UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 8-K AMENDMENT
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
April 30, 2002
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Date of Report (Date of earliest event reported)
KLEENAIR SYSTEMS, INC.
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(Exact Name of Registrant as specified in Charter)
Commission File No. 033-03362
Nevada 87-0431043
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(State of Other Jurisdiction (I.R.S. Employer
of Incorporation) Identification No.)
1711 Langley Avenue, Irvine, California 92714
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(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, Including Area Code: (949) 955-3492
Item 2. Acquisition or Disposition of Assets
Pursuant to an Agreement and Plan of Reorganization (the
"Agreement") entered into March 1, 2002 between KleenAir Systems, Inc.
("KAIR" or the "Registrant"), a Nevada corporation, and the share holders of
Carbon Cloth Technologies, Inc. ("CCT"), a California corporation, 100% of
the outstanding shares of common stock of CCT are to be exchanged for
1,000,000 new shares of common stock of KAIR in a transaction in which CCT
effectively became the wholly owned subsidiary of KAIR.
The Agreement was adopted by the unanimous consent of the Board of
Directors of each corporation and of the shareholders of record holding
greater than 67% of CCT on April 18, 2002.
Prior to the merger, CCT had 6,000,000 shares of common stock
outstanding all of which shares 6,000,000 (or 100% of the outstanding
shares) were exchanged by the shareholders of CCT for 1,000,000 shares of
common stock of KAIR. By virtue of the exchange, CCT shareholders acquired
approximately six percent (6%) of the issued and outstanding common stock of
KAIR. There was no change of control of KAIR. Subsequent to the closing of
the Agreement transaction, the Registrant then had a total of approximately
17,000,000 shares of common stock issued and outstanding.
Prior to the effectiveness of the Agreement, KAIR had an aggregate of
approximately 16,000,000 shares of common stock, par value $.001, issued and
outstanding.
One of the officers and directors of CCT became Vice President of
Marketing of KAIR subsequent to the Agreement and all other officers and
directors of CCT resigned their positions in CCT.
The business to be conducted by CCT after closing of the Agreement is
the business of engineering, manufacturing and marketing of thermal
insulation devices for vehicles, including but not limited to insulation
devices to maintain the heat required to cause the catalytic converters on
diesel engines to operate and reduce polluting emissions. Many of the
customers of CCT are the same as KAIR's presently or on the list of target
customers for KAIR.
A copy of the Agreement is attached hereto as an exhibit. The
foregoing description is modified by such reference.
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The acquisition of Carbon Cloth Technologies Inc. (CCT), with its
thermal management systems, brings immediate revenue opportunities to
KleenAir Systems, Inc. It will make a significant contribution to overhead
expense as the Company reduces manufacturing costs and improves CCT gross
margins.
The initial independent valuation of Carbon Cloth was approximately
$1.5 million. However, the same independent valuation indicated $13.5
million value by integrating this technology into the Company's NOx and
Particulate reduction systems.
The technology is currently in use by the New York City Transit
Authority and substantial additional orders are anticipated. The Company's
strategy will be to use Carbon Cloth's existing products, contacts, and
reputation to open doors with fleet operators of heavy-duty diesel vehicles
for its NOx and Particulate Reduction systems.
Item 7. Financial Statement, Pro Forma Information and Exhibits
(a) Financial Statements of Business Acquired
See Exhibit A
(b) Pro Forma Financial Information
See Exhibit B
(c) Exhibits
Number Description
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2.1 Agreement and Plan of Reorganization, dated as of March 1,
2002, by and among KleenAir Systems, Inc., a Nevada
corporation, and Carbon Cloth Technologies, Inc., a
California corporation ("CCT"), and the owners of all the
outstanding shares of common stock of CCT. (Schedules and
Exhibits omitted.)
(FILED WITH ORIGINAL FORM 8-K ON MAY 14, 2002)
2.2 Amendment to the Agreement and Plan of Reorganization.
(FILED WITH ORIGINAL FORM 8-K ON MAY 14, 2002)
99.1 Press release dated April 10, 2002.
(FILED WITH ORIGINAL FORM 8-K ON MAY 14, 2002)
99.2 Press release dated April 30, 2002.
(FILED WITH ORIGINAL FORM 8-K ON MAY 14, 2002)
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
KLEENAIR SYSTEMS, INC.
Date: 07/16/02 By: /s/ LIONEL SIMONS
Lionel Simons
President
EXHIBIT A - UNAUDITED HISTORICAL FINANCIAL STATEMENTS OF CARBON CLOTH
TECHNOLOGIES, INC.
CARBON CLOTH TECHNOLOGIES, INC.
Balance Sheet
As of April 30, 2002
(Unaudited)
ASSETS
Current Assets:
Cash $ (4,720)
Accounts receivable 22,397
Inventory 10,331
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Total current assets 28,008
-----------
Property and Equipment:
Office furniture and equipment 4,209
Accumulated depreciation (2,817)
-----------
Total property and equipment 1,392
Other assets (net) 322
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TOTAL ASSETS $ 29,722
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 176,489
Amounts due stockholders 49,221
Loans payable 40,000
Due to Edge Film & Tape 2,108
-----------
Total current liabilities 267,818
-----------
Stockholders' Equity:
Capital stock 511,400
Retained earnings (749,496)
-----------
Total stockholders' equity (238,096)
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 29,722
===========
EXHIBIT A - Continued
CARBON CLOTH TECHNOLOGIES, INC.
Statement of Operations
For the Seven Months Ended April 30, 2002
and the Year Ended September 30, 2001
(Unaudited)
Seven Months Year Ended
Ended September
April 30, 2002 30, 2001
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REVENUES:
Sales $ 117,657 $ 49,040
Other (4,256) 679
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Total revenues 113,401 49,719
COST OF GOODS SOLD 51,450 21,287
PRODUCT DEVELOPMENT 96,429 -
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Gross Profit (34,478) 28,432
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SELLING, GENERAL & ADMINISTRATIVE EXPENSES:
Marketing R & D 42,312 111,878
Other 57,358 109,834
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Total S, G & A 99,670 221,712
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INCOME FROM OPERATIONS $ (134,148) $ (193,280)
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EXHIBIT B - PRO FORMA COMBINED FINANCIAL STATEMENTS
PRO FORMA FINANCIAL DATA REGARDING ACQUISITION OF CARBON CLOTH TECHNOLOGIES
The following tables set forth summarized historical financial statements as
for the Company and for Carbon Cloth Technologies, adjustments to reflect
the effects of the acquisition, and pro form combined amounts. Pro forma
adjustments reflect the acquisition of Carbon Cloth.
The balance sheets for the entities are as of March 31, 2002 for KleenAir
Systems and April 30, 2002 for Carbon Cloth. The historical income
statements are for the year ended December 31, 2001 for KleenAir and for the
fiscal year ended September 30, 2001 for Carbon Cloth. The historical
income statements for the most recent quarter present the period from
January 1 through March 31, 2001 for both entities. Any effects due to the
disparity in the dates of the balances sheets presented is believed to be
immaterial. No significant transactions occurred during April 2002 for
either entity.
Pro Forma Balance Sheets
As of March 31 and April 30, 2002
Historical
KleenAir Carbon Cloth
March 31, April 30, Pro Forma Pro Forma
2002 2002 Adjustments Combined
---------- ----------- ----------- ----------
ASSETS
Cash $ 624,092 $ (4,720) $ - $ 619,372
Accounts receivable 1,600 22,397 - 23,997
Inventory - 10,331 - 10,331
Note receivable 120,000 - - 120,000
Prepaid expenses 139,714 - - 139,714
Property & equipment 96,441 4,209 - 100,650
Accumulated depreciation (32,442) (2,817) - (35,259)
Patent license 161,858 - 1,000,000 1,161,858
Other assets - 322 - 322
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TOTAL ASSETS $1,111,263 $ 29,722 $ 1,000,000 $2,140,985
========== ========== =========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 36,382 $ 176,489 $ - $ 212,871
Other liabilities - 40,000 - 40,000
Related party liabilities 167,465 51,329 - 218,794
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Total Current Liabilities 203,847 267,818 - 471,665
---------- ---------- ----------- ----------
STOCKHOLDERS' EQUITY:
Common stock 16,425 511,400 (510,400) 17,425
Other stockholders' equity 4,789,662 - 760,904 5,550,566
Retained earnings (3,898,671) (749,496) 749,496 (3,898,671)
---------- ---------- ----------- ----------
Total Stockholders' Equity 907,416 (238,096) 1,000,000 1,669,320
---------- ---------- ----------- ----------
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY $1,111,263 $ 29,722 $ 1,000,000 $2,140,985
========== ========== =========== ==========
EXHIBIT B - Continued
Pro Forma Income Statements
For the Year Ended December 31, 2001 and September 30, 2001
Historical
KleenAir Carbon Cloth
December September Pro Forma Pro Forma
31, 2001 30, 2001 Adjustments Combined
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December 31 September 30
Net sales & revenue $ 123,788 $ 49,719 $ - $ 173,507
Cost of goods sold - 21,286 - 21,286
Research & Development 241,904 - - 241,904
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Gross profit (118,116) 28,433 - (89,683)
Selling, general &
administrative expenses 505,766 221,712 100,000 827,478
---------- ---------- ----------- ----------
Income/(loss) from
operations (623,882) (193,279) (100,000) (917,161)
Other income/(expense) 71 - - 71
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Income/(loss) before
income taxes (623,811) (193,279) (100,000) (917,090)
Income tax expense/(benefit) - - - -
---------- ---------- ----------- ----------
Net income/loss $ (623,811) $ (193,279) $ (100,000) $ (917,090)
========== ========== =========== ==========
Earnings per share:
Basic $ (0.05) $ (0.03) $ (0.06)
Diluted (0.05) (0.03) (0.06)
Weighted average shares
outstanding:
Basic 13,372,112 5,811,000 14,372,112
Diluted 13,372,112 5,811,000 14,372,112
EXHIBIT B - Continued
Pro Forma Income Statement
Three Months Ended March 31, 2001
Historical
----------------------- Pro Forma Pro Forma
KleenAir Carbon Cloth Adjustments Combined
---------- ----------- ----------- ----------
Net sales & revenue $ - $ 68,181 $ - $ 68,181
Cost of goods sold - 33,632 - 33,632
Research & Development 61,948 2,000 - 63,948
---------- ---------- ----------- ----------
Gross profit (61,948) 32,549 - (29,399)
Selling, general &
administrative expenses 134,862 73,350 25,000 233,212
---------- ---------- ----------- ----------
Income/(loss) from
operations (196,810) (40,801) (25,000) (262,611)
Other income and expenses 1 (1,155) - (1,154)
---------- ---------- ----------- ----------
Income/(loss) before
income taxes (196,809) (41,956) (25,000) (263,765)
Income tax expense - - - -
---------- ---------- ----------- ----------
Net income $ (196,809) $ (41,956) $ (25,000) $ (263,765)
========== ========== =========== ==========
Earnings per share:
Basic $ (0.01) $ (0.05) $ (0.02)
Diluted (0.01) (0.05) (0.02)
Weighted average shares
outstanding:
Basic 16,030,815 764,504 17,030,815
Diluted 16,030,815 764,504 17,030,815
Note 1: The pro forma adjustments for both the year and quarter consists of
the amortization of the acquisition cost using a straight-line method over
ten years. Such cost is attributable to the patent and marketing rights
associated with Carbon Cloths main product.
Note 2: The pro forma adjustments to the equity accounts in the balance
sheet are adjusments to eliminate the accounts of Carbon Cloth to reflect the
acquisition on a consolidated basis.