SCHEDULE 14 C INFORMATION
Information Statement Pursuant to Section 14 (c) of the
Securities Exchange Act of 1934
Check the appropriate box:
[X] Preliminary Information Statement
[ ] Confidential for Use of the Commission (as permitted by Rule 14c-
5(d)(2))
[ ] Definitive Information Statement Only
INTERNATIONAL IMAGING SYSTEMS, INC.
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(Name of Registrant As Specified in Charter)
Payment of filing Fee (check the appropriate box):
[ ] No Fee Required
[X] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11
(1) Title of each class of securities to which transaction applies:
Common Stock, par value $.001 per share
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(2) Aggregate number of securities to which transaction applies:
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3,014,350
issued
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
$.001 per share, based on one-third of the par value
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(4) Proposed maximum aggregate value of transaction:
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$3,014.35
(5) Total fee paid:
$0.38
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[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11 (a)(2) and identify the filing for which the offsetting fee
was paid.
INFORMATION STATEMENT
SPIN-OFF
OF
RENEWABLE ASSETS, INC.
We are sending this Information Statement to you and all other holders of
International Imaging Systems, Inc. ("IIS") common stock in connection with the
spin-off of all of the shares of Renewable Assets, Inc., a Delaware corporation
("RAI"), owned by IIS, which now represents all of the issued and outstanding
common stock of RAI. As part of the spin-off, we will distribute to each
stockholder of record as of April 14, 2004, a dividend of one-half share of RAI
common stock for each share of IIS common stock that such stockholder of record
owned on April 14, 2004. Following the spin-off, RAI will be a separate company,
no longer owned in any way by IIS. Should you have any questions regarding this
Information Statement or the spin-off, please contact International Imaging
Systems, Inc., 6689 N.W. 16th Terrace, Ft. Lauderdale, FL 33309, at (954)
978-9090.
In reviewing this Information Statement, you should note the following:
- WE ARE NOT ASKING YOU FOR A PROXY, AND WE REQUEST THAT YOU DO NOT SEND
US A PROXY.
- In assessing the impact of the spin-off on you, as an IIS stockholder,
you should review the matters set forth under the caption "Risk
Factors" beginning on page 6.
- Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved our spin-off of RAI.
The Securities and Exchange Commission has not passed upon the
fairness or merits of the spin-off of RAI or upon the accuracy or
adequacy of the information contained in this Information Statement.
Please note that the Board of Directors of IIS unanimously approved the
spin-off, as it believes that the spin-off is in the best interests of IIS and
its stockholders.
You will not need to pay any consideration or surrender or exchange your IIS
common stock in order to receive RAI common stock. After the spin-off
distribution, we expect, but cannot guarantee, that RAI will file an application
to have the common stock of RAI traded on the OTC Bulletin Board.
The date of this Information Statement is ____________ __, 2004. We mailed this
Information Statement to International Imaging Systems, Inc. stockholders on or
about ____________ __, 2004.
TABLE OF CONTENTS
Page
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SUMMARY.......................................................................1
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RISK FACTORS..................................................................3
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THE SPIN-OFF OF RAI...........................................................8
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MANAGEMENT OF RAI FOLLOWING THE SPIN-OFF.....................................10
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF RAI OPERATIONS.......................19
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DESCRIPTION OF IIS' AND RAI' CAPITAL STOCK...................................20
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT...............21
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INDEPENDENT ACCOUNTANTS......................................................22
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WHERE YOU CAN FIND MORE INFORMATION..........................................22
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ii
SUMMARY
The following summary answers certain questions you may have with respect to
IIS' spin-off of RAI and highlights selected information from this Information
Statement that is important to you. This summary does not contain all of the
information about the spin-off. You should carefully read this entire
Information Statement.
Q. WHAT WILL HAPPEN IN THE SPIN-OFF?
In the spin-off, IIS will distribute to its stockholders all of the shares of
RAI common stock owned by IIS, which now represents all of the issued and
outstanding common stock of RAI, by distributing one-half share of RAI common
stock for each share of IIS common stock owned by such stockholders. No
fractional shares will be distributed through the spin-off. Instead, all
fractional shares will be rounded up to the nearest whole share. To the extent
necessary to round up fractional shares, IIS will subscribe for additional
shares of RAI's common stock. After the spin-off, RAI will be a separate
company, no longer owned in any way by IIS.
Q. WHAT IS RAI?
RAI was formed in December 2003 to continue to pursue IIS' business of marketing
pre-owned, brand name photocopy machines for an unrelated office furniture
company. That business was IIS' primary business prior to its acquisition of all
of the limited liability company interests of Advanced Imaging Systems, LLC.
That business was operated under IIS' former name, A.M.S. Marketing, Inc. On
December 22, 2003, IIS transferred that business, all of the goodwill associated
with that business and all of IIS' rights and obligations under a marketing
services agreement to RAI. Pursuant to the marketing services agreement among
IIS, Sun Coast Imaging Systems, Inc. ("SCIS"), an affiliate of Office Furniture
Warehouse, Inc. ("OFWI"), and OFWI, dated December 1, 2003, revenues generated
from the sale of pre-owned photocopy machines are shared equally between RAI and
OFWI, after deducting from such revenues the cost of each photocopier, the cost
of a 90-day warranty purchased from unaffiliated parties, and the payment of a
$50 referral fee to any furniture salesman of OFWI who refers a customer to RAI
that purchases a pre-owned photocopy machine. The 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.
Q. WHY ARE WE UNDERTAKING THE SPIN-OFF?
The Board of Directors determined that the business aspects of IIS' current
primary line of business as a turnkey supplier of plastic and paper card
products varies significantly from the marketing services orientation of RAI's
business. The Board of Directors believes that separating RAI's business from
IIS' business will allow each company to focus on strategies that will benefit
each company's own business. The plastic and paper card product business
requires a management team with significantly different marketing and technical
skills than the retail-oriented promotional services business. IIS designs,
manufactures and markets plastic and paper card products, including credit
cards, pre-paid telephone cards, value storage cards, access entry cards,
identity cards and business cards. IIS provides its products to domestic and
international customers. To date a majority of these customers have been in the
telecommunications industry. RAI markets pre-owned brand name photocopy machines
for an unrelated third party. RAI's marketing primarily targets individuals and
small business owners.
Q. WHAT WILL I RECEIVE IN THE SPIN-OFF?
We are making a distribution of RAI common stock to all holders of IIS common
stock. For every one share of IIS common stock you owned on April 14, 2004, you
will receive one-half of a share of RAI common stock. No fractional shares will
be issued. Instead, fractional shares will be rounded up to the nearest whole
share. Shortly after the completion of the spin-off, you will receive an RAI
stock certificate that represents your ownership in RAI.
1
Q. WHERE WILL RAI COMMON STOCK AND IIS COMMON STOCK BE TRADED FOLLOWING
THE SPIN-OFF?
As of the date of this Information Statement, there is no public market for the
common stock of either IIS or RAI. IIS plans to file for trading on the OTC
Bulletin Board. We believe RAI plans to file for trading on the OTC Bulletin
Board following the completion of the spin-off.
Q. DO I HAVE TO PAY FEDERAL INCOME TAXES ON THE RECEIPT OF RAI COMMON
STOCK?
Based on IIS' determination that it does not have any current or accumulated
earnings and profits, your receipt of the distribution of RAI common stock will
be subject to federal income taxation only to the extent that the fair market
value of your RAI common stock exceeds the adjusted tax basis in your IIS common
stock.
Q. WHEN WILL THE SPIN-OFF OCCUR?
We intend to complete the spin-off prior to October 31, 2004, but it could be
delayed.
Q. WHAT WILL IIS' BUSINESS BE AFTER THE SPIN-OFF?
IIS will continue to sell plastic and paper card products and printing services
to domestic and international customers in the telecommunications, financial,
loyalty and retail, and security and identity industries.
Q. WHAT WILL RAI'S BUSINESS BE AFTER THE SPIN-OFF?
RAI will be a separate public company. RAI plans to continue to market
pre-owned, refurbished Canon and Minolta photocopy machines in conjunction with
OFWI, an unaffiliated party located in Pompano Beach, Florida. The photocopiers
marketed by RAI range from simple desk-top models to stand-alone, multi-function
business machines. RAI markets the pre-owned photocopiers by means of daily
advertisements in local newspapers, daily facsimile transmissions to local
businesses, periodic advertisements in newspapers of larger circulation and
direct mail solicitations that are created and paid for by RAI. In addition, RAI
prepares advertisements that are run as adjuncts to OFWI's furniture
advertisements and the costs thereof are borne by OFWI.
Q. WILL IIS AND RAI COMPETE AGAINST EACH OTHER AFTER THE SPIN-OFF?
Based on each company's current business plan, it is not anticipated that they
will compete against each other.
2
RISK FACTORS
In assessing the impact of the spin-off on you, as an IIS' stockholder, you
should be aware of the following risks relating to the spin-off and to RAI's
operations:
RAI RECENTLY COMMENCED OPERATIONS AND IS SUBJECT TO RISKS ASSOCIATED WITH
START-UP COMPANIES.
RAI was incorporated in December 2003. While it is the successor to the
pre-owned photocopier marketing business of IIS, that business is in the
developmental stage and RAI's potential should be considered in light of the
risks, expenses, and problems frequently encountered by companies in their early
stage of development. Such risks include:
- the failure to anticipate and adapt to market conditions;
- the rejection of its services;
- development of superior services by competitors; and
- the inability to identify, attract, retain, and motivate the qualified
personnel it will need to expand its operations.
Since there is a limited operating history, an investor must consider the risks
and difficulties frequently encountered by early stage companies in highly
competitive markets such as the business equipment market. These risks include
RAI's ability to:
- establish marketing partners;
- attract additional capital;
- identify strategic relationships;
- respond effectively to competitive pressures; and
- hire, attract, retain and motivate qualified personnel.
There can be no assurance that RAI will be successful in addressing these risks.
There can be no assurance that RAI will achieve or sustain profitability or
positive cash flow from its operations.
RAI IS EXPLORING INTRODUCING NEW PRODUCTS, THE SUCCESS OF WHICH WILL DEPEND ON
MANY FACTORS.
RAI is exploring marketing additional products that neither it nor IIS marketed
before, although IIS similarly explored marketing additional products. Such
products include new and pre-owned office equipment, office furniture, home
furnishings and appliances. There is no operating history of IIS or RAI upon
which to evaluate if these efforts will be successful. Because the market for
these products may vary significantly from the market for pre-owned photocopy
machines, it is impossible to forecast the scope, magnitude or timing of any
future revenues, if any. Further, there is no assurance that RAI will be able to
enter into any strategic alliances for the promotion of any of the potential
products. Therefore, you should consider these prospects in light of the risks
and uncertainties encountered by companies trying to establish a new line of
business, particularly companies proposing to enter markets dominated by large
and well-known competitors.
IF RAI NEEDS ADDITIONAL CAPITAL TO FUND ITS OPERATIONS, IT MAY NOT BE ABLE TO
OBTAIN SUFFICIENT CAPITAL AND MAY BE FORCED TO LIMIT THE SCOPE OF ITS
OPERATIONS.
3
RAI may not have enough capital to fund its future operations without additional
capital investments. RAI anticipates that it will need additional capital
resources to finance its operations.
If RAI cannot obtain additional funding, it may be required to:
- limit its marketing efforts;
- decrease the level of customer service; and
- decrease or eliminate capital expenditures.
Such reductions could materially adversely affect RAI's ability to compete. Even
if RAI finds a source of additional capital, it may not be able to negotiate
terms and conditions for receiving the additional capital that are acceptable to
it. Any future capital investments could dilute or otherwise materially
adversely affect the holdings or rights of RAI's stockholders.
RAI MUST ATTRACT AND RETAIN QUALIFIED EMPLOYEES.
As of the date of this Information Statement, Alfred M. Schiffrin is the sole
employee of RAI. If RAI expands its business, it will need to hire additional
personnel and expand its management team. RAI's success will depend on getting
the right people involved in the growth and development of RAI. Its business
could be materially adversely affected if it is not able to attract new,
qualified employees and retain them as its business expands.
RAI'S GROWTH DEPENDS ON THE CONTINUED SERVICES OF ALFRED M. SCHIFFRIN.
RAI is dependent on the continued services of Alfred M. Schiffrin, who currently
has day-to-day management responsibilities for the business of RAI. If Mr.
Schiffrin is unable to continue to manage the business, RAI's business may be
adversely affected. RAI does not maintain key person life insurance for Mr.
Schiffrin. As a result, it is exposed to the costs associated with the death of
its sole employee. These risks include:
- costs of finding and training a replacement; and
- reduction in its productivity.
THERE IS SIGNIFICANT COMPETITION IN THE MARKETPLACE THAT MAY HINDER RAI'S
ABILITY TO SUCCESSFULLY PROMOTE PRODUCTS AND DECREASE THE REVENUE GENERATED BY
SUCH PROMOTION.
The market for pre-owned photocopy machines is highly competitive. RAI faces
competition from companies with far greater financial, distribution, management
and advertising resources than RAI. There is no assurance that RAI will be
successful in improving its competitive position.
LACK OF A CURRENT MARKET FOR RAI'S COMMON STOCK MAKES THE FUTURE PERFORMANCE OF
RAI'S COMMON STOCK DIFFICULT TO PREDICT.
There is no current public market for RAI's common stock. RAI intends to file a
listing application to have its common stock traded on the OTC Bulletin Board
after the spin-off. There is no assurance that RAI will be able to qualify for
trading on the OTC Bulletin Board. Even if RAI qualifies for trading on the OTC
Bulletin Board, there can be no guarantee that a market for RAI common stock
will develop or be maintained. No assurance can be given regarding the prices at
which RAI's' common stock will trade after the spin-off. Until RAI's common
stock is distributed and an orderly market develops, the price at which RAI's
common stock trades may fluctuate significantly.
4
THE TRADING PRICES OF IIS' AND RAI'S COMMON STOCK AFTER THE SPIN-OFF IS
UNCERTAIN.
As a result of the spin-off, you will own shares of IIS and RAI common stock.
There will be no organized market for the shares of RAI that you will receive
through the spin-off.
RAI IS PROJECTED TO LOSE MONEY AND GENERATE NEGATIVE CASH FLOW FOR THE
FORESEEABLE FUTURE AND MAY NEVER BECOME PROFITABLE.
RAI expects to incur operating losses and to generate negative cash flow while
it explores opportunities to expand its business. Even if RAI is successful in
defining one or more opportunities to expand its business, no assurance can be
given that RAI will achieve or sustain profitability or positive cash flow from
operating activities in the future or that it will generate sufficient cash flow
to service its operating obligations.
RAI'S DIRECTORS HAVE LIMITED PERSONAL LIABILITY FOR THEIR ACTIONS.
Subject to limitations imposed by Delaware law, RAI's Certificate of
Incorporation provides that its directors will not be personally liable to
stockholders for monetary damages if they breach their fiduciary duty of care as
directors, including breaches that constitute gross negligence. Thus, under
certain circumstances, neither RAI nor its stockholders will be able to recover
damages even if directors take actions that may be harmful to stockholder
interests.
RAI'S STOCKHOLDERS MAY EXPERIENCE DILUTION FROM FUTURE OFFERING OF SECURITIES
AND EMPLOYEE STOCK OPTION PROGRAMS.
RAI may in the future adopt incentive programs or benefit plans. The issuance of
additional securities or the exercise of any options or warrants will dilute the
percentage ownership of your common stock. In addition, the exercise of any
warrants or options could adversely affect the prevailing market price of RAI's
common shares.
THE PRICE OF RAI'S COMMON SHARES CAN FLUCTUATE SIGNIFICANTLY, SOMETIMES IN A
MANNER UNRELATED TO THE PERFORMANCE OF RAI.
There is no public market for RAI's common stock. The price of RAI's common
shares could vary widely in response to various factors and events, including:
- the listing of RAI securities on a national exchange or market;
- the number of common shares being sold and purchased in the
marketplace;
- variations in our operating results;
- press reports;
- regulation and industry trends;
- rumors of significant events which can circulate quickly in the
marketplace, particularly over the internet; and
- the difference between our actual results and the results expected by
stockholders and analysts.
In the past, following periods of volatility in the market price of a company's
securities, securities class action litigation has often been instituted against
such a company. Such litigation could result in substantial costs and a
diversion of management's attention and resources.
RAI DOES NOT INTEND TO PAY DIVIDENDS.
RAI does not intend to pay any dividends in the foreseeable future. RAI intends
to retain its cash for continued development and expansion of its business. Any
future payment of a cash dividend on RAI's common stock will be dependent upon
the financial condition of RAI and other factors deemed relevant by RAI's Board
of Directors.
5
RAI RELIES ON OFWI TO GENERATE REVENUE.
RAI is highly dependent upon OFWI. RAI conducts all of its business at OFWI's
facilities. Termination by OFWI of its agreement with RAI would have a material
adverse effect upon RAI, as RAI 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.
AS SCIS IS AN AFFILIATE OF OFWI, OFWI MAY REFER FEW, IF ANY, CUSTOMERS TO RAI.
RAI has agreed to pay $50 to any salesperson of OFWI who refers a customer to
RAI that eventually purchases a photocopy machine from RAI. As SCIS is a
recently formed affiliate of OFWI that is engaged in the same business as RAI,
salespeople of OFWI may make few, if any, referrals to RAI. Therefore, RAI will
likely be dependent on developing its own customers and other referral sources.
6
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS
The following statements are or may constitute forward-looking statements:
- statements set forth in this Information Statement or statements
incorporated by reference from documents IIS has filed with the
Securities and Exchange Commission, including possible or assumed
future results of IIS' operations, including but not limited to any
statements contained herein or therein concerning:
- revenues for the near term;
- the status, effectiveness and projected completion of Year 2004
initiatives;
- the outcome of potential litigation;
- IIS' expectations concerning its profitability in 2003 and IIS'
ability to generate positive cash flows in the year 2004;
- the outcome and success of the spin-off;
- any statements preceded by, followed by or that include the words
"believes," "expects," "predicts," "anticipates," "intends,"
"estimates," "should," "may" or similar expressions; and
- other statements contained or incorporated by reference in this
Information Statement regarding matters that are not historical facts.
Because such statements are subject to risks and uncertainties, actual results
may differ materially from those expressed or implied by such forward-looking
statements. Such factors include:
- general economic and business conditions;
- technology changes;
- competition;
- changes in business strategy or development plans;
- the ability to attract and retain qualified management and staff;
- liability and other claims which might be asserted against RAI;
- other factors referenced in this Information Statement, including
without limitation under the captions "Summary", "Risk Factors",
"Management's Discussion and Analysis of Financial Condition and
Results of Operations of RAI" and "Business of IIS and RAI after the
spin-off."
You should not place undue reliance on such statements, which speak only as of
the date that they were made. IIS' independent public accountants have not
examined or compiled the forward-looking statements and, accordingly, do not
provide any assurance with respect to such statements. These cautionary
statements should be considered in connection with any written or oral
forward-looking statements that IIS or RAI may issue in the future. IIS does not
undertake any obligation to release publicly any revisions to such
forward-looking statements after the effective date of this Information
Statement.
7
THE SPIN-OFF OF RAI
GENERAL
IIS intends to "spin-off" all of the shares it owns of its wholly-owned
subsidiary of RAI. In the spin-off transaction (the "spin-off"), IIS will
distribute to its stockholders one-half share of RAI common stock for each share
of IIS common stock owned by such stockholder on April 14, 2004. No fractional
shares will be distributed through the spin-off. Instead, all fractional shares
will be rounded up to the nearest whole share. To the extent necessary to round
up fractional shares, IIS will subscribe for additional shares of RAI common
stock. Following the spin-off, RAI will be a separate company, no longer owned
in any way by IIS. Stockholders who hold shares of IIS' common stock through
brokerage and "street name" accounts should expect to receive an account
statement from their brokerage firm reflecting the number of shares of RAI
common stock received by such stockholder in the spin-off. Following the
spin-off, stockholders who hold shares through brokerage accounts may request
physical certificates representing their shares of RAI's common stock.
No holder of IIS' common stock will be required to pay any cash or other
consideration for shares of RAI's common stock received in the spin-off or to
surrender or exchange shares of IIS' common stock in order to receive shares of
RAI's common stock.
MANNER OF EFFECTING THE SPIN-OFF
Following the spin-off, each IIS stockholder of record on April 14, 2004, will
receive an RAI stock certificate that represents the RAI common stock owned by
such stockholder. Stockholders that hold shares of IIS common stock through
brokerage and "street name" accounts should expect to receive an account
statement from their brokerage firm reflecting the number of shares of RAI
common stock received by such stockholder in the spin-off. Following the
spin-off, stockholders who hold shares through brokerage accounts may request
physical certificates representing their shares of RAI common stock. RAI expects
to mail such stock certificates to stockholders on or about October 31, 2004,
but this could be delayed.
No holder of RAI common stock will be required to pay any cash or other
consideration for shares of RAI's common stock received in the spin-off or to
surrender or exchange shares of RAI's common stock in order to receive shares of
RAI's common stock. However, holders will be required to pay income taxes as a
result of the spin-off.
REASONS FOR THE SPIN-OFF
RAI intends to develop and pursue business opportunities that will have, as
compared to the business currently carried out through IIS, differences with
respect to markets and capital requirements and will require a different
business plan. IIS' primary business is delivering turnkey plastic and paper
card products to customers in the telecommunications, financial, loyalty and
retail, and identity and security markets. The primary business of RAI is the
marketing of pre-owned office equipment.
The Board of Directors of IIS approved the spin-off for the following reasons:
Management Focus. IIS and RAI serve different markets, service different
customers, are subject to different competitive forces and must be managed with
different long-term and short-term strategies and goals. IIS believes that
separating its businesses into two independent public companies, each with its
own management team and board of directors is necessary to address current and
future management issues and considerations that result from operating these
diverse businesses within a single company. The separation will enable RAI to
put in place a management team with skills conducive to growing a company with
interests in the marketing of pre-owned office equipment. The separation will
enable the management of each business to manage that business, and to adopt and
implement strategies for that business, solely with regard to the needs and
objectives of that business. In addition, as a result of the separation, the
management of each business will be able to devote its full attention to
managing that business.
8
Capital Structure. IIS believes that the spin-off will allow each of the
companies to organize its capital structure and allocate its resources to
support the very different needs and goals of the particular business. Capital
borrowings can be tailored to the specific needs of each business. Each business
will be able to allocate its resources without considering the needs of the
other business.
Attracting and Retaining Key Employees. IIS' Board of Directors believes that
the ability to attract and retain key personnel is fundamental to its ability to
establish viable businesses. The spin-off will enable each company to establish
focused equity-based compensation programs that should enable each of them to
better attract and retain key personnel.
Investor Understanding. Potential debt and equity investors and securities
analysts should be able to better evaluate the financial performance of each
company and their respective strategies, thereby enhancing the likelihood that
each will achieve appropriate market recognition. The stock of each of the two
companies will also appeal to investors with differing investment objectives,
and will allow investors to focus their investments more directly to the areas
of their primary interest.
Cost Savings. Each company should be able to rationalize better its
organizational costs structure after the spin-off.
BOARD AND STOCKHOLDER APPROVAL; APPRAISAL RIGHTS
After careful consideration, the IIS Board of Directors unanimously approved the
spin-off. IIS will not hold a meeting or solicit proxies for the spin-off, as no
approval of the spin-off of RAI is required under Delaware law. In addition,
under Delaware law IIS' stockholders have no right to an appraisal of the value
of their shares in connection with the spin-off.
OUTSIDE CONSULTANTS
Neither IIS nor RAI has engaged a consultant or other outside party to prepare a
report, opinion or appraisal with respect to the spin-off.
REASONS FOR FURNISHING THE INFORMATION STATEMENT TO IIS' STOCKHOLDERS
This Information Statement is being furnished by IIS solely to provide
information to IIS' stockholders who will receive shares of RAI's common stock
in the spin-off. It is not, and is not to be construed as, an inducement or
encouragement to buy or sell any securities of IIS or RAI. The information
contained in this Information Statement is believed by IIS and RAI to be
accurate as of the date set forth on its cover. Changes may occur after that
date, and neither IIS nor RAI will update the information except in the normal
course of their respective public disclosure practices.
LISTING AND TRADING OF IIS' COMMON STOCK AND RAI'S COMMON STOCK
Each of IIS and RAI expects to file a listing application with the OTC Bulletin
Board. IIS has not determined when such application will be filed, and, in the
case of RAI, it is expected that such application will not be filed until after
the completion of the spin-off.
RAI initially will have approximately 146 stockholders of record based upon the
number of stockholders of record of IIS as of April 14, 2004. The prices at
which the RAI common stock will trade will be determined by the marketplace and
may be influenced by many factors, including, among others, the depth and
liquidity of the market for the RAI'S common stock, investor perception of RAI
and its industry, RAI's dividend policy and general economic and market
conditions.
Shares of RAI common stock distributed to IIS' stockholders in the spin-off will
be freely transferable, except for securities received by persons who may be
deemed to be "affiliates" of RAI after the spin-off, which generally include
individuals or entities that control, are controlled by, or are under common
control with RAI and may include certain officers and directors of RAI as well
as principal stockholders of RAI. Persons who are affiliates of RAI will be
permitted to sell their shares of RAI's common stock only pursuant to an
effective registration statement under the Securities Act or an exemption from
the registration requirements of the Securities Act.
9
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The discussion of U.S. Federal income tax consequences set forth below is a
summary only and is not intended to address the specific tax consequences to
each IIS stockholder or those of IIS. Each stockholder should consult his own
tax advisor as to the Federal, state, local and foreign tax consequences of the
spin-off to such stockholder.
The spin-off of RAI will be a taxable distribution under the Internal Revenue
Code of 1986, as amended (the "Code"). IIS will recognize gain equal to the
excess of (x) the fair market value of the RAI common stock on the distribution
date, over (y) IIS' adjusted tax basis in the RAI common stock on such date.
Each stockholder of IIS common stock who receives RAI common stock in the
spin-off will be treated as receiving a distribution in an amount equal to the
fair market value of such RAI common stock on the distribution date. IIS does
not expect the distribution to be taxable as a dividend to such stockholder
because IIS, taking into consideration the gain recognized by IIS in this
spin-off, expects to have neither current nor accumulated earnings and profits.
Accordingly, IIS expects the distribution of RAI common stock to be a nontaxable
return of capital to the extent of each stockholder's adjusted tax basis in the
IIS common stock, with any remaining amount being taxed as a capital gain,
assuming such stockholder has held the IIS common stock as a capital asset. If
such stockholder has held the IIS common stock for more than one year, the
capital gain will be subject to long-term capital gains rates. To the extent
that IIS, notwithstanding its current expectations, does have current or
accumulated earning and profits, each stockholder would realize dividend income
with respect to the distribution received. Although dividends currently are
taxed at the same rate as long-term capital gains, unlike capital gains,
dividends cannot be offset by capital losses. Stockholders that are corporations
generally would be entitled to a deduction for 70% of the amount of any
dividends received. This dividends received deduction does not apply to capital
gains.
The tax basis in a stockholder's share of IIS' common stock after the spin-off
will be reduced by the portion of the distribution, if any, that was treated as
a nontaxable return of capital. The tax basis of such stockholder's shares of
RAI common stock received in the spin-off will be their fair market value as of
the distribution date, and the holding period for such shares will commence the
day following the distribution.
MANAGEMENT OF RAI FOLLOWING THE SPIN-OFF
After the spin-off, Alfred M. Schiffrin shall hold the following office and be
the sole director of RAI. Additional directors are expected to be named
following the spin-off.
NAME AGE POSITION
Alfred M. Schiffrin 66 President, Secretary, Treasurer and
Director
Alfred M. Schiffrin was President, Secretary, Treasurer and a Director of A.M.S.
Marketing, Inc. ("AMS"), the predecessor to RAI's business, from January 1998
until July 31, 2003. Mr. Schiffrin currently is the sole director and officer of
RAI, and pursuant to an oral agreement among IIS, RAI and Mr. Schiffrin, he is
entitled to receive 25% of RAI's profits. Such agreement will terminate upon the
consummation of the spin-off.
SELECTED RAI FINANCIAL DATA
RAI was recently formed, is a development stage company and is the successor to
the pre-owned photocopier marketing services line of business of IIS. That was
the only line of business of IIS during 2002 and during 2003 prior to July 2003.
During that period, IIS was a developmental stage company and operated under the
AMS name. Accordingly, we believe that selected financial data concerning RAI
would not be meaningful in and of itself. In lieu thereof, set forth below is
the audited balance sheet of RAI as the successor to the AMS photocopier
division as of December 31, 2003 and the related statements of operations,
shareholders' equity and cash flows for the years ended December 31, 2003 and
2002.
10
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,
shareholders' equity and cash flows for the years ended December 31, 2003 and
2002. 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 auditing standards generally accepted
in the United States of America. 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.
Thomas W. Klash
Certified Public Accountant
Hollywood, Florida
April 14, 2004
11
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 SHAREHOLDERS' 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 -
100 Shares Issued and Outstanding --
Deficit Accumulated During Development Stage --
----------
TOTAL SHAREHOLDERS' EQUITY --
----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ --
==========
See accompanying notes to financial statements.
12
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)
============= ============= =============
See accompanying notes to financial statements.
13
RENEWABLE ASSETS, INC.
SUCCESSOR TO A.M.S. MARKETING, INC. - PHOTOCOPIER DIVISION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 2003 AND 2002
DEFICIT
COMMON STOCK ACCUMULATED
$.001 PAR VALUE ADDITIONAL DURING
-------------------------- PAID-IN DEVELOPMENT
SHARES AMOUNT CAPITAL TOTAL STAGE
----------- ----------- ----------- ----------- -----------
BALANCE - January 1, 2002 4,613,900 $ 4,613 $ 70,787 $ 5,558 $ (69,842)
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 (3,568) (92,982)
ISSUANCE OF COMMON STOCK
IN CONNECTION WITH
MERGER 1,200,000 1,200 (1,200) -- --
RECLASSIFICATION OF EQUITY
RESULTING FROM REVERSE
MERGER (5,856,200) (5,856) (90,694) 3,568 96,550
NET (LOSS) FOR PERIOD -- -- -- (3,568) (3,568)
ISSUANCE OF COMMON STOCK 100 -- -- -- --
----------- ----------- ----------- ----------- -----------
BALANCE - December 31, 2003 100 $ -- $ -- $ -- $ --
=========== =========== =========== =========== ===========
See accompanying notes to financial statements.
14
RENEWABLE ASSETS, INC.
SUCCESSOR TO A.M.S. MARKETING, INC. - PHOTOCOPIER DIVISION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2003 AND 2002
AND FROM JANUARY 1, 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.
15
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.
The Company's principal business was the brokerage of
pre-owned name brand copy machines from a facility located
in Pompano Beach, Florida.
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 considered to be a "reverse merger" since the
former owners of "AIS" now control more than 50% of "AMS" as
a result of the merger. The effect of the transaction
reflects the historical values of "AIS" with a
recapitalization of "AMS" shareholders' equity.
The parent company, through its wholly-owned subsidiary,
"AIS", is now principally engaged in the manufacture and
sale of telephone credit cards and security cards of all
types.
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.
It is expected that a total of 3,014,350 shares of $.001 par
value common stock will be issued to existing shareholders
in connection with the spin-off.
16
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
"reverse merger". 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.
Sales Revenue:
Revenue is recognized in the financial statements when sales
are finalized. Reported sales are arrived at by deducting
discounts and return allowances.
Advertising:
Advertising costs are expensed as incurred.
17
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.
18
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RAI OPERATIONS
The following discussion should be read in conjunction with RAI'S Financial
Statements and Notes set forth elsewhere in this Information Statement.
OVERVIEW
The Company is in the development stage. The Company commenced operations in
December 2003. It was formed to pursue the pre-owned photocopier marketing
services line of business of IIS that commenced operations in the Fall of 1998.
The Company is currently engaged in marketing activities for an unrelated party
and has no employees other than its president, Alfred W. Schiffrin, who is
unsalaried. Since July 21, 2003 (the date of the acquisition of Advanced Imaging
Systems, Inc. by A.MS), and until the consummation of the spin-off, he is
entitled to receive 25% of the Company's profits pursuant to an oral agreement
among the Company, IIS and Mr. Schiffrin. Following the spin-off, it is
anticipated that Mr. Schiffrin will receive no compensation for his services
until the Company's resources permit. The Company does not anticipate hiring any
employees, purchasing any plant or significant equipment or conducting any
product research and development during the next 12 months. The Company also
does not anticipate initiating any sales activities for its own account until
such time as the Company's resources permit.
During the next 12 months, the Company intends to continue marketing pre-owned
photocopiers. The Company will also continue to explore 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 the Company's resources permit.
The Company is also considering other means of expanding its business, such as
through acquisition, merger or other form of business combination involving one
or more entities engaged in the same, similar or unrelated business as the
Company. Any such transaction may entail the issuance of additional shares of
its common stock, but there are no current plans to engage therein. Any such
acquisition, merger or combination 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 thereof, may not be required. The Company's president has run the
business for five years. Prior to that he had experience as an investment banker
in locating potential acquisitions but the Company may employ the services of a
broker or finder who would be entitled to compensation to assist in identifying
suitable opportunities.
While the Company only began operations in December 2003, it is the successor to
the pre-owned photocopier marketing services line of business of IIS. That was
the only line of business of IIS during 2002 and during 2003 prior to July 2003.
During that period IIS operated under the AMS name. As discussed below, fiscal
year 2002 for AMS and fiscal year 2003 for IIS with respect to the photocopier
business was characterized by nominal revenues offset by relatively significant
professional fees and expenses associated with the Company being a reporting
issuer.
RESULTS OF OPERATIONS
Revenues from the photocopier business in fiscal 2002 and 2003 were
approximately $9,000 and $4,500, respectively, and expenses from the photocopier
business were approximately $32,140 and $8,068, respectively, resulting in a net
loss for each such year in the amount of approximately $23,140 and $3,568,
respectively. Of the $32,140 of expenses in fiscal 2002, approximately $13,490
represented legal, accounting and filing fees incurred in connection with AMS
being a reporting issuer and of the $8,068 of expenses in fiscal 2003,
approximately $5,525 represented legal, accounting and filing fees incurred in
connection with being a reporting issuer. The decrease in revenues from fiscal
2002 to fiscal 2003 is primarily attributable no sales being effected during the
fourth quarter of fiscal 2003. During such period, Mr. Schiffrin was
concentrating all of his efforts on effecting the acquisition of Advanced
Imaging Systems, Inc. The decrease in expenses from fiscal 2002 to fiscal 2003
is primarily attributable to the related decrease in sales.
19
The Company is not presently aware of any known trends, events or uncertainties
that may cause its revenues or income from operations to vary materially from
those of the photocopier business of AMS or IIS.
LIQIDITY AND CAPITAL RESOURCES
Historically, IIS has financed its operations through revenues from operations,
private sales of its securities and loans from its president. During fiscal
2003, IIS financed its operations through revenues from operations. As of
December 31, 2003 and April 14, 2004, the Company had cash of $.00 and $1,600,
respectively. The Company is exploring opportunities to raise cash to finance
its operations for the foreseeable future. In addition, the Company is
considering expansion through acquisitions. No specific targets are currently
under consideration. If the Company is not successful in raising cash, it may be
forced to borrow funds. No assurance can be given that funds will be available
to borrow, or if available, will be on terms favorable to the Company.
DESCRIPTION OF IIS CAPITAL STOCK AND RAI CAPITAL STOCK
DESCRIPTION OF IIS CAPITAL STOCK
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, par value $.001 per
share, and 1,000,000 shares are classified as undesignated preferred stock, par
value $.001 per share. 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 the Company's common stock are duly and validly issued,
fully paid and non-assessable.
DESCRIPTION OF RAI CAPITAL STOCK
RAI'S authorized capital consists of 30,000,000 shares of capital stock, of
which 29,000,000 shares are classified as common stock, par value $.001 per
share, and 1,000,000 shares are classified as undesignated preferred stock.
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 RAI's
common stock are duly and validly issued, fully paid and non-assessable.
DESCRIPTION OF PREFERRED STOCK OF IIS AND RAI
Each of IIS and RAI is authorized to issue up to 1,000,000 shares of
undesignated preferred stock. The board of directors of each company is
empowered, without stockholder approval, to issue series of preferred stock with
any designations, rights and preferences as each may from time to time
determine. Thus, 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 of the company issuing such shares of
preferred stock. Preferred stock, if issued, could be utilized, under special
circumstances, as a method of discouraging, delaying or preventing a change in
control.
20
PENNY STOCK RULES
The Securities and Exchange Commission has adopted Rule 15g-9 which established
the definition of a "penny stock", for the purposes relevant to RAI, as any
equity security that has a market price of less than $5.00 per share or with an
exercise price of less than $5.00 per share, subject to certain exceptions. For
any transaction involving a penny stock, unless exempt, the rules require: (i)
that a broker or dealer approve a person's account for transactions in penny
stocks; and (ii) the broker or dealer receive from the investor a written
agreement to the transaction, setting forth the identity and quantity of the
penny stock to be purchased. In order to approve a person's account for
transactions in penny stocks, the broker or dealer must (i) obtain financial
information and investment experience objectives of the person; and (ii) make a
reasonable determination that the transactions in penny stocks are suitable for
that person and the person has sufficient knowledge and experience in financial
matters to be capable of evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a penny
stock, a disclosure schedule prepared by the Commission relating to the penny
stock market, which, in highlight form, (i) sets forth the basis on which the
broker or dealer made the suitability determination; and (ii) that the broker or
dealer received a signed, written agreement from the investor prior to the
transaction. Disclosure also has to be made about the risks of investing in
penny stocks in both public offerings and in secondary trading and about the
commissions payable to both the broker-dealer and the registered representative,
current quotations for the securities and the rights and remedies available to
an investor in cases of fraud in penny stock transactions. Finally, monthly
statements have to be sent disclosing recent price information for the penny
stock held in the account and information on the limited market in penny stocks.
If RAI stock is listed at a price of less that $5.00 the stock will be a penny
stock. As a penny stock the shares could be less liquid than if the stock was
not so classified.
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
RAI is subject to the provisions of Section 203 of the Delaware General
Corporation Law ("DGCL"). Subject to certain exceptions, Section 203 of the DGCL
prohibits a publicly-held Delaware corporation from engaging in a "business
combination" with an "interested stockholder" for a period of three years after
the date of the transaction in which the person became an interested
stockholder. Subject to certain exceptions, an "interested stockholder" is a
person who, together with affiliates and associates, owns, or within three years
did own, 15% or more of the corporation's voting stock. A "business combination"
includes (1) mergers, consolidations and sales or other dispositions of 10% or
more of the assets of a corporation to or with an interested stockholder, (2)
certain transactions resulting in the issuance or transfer to an interested
stockholder of any stock of such corporation or its subsidiaries, and (3) other
transactions resulting in a disproportionate financial benefit to an interested
stockholder. The restrictions of Section 203 of the Delaware General Corporation
Law do not apply where: (1) the business combination or the transaction in which
the stockholder becomes interested is approved by the corporation's Board of
Directors prior to the date the interested stockholder acquired its shares; (2)
the interested stockholder acquired at least 85% of the outstanding voting stock
of the corporation in the transaction in which the stockholder became an
interested stockholder excluding, for determining the number of shares
outstanding, shares owned by persons who are directors as well as officers and
by employee stock plans in which participants do not have the right to determine
confidentially whether shares held subject to the plan will be tendered in a
tender or exchange offer; or (3) the business combination is approved by the
Board of Directors and the affirmative vote of two-thirds of the outstanding
voting stock not owned by the interested stockholder at an annual or special
meeting.
The business combinations provisions of Section 203 of the DGCL may have the
effect of deterring merger proposals, tender offers or other attempts to effect
changes in control of RAI that are not negotiated with and approved by the Board
of Directors.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The spin-off will be on the basis of one-half share of RAI common stock for each
share of IIS common stock owned on April 14, 2004. In connection with the
spin-off, no options or warrants will be issued to holders of IIS options or
warrants as of April 14, 2004. The following table sets forth certain
information regarding the anticipated beneficial ownership of RAI common stock
following the spin-off by (i) each person anticipated by IIS to own beneficially
5% or more of the RAI common stock and (ii) the directors and officers of RAI;
and all directors and officers of RAI as a group. Unless otherwise indicated,
21
the information in the table is based upon the actual holdings of IIS common
stock as of April 14, 2004, and such information is derived based upon the
hypothetical assumption that the effective date of the spin-off was April 14,
2004, so as to inform the reader what the beneficial ownership of RAI common
stock would have been at that time. Actual ownership on the spin-off payment
date may vary from that shown in the table.
Unless otherwise indicated, all persons listed have sole voting power and
investment power with respect to such shares, subject to community property
laws, where applicable, and the information contained in the notes to the table.
Name and Address of Beneficial Owner(1) Shares of Common Stock Owned Percentage (%) of Common Stock(2)
- --------------------------------------- ---------------------------- ---------------------------------
Sarah Cinnante(3) 600,000 20.49%
Michael D'Angelo(3) 600,000 20.49%
Laura Palisa Mujica(4) 600,000 20.49%
Lara Nicole Sarafianos(5) 600,000 20.49%
Alicia M. LaSala(6) 600,000(7) 6.83%(7)
Alfred M. Schiffrin(8) 200,000 6.83%
All officers and directors as a group 200,000 6.83%
(one person)
- -------------------
(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.
(3) The business address of the stockholder, director or officer, as the
case may be, noted above is 6689 N.W. 16th Terrace, Ft. Lauderdale, FL
33309.
(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 10,000 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. Mrs. LaSala disclaims beneficial ownership of such
shares.
(8) The business address of the stockholder noted above is 7040 W. Palmetto
Park Road, Building 4, # 572, Boca Raton, FL 33433. Prior to the
spin-off, Mr. Schiffrin was the sole director and officer of the
Company.
INDEPENDENT ACCOUNTANTS
The Board of Directors of RAI has selected Thomas W. Klash, CPA, to audit its
financial statements for the year ending December 31, 2003.
WHERE YOU CAN FIND MORE INFORMATION
The descriptions in this information statement concerning the contents of any
contract, agreement or documents are not necessarily complete. For those
contracts, agreements or documents that are filed as exhibits to the
registration statement, you should read the exhibit for a more complete
understanding of the document or subject matter involved.
Because IIS is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, it files reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
22
the registration statement, including the attached exhibits and schedules, and
any reports, proxy statements or other information that we file at the
Securities and Exchange Commission's public reference room in Washington, D.C.
at 450 Fifth Street, N.W., 20549. You can request copies of these documents by
writing to the Securities and Exchange Commission and paying a duplicating
charge. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for
further information on the operation of its public reference rooms in other
cities. The Securities and Exchange Commission makes our filings available to
the public on its internet site (http://www.sec.gov).
The Commission allows companies to "incorporate by reference" information into
registration statements that have been previously filed with the Commission,
which means that IIS can disclose important information to you by referring you
to other documents that it filed separately with the Commission. You should
consider the incorporated information as if it were reproduced in this
prospectus, except for any information directly superseded by information
subsequently filed with the Securities and Exchange Commission and incorporated
in this registration statement or directly contained in this registration
statement.
IIS incorporates by reference the documents listed below which were filed with
the Commission under the Securities Exchange Act of 1934, as amended, and any
future filings made with the Commission under Sections 13(a), 13(c), 14, or
15(d) of the Securities Exchange Act of 1934, as amended, until such time as all
of the securities covered by this prospectus supplement have been sold.
- The registrant's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 2002 (filed on February 25, 2003).
- The registrant's Quarterly Reports on Form 10-QSB for the period ended
September 30, 2003 (filed on November 13, 2003).
- The registrant's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 2003 (filed on _____________, 2004).
IIS may file additional documents with the Securities and Exchange Commission
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, as amended, on or after the date of this registration statement. The
Securities and Exchange Commission allows us to incorporate by reference into
this registration statement such documents. You should consider any statement
contained in this registration statement (or in a document incorporated into
this registration statement) to be modified or superseded to the extent that a
statement in a subsequently filed document modifies or supersedes such
statement.
You may request a copy of these filings, at no cost, by writing or telephoning
us at the following address:
Renewable Assets, Inc.
7040 W. Palmetto Park Road
Building 4, # 572
Boca Raton, FL 33433
(561) 488-9938
23