As filed with the Securities and Exchange Commission on March 16, 2006
Reg. No. 333-129458
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM SB-2/A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
AMENDMENT NO. 1
Renewable Assets, Inc.
--------------------------------------------
(Name of Small Business Issuer in its Charter)
Delaware 8741 20-0858618
- ------------------------ ----------------- ----------------
(State of Incorporation) (Primary Standard (I.R.S. Employer
Industrial Identification
Classification) Code Number)
7040 W. Palmetto Park Road, No. 572,
Boca Raton, Florida 33433 (561) 488-9938
- --------------------------------------- ------------------
(Address of principal executive offices (Telephone Number)
and principal place of business)
Alfred M. Schiffrin
Chief Executive Officer
Renewable Assets, Inc.
7040 W. Palmetto Park Road, Bldg. 4, No. 572
Boca Raton, Florida 33433
(561) 488-9938
--------------
(Name, address and telephone number of agent for service)
Copy to:
Eugene Michael Kennedy, Esq.
Law Office of Eugene Michael Kennedy, P.A.
517 Southwest First Avenue
Fort Lauderdale, Florida 33301
(954) 524-4155
Approximate date of proposed sale to the public: May 1, 2006 from
time to time after the date this registration statement becomes
effective.
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for
the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, check the following box. [ ]
Page 1
CALCULATION OF REGISTRATION FEE
Proposed Proposed maximum
Title of each class of Shares/Warrants to be maximum aggregate offering Amount of
securities to be registered registered offering price price(1)(2) registration fee
- --------------------------- --------------------- -------------- ------------------ ----------------
Common Stock and Warrants 1,000,000 Shares $ 0.25 $ 250,000 $ 29.43
Comprising 1,000,000 Units 5,000,000 Class "A"
Warrants
Common Stock Underlying
Class "A" Warrants 5,000,000 Shares $ 0.50 $ 2,500,000 $ 294.25
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Gross Proceeds to
Issuer (6,000,000 Shares) $ 2,750,000
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Total Registration Fee
$ 248.43
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(1) Estimated in accordance with Rule 457(c) under the Securities Act
of 1933, as amended, solely for the purpose of calculating the
registration fee and represents the offering price of the Units,
comprised of one (1) presently unissued share of Common Stock and five
(5) Class "A" Common Stock Purchase Warrants per Unit and the exercise
price of the Class "A" Common Stock Purchase Warrants being offered by
the Company. In addition to the shares set forth in the table, the
amount to be registered includes an indeterminate number of shares
issuable upon exercise of the Warrants; as such number may be adjusted
as a result of stock splits, stock dividends and similar transactions
in accordance with Rule 416.
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states
that this registration statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until
the registration statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
The information in this prospectus is not complete and may be changed.
We shall not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any state where an
offer or sale is not permitted.
Page 2
PROSPECTUS
RENEWABLE ASSETS, INC.
1,000,000 Units Comprised of One (1) Share of Common Stock
and Five (5) Class "A" Common Stock Purchase Warrants per Unit
This prospectus relates to the registration and sale of:
a. 1,000,000 Units @$0.25 per Unit, on a "best-efforts, no
minimum basis" by management, each Unit consisting of:
i. Five (5) Class "A" Common Stock Purchase Warrants
("Warrants") - Each of which is exercisable, at any time
prior to their termination two years from the date of
this prospectus, in exchange for one (1) share of Common
Stock at the Exercise Price of $0.50 per share; an
aggregate of 5,000,000 Shares; and
ii. One (1) share of Common Stock; an aggregate of 1,000,000
shares; and
b. 5,000,000 shares of our Common Stock issuable upon the
exercise of the Warrants in the Units being offered by
this Prospectus.
We are selling 1,000,000 shares of Common Stock and 5,000,000 Warrants
within the Units in this offering and will receive the proceeds from
the sale of the Units, if any, as well as the exercise price of the
Warrants if and when the purchasers or subsequent holders of the
Warrants exercise them. We are paying the expenses of registering the
Warrants and all of these shares.
As of the date of this Prospectus our Common Stock is not being
traded. The shares of Common Stock and the Warrants included in this
Prospectus may be offered and sold directly by the Unit purchasers and
Warrantholders in the open market, when, as and if an active market in
our securities is made by one or more registered market makers at
prevailing prices, or in individually negotiated transactions, through
agents designated from time to time, or through underwriters or
dealers. We will not control or determine the price at which a
Warrantholder or stockholder decides to sell its Warrants or shares.
Brokers or dealers effecting transactions in these securities should
confirm that they are registered under applicable state law or that an
exemption from registration is available.
Our principal executive offices are located at 7040 W. Palmetto Park
Road, Bldg. 4, No. 572, Boca Raton, Florida 33433, and our telephone
number is (561) 488-9938.
Investing In Our Common Stock Involves A High Degree Of Risk.
You should understand the risks associated with investing in the Units
and our Common Stock. Before making an investment, read the "Risk
Factors," which begin on page 7 of this prospectus.
The price of the Units being offered, as well as the Exercise Price of
the Warrants, have all been arbitrarily determined by us, without any
relationship to any generally accepted criteria of value, including
but not limited to book value.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities
or passed upon the adequacy or accuracy of the Prospectus. Any
representation to the contrary is a criminal offense.
Subject to completion, dated _______________________, 2006.
Renewable Assets, Inc., 7040 W. Palmetto Park Road, Bldg. 4, No. 572,
Boca Raton, FL 33433, (561) 488-9938.
Page 3
TABLE OF CONTENTS
Page
Prospectus
Summary..............................................................5
Risk
Factors..............................................................7
Forward-Looking
Statements..........................................................11
Use of
Proceeds............................................................11
Market Price of Common Stock and Other Shareholder
Matters.............................................................12
Determination of Offering Price.....................................12
Dilution............................................................12
Management's Discussion and Analysis or Plan of Operation...........13
Business............................................................17
Directors, Executive Officers, Promoters and Control Persons........19
Executive Compensation..............................................20
Security Ownership of Certain Beneficial Owners and Management......21
Plan of Distribution................................................22
Certain Relationships and Related Transactions......................23
Description of Securities...........................................24
Interests of Named Experts and Counsel..............................26
Disclosure of Commission Position of Indemnification for
Securities Act Liabilities..........................................26
Legal Matters.......................................................26
Where You Can Find More Information.................................27
Index to Financial Statements.......................................28
Exhibits............................................................62
You may rely only on the information contained in this prospectus. We
have not authorized any other person to provide you with different
information. If anyone provides you with different or inconsistent
information, you should not rely on it. We are not making an offer to
sell these securities in any jurisdiction where the offer or sale is
not permitted.
Page 4
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this
prospectus; it does not contain all of the information you should
consider before investing in the Units or our Common Stock. Read the
entire prospectus before making an investment decision. Throughout
this prospectus, the terms "we," "us," "our," "RAI" and "our Company"
refer to Renewable Assets, Inc., a Delaware corporation.
Business
Our Company is in the development stage. We were incorporated by our
parent, International Imaging Systems, Inc. ("IIS"), in the State of
Delaware on December 12, 2003, to continue to pursue the line of
business of IIS, that consists of marketing pre-owned, brand-name
photocopy machines as agent for an unaffiliated office furniture
company, Office Furniture Warehouse, Inc. On December 22, 2003, IIS
assigned to us that line of business and a related marketing services
agreement with Office Furniture Warehouse without consideration and
without any operations funding by IIS at the time of the contract
assignment or since, other than some legal and accounting expenses. We
continue to be engaged in that enterprise, albeit restricted by our
limited resources.
Services/Products
We are currently marketing pre-owned, refurbished Canon and Minolta
photocopy machines for Office Furniture Warehouse in Pompano Beach,
Florida, where Office Furniture Warehouse maintains a 12,000 square
foot showroom and a nearby 30,000 square foot warehouse. Office
Furniture Warehouse is a retail seller of new and used office
furniture and systems. The photocopy machines we market range from
simple desk-top models to stand-alone, multi-function business
machines. We are one of two, co-exclusive marketers of pre-owned
photocopiers for Office Furniture Warehouse. Revenues generated from
our sale of pre-owned photocopiers are shared equally with Office
Furniture Warehouse, after deducting the cost of each photocopier.
The marketing agreement has an initial term of three years and
automatically renews for successive one year terms unless terminated
by mutual agreement or upon the happening of certain events, such as
bankruptcy.
We select and arrange for the purchase by Office Furniture Warehouse
of the pre-owned photocopiers to be marketed. Under the marketing
agreement, Office Furniture Warehouse is obligated to provide us with
the number and the models of pre-owned photocopiers for sale as we may
reasonably request. Our president is responsible for, and effects
sales of, those photocopiers on behalf of Office Furniture Warehouse
and schedules delivery and installation of sold machines by Office
Furniture Warehouse trucks and personnel.
We are highly dependent upon Office Furniture Warehouse. Termination
by Office Furniture Warehouse of the marketing agreement would have a
material adverse effect upon us, since we currently lack the financial
resources to operate our own retail outlets as principal and may be
unable to locate another party for whom we could provide our marketing
services on the same terms and conditions as agreed with Office
Furniture Warehouse.
Spin-Off; Corporate Background
Our Company was formed by International Imaging Systems, Inc., as its
wholly owned subsidiary. On April 13, 2004, a Board of Directors of
IIS approved a spin-off distribution of all 3,014,350 shares of our
Common Stock issued and outstanding and owned by IIS, to the IIS
stockholders of record as of April 14, 2004.
As part of the spin-off each stockholder of record of IIS is to
receive one-half (1/2) share of our Common Stock for each full share
of IIS common stock owned on April 14, 2004. The spin-off has not yet
taken place due to our mutual inability to meet certain conditions
required to distribute the spin-off stock to the
Page 5
recipients as unrestricted common stock. We expect to be in a position
to meet all of the conditions necessary to undertaking the spin-off
shortly after the date of this Prospectus. We believe that the delay
to this point has impeded our ability to access the capital markets
as an independent company. There is no assurance however, that even
if the spin-off had been effected, we would have been able to raise
additional capital on acceptable terms, or at all. There is no
assurance that the spin-off will ever be consummated, and in that
circumstance we will have to seek alternatives to raise capital and
to otherwise continue our business.
Our parent, International Imaging Systems, Inc., was incorporated under
its original name, "A.M.S. Marketing, Inc." in the State of Delaware on
July 23, 1998. On July 31, 2003, A.M.S. Marketing, Inc., a Delaware
corporation, Advanced Imaging Systems, LLC, a Delaware limited liability
company, and the members of Advanced Imaging Systems, LLC effected a
change in control of A.M.S. Marketing under a certain Agreement and Plan
of Exchange dated July 28, 2003, (the "Exchange Agreement"). A.M.S.
Marketing, Inc. issued to the members ("Members") of Advanced Imaging
Systems, LLC an aggregate of 1,200,000 shares of A.M.S. Marketing's
common stock, par value $.001 per share, in exchange for all of the
ownership interest in Advanced Imaging Systems, LLC issued and outstanding
on that date. Immediately prior to the shares exchange transaction, the
four (4) members of Advanced Imaging Systems, LLC each purchased 900,000
shares of A.M.S. Marketing, Inc.'s common stock, 3,600,000 shares in the
aggregate, from Mr. Alfred M. Schiffrin, A.M.S. Marketing, Inc.'s former
President and sole Director, and our president and sole Director for $.05
per share, paid partly in cash with the balance by recourse promissory
notes secured by the purchased shares. The notes are presently current.
After the exchange transaction in September, 2003, A.M.S. Marketing,
Inc. changed its name to International Imaging Systems, Inc.
The shares of A.M.S. Marketing, Inc.'s issued and outstanding in the
acquisition transaction together with the shares purchased by the members
of Advanced Imaging Systems, LLC from Mr. Schiffrin represented
approximately 82% of our parent's issued and outstanding shares at the
time of the transaction and represents approximately 64% of the issued
and outstanding shares of International Imaging Systems, Inc. at
March 10, 2006. Advanced Imaging Systems, LLC does business in its
own name at this time. At the time of the acquisition, the members of
Advanced Imaging Systems, LLC. were Lara Sarafianos, Laura Palisa Mujica,
Sarah Cinnante and Michael D'Angelo, each of whom owned 25% of Advanced
Imaging Systems, LLC prior to its acquisition by IIS as a wholly owned
subsidiary. Prior to our parent's acquisition of Advanced Imaging Systems,
LLC, there was no affiliation or other relationship between Advanced
Imaging Systems, LLC or its members and A.M.S./IIS.
Employees; Facilities
We have no current employees other than our sole officer and director,
Mr. Alfred M. Schiffrin. Our prospects for success are heavily
dependent upon the decisions made by Mr. Schiffrin, who currently
devotes approximately 50% of his business time to the Company's
affairs. We operate from the facilities of Office Furniture Warehouse
in Pompano Beach, Florida. We do not pay any rent for the use of these
facilities. Our principal executive offices are located at 7040 W.
Palmetto Park Road, Bldg. 4, No. 572, Boca Raton, Florida 33433 where
our telephone number is (561) 488-9938.
THE OFFERING
- ------------
* One Million (1,000,000) Units offered by management on a "best-
efforts, no minimum" basis at $0.25 per Unit; Each Unit consists
of one (1) share of previously authorized unissued Common Stock
and five (5) Class "A" Common Stock Purchase Warrants, each
Warrant exercisable to acquire one (1) additional share of
* Common Stock at the exercise price of $0.50 per share.
* Common Stock currently outstanding: 3,014,350 shares
* Common Stock to be outstanding after the maximum offering,
assuming none of the Warrants are exercised: 4,014,350 shares
* Common Stock to be outstanding after the offering, assuming the
sale of all of the Units offered and exercise of all of the
Warrants: 9,014,350 shares
Page 6
* Proceeds: Maximum gross proceeds from the sale of Units: $250,000
* Use of Proceeds: Expenses of this Offering, general operating
expenses working capital
* Each Class "A" Warrant of the five (5) Warrants comprising the
Units represents the right to purchase one (1) share of Common
Stock upon exercise by the Warrantholder and payment to the
Company in the amount of $.50 at any time within two (2) years
of the date of this prospectus. Upon exercise of all of the
Warrants comprising the Units, the Company will realize maximum,
additional proceeds in the amount of $2,500,000.
Risk Factors. Any investment in our Common Stock involves significant
risks. See "Risk Factors".
RISK FACTORS
An investment in our Common Stock involves a high degree of risk. You
should carefully consider the risks described below and the other
information contained in this prospectus and in the documents
incorporated by reference before deciding to invest in our Company. If
any of the following risks actually occur, our business, financial
condition or operating results, and the future trading price or value
of our securities could be materially adversely affected.
RISKS RELATED TO OUR COMPANY
Limited Operating History; Chronic Lack of Adequate Funding
- -----------------------------------------------------------
Our Company has limited operating history on which to base an
investment decision. We were originally organized as A.M.S. Marketing,
Inc. on July 23, 1998, but have not yet been able to emerge from the
development stage due to a chronic lack of adequate funding. Our
limited operating history and slow development is a factor for
investors to consider in evaluating an investment in the Units and our
Common Stock.
From inception in July, 1998 we have had only minimal revenues. We
have experienced losses of $164,331 since our inception; with net
loss of $3,568 for the fiscal year ended December 31, 2003, net
profit of $2,698 for the fiscal year ended December 31, 2004 and net
loss of $70,479 for the year ended December 31, 2005. In each of our
fiscal years ended December 31, 2005, December 31, 2004 and December
31, 2003, our Independent Auditor has raised significant doubt as to
our ability to continue as a going concern. Factors that have
contributed to that substantial concern include our cumulative loss
since inception and our lack of substantial assets at all times
material.
No Forseable Dividends
- ----------------------
We do not plan to pay any cash dividends on our Common Stock in
the foreseeable future. Any decision to pay dividends is within
the discretion of the board of directors and will depend upon our
profitability at the time, cash available and other factors.
Therefore, no assurance can be given that there will ever be any
such cash dividends or distributions in the future.
Dependence Upon Sole Officer and Director
- -----------------------------------------
We are dependent on the efforts of Alfred Schiffrin, our Chief
Executive Officer and sole director, to make the Company a viable
business. The loss of the services of Mr. Schiffrin could delay or
prevent us from achieving our objectives.
Prospective Dilution of Ownership Interest of Purchasing
- --------------------------------------------------------
Shareholders Any additional financing that we successfully
conclude might cause significant dilution, and may, if involving
debt, create risks associated with the use of leverage. While we
currently have minimal working capital, we believe it to be
insufficient to continue any increased level of development
efforts, and insufficient to create and operate the marketing
organization needed to market and sell more products. We
Page 7
will be required to seek additional private and or public equity or
debt financing in the future. Any equity financing, including proceeds
from exercise of the Class "A" Warrants, will involve substantial
dilution of those purchasing common shares in this offering. Debt
financings would subject us to the risks associated with leverage,
including increased interest expense and the possible risk of default
and ultimately becoming insolvent.
RISKS RELATED TO OUR SUPPLY
Sole Source of Supply
We are operating with a sole source of previously owned photocopy
machines. We are completely reliant on Office Furniture Warehouse
and its affiliate, Sun Coast Imaging Systems, for marketing product.
At this stage in our corporate development, we have no intellectual
property. We do not own any intellectual property rights.
Non-Exclusive Marketing Rights
- ------------------------------
We presently have marketing rights from our only source of pre-owned
photocopiers; Office Furniture Warehouse, Inc. ("OFWI"). Our marketing
rights are co-exclusive with its affiliate, Sun Coast Imaging Systems,
Inc. In the event that we are unfavored by OFWI at any point, under
the co-exclusive arrangement, we would be less able or unable to
secure product to market in our operations. We intend to develop other
sources and other pre-owned product sales, but there is no commitment
or agreement regarding the Company and the marketing of any other
sources or products. We have not targeted any other supply sources to
acquire additional pre-owned merchandise, although we now intend to do
so on an active basis. Our present business plan is dependent upon our
ability to secure and market pre-owned merchandise. Under our current
business plan our future growth and potential profitability, if any,
will depend on our ability to both successfully market pre-owned
merchandise and to secure additional product lines and multiple supply
sources.
RISKS RELATED TO OUR COMMON STOCK
No Assurance of Proceeds from Sale of the Units in this Offering
- ----------------------------------------------------------------
Our officers are conducting a "best-efforts, no minimum" offering
without the services of an underwriter. Our sole officer, without the
participation of registered securities broker dealers, is to conduct
the sale of the Units. We are offering the Units on a "best-efforts,
no minimum" basis; there is no escrow or trust account for the
proceeds, and there is no assurance that any or all of the Units will
be sold.
Arbitrary Unit Price; Warrant Exercise Price
- --------------------------------------------
The price of the Units being offered and the Exercise Price of the
Class "A" Common Stock Purchase Warrants were arbitrarily determined.
We established the price of the Units and the price for Warrant
exercise without any relationship to their intrinsic or actual book
value. Our determination was arbitrary and totally unrelated to any
recognized criteria of value usually adhered to by issuers.
Prospective Lack of a Liquid Market
- -----------------------------------
The Shares and Warrants comprising the Units are detachable and will
be tradeable upon issuance. Despite that fact, there is no assurance
that a liquid public market for our securities will ever develop. As
of the date of this prospectus there has been no established public
trading market for our Common Stock, and there can be no assurance
that a regular and established market will be developed upon the
completion of this offering; nor that if initially developed, any such
trading market would be maintained for any particular duration. There
can also be no assurance as to the depth or liquidity of any market
for the Common Stock or the prices at which holders may be able to
sell shares. Our Common Stock currently is not being traded in the
public market place.
Page 8
No Current Trading Market for Common Stock; Continuing Lack of
- --------------------------------------------------------------
Market Liquidity
- ----------------
There presently is no public trading market for our securities. Upon
completion of this Offering, we will seek to secure trading privileges
of our Common Stock and Warrants on the Pink Sheets and or on the
Over-the-Counter (OTC) Bulletin Board, both being electronic quotation
systems. There is and cannot be any assurance that such trading
privileges will be granted. Companies that have their shares listed on
the Pink Sheets electronic system normally are not followed by market
analysts, and many institutional investors are prohibited from, or do
not invest in securities of such companies. As a result, trading on
the Pink Sheets electronic trading system is characterized by a lack
of liquidity, sporadic trading, larger spreads between bid and ask
quotations, and other conditions that may affect an investor's ability
to sell shares.
The OTC Bulletin Board, which lists only companies obligated to file
periodic reports with the U.S. Securities and Exchange Commission, is
generally considered to be a more viable market place than that
represented by the Pink Sheets; but no assurance can be given that our
securities will be admitted for quotation on the OTC Bulletin Board.
Since we are a small company and virtually unknown to investors and
securities brokers, our securities will most likely be thinly traded,
meaning that the number of persons interested in purchasing our
securities at or near ask prices at any given time may be relatively
small or even non-existent, so you may be unable to sell at or near
ask prices, or at all, if you need to sell your securities to raise
money or otherwise desire to liquidate your holdings.
Most investment advisors and brokers, as well as many investors, will
not consider making investments in an early development stage company
such as ours or purchase or recommend the purchase of our securities
until such time as we become more seasoned and commercially viable. As
a consequence, assuming that a market is established, there may be
periods of several days or more when trading activity in our
securities is minimal or non-existent, as compared to a seasoned
issuer which has a large and steady volume of trading activity that
will generally support continuous sales without an adverse effect on
trading price. Due to these conditions, we can give you no assurance
that you will be able to sell your securities at or near ask prices,
or at all, if you need money or otherwise desire to liquidate your
securities.
Our Shares are "Penny Stock"; Prospective Limited Market for Resale
- -------------------------------------------------------------------
Investors may have difficulty selling our shares because they will be
deemed "Penny Stocks". Assuming that a public trading market develops,
since our Common Stock will not be listed on the Nasdaq Stock Market,
at any time that the trading price of our Common Stock is below $5.00
per share, trading in our shares will be subject to the requirements
of certain rules promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), which require additional
disclosure by broker-dealers in connection with any trades involving a
stock defined as a penny stock (generally, any non- Nasdaq equity
security that has a market price of less than $5.00 per share, subject
to certain exceptions). Those rules require the delivery, prior to any
penny stock transaction, of a disclosure schedule explaining the penny
stock market, and the risks associated therewith, and impose various
sales practice requirements on broker-dealers who sell penny stocks to
persons other than established customers and accredited investors
(generally defined as an investor with a net worth in excess of
$1,000,000 or annual income exceeding $200,000 individually or
$300,000 together with a spouse). For these types of transactions, the
broker-dealer must make a special suitability determination for the
purchaser and have received the purchaser's written consent to the
transaction prior to the sale. The broker- dealer also must disclose
the commissions payable to the broker- dealer, current bid and offer
quotations for the penny stock and, if the broker-dealer is the sole
market maker, the broker-dealer must disclose this fact and the
broker-dealer's presumed control over the market. That information
must be provided to the customer orally or in writing before or with
the written confirmation of trade sent to the customer. Monthly
statements must be sent disclosing recent price information for the
penny stock held in the customer's account and generally negative
information on the limited market in penny stocks. The additional
burdens imposed upon broker-dealers by those requirements could
discourage broker-dealers from effecting transactions in our Common
Stock, which could severely limit the market liquidity of the Common
Stock and the ability of holders of the Common Stock to sell their
shares.
Page 9
Control By Insiders
- -------------------
The current majority shareholders and management of the Company will
continue to exercise control over the Company after completion of this
offering even if the maximum number of Units is sold. Anti-takeover
provisions in our Certificate of Incorporation could affect the value
of our stock. Our Certificate of Incorporation contains certain
provisions that could impede a non-negotiated change in control. In
particular, without shareholder approval we can issue up to 1,000,000
shares of preferred stock with rights and preferences determined by
the board of directors. These provisions could make a hostile takeover
or other non-negotiated change in control difficult, while a
takeover/change of control could be at a premium to the then current
stock price.
Future Further Dilution of Ownership Interest; Possible Market
- --------------------------------------------------------------
Price Impacts
- -------------
Future issuance of additional Common and or Preferred Stock, if any,
would dilute existing shareholders. We are authorized to issue up to
29,000,000 shares of Common Stock. To the extent of that
authorization, our board of directors has the ability, without seeking
or securing shareholder approval, to issue additional shares of Common
Stock in the future for any consideration that the board of directors
may consider sufficient. The issuance of additional Common Stock in
the future will reduce the proportionate ownership and voting power of
the Common Stock and the Common Stock underlying Warrants offered
hereby. We are also authorized to issue up to 1,000,000 shares of
Preferred Stock, with one or more designated series setting forth the
rights and preferences, and the remaining undesignated preferred
shares may also be designated by the board of directors. Such
designation of new series of preferred stock may be made without
shareholder approval, and could create additional securities which
would have dividend and liquidation preferences over the Common Stock
and the Common Stock underlying the Warrants comprising the Units
offered hereby. Preferred shareholders could adversely affect the
rights of holders of Common Stock by:
* exercising voting, redemption and conversion rights to the
detriment of the holders of Common Stock;
* receiving preferences over the holders of Common Stock
regarding our surplus funds in the event of our dissolution
or liquidation;
* delaying, deferring or preventing a change in control of our
Company; and
* discouraging bids for our Common Stock.
Substantial share overhang could have a material effect on our stock
price. As of March 10, 2006, we had outstanding 3,014,350 shares of
Common Stock, all of which were "restricted securities" (as that term
is defined under Rule 144 promulgated under the Securities Act of
1933, as amended). Excluding the issuance of shares on the exercise of
Warrants, upon completion of this offering at the maximum number of
Units sold, after the date of this Prospectus there will be 1,000,000
freely tradable shares outstanding. Following completion of the
planned spin-off of all of our presently issued and outstanding shares
shortly after the date of this prospectus, there will be approximately
1,407,800 freely tradeable shares of our common stock outstanding.
There will also be at that point, approximately 2,606,550 restricted
shares issued and outstanding held by certain "large shareholders" of
our spin-off stock. No prediction can be made if or when such shares
will be offered for sale in the public market, or what the effect that
the availability of all of such newly registered shares for sale will
have on the market prices prevailing from time to time. The
possibility that substantial amounts of Common Stock may be sold in
the public market may adversely affect prevailing market prices for
our Common Stock.
We have not issued any Common Stock purchase options under our 2005
Stock Plan. The exercise of future outstanding stock options may
affect the market value at the time of their exercise and sale. At
March 10, 2006 no such options have been granted. These options, if
granted, will entitle the holders to purchase one (1) common share for
each option at the exercise price established at the time of grant, if
any. All options, if granted, will expire on December 21, 2007. A
number of these options, if granted, will be exercised and the common
shares might be sold when the stock price exceeds their exercise
price, and if this occurs, it may have a negative effect on the market
price of our Common Stock at the time of sale.
Page 10
FORWARD-LOOKING STATEMENTS
While the Private Securities Litigation Reform Act of 1995 provides a
"safe harbor" for forward-looking statements, the safe harbor provided
others, does not apply to companies that issue "Penny Stocks". Our
shares will be deemed penny stocks. Nevertheless, this document
contains forward-looking statements, which reflect the views of our
management with respect to future events and financial performance.
These forward-looking statements are subject to a number of
uncertainties and other factors that could cause actual results to
differ materially from such statements. Forward- looking statements
are identified by words such as "anticipates," "believes,"
"estimates," "expects," "plans," "projects," "targets" and similar
expressions. Readers are cautioned not to place undue reliance on
these forward-looking statements, which are based on the information
available to management at this time and which speak only as of this
date. We undertake no obligation to update or revise any forward-
looking statements, whether as a result of new information, future
events or otherwise. For a discussion of some of the factors that may
cause actual results to differ materially from those suggested by the
forward-looking statements, please read carefully the information
under "Risk Factors". The identification in this document of factors
that may affect future performance and the accuracy of our forward-
looking statements is meant to be illustrative and by no means
exhaustive. All forward-looking statements should be evaluated with
the understanding of their inherent uncertainty.
THE PROSPECTUS
You may rely only on the information contained in this prospectus. We
have not authorized anyone to provide information different from that
stated in this prospectus. Neither the delivery of this prospectus nor
the sale of Common Stock means that information contained in this
prospectus is correct after the date of this prospectus. This
prospectus is not an offer to sell or solicitation of an offer to buy
these securities in any circumstances under which the offer or
solicitation is unlawful.
USE OF PROCEEDS
Assuming the sale of all of the 1,000,000 Units offered, we will
receive the $250,000 maximum proceeds of the sale. If any or all of
the 5,000,000 Class "A" Common Stock Purchase Warrants comprising of
the Units are sold and subsequently exercised, we will receive the
aggregate exercise price of the Class "A" Warrants. We expect to use
the proceeds received from sale of the Units for general working
capital purposes, including establishing a proper marketing
organization to market and sell pre-owned merchandise, and for other
general and administrative expenses.
The following table sets forth, our current view of the Company's use
of the proceeds raised in this offering over the succeeding twelve
month period in the event that we sell all of the Units, or if we only
sell 25%, 50% or 75% of the Units:
- -----------------------------------------------------------------------------------
Sale of Units 25% 50% 75% 100%
- -----------------------------------------------------------------------------------
Offering Proceeds $ 62,500 $ 125,000 $ 187,500 $ 250,000
- -----------------------------------------------------------------------------------
Marketing $ 30,000(1) $ 80,000(1) $ 130,000(2) $ 140,000(2)
- -----------------------------------------------------------------------------------
Website(3) $ 15,000 $ 15,000 $ 15,000 $ 15,000
- -----------------------------------------------------------------------------------
General and Administrative
Expenses(4) $ 10,000 $ 20,000 $ 30,000 $ 40,000
- -----------------------------------------------------------------------------------
Working Capital(5) $ 7,500 $ 10,000 $ 12,500 $ 55,000
- -----------------------------------------------------------------------------------
Total $ 62,500 $ 125,000 $ 187,500 $ 250,000
===================================================================================
(1) With minimal proceeds, we will invest in advertising, promotion
and mailings to expand awareness of our product availability.
(2) With proceeds of 50% or more of the offering, we plan to engage
two sales and marketing persons on a draw against commissions basis
included here as marketing expenses.
Page 11
(3) We view the planned website as a close second priority to
complement the marketing plan from the outset. The estimated website
expense will carry us through the first 12 months of operations with
proceeds at any level.
(4) We have little in the way of overhead expenses in our current
circumstances and plan to compensate our sole officer somewhat in
proportion with proceeds raised. This element of our planned use of
proceeds is our lowest priority expense category.
(5) We have estimated the reserve shown in proportion to proceeds
raised for indefinite "working capital"; to maintain as much
flexibility in committing those funds as possible for unanticipated or
opportunistic use.
MARKET PRICE OF COMMON STOCK AND OTHER SHAREHOLDER MATTERS
Market Information. There is no established public trading market for
our Common Stock or Warrants. Assuming the existence after this
offering of a public trading market, the securities comprising the
Warrants may be detached and sold directly by the purchasers in the
open market, at prevailing prices or in individually negotiated
transactions, through agents, underwriters, or dealers. We will not
control or determine the price at which the securities are sold.
Shareholders. Giving effect to the spin-off shares proposed for
distribution after the date of this prospectus, to the beneficial
shareholders of International Imaging Systems, Inc., the Company
estimates that there will be approximately 150 holders of record of
our Common Stock upon completion of this offering.
Dividends. We have not paid any dividends on our Common Stock to date
and do not anticipate that we will be paying dividends in the
foreseeable future. Any payment of cash dividends on our Common Stock
in the future will be dependent upon the amount of funds legally
available; earnings, financial condition, capital requirements and
other factors that the Board of Directors may think are relevant. We
intend for the foreseeable future, to follow a policy of retaining all
of our earnings, if any, to finance the development and expansion of
our business and, therefore we have no current intention to pay cash
dividends on our Common Stock.
Determination of Offering Pricing
- ---------------------------------
In the absence of any market price for our common equity, the offering
price of the Unit and the exercise price of the Class "A" Common Stock
Purchase Warrants comprising the Units were arbitrarily determined
without any relationship to their intrinsic value or actual book
value. We set those prices without any reference whatsoever to any
recognized criteria of value usually employed or addressed to by
issuers. We considered the estimated proceeds the Company needs to
fund our proposed plan to attempt to emerge from its prolonged
development state as a stand-alone entity. We estimated that
respectiveness of speculative investors to purchasing approximately
33.2% of the ownership interest in our Company for a total of
$250,000, or $0.25 per share (attributing no part of the purchase
price to the Warrants comprising the Units.) With no other criteria,
we came to view the terms of the offering as saleable to a degree
sufficient to justify the expenditure of the expenses incurred in this
proposed offering.
Dilution
- --------
The pro forma net tangible book value of the Company as of December
31, 2005 was $-0- per share of capital stock. "Pro forma net tangible
book value" per share represents the amount of total tangible assets
and intangible assets of the Company less the total liabilities of the
Company, divided by the number of shares of capital stock issued and
outstanding. After giving effect to the sale of the all of the Shares
Page 12
comprising the Units offered hereby (1,000,000) and receipt by the
Company of the gross proceeds therefrom, based on a per Unit price of
$0.25 per Unit (attributing no portion of the purchase price to the
Class "A" Common Stock Purchase Warrants comprising the Units) without
deduction for offering expenses that may be incurred, the pro forma
net tangible book value of the Company as of December 31, 2005 would
be approximately $0.06 per share. This represents an immediate
increase in the net tangible book value of $0.06 per share to existing
shareholders and an immediate dilution of $0.19 or 76% per share to
new investors. The following table illustrates this per share
dilution:
- ---------------------------------------------------------------------------
Price per share to private placement investors in this Offering $0.25
- ---------------------------------------------------------------------------
Pro forma net tangible book value per share as of 12/31/05 $-0-
- ---------------------------------------------------------------------------
Pro forma net tangible book value per share after the full
Offering is sold (without exercise of any Warrants) $0.06
- ---------------------------------------------------------------------------
Increase per share attributable to new investors $0.06
- ---------------------------------------------------------------------------
Immediate dilution per share to investors in this Offering $0.19
===========================================================================
The following table summarizes, on a pro forma basis as of December
31, 2005, the number of Shares of Common stock purchased from the
Company, the total consideration paid to the Company and the average
price per share paid by existing shareholders and by investors
purchasing all of the Unit Shares in this Offering (based on an
offering price of $0.25 per Unit and without deducting any offering
expenses):
Shareholders Shares Approximate Percentage of Total Percent of Approximate
Purchased Total Capital Interest Consideration Total Paid Average Price
in Company Paid Per Share
- -----------------------------------------------------------------------------------------
Existing
Shareholder 3,014,350 75.1% $301 0.12% $.001
- -----------------------------------------------------------------------------------------
New Investors 1,000,000 24.9% $250,000 1.00% $0.25
- -----------------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Overview
While we commenced operations December 12, 2003, we are still in an
early development stage. We were formed by, and as a wholly owned
subsidiary of, our parent, International Imaging Systems, Inc., to
pursue the pre-owned photocopier marketing services line of business
of our parent that commenced its operations in the Fall of 1998.
We are currently engaged in agency marketing activities for a single
unrelated entity and have no employees other than our President,
Alfred M. Schiffrin, who is unsalaried. Pursuant to an amended oral
agreement among International Imaging Systems, Inc., Mr. Schiffrin and
us, Mr. Schiffrin received 160,000 shares of our parent's common stock
in lieu of any other form of compensation for services rendered to the
Company from January 1, 2005 through completion of the proposed spin-
off of our Common Stock to the shareholders of our parent,
International Imaging Systems, Inc. The spin-off has not been
undertaken and will not undertaken until shortly after the date of
this prospectus. We do not anticipate purchasing any plant or
significant equipment or conducting any product research and
development during the next 12 months. As sales and marketing agent,
operating from rent free facilities, we essentially have no overhead
relating to our sales and marketing activities. We do not anticipate
initiating any sales activities for our own account (acting as a
principal) until such time as our resources permit.
Page 13
During the next 12 months, we intend to continue marketing pre-owned
photocopiers. We will also continue to explore our prospects for the
marketing of other products, including new and pre-owned items of
office equipment other than photocopiers, office furniture, home
furnishings and appliances, as well as the purchase and resale of such
items to the extent that our resources permit. We are also considering
other means of expanding our business, such as through acquisition,
merger or other form of business combination involving one or more
entities engaged in the same or similar business as us. Any such
transaction may entail the issuance of additional shares of our Common
Stock, but there are no current plans to engage in any acquisition,
merger or other form of business combination. Any such transaction
will be made in compliance with applicable Federal and state
securities and corporate law, and, depending upon the structure of the
transaction, submission of information to shareholders regarding any
such transaction prior to consummation, as well shareholder approval,
may not be required. Our President, Mr. Alfred M. Schiffrin, has run
the business for more than five years for our parent. Prior to that he
had experience as an investment banker in locating potential
acquisitions, but we may employ the services of a broker or finder who
would be entitled to compensation to assist in identifying suitable
opportunities.
While we only began operations in December 2003, we are the successor
to the pre-owned photocopier marketing services line of business of
International Imaging Systems, Inc. As discussed below, fiscal years
2003 through 2005 were characterized by nominal revenues. Neither we
nor our parent have been able to generate significant revenues from
the sale of pre-owned photocopiers due principally to a lack of
financial resources. We continue to believe that the pre-owned
photocopier business and other complementary business segments that
also focus on the sale of pre-owned merchandise, like office
furniture, are attractive markets for us to exploit. Our belief is
based on the knowledge that pre-owned merchandise can be purchased at
deep discounts to retail prices for merchandise, usually in new or
very near new condition, often at as much as a 95% discount, and may
be resold to end users for as little as a 50% discount to retail,
thereby providing the end users with substantial savings while at the
same time allowing us to realize significant gross profit margins. We
intend to raise working capital to facilitate the expansion of our
business model from that of agent to a blend of agent and principal.
The perceived demand for pre-owned office equipment may be dependent
on, among other things, general economic conditions, which are
cyclical in nature. Inasmuch as a major portion of our activities will
be the receipt of revenues from the sale of such equipment, our
competitors, as well as the general economic conditions, including
prolonged recessionary periods, may limit our future business
operations. We intend to remain flexible in our planned business
operations and will continually review our plans, including the plan
to engage in the marketing and sale of other product lines. We expect
that implementation of our current and future business plans will be
adopted and or implemented only if such plans are deemed to be in the
best interests of the shareholders. Management will use its discretion
to take advantage of future business opportunities believed to be
beneficial to the Company and to the shareholders' interests.
Capital and Source of Liquidity. As of December 31, 2004 and December
31, 2005, we had cash of $5,288 and $18 respectively and accounts
receivable of $1,200 and $3,500 respectively. We are proposing,
through registration and sale of the Units, to raise cash to finance
and expand our operations for the foreseeable future. In addition, we
may consider expansion through acquisition(s). No specific targets are
currently under consideration. If we are not successful in raising
cash, we may be forced to borrow funds. There is and can be no
assurance that funds will be available to borrow, or if available,
that they will be available on terms favorable or acceptable to us.
On a long-term basis, liquidity is dependent on significant expansion
of operations, receipt of consequent revenues, and perhaps additional
infusions of capital and debt financing. Management believes that
additional capital and debt financing in the short term will allow the
Company to effectuate its marketing and sales efforts, resulting in
increased revenue and greater liquidity in the long term. However,
there can be no assurance that we will be able to obtain additional
equity or debt financing in the future, if at all. We are not a party
to any off-balance sheet arrangements and do not engage in trading
activities involving non-exchange traded contracts. We have no
financial guarantees, debt or lease agreements, or other arrangements
that could trigger a requirement for an early payment or that could
change the value of our assets.
Page 14
Notwithstanding the negligible amount of working capital that we had
on hand on December 31, 2005, we believe, in light of our minimal
overhead expenses, that we have sufficient financial resources to
continue maintaining the minimal level of operations we have thus far
conducted, for the next 12 months; but without additional financing,
including the possible proceeds from exercise of Class "A" Warrants
offered in the Units, the Company will not be able to implement its
expansion plan. There are, however, many conditions that could impact
our proposed business plan and could effectively limit our ability to
market and sell the pre-owned equipment. We cannot give any assurance
that we will be able to continue or obtain the financing required for
us to continue to successfully market and sell pre-owned equipment.
Plan of Operation. We are still in the development stage and have not
conducted significant operations to date, nor have we received
significant operating revenues. We have experienced problems, delays,
expenses and difficulties sometimes encountered by an enterprise in
our stage of development, many of which are beyond the Company's
control. These include, but are not limited to, costs and expenses
that may exceed current estimates, competition, product acquisition;
and lack of additional supply channels. We are of the opinion that the
proceeds of the sale of our securities in this offering and future
revenues will be sufficient to pay all of our operating expenses for
the next twelve months.
You should consider the likelihood of our future success to be highly
speculative in light of our limited operating history, as well as the
limited resources, problems, expenses, risks and complications
frequently encountered by similarly situated companies. To address
these risks, we must, among other things:
* satisfy our future capital requirements for the implementation
of our business plan;
* implement and successfully execute our business and marketing
strategy to secure merchandise and develop and maintain a
diverse customer and referral base;
* seek other marketable product lines;
* respond to competitive developments; and
* attract, retain, and motivate qualified personnel.
If we are unable to successfully address these risks, our prospects,
financial condition and results of operations will diminish,
ultimately leading in all likelihood to cessation of our operations.
Critical Accounting Policies. Our financial statements have been
prepared on a continuing operations basis, which contemplates the
realization of assets and the settlement of liabilities and
commitments in the normal course of business. The preparation of
financial statements and related disclosures in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosure of contingent assets
and liabilities at the date of the financial statements and revenues
and expenses during the period reported. The following accounting
policies involve a "critical accounting estimate" because they are
particularly dependent on estimates and assumptions made by management
about matters that are highly uncertain at the time the accounting
estimates are made. In addition, while we have used our best estimates
based on facts and circumstances available to us at the time,
different estimates reasonably could have been used in the current
period, and changes in the accounting estimates we used are reasonably
likely to occur from period to period which may have a material impact
on the presentation of our financial condition and results of
operations. We review these estimates and assumptions periodically and
reflect the effects of revisions in the period that they are
determined to be necessary.
In March 2005, the staff of the SEC issued Staff Accounting Bulletin
No. 107 ("SAB 107"). The interpretations in SAB 107 expresses views of
the staff regarding the interaction between SFAS 123 (R) and certain
SEC rules and regulations and provide the staff's views regarding the
valuation of share-based payment arrangements for public companies.
In particular SAB 107 provides guidance related to share-based
payment transactions with non-employees, the transition from public
entity status, valuation methods (including assumptions such as
expected volatility and expected term), the accounting for certain
Page 15
redeemable financial instruments issued under share-based payment
arrangements, the classification of compensation expense, non GAAP
financial measures, first-time adoption of SFAS 123 (R) in an interim
period, capitalization of compensation cost related to share-based
payment arrangements, the accounting for income tax effects of share-
based payment arrangements upon adoption of SFAS 123 (R), the
modification of employees share options prior to adoption of SFAS 123
(R) and disclosures in Management's Discussion and Analysis
subsequent to adoption of SFAS 123 (R) when applicable. We have not
engaged in any Company share-based payment arrangements.
Results of Operations. Revenues in fiscal year 2004 and 2003 from the
photocopier business were $6,960 and $4,500, respectively, and expenses
were $3,786 and $8,068, respectively, resulting in a net income for
fiscal 2004 of $2,698 after a provision of $476 for income taxes, as
compared to a net (loss) in fiscal 2003 of ($3,568). Revenues for the
year ended December 31, 2005 were $19,390 as compared to $6,960 for
the same period in 2004; resulting in net (loss) of ($70,479) in 2005
and net income of $2,698 in 2004. The net (loss) from the year ended
December 31, 2005 was primarily attributable to the expense incurred
by the Company in connection with its compensation arrangement with
Alfred M. Schiffrin, the Company's sole officer and director, in which
he received 160,000 shares of International Imaging Systems, Inc.
("IIS"), in lieu of any other form of compensation and legal and
accounting fees. We do not believe the differences in results of
operations are meaningful or indicative of any trend but are primarily
attributable otherwise to factors beyond our control, such as the
timing of sales.
We are currently unaware of any trends that may have negative effects
upon our results of operations, although we expect continued and
increased competition from Sun Coast Imaging, our co-exclusive
marketing agent for, and an affiliate of, Office Furniture Warehouse.
HISTORY
The Company was formed by and as a wholly-owned subsidiary of
International Imaging Systems, Inc. On April 13, 2004, the board of
directors of International Imaging Systems approved a spin-off
distribution of all 3,014,350 of our shares of Common Stock issued and
outstanding and owned by IIS, to the IIS stockholders of record as of
April 14, 2004. As part of the spin-off, each stockholder of record of
IIS is to receive one-half share of our Common Stock for each full
share of IIS common stock owned on the record date. As a result, the
principal shareholders of IIS as of April 14, 2004, Mr. Michael
D'Angelo, Ms. Laura Palisa Mujica, Ms. Laura Sarafianos and Mr. Alfred
Schiffrin will become the principal shareholders of our Company. On
the record date, there were 6,028,700 shares of IIS common stock
outstanding. The proposed spin-off has not yet been undertaken and is
planned to be completed shortly after the date of this prospectus.
Our business was the only line of business of IIS prior to its
acquisition of Advanced Imaging Systems, LLC, a Delaware limited
liability company. Before the acquisition, IIS operated under the name
"A.M.S. Marketing, Inc." The background to the acquisition is as
follows:
On July 31, 2003, A.M.S. Marketing, Inc., Advanced Imaging Systems,
LLC and the members of Advanced Imaging Systems, LLC, Mr. Michael
D'Angelo, Ms. Sarah Cinnante, Ms. Laura Palisa Mujica, and Ms. Laura
Sarafianos ("Members"), effected a change of control of AMS Marketing,
Inc. pursuant to an Agreement and Plan of Exchange, dated July 28,
2003 (the "Exchange Agreement"). As provided in the Exchange
Agreement, A.M.S. Marketing, Inc. issued to the Members an aggregate
of 1,200,000 shares (the "Shares") of A.M.S. Marketing's Common Stock,
par value $.001 per share, in exchange for all of the limited
liability company interests of Advanced Imaging Systems, LLC issued
and outstanding on that date.
Immediately prior to the share exchange, the Members each purchased
900,000 shares of A.M.S. Marketing, Inc.'s Common Stock (3,600,000
shares in the aggregate) from Alfred M. Schiffrin, A.M.S.
Page 16
Marketing, Inc.'s former president and sole director, and our current
president and sole director, for $.05 per share, payable partly in
cash and the balance by recourse promissory notes secured by the
purchased shares. Each purchaser paid $625 in cash and executed and
delivered a note in the original principal amount of $44,375. The four
(4) notes are payable in monthly installments commencing on August 1,
2003 and ending on May 1, 2006. To date, all installments due under
the notes have been paid.
The Shares of A.M.S. Marketing, Inc., now International Imaging Systems,
Inc., issued in the exchange, together with the shares purchased by the
Members from Mr. Schiffrin, represented approximately 82% of the total
then issued and outstanding shares of the A.M.S. Marketing, Inc.'s
common stock and approximately 64% of the issued and outstanding shares
of IIS at March 10, 2006.
BUSINESS
Business of Issuer. The Company is currently marketing pre-owned,
refurbished Canon and Minolta photocopy machines for Office Furniture
Warehouse, Inc. ("OFWI") in Pompano Beach, Florida, where OFWI
maintains a 12,000 square foot showroom and a nearby 30,000 square
foot warehouse. OFWI is a retail seller of new and used office
furniture and equipment. The photocopy machines marketed by the
Company range from simple desk-top models to stand-alone, multi-
function business machines.
Pursuant to a marketing services agreement assigned without cost to
the Company by its parent, International Imaging Systems, Inc.
("IIS"), dated December 1, 2003 (the "Agreement"), among International
Imaging Systems, Inc., Sun Coast Imaging Systems, Inc. ("SCIS"), an
affiliate of OWFI, and OFWI, revenues generated from the Company's
sale of pre-owned photocopiers are shared equally between the Company
and OFWI, after deducting the cost of each photocopier. The agreement
has an initial term of three years, ending December 1, 2006, and
automatically renews for successive one-year terms unless terminated
by mutual agreement or upon the happening of certain events, such as
bankruptcy.
The Company is one of two, co-exclusive marketers for OFWI of pre-
owned photocopiers. The other co-exclusive marketer is an affiliate of
OFWI. In that capacity, the Company selects and arranges for the
purchase by OFWI of the pre-owned photocopiers to be marketed. Under
the Agreement, OFWI and SCIS are obligated to provide the Company with
such number and the models of pre-owned photocopiers for sale as the
Company may reasonably request. The Company's president is responsible
for and effects sales of such photocopiers on behalf of OFWI and
schedules delivery and installation thereof by OFWI trucks and
personnel.
The Company is currently completely dependent upon OFWI. Termination
by OFWI of the Marketing Agreement with the Company would have a
material adverse effect upon the Company, as the Company currently
lacks the financial resources to operate its own retail outlets and
may be unable to locate another party for whom it could provide its
marketing services on the same terms and conditions as agreed with
OFWI.
The Company is exploring other marketing opportunities, including new
and pre-owned office equipment, office furniture, home furnishings and
appliances, as well as the purchase and sale as principal of such
items to the extent the Company's resources might permit. In each
case, the Company will attempt to favor in its product mix pre-owned
items, since the Company believes it can realize greater profit
margins on pre-owned items. The Company's parent also explored other
marketing opportunities but was unable to identify any appropriate
opportunities. No assurance can be given that we will be able to
identify and secure any such opportunities.
Page 17
We currently have no employees, and are dependent solely upon the
efforts, abilities, business generation capabilities and project
execution of our sole executive officer, Alfred Schiffrin, to conduct
RAI's business and generate revenues; if the Company loses the
services of Mr. Schiffrin, it would severely affect our ability to
sustain operations at all. Mr. Schiffrin is currently devoting
approximately 20 hours per week to the Company's affairs, including
solicitation of potential business, creation of appropriate marketing
and business plans as well as the preparation of appropriate funding
plans and efforts.
Markets; Seasonality. This Company's target market includes a wide
variety of potential customers, including business entities and firms
engaged in providing services to the general public. Among expected
purchasers are firms offering general securities services, real
estate, insurance and mortgage brokers to the public; anyone with
office and related paperwork activities and operations. We haven't
encountered any material seasonality in the sale and marketing of
previously owned photocopy equipment.
Distribution Methods of the products or services. We will employ a
variety of generally accepted marketing methods for advertising and
promoting our pre-owned equipment merchandise, including direct mail,
telephone solicitation and targeted media advertising. Our marketing
efforts to date have been severely hampered by a lack of working
capital. Nevertheless, the Company has from time to time employed
various marketing methods in an attempt to drive its business
including:
-Cross selling to the office furniture customers of Office Furniture
Warehouse through the use of direct mailers, coupled with follow-up
telephone solicitations;
-Sales solicitations aimed at small and medium size businesses,
usually high volume users such as legal and accounting firms, mortgage
brokerages, and real estate and insurance agencies, by means of direct
mail marketing and telephone solicitation;
-Advertising in the Ft. Lauderdale Sun-Sentinel Newspaper and Florida
Trend Magazine;
-"Fax Blasts" to the local business community, and;
-Word-of-mouth referrals.
The Company primarily serves small and medium size businesses within
Dade, Broward, and Palm Beach Counties, Florida. On occasion, however,
we have sold photocopiers to customers located in Collier County,
Florida, the Bahamas, and Haiti.
Depending upon the amount of the proceeds received in the offering,
and the amount of retained earnings from future operations, if any, we
plan to implement the following additional marketing methods:
-The development of a Company internet website that can be updated
daily, if necessary, in order to showcase the Company's then currently
available product offerings and other relevant information. We
estimate the cost of the website development at $ 15,000;
-Scripting and production of a radio and television commercial for use
on local radio stations and selected local broadcasts of business
television shows, such as those shown on CNBC. The estimated
production cost of such commercials is approximately $ 5,000 each. The
cost of the "air time" varies according to a number of factors
including the length of the commercial, the time of day that the
commercial is to be aired, the frequency of the airing of the
commercial, and the total volume of air time purchased by the
advertiser, and;
-Engaging commission sales and marketing personnel on the basis of a
$2,000 per month draw-versus-commission, per individual, coupled with
automobile and cellular phone allowances.
Page 18
Status of publicly announced new product or services. The Company has
not made any public disclosures or announcements of any proposed
products or services. Presently there are no such products or services
other than as disclosed in this registration statement.
Competitive business conditions. There are many individuals, firms,
and other business entities engaged in offering photocopiers, which
RAI offers to potential customers. Based upon available financing for
advertising, marketing and promotion of sales products, the number of
persons in management and other employees, combined with the
experience of conducting a widely diversified products, RAI is
presently an insignificant entity in the marketplace and we expect
that we shall remain so for the near future.
Dependence on one or a few major customers. Presently being in the
development stage, we have no dominant client or customer. We have no
reasonable criteria to predict whether or not we will become dependent
on one or but a few major customers for future revenues.
Intellectual Property: Patents, Trademarks, Licenses, etc. We have no
patents or trademarks at the present time. In the unlikely event that
we obtain intellectual property in the future, we intend to protect it
through appropriate state and federal registrations and enforcement as
applicable.
Government Regulation and Approval. RAI is not required to obtain any
particular government approvals for the marketing and the proposed
marketing of pre-owned merchandise.
Research and Development. We have not spent any funds on product or
service research or development.
Environmental Compliance. We have no product or contemplated service
that has any direct or known indirect impact on the environment, and
therefore do not anticipate any significant costs to comply with
governmental environment laws and regulations.
Corporate Information. Our principal office is located at 7040 W.
Palmetto Park Road, Bldg. 4, No. 572, Boca Raton, Florida 33433 and
our telephone number is (561) 488-9938.
Property. The Company neither owns nor leases any real property.
Legal Proceedings. There are no pending legal proceedings by or
against the Company and the Company is unaware of any threatened
litigation or of any basis upon which possible litigation against the
Company might rest.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Directors and Executive Officers. The following table sets forth the
name, age and position held by each of our executive officers and
directors as of March 10, 2005. Directors are elected for a period of
one year and thereafter serve until the next annual meeting or such
time as their successors are qualified.
NAME AGE POSITION
---- --- --------
Alfred M. Schiffrin 68 President/Secretary/Treasurer and Director
Alfred M. Schiffrin has been our President, Secretary, Treasurer and
sole director since our formation in December 2003. Prior to that
date, he was the sole officer and director of our parent,
International Imaging Systems, Inc. From December 1996, to September
1998, he was the President of Newmarket Strategic Development Corp., a
publicly held development company.
Page 19
Mr. Schiffrin also has more than twenty years of experience in the
investment banking and securities industry, having been associated in
various capacities with NASD member firms located in New York, Colorado
and Florida. Most recently he was employed in the following positions by
broker/dealers:
General Principal from August 2004 to April 2005 of Acosta Financial
Services; Director of Continuing Education from November 2001 to July
2004 of L.H. Ross & Company, and General Principal from June 1999 to
February 2001 of First Madison Securities.
While Mr. Schiffrin holds Series 7, Series 24, Series 53 and Series 63
securities licenses and was admitted as a Member of the NASD Board of
Arbitrators in 1987, he is not currently affiliated with any broker or
dealer.
There are no material proceedings known to us to which Mr. Schiffrin
or any of our affiliates, or any owner of record or beneficially of
more than 5% of any class of our voting securities to be distributed,
or any affiliate of such persons, is a party adverse to us or has a
material interest adverse to our interests.
Mr. Schiffrin has not, and does not receive any compensation for his
services as a Director.
Compliance With Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") requires the Company's officers and directors, and persons who
own more than ten percent of a registered class of the Company's
equity securities (collectively the "Reporting Persons") to file
reports and changes in ownership of such securities with the
Securities and Exchange Commission and the Company. Based solely upon
a search for (i) Forms 3, 4 and 5 and amendments thereto which might
have been furnished to the Company pursuant to Rule 16a-3(e),
promulgated under the Exchange Act, and/or written representations
which might have been furnished to the Company by any Reporting
Persons stating that such person was not required to file a Form 5,
since the Company's inception, it has been determined that no one has
been delinquent with respect to the reporting obligations set forth in
Section 16(a) of the Exchange Act.
Executive Compensation
Pursuant to an oral agreement as amended on August 22, 2005, and
effective as of January 1, 2005 among the Company, IIS and Alfred M.
Schiffrin, the Company's sole officer and director, Mr. Schiffrin has
waived all other forms of compensation in exchange for 160,000 shares
of IIS common stock, valued at $48,000, for his services to the
Company, prior to distribution of the proposed spin-off of all the
Company's Common Stock by IIS to the IIS Stockholders. The spin-off
has not been undertaken or effected. The arrangement will terminate
upon the consummation of the spin-off planned to occur shortly after
the date of this prospectus. Until December 31, 2004 Mr. Schiffrin was
entitled to receive 25% of the gross profits on any sale by the
Company of a pre-owned copier. In the years ended December 31, 2002
and 2003, Mr. Schiffrin received no compensation. In teh year ended
December 31, 2004 Mr. Schiffrin received $1,740 in commission expense
from the Company. The Company expects to pay Mr. Schiffrin reasonable
compensation for his services after completion of the proposed spin-
off at such time as the Company's business develops to such extent
that it is able to do so. The Company has an unused stock option plan
and does not have any other employment agreements.
Options/Stock Appreciation Rights (SARs). No options or stock
appreciation rights have been granted to the officers since inception.
Compensation of Board of Directors. Currently, directors do not
receive any compensation for their services. However, we anticipate
that in the future, independent directors will receive stock options
for their services. We currently reimburse all directors for any
expenses incurred by them in attending meetings of the Board of
Directors.
Key Man Insurance. We do not currently maintain life insurance
covering the death of our sole officer, director and key employee.
Page 20
Security Ownership of Certain Beneficial Owners and Management
All of our issued and outstanding shares of Common Stock are currently
owned by our parent, International Imaging Systems, Inc. ("IIS"). The
following table sets forth information available to us, as of March
10, 2006 with respect to the beneficial ownership of the outstanding
shares of International Imaging Systems, Inc.'s common stock by (i)
any holder of more than five percent (5%) of the outstanding shares;
(ii) our sole officer and director; and (iii) the officers and
directors of International Imaging Systems, Inc. as a group:
- ----------------------------------------------------------------------------
Name and Address of Beneficial Owner(1) Shares of Common Percentage (%) of
(International Imaging Systems, Inc.) Stock Owned(2) Common Stock(2)
- ----------------------------------------------------------------------------
Michael D'Angelo(3) 1,500,000 19.83%
- ----------------------------------------------------------------------------
Laura Palisa Mujica(4) 2,100,000 27.76%
- ----------------------------------------------------------------------------
Lara Nicole Sarafianos(5) 1,200,000 15.86%
- ----------------------------------------------------------------------------
Alicia M. LaSala(6) 504,000(7) 6.62%(7)
- ----------------------------------------------------------------------------
Alfred M. Schiffrin(8) 635,000 8.40%
- ----------------------------------------------------------------------------
Alex Sarafianos(9) 25,000(10) 0.33%(10)
- ----------------------------------------------------------------------------
C. Leo Smith(3) 0(11) 0%(11)
- ----------------------------------------------------------------------------
Susan Archer(3) 130,000 1.72%
- ----------------------------------------------------------------------------
All officers and directors as a group
(three) persons(11) 155,000(11) 2.05%
- ----------------------------------------------------------------------------
When the Renewable Assets, Inc. spin-off distribution is effected
shortly after the date of this prospectus, the number of RAI (the
Company's) shares outstanding will still be 3,014,350, excluding sale
of Units, and the percentage of ownership of those shares will
correspond directly to those shown in the above table; except that
205,000 RAI shares (5.11%) will be held by the sole officer and
director of RAI "as a group". The spin-off distribution has not taken
place. Pending consummation of the proposed spin-off, all of our
issued and outstanding Common Stock is owned and held by our parent,
IIS.
(1) Beneficial ownership as reported in the table above has been
determined in accordance with Instruction (1) to Item 403 (b) of
Regulation S-B of the Exchange Act.
(2) Percentages are approximate, based on 7,463,700 IIS shares issued
and outstanding on March 10, 2006. The proposed spin-off distribution
of 3,014,350 Shares of the Company's Common Stock will be on the basis
of one (1) Share of RAI Common Stock per every two (2) Shares of IIS
common stock held of record on April 14, 2004, the record date. The
resulting Stockholder percentages of RAI Common Stock will be
approximately the same as reported in the table above for IIS common
stock ownership. The spin-off distribution has not taken place.
(3) The business address of the stockholder, director or officer, as
the case may be, noted above is 2419 E. Commercial Blvd., Ste. 307,
Ft. Lauderdale, FL 33308.
(4) The address of the stockholder noted above is 824 S.E. 8th Street,
Ft. Lauderdale, FL 33316.
(5) The address of the stockholder noted above is 4440 N.E. 22nd
Avenue, Lighthouse Point, FL 33064.
(6) The address of the stockholder noted above is 6674 Serena Lane,
Boca Raton, FL 33433.
(7) Includes 20,000 shares of Common Stock owned of record by a trust
for the benefit of Mrs. LaSala's minor child of which her husband is
the sole trustee, and 100,000 shares of Common stock owned of record by
her husband. Mrs. LaSala disclaims beneficial ownership of such
shares.
(8) The business address of Mr. Schiffrin is 7040 W. Palmetto Park
Road, Building 4, No. 572, Boca Raton, FL 33433. Mr. Schiffrin is the
sole director and officer of Renewable Assets, Inc. (the Company).
Mr. Schiffrin's wife, Mrs. Carol Schiffrin, owns 750 shares. Mr.
Schifrrin's adult children both of whom do not reside with Mr.
Schiffrin own a total of 800 shares. Mr. Schiffrin disclaims
beneficial ownership in all of the shares owned by Mrs. Schiffrin and
his adult children.
Page 21
(9) The address of the IIS director noted above is 16008 Wilmington
Place, Tampa FL 33647.
(10) Excludes all shares owned by Lara Nicole Sarafianos. Mr.
Sarafianos is the brother-in-law of Mrs. Sarafianos and disclaims
beneficial ownership of all shares owned by Mrs. Sarafianos.
(11) Excludes 2,100,000 shares owned by the mother of Mr. Smith, Laura
Palisa Mujica. Mr. Smith disclaims beneficial ownership of such
shares. The officers and directors of International Imaging Systems,
Inc. are:
C. Leo Smith - CEO, CFO and Director, Susan Archer - Secretary, Alex
Sarafianos - Director. Our sole officer and director, Mr. Alfred
Schiffrin currently owns 635,000 shares of IIS. The promoter of IIS
was Mr. Schiffrin. The IIS control persons include Mr. Schiffrin,
Michael D'Angelo, Laura Pulisa Mujica, Lara Sarafianos and the IIS
officers and directors, C. Leo Smith, Susan Archer and Alex
Sarafianos.
PLAN OF DISTRIBUTION
We are offering, without the services of an underwriter, 1,000,000
Units on a "best-efforts, no-minimum" basis, at the price of $ 0.25
per Unit. As the only officer and director of RAI, Mr. Alfred M.
Schiffrin will be the sole participant in the sale of the securities
on behalf of the Company. As an associated person of the Issuer, in
connection with undertaking and effecting sales of the Units on behalf
of the Company, Mr. Schiffrin is exempt from any requirement to
register as a broker-dealer in connection with his participation in
the offering as described. He will not receive any compensation for
services in connection with effecting sales of the Units and he will
continue simultaneously with his activities and his officer and
director duties for RAI otherwise then in connection with undertaking
and effecting sales of the Units in this offering.
Future Audit committee
We intend to establish an Audit Committee upon appropriate expansion
of our board of directors. The audit committee of our board of
directors, if any, will be responsible for reviewing and monitoring
our financial statements and internal accounting procedures,
recommending the selection of independent auditors by our board,
evaluating the scope of the annual audit, reviewing audit results,
consulting with management and our independent auditor prior to
presentation of financial statements to stockholders and, as
appropriate, initiating inquiries into aspects of our internal
accounting controls and financial affairs. To date we have not
identified or sought additional directors and we are uncertain
whether any future candidate will qualify as an "audit committee
financial expert" under the federal securities laws.
Future Compensation committee
We intend to establish a Compensation Committee upon expansion of our
board and management. All members of our compensation committee will
be independent directors. We currently expect that the compensation
committee will recommend approval to the full board of the annual
compensation budget for all employees, bonuses, grants of stock
options and any adoptions or changes to our benefit plans. To date we
have neither identified nor sought additional director candidates.
Code of Conduct and Ethics
The company has adopted a code of business conduct and ethics
applicable to our directors, officers and employees, in accordance
with applicable federal securities laws and the NASD Rules.
Indemnification of executive officers and directors
We have agreed to indemnify our executive officers and directors for
all costs, charges and expenses, including an amount paid to settle an
action or satisfy a judgment, reasonably incurred by them in respect
of any civil, criminal or administrative action or proceeding to which
they are made a party by reason of being or having been a director or
officer, if (a) they acted honestly and in good faith with a view to
our best interests, and (b) in the case of a criminal or administrative
action or proceeding that is enforced by a monetary penalty, they had
reasonable grounds for believing that their conduct was lawful.
Page 22
To the extent that our directors, officers and controlling persons are
indemnified under provisions that may be contained in our bylaws,
Delaware law or contractual arrangements against liabilities arising
under the Securities Act, we have been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against
public policy as expressed in the Securities Act and is therefore
unenforceable.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has not entered into any transactions during the last two
fiscal years with any director, executive officer, director nominee,
or any 5% or more shareholder or promoter of its sole shareholder, its
parent, IIS, nor has the Company entered into transactions with any
member of the immediate families of the foregoing persons (includes
spouse, parents, children, siblings, and in-laws) nor is any such
transaction proposed, except for the amended oral agreement between
the Company and Mr. Schiffrin described above under "Executive
Compensation". Except as set forth below, no other transactions have
occurred since the beginning of the Company's last fiscal year or are
proposed with respect to which a director or executive officer of the
Company, or any member of the immediate families of the foregoing
persons, had or will have a direct or indirect material interest.
During fiscal year 2005, RAI received additional paid-in capital from
its sole shareholder, its parent, International Imaging Systems, Inc.
("IIS") in the aggregate amount of $ 61,200. That total sum was
comprised of:
1. $ 5,700 in cash for the payment of RAI's accounting fees;
2. $ 7,500 in cash for the payment of RAI's legal fees, and;
3. $ 48,000 in the form of 160,000 shares of IIS' common stock,
valued at the then market price of $ .30 per share, for services
rendered to RAI by its president and sole director, Alfred
Schiffrin. The shares were issued pursuant to IIS' 2003 Equity
Compensation Program.
In fiscal year 2004 RAI received paid-in capital from IIS in the
amount of $ 3,014 in cash, consideration paid for the issuance of
3,014,350 shares of RAI's Common Stock at par value of $ .001 to IIS.
During fiscal year 2005, IIS received an aggregate of $609,800 in
working capital advances from Laura Palisa Mujica, Michael D'Angelo,
and Lara Sarafianos, each of whom is a shareholder of more than 5% of
IIS' issued and outstanding common stock. Of the total amount of these
advances, $250,671 was repaid as of December 31, 2005. The advances
are short term and bear no interest.
During fiscal year 2004 IIS received an aggregate of $ 373,500 in
working capital advances from Laura Palisa Mujica, Michael D'Angelo,
and Lara Sarafianos, each of whom is a shareholder of more than 5% of
IIS' issued and outstanding common stock. Of the total amount of these
advances, $341,094 was repaid as of December 31, 2004. These advances
too, are short term and bear no interest.
In fiscal year 2005, IIS paid promotional and marketing development
fees totaling $4,500 to an entity owned by C. Leo Smith, IIS' Chief
Executive Officer.
During fiscal year 2004, IIS paid promotional and marketing
development fees totaling $ 7,000 to an entity owned by C. Leo Smith,
IIS' Chief Executive Officer.
During fiscal year 2005, Laura Palisa Mujica, Michael D'Angelo, and
Lara Sarafianos, each of whom is a shareholder of more than 5% of IIS'
issued and outstanding common stock, loaned IIS an aggregate of
$360,600, which funds were loaned by IIS to Alcard Mexico, S.A., a
non-affiliated third party, and a customer of IIS. The shareholders'
loans bear interest at the rate of 6% per annum, and are repayable in
two years. As of December 31, 2005 $55,100 of the original
principal amount of the shareholders' loans had been repaid.
Page 23
DESCRIPTION OF SECURITIES
The Company's authorized capital consists of 30,000,000 shares of
capital stock, of which 29,000,000 shares are classified as Common
Stock, $0.001 par value per share, and 1,000,000 shares are classified
as undesignated Preferred Stock, $0.001 par value per share. When the
proposed spin-off distribution is completed, our Common Stock will be
held by approximately 150 shareholders. The spin-off distribution has
not yet taken place. It is planned at this time to be undertaken
shortly after the date of this prospectus.
Holders of shares of Common Stock are entitled to one vote per share
at all meetings of stockholders. Stockholders are not permitted to
cumulate votes in the election of directors. All shares of Common
Stock are equal to each other with respect to liquidation rights and
dividend rights. There are no preemptive rights to purchase any
additional shares of Common Stock. In the event of liquidation,
dissolution or winding up of the Company, holders of the Common Stock
will be entitled to receive on a pro rata basis all assets of the
Company remaining after satisfaction of all liabilities. The
outstanding shares of Common Stock are duly and validly issued, fully
paid and non-assessable.
The Units offered by this prospectus are each comprised of one share
of authorized, presently unissued Common Stock and five (5) Class A
Common Stock Purcahase Warrants ("Warrants") each of which is
exercisable by the holder to purchase one (1) additional share of
Common Stock upon exercise by the holder at the price of $0.50 per
share payable to the Company. The Warrants are exercisable to purchase
our Common Stock at any time prior to two (2) years from the date of
this prospectus. The Warrants are detachable from the Units upon
purchase in this offering and may be tradable in the event that a
market for the Warrants may develop after the date of this prospectus.
There is and can be no assurance that any such market will develop.
The Warrants, of and in themselves, represent no ownership in the
Company and represent only the holder's right to acquire shares of our
authorized, previously unissued Common Stock at the exercise price of
$0.50 per share at any time during their term as indicated above.
We are authorized to issue up to 1,000,000 shares of previously
undesignated Preferred Stock. Our board of directors is empowered,
without stockholder approval, to issue series of Preferred Stock with
any designations, rights and preferences as they may from time to time
determine. So, Preferred Stock, if issued, could have dividend,
liquidation, conversion, voting or other rights that could adversely
affect the voting power or other rights of the Common Stock. Preferred
Stock, if issued, could be utilized, under special circumstances, as a
method of discouraging, delaying or preventing a change in control of
our Company.
As of the date hereof, the Company has outstanding 3,014,350 shares
of Common Stock all of which are held by our parent, International
Imaging Systems, Inc., ("IIS") and no shares of Preferred Stock.
Future issuance of shares of Preferred Stock, or the issuance of
rights to purchase such shares, could be used to discourage an
unsolicited acquisition proposal. For instance, the issuance of a
series of Preferred Stock might impede an acquisition or other
business combination by including class voting rights that would
enable the holder to block such a transaction, or facilitate a
business combination by including voting rights that would provide
a required percentage vote of the stockholders. In addition, under
certain circumstances, the issuance of Preferred Stock could adversely
affect the voting power of the holders of the Common Stock. Although
the board of directors is required to make any determination to issue
such stock based on its judgment as to the best interests of RAI's
stockholders, the board of directors could act in a manner that would
discourage an acquisition attempt or other transaction that some, or
a majority, of the stockholders might believe to be in their best
interests, or in which stockholders might receive a premium for their
stock over the then market price of such stock. The board of directors
does not at present intend to seek stockholder approval prior to any
issuance of currently authorized capital stock, unless otherwise
required by law or stock exchange rules. We have no present plans to
issue any Preferred Stock.
Page 24
Voting Rights Control
Each share of authorized Common Stock is entitled to one vote.
Cumulative voting in the election of directors is not permitted and
the holders of a majority of the number of outstanding shares will be
in a position to control the election of directors, at a general
shareholder meeting, and may elect all of the directors standing for
election.
No Dividend Policy
The Company has never declared or paid a cash dividend on its Common
Stock, nor does it have any present intent to do so in the near
future. It is anticipated that all earnings will be retained to
provide working capital for the implementation of the business plan,
until such time as the directors shall, in their sole discretion,
declare that the Company's working capital requirements and cash
position will permit a cash distribution to stockholders. Stock
dividends may be declared, from time to time, in the sole discretion
of the board of directors. No such stock dividends have ever been
declared and none are anticipated in the foreseeable future.
Proposed Spin-Off
On April 13, 2004, International Imaging Systems, Inc. approved a
spin-off distribution to its beneficial shareholders of all of the
then issued and outstanding RAI common shares, 3,014,350 shares. The
proposed spin-off distribution is expected to be undertaken shortly
after the date of this prospectus.
Conflicts of Interest Policies
All future transactions between us and any of our officers and
directors must be on terms no less favorable than could be obtained
from independent third parties. Our bylaws require that a majority of
disinterested directors is required to approve any proposal in which
any of our officers or directors has a principal or other interest.
Shares Eligible For Future Sale. As of March 10, 2006, we had
3,014,350 "restricted" shares of Common Stock outstanding all of which
are held of record by our parent, International Imaging Systems, Inc.,
("IIS"), pending a proposed spin-off distribution to the IIS
shareholders of record on the record date, April 14, 2004. The spin-
off has not been undertaken.
Freely Tradeable Shares After Offering
After the full completion of this Units offering, exclusive any
exercise of the Class "A" Warrants, and after completion of the spin-
off distribution of 3,014,350 shares of our issued and outstanding
Common Stock by our parent to its shareholders, intended to be
undertaken shortly after the date of this prospectus, there will be a
total of approximately 1,407,800 shares of our Common Stock that will
be tradable without restriction. The remaining 2,606,550 shares of the
Company's issued and outstanding Common Stock will be "restricted
securities" as that term is defined in Rule 144 promulgated under the
Securities Act held after the spin-off by so-called "large shareholders"
of the Company. All of those restricted common shares, owned by control
persons, will subsequently become eligible for public sale under Rule 144
as currently in effect. In general, a person (or persons whose shares are
aggregated) who has beneficially owned restricted securities shares for
at least one year, including persons who may be deemed our "affiliates,"
as that term is defined under the Securities Act, would be entitled to
sell their respective stock within any three month period, if the number
of shares does not exceed the greater of 1% of the then outstanding
shares or the average weekly trading volume of shares during the four
calendar weeks preceding such sale. Sales under Rule 144 are subject to
certain manner-of-sale provisions, notice requirements and the
availability of current public information about the Company. A person
who has not been our affiliate at any time during the three months
preceding a sale, and who has beneficially owned his shares for at
least two years, would be entitled under Rule 144(k) to sell such
shares without regard to any volume limitations under Rule 144. The
sale, or availability for sale, of substantial amounts of restricted
stock issued in the future could, in the further future, adversely
affect the market price of the Common Stock and could impair our
ability to raise additional capital through the sale of our equity
Page 25
securities or through debt financing. The future availability of Rule
144 to holders of such restricted securities would be conditioned on,
among other factors, the availability of certain public information
concerning the Company.
Transfer Agent
The transfer agent for our Common Stock is Corporate Stock Transfer in
Denver, Colorado, and their telephone number is (303) 282-4800. Their
Internet website is available to all of our shareholders at
www.corporatestock.com. While we will act as our own transfer agent
- -----------------------
(Warrant Agent) for the redeemable Warrants comprising the Units being
offered, all issuance and transfer of the common shares that may be
issued on the exercise of the Warrants will be effected by our
transfer agent.
INTERESTS OF NAMED EXPERTS AND COUNSEL
No expert or counsel was hired on a contingent basis to receive a
direct or indirect interest in our business that is valued at greater
than $50,000. Thomas W. Klash, Certified Public Accountant, has
reviewed or audited the financial statements included in this
Prospectus to the extent and for the periods indicated in his reports
thereon.
Changes In And Disagreements With Accountants On Accounting And
Financial Disclosure
The reports of Thomas W. Klash, CPA on Renewable Assets, Inc.'s
financial statements for the fiscal years ended December 31, 2003,
2004 and 2005 did not contain an adverse opinion or disclaimer of
opinion, nor were they modified as to uncertainty, audit scope or
accounting principles, however the reports were modified to include an
explanatory paragraph in which the Auditor expressed substantial doubt
about our ability to continue as a going concern.
During the years ended December 31, 2003, 2004 and 2005, there were no
disagreements with Thomas W. Klash, CPA on any matter of accounting
principles or practices, financial statement disclosure, or auditing
scope or procedure which, if not resolved to satisfaction of Thomas W.
Klash, CPA, would have caused him to make reference to the subject
matter of such disagreements in connection with his report on our
financial statements for those years.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES
ACT LIABILITIES
We are authorized in our Certificate of Incorporation and our By- Laws
to indemnify our officers and directors to the fullest extent allowed
under the provisions of the Delaware General Corporation Law for
claims brought against such persons in their capacity as officers and
or directors. We may hold harmless each person who serves at any time
as a director or officer from and against any and all claims,
judgments and liabilities to which such person shall become subject by
reason of the fact that he is or was a director or officer, and may
reimburse such person for all legal and other expenses reasonably
incurred by him or her in connection with any such claim or liability.
We also have the power to defend such person from all suits or claims
in accord with the Delaware Statutes. The rights accruing to any
person under our by-laws and Certificate of Incorporation do not
exclude any other right to which any such person may lawfully be
entitled, and we may indemnify or reimburse such person in any proper
case, even though not specifically provided for by the bylaws and
Certificate of Incorporation. Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to
directors, officers and controlling persons of the small business
issuer pursuant to the foregoing provisions, or otherwise, the small
business issuer has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable.
LEGAL MATTERS
Eugene Michael Kennedy, Esq. of the Law Office of Eugene Michael
Kennedy, P.A., has rendered an opinion with respect to the validity of
the shares of Common Stock covered by this Prospectus.
Page 26
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a
registration statement on Form SB-2 (File Number 333-129458) under
the Securities Act of 1933 regarding the Units offered hereby. This
prospectus does not contain all of the information found in the
registration statement, portions of which are omitted as permitted
under the rules and regulations of the SEC. For further information
regarding us and the securities offered by this prospectus, please
refer to the registration statement, including its exhibits and
schedules. Statements made in this prospectus concerning the contents
of any contract, agreement or other document filed as an exhibit to
the registration statement are summaries of the terms of those
documents. The registration statement of which this prospectus forms
a part, including its exhibits and schedules, may be inspected and
copied at the public reference room maintained by the SEC at 100 F
Street, N.E., Room 1580, Washington, D.C. 20549. Copies of the
materials may also be obtained from the SEC at prescribed rates by
writing to the public reference room maintained by the SEC at 100 F
Street, N.E., Washington, D.C. 20549. You should call 1-800-SEC-0330
for more information on the public reference room.
Our registration statement and other information that we file
with the SEC are available to the public from the SEC's website at
http://www.sec.gov.
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Page 27
INDEX TO FINANCIAL STATEMENTS
The following financial statements required by Item 310 of Regulation
S-B are furnished below:
As of December 31, 2005:
- ------------------------
INDEPENDENT AUDITOR'S REPORT 31
FINANCIAL STATEMENTS
Balance Sheet 32
Statements of Operations 32
Statements of Shareholder's Deficiency 34
Statements of Cash Flows 35
Notes to Financial Statements 36 - 39
As of December 31, 2004:
- ------------------------
INDEPENDENT AUDITOR'S REPORT 42
FINANCIAL STATEMENTS
Balance Sheet 43
Statements of Operations 44
Statement of Shareholder's Equity 45
Statement of Cash Flows 46
Notes to Financial Statements 47 - 49
As of December 31, 2003:
- ------------------------
INDEPENDENT AUDITOR'S REPORT 52
FINANCIAL STATEMENTS
Balance Sheet 53
Statements of Operations 54
Statement of Shareholder's Equity 55
Statement of Cash Flows 56
Notes to Financial Statements 57 - 59
Page 28
RENEWABLE ASSETS, INC.
SUCCESSOR TO
A.M.S. MARKETING, INC. - PHOTOCOPIER DIVISION
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
DECEMBER 31, 2005
Page 29
RENEWABLE ASSETS, INC.
SUCCESSOR TO
A.M.S. MARKETING, INC. - PHOTOCOPIER DIVISION
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
TABLE OF CONTENTS
Independent Auditor's Report 1
Balance Sheet 2
Statements of Operations 3
Statements of Shareholder's Deficiency 4
Statements of Cash Flows 5
Notes to Financial Statements 6-9
Page 30
INDEPENDENT AUDITOR'S REPORT
The Board of Directors and Shareholder
Renewable Assets, Inc.
Successor to A.M.S. Marketing, Inc. - Photocopier Division
(A Development Stage Company)
Boca Raton, Florida
I have audited the accompanying balance sheet of Renewable Assets,
Inc., Successor to A.M.S. Marketing, Inc. - Photocopier Division (A
Development Stage Company) as of December 31, 2005, and the related
statements of operations, shareholder's deficiency and cash flows for
the years ended December 31, 2005 and 2004, and for the period from
July 23, 1998 (inception) through December 31, 2005. 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 audits.
I conducted my audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards
require that I plan and perform the audits 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 audits
provided 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 Renewable
Assets, Inc., Successor to A.M.S. Marketing, Inc. - Photocopier
Division as of December 31, 2005, and the results of operations and
its cash flows for each of the years ended December 31, 2005 and 2004,
in conformity with generally accepted accounting principles generally
accepted in the United States of America.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note F
to the financial statements, the photocopy division of A.M.S.
Marketing, Inc. has sustained recurring operating losses and has
minimal assets. These factors raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans
in regard to these matters are also described in Note F. The financial
statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/Thomas W. Klash
Certified Public Accountant
Hollywood, Florida
February 15, 2006
- 1 -
Page 31
RENEWABLE ASSETS, INC.
SUCCESSOR TO
A.M.S. MARKETING, INC. - PHOTOCOPIER DIVISION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
DECEMBER 31, 2005
ASSETS
CURRENT ASSETS:
Cash $ 18
Commission Receivable 3,500
-----------
TOTAL CURRENT ASSETS $ 3,518
===========
LIABILITIES AND SHAREHOLDER'S DEFICIENCY
CURRENT LIABILITIES:
Accounts Payable $ 7,085
-----------
TOTAL CURRENT LIABILITIES 7,085
-----------
SHAREHOLDER'S DEFICIENCY:
Preferred Stock, $.001 Par Value -
1,000,000 Shares Authorized -
-0- Shares Issued and Outstanding
Common Stock, $.001 Par Value -
29,000,000 Shares Authorized -
3,014,350 Shares Issued and Outstanding 3,014
Additional Paid-In Capital 61,200
Accumulated Deficit - Development Stage (67,781)
-----------
TOTAL SHAREHOLDER'S DEFICIENCY (3,567)
-----------
TOTAL LIABILITIES AND SHAREHOLDER'S DEFICIENCY $ 3,518
===========
See accompanying notes to financial statements.
- 2 -
Page 32
RENEWABLE ASSETS, INC.
SUCCESSOR TO A.M.S. MARKETING, INC. - PHOTOCOPIER DIVISION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2005 AND 2004
AND FROM JULY 23, 1998 (INCEPTION) TO DECEMBER 31, 2005
CUMULATIVE
DEVELOPMENT
2005 2004 STAGE AMOUNTS
----------- ----------- -------------
COMMISSION REVENUES $ 19,390 $ 6,960 $ 73,445
GENERAL AND ADMINISTRATIVE
EXPENSES 89,869 3,786 237,300
----------- ----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES (70,479) 3,174 (163,855)
PROVISION FOR INCOME TAXES -- 476 476
----------- ----------- -----------
NET INCOME (LOSS) $ (70,479) $ 2,698 $ (164,331)
=========== =========== ===========
BASIC AND DILUTED EARNINGS
(LOSS) PER SHARE $ (.023) $ .001 $ (.055)
=========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 3,014,350 3,014,350 3,014,350
=========== =========== ===========
See accompanying notes to financial statements.
- 3 -
Page 33
RENEWABLE ASSETS, INC.
SUCCESSOR TO A.M.S. MARKETING, INC. - PHOTOCOPIER DIVISION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF SHAREHOLDER'S DEFICIENCY
YEARS ENDED DECEMBER 31, 2005 AND 2004
RETAINED
EARNINGS
OR
DEFICIT
ACCUMULATED
COMMON STOCK ADDITIONAL DURING
$.001 PAR VALUE PAID-IN DEVELOPMENT
-----------------------
SHARES AMOUNT CAPITAL STAGE TOTAL
----------------------- ----------- ------------- ----------
BALANCE - December 31, 2003 3,014,350 $ -- $ -- $ -- $ --
PROCEEDS FROM ISSUANCE
OF COMMON STOCK -- 3,014 -- -- 3,014
NET INCOME FOR PERIOD -- -- -- 2,698 2,698
--------- ---------- ----------- ------------- ----------
BALANCE - December 31, 2004 3,014,350 3,014 -- 2,698 5,712
ADDITIONAL CAPITAL
CONTRIBUTION FROM
PARENT -- -- 61,200 -- 61,200
NET (LOSS) FOR PERIOD -- -- -- (70,479) (70,479)
--------- ---------- ----------- ------------- ----------
BALANCE - December 31, 2005 3,014,350 $ 3,014 $ 61,200 $ (67,781) $ (3,567)
========= ========== =========== ============= ==========
See accompanying notes to financial statements.
- 4 -
Page 34
RENEWABLE ASSETS, INC.
SUCCESSOR TO A.M.S. MARKETING, INC. - PHOTOCOPIER DIVISION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2005 AND 2004
AND FROM JULY 23, 1998 (INCEPTION) TO DECEMBER 31, 2005
CUMULATIVE
DEVELOPMENT
2005 2004 STAGE AMOUNTS
----------- ----------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income or (Loss) $ (70,479) $ 2,698 $ (164,331)
Adjustments to Reconcile Net Income (Loss) to
Net Cash Provided by (Used in) Operating
Activities:
Officer Compensation Paid by Issuance
of Common Stock of Parent Company 48,000 -- 48,000
Commission Receivable (2,300) (1,200) (3,500)
Accounts Payable 6,785 300 7,085
Income Taxes Payable (476) 476 --
----------- ----------- -----------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (18,470) 2,274 (112,746)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Borrowings 2,500 -- 30,000
Repayment of Borrowings (2,500) -- (30,000)
Working Capital Advances from Parent 13,200 -- 13,200
Issuance of Common Stock -- 3,014 99,564
NET CASH PROVIDED BY ----------- ----------- -----------
FINANCING ACTIVITIES 13,200 3,014 112,764
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH (5,270) 5,288 18
CASH - Beginning of Period 5,288 -- --
----------- ----------- -----------
CASH - End of Period $ 18 $ 5,288 $ 18
=========== =========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
- -----------------------------------
The Company made no payments for interest
and $476 for income taxes.
Stock compensation paid and working capital
advances paid by the parent company initially
recorded as loans were reclassified to
additional paid-in capital.
See accompanying notes to financial statements.
- 5 -
Page 35
RENEWABLE ASSETS, INC.
SUCCESSOR TO
A.M.S. MARKETING, INC. PHOTOCOPIER DIVISION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2005
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
Nature of Operations:
A.M.S. Marketing, Inc. ("AMS" or the Company) was incorporated
in the state of Delaware on July 23, 1998.
On July 21, 2003, "AMS" acquired 100% ownership of Advanced Imaging
Systems, LLC ("AIS"), a privately owned Delaware entity in exchange
for 1,200,000 shares of its previously unissued common stock. Prior
to the execution of the exchange agreement, the members (owners) of
"AIS" purchased a controlling interest in "AMS" from an existing "AMS"
shareholder. As a result of the foregoing transactions, the previous
owners of "AIS" became the 81.96% owners of "AMS". For accounting
purposes, "AIS" is considered to be the acquirer and "AMS" the
acquired entity. The business combination was accounted for as a
reorganization of entities under common control. No fair value
adjustments resulted from the reorganization.
Prior to the merger, the Company's ("AMS") principal business was the
brokerage of pre-owned name brand copy machines from a facility
located in Pompano Beach, Florida.
In October, 2003, A.M.S. Marketing, Inc. changed its name to
International Imaging Systems, Inc. ("IIS").
On December 12, 2003, "IIS" formed Renewable Assets, Inc., a wholly-
owned subsidiary, to operate the photocopier division.
On April 13, 2004, the Board of Directors approved a plan to spin off
the Company's photocopy division (Renewable Assets, Inc.)
3,014,350 shares of $.001 par value Renewable Assets, Inc. common
stock will be issued to existing shareholders of International Imaging
Systems, Inc. in connection with the spin-off not yet undertaken.
- 6 -
Page 36
RENEWABLE ASSETS, INC.
SUCCESSOR TO
A.M.S. MARKETING, INC. PHOTOCOPIER DIVISION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2005
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued -
Basis of Presentation:
The financial statements include the accounts of the predecessor
Company's photocopier division. The historical accumulated deficit was
eliminated as a result of the reorganization.
Development Stage:
The Company's management is in the process of raising working capital,
developing a new business plan and exploring various business
opportunities. Accordingly, the Company is classified as a
development stage company.
Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of items included in
the financial statements. Actual results could differ from those
estimates.
Financial Instruments:
The carrying values of accounts receivable and accounts payable
approximate fair value at December 31, 2005.
Commission Receivable:
The commission receivable is considered to be fully collectible as of
December 31, 2005.
Commission Revenues:
The Company recognizes commission revenues as an agent for a
principal. As such, commissions are recorded pursuant to a
predetermined fixed rate, and after the machines are accepted by the
ultimate purchaser. The Company locates buyers and is not obligated
to take possession of, or fulfill the shipment of the machines sold.
Selling prices of the machines sold are determined by the principal,
and not the Company. Collection of the sales price and customer
returns are the responsibility of the principal.
- 7 -
Page 37
RENEWABLE ASSETS, INC.
SUCCESSOR TO
A.M.S. MARKETING, INC. PHOTOCOPIER DIVISION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2005
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued -
Advertising:
Advertising costs are expensed as incurred.
Earnings or (Loss) Per Common Share:
Basic and diluted earnings per common share is calculated by dividing
net income or loss by the weighted average number of common shares
outstanding during the period. Shares issued are considered to be
outstanding for all periods presented.
NOTE B - CONCENTRATION OF RISK -
Substantially all of the division's revenues are derived from the sale
of pre-owned, refurbished photocopy machines through a marketing
arrangement with one company. Termination of the marketing arrangement
would have a material adverse effect upon the business.
NOTE C - RELATED PARTY TRANSACTIONS -
On August 22, 2005, the Company's president received 160,000 common
shares of the parent company (International Imaging Systems, Inc.) for
administrative and management consulting services rendered in the
third quarter of 2005. The accompanying financial statements include
$48,000 compensation expense based upon the fair value of the shares.
Shares of the parent company were issued in accordance with the
provisions of the International Imaging Systems, Inc. 2003 equity
incentive program. The compensation paid by the parent company is
reflected as additional paid-in capital in the accompanying balance
sheet.
The Company received $13,200 working capital advances from the
shareholder (parent company) during 2005, reflected as additional
paid-in capital in the accompanying balance sheet.
Commission expense of $1,740 was paid to the Company's president
during 2004.
- 8 -
Page 38
RENEWABLE ASSETS, INC.
SUCCESSOR TO
A.M.S. MARKETING, INC. PHOTOCOPIER DIVISION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2005
NOTE D - STOCK OPTION PLAN -
The Company's 2005 Stock Option Plan (the "Plan") was adopted by the
Board of Directors and approved by the shareholder on September 15,
2005. The "Plan" provides for the granting of stock options to
employees, directors, and consultants.
Certain awards are intended to qualify as "incentive stock options"
within the meaning of Section 422 of the Internal Revenue Code (the
"Code"). Other awards granted under the "Plan" are not intended to
qualify as incentive stock options under the "Code".
The total number of shares of the Company's stock that may be issued
under the "Plan" may not exceed 2,000,000. The purchase price,
exercise date, and expiration date of options to be issued will be set
at the time of grant by management.
As of December 31, 2005, no stock options were granted under the
"Plan".
NOTE E - INCOME TAXES -
The Company has a net operating loss carryforward of approximately
$66,000, which may be carried forward through the year 2025 to offset
future taxable income.
Deferred tax assets, amounting to approximately $13,000, relating to
the potential tax benefit of the net operating loss carryforward, was
offset by a valuation allowance due to the uncertainty of profitable
operations in the future.
NOTE F - GOING CONCERN UNCERTAINTY -
The photocopier division has sustained recurring operating losses in
prior years and has minimal assets. These factors raise substantial
doubt as to the business's ability to continue as a going concern.
Management's plans regarding this uncertainty are to raise additional
working capital through the implementation of a successful business
plan.
- 9 -
Page 39
RENEWABLE ASSETS, INC.
SUCCESSOR TO
A.M.S. MARKETING, INC. - PHOTOCOPIER DIVISION
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
DECEMBER 31, 2004
Page 40
RENEWABLE ASSETS, INC.
SUCCESSOR TO
A.M.S. MARKETING, INC. - PHOTOCOPIER DIVISION
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
TABLE OF CONTENTS
Independent Auditor's Report 1
Balance Sheet 2
Statements of Operations 3
Statements of Shareholder's Equity 4
Statements of Cash Flows 5
Notes to Financial Statements 6-8
Page 41
INDEPENDENT AUDITOR'S REPORT
The Board of Directors and Shareholders
Renewable Assets, Inc.
Successor to A.M.S. Marketing, Inc. - Photocopier Division
(A Development Stage Company)
Boca Raton, Florida
I have audited the accompanying balance sheet of Renewable Assets,
Inc., Successor to A.M.S. Marketing, Inc. - Photocopier Division (A
Development Stage Company) as of December 31, 2004, and the related
statements of operations, shareholder's equity and cash flows for the
years ended December 31, 2004 and 2003, and for the period from July 23,
1998 (inception) through December 31, 2004. 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
audits.
I conducted my audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States. Those standards require
that I plan and perform the audits 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 audits provided 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 Renewable
Assets, Inc., Successor to A.M.S. Marketing, Inc. - Photocopier
Division as of December 31, 2004, and the results of operations and
its cash flows for each of the years ended December 31, 2004 and 2003,
in conformity with generally accepted accounting principles generally
accepted in the United States of America.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note D
to the financial statements, the photocopy division of A.M.S.
Marketing, Inc. has sustained recurring operating losses and has
minimal assets. These factors raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans
in regard to these matters are also described in Note D. The financial
statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/Thomas W. Klash
Certified Public Accountant
Hollywood, Florida
February 15, 2005
- 1 -
Page 42
RENEWABLE ASSETS, INC.
SUCCESSOR TO
A.M.S. MARKETING, INC. - PHOTOCOPIER DIVISION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
DECEMBER 31, 2004
ASSETS
CURRENT ASSETS:
Cash $ 5,288
Accounts Receivable 1,200
-----------
TOTAL CURRENT ASSETS $ 6,488
===========
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts Payable $ 300
Income Taxes Payable 476
-----------
TOTAL CURRENT LIABILITIES 776
-----------
SHAREHOLDER'S EQUITY:
Preferred Stock, $.001 Par Value -
1,000,000 Shares Authorized -
-0- Shares Issued and Outstanding
Common Stock, $.001 Par Value -
29,000,000 Shares Authorized -
3,014,350 Shares Issued and Outstanding 3,014
Retained Earnings - Development Stage 2,698
-----------
TOTAL SHAREHOLDERS' EQUITY 5,712
-----------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $ 6,488
===========
See accompanying notes to financial statements.
- 2 -
Page 43
RENEWABLE ASSETS, INC.
SUCCESSOR TO A.M.S. MARKETING, INC. - PHOTOCOPIER DIVISION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2004 AND 2003
AND FROM JULY 23, 1998 (INCEPTION) TO DECEMBER 31, 2004
CUMULATIVE
DEVELOPMENT
2004 2003 STAGE AMOUNTS
----------- ----------- -------------
COMMISSION REVENUES $ 6,960 $ 4,500 $ 54,055
GENERAL AND ADMINISTRATIVE
EXPENSES 3,786 8,068 147,431
----------- ----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES 3,174 (3,568) (93,376)
PROVISION FOR INCOME TAXES 476 -- 476
----------- ----------- -----------
NET INCOME (LOSS) $ 2,698 $ (3,568) $ (93,852)
BASIC AND DILUTED EARNINGS
(LOSS) PER SHARE $ .001 $ (.001) $ (.003)
=========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 3,014,350 3,014,350 3,014,350
=========== =========== ===========
See accompanying notes to financial statements.
- 3 -
Page 44
RENEWABLE ASSETS, INC.
SUCCESSOR TO A.M.S. MARKETING, INC. - PHOTOCOPIER DIVISION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF SHAREHOLDER'S EQUITY
YEARS ENDED DECEMBER 31, 2004 AND 2003
RETAINED
EARNINGS
OR
DEFICIT
ACCUMULATED
COMMON STOCK ADDITIONAL DURING
$.001 PAR VALUE PAID-IN DEVELOPMENT
-----------------------
SHARES AMOUNT CAPITAL STAGE TOTAL
----------------------- ---------- ------------ ---------
BALANCE - December 31, 2002 4,656,200 $ 4,656 $ 91,894 $ (92,982) $ 3,568
ISSUANCE OF COMMON STOCK
IN CONNECTION WITH
MERGER 1,200,000 1,200 (1,200) -- --
NET (LOSS) FOR PERIOD -- -- -- (3,568) (3,568)
RECLASSIFICATION OF EQUITY
RESULTING FROM
REORGANIZATION (5,856,200) (5,856) (90,694) 96,550 --
ISSUANCE OF COMMON STOCK 3,014,350 -- -- -- --
--------- --------- --------- ------------ ---------
BALANCE - December 31, 2003 3,014,350 -- -- -- --
PROCEEDS FROM ISSUANCE
OF COMMON STOCK -- 3,014 -- -- 3,014
NET INCOME FOR PERIOD -- -- -- 2,698 2,698
--------- --------- --------- ------------ ---------
BALANCE - December 31, 2004 3,014,350 $ 3,014 $ -- $ 2,698 $ 5,712
========= ========= ========= ============ =========
See accompanying notes to financial statements.
- 4 -
Page 45
RENEWABLE ASSETS, INC.
SUCCESSOR TOA.M.S. MARKETING, INC. - PHOTOCOPIER DIVISION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2004 AND 2003
AND FROM JULY 23, 1998 (INCEPTION) TO DECEMBER 31, 2004
CUMULATIVE
DEVELOPMENT
2004 2003 STAGE AMOUNTS
----------- ----------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income or (Loss) $ 2,698 $ (3,568) $ (93,852)
Adjustments to Reconcile Net Income (Loss) to
Net Cash Provided by (Used in) Operating
Activities:
Accounts Receivable (1,200) -- (1,200)
Accounts Payable 300 -- 300
Income Taxes Payable 476 -- 476
NET CASH (USED IN) OPERATING ----------- ----------- -----------
ACTIVITIES 2,274 (3,568) (94,276)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of Common Stock 3,014 -- 99,564
Proceeds from Borrowings - Shareholder -- -- 27,500
Repayment of Borrowings - Shareholder -- -- (27,500)
NET CASH PROVIDED BY ----------- ----------- -----------
FINANCING ACTIVITIES 3,014 -- 99,564
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH 5,288 (3,568) 5,288
CASH - Beginning of Period -- 3,568 --
----------- ----------- -----------
CASH - End of Period $ 5,288 $ -- $ 5,288
=========== ========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
- -----------------------------------
The Company made no payments for interest or income taxes.
See accompanying notes to financial statements.
- 5 -
Page 46
RENEWABLE ASSETS, INC.
SUCCESSOR TO
A.M.S. MARKETING, INC. PHOTOCOPIER DIVISION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
Nature of Operations:
A.M.S. Marketing, Inc. ("AMS" or the Company) was incorporated in the
state of Delaware on July 23, 1998.
On July 21, 2003, "AMS" acquired 100% ownership of Advanced Imaging
Systems, LLC ("AIS"), a privately owned Delaware entity in exchange
for 1,200,000 shares of its previously unissued common stock. Prior
to the execution of the exchange agreement, the members (owners) of
"AIS" purchased a controlling interest in "AMS" from an existing "AMS"
shareholder. As a result of the foregoing transactions, the previous
owners of "AIS" became the 81.96% owners of "AMS". For accounting
purposes, "AIS" is considered to be the acquirer and "AMS" the
acquired entity. The business combination was accounted for as a
reorganization of entities under common control. No fair value
adjustments resulted from the reorganization.
Prior to the merger, the Company's ("AMS") principal business was the
brokerage of pre-owned name brand copy machines from a facility
located in Pompano Beach, Florida.
In October, 2003, A.M.S. Marketing, Inc. filed a Certificate of
Amendment to change its name to International Imaging Systems, Inc.
("IIS").
On December 12, 2003, "IIS" formed Renewable Assets, Inc., a wholly-
owned subsidiary, to operate the photocopier division.
On April 13, 2004, the Board of Directors approved a plan to spin off
the Company's photocopy division (Renewable Assets, Inc.)
3,014,350 shares of $.001 par value Renewable Assets, Inc. common
stock will be issued to existing shareholders of International Imaging
Systems, Inc. in connection with the spin-off not yet undertaken.
- 6 -
Page 47
RENEWABLE ASSETS, INC.
SUCCESSOR TO
A.M.S. MARKETING, INC. PHOTOCOPIER DIVISION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued -
Basis of Presentation:
The financial statements include the accounts of the predecessor
Company's photocopier division. The historical accumulated deficit was
eliminated as a result of the reorganization.
Development Stage:
The Company's management is in the process of raising working capital,
developing a new business plan and exploring various business
opportunities. Accordingly, the Company is classified as a
development stage company.
Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of items included in
the financial statements. Actual results could differ from those
estimates.
Financial Instruments:
The carrying values of accounts receivable and accounts payable
approximate fair value at December 31, 2004.
Accounts Receivable:
Accounts receivable are stated at net realizable value. All accounts
are considered to be fully collectible as of December 31, 2004.
Commission Revenues:
In connection with the Company's revenue recognition policy, the
Company recognizes commission revenues as an agent for a principal. As
such, commissions are recorded pursuant to a predetermined fixed rate,
and after the machines are accepted by the ultimate purchaser. The
Company locates buyers and is not obligated to take possession of, or
fulfill the shipment of the machines sold. Selling prices of the
machines sold are determined by the principal, and not the Company.
Collection of the sales price and customer returns are the
responsibility of the principal.
- 7 -
Page 48
RENEWABLE ASSETS, INC.
SUCCESSOR TO
A.M.S. MARKETING, INC. PHOTOCOPIER DIVISION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued -
Advertising:
Advertising costs are expensed as incurred.
Earnings or (Loss) Per Common Share:
Basic and diluted earnings per common share is calculated by dividing
net income or loss by the weighted average number of common shares
outstanding during the period. Shares issued are considered to be
outstanding for all periods presented.
NOTE B - CONCENTRATION OF RISK -
Substantially all of the division's revenues are derived from the sale
of pre-owned, refurbished photocopy machines through a marketing
arrangement with one company. Termination of the marketing arrangement
would have a material adverse effect upon the business.
NOTE C - RELATED PARTY TRANSACTIONS -
Commission expense of $1,740 was paid to the Company's president
during 2004.
NOTE D - GOING CONCERN UNCERTAINTY -
The photocopier division has sustained recurring operating losses in
prior years and has minimal assets. These factors raise substantial
doubt as to the business's ability to continue as a going concern.
Management's plans regarding this uncertainty are to raise additional
working capital through the implementation of a successful business
plan.
- 8 -
Page 49
RENEWABLE ASSETS, INC.
SUCCESSOR TO
A.M.S. MARKETING, INC. - PHOTOCOPIER DIVISION
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
DECEMBER 31, 2003
Page 50
RENEWABLE ASSETS, INC.
SUCCESSOR TO
A.M.S. MARKETING, INC. - PHOTOCOPIER DIVISION
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
TABLE OF CONTENTS
Independent Auditor's Report 1
Balance Sheet 2
Statements of Operations 3
Statement of Shareholder's Equity 4
Statement of Cash Flows 5
Notes to Financial Statements 6-8
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INDEPENDENT AUDITOR'S REPORT
The Board of Directors and Shareholders
Renewable Assets, Inc.
Successor to A.M.S. Marketing, Inc. - Photocopier Division
(A Development Stage Company)
Boca Raton, Florida
I have audited the accompanying balance sheet of Renewable Assets,
Inc., Successor to A.M.S. Marketing, Inc. - Photocopier Division (A
Development Stage Company) as of December 31, 2003, and the related
statements of operations, shareholder's equity and cash flows for the
years ended December 31, 2003 and 2002, and for the period from July 23,
1998 (inception) through December 31, 2003. 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
audits.
I conducted my audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards
require that I plan and perform the audits 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 audits provided 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 Renewable
Assets, Inc., Successor to A.M.S. Marketing, Inc. - Photocopier
Division as of December 31, 2003, and the results of operations and
its cash flows for each of the years ended December 31, 2003 and 2002,
in conformity with generally accepted accounting principles generally
accepted in the United States of America.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note B
to the financial statements, the photocopy division of A.M.S.
Marketing, Inc. has sustained recurring operating losses and has no
assets. These factors raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note B. The financial
statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/Thomas W. Klash
Certified Public Accountant
Hollywood, Florida
February 15, 2005
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RENEWABLE ASSETS, INC.
SUCCESSOR TO
A.M.S. MARKETING, INC. - PHOTOCOPIER DIVISION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
DECEMBER 31, 2003
ASSETS
CURRENT ASSETS $ --
----------
TOTAL CURRENT ASSETS $ --
----------
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES $ --
----------
SHAREHOLDERS' EQUITY:
Preferred Stock, $.001 Par Value -
1,000,000 Shares Authorized -
-0- Shares Issued and Outstanding
Common Stock, $.001 Par Value -
29,000,000 Shares Authorized -
3,014,350 Shares Subscribed --
Deficit Accumulated During Development Stage --
----------
TOTAL SHAREHOLDERS' EQUITY --
----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ --
==========
See accompanying notes to financial statements.
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RENEWABLE ASSETS, INC.
SUCCESSOR TO A.M.S. MARKETING, INC. - PHOTOCOPIER DIVISION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2003 AND 2002
AND FROM JULY 23, 1998 (INCEPTION) TO DECEMBER 31, 2003
CUMULATIVE
DEVELOPMENT
2003 2002 STAGE AMOUNTS
---------- ----------- -------------
COMMISSION REVENUES $ 4,500 $ 9,000 $ 47,095
GENERAL AND ADMINISTRATIVE
EXPENSES 8,068 32,140 143,645
---------- ----------- -----------
NET (LOSS) $ (3,568) $ (23,140) $ (96,550)
========== =========== ===========
BASIC AND DILUTED (LOSS) PER SHARE $ (.001) $ (.007) $ (.032)
========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 3,014,350 3,014,350 3,014,350
========== =========== ===========
See accompanying notes to financial statements.
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RENEWABLE ASSETS, INC.
SUCCESSOR TO A.M.S. MARKETING, INC. - PHOTOCOPIER DIVISION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF SHAREHOLDER'S EQUITY
YEARS ENDED DECEMBER 31, 2003 AND 2002
DEFICIT
ACCUMULATED
COMMON STOCK ADDITIONAL DURING
$.001 PAR VALUE PAID-IN DEVELOPMENT
----------------------
SHARES AMOUNT CAPITAL STAGE TOTAL
---------------------- ----------- ----------- ----------
BALANCE - January 1, 2002 4,613,900 $4,613 $70,787 $ (69,842) $ 5,558
SALE OF COMMON STOCK 42,300 43 21,107 -- 21,150
NET (LOSS) FOR PERIOD -- -- -- (23,140) (23,140)
---------- ------ ------- --------- ----------
BALANCE - December 31, 2002 4,656,200 4,656 91,894 (92,982) 3,568
ISSUANCE OF COMMON STOCK
IN CONNECTION WITH
MERGER 1,200,000 1,200 (1,200) -- --
NET (LOSS) FOR PERIOD -- -- -- (3,568) (3,568)
RECLASSIFICATION OF EQUITY
RESULTING FROM
REORGANIZATION (5,856,200) (5,856) (90,694) 96,550 --
ISSUANCE OF COMMON STOCK 3,014,350 -- -- -- --
---------- ------ ------- --------- ----------
BALANCE - December 31, 2003 3,014,350 $ -- $ -- $ -- $ --
========== ====== ======= ========= ==========
See accompanying notes to financial statements.
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RENEWABLE ASSETS, INC.
SUCCESSOR TOA.M.S. MARKETING, INC. - PHOTOCOPIER DIVISION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2003 AND 2002
AND FROM JULY 23, 1998 (INCEPTION) TO DECEMBER 31, 2003
CUMULATIVE
DEVELOPMENT
2003 2002 STAGE AMOUNTS
-------- -------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (Loss) $ (3,568) $ (23,140) $ (96,550)
Adjustments to Reconcile Net (Loss) to Net
Cash Used in Operating Activities:
Accounts Receivable (Increase) Decrease -- 5,884 --
Accounts Payable (Increase) Decrease -- (426) --
--------- --------- ----------
NET CASH (USED IN) OPERATING
ACTIVITIES (3,568) (17,682) (96,550)
--------- --------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of Common Stock -- 21,150 96,550
Proceeds from Borrowings - Shareholder -- 5,000 27,500
Repayment of Borrowings - Shareholder -- (5,000) (27,500)
--------- --------- ----------
NET CASH PROVIDED BY FINANCING
ACTIVITIES -- 21,150 96,550
--------- --------- ----------
INCREASE (DECREASE) IN CASH (3,568) 3,468 --
CASH - Beginning of Period 3,568 100 --
--------- --------- ----------
CASH - End of Period $ -- $ 3,568 $ --
========= ========= ==========
See accompanying notes to financial statements.
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RENEWABLE ASSETS, INC.
SUCCESSOR TO
A.M.S. MARKETING, INC. PHOTOCOPIER DIVISION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
Nature of Operations:
A.M.S. Marketing, Inc. ("AMS" or the Company) was incorporated in the
state of Delaware on July 23, 1998.
On July 21, 2003, "AMS" acquired 100% ownership of Advanced Imaging
Systems, LLC ("AIS"), a privately owned Delaware entity in exchange
for 1,200,000 shares of its previously unissued common stock. Prior
to the execution of the exchange agreement, the members (owners) of
"AIS" purchased a controlling interest in "AMS" from an existing "AMS"
shareholder. As a result of the foregoing transactions, the previous
owners of "AIS" became the 81.96% owners of "AMS". For accounting
purposes, "AIS" is considered to be the acquirer and "AMS" the
acquired entity. The business combination is was accounted for as a
reorganization of entities under common control. No fair value
adjustments resulted from the reorganization.
Prior to the merger, the Company's ("AMS")principal business was the
brokerage of pre-owned name brand copy machines from a facility
located in Pompano Beach, Florida.
In October, 2003, A.M.S. Marketing, Inc. filed a Certificate of
Amendment to change its name to International Imaging Systems, Inc.
("IIS").
On December 12, 2003, "IIS" formed Renewable Assets, Inc., a wholly-
owned subsidiary, to operate the photocopier division. Common shares
subscribed to by the parent company were paid for on June 30, 2004.
On April 13, 2004, the Board of Directors approved a plan to spin off
the Company's photocopy division.
3,014,350 shares of $.001 par value Renewable Assets, Inc. common
stock will be issued to existing shareholders of International
Imaging Systems, Inc. in connection with the spin-off.
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RENEWABLE ASSETS, INC.
SUCCESSOR TO
A.M.S. MARKETING, INC. PHOTOCOPIER DIVISION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued -
Basis of Presentation:
The financial statements include the accounts of the predecessor
Company's photocopier division. The historical accumulated deficit was
eliminated as a result of the reorganization. The Company's
photocopier division had no sales in the fourth quarter of 2003.
Development Stage:
The Company's management is in the process of raising working capital,
developing a new business plan and exploring various business
opportunities. Accordingly, the Company is classified as a
development stage company.
Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of items included in
the financial statements. Actual results could differ from those
estimates.
Commission Revenues:
In connection with the Company's revenue recognition policy, the
Company recognizes commission revenues as an agent for a principal. As
such, commissions are recorded pursuant to a predetermined fixed rate,
and after the machines are accepted by the ultimate purchaser. The
Company locates buyers and is not obligated to take possession of, or
fulfill the shipment of the machines sold. Selling prices of the
machines sold are determined by the principal, and not the Company.
Collection of the sales price and customer returns are the
responsibility of the principal.
Advertising:
Advertising costs are expensed as incurred.
(Loss) Per Common Share:
Basic and diluted (loss) per common share is calculated by dividing
net income or loss by the weighted average number of common shares
outstanding during the period. Shares subscribed are considered to be
outstanding for all periods presented.
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RENEWABLE ASSETS, INC.
SUCCESSOR TO
A.M.S. MARKETING, INC. PHOTOCOPIER DIVISION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003
NOTE B - GOING CONCERN UNCERTAINTY -
The photocopier division has sustained recurring operating losses and
has no assets. These factors raise substantial doubt as to the
business's ability to continue as a going concern. Management's plans
regarding this uncertainty are to raise additional working capital
through the implementation of a successful business plan.
NOTE C - CONCENTRATION OF RISK -
Substantially all of the division's revenues are derived from the sale
of pre-owned, refurbished photocopy machines through a marketing
arrangement with one company. Termination of the marketing
arrangement would have a material adverse effect upon the business.
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PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our By-Laws and Certificate of Incorporation provide that we may
indemnify and hold harmless each person who serves at any time as a
director or officer from and against any and all claims, judgments and
liabilities to which such person shall become subject by reason of the
fact that he is or was a director or officer, and may reimburse such
person for all legal and other expenses reasonably incurred by him or
her in connection with any such claim or liability. We also have the
power to defend such person from all suits or claims in accord with
the Delaware Statutes. The rights accruing to any person under our
bylaws and Certificate of Incorporation do not exclude any other right
to which any such person may lawfully be entitled, and we may
indemnify or reimburse such person in any proper case, even though not
specifically provided for by the bylaws and Articles of Incorporation.
Insofar as indemnification for liabilities for damages arising under
the Securities Act of 1933, (the "Securities Act") may be permitted to
our directors, officers, and controlling persons pursuant to the
foregoing provision, or otherwise, we have been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act and is,
therefore, unenforceable.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
We estimate that expenses in connection with the distribution
described in this Registration Statement (other than brokerage
commissions, discounts or other expenses relating to the sale of the
shares by the Selling Stockholders) will be as set forth below. We
will pay all of the expenses with respect to the distribution, and
such amounts, with the exception of the U.S. Securities and Exchange
Commission registration fee, are estimates.
SEC registration fee $ 728.54
Accounting fees and expenses 2,500.00
Legal fees and expenses 35,000.00
Printing expenses 1,200.00
Federal Taxes -0-
State Blue-Sky Registration 2,500.00
Transfer Agent Fees 1,500.00
Miscellaneous 2,500.00
Total $ 45,928.54
===========
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
From inception on December 12, 2003, as a wholly owned subsidiary
corporation, through March 10, 2006 a total of 3,014,350 shares of our
Common Stock has been issued. All of those shares were issued as
founder's stock to the Company's incorporator, International Imaging
Systems, Inc. ("IIS"). The shares were issued pursuant to the
exemption from registration provided in Section 4.(2) of the
Securities Act, as a transaction by an issuer not involving any public
offering. The shares were issued without cost to the recipient.
The proposed spin-off, when undertaken as planned, shortly after the
date of this prospectus, of the same 3,014,350 shares of our Common
Stock pro-rata to the shareholders of record as of April 14, 2004 of
our parent, International Imaging Systems, Inc., will be a
distribution of restricted stock to "large shareholders" and
unrestricted stock to the other recipients, pursuant to Staff Legal
Bulletin No. 4(CF), paragraph 4. The category "large shareholders"
includes Lara Sarafianos, Michael D'Angelo, Alfred Schiffrin, our sole
Page 60
office and director, and Laura Palisa Mujica, record holder recipients
representing in the aggregate 2,606,550 shares of our Common Stock in
the planned spin-off distribution. The remaining 407,800 shares in the
spin-off will be distributed to the other IIS Shareholders as
unrestricted stock.
On July 15, 2003, Mr. Schiffrin sold 3,600,000 shares of IIS (then
A.M.S. Marketing, Inc.) restricted common stock to Lara Sarafianos,
Michael D'Angelo, Laura Palisa Mujica and Sarah Cinnante for cash in
the aggregate amount of $2,500 and promissory notes in the aggregate
original principal amount of $177,500. The shares were sold by Mr.
Schiffrin in private transactions which did not involve either the
issuer, IIS, or the Company (RAI). The transactions were exempt from
registration under the so-called "Section 4.(1 1/2)" exemption in that
Mr. Schiffrin had held the shares sold for more than five (5) years,
sold them in private transactions and assured certain safeguards were
implemented against resale of the stock following the private
transactions.
ITEM 27. EXHIBITS
A. INDEX TO EXHIBITS
(3) Certificate of Incorporation and By-Laws
(4) Instruments defining the rights of security holders,
including indentures.
(5) Opinion of Counsel
(10) Material Contracts Code of Ethics
(20) Subscription Agreement Consent of Experts
(99) Additional Exhibits
B. DESCRIPTION OF EXHIBITS
Exhibit No. Description
- ----------- -----------
3.1 Certificate of Incorporation of Renewable Assets, Inc. -
December 12, 2003, as filed July 12, 2005 with our Form
10-KSB and incorporated herein by reference.
3.3 Bylaws of Renewable Assets, Inc. - December 13, 2003, as
filed July 12, 2005 with our Form 10-KSB and incorporated
herein by reference.
4.1 Specimen Stock Certificate - as filed July 12, 2005, with
our Form 10-KSB and incorporated herein by reference.
4.2 Specimen Agreement - Redeemable Class "A" Common Stock
Purchase Warrant - as filed November 4, 2005 with our
SB-2 and incorporated by reference.
5.1 Opinion of counsel as to legality of securities being
registered.
10.1 2005 Stock Plan - September 15, 2005 - as filed November
4, 2005 with our SB-2 and incorporated by reference.
10.2 Marketing Service Agreement - Office Furniture Warehouse,
Inc. Sun Coast Imaging Systems, Inc. and International
Imaging Systems, Inc. dated December 1, 2003 as filed
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July 12, 2005 with our Form 10-KSB and incorporated
herein by reference.
10.3 Amendment to the Terms of the Oral Agreement among
Renewable Assets, Inc. and Alfred Schiffrin - as filed
November 4, 2005 with our SB-2 and incorporated by reference.
14.1 Officers' Code of Ethics - as filed November 4, 2005 with
our SB-2 and incorporated by reference.
20.1 Subscription Agreement - filed herewith.
23.1 Independent Auditor's Consent - 2005 - filed herewith.
23.2 Independent Auditor's Consent - 2004 - filed herewith.
23.3 Independent Auditor's Consent - 2003 - filed herewith.
23.4 Consent of Counsel (included in Exhibit 5.1) - filed herewith.
99.1 Agreement and Plan of Exchange, effective as of July 31,
2003, by and among A.M.S. Marketing, Inc., Advanced
Imaging Systems, LLC and all of the holders of limited
liability company interests in Advanced Imaging Systems,
LLC (omitting all schedules and exhibits).*
99.2 A.M.S. Marketing, Inc. Common Stock Purchase Agreement,
dated July 15, 2003, between Alfred M. Schiffrin and
Sarah Cinnante.
99.3 A.M.S. Marketing, Inc. Common Stock Purchase Agreement,
dated July 15, 2003, between Alfred M. Schiffrin and
Michael D'Angelo.
99.4 A.M.S. Marketing, Inc. Common Stock Purchase Agreement,
dated July 15, 2003, between Alfred M. Schiffrin and
Laura Palisa Mujica.
99.5 A.M.S. Marketing, Inc. Common Stock Purchase Agreement,
dated July 15, 2003, between Alfred M. Schiffrin and
Lara Nicole Sarafianos.
99.6 Secured Promissory Note, dated July 15, 2003, from Sarah
Cinnante to Alfred M. Schiffrin for purchase of A.M.S.
Marketing, Inc. common stock.
99.7 Secured Promissory Note, dated July 15, 2003, from Michael
D'Angelo to Alfred M. Schiffrin for purchase of A.M.S.
Marketing, Inc. common stock.
99.8 Secured Promissory Note, dated July 15, 2003, from Laura
Palisa Mujica to Alfred M. Schiffrin for purchase of
A.M.S. Marketing, Inc. common stock.
99.9 Secured Promissory Note, dated July 15, 2003, from Lara
Nicole Sarafianos to Alfred M. Schiffrin for purchase of
A.M.S. Marketing, Inc. common stock.
* The Registrant will furnish all omitted and schedules and exhibits
to the Agreement and Plan of Exchange, effective as of July 31, 2003,
by and among A.M.S. Marketing, Inc., Advanced Imaging Systems, LLC and
all of the holders of limited liability company interests in Advanced
Imaging Systems, LLC, upon request of the Securities and Exchange
Commission.
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ITEM 28. UNDERTAKINGS
A. Rule 415 Offering
We hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if
the registration statement is on Form S-3 or Form S-8, and the
information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the Company
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act
of 1934 that are incorporated by reference in this registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
B. We hereby request the acceleration of the Effective Date hereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing
provisions, or otherwise, the Company has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the
Company in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
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SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements of filing on Form SB-2 and authorized
this registration statement to be signed on its behalf by the
undersigned, in Boca Raton, Florida, on March 13, 2006.
Renewable Assets, Inc.
By: /s/ Alfred M. Schiffrin
-----------------------------
Alfred M. Schiffrin
Chief Executive Officer,
Chief Financial Officer,
Principal Accounting Officer
and Director
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