UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
AMENDMENT NO. 1
TO
FORM 10-SB
GENERAL FORM FOR REGISTRATION
OF SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of The Securities Exchange Act of 1934
Nu Electric Corp.
(Name of Small Business Issuer in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
23-2426437
(I. R. S. Employer Identification No. )
624 East Tarpon Avenue, Tarpon Springs, FL 34689
(Address of principal executive offices) (Zip Code)
(727)942-8938
(Issuer's telephone number)
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
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TABLE OF CONTENTS
Part I
Item 1. Description of Business..............................................3
Item 2. Plan of Operation....................................................7
Item 3. Description of Property..............................................7
Item 4. Security Ownership of Certain Beneficial
Owners and Management................................................8
Item 5. Directors, Executive Officers, Promoters
and Control Persons..................................................9
Item 6. Executive Compensation..............................................10
Item 7. Certain Relationships and Related Transactions......................10
Item 8. Description of Securities...........................................10
Part II
Item 1. Market Price of and Dividends on the Registrant's
Common Equity and Other Shareholder Matters.........................12
Item 2. Legal Proceedings...................................................13
Item 3. Changes in and Disagreements with Accountants.......................13
Item 4. Recent Sales of Unregistered Securities.............................13
Item 5. Indemnification of Directors and Officers...........................14
Part F/S
Financial Statements.........................................................15
Part III
Item 1. Index to Exhibits...................................................
Item 2. Description of Exhibits.............................................
Signatures...................................................................
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THIS REGISTRATION STATEMENT CONTAINS CERTAIN FORWARD LOOKING STATEMENTS WITHIN
THE MEANING OF THE PRIVATE SECURITIES REFORM ACT OF 1995. THE REGISTRANT INTENDS
THAT SUCH FORWARD LOOKING STATEMENTS BE SUBJECT TO THE SAFE HARBORS CREATED
THEREBY. THESE FORWARD LOOKING STATEMENTS INCLUDE STATEMENTS REGARDING (I) THE
REGISTRANT'S RESEARCH AND DEVELOPMENT PLANS, MARKETING PLANS, CAPITAL AND
OPERATIONS EXPENDITURES, AND RESULTS OF OPERATIONS; (II) POTENTIAL FINANCING
ARRANGEMENTS; (III) POTENTIAL UTILITY AND ACCEPTANCE OF THE REGISTRANT'S
EXISTING AND PROPOSED PRODUCTS; AND (IV) THE NEED FOR, AND AVAILABILITY OF,
ADDITIONAL FINANCING.
THE FORWARD LOOKING STATEMENTS INCLUDED HEREIN ARE BASED ON CURRENT EXPECTATIONS
AND INVOLVE A NUMBER OF RISKS AND UNCERTAINTIES. THESE FORWARD LOOKING
STATEMENTS ARE BASED ON ASSUMPTIONS REGARDING THE REGISTRANT'S BUSINESS AND
TECHNOLOGY WHICH INVOLVE JUDGMENTS WITH RESPECT TO, AMONG OTHER THINGS, FUTURE
SCIENTIFIC, ECONOMIC, REGULATORY AND COMPETITIVE CONDITIONS, AND FUTURE BUSINESS
DECISIONS, ALL OF WHICH ARE DIFFICULT OR IMPOSSIBLE TO PREDICT ACCURATELY AND
MANY OF WHICH ARE BEYOND THE CONTROL OF THE REGISTRANT. ALTHOUGH THE REGISTRANT
BELIEVES THAT THE ASSUMPTIONS UNDERLYING THE FORWARD LOOKING STATEMENTS ARE
REASONABLE, ANY OF THE ASSUMPTIONS COULD PROVE INACCURATE AND, THEREFORE, ACTUAL
RESULTS MAY DIFFER MATERIALLY FROM THOSE SET FORTH IN THE FORWARD LOOKING
STATEMENTS. IN LIGHT OF THE SIGNIFICANT UNCERTAINTIES INHERENT IN THE FORWARD
LOOKING INFORMATION CONTAINED HEREIN, THE INCLUSION OF SUCH INFORMATION SHOULD
NOT BE REGARDED AS ANY REPRESENTATION BY THE REGISTRANT OR ANY OTHER PERSON THAT
THE OBJECTIVES OR PLANS OF THE REGISTRANT WILL BE ACHIEVED.
References in this registration statement to "We," "Us," or the "Company" refer
to Nu Electric Corporation, as well as their subsidiaries and predecessors.
PART I
Item 1. Description of Business.
(a) Business Development.
We were incorporated as Escalator, Inc. under the General Corporation
Laws of the State of Delaware on April 17, 1986. On June 3, 1986, Lone
Pine Resources, Inc. was merged with our Company through a reverse
merger whereby the shareholders of Lone Pine Resources, Inc. received
an equal number of shares in Escalator, Inc. Lone Pine Resources, Inc.
was incorporated under the laws of Utah on June 23, 1983.
We conducted operations through our two wholly-owned subsidiaries
Escalator Securities, Inc. and Escalator Investments, Inc., both
Pennsylvania corporations. Escalator Investments, Inc. was incorporated
in the State of Pennsylvania on August 15, 1984
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and conducted financial planning activities through approximately 1992
as a Registered Investment Advisor under the Investment Advisors Act of
1940. Since 1992, Escalator Investments, Inc. has had no operations.
Escalator Securities, Inc. was incorporated in the State of
Pennsylvania on August 22, 1985, and conducted business as a registered
broker-dealer under the Securities Exchange Act of 1934 and the
Pennsylvania Securities Act of 1972 until 1997. On December 31, 1997,
Escalator Securities, Inc. was closed by the National Association of
Securities Dealers. Since this date, Escalator Securities, Inc. has had
no operations.
On July of 1990, we acquired Frank Communications Corp., a Pennsylvania
corporation incorporated on May 30, 1989, which was in the business of
financial public relations. In consideration of this acquisition, we
paid $1,000.
On June 30, 1997, we transferred our holdings in Escalator Securities,
Inc. to Escalator Investments, Inc. pursuant to the terms of an
Agreement and Plan of Spinoff. On December 31, 1997, Escalator
Securities, Inc. was closed by the National Association of Securities
Dealers.
On April 22, 1998, we changed our name to Nu Electric Corporation. On
June 30, 1999, we acquired Clean Water Technologies, Inc. (hereinafter
"Clean Water"), a Florida limited liability company, through an
agreement and plan of merger whereby all of the outstanding and issued
shares of Clean Water were exchanged for shares of Nu Electric.
Pursuant to this agreement, we acquired all of the assets of the
business of Clean Water.
We have not been a party to any bankruptcy, receivership or similar
proceeding. We have not been involved in any material reclassification,
merger, consolidation, or purchase or sale of a significant amount of
assets not in the ordinary course of business.
(b) Business of Issuer.
(1) Principal products or services and their markets.
We currently have no products, services or revenues. We plan
to focus our efforts on sub-licensing environmentally friendly
technology developed by third parties. We have developed no
criteria for identifying such technology or for the
identification of sub-licensees of such technology. There can
be no guarantee that we will be able to locate and obtain
licenses to such technology or such sub-licensees.
If we are able to obtain licenses for the use of technologies,
we plan to sub-license such technology to third parties. If we
are able to locate sub-licensees, and such sub-licensees are
subsequently able to locate applications for the technology,
we plan to obtain royalty fees on the use of the licensed
technology. There can be no assurance that, if we obtain
licenses to environmentally friendly technologies, we will be
able to locate entities with the requisite knowledge and
experience to arrange application of such technology. Further,
there is no guarantee that if located, we will be able to
enter into licensing agreements with favorable terms, if
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at all. If we are unable to acquire rights to technology or
sub-license such technology to qualified entities, if
obtained, it may have a materially adverse effect on our
business and operations.
In our acquisition of Clean Water, we acquired a license to
technology related to the removal of arsenic from water. We
plan to sub-license this technology to parties with the
requisite experience and knowledge to arrange for its
technological application. We are currently awaiting patent
approval of this technology, but there can be no assurance
that a patent will be granted. Even if a patent is granted,
there is no guarantee that we will be able to sub-license this
technology to a third party. If patent approval is not
granted, it may make it difficult, if not impossible, for us
to sub-license our current licensed technology.
(2) Distribution methods of the products or services.
We have no products or services to be distributed. As of the
date of this registration statement, we have no plans for
distribution of any products or services that we may develop
in the future.
(3) Status of any publicly announced new product or service.
We currently have no new products or services that have been
publicly announced.
(4) Competitive business conditions and the small business
issuer's competitive position in the industry and methods of
competition.
In our search for technology and qualified parties to apply
such technology, we will compete with entities having
significantly greater financial and other resources than that
of the company. There can be no assurance that we will be able
to compete effectively with such entities. Further, we will
compete with our own potential sub-licensees for the location
and acquisition of environmentally friendly technologies. Our
failure to effectively compete with such entities could have a
materially adverse effect on our business and operations.
(5) Sources and availability of raw materials and the names of
principal suppliers.
We have no arrangements for raw materials or suppliers.
(6) Dependence on one or a few major customers.
We have no customers.
(7) Intellectual Property.
Through our acquisition of Clean Water, we acquired an
exclusive license for a process to remove arsenic from
drinking water. More specifically, the technology is a method
of removing arsenic species from an aqueous liquid using
modified zeolite materials. This agreement is for a period of
the longer of twenty years or the patent expiration. Although
we are the exclusive licensee of this technology, the owners
of the technology are permitted by the agreement to infringe
upon our
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exclusive rights in the case of our insolvency, bankruptcy,
dissolution, breach or similar occurrence. In addition, we are
required to carry product liability insurance coverage in an
amount sufficient to cover claims arising from the use of the
Clean Water technology.
In consideration for this exclusive license, Clean Water paid
seven-hundred thousand (700,000) shares of their common stock
as the initial license fee for this technology. Further, we
must pay two percent (2%) of revenues earned from the use of
this technology. This percentage is subject to the following
minimum royalty schedule:
First 24 months $0
End of year three $5,000
End of year four $6,000
End of year five $7,200
End of year six $8,640
End of year seven and each year thereafter $10,368
Two patent applications (Numbers 60/036,704 and 90/016,126)
for this technology have been filed with the United States
Patent and Trademark Office, by inventor Dr. Dagmar Bonnin.
These are both pending applications, and there is no guarantee
that patents for these applications will be granted.
As of the date of this registration statement, we currently
have no patents, trademarks, franchises, concessions, royalty
agreements or labor contracts.
(8) Need for any government approval of principal products or
services. We are not in need of governmental approval, as we
have no products or services.
(9) Effect of existing or probable governmental regulations on the
business. Although we have no operations which are currently
affected by governmental regulation, we feel that the
following may be of importance, if we attempt to utilize our
license for the technology to remove arsenic from water.
Environmental Protection Agency ("EPA") established the
current maximum contaminant level (MCL) for arsenic, 50
micrograms per liter (ug/L) or parts per billion (ppb), in
1975. This drinking water standard is based on the standard
set by the Public Health Service in 1943.
In 1996, Congress established certain requirements the EPA
must meet in designating a new standard for arsenic. These
requirements have shaped the agency's strategic approach. The
EPA will use peer-reviewed health effects research to meet the
statutory deadlines, along with studies of treatment,
analytical methods, occurrence, and cost-benefits, and will
identify affordable small system technologies. Results of
focused long-term arsenic research efforts
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will be considered in future reviews of the MCL, which will be
evaluated at least every 6 years, as appropriate, as required
by the 1996 amendments.
Proposed new standards on arsenic are to be publicly released
on January 1, 2000 and finalized by January 1, 2001. These
standards will dictate the parameters within which our company
may be able to proceed in developing an area of operations.
Further, if we are able to acquire other environmentally
friendly technologies in the future, of which there can be no
assurance, we will likely be affected by regulations similar
to those discussed above. Our failure to develop awareness on
all regulations relating to technologies, which we may seek to
acquire, could result in obsolescence of licenses obtained by
us. Such obsolescence could have a materially adverse effect
on our business and operations.
(10) Research and Development in the last two fiscal years. As of
the date of this registration statement, no amount has been
spent on research and development.
(11) Costs and effects of compliance with environmental laws. We
anticipate that the nature of our business will surround
compliance with environmental laws. We plan to acquire
technology based on compliance with the environmental law
standards. Since these standards will likely change regularly
in the future, we will incur expenses in seeking technology
which compliments such standards. Our failure to acquire
technologies, which comply with environmental law regulations,
could have a materially adverse effect on our operations.
(12) Number of total employees and number of full time employees.
We currently have two total and full-time employees. There are
no employment or collective bargaining agreements in place.
Item 2. Plan of Operation.
We are currently unable to satisfy our cash requirements without the financial
support of our management. We anticipate that we will meet our cash requirements
for the foreseeable future through financial support of our management.
Eventually, we may seek to raise additional funds. We have not yet determined if
or how we plan to obtain these additional funds.
We plan to acquire existing technology, which has already been fully developed.
Consequently, we do not anticipate significant research and development expenses
over the next twelve months. We do not expect to purchase or sell any plant and
significant equipment or make any significant changes in the number of employees
over the next twelve months.
Item 3. Description of Property.
Our offices are located at 624 East Tarpon Avenue, Tarpon Springs, Florida. The
space is approximately 1500 square feet and is leased by Wall Street
Communications, Inc., a sub-chapter
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S corporation controlled by the Scalas, at a monthly rent of $1100.00. We do not
own any significant real or personal property.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
(a) Security Ownership of Certain Beneficial Owners
<TABLE>
<CAPTION>
Title of Name & Address of Amount & Nature Percent
Class Beneficial Owner.. of Ownership of Class
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Howard & Laurie Scala 1,596,340 Joint Tenancy 41.8%
624 East Tarpon Avenue
Tarpon Springs, FL 34689
Common Howard & Laurie Scala 79,500 Indirect 2.1%
Wall Street Communications
624 East Tarpon Avenue
Tarpon Springs, FL 34689
Common Howard Scala / IRA 202,480 Direct 5.3%
624 East Tarpon Avenue
Tarpon Springs, FL 34689
Common Laurie Scala /IRA 45,970 Direct 1.2%
624 East Tarpon Avenue
Tarpon Springs, FL 34689
Common Laurie Scala C/F 33,230 Direct 0.9%
Matthew & Jeffrey Scala
624 East Tarpon Avenue
Tarpon Springs, FL 34689
Common Clifford Gross 753,424 Direct 19.7%
Utek, LLC
202 South Wheeler Street
Plant City, Florida 33566
</TABLE>
<TABLE>
<CAPTION>
(b) Security Ownership of Management
Title of Name & Address of Amount & Nature Percent
Class Beneficial Owner of Ownership of Class
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Howard & Laurie Scala 1,596,340 Joint Tenancy 41.8%
624 East Tarpon Avenue
Tarpon Springs, FL 34689
Common Howard & Laurie Scala 79,500 Indirect 2.1%
Wall Street Commmunications
624 East Tarpon Avenue
Tarpon Springs, FL 34689
Common Howard Scala / IRA 202,480 Direct 5.3%
624 East Tarpon Avenue
Tarpon Springs, FL 34689
Common Laurie Scala /IRA 45,970 Direct 1.2%
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624 East Tarpon Avenue
Tarpon Springs, FL 34689
Common Laurie Scala C/F 33,230 Direct 0.9%
Matthew & Jeffrey Scala
624 East Tarpon Avenue
Tarpon Springs, FL 34689
- ----------------------------------------------------------------------------------------------------------
TOTAL Howard & Laurie Scala 1,957,520 shares 51.3%
</TABLE>
(c) Changes in Control.
There are currently no arrangements which may result in a change of
control of the Company.
Item 5. Directors and Executive Officers, Promoters and Control Persons.
(a) Officers and Directors.
The following chart sets forth information on our officers and
directors:
<TABLE>
<CAPTION>
Name Age Title(s) Term of Office
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Laurie C. Scala 47 President, Secretary/Treasurer, & Director July 1, 1998 to present
Howard A.Scala 45 Vice President & Director July 1, 1998 to present
</TABLE>
Our Bylaws require that we have a minimum of one director. Directors
are elected at our annual meeting to be held on the second Monday of
each September or at a time as soon thereafter as is convenient, at a
time to be fixed by the Board of Directors. Directors shall serve until
their successors are duly elected or appointed. A vacancy on the Board
of Directors may be filled by a majority vote of the remaining
directors.
Our Bylaws provide for a minimum of the following officers: President,
Treasurer and Secretary. These officers are to be elected by the Board
of Directors at the first Board meeting following the annual meeting.
Other officers may be appointed by the Board at any time, and the Board
may fill any vacancies.
Laurie C. Scala is a graduate of Douglas College in Communications
(B.A. 1975). She began her brokerage career as a registered
representative of Merrill Lynch, Pierce, Fenner & Smith, Inc. in 1976.
In 1980, she became a Vice President of Herzfeld & Stern, Inc. In 1982,
Mrs. Scala assumed a position as Vice President of Thomson McKinnon
Securities, Inc. In 1984, she left her former position to work at a
partnership formed with her husband, Howard Scala, providing financial
planning and brokerage services. Since its formation in 1986, Mrs.
Scala has worked for the Company. She holds no other directorships in
any reporting companies.
Howard A. Scala is a graduate of Syracuse University School of
Management in Marketing (B.S. 1973). He began his brokerage career as a
registered representative of Merrill Lynch, Pierce, Fenner & Smith,
Inc. in 1976. In 1980, he became a Vice President of Herzfeld & Stern,
Inc. In 1982, Mr. Scala assumed a position as Vice President of Thomson
McKinnon Securities, Inc. In 1984, he left his former position to work
at a partnership formed with his wife, Laurie Scala, providing
financial planning and brokerage services. Since its formation
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in 1986, Mr. Scala has worked for the Company. He holds no other
directorships in any reporting companies.
(b) Identify Significant Employees.
We have no persons, not mentioned above, who are expected to make a
significant contribution to our business.
(c) Family relationships.
Laurie and Howard Scala are husband and wife.
(d) Involvement in certain legal proceedings. As of December 31, 1997,
Escalator Securities, Inc. was expelled as a broker-dealer from the
National Association of Securities Dealers, and Howard Scala was barred
as a broker.
Other than the aforementioned, we have had no events that occurred
during the past five years, including bankruptcies, criminal
convictions or proceedings, court orders or judgments, that are
material to an evaluation of the ability or integrity of any director,
person nominated to become a director, executive officer, promoter or
control person of our Company.
Item 6. Executive Compensation.
<TABLE>
<CAPTION>
- --------------------- -------- ---------- ---------- ------------------- ------------------ ----------------- ----------- ---------
Name and Principle Year Salary Bonus ($) Other Annual Restricted Securities LTIP Other
Position ($) Compensation ($) Stock Award(s) Underlying Payouts ($)
($) Options (#) ($)
- --------------------- -------- ---------- ---------- ------------------- ------------------ ----------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Laurie & Howard
Scala, 1996 0 0 0 0 0 0 0
President & Vice 1997 0 0 0 0 0 0 0
President 1998 0 0 0 $187,500 0 0 0
respectively
- --------------------- -------- ---------- ---------- ------------------- ------------------ ----------------- ----------- ---------
</TABLE>
Item 7. Certain Relationships and Related Transactions.
There have been no transactions during the last two years, or proposed
transactions, to which we were or are a party, in which any of our directors,
executive officers, nominees for such positions, security holders or the
families of such people had a material interest. We are not a subsidiary of any
other company. We have not entered into any transactions with promoters.
Item 8. Description of Securities.
Common Stock.
In General. We are authorized to issue 50,000,000 shares of common stock with a
par value of $0.002 each, of which have 3,814,572 common shares were outstanding
as of September 30, 1999. All of the issued and outstanding common stock is
fully paid and non-assessable.
Voting. Each share of our common stock entitles the holder thereof to one vote
per share in the election of directors and in all other matters upon which
stockholders are entitled to vote. The holders of shares of common stock do not
have cumulative voting rights, which means that the
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holders of more than 50% of the outstanding shares voting for the election of
directors can elect all of the directors to be elected, if they so choose. In
such event, the holders of the remaining shares will not be able to elect any of
our directors. As of the date of this registration statement, Howard and Laurie
Scala are the beneficial owners of 1,957,520 voting shares or approximately 51%
of our outstanding voting stock. As the majority shareholders of the Company,
the Scalas would be able to elect all of the Directors of the Company.
Dividends. Each share of common stock entitles the holder thereof to receive
cash dividends as the Board of Directors may declare from funds legally
available therefor. However, we have not declared any dividends to date and do
not intend to declare any dividend on our common stock in the foreseeable
future.
Rights. There are no preemptive rights with respect to the common stock. Upon
liquidation, dissolution or winding up of the affairs of the Company, and after
payment of creditors, the assets legally available for distribution will be
divided ratably on a share-for-share basis among the holders of the outstanding
shares of common stock.
Preferred Stock.
We are not authorized to issue any preferred stock at this time.
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PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Related Stockholder Matters.
(a) Market information.
Our common stock is traded on the NASDAQ Over the Counter Bulletin
Board ("OTCBB") under the symbol NRGE. The following bid quotations
have been reported for the period beginning January 1, 1997 and ended
September 30, 1999:
Bid Quotations
--------------
Period High Low
------ ---- ----
Quarter Ended:
March 31, 1997 $5/8 $5/16
June 30, 1997 $1 3/8 $19/32
September 30, 1997 $1 1/8 $1/2
December 31, 1997 $11/16 $1/2
Quarter Ended:
March 31, 1998 $3/8 $1/4
June 30, 1998 $1/2 $3/8
September 30, 1998 $17/32 $3/8
December 31, 1998 $23/32 $5/32
Quarter Ended:
March 31, 1999 $11/16 $13/32
June 30, 1999 $1 7/8 $3/8
September 30, 1999 $1 1/16 $1/2
Such quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission. Such quotes are not necessarily representative
of actual transactions or of the value of our securities, and are in
all likelihood not based upon any recognized criteria of securities
valuation as used in the investment banking community.
The Company has been advised that approximately seven member firms of
the NASD are currently acting as market makers for the common stock.
There is no assurance that an active trading market will develop which
will provide liquidity for the Company's existing shareholders or for
persons who may acquire common stock through the exercise of warrants.
(b) Holders.
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As of September 30, 1999, there were approximately 113 holders of
record of our 3,814,572 shares of common stock outstanding. Of these
shares, 2,873,198 are restricted securities within the meaning of Rule
144(a)(3) promulgated under the Securities Act of 1933, as amended,
because such shares were issued and sold by the Company in private
transactions not involving a public offering. Certain of the shares of
common stock are held in "street" name and may, therefore, be held by
several beneficial owners. Our transfer agent is Fidelity Transfer
Company located at 1800 South West Temple, Suite 301, Box 53, Salt Lake
City, UT 84115.
No prediction can be made as to the effect, if any, that future sales
of shares of common stock or the availability of common stock for
future sale will have on the market price of the common stock
prevailing from time-to-time. Sales of substantial amounts of common
stock on the public market could adversely affect the prevailing market
price of the common stock.
(c) Dividends.
We have not paid a cash dividend on our common stock in the past two
years. The payment of dividends may be made at the discretion of our
Board of Directors and will depend upon, among other things, our
operations, our capital requirements and our overall financial
condition. As of the date of this registration statement, we have no
intention to declare dividends.
Item 2. Legal Proceedings.
We are currently unaware of any pending legal proceeding or any proceeding
contemplated by a governmental authority in which we may be involved.
Item 3. Changes in and Disagreements with Accountants.
In August 1998, we retained our current accountants, Acquavella, Chiarelli,
Shuster & Co. We dismissed our previous accountant, Robert DiMarco, because the
firm was understaffed. The dismissal was not due to any unfavorable report or
disagreement. Further, the dismissal was not related to any advice or
recommendations of the accountant. The change was made solely based on the fact
that the Board of Directors felt that a larger firm may better meet the needs of
our Company.
Item 4. Recent Sales of Unregistered Securities.
On January 13, 1997 we issued 3,000 shares of our common stock as an employee
bonus. This transaction was made in reliance on the exemption from the
registration requirements provided in section 4(2) of the Securities Act of
1933.
On June 30, 1997, we issued 306,000 shares of our common stock in the conversion
of outstanding 10% convertible bonds. This transaction was made in reliance on
the exemption from the registration requirements provided in section 4(2) of the
Securities Act of 1933.
On March 2, 1998, we issued 3,000 shares of our common stock as an employee
bonus. In addition, we issued 500,000 shares to Howard and Laurie Scala as
compensation for services
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rendered on the same date. These transactions were made in reliance on the
exemption from the registration requirements provided in section 4(2) of the
Securities Act of 1933.
On February 17, 1999, we issued 2,000 shares of our common stock as an employee
bonus. This transaction was made in reliance on the exemption from the
registration requirements provided in section 4(2) of the Securities Act of
1933.
On June 17, 1999 we issued 1,000,000 shares of our common stock as compensation
for services rendered. This transaction was made in reliance on the exemption
from the registration requirements provided in section 4(2) of the Securities
Act of 1933.
On June 30, 1999, we issued 893,000 shares of our common stock pursuant to the
Agreement and Plan of Merger with Clean Water.
Item 5. Indemnification of Directors and Officers.
Our Amended and Restated Certificate of Incorporation eliminates the liability
of our directors, officers, and trustees to the fullest extent permitted by
Section 145 of the Delaware General Corporation Law ("DCGL"), as the same may be
amended from time to time.
Section 145(a) of the DGCL provides that a Delaware corporation may indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
Section 145(b) of the DGCL provides that a Delaware corporation may indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the corporation unless and only to the extent that
the Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to be indemnified for such expenses which the court shall
deem proper.
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Section 145 of the DGCL further provides that to the extent a director or
officer of a corporation has been successful on the merits or otherwise in the
defense of any action, suit or proceeding referred to in subsections (a) and (b)
of Section 145, or in the defense of any claim, issue, or matter therein, he
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith; that indemnification and
advancement of expenses provided by, or granted pursuant to Section 145 shall
not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any bylaw,
agreement, vote of stockholders or disinterested directors or otherwise, both as
to his official capacity and as to action in another capacity while holding such
office; that indemnification and advancement of expenses provided by, or granted
pursuant to, Section 145 shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director or officer and
shall inure to the benefit of the heirs, executors and administrators of such a
person; and that the corporation shall have the power to purchase and maintain
insurance on behalf of any person who is or was a director or officer of the
corporation against any liability asserted against him and incurred by him in
any such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability under
such Section 145.
15
<PAGE>
NU ELECTTRIC CORPORATION & SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
JUNE 27, 1999
<PAGE>
NU ELECTRIC, CORPORATION & SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
JUNE 27, 1999
TABLE OF CONTENTS
Page
----
Independent Auditor's Report F-1
Consolidated Financial Statements:
Balance Sheet F-2
Statement of Operations F-3
Statement of Stockholder's Equity (Deficiency) F-4
Statement of Cash Flows F-5
Notes to Financial Statements F-6-9
Consolidating Supplementary Information:
Independent Auditor's Report on
Supplementary Information F-10
Schedule of Selling, General and
Administrative Expenses F-11
<PAGE>
To The Stockholders And Directors
Nu Electric, Corporation & Subsidiaries
Tarpon Springs, Florida 34689
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying consolidated balance sheet of NU ELECTRIC,
CORPORATION & SUBSIDIARIES, as of June 28, 1998 and June 27, 1999 and the
related consolidated statements of operations, retained earnings, stockholder's
equity (deficiency) and cash flows for the fifty two weeks then ended. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. A audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. A audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of NU ELECTRIC, CORPORATION &
SUBSIDIARIES, as of June 28, 1998 and June 27, 1999, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
/s/ Acquavella, Chiarelli, Shuster & Co.
Iselin, New Jersey
July 21, 1999
F-1
<PAGE>
<TABLE>
<CAPTION>
NU ELECTRIC, CORPORATION & SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
JUNE
ASSETS
June 28, June 27,
1998 1999
---- ----
<S> <C> <C>
Cash $ 8,582 $ 16,483
Deposits 925 925
Property and equipment (net) (note 2) 15,798 12,638
----------- -----------
$25,305 $30,046
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Due to officer $ 25,000 $ 15,000
10% convertible note payable (note 3) 5,000 -
----------- -----------
Total liabilities 30,000 15,000
----------- -----------
Stockholders' equity and deficiency
Common stock - par value $.001
Authorized 50,000,000 shares
Issued and outstanding 2,917,855 shares 21,543 61,543
Additional paid in capital 761,158 763,158
Accumulated deficit ( 787,396) ( 809,655)
----------- -----------
Total stockholders' equity (deficit) ( 4,695) ( 15,046)
----------- -----------
$ 25,305 $ 30,046
=========== ===========
</TABLE>
See accountants' report an notes to financial statements
F-2
<PAGE>
<TABLE>
<CAPTION>
NU ELECTRIC CORPORATION & SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
Fifty-two Fifty-two
Weeks Ended Weeks Ended
June 28, 1998 June 27, 1999
------------- -------------
<S> <C> <C>
Revenues:
Commissions $ 73,813
Interest and dividends 411 18
Other income 23,379 21,303
------------ ------------
Total revenues 97,603 21,321
------------ ------------
Operating Expenses:
Salaries and related expenses 20,293 -
Clearing expenses and commissions 32,612 -
Depreciation/amortization 41 3,160
Rent 10,834 6,102
Selling, general and administration 58,621 34,318
------------ ------------
Total operating expenses 122,401 43,580
------------ ------------
Net Income (loss) ($ 24,798) ($22,259)
============ ============
Net income per common share ($ .012939) ($.00584)
============ ============
</TABLE>
See accountants' report and notes to financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
NU ELECTRIC CORPORATION & SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY (DEFICIT)
FIFTY-TWO WEEKS ENDED JUNE 28, 1998 AND FIFTY-TWO WEEKS ENDED JUNE 27, 1999
C o m m o n S t o c k
----------------------
Additional
Number of Par Paid-In
Shares Value Capital
------ ----- -------
Deficit
<S> <C> <C> <C> <C>
Balance - June 27, 1997 1,107,397 $21,543 $758,736 ($762,598)
Net income (loss) 799,000 - 2,422 ( 24,798)
------------ ----------- ----------- -----------
Balance - June 28, 1998 1,906,397 21,543 761,158 ( 787,396)
Net income (loss) 1,011,458 40,000 2,000 ( 22,259)
------------ ----------- ----------- -----------
Balance - June 27, 1999 2,917,855 $61,543 $763,158 ($809,655)
============ =========== =========== ===========
</TABLE>
See accountants' report and financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
NU ELECTRIC, CORPORATION & SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Fifty-two Fifty-two
Weeks Ended Weeks Ended
June 28, 1998 June 27, 1999
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income/(loss) ( 24,798) ( 22,259)
Adjustment to reconcile net loss to
net cash used in operations:
Depreciation and amortization 41 3,160
(Increase) decrease in due from brokers and dealers 13,227 -
(Increase) decrease in deposits,
prepaid expenses and other assets 8,943 -
Increase (decrease) in accounts payable and
accrued expenses ( 39,702) -
------------ -------------
Net cash provided (used) by operating activities ( 42,289) ( 19,099)
------------ -------------
Cash flows from investing activities:
Increase in additional paid in capital 2,422
------------
Net cash provided (used) by investing activities 2,422
------------
Cash flows from financing activities:
Proceeds from the issuance of 1,000,000
shares of common stock - 40,000
Decrease in 10% convertible notes payable ( 40,000) ( 3,000)
(Increase) decrease in due from officers 32,880 ( 10,000)
------------ -------------
Net cash provided (used) by financing activities ( 7,120) 27,000
------------ -------------
Net increase (decrease) in cash ( 46,987) 7,901
Cash - beginning 55,569 8,582
------------ -------------
Cash - ending $ 8,582 $16,483
============ =============
Supplementary information:
- -------------------------
Increase in additional paid in capital $2,000.
</TABLE>
See accountants' report and notes to financial statements.
F-5
<PAGE>
NU ELECTRIC, CORPORATION & SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
JUNE 27, 1999
1. Organization and Nature of Business:
Escalator, Inc. was incorporated under the General Corporation laws
of the state of Delaware on April 17, 1986. On April 22, 1998, a
certificate of amendment was filed to change the name of the
Corporation to Nu-Electric Corporation. The Company is a publicly
traded Company which trades under the symbol NRGE. The Company owns
100% of Frank Communications Corp. and Escalator, Inc.
(Pennsylvania). Escalator, Inc. (Pennsylvania) owns 100% of
Escalator, Investments Inc. and Escalator Securities Inc.
Escalator Securities Inc. a licensed broker dealer and market maker
in securities. The Company is licensed by the Securities and Exchange
Commission, various State security agencies and the National
Association of Securities Dealers. On December 31, 1997 the Company
surrendered its license. Frank Communications Corp. provides
Financial Public Relations Services. The Company ceased operations in
July of 1997. As of June 28, 1998 all subsidiaries have ceased doing
business and are in the process of being dissolved. All significant
intercompany transactions and balances have been eliminated.
2. Summary of Significant Accounting Policies
a. Principals of Consolidation:
---------------------------
The consolidated financial statements include the accounts of
Nu-Electric Corporation (Delaware), its wholly-owned subsidiaries
of Frank Communications Corp. and Escalator, Inc. (Pennsylvania).
Also Escalator Investments, Inc. and Escalator Securities, Inc.
both Pennsylvania corporations wholly owned by Escalator, Inc.
(Pennsylvania). All significant intercompany transactions and
balances have been eliminated.
b. Securities not Readily Marketable:
---------------------------------
Securities not readily marketable represent securities which
cannot be sold or offered due to arrangements, restrictions or
other conditions applicable to the Company. The securities are
listed at fair value as determined by Board of Directors and is
unchanged for the period covered by the accompanying financial
statements.
c. Property, Equipment, Depreciation and Amortization:
--------------------------------------------------
Property and equipment are stated at cost. Depreciation and
amortization are provided using the straight-line and declining
balance method over the estimated useful lives of the assets.
F-6
<PAGE>
NU ELECTRIC, CORPORATION & SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
JUNE 27, 1999
2. Summary of Significant Accounting Policies (Continued)
d. Amortization of Debt Issuance Costs:
------------------------------------
The company and its subsidiaries file a consolidated Federal
income tax return. Investment tax credits, when applicable, are
recorded as a reduction of Federal income tax in the year in
which the credits are utilized.
e. Income Taxes:
------------
Debt issue costs associated with the 10% convertible notes
payable are being amortized over the term of the notes using the
straight line method which expired in 1997.
f. Income/(Loss) Per Common Share:
------------------------------
The income or loss per common share is based on the weighted
average number of shares outstanding (2,917,855). Fully diluted
income/loss per share amounts are not presented because the
exercise of the stock option and the conversion of the 10%
convertible notes payable are anti-dilutive.
g. Statement of cash flows:
-----------------------
For purposes of the statement of cash flows, the Company
considers all highly liquid accounts with a maturity of three
months or less as cash equivalents.
h. Concentrations of Credit Risk:
-----------------------------
Financial instruments which potentially subject the Company to
concentrations of credit risk consist of cash and cash
equivalents. The company places its temporary cash investments
with a quality, high credit financial institution. At times, such
investments, along with the Company's cash balances with this
institution, exceeded the current insured amount under the
Federal Deposit Insurance Corporation.
i. Use of Estimates in Preparation of Financial Statements:
-------------------------------------------------------
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make certain estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
those estimates.
F-7
<PAGE>
NU ELECTRIC, CORPORATION & SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
JUNE 27, 1999
3. 10% Convertible Notes Payable
The Company issued $351,000 unsecured 10% convertible notes in June
1987. The notes matured on June 1, 1997. Holders of $306,000 worth
converted their bonds to common stock at $1 per share, which was a
discount from their previous conversion rate of $10 per share. Two
bondholders holding $40,000 worth took a cash settlement. The
remaining holder of $5,000 was repaid $3,000 in full settlement of
the obligation prior to June 27, 1999.
4. Income Taxes
For income tax reporting, the Company and its subsidiaries have net
operating loss carry forwards, and investment tax credit carry
forwards available to reduce future Federal income taxes. If not
used, the carry forwards will expire as follows:
Year Ending Federal Net Investment
In June Operating Loss Tax Credits
------- -------------- -----------
2000 $700
2001 $32,835
2002 54,000
2003 71,000
2004 183,000
2005 160,000
2008 33,713
2010 13,569
2011 121,290
2012 24,259
2013 22,259
-------- ------
$716,464 $700
======== ======
F-8
<PAGE>
NU ELECTRIC, CORPORATION & SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
JUNE 27, 1999
5. Capital Stock
As of June 27, 1999, the Company issued an additional 750,000 shares
of stock in connection with $30,000 expenses paid on behalf of Nu
Electric, Corporation & Subsidiaries by an entity owned by one of the
majority shareholders. In addition, in lieu of cash repayment of a
$10,000 officer loan payable was converted to 250,000 shares of
common stock.
6. Subsequent Event - Business Combination
On June 30, 1999, Nu Electric, Corporation & Subsidiaries, a Delaware
Corporation entered into a merger agreement with Clean Water
Technologies, Inc. , (CWT) a florida Corporation. The merger was
accounted for by the pooling of interests method, where the
10,000,000 shares of outstanding common stock of CWT was converted to
893,000 shares of common stock of Nu Electric, Corporation &
Subsidiaries. CWT had no assets, liabilities or income of any kind,
character or description at the time of the merger, and accordingly
there was no effect on the revenues and earnings reported. CWT holds
a license for a technology developed at USF (University of South
Florida) to remove arsenic from drinking water.
F-9
<PAGE>
[LOGO]
Stockholders and Directors
Nu Electric, Corporation & Subsidiaries
Tarpon Springs, Florida 34689
INDEPENDENT AUDITOR'S REPORT ON
CONSOLIDATING SUPPLEMENTARY INFORMATION
Our audits of the consolidated financial statements included in the preceding
section of this report were directed to the consolidating supplementary
information as of June 27, 1999 and the June 28, 1998, and for the fifty-two
weeks then ended, presented in the following section of this report has been
subjected to the auditing procedures applied in the audit of the basic
consolidated financial statements. This information, while not considered
necessary for fair presentation of the consolidated financial position, results
of operations and cash flows of the Company and its subsidiaries, is in our
opinion, fairly stated in all material respects in relation tot he consolidated
financial statements taken as a whole.
/s/ Acquavella, Chiarelli, Shuster & Co.
F-10
<PAGE>
NU ELECTRIC, CORPORATION & SUBSIDIARIES
SCHEDULE OF SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
<TABLE>
<CAPTION>
Fifty-two Fifty-two
weeks ended weeks ended
June 28, 1998 June 27, 1999
------------- -------------
<S> <C> <C>
Dues and subscriptions $12,264 $1,945
Fines litigation and assessments 1,939 -
Insurance 2,603 -
Legal and accounting 22,106 4,274
Office expense and supplies 4,818 8,642
Sales, promo, auto and travel 8,748 12,320
Taxes, licenses and filing fees 3,702 1,854
Telephone and utilities and maintenance 2,441 5,283
-------- --------
$58,621 $34,318
======== ========
</TABLE>
See accountants' report and notes to financial statements.
F-11
<PAGE>
EXHIBIT INDEX
EXHBIT # ITEM Page
2.1 Acquisition of Escalator, Inc.*
2.2 Lone Pine Resources, Inc. Merger*
2.3 Agreement and Plan of Spinoff*
2.4 Acquisition of Clean Water Technologies, Inc.*
3.1 Articles of Incorporation*
3.2 Bylaws*
4 Share Certificate*
21 Subsidiaries of the Registrant*
27 Financial Data Schedule*
* Previously filed.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
NU ELECTRIC CORP.
/s/ Laurie Scala
---------------------------
By: Laurie Scala, President
Date: 10/13/99
18
