UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 2001
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 33-3362-D
KLEENAIR SYSTEMS, INC.
(Exact name of small business issuer as specified in its charter)
State of Nevada 87-0431043
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification #)
1370 South Acacia Avenue, Fullerton, CA 92831
(Address of principal executive offices)
(714) 774-3652
(Issuer's telephone number)
828 Production Place, Newport Beach, CA 92663
(Former address of principal executive offices)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days [X] Yes [ ] NO
State the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
There were 13,683,682 shares of common stock, $0.001 Par Value,
outstanding as of September 30, 2001.
Transitional Small Business Disclosure Format (check one); Yes [ ] No [X]
1
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
REPORT ON REVIEW BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
KleenAir Systems, Inc.
Fullerton, CA
We have reviewed the accompanying balance sheet of KleenAir Systems, Inc. (a
development stage enterprise) (the "Company") as of September 30, 2001, and
the related statements of operations, stockholders' equity, and cash flows
for the three and nine months ended September 30, 2001 and 2000. We have
also reviewed the cumulative statements of operations, stockholders equity
and cash flows for the period from January 1, 1995 through September 30,
2001. These financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical review
procedures to financial data and making inquiries of persons responsible for
financial and accounting matters. It is substantially less in scope than an
audit conducted in accordance with generally accepted auditing standards,
the objective of which is the expression of an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express such
an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet as of December 31, 2000, and the related
statements of operations, stockholders' equity and cash flows for the year
then ended (not presented herein); and, in our report dated April 2, 2001,
we expressed an opinion on those financial statements which was qualified
based on the Company's ability to continue as a going concern. In our
opinion, the information set forth in the accompanying condensed
consolidated balance sheet as of December 31, 2000 is fairly stated in all
material respects in relation to the consolidated balance sheet from which
it has been derived.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company is in the development stage and has no
operating revenues. This situation raises substantial doubt as to the
Company's ability to continue as a going concern. Management's plans in
regard to this situation are also described in Note 2. The financial
statements do not include any adjustments that might result from the outcome
of this uncertainty.
/s/ Robert Early & Company
ROBERT EARLY & COMPANY, P.C.
Abilene, Texas
November 12, 2001
2
KLEENAIR SYSTEMS, INC.
(A Development Stage Company)
BALANCE SHEETS
ASSETS
September 30, December 31,
2001 2000
---------- ----------
Unaudited
CURRENT ASSETS:
Cash $ 13,229 $ 24,365
Accounts receivable 1,600 -
Accounts receivable-related party 9,286 55,693
Inventory-materials 22,133 -
Prepaid expenses 800 198,925
---------- ----------
Total Current Assets 47,048 278,983
PROPERTY AND EQUIPMENT (net) 52,744 60,482
OTHER ASSETS:
Patent license 136,313 130,049
---------- ----------
TOTAL ASSETS $ 236,105 $ 469,514
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable ($72,116 and $67,453 due
to related parties, respectively) $ 105,145 $ 119,151
Advances from directors 40,000 40,000
---------- ----------
Total Current Liabilities 145,145 159,151
---------- ----------
STOCKHOLDERS' EQUITY:
Preferred stock, series A, $.001 par value
(10,000,000shares authorized, none
outstanding)
Common stock, $.001 par value (50,000,000
shares authorized, 13,683,682 and
12,579,082 outstanding,respectively) 13,684 12,579
Additional paid-in capital 3,494,264 3,375,835
Deficit accumulated during the development
stage (3,416,988) (3,078,051)
---------- ----------
Total Stockholder's Equity 90,960 310,363
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 236,105 $ 469,514
========== ==========
See accompanying selected information and accountants' report.
3
KLEENAIR SYSTEMS, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
For Three and Nine Months Ended September 30, 2001 and 2000
Cumulative
Three Months Nine Months During Devel-
2001 2000 2001 2000 opment Stage
---------- ---------- ---------- ---------- ------------
REVENUES:
Sale of product license $ 51,650 $ - $ 113,901 $ - $ 113,901
Services - - 4,600 - 4,600
---------- ---------- ---------- ---------- ------------
Total Revenues 51,650 - 118,501 - 118,501
---------- ---------- ---------- ---------- ------------
PRODUCT DEVELOPMENT COSTS 57,060 42,739 129,317 52,675 592,111
---------- ---------- ---------- ---------- ------------
OPERATING EXPENSES:
Personnel costs and director fees 59,188 - 59,188 - 581,462
Consultants 7,435 27,445 12,424 49,445 1,290,784
Professional fees 5,154 16,335 13,588 43,973 214,541
Office expenses 282 1,511 721 4,393 24,435
Depreciation and amortization 3,889 92,394 11,367 96,813 24,368
Advertising and promotion 795 975 179,705 16,306 332,052
Loss on cancellation of
licensing agreements - - - - 19,860
Rent 3,750 7,500 17,500 22,500 50,000
Other expenses 1,177 7,673 33,697 20,534 109,065
Unknown sources prior to current
ownership - - - - 151,518
---------- ---------- ---------- ---------- ------------
Total operating expenses 81,670 153,833 328,190 253,964 2,798,085
---------- ---------- ---------- ---------- ------------
LOSS FROM OPERATIONS (87,080) (196,572) (339,006) (306,639) (3,271,695)
OTHER INCOME AND (EXPENSES):
Interest income 8 705 69 2,249 2,498
Amortization of discount on
receivables - - - - 20,259
---------- ---------- ---------- ---------- ------------
Loss Before Extraordinary Item (87,072) (195,867) (338,937) (304,390) (3,248,938)
Extraordinary Item:
Costs of terminated acquisition - - - - (168,050)
---------- ---------- ---------- ---------- ------------
Net Loss $ (87,072) $ (195,867) $ (338,937) $ (304,390) $ (3,416,988)
========== ========== ========== ========== ============
Basic earnings per share:
Loss Per Share Before Extraordinary
Item $ (0.01) $ (0.02) $ (0.03) $ (0.03) $ (0.67)
Loss Per Share From Extraordinary
Item - - - - (0.03)
---------- ---------- ---------- ---------- ------------
Net Loss Per Share $ (0.01) $ (0.02) $ (0.03) $ (0.03) $ (0.70)
========== ========== ========== ========== ============
Weighted Average Shares Outstanding 12,995,502 11,797,236 12,719,414 10,609,886 4,860,708
========== ========== ========== ========== ============
See accompanying selected information and accountants' report.
4
KLEENAIR SYSTEMS, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
Accumulated
Additional Unearned Deficit During
Preferred Stock Common Stock Paid-In Compen- Development
Shares Amount Shares Amount Capital sation Stage
--------- -------- --------- ---------- --------- --------- ----------
BALANCES, 1/1/95 - $ - 74,132 $ 74 $ 151,444 $ - $ (151,518)
Stock issued for cash - - 27,334 27 66,982 - -
For adjustment - - 534 1 - - -
For consulting services - - 86,148 86 279,439 - -
For professional services - - 4,666 5 12,745 - -
For purchase of patent rights 933,334 934 60,000 60 13,905 - -
For directors' compensation - - 4,000 4 22,496 - -
For officers' compensation 33,334 33 9,334 9 194,958 - -
Other contributed capital - - - - 2,367 - -
Options compensation - - - - 70,313 (152,016) -
Net loss - - - - - - (329,289)
--------- -------- --------- ---------- --------- --------- ----------
BALANCES, 12/31/95 966,668 967 266,148 266 814,649 (152,016) (480,807)
Stock issued for services 13,332 13 24,666 25 201,837 (78,750) -
For officers' compensation 33,332 33 - - 15,592 (15,625) -
For aborted acquisition - - 40,000 40 140,510 - -
Exercise of options - - 75,000 75 112,424 - -
Conversion to common (318,666) (319) 318,666 319 - - -
Net Loss - - - - - 187,346 (716,511)
--------- -------- --------- ---------- --------- --------- ----------
BALANCES, 12/31/96 694,666 694 724,480 725 1,285,012 (59,045) (1,197,318)
Stock issued for cash - - 120,000 120 14,880 - -
For officers' compensation 33,334 33 - - 3,842 (3,875) -
Conversion to common (100,000) (100) 100,000 100 - - -
Net loss - - - - - 37,979 (55,438)
--------- -------- --------- ---------- --------- --------- ----------
BALANCES, 12/31/97 628,000 627 944,480 945 1,303,734 (24,941) (1,252,756)
(Continued on next page)
<FN>
See Accountants' report and selected information.
5
</FN>
KLEENAIR SYSTEMS, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
(Continued)
Accumulated
Additional Unearned Deficit During
Preferred Stock Common Stock Paid-In Compen- Development
Shares Amount Shares Amount Capital sation Stage
--------- -------- ---------- ---------- ---------- --------- -----------
Stock issued for cash - $ - 800,000 $ 800 $ 199,200 $ - $ -
For services - - 2,120,000 2,120 92,255 - -
To officers and directors - - 320,000 320 59,680
For diesel license - - 2,000,000 2,000 60,500 - -
Conversion to common (403,334) (403) 403,334 403 - - -
Net loss - - - - - 24,941 (305,561)
--------- -------- ---------- ---------- ---------- --------- -----------
BALANCES, 12/31/98 224,666 224 6,587,814 6,588 1,715,369 - (1,558,317)
Stock issued for cash - - 146,800 147 35,653 - -
For services - - 1,103,334 1,103 247,179 - -
For equipment - - 33,200 33 8,267 - -
To officers and directors - - 1,425,000 1,425 408,808 - -
Conversion to common (61,334) (61) 61,334 61 - - -
Net loss - - - - - - (802,722)
--------- -------- ---------- ---------- ---------- --------- -----------
BALANCES, 12/31/99 163,332 163 9,357,482 9,357 2,415,276 - (2,361,039)
Stock issued for cash - - 1,414,000 1,414 357,336 - -
For services - - 1,642,666 1,643 600,024 - -
As promotion - - 1,600 2 3,199 - -
Conversion to common (163,332) (163) 163,334 163 - - -
Net loss - - - - - - (717,012)
--------- -------- ---------- ---------- ---------- --------- -----------
BALANCES, 12/31/00 - - 12,579,082 12,579 3,375,835 - (3,078,051)
Stock issued for cash - - 180,000 180 17,820 - -
For services - - 274,600 275 42,071 - -
To officers and directors - - 650,000 650 58,538 - -
Net loss - - - - - - (338,937)
--------- -------- ---------- ---------- ---------- --------- -----------
BALANCES, 09/30/01 - $ - 13,683,682 $ 13,684 $3,494,264 $ - $(3,416,988)
========= ======== ========== ========== ========== ========= ===========
See Accountants' report and accompanying selected information.
6
KLEENAIR SYSTEMS, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Increases/(Decreases) in Cash and Cash Equivalents
For Nine Months Ended September 30, 2001 and 2000
Cumulative
During Devel-
2001 2000 opment Stage
--------- --------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(338,937) $(304,390) $(3,416,988)
Adjustments to reconcile net income/(loss)
to net cash provided by operations:
Losses prior to current ownership - - 151,518
Depreciation 11,367 7,749 24,368
Amortization of:
Prepaid expenses 198,125 89,063 628,470
Deferred services - - 250,267
Stock issued for services 101,534 5,426 1,441,616
Stock issued for extraordinary loss - - 140,550
Changes in operating assets and liabilites:
Accounts receivable 44,807 - (10,887)
Inventory (22,133) - (22,133)
Advances to consultants - - 20,000
Prepaid expenses - (15,000) (200,800)
Trade accounts payable (14,006) 491 105,145
Advances from directors - 15,000 40,000
--------- --------- -----------
NET CASH USED BY OPERATING ACTIVITIES (19,243) (201,661) (848,874)
--------- --------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment (3,629) (48,649) (68,810)
Patent licensing costs (6,264) - (58,913)
--------- --------- -----------
NET CASH USED IN INVESTING ACTIVITIES (9,893) (48,649) (127,723)
--------- --------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuing stock 18,000 283,750 987,459
Additional capital contributions - - 2,367
--------- --------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 18,000 283,750 989,826
--------- --------- -----------
NET INCREASE/(DECREASE) IN CASH (11,136) 33,440 13,229
CASH AT BEGINNING OF PERIOD 24,365 25,980 -
--------- --------- -----------
CASH AT END OF PERIOD $ 13,229 $ 59,420 $ 13,229
========= ========= ===========
SUPPLEMENTAL DISCLOSURES:
Cash payments for:
Interest $ - $ - $ -
Income taxes - - -
Non-cash investing and financing transactions:
Stock issued for:
Compensation and directors fees 59,188 - 707,296
Services and prepaid services 42,346 361,676 1,206,995
Equipment - - 8,300
Patent licensing - - 3,507,500
Repurchase of U.S. diesel license - - 62,500
Acquisition of National Diversified
Telecom, Inc. - - 140,550
Sale of marketing licenses for
notes receivable - - 1,736,558
See Accountants' report and accompanying selected information.
7
KLEENAIR SYSTEMS, INC.
(A Development Stage Enterprise)
SELECTED INFORMATION FOR FINANCIAL STATEMENTS
September 30, 2001
(Unaudited)
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions of Regulation S-B. They do
not include all information and footnotes required by generally accepted
accounting principles for complete financial statements. However, except as
disclosed herein, there has been no material change in the information
included in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 2000. In the opinion of Management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. The report of Robert Early & Company, P.C.
commenting on their review accompanies the condensed financial statements
included in Item 1 of Part 1. Operating results for the nine month period
ended September 30, 2001, are not necessarily indicative of the results that
may be expected for the year ending December 31, 2001.
NOTE 2: GOING CONCERN ISSUES
These financial statements have been prepared assuming that the Company will
continue as a going concern. The Company has neither sufficient operating
revenues or disposable assets to fund completion of its development program,
current level of expenses, or initial production stages. In this situation,
the Company is reliant solely upon its ability to raise capital through
sales of its stock, debt financing, or acquisition of services through
issuances of the Company's stock. There is no assurance that a market
exists for the sale of the Company's stock or that lenders could be found to
loan money to the Company. Should financing not be available, the Company
would, in all likelihood, be forced to stop development efforts and/or to
shut down its activities completely.
Management has had indications that investors are interested in the
technology being developed by the Company and that these investors have
capacity and will be willing to be available to provide financing for the
remaining cost of the development of the device. As such, Management
anticipates that development activities being carried on by the Company will
be continued and that there should be no substantial difficulties in
obtaining sufficient financing to carry its project through to completion
and subsequent distribution. The financial statements do not include any
adjustments relating to the recoverability and classification of recorded
asset amounts or the amount of liabilities that might be necessary should
the Company be unable to continue in existence.
NOTE 3: CORRECTION OF AN ACCOUNTING ERROR
Upon review of the Company's financial statements, the SEC determined that
the Company had recorded an incorrect value for its patent in 1995. The
Company recorded the value of its patent at $3,500,000 based on offers to
purchase the patent made to the previous owners. However, the SEC follows a
8
very conservative interpretation of the applicable accounting rules with
regard to the acquisition of intangible assets when the consideration given
is non marketable stock rather than cash. In accordance with the required
correction, the patent's originally recorded value was revised downward from
the estimated value of the patent to the par value of the stock issued, i.e.
$7,000. The correction of the error resulted in a corresponding reduction
of Additional Paid in Capital in the earliest period presented.
NOTE 4: PROPERTY AND EQUIPMENT
The Company has purchased testing equipment, a test automobile, and office
equipment and furniture as presented in the following table. Depreciation
expense for the third quarter of 2001 and 2000 totals $3,889 and $3,331.
The totals for the nine months ended September 30, 2001 and 2000 are $11,367
and $7,750, respectively.
Office furniture and equipment $ 8,898
Test vehicle 5,750
Analysis equipment 62,464
---------
77,112
Accumulated depreciation (24,368)
---------
Net property & equipment $ 52,744
=========
NOTE 5: SALE OF LICENSE
During the first quarter of 2001, the Company sold certain marketing
licenses regarding patents to its new gasoline carburetor to Extengine, LLC
for $50,000. During the second quarter, sold certain marketing licenses to
Extengine regarding its new diesel injection management system for $50,000.
NOTE 6: STOCK TRANSACTIONS
During the third quarter of 2001, the Company has entered into contracts
which acquire technical and financial services in exchange for stock
registered under a S-8 registration. A total of 24,600 shares valued at
$7,300 were issued under these contracts. Another 50,000 restricted shares
were issued to pay for technical services billed at $16,834. The Company
issued 200,000 shares to a long-time key consultant and co-founder of the
Company in lieu of cash consideration. Directors were issued 650,000
restricted shares for the unpaid services that they provide to the Company.
NOTE 7: SUBSEQUENT EVENTS
In November 2001, the Company filed a registration statement on Form S-8 to
register 2,200,000 shares to be used to compensate employees and consultants
providing services to the Company.
9
Item 2. Management's Discussion and Plan of Operation
The Company was incorporated under the laws of the State of Nevada on
February 4, 1986, under the name of Covington Capital Corporation. In 1986,
the Company filed an S-18 and registered certain stock. From 1989 through
1993, the Company underwent a series of name changes in order to explore
various business opportunities. However, none of the business opportunities
was successfully completed.
In April, 1995, under the name Investment and Consulting International,
Inc., the Company acquired a patent for a proprietary device designed to
neutralize nitrogen oxide automobile emissions from a separate company which
was then known as KleenAir Systems, Inc. Simultaneously with the acquisition
of the patent, the Company acquired the right to use the corporate name
KleenAir Systems, Inc., and changed to its current name.
Since acquiring the patent in 1995, the Company has been a developmental
stage company and has worked towards the completion of the development and
testing of the NOxMasterTM technology. The Company owns US Patent #
5,224,346 Engine NOx Reduction System issued in 1993, US Patent # 5,609,026
Engine NOx Reduction issued in 1997. In 1999 the Company was issued a third
patent on Ammonia Injection in NOx Control, US Patent # 5,992,141. The
Company has applied for and maintained patent protection under the Patent
Cooperation Treaty (PCT) to protect its intellectual property in a variety
of countries that are significant producers of automotive products.
The Company has applied for additional patents related to its NOxMasterTM
technology and in addition has applied for a patent on a new emission
control device, the Sonic Flow Carburetor, which atomizes fuel on gasoline
powered engines, enhancing operating efficiency and reducing emissions. A
license for this technology has been sold to Ecologic, LLC for China, India
and California.
The Company has recently moved into new R & D facilities at 1370 S. Acacia
Avenue, Fullerton, CA 92831, occupying approximately 4,000 sq. ft. of an
18,000 square foot building in which its associated companies, Extengine
Transport Systems and Ecologic Engine Testing Laboratories, are establishing
an extensive engine and chassis dynomometer auto testing center. The
Company also acquired appropriate computers and test equipment to advance
its development and testing activity and acquired a diesel vehicle for
testing its products. In addition, the Company continues to use the CARB
approved testing facilities of California Environmental Engineering of Santa
Ana, CA for state testing requirements.
The Company successfully concluded the first phase of a testing program in
the UK and has been awarded a significant grant to complete the final phase
of its London Taxi Program. This will be a six-month in-service test for
several vehicles starting January 2002. During the 4th quarter test systems
will be installed on several vehicles of a UK Local Authority. Patent
awards have now been confirmed for several European countries including the
UK, Germany, France, Italy, Spain and Sweden.
US testing of the NOxMasterTM Diesel Catalytic Converter, together with its
NOxMasterTM Ammonia Injection System, continues to present an integrated
system for the elimination of emissions from diesel powered mobile sources.
10
The Company has applied for an EO certification from the California Air
Resources Board (CARB) that will enable it to commence sales of its products
in California. It is preparing to meet CARB Retrofit Verification
requirements for heavy-duty vehicles
Once production and sales begin, the Company anticipates employing initially
15 to 20 employees, primarily in management, technical and administrative
capacities. The Company is actively seeking sources of funding for its
operating capital requirements both to complete its test and evaluation
programs and to support initial sales and production.
The Company is negotiating potential licensing and other commercial
arrangements with certain international companies in the automotive
industry, subject to completion of satisfactory test and evaluation
programs.
Disclosure Regarding Forward-Looking Statements
Where this Form 10-QSB includes "forward-looking" statements within the
meaning of Section 27A and Section 21E of the Securities Act, the Company
desires to take advantage of the "safe harbor" provisions thereof.
Therefore, the Company is including this statement for the express purpose
of availing itself of the protections of such safe harbor provisions with
respect to all of such forward-looking statements. The forward-looking
statements in this Form 10-QSB reflect the Company's current views with
respect to future events and financial performance. These forward-looking
statements are subject to certain risks and uncertainties that could cause
actual results to differ from those anticipated. These risks include, but
are not limited to, economic conditions, changes in environmental
regulations, the market for venture capital, etc. In this Form 10-QSB, the
words "anticipates," "believes, "expects," "intends," "future" and similar
expressions identify forward-looking statements. The Company undertakes no
obligation to publicly revise these forward-looking statements to reflect
events or circumstances that may arise after the date hereof. All subsequent
written and oral forward-looking statements attributable to the Company or
persons acting on its behalf are expressly qualified in their entirety by
this section.
PART II - OTHER INFORMATION
Item 2: Changes in Securities and Use of Proceeds
Issuance of Unregistered Shares
During the quarter ended September 30, 2001, the Company sold securities
in the transactions described below without registering the securities
under the Securities Act of 1933. No underwriter, sales or placement
agent was involved in any of the transactions.
1. On July 13, 2001, 100,000 restricted shares of common stock were
issued to Pollution Control, Inc. in exchange for cash of $10,000. These
restricted shares were issued in reliance on the exemption from
registration provided by Section 4(2) of the Securities Act of 1933.
11
2. On August 28, 2001, a total of 850,000 restricted shares of common
stock valued at $77,400 were granted to a key consultant three directors
of the Company. These restricted shares were issued in reliance on the
exemption from registration provided by Section 4(2) of the Securities Act
of 1933.
3. On September 10, 2001, at total of 80,000 restricted shares of common
stock were issued to Pollution Control, Inc. in exchange for cash of
$8,000. These restricted shares were issued in reliance on the exemption
from registration provided by Section 4(2) of the Securities Act of 1933.
4. On September 30, 2001, a total of 50,000 restricted shares of common
stock valued at $16,784.37 were issued to a consultant in exchange for
technical services rendered to the Company. These restricted shares were
issued in reliance on the exemption from registration provided by Section
4(2) of the Securities Act of 1933.
The facts relied on to make the exemption from registration provided by
Section 4(2) of the Securities Act of 1933 available for the sale of
securities discussed in above were: (1) the limited number of purchasers;
(2) the sophistication or accreditation of the purchasers; (3) their
relationship with the Company and/or access to material information about
the Company; (4) the information furnished to them by the Company; (5) the
absence of any general solicitation or advertising; and (6) restrictions
on transfer of the securities issued to them as indicated by a legend on
the certificates representing such securities.
Item 6: Exhibits and Reports on Form 8-K
Exhibit 23 -- Consent to incorporation by reference
Reports on Form 8-K -- None
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
KLEENAIR SYSTEMS, INC.
Date: November 13, 2001 By: /s/ LIONEL SIMONS
Lionel Simons., President,
Secretary,
Principal Accounting Officer,
& Principal Financial Officer
12