within an industry for evaluations.
The Company has been in the developmental stage since inception
and has no operations to date. Other than issuing shares to its
original shareholders, the Company never commenced any
operational activities. There is no assurance the Company will be
able to negotiate a business combination on terms favorable to
the Company. The Company has not established a specific length of
operating history or a specified level of earnings, assets, net
worth or other criteria which it will require a target company to
have achieved, and without which the Company would not consider a
business combination in any form with such. Accordingly, the
Company may enter into a business combination with a target
company having no significant operating history, losses, limited
or no potential for earnings, limited assets, negative net worth,
or other negative characteristics.
CONTINUED MANAGEMENT CONTROL, LIMITED TIME AVAILABILITY. While
seeking a business combination, management anticipates devoting
up to twenty hours per month to the business of the Company. The
Company's officers have not entered into written employment
agreements with the Company and are not expected to do so in the
foreseeable future. The Company has not obtained key man life
insurance on its officers or directors. Notwithstanding the
combined limited experience and time commitment of management,
loss of the services of any of these individuals would adversely
affect development of the Company's business and its likelihood
of continuing operations. See "MANAGEMENT."
REPORTING REQUIREMENTS MAY DELAY OR PRECLUDE ACQUISITION.
Companies subject to Section 13 of the Securities Exchange Act of
1934 (the "Exchange Act") must provide certain information about
significant acquisitions, including certified financial
statements for the company acquired, covering one or two years,
depending on the relative size of the acquisition. The time and
additional costs that may be incurred by some target entities to
prepare such statements may significantly delay or even preclude
the Company from completing an otherwise desirable acquisition.
Acquisition prospects that do not have or are unable to obtain
the required audited statements may not be appropriate for
acquisition so long as the reporting requirements of the 1934 Act
are applicable.
LACK OF MARKET RESEARCH OR MARKETING ORGANIZATION. The Company
has not conducted or received results of market research
indicating that market demand exists for the transactions
contemplated by the Company. Moreover, the Company does not have,
and does not plan to establish, a marketing organization. If
there is demand for a business combination as contemplated by the
Company, there is no assurance the Company will successfully
complete such transaction.
LACK OF DIVERSIFICATION. In all likelihood, the Company's
proposed operations, even if successful, will result in a
business combination with only one entity. Consequently, the
resulting activities will be limited to that entity's business.
The Company's inability to diversify its activities into a number
of areas may subject the Company to economic fluctuations within
a particular business or industry, thereby increasing the risks
associated with the Company's operations.
REGULATION. Although the Company will be subject to regulation
under the Securities Exchange Act of 1934, management believes
the Company will not be subject to regulation under the
Investment Company Act of 1940, insofar as the Company will not
be engaged in the business of investing or trading in securities.
In the event the Company engages in business combinations which
result in the Company holding passive investment interests in a
number of entities, the Company could be subject to regulation
under the Investment Company Act of 1940. In such event, the
Company would be required to register as an investment company
and could be expected to incur significant registration and
compliance costs. The Company has obtained no formal
determination from the Securities and Exchange Commission as to
the status of the Company under the Investment Company Act of
1940 and, consequently, any violation of such Act would subject
the Company to material adverse consequences.
PROBABLE CHANGE IN CONTROL AND MANAGEMENT. A business combination
involving the issuance of the Company's common stock will, in all
likelihood, result in shareholders of a private company obtaining
a controlling interest in the Company. Any such business
combination may require management of the Company to sell or
transfer all or a portion of the Company's common stock held by
them, or resign as members of the Board of Directors of the
Company. The resulting change in control of the Company could
result in removal of one or more present officers and directors
of the Company and a corresponding reduction in or elimination of
their participation in the future affairs of the Company.
REDUCTION OF PERCENTAGE SHARE OWNERSHIP FOLLOWING BUSINESS
COMBINATION. The Company's primary plan of operation is based
upon a business combination with a private concern which, in all
likelihood, would result in the Company issuing securities to
shareholders of such private company. Issuing previously
authorized and unissued common stock of the Company will reduce
the percentage of shares owned by present and prospective
shareholders, and a change in the Company's control and/or
management.
DISADVANTAGES OF BLANK CHECK OFFERING. The Company may enter into
a business combination with an entity that desires to establish a
public trading market for its shares. A target company may
attempt to avoid what it deems to be adverse consequences of
undertaking its own public offering by seeking a business
combination with the Company. The perceived adverse consequences
may include, but are not limited to, time delays of the
registration process, significant expenses to be incurred in such
an offering, loss of voting control to public shareholders, and
the inability or unwillingness to comply with various federal and
state securities laws enacted for the protection of investors.
These securities laws primarily relate to registering securities
and full disclosure of the Company's business, management, and
financial statements.
TAXATION. Federal and state tax consequences will, in all
likelihood, be major considerations in any business combination
the Company may undertake. Typically, these transactions may be
structured to result in tax-free treatment to both companies,
pursuant to various federal and state tax provisions. The Company
intends to structure any business combination so as to minimize
the federal and state tax consequences to both the Company and
the target entity. Management cannot assure that a business
combination will meet the statutory requirements for a tax-free
reorganization, or that the parties will obtain the intended tax-
free treatment upon a transfer of stock or assets. A non-
qualifying reorganization could result in the imposition of both
federal and state taxes, which may have an adverse effect on both
parties to the transaction.
REQUIREMENT OF AUDITED FINANCIAL STATEMENTS MAY DISQUALIFY TARGET
COMPANIES. Management believes that any potential target company
must provide audited financial statements for review, and for the
protection of all parties to the business combination. One or
more attractive target companies may forego a business
combination with the Company, rather than incur the expenses
associated with preparing audited financial statements.
BLUE SKY CONSIDERATIONS. Because the securities registered
hereunder have not been registered for resale under the blue sky
laws of any state, and the Company has no current plans to
register or qualify its shares in any state, holders of these
shares and persons who desire to purchase them in any trading
market that might develop in the future, should be aware that
there may be significant state blue sky restrictions upon the
ability of new investors to purchase the securities. These
restrictions could reduce the size of any potential market. As a
result of recent changes in federal law, non-issuer trading or
resale of the Company's securities is exempt from state
registration or qualification requirements in most states.
However, some states may continue to restrict the trading or
resale of blind-pool or "blank-check" securities. Accordingly,
investors should consider any potential secondary market for the
Company's securities to be a limited one.
ITEM 2. PLAN OF OPERATION
NOTE REGARDING PROJECTIONS AND FORWARD-LOOKING STATEMENTS
This registration statement includes projections of future
results and "forward-looking statements" as that term is defined
in Section 27A of the Securities Act and Section 21E of the
Exchange Act. All statements that are included in this
registration statement other than statements of historical fact,
are forward-looking statements. Although Management believes that
the expectations reflected in these forward-looking statements
are reasonable, it can give no assurance that such expectations
will prove to have been correct. Important factors that could
cause actual results to differ materially from the expectations
are disclosed in this registration statement, including, without
limitation, in conjunction with those forward-looking statements
contained in this registration statement
Plan of Operation - General
The Company's plan is to seek, investigate and, if such
investigation warrants, acquire an interest in one or more target
companies presented to it by persons or firms who or which desire
to seek the perceived advantages of a publicly held corporation.
At this time, the Company has no plan, proposal, agreement,
understanding or arrangement to acquire or merge with any
specific business or company, and the Company has not identified
any specific business or company for investigation and
evaluation. No member of Management or promoter of the Company
has had any material discussions with any other company with
respect to any acquisition for that company. The Company will not
restrict its search to any specific business, industry or
geographical location, and the Company may participate in
business venture of virtually any kind or nature. The discussion
of the proposed business under this caption and throughout this
Registration Statement is purposefully general and is not meant
to be restrictive of the Company's virtually unlimited discretion
to search for and enter into potential business opportunities.
The Company's potential success is heavily dependent on the
Company's management, which will have virtually unlimited
discretion in searching for and entering into a business
combination. None of the officers and directors of the Company
has had any experience in the proposed business of the Company.
Management anticipates that it will only participate in one
potential business venture. This lack of diversification should
be considered a substantial risk in investing in the Company
because it will not permit the Company to offset potential losses
from one venture against gains from another.
The Company may seek a business combination with a firm which
only recently commenced operations, or a developing company in
need of additional funds for expansion into new products or
markets or seeking to develop a new product or service, or an
established business which may be experiencing financial or
operating difficulties and needs additional capital which is
perceived to be easier to raise by a public company. In some
instances, a business combination may involve the acquisition or
merger with a corporation which does not need substantial
additional cash but which desires to establish a public trading
market for its common stock. The Company may purchase assets and
establish wholly-owned subsidiaries in various businesses or
purchase existing businesses as subsidiaries.
The Company anticipates that the selection of a combination in
which to participate will be complex and extremely risky. Because
of general economic conditions, rapid technological advances
being made in some industries, and shortages of available
capital, management believes that there are numerous firms
seeking the benefits of a publicly-traded corporation. Such
perceived benefits of a publicly traded corporation may include
facilitating or improving the terms on which additional equity
financing may be sought, providing liquidity for the principals
of a business, creating a means for providing incentive stock
options or similar benefits to key employees, providing liquidity
(subject to restrictions of applicable statues) for all
shareholders, and other factors. Potentially available business
opportunities may occur in many different industries and at
various stages of development, all of which will make the task of
comparative investigation and analysis of such business
opportunities extremely difficult and complex.
As is customary in the industry, the Company may pay a finder's
fee for locating an acquisition prospect. If any such fee is
paid, it will be approved by the Company's Board of Directors and
will be in accordance with the industry standards. Such fees are
customarily between 1% and 5% of the size of the transaction,
based upon a sliding scale of the amount involved. Such fees are
typically in the range of 5% on a $1,000,000 transaction ratably
down to 1% in a $4,000,000 transaction. Management has adopted a
policy that such a finder's fee or real estate brokerage fee
could, in certain circumstances, be paid to any employee (if
there are any in the future), officer, director or 5% shareholder
of the Company, if such person plays a material role in bringing
a transaction to the Company.
Paying a finder's fee to an insider could give rise to a conflict
of interest. The Company's board of directors considers such
payment, together with any profit on the equity interest held by
insiders, to constitute payment for the insiders' services,
especially given that Management serves without compensation. To
provide further safeguards for the shareholders, however, the
Company's board will ensure that any finder's fee paid to an
insider is "earned" in the sense that the work performed by the
insider is equivalent to the amount of work typically performed
by an independent third party seeking such fees. Additionally,
the insider is not permitted to be a 5% shareholder, officer, or
director of the target company. The finder's fee, whether paid to
insiders or to an independent third party, may be paid from the
revenues or other funds provided by the target company.
As part of any transaction, the acquired company may require that
Management or other stockholders of the Company sell all or a
portion of their shares to the acquired company, or to the
principals of the acquired company. It is anticipated that the
sales price of such shares will be lower than the current market
price or anticipated market price of the Company's Common Stock.
The Company's funds are not expected to be used for any stock
purchase from insiders. (Although such repurchase may be required
in order to complete a business combination, whether for tax
purposes or otherwise, Management does not anticipate that such
transactions will arise). The Company's shareholders will not be
provided the opportunity to approve or consent to such sale. The
opportunity to sell all or a portion of their shares in
connection with an acquisition may influence management's
decision to enter into a specific transaction. However,
management believes that since the anticipated sales price will
be less than the market value, the potential of a stock sale by
management will not be a material factor in their decision to
enter a specific transaction. Management will treat all shares of
the Company as equal in such a transaction. Management will not
negotiate for the purchase or other special treatment of shares
held by insiders in a business combination.
The above description of potential sales of management stock is
not based upon any corporate bylaw, shareholder or board
resolution, or contract or agreement. No other payments of cash
or property are excepted to be received by Management in
connection with any acquisition.
The Company has not formulated any policy regarding the use of
consultants or outside advisors, but does not anticipate that it
will use the service of such persons. Company policy does,
however, permit a merger or other business combination with an
entity in which the Company's management, or their affiliates or
associates have an ownership interest. Such a target company will
be evaluated by the Company's board of directors as discussed
herein, with the interested individuals prohibited from voting to
accept or reject the combination. At this time, no such entities
have been proposed or identified.
The Company has insufficient capital with which to provide the
owners of target companies with any significant cash or other
assets. However, management believes the Company will offer
owners of target companies the opportunity to acquire a
controlling ownership interest in a public company at
substantially less cost than is required to conduct an initial
public offering. The owners of the target companies will,
however, incur significant post-merger or acquisition
registration costs in the event they wish to register a portion
of their shares for subsequent sale. The Company will also incur
significant legal and accounting costs in connection with the
acquisition of a target company, including the costs of preparing
post-effective amendments, Forms 8-K, agreements, and related
reports and documents. Nevertheless, the officers and directors
of the Company have not conducted market research and are not
aware of statistical data which would support the perceived
benefits of a merger or acquisition transaction for the owners of
a target company. The Company does not intend to make any loans
to any prospective merger or acquisition candidates or to
unaffiliated third parties.
Sources of Opportunities
The Company anticipates that business for possible acquisition
will be referred by various sources, including its officers and
directors, professional advisors, securities broker-dealers,
venture capitalists, members of the financial community, and
others who may present unsolicited proposals. The Company has not
devised any notices or advertisements to assist in its search for
a target company, nor is any such notice or advertisement
proposed, other than a web-site which will advertise the
Company's availability. While the Company may acquire or merge
with a company in which the Company's management, promoters,
shareholders, or their affiliates or associates directly or
indirectly have an ownership interest, no finder's fee may be
paid to such insiders who are deemed control persons of the
target company.
The Company will seek a potential target company from all known
sources, but will rely principally on personal contacts of its
officers and directors as well as indirect associations between
them and other business and professional people. It is not
presently anticipated that the Company will engage professional
firms specializing in business acquisitions or reorganizations.
The officers and directors of the Company are currently employed
in other positions and will devote only a portion of their time
(not more than 5-10 hours per week) to the business affairs of
the Company, until such time as an acquisition has been
determined to be highly favorable, at which time they expect to
spend full-time investigating and closing any acquisition for a
period of two weeks. In addition, in the face of competing
demands for their time, the officers and directors may grant
priority to their full-time positions rather than to the Company.
Evaluation of Opportunities
The analysis of new target companies will be undertaken by or
under the supervision of the officers and directors of the
Company (see "Management"). Management intends to concentrate on
identifying prospective target companies which may be brought to
its attention through present associations with management. In
analyzing prospective target companies, management will consider
such matters as the available technical, financial and managerial
resources; working capital and other financial requirements;
history of operation, if any; prospects for the future; present
and expected competition; the quality and experience of
management services which may be available and the depth of that
management; the potential for further research, development or
exploration; specific risk factors not now foreseeable but which
then may be anticipated to impact the proposed activities of the
Company; the potential for growth or expansion; the potential for
profit; the perceived public recognition or acceptance of
products, services or trades; name identification; and other
relevant factors. Officers and directors of each Company will
meet personally with management and key personnel of the firm
sponsoring the combination as part of their investigation. To the
extent possible, the Company intends to utilize written reports
and personal investigation to evaluate the above factors. The
Company will not acquire or merge with any company for which
audited financial statements cannot be obtained.
It may be anticipated that any opportunity in which the Company
participates will present certain risks. Many of these risks
cannot be adequately identified prior to selection of the
specific opportunity, and the Company's shareholders must,
therefore, depend on the ability of management to identify and
evaluate such risk. In the case of some of the opportunities
available to the Company, it may be anticipated that the
promoters thereof have been unable to develop a going concern or
that such business is in its development stage in that it has not
generated significant revenues from its principal business
activities prior to the Company's participation. There is a risk,
even after the Company's participation in the activity and the
related expenditure of the Company's funds, that the combined
enterprises will still be able to become a going concern or
advance beyond the development stage. Many of the opportunities
may involve new and untested products, processes, or market
strategies which may not succeed. Such risks will be assumed by
the Company and, therefore, its shareholders.
There is the additional risk that the Company will not find a
suitable target. Management does not believe the Company will
generate revenue without finding and completing a transaction
with a suitable target company. If no such target is found,
therefore, no return on an investment in the Company will be
realized, and there will not, most likely, be a market for the
Company's stock.
The Company will not restrict its search for any specific kind of
business, but may acquire a venture which is in its preliminary
or development stage, which is already in operation, or in
essentially any stage of its corporate life. It is currently
impossible to predict the status of any business in which the
Company may become engaged, in that such business may need
additional capital, may merely desire to have its shares publicly
traded, or may seek other perceived advantages which the Company
may offer.
Acquisition of Opportunities
In implementing a structure for a particular business
acquisition, the Company may become a party to a merger,
consolidation, reorganization, joint venture, franchise or
licensing agreement with another corporation or entity. It may
also purchase stock or assets of an existing business. On the
consummation of a transaction, it is possible that the present
management and shareholders of the Company will not be in control
of the Company. In addition, a majority or all of the Company's
officers and directors may, as part of the terms of the
acquisition transaction, resign and be replaced by new officers
and directors without a vote of the Company's shareholders. It is
anticipated that securities issued in any such reorganization
would be issued in reliance on exemptions from registration under
applicable Federal and state securities laws. In some
circumstances, however, as a negotiated element of this
transaction, the Company may agree to register such securities
either at the time the transaction is consummated, under certain
conditions, or at specified time thereafter. The issuance of
substantial additional securities and their potential sale into
any trading market which may develop in the Company's Common
Stock may have a depressive effect on such market. While the
actual terms of a transaction to which the Company may be a party
cannot be predicated, it may be expected that the parties to the
business transaction will find it desirable to avoid the creation
of a taxable event and thereby structure the acquisition in a so
called "tax free" reorganization under Sections 368(a)(1) or 351
of the Internal Revenue Code of 1986, as amended (the "Code"). In
order to obtain tax free treatment under the Code, it may be
necessary for the owners of the acquired business to own 80% or
more of the voting stock of the surviving entity. In such event,
the shareholders of the Company, including investors in this
offering, would retain less than 20% of the issued and
outstanding shares of the surviving entity, which could result in
significant dilution in the equity of such shareholders.
As part of the Company's investigation, officers and directors of
the Company will meet personally with management and key
personnel, may visit and inspect material facilities, obtain
independent analysis or verification of certain information
provided, check reference of management and key personnel, and
take other reasonable investigative measures, to the extent of
the Company's limited financial resources and management
expertise.
The manner in which the Company participates in an opportunity
with a target company will depend on the nature of the
opportunity, the respective needs and desires of the Company and
other parties, the management of the opportunity, and the
relative negotiating strength of the Company and such other
management.
With respect to any mergers or acquisitions, negotiations with
target company management will be expected to focus on the
percentage of the Company which the target company's shareholders
would acquire in exchange for their shareholdings in the target
company. Depending upon, among other things, the target company's
assets and liabilities, the Company's shareholders will, in all
likelihood, hold a lesser percentage ownership interest in the
Company following any merger or acquisition. The percentage
ownership may be subject to significant reduction in the event
the Company acquires a target company with substantial assets.
Any merger or acquisition effected by the Company can be expected
to have a significant dilutive effect on the percentage of shares
held by the Company's then shareholders, including purchasers in
this offering.
Management has advanced, and will continue to advance, funds
which shall be used by the Company in identifying and pursuing
agreements with target companies. Management anticipates that
these funds will be repaid from the proceeds of any agreement
with the target company, and that any such agreement may, in
fact, be contingent upon the repayment of those funds.
The Company will not have sufficient funds to undertake any
significant development, marketing and manufacturing of any
products which may be acquired. Accordingly, following the
acquisition of any such product, the Company will, in all
likelihood, be required to either seek debt or equity financing
(including private placements of restricted stock or a public
offering of common stock), or obtain funding from third parties,
in exchange for which the Company would probably be required to
give up a substantial portion of its interest in any acquired
product. There is no assurance that the Company will be able
either to obtain additional financing or interest third parties
in providing funding for the further development, marketing and
manufacturing of any products acquired.
It is anticipated that the investigation of specific target
companies and the negotiation, drafting and execution of relevant
agreements, disclosure documents and other instruments will
require substantial management time and attention and substantial
costs for accountants, attorneys and others. If a decision is
made not to participate in a specific combination the cost
therefore incurred in the related investigation would not be
recoverable. Furthermore, even if an agreement is reached for the
participation in a specific combination, the failure to
consummate that transaction may result in the loss of the Company
of the related costs incurred.
Management believes that the Company may be able to benefit from
the use of "leverage" in the acquisition of a target company.
Leveraging a transaction involves the acquisition of a business
through incurring significant indebtedness for a large percentage
of the purchase price of that business. Through leveraged
transaction, the Company would be required to use less of its
available funds for acquiring the target company and, therefore,
could commit those funds to the operations of the target company,
to acquisition of other business opportunities, or to other
activities. The borrowing involved in a leveraged transaction
will ordinarily be secured by the assets of the target company to
be acquired. If the target company acquired is not able to
generate sufficient revenues to make payments on the debt
incurred by the Company to acquire that target company, the
lender would be able to exercise the remedies provided by law or
by contract. These leveraging techniques, while reducing the
amount of funds that the Company must commit to acquire a target
company, may correspondingly increase the risk of loss to the
Company. No assurance can be given as to the terms or
availability of financing for any acquisition by the Company.
During periods when interest rates are relatively high, the
benefits of leveraging are not as great as during periods of
lower interest rates, because the investment in the target
company held on a leveraged basis will only be profitable if it
generates sufficient revenues to cover the related debt and other
costs of the financing. Lenders from which the Company may obtain
funds for purposes of a leveraged buy-out may impose restrictions
on the future borrowing, distribution, and operating policies of
the Company. It is not possible at this time to predict the
restrictions, if any, which lenders may impose, or the impact
thereof on the Company.
Management
The Company's Management consist of the executive officers and
directors identified below (see "Item 5. - Directors and
Executive Officer"). These individuals do not have any prior
experience in dealing with blank-check companies, and are not
involved with any other blank-check companies that could compete
with this Company. There are no arrangements, agreements, or
understandings in which non-management shareholders participate
in or influence the management of the Company's affairs.
Management has not intentions of issuing or selling new
securities of the Company prior to the identification of a target
company for a business combination. In addition, the Company will
not issue any securities to executive officers, directors, or
promoters, or to their affiliates.
Management has agreed to advance additional funds to the Company
as needed for operating capital or to enable the Company to
search for or complete a business combination with a target
company. There is no arrangement in place for repaying Management
for these funds, and all advances are made without expectation of
repayment, unless the owners of a target company agree to repay
all or a portion of these advances. The Company does not intend
to issue equity or incur debt in order to repay Management for
these advances, or for any other reasons.
Competition
The Company is an insignificant participant among firms which
engage in business combinations with, or financing of,
development-stage enterprises. There are many established
management and financial consulting companies and venture capital
firms which have significantly greater financial and personal
resources, technical expertise and experience than the Company.
In view of the Company's limited financial resources and
management availability, the Company will continue to be a
significant competitive disadvantage vis-a-vis the Company's
competitors.
Year 2000 Compliance
The Company is aware of the issues associated with the
programming code in existing computer systems as the year 2000
approaches. The Company has assessed these issues as they relate
to the Company, and since the Company currently has no operating
business and does not use any computers, and since it has no
customers, suppliers or other constituents, it does not believe
that there are any material year 2000 issues to disclose in this
Form 10-SB.
Regulation and Taxation
The Investment Company Act of 1940 defines an "investment
company" as an issuer which is or holds itself out as being
engaged primarily in the business of investing, reinvesting or
trading securities. While the Company does not intend to engage
in such activities, the Company obtains or continues to hold a
minority interest in a number of development stage enterprises.
The Company could be expected to incur significant registration
and compliance costs if required to register under the Investment
Company Act of 1940. Accordingly, management will continue to
review the Company's activities from time to time with a view
toward reducing the likelihood the Company could be classified as
an "investment company".
The Company intends to structure a merger or acquisition in such
manner as to minimize Federal and state tax consequences to the
Company and to any target company.
Employees
The Company's only employees at the present time are its officers
and directors, who will devote as much time as the Board of
Directors determine is necessary to carry out the affairs of the
Company. (See "Management").
ITEM 3. DESCRIPTION OF PROPERTIES.
The Company has the use of a limited amount of office space from
Rick Oldfield, at no cost to the Company. The Company pays its
own charges for long distance telephone calls and other
secretarial, photocopying, and similar expenses. There is no
rental agreement or other costs for these services.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following tables set forth information relating to the
beneficial ownership of the Company's common stock by those
persons holding beneficially more than 5% of the Company's
capital stock, by the Company's directors and executive officers,
and by all of the Company's directors and executive officers as a
group.
a) Security Ownership of Certain Beneficial Owners
<TABLE>
<S> <C> <C> <C>
Title Name and Address of Amount and Percent of Class
of Beneficial Owner Nature of
Class Beneficial
Ownership
Common Alan R. & Sharon A. 4,278,201 13.04%
Kipnis
20529 Dumont St.
Woodland Hills, CA
91364
Common Rick Oldfield 6,663,102 20.31%
1839 S.E. Port St. Lucie
Blvd
Port St. Lucie, FL 34952
Common Diane Mullins 2,741,998 8.36%
8454 Brand Lane
Penngrove, CA 94951
</Table
>
b) Security Ownership of Management
</TABLE>
<TABLE>
<S> <C> <C> <C>
Title Name and Address of Amount and Percent of Class
of Beneficial Owner Nature of
Class Beneficial
Ownership
Common Alan R. & Sharon A. 4,278,201 13.04%
Kipnis
20529 Dumont St.
Woodland Hills, CA
91364
Common Rick Oldfield 6,663,102 20.31%
1839 S.E. Port St. Lucie
Blvd.
Port St. Lucie, FL 34952
Common All directors and 10,940,603.00 33.35%
officers as a group (2
individuals)
</Table
>
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
The members of the Board of Directors of the Company serve until
the next annual meeting of stockholders, or until their
successors have been elected. The officers serve at the pleasure
of the Board of Directors. Information concerning the directors
and executive officers of the Company follows:
</TABLE>
<TABLE>
<S> <C> <C>
Name / Address Age Position
Richard J. Oldfield 49 President /
Director
James W. Blake 40 Secretary / Treasurer
Alan R. Kipnis 50 Director
</TABLE>
Richard J. Oldfield
Mr. Oldfield is the President and a Director of the Company, and
has been since April, 1998. Mr. Oldfield has served as President
of Treasure Coast Mortgage since 1987. Prior to his tenure with
Treasure Coast Mortgage, Mr. Oldfield was a successful real
estate broker, working with Walter Mortgage from 1985 to 1987,
Draizin Realty from 1984 to 1985, Tardiff Realty from 1982 to
1983, and Kenny Rogers Realty from 1981 to 1982. Prior to that
time he worked as a commercial fisherman from 1974 to 1980. He
was a dean's list student at Broward Community College, where he
attended at various times from 1967-1974, and was a sergeant in
the U.S. army from 1968 to 1970, where he received the Bronze
Star.
James W. Blake
Mr. Blake is the Secretary and Treasurer of the Company, and has
served in those positions since April, 1998. Mr. Blake has served
as President of American International Square, Ltd. since
February, 1996. From March, 1989 through November, 1991, he was
the Secretary of Taj & Blake International Trading Company. Both
of these companies were general trading entities which located
goods manufactured in the United States for overseas buyers. Mr.
Blake is a member of Who's Who in Finance and Industry, and has
received the "Good Citizenship Award" from the Daughters of the
American Revolution, and the "God and Country Award" from the Boy
Scouts of America.
Alan Kipnis
Mr. Kipnis is a Principal of Lee & Associates Commercial Real
Estate Services - Los Angeles North, Inc. (a member of the Lee &
Associates Group of Companies.) Prior to Lee & Associates, Mr.
Kipnis was First Vice President with CB Commercial Real Estate
Group (Coldwell Banker) for 18 years in Industrial/Office Sales
and Leasing in the San Fernando Valley area of Los Angeles. Prior
to that, he was President of Marketing for CPI Business Systems,
and worked as Marketing Representative for IBM for eight years.
He is a member of the American Industrial Real Estate Association
(AIR). Mr. Kipnis earned a Bachelors Degree in Mathematics from
UCLA in 1969, and a Masters in Business from UCLA in 1971.
Prior Blank Check Experience
None of the officers or directors of the Company have any prior
experience with blank check companies.
ITEM 6. EXECUTIVE COMPENSATION
No compensation of directors or executive officers is paid or
anticipated to be paid by the Company until an acquisition is
completed. On acquisition of a target company, current management
may resign and be replaced by persons associated with the
business acquired, particularly if the Company participates in
the target company by effecting a reorganization, merger, or
consolidation. If any member of current management remains after
effecting an acquisition, that member's time commitment will
likely be adjusted based on the nature and method of the
acquisition and location of the business. That time commitment
cannot be predicted prior to the acquisition. Compensation of
management will be determined by the board of directors in place
after the acquisition, and shareholders of the Company will not
have the opportunity to vote on or approve such compensation.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
ITEM 8. DESCRIPTION OF SECURITIES.
Common Stock
The Company's Articles of Incorporation authorizes the issuance
of 50,000,000 shares of Common Stock, $0.001 par value per share,
of which 32,805,784 are issued and outstanding. The shares are
non-assessable, without pre-emptive rights, and do not carry
cumulative voting rights. Holders of common shares are entitled
to one vote for each share on all matters to be voted on by the
stockholders. The shares are fully paid, non-assessable, without
pre-emptive rights, and do not carry cumulative voting rights.
Holders of common shares are entitled to share ratably in
dividends, if any, as may be declared by the Company from time-to-
time, from funds legally available. In the event of a
liquidation, dissolution, or winding up of the Company, the
holders of shares of common stock are entitled to share on a pro-
rata basis all assets remaining after payment in full of all
liabilities.
Preferred Stock
The Company's Articles of Incorporation authorizes the issuance
of 20,000,000 shares of preferred stock, $0.01 par value per
share, none of which have been issued. The Company currently has
no plans to issue any preferred stock. The Company's Board of
Directors has the authority, without action by the shareholders,
to issue all or any portion of the authorized but unissued
preferred stock in one or more series and to determine the voting
rights, preferences as to dividends and liquidation, conversion
rights, and other rights of such series. The preferred stock, if
and when issued, may carry rights superior to those of common
stock; however no preferred stock may be issued with rights equal
or senior to the preferred stock without the consent of a
majority of the holders of then-outstanding preferred stock.
The Company considers it desirable to have preferred stock
available to provide increased flexibility in structuring
possible future acquisitions and financings, and in meeting
corporate needs which may arise. If opportunities arise that
would make the issuance of preferred stock desirable, either
through public offering or private placements, the provisions for
preferred stock in the Company's Certificate of Incorporation
would avoid the possible delay and expense of a shareholder's
meeting, except as may be required by law or regulatory
authorities. Issuance of the preferred stock could result,
however, in a series of securities outstanding that will have
certain preferences with respect to dividends and liquidation
over the common stock which would result in dilution of the
income per share and net book value of the common stock. Issuance
of additional common stock pursuant to any conversion right which
may be attached to the terms of any series of preferred stock may
also result in dilution of the net income per share and the net
book value of the common stock. The specific terms of any series
of preferred stock will depend primarily on market conditions,
terms of a proposed acquisition or financing, and other factor
existing at the time of issuance. Therefor, it is not possible at
this time to determine in what respect a particular series of
preferred stock will be superior to the Company's common stock or
any other series of preferred stock which the Company may issue.
The Board of Directors does not have any specific plan for the
issuance of preferred stock at the present time, and does not
intend to issue any preferred stock at any time except on terms
which it deems to be in the best interest of the Company and its
shareholders.
The issuance of preferred stock could have the effect of making
it more difficult for a third party to acquire a majority of the
outstanding voting stock of the Company. Further, certain
provisions of Nevada law could delay or make more difficult a
merger, tender offer, or proxy contest involving the Company.
While such provisions are intended to enable the Board of
Directors to maximize shareholder value, they may have the effect
of discouraging takeovers which could be in the best interests of
certain shareholders. There is no assurance that such provisions
will not have an adverse effect on the market value of the
Company's stock in the future.
Shares Eligible for Future Sale
Of the issued and outstanding shares, 22,498,068 are subject to
resale restrictions and, unless registered under the Securities
Act or exempted under another provision of the Securities Act,
will be ineligible for sale in the public market. Sales may be
made after two years from their acquisition in accordance with
Rule 144 promulgated under the Securities Act.
In general, Rule 144 permits a person (or persons whose shares
are aggregated) who has beneficially owned shares that were
acquired privately (either directly from the Company or from an
Affiliate of the Company) for at least two years, or who is an
Affiliate of the Company, to sell within any three-month period,
a number of such shares that does not exceed the greater of 1% of
the then-outstanding shares of the Company's Common Stock
(approximately 43,000 as of the date of this statement) or the
average weekly trading volume in the Company's common stock
during the four calendar weeks immediately preceding such sale.
Sales under Rule 144 are also subject to certain manner of sale
provisions, notice requirements, and the availability of current
public information about the Company. A person (or persons whose
shares are aggregated) who is not deemed to have been an
Affiliate at any time during the 90 days preceding a sale, and
who has beneficially owned shares for at least three years, is
entitled to sell all such shares under Rule 144 without regard to
the volume limitations, current public information requirements,
manner of sale provisions, or notice requirements. Sales of
substantial amounts of the Common Stock of the Company in the
public market could affect prevailing market prices adversely.
PART II
ITEM 1. MARKET PRICE FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
As of March 13, 1998, there were 32,805,784 issued and
outstanding shares of the Registrant's common stock. Of these,
22,498,068 are restricted. There are 579 shareholders of the
common stock. There is no active market for the registrant's
securities.
Effective August 11, 1993, the Securities and Exchange Commission
adopted Rule 15g-9, which established the definition of a "penny
stock," for purposes relevant to the Company, 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: (i) that a broker or dealer
approve a person's account for transactions in penny stocks; and
(ii) 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 (i) obtain financial information and investment
experience and objectives of the person; and (ii) make a
reasonable determination that the transactions in penny stocks
are suitable for that person and that 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 prepared by the Commission relating
to the penny stock market, which, in highlight form, (i) sets
forth the basis on which the broker or dealer made the
suitability determination; and (ii) that the broker or dealer
received a signed, written agreement from the investor prior to
the transaction. Disclosure also has to be made about the risks
of investing in penny stocks in both public offerings and in
secondary trading, and about 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.
The National Association of Securities Dealers, Inc. (the
"NASD"), which administers NASDAQ, has recently made changes in
the criteria for initial listing on the NASDAQ Small Cap market
and for continued listing. For initial listing, a company must
have net tangible assets of $4 million, market capitalization of
$50 million or net income of $750,000 in the most recently
completed fiscal year or in two of the last three fiscal years.
For initial listing, the common stock must also have a minimum
bid price of $4 per share. In order to continue to be included on
NASDAQ, a company must maintain $2,000,000 in net tangible assets
and a $1,000,000 market value of its publicly-traded securities.
In addition, continued inclusion requires two market-makers and a
minimum bid price of $1.00 per share.
Management intends to strongly consider undertaking a transaction
with any merger or acquisition candidate which will allow the
Company's securities to be traded without the aforesaid
limitations. However, there can be no assurances that, upon a
successful merger or acquisition, the Company will qualify its
securities for listing on NASDAQ or some other national exchange,
or be able to maintain the maintenance criteria necessary to
insure continued listing. The failure of the Company to qualify
its securities or to meet the relevant maintenance criteria after
such qualification in the future may result in the discontinuance
of the inclusion of the Company's securities on a national
exchange. In such events, trading, if any, in the Company's
securities may then continue in the non-NASDAQ over-the-counter
market. As a result, a shareholder may find it more difficult to
dispose of, or to obtain accurate quotations as to the market
value of, the Company's securities.
ITEM 2. LEGAL PROCEEDINGS
The Company and its directors have instituted action for a
declaratory judgment concerning a contract with Leann Gibbs, an
individual resident in Ontario, Canada. The Complaint was filed
in the Nineteenth Judicial Circuit Court, in and for St. Lucie
County, Florida, as Case No. 98-736CA03. Ms. Gibbs and the
Company had entered into a contract pursuant to which she would
transfer to the Company her interest in a number of mica mines,
in exchange for stock in the Company. The Company was to then
pursue a business in mining the mica and selling the raw material
to companies that would process it. The agreement with Ms. Gibbs
was never consummated, and the parties, after much discussion,
agreed to withdraw from the agreement. The Company has instituted
the action to declare the agreement void, simply to protect
itself from a later breach of contract action.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
The Company recently changed auditors from Kurt D. Saliger, CPA,
to Robert J. Boyer, CPA. This was done for purposes of
convenience, as Mr. Boyer is located near the Company's offices
in Florida, while Mr. Saliger is located in Las Vegas, NV. The
Company had no disagreement with Mr. Saliger concerning his 1997
audit.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
The Company has not issued or sold any unregistered securities in
the previous three years.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company and its affiliates may not be liable to its
shareholders for errors in judgment or other acts, or omissions
not amounting to intentional misconduct, fraud or a knowing
violation of the law, since provisions have been made in the
Articles of incorporation and By-laws limiting such liability.
The Articles of Incorporation and By-laws also provide for
indemnification of the officers and directors of the Company in
most cases for any liability suffered by them or arising from
their activities as officers and directors of the Company if they
were not engaged in intentional misconduct, fraud or a knowing
violation of the law. Therefore, purchasers of these securities
may have a more limited right of action than they would have
except for this limitation in the Articles of Incorporation and
By-laws.
The officers and directors of the Company are accountable to the
Company as fiduciaries, which means such officers and directors
are required to exercise good faith and integrity in handling the
Company's affairs. A shareholder may be able to institute legal
action on behalf of himself and all others similarly stated
shareholders to recover damages where the Company has failed or
refused to observe the law.
Shareholders may, subject to applicable rules of civil procedure,
be able to bring a class action or derivative suit to enforce
their rights, including rights under certain federal and state
securities laws and regulations. Shareholders who have suffered
losses in connection with the purchase or sale of their interest
in the Company in connection with such sale or purchase,
including the misapplication by any such officer or director of
the proceeds from the sale of these securities, may be able to
recover such losses from the Company.
PART F/S
The financial statements and supplemental data required by this
Part F/S include the following:
Reports of Independent Auditors, Kurt D. Saliger, CPA,
dated April 28, 1998, and Robert J. Boyer, CPA,
dated April 30, 1999.
Balance Sheet as of March 31, 1999 (unaudited),
December 31, 1998, and December 31, 1997.
Statement of Operation for the period January 1, 1999
through March 31, 1999 (unaudited), and the years
ended December 31, 1998, and December 31, 1997.
Statement of Stockholders' Equity.
Statement of Cash Flows for the period January 1, 1999
through March 31, 1999 (unaudited), and the years
ended December 31, 1998, and December 31, 1997.
Notes to Financial Statements for the Period Ended
March 31, 1999
Notes to Financial Statements for the Year Ended 1998
Notes to Financial Statements for the Year Ended 1997
Robert J. Boyer, CPA, PA 11379 N.W. 20th Drive, Coral Springs,
Florida 33071
To the Board of Directors and Stockholders
of: Fuji Electrocell Corporation
(A Development Stage Company)
I have audited the accompanying balance sheet of Fuji Electrocell
Corporation as of December 31, 1998, and the related statements
of income, retained earnings and cash flows for the year then
ended. These financial statements are the responsibility of the
Company's management. My responsibility is to express an opinion
on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted
auditing standards. Those standards require that I plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. I believe that my
audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Fuji
Electrocell Corporation at December 31, 1998, and the results of
its operations, retained earnings, and its cash flows for the
year then ended in conformity with generally accepted accounting
principles.
/s/ Robert J. Boyer, CPA
Robert J. Boyer, CPA
Coral Springs, FL
April 30, 1999
FUJI ELECTROCELL CORPORATION
(A Development Stage Company)
BALANCE SHEET
