UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14C/A
INFORMATION STATEMENT PURSUANT TO SECTION 14(C)
OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. 3)
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NURESCELL INC.
(Name of Registrant as Specified in Its Charter)
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NURESCELL INC.
P.O. Box 116
North Haven, Connecticut 06473
INFORMATION STATEMENT
Dated [ ], 2003
GENERAL
This Information Statement is being circulated to the stockholders
of Nurescell Inc., a Nevada corporation (the "Company"), in connection with the
taking of corporate action without a meeting by the written consent (the
"Written Consent") of the holder of a majority of the Company's outstanding
shares of $0.0001 par value common stock (the "Common Stock"). The stockholder
who signed the Written Consent is Triton Private Equities Fund, L.P. ("Triton"),
which holds of record 30,000,000 shares of Common Stock (65.1% of the shares
outstanding). A copy of the Written Consent is attached to this Information
Statement as Exhibit "A."
As more completely described below, the matters upon which action
has been taken pursuant to the Written Consent are: (i) approval of the transfer
of the Company's proprietary radiation shielding technology, constituting
substantially all of the Company's assets (the "Technology Transfer"), (ii)
approval of an amendment to the Fourth Article of the Company's Articles of
Incorporation, as amended, to increase the number of authorized shares of Common
Stock from 50,000,000 to 2,000,000,000 (the "Share Increase") and (iii)
authorization of the Company's Board of Directors to implement an up to
one-for-2,000 reverse stock split of the Company's outstanding Common Stock (the
"Reverse Stock Split") upon a determination by the Board of Directors that the
Reverse Stock Split is in the best interests of the Company and its
stockholders.
The date and place at which action was taken by Written Consent was
[_______________], 2003, at 225 N. Market Street, Suite 333, Wichita, Kansas
67202.
This Information Statement is being first given or sent to
stockholders on or about [__________________], 2003.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
VOTING SECURITIES AND VOTE REQUIRED
On [_______], 2003, the Company's Board of Directors ratified or
approved, subject to stockholder approval, the Share Increase and the Technology
Transfer, which the Board of Directors deemed to be in the best interests of the
Company and its stockholders. The Board of Directors further authorized the
preparation of the Written Consent and the preparation and circulation of this
Information Statement to the Company's stockholders.
There are currently 46,060,025 shares of Common Stock outstanding,
with each share of Common Stock being entitled to one vote. The written consent
of ten or fewer stockholders of the Company holding at least 23,030,013 shares
of the issued and outstanding Common Stock was necessary to approve the actions
taken pursuant to the Written Consent. Except for the Common Stock, there is no
class of voting securities outstanding at this date. The record date for
determining the stockholders who are entitled to receive this Information
Statement is [______], 2003 (the "Record Date").
-3-
The matters upon which action was taken pursuant to the Written
Consent were: (i) the approval of the Technology Transfer, (ii) the approval of
the Share Increase and (iii) the authorization of the Reverse Stock Split.
Pursuant to a Restructure Agreement (the "Restructure Agreement")
entered into on March 21, 2003 between the Company, Triton, Advanced Technology
Industries, Inc. and its subsidiary, ATI Nuklear AG, on March 21, 2003, Triton
converted $30,000 in principal amount of a convertible promissory note
previously issued to Triton by the Company into 30,000,000 shares of Common
Stock, thus giving Triton approximately 65% of the Company's outstanding Common
Stock and voting control over the Company. Also on March 21, 2003, Triton's
representative, Lawrence Shatsoff, became the Company's sole officer and
director, replacing James Samuelson (a representative of Advanced Technology
Industries, Inc.) and Shelby Brewer. No loans or pledges were obtained by Triton
for the purpose of acquiring control of the Company and, except as specified in
the Restructure Agreement, there are no arrangements or understandings among
Triton and those persons formerly in control of the Company with respect to the
election of directors or other matters.
The cost of this Information Statement, consisting of printing,
handling and mailing of the Information Statement and related materials, and the
actual expense incurred by brokerage houses, custodians, nominees and
fiduciaries in forwarding the Information Statement to the beneficial owners of
the shares of Common Stock, will be paid by the Company.
APPROVAL OF THE TECHNOLOGY TRANSFER
SUMMARY TERM SHEET. The following summary highlights certain
material information from this Information Statement regarding the Technology
Transfer and does not contain all of the information that is important to you.
To fully understand the Technology Transfer, you should read carefully this
entire Information Statement, including the attached Exhibits, which begin at
page A-1.
o Parties to the Technology Transfer: The Company, Advanced Technology Industries, Inc.
("ATI") and ATI Nuklear AG ("AG"). See "Background
Information" below.
o Assets being transferred by the Company: Proprietary radiation shielding technology, constituting
all of the Company's assets,other than any cash on hand.
See "Terms of the Technology Transfer" and "Effect of the
Technology Transfer" below.
o Payment to be received by the Company: Cancellation by ATI and AG of all debts and other
obligations owed to either of them by the Company
(approximately $1.2 million). See "Terms of the Technology
Transfer" and "Effect of the Technology Transfer" below.
o Effect on the Company's stockholders: Stockholders will retain their shares in the Company and
will receive no payment as a result of the Technology
Transfer. See "Effect of the Technology Transfer" below.
-4-
BACKGROUND INFORMATION. On March 21, 2003, the Company's Board of
Directors approved the Technology Transfer, which was ratified by the Company's
Board of Directors on [____ ], 2003. The Technology Transfer is being made
pursuant to the Restructure Agreement, which was entered into by the Company in
order resolve various defaults with respect to its debts and other obligations
to Triton, ATI and AG. A copy of the Restructure Agreement is attached to this
Information Statement as Exhibit "B." The parties to the Technology Transfer are
as follows:
Nurescell Inc.
P.O. Box 116
North Haven, Connecticut 06473
(203) 239-9734
The Company is a development stage company, with its operations to
date as described in its report on Form 10-KSB for the fiscal year ended March
31, 2003 (as amended), a copy of which (without exhibits) is attached to this
Information Statement as Exhibit "C" and its report on Form 10-QSB for the
fiscal quarter ended June 30, 2003, a copy of which (without exhibits) is
attached to this Information Statement as Exhibit "D." The Company's operations
have, however, been reduced to a minimal level due to a failure to successfully
market its proprietary radiation shielding technology (the "Technology") and a
lack of funding. See "Fairness of the Technology Transfer; Recommendation of the
Board of Directors" below. For the fiscal year ended March 31, 2003, the Company
had no revenues and incurred a net loss of $449,328. In addition, the Company
has incurred losses from operations since inception and, as of March 31, 2003,
had an accumulated deficit of $10,895,909 and a working capital deficit of
$4,226,151. Although the auditor's report accompanying the Company's financial
statements for that fiscal year (which are included in Exhibit "C")indicated
that those financial statements were prepared assuming that the Company will
continue as a going concern, due to its financial condition and other factors,,
there was substantial doubt as to the Company's ability to continue in that
capacity.
Advanced Technology Industries, Inc.
Taubenstrasse 20
Berlin, Germany 10117
011-49-30-201-7780
ATI is a publicly-traded Delaware corporation that was formed to
identify, assess, acquire and capitalize on innovative technologies introduced
and developed by scientists throughout the world. ATI's principal activities
include identifying, reviewing and assessing technologies for their commercial
applicability and potential and acquiring interests in a portfolio of
technologies and companies.
ATI Nuklear AG
Taubenstrasse 20
Berlin, Germany 10117
011-49-30-201-7780
AG is German company that is a wholly-owned subsidiary of ATI. AG is
engaged in the development of radiation shielding and nuclear waste storage and
transportation.
TERMS OF THE TECHNOLOGY TRANSFER. The Technology Transfer provides
for the transfer by the Company to ATI or AG of all right, title and interest in
and to the Technology in return for the cancellation by ATI and AG of all debts
and other obligations owed to either of them by the Company (the "ATI
Obligations"), consisting primarily of a $1 million promissory note, plus
interest, secured by the Technology (among other things) and approximately
$200,000 in short-term cash advances and payments made by ATI to or for the
Company. The Technology consists of proprietary intellectual property, including
patents and patent applications.
The Restructure Agreement contains various customary provisions
relating to the Company, ATI and AG. Those provisions include, among other
things, representations and warranties with respect to (i) the execution and
enforceability of the Restructure Agreement and (ii) title to, and absence of
liens on, the Technology. The preparation and circulation of this Information
Statement is a condition to the completion of the Technology Transfer, and,
subject to certain provisions of the Restructure Agreement, it is expected that
such completion will occur 23 days after this Information Statement is sent or
given to the Company's stockholders. No federal or state regulatory requirements
or approvals must be complied with or obtained in connection with the Technology
Transfer. In light of AG's security interest in the Technology in connection
with the ATI Obligations, the parties have agreed that the transfer of the
Technology pursuant to the Restructure Agreement constitutes a transfer of
collateral pursuant to Section 9609 of the California Uniform Commercial Code.
-5-
PAST CONTACTS BETWEEN THE COMPANY, ATI AND AG. During the past two
years, (i) ATI has owned 4,590,000 shares of Company Common Stock (see "Security
Ownership of Certain Beneficial Owners and Management" below) and (ii) James
Samuelson, who was an officer and director of the Company until March 21, 2003,
was also an officer of ATI. In addition, the Company has previously incurred the
ATI Obligations and has entered into a "License Agreement" dated as of August
15, 2000, an "Investment Agreement" dated as of August 17, 2000 and a
Modification Agreement dated as of June 11, 2001 with AG, each of which was
later amended by a "Transaction Restructure Agreement" entered into as of
September 30, 2001 between the Company, ATI and AG. Under the License Agreement,
as amended, Nurescell has licensed the Technology to AG in return for specified
royalty payments.
EFFECT OF THE TECHNOLOGY TRANSFER. Following the consummation of the
Technology Transfer, the Company expects to have essentially no assets. However,
after that consummation, as well as certain anticipated conversions of
outstanding debt into Common Stock (see "Approval of an Increase in the
Authorized Shares" below), it is expected that the Company will be left with
only approximately $100,000 in liabilities. It is expected that those remaining
liabilities will either be settled for cash using funds provided by Triton or
paid with funds provided by a third party in conjunction with a merger or other
consolidation with the Company. As the Technology Transfer involves the transfer
of assets in return for cancellation of certain indebtedness, the Company's
stockholders will receive no payment as a result of the Technology Transfer and
will retain their equity interests in the Company following the consummation of
the transaction. For accounting purposes, the Company will treat the Technology
Transfer as an exchange for the extinguishment of debt.
-6-
The following is a pro forma balance sheet which shows the pro forma
effects of the consummation of the Technology Transfer and the Restructure
Agreement:
NURESCELL INC.
(A Company in the Development Stage)
PRO FORMA BALANCE SHEET
MARCH 31, 2003
(Unaudited)
March 31, 2003
----------------------------------------------------
Pro Forma
Historic Adjustments Note Pro Forma
------------- ------------- ---- -------------
ASSETS
Current Assets:
Cash 5,125 -- 5,125
------------- ------------- -------------
Total Assets $ 5,125 $ -- $ 5,125
============= ============= =============
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Convertible notes payable - ATI (related party) 1,000,000 (1,000,000) (a) --
Convertible notes payable - Triton related party) 690,000 -- 690,000
Accounts payable 296,399 -- 296,399
Due to stockholders and former officers 254,022 (176,158) (b) 77,864
Accrued expenses 1,540,855 (120,000) (b) 1,420,855
Unearned revenue 450,000 (450,000) --
------------- ------------- -------------
Total Current Liabilities 4,231,276 (1,746,158) 2,485,118
------------- ------------- -------------
STOCKHOLDERS' DEFICIENCY
Preferred stock - 0.0001 par value; 1,000,000 shares authorized;
-0- shares issued and outstanding
Common stock - 0.0001 par value; 50,000,000 shares authorized;
46,070,238 shares issued and 46,060,025 shares outstanding 4,607 -- 4,607
Additional paid-in capital 6,695,151 1,296,158 (a)(b) 7,991,309
Treasury stock, at cost - 10,213 shares (30,000) -- (30,000)
Deficit accumulated during the development stage (10,895,909) 450,000 (c) (10,445,909)
------------- ------------- -------------
Total Stockholders' Deficiency (4,226,151) 1,746,158 (2,479,993)
------------- ------------- -------------
Total Liabilities and Stockholders' Equity $ 5,125 $ -- $ 5,125
============= ============= =============
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NURESCELL INC.
(A Company in the Development Stage)
NOTES TO PRO FORMA BALANCE SHEET
MARCH 31, 2003
(Unaudited)
Notes Description Addition/(Subtraction)
- ----- ----------- ----------------------
(a) CONVERTIBLE NOTES PAYABLE - ATI (RELATED PARTY) - In accordance with
the Restructure Agreement, ATI relieves the Company of its principal
debt obligation in exchange for the transfer of the Technology, as
defined in the Restructure Agreement. ($1,000,000)
(a) ADDITIONAL PAID-IN CAPITAL - The cancellation of the obligation to ATI
and subsequent transfer of the Technology to ATI results in the
recognition of additional paid-in capital. $1,000,000
(b) ACCRUED EXPENSES - The Restructure Agreement provides for the relief of
accrued Interest related to the principal debt obligation. ($ 120,000)
(b) DUE TO STOCKHOLDERS AND FORMER OFFICERS - The Restructure Agreement
provides for the relief of amounts due to ATI for (i) short-term
advances made to the Company and (ii) the settlement of various legal
fees that ATI paid on the Company's behalf. ($ 176,158)
(b) ADDITIONAL PAID-IN CAPITAL - The forgiveness of (i) interest relating
to the cancellation of the principal debt obligation and (ii) the
cancellation of amounts due for short-term advances and obligations for
various legal fees results in the recognition of additional paid-in
capital. $ 296,158
(c) UNEARNED REVENUE - The reduction of unearned revenue is due to the
cancellation of the licensing agreement and transfer of the Technology
to ATI. ($ 450,000)
(c) DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE - This represents
recognition of income resulting from the transfer of the Technology to
ATI. $ 450,000
FAIRNESS OF THE TECHNOLOGY TRANSFER; RECOMMENDATION OF THE BOARD OF
DIRECTORS. In December 2001, the Company defaulted in its obligations to Triton
with respect to $720,000 in principal amount of convertible promissory notes.
Initially, the Company believed it could cure the default by obtaining
additional funding from ATI and, for a time, Triton agreed to wait for that
funding. By August 2002, however, the funding from ATI had not yet materialized,
leading Triton to propose the Technology Transfer as a cure for the default. At
that point, the Company continued to pursue the ATI funding but also began work
on the Technology Transfer as an alternate plan. However, towards the end of
2002, it became clear that funding would not be available from ATI, leaving the
Technology Transfer as the only means acceptable to Triton for the cure of the
Company's default.
The Company believes that the following factors exist in favor of, and
against, the Technology Transfer:
Factors in Favor of the Technology Transfer Factors Against the Technology Transfer
- ------------------------------------------- ---------------------------------------
It will eliminate the ATI Obligations It will leave the Company with no assets
(other than any cash on hand)
It will allow the Company to cure its and no way of doing business.
defaults to Triton without a cash payment
It will allow the Company to be marketed
as a relatively "clean" shell in an attempt
to obtain some value for its stockholders
While the above factor against the Technology Transfer would normally
be very significant, the Company believes that significance has been negated by
the fact that (i) after trying for a number of years, the Company has been
unsuccessful in marketing the Technology, making it is highly uncertain as to
when, if ever, the Technology could be used as the basis for profitable business
operations and (ii) despite the past efforts of both the Company and ATI, the
Company has been unable to obtain funding for its operations. Therefore, Triton
has taken control of the Company with the belief that the only way to obtain any
value for the Company's stockholders is to (i)reduce the Company to a
publicly-traded "shell" with no significant assets or liabilities, (ii) adopt a
business plan to engage in a merger or other business combination with an as yet
unidentified company (turning the Company into what is sometimes referred to as
a "blank check" public company) and (iii) carry out the Reverse Stock Split so
as to greatly reduce the number of outstanding shares and potentially raise the
Company's stock price from its current levels, both of which Triton believes
will enhance the Company's marketability. Based on its experience, Triton
believes that such a merger or other business combination is not feasible so
long as the ATI Obligations remain in existence. While the ATI Obligations could
possibly be satisfied through a sale of the Technology to a third party for an
amount sufficient to repay the ATI Obligations, the Company does not believe
that is a viable alternative due to (i) the amount of the ATI Obligations, which
exceed $1,200,000, an amount far greater than the Company's current market value
of approximately $46,000 based on a stock price of $.001 per share (see
"Authorization for the Company's Board of Directors to Effectuate a Reverse
Stock Split of the Company's Common Stock of up to One-for-2000" below) and (ii)
the Company's past lack of success in generating any significant interest in the
Technology. For those reasons, the Company has not sought third party offers to
purchase the Technology and, to date, has received no such offers. In light of
the above, the Company's Board of Directors has determined that it is in the
Company's best interests to transfer the Technology to ATI or AG. In reaching
its determination, the Board of Directors considered (i) the terms of the
Technology Transfer and related matters, (ii) those potential alternatives to
the Technology Transfer described above, (iii) the financial risks if the
Technology Transfer is not consummated, including inability to repay the ATI
Obligations, (iv) the risk that if the Company retains the Technology it will
not be able raise sufficient funds to utilize the Technology and (v) the ongoing
operating losses of the Company and the substantial legal, accounting and other
costs that would be incurred if the Company were to continue its business
operations with respect to the Technology.
Based on the foregoing, the Board of Directors believes that the
Company's transfer of substantially all of its assets through the Technology
Transfer is fair to, and in the best interests of, the Company and its
stockholders. In view of the variety of factors considered in connection with
its evaluation of the Technology Transfer, the Board of Directors did not find
it practicable to, and did not quantify or otherwise attempt to, assign relative
weights to the specific factors considered in reaching its determination. Due to
the Company's financial condition, it could not pay for an opinion from a third
party as to the fairness of the Technology Transfer.
FEDERAL INCOME TAX CONSEQUENCES OF THE TECHNOLOGY TRANSFER. There
will be no material adverse tax consequences to the Company as a result of the
Technology Transfer. Stockholders of the Company will experience no direct
federal income tax consequences as a result of the consummation of the
Technology Transfer. The foregoing constitutes only a general description of the
federal income tax consequences of the Technology Transfer.
OTHER INFORMATION. The affirmative vote of the holders of a majority
of the shares of outstanding Common Stock is required for the approval of the
Technology Transfer (with that vote having been obtained pursuant to the Written
Consent). Based on the above factors, the Board of Directors believes that the
Technology Transfer is in the best interests of the Company and its
stockholders. It is anticipated that the Technology Transfer will occur 23 days
following the mailing of this Information Statement to the Company's
stockholders. Stockholders of the Company have no dissenters' or appraisal
rights with respect to the Technology Transfer.
APPROVAL OF AN INCREASE IN THE AUTHORIZED SHARES
The Company is presently authorized to issue up to 50,000,000 shares
of Common Stock and up to 1,000,000 shares of preferred stock, in each case par
value $0.0001 per share. The Company currently has outstanding 46,060,025 shares
of Common Stock, with no preferred stock issued and outstanding. As a result,
the Company has less than 4,000,000 shares of Common Stock available for future
issuance. As of the Record Date, Triton was entitled to convert its existing
$305,000 in principal amount of the Company's Series 1999-A Convertible
Promissory Note and $385,000 in principal amount of the Company's Series 2000-A
Convertible Promissory Note (collectively, the "Notes"), as well as an
additional $[_____] that Triton has loaned to the Company or provided for its
benefit for operating expenses (the "Operating Loans"), into up to [_____]
shares of the Company's Common Stock. While that number varies based on the
market price of the Common Stock, assuming (i) a continuing market price of
$[_____] per share and (ii) that the combined principal, accrued interest and
accrued penalties on the Notes and Operating Loans totals approximately
$[______], the Company anticipates that in the future Triton will be able to
convert the Notes and Operating Loans into at least [______] shares of Common
Stock. Therefore, the number of authorized shares must be increased to at least
[_______] in order to satisfy the Company's legal obligations to Triton. In
addition, certain persons who are owed money by the Company for services
previously rendered as officers, directors, employees and consultants (including
Adrian Joseph, Sharon Nitka, Shelby Brewer, John Longenecker and James
Samuelson, all of whom are former officers and/or directors of the Company) have
agreed to exchange a total of $722,459 in debt owed to them by the Company into
an aggregate of 72,245,862 shares of the Company's Common Stock. As a result,
the number of authorized shares must be increased to at least [ ] in order to
satisfy the Company's legal obligations to Triton and those other creditors.
Triton now owns approximately 65% of the Company's outstanding Common Stock.
Assuming the issuance of an additional [_____] shares of Common Stock to Triton
following the Share Increase, it is expected that Triton's interest in the
Company will increase to approximately [___ %]. At this time, Triton intends to
use its control over the Company to bring about a merger or other business
combination with as third party. There is, however, no estimate as to when, if
ever, a suitable merger or other business combination for the Company will be
identified.
In light of the above, the Share Increase will amend the Fourth
Article of the Company's Articles of Incorporation to increase the number of
authorized shares of Common Stock to 2,000,000,000, with [____] of those shares
reserved for issuance to Triton, 72,245,862 of those shares reserved for
issuance to certain other creditors as described above, and the balance to be
used for such other issuances (including, but not limited to, issuances to
consultants of the Company as compensation for their services) as the Company's
Board of Directors may approve from time-to-time. The rights of those additional
shares of Common Stock will be identical to those of the currently outstanding
shares and the amendment will not alter the current number of issued shares or
the relative rights and limitations of those shares. The Company has no current
plans for the issuance of additional shares of Common Stock other than as
described above. Any issuance of additional shares of Common Stock could have
the effect of, among other things, diluting earnings per share, book value per
share and/or voting power of the currently outstanding shares of Common Stock.
There is no assurance that the additional authorized shares will be issued under
circumstances that result in increased stockholder value for existing
stockholders. It is not anticipated that any issuance of additional shares will
require a vote of the Company's stockholders.
Were the Share Increase not approved, the Company would be unable to
comply with its obligations with respect to Triton and certain other creditors,
which would, in turn, subject the Company to liability due to its default with
respect to those obligations. In addition, if the Share Increase was not
approved the Company would be prohibited from pursuing other courses of action
that might require it to issue additional shares of Common Stock in excess of
the currently remaining authorized but unissued shares. At this time, however,
there are no transactions of that nature which are probable of occurring.
On [____], 2003, the Company's Board of Directors approved the Share
Increase. The affirmative vote of the holders of a majority of the shares of
outstanding Common Stock is required for the approval of the Share Increase
(with that vote having been obtained pursuant to the Written Consent). Based on
the above factors, the Board of Directors believes that the Share Increase is in
the best interests of the Company and its stockholders. It is anticipated that
formal implementation of the Share Increase will occur by filing an amendment to
the Company's Articles of Incorporation with the Nevada Secretary of State no
sooner than twenty days after this Information Statement is first mailed to
stockholders. Stockholders of the Company have no dissenters' or appraisal
rights with respect to the Share Increase.
AUTHORIZATION FOR THE COMPANY'S BOARD OF DIRECTORS
TO EFFECTUATE A REVERSE STOCK SPLIT OF THE
COMPANY'S COMMON STOCK OF UP TO ONE-FOR-2000
GENERAL. The Reverse Stock Split has been authorized pursuant to the
Written Consent; it will, however, be implemented only upon a determination by
the Company's Board of Directors that the Reverse Stock Split in a specified
amount (up to one-for-2000) is in the best interests of the Company and its
stockholders. It is anticipated the Board of Directors will consider making such
a determination only after approximately [___] shares of Common Stock have been
issued to Triton and certain other creditors as described above in "Approval of
an Increase in the Authorized Shares" (the "Conversion Issuances"). Triton
authorized the Reverse Stock Split pursuant to the Written Consent in order to
greatly reduce the number of outstanding shares and potentially raise the
Company's stock price from its current levels, both of which Triton believes
will enhance the Company's marketability as a "blank check" public company, as
described above in "Approval of the Technology Transfer - Fairness of the
Technology Transfer; Recommendation of the Board of Directors." It is expected
that the Company's Board of Directors will consider the same factors when called
upon to make its determination as to whether the Reverse Stock Split is in the
best interests of the Company and its stockholders.
PURPOSES AND EFFECTS OF THE REVERSE STOCK SPLIT. Consummation of the
Reverse Stock Split will alter the number of issued and outstanding shares of
Common Stock which, assuming the prior issuance of [____] shares in the
Conversion Issuances, will be reduced to as few as [____] shares as a
consequence thereof. The Company's Common Stock is listed for trading on the OTC
Bulletin Board under the symbol "NUSL." On the Record Date, the reported closing
price of the Common Stock on the OTC Bulletin Board was $[____] per share. The
Board of Directors believes that the maximum Reverse Stock Split will help
achieve a per-share price of approximately $[____], which, in turn, should make
the Company a more attractive candidate in a merger or other business
combination, which is currently being evaluated by Triton and appears to be the
only way of obtaining value for the Company's stockholders in light of the
Company's current financial condition (see the financial statements included in
Exhibits "C" and "D"). For additional information on the Company's financial
condition and other related matters, please refer to the reports and other
information filed by the Company with the Securities and Exchange Commission
(the "SEC"). Such reports and other information can be accessed electronically
by means of the SEC's home page on the Internet at www.sec.gov or at other
Internet sites such as www.freeedgar.com. You can also read and copy any
materials that the Company files with the SEC at the SEC's Public Reference Room
at 450 Fifth Street, N.W., Washington, D.C. 20549. You can obtain information
about the operation of the SEC's Public Reference Room by calling the SEC at
1-800-SEC-0330. A copy of any public filing is also available, at no charge, by
contacting the Company's President, Lawrence Shatsoff, by telephone at (203)
239-9734 or by mail at P.O. Box 116, North Haven, Connecticut 06473.
On the Record Date, the number of record holders of the Common Stock
was [____] and the number of beneficial holders of Common Stock was estimated to
be approximately [_____]. The Company does not anticipate that the Reverse Stock
Split will result in a reduction in the number of such holders of the Company's
Common Stock.
The Reverse Stock Split will only affect the number of shares of
Common Stock issued and outstanding at the time thereof and will have no effect
upon the number of authorized but unissued shares of Common Stock. The Common
Stock will continue to be $0.0001 par value following the Reverse Stock Split.
The following example of the maximum effect of the Reverse Stock Split is
intended only for illustrative purposes, with "Common Stock Outstanding"
calculated based on 46,060,025 shares outstanding as of the Record Date plus the
assumed issuance of [ ] additional shares pursuant to the Conversion Issuances
after the Record Date and prior to the Reverse Stock Split:
Reverse Stock Common Stock Authorized and
Split Outstanding Unissued Common Stock
1 for 2000 [ ] [ ]
------------------- -------------
At such time as the Reverse Stock Split may take effect (the
"Effective Date"), each share of Common Stock issued and outstanding immediately
prior thereto (the "Old Common Stock") will be reclassified as and changed into
the appropriate number of shares of the Company's Common Stock, $0.0001 par
value per share (the "New Common Stock"). Shortly after the Effective Date, the
Company will send transmittal forms to the holders of the Old Common Stock to be
used in forwarding their certificates formerly representing shares of Old Common
Stock for surrender and exchange for certificates representing shares of New
Common Stock. In the event the Reverse Stock Split results in fractional shares,
certificates in the New Common Stock will be issued that round those fractional
shares up to the nearest whole share. Holders of New Common Stock will have
voting and other rights identical to those of the Old Common Stock.
FEDERAL INCOME TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT. The
following is a summary of the material federal income tax consequences of the
proposed Reverse Stock Split. This summary does not purport to be complete and
does not address the tax consequences to holders that are subject to special tax
rules, such as banks, insurance companies, regulated investment companies,
personal holding companies, foreign entities, nonresident alien individuals,
broker-dealers and tax-exempt entities. This summary is based on the Internal
Revenue Code of 1986, as amended (the "Code"), Treasury regulations and proposed
regulations, court decisions and current administrative rulings and
pronouncements of the Internal Revenue Service, all of which are subject to
change, possibly with retroactive effect, and assumes that the New Common Stock
will be held as a "capital asset" (generally, property held for investment) as
defined in the Code. Holders of Old Common Stock are advised to consult their
own tax advisers regarding the federal income tax consequences of the proposed
Reverse Stock Split in light of their personal circumstances and the
consequences under state, local and foreign tax laws applicable to them.
o The Reverse Stock Split will qualify as a
recapitalization described in Section 368(a)(1)(E) of
the Code;
o No gain or loss will be recognized by the Company in
connection with the Reverse Stock Split;
o No gain or loss will be recognized by a stockholder who
exchanges all of his, her or its shares of Old Common
Stock solely for shares of New Common Stock;
o The aggregate basis of the shares of New Common Stock to
be received in the Reverse Stock Split will be the same
as the aggregate basis of the shares of Old Common Stock
surrendered in exchange therefor; and
o The holding period of the shares of New Common Stock to
be received in the Reverse Stock Split will include the
holding period of the shares of Old Common Stock
surrendered in exchange therefor.
EACH HOLDER OF COMMON STOCK OF THE COMPANY IS URGED TO CONSULT WITH
HIS, HER OR ITS OWN TAX ADVISER WITH RESPECT TO THE TAX CONSEQUENCES OF THE
PROPOSED REVERSE STOCK SPLIT, INCLUDING THE APPLICATION AND EFFECT OF THE LAWS
OF ANY STATE, MUNICIPAL, FOREIGN OR OTHER TAXING JURISDICTION APPLICABLE TO
THEM.
OTHER INFORMATION. The affirmative vote of the holders of a majority
of the shares of outstanding Common Stock is required to authorize the Reverse
Stock Split (with that vote having been obtained pursuant to the Written
Consent). Based on the above factors, the Board of Directors believes that
authorization of the Reverse Stock Split is in the best interests of the Company
and its stockholders. Upon such authorization, the Reverse Stock Split will
occur only upon approval by the Company's Board of Directors (which shall
specify the exact amount of the split, up to one-for-2000), and in any event no
sooner than twenty days following the mailing of this Information Statement to
the Company's stockholders. Stockholders of the Company have no dissenters' or
appraisal rights with respect to the Reverse Stock Split.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
BENEFICIAL OWNERSHIP. The following table contains information, as
of the Record Date, with respect to the beneficial ownership of the Company's
Common Stock by (i) all directors of the Company, (ii) all persons or entities
who beneficially own more than 5% of the Common Stock and (iii) all directors
and executive officers of the Company as a group. Common Stock not outstanding
but deemed beneficially owned by a stockholder by virtue of the right to acquire
shares within 60 days is treated as outstanding only when determining the amount
and percentage of Common Stock owned by such stockholder. Unless otherwise
noted, each person or entity listed below has sole voting and investment power
with respect to the shares shown.
Name of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership Class (1)
----------------------- ---------------------- ----------
Lawrence Shatsoff, -0- N/A
President, Secretary,
Chief Financial Officer and Director (2)
Triton Private Equities Fund, L.P. (3) [ ](4) [ ]%
Advanced Technology Industries, Inc. (5) 4,590,000 9.97%
All current directors and -0- N/A
executive officers as a group
(one person)
----------------
(1) Based on 46,060,025 shares of Common Stock issued and
outstanding as of [_______________], 2003.
(2) Address is c/o the Company at P.O. Box 116, North Haven,
Connecticut 06473.
(3) Address is 225 N. Market Street, Suite 333, Wichita,
Kansas, 67202.
(4) This amount includes [ ] shares obtainable upon
conversion of the principal amount of the Notes plus
accrued interest thereon and accrued penalties with
respect thereto, based on a conversion rate of $[ ] per
share on the Record Date. The conversion rate varies
based on a percentage of a specified average closing bid
price of the Common Stock during a specified period
prior to the conversion date. This amount also includes
[ ] shares obtainable upon conversion of the principal
amount of the Operating Loans plus accrued interest
thereon, based on a conversion rate of $[ ] per share on
the Record Date. The conversion rate also varies based
on a percentage of a specified average closing bid price
of the Common Stock during a specified period prior to
the conversion date. Because both of the above
conversion rates are based on the price of the Company's
Common Stock in the public market, the number of
conversion shares obtainable by Triton is subject to
change.
(5) Address is Taubenstrasse 20, Berlin, Germany, 10117.
CHANGE IN CONTROL. Triton is in the process of determining whether
the Company has any value as a participant in a merger or other business
combination. At this time, there is no estimate as to when, if ever, a suitable
merger or other business combination for the Company will be identified. Should
such a merger or other business combination actually occur, it is expected that
there would be an accompanying change in control of the Company.
ADDITIONAL INFORMATION
For additional information regarding the Company, including a
description of its business and property, the market for its Common Stock and
the most recent annual and quarterly financial statements and management's
discussion and analysis with respect thereto, see the Company's report on Form
10-KSB (as amended) for the fiscal year ended March 31, 2003, which is attached
as Exhibit "C," and the Company's report on Form 10-QSB for the fiscal quarter
ended June 30, 2003, which is attached as Exhibit "D."
INTEREST OF CERTAIN PERSONS IN THE MATTERS TO BE ACTED UPON
With the exception of Lawrence Shatsoff, the current sole director
and officer of the Company, and James Samuelson, a former director and officer
of the Company, as of the date of this Information Statement there are no
persons who have been a director or officer of the Company since the beginning
of the last fiscal year, or any associate of any such person, who have any
substantial interest in the matters acted upon by the Written Consent. Mr.
Shatsoff is a member of Triton Capital Management, L.L.C., the general partner
of Triton, which has a substantial interest in the Share Increase. Mr. Samuelson
is an officer of ATI, which has a substantial interest in the Technology
Transfer.
PROPOSALS BY STOCKHOLDERS
The Company's Board of Directors does not know of any matters that
are to be presented to Triton for its approval and consent pursuant to the
Written Consent other than those referred to in this InformatioStatement. If any
stockholder of the Company entitled to vote intends to submit to the Company a
proposal for inclusion in the Written Consent, other than elections to offices,
such proposal must be received at the Company's offices, located at P.O. Box
116, North Haven, Connecticut 06473, attention: President, not later than [ ],
2003.
DELIVERY OF DOCUMENTS TO STOCKHOLDERS SHARING AN ADDRESS
One Information Statement will be delivered to multiple stockholders
sharing an address unless the Company receives contrary instructions from one or
more of the stockholders. Upon receipt of such notice, the Company will under-
take to deliver promptly a separate copy of the Information Statement to the
stockholder at a shared address to which a single copy of the documents was
delivered and provide instructions as to how the stockholder can notify the
Company that the stockholder wishes to receive a separate copy of the
Information Statement. In the event a stockholder desires to provide such notice
to the Company, such notice may be given verbally by telephoning the Company's
offices at (203) 239-9734 or by mail to P.O. Box 116, North Haven, Connecticut
06473.
By Order of the Board of Directors
/s/ Lawrence Shatsoff,
President
-8-
EXHIBIT "A" TO THE INFORMATION STATEMENT
ACTION BY WRITTEN CONSENT
WITHOUT A MEETING OF THE
STOCKHOLDERS OF NURESCELL INC.
The undersigned, Triton Private Equities Fund, L.P. ("Triton"), being
the holder of at least a majority of the voting power of Nurescell Inc., a
Nevada corporation (the "Corporation"), does hereby take, consent to, and
approve the following actions.
WHEREAS, the Board of Directors of the Corporation, at a
special meeting held on [ ], 2003 (the "Special Meeting"), has
authorized and approved, subject to stockholder approval,
certain corporate actions which the Board of Directors deemed
to be in the best interests of the Corporation and its
stockholders;
WHEREAS, at the Special Meeting, the Board of Directors of the
Corporation further authorized and directed the submission to
Triton of certain corporate actions for approval and
authorization;
WHEREAS, Section 78.320 of the Nevada Revised Statutes, as
amended, provides that any action required to be taken at a
meeting of the stockholders of a corporation may be taken
without a meeting if, before or after the action,written
consent setting forth the action so taken shall be signed by
stockholders holding at least a majority of the voting power;
WHEREAS, Triton is a stockholder of record as of the date of
this written consent and holds shares in excess of a majority
of the Corporation's issued and outstanding shares of Common
Stock; and
A-1
WHEREAS, Triton has been fully apprised and informed of the
nature of the certain corporate actions and has concluded that
approval and authorization of such corporate actions would be
beneficial to the Corporation and in the best interests of its
stockholders.
Approval of Amendment to Articles of Incorporation
--------------------------------------------------
RESOLVED, that Triton hereby approves an amendment to the
Corporation's Articles of Incorporation (the "Amendment")
striking the first paragraph of Article FOURTH, as previously
amended, in its entirety and replacing it with the following:
"FOURTH: The Corporation is authorized to issue two classes of
shares to be designated Common Stock ("Common Stock") and
Preferred Stock ("Preferred Stock"). The total number of
shares of stock which the Corporation shall have authority to
issue is 2,001,000,000, of which 2,000,000,000 shares shall be
Common Stock, $0.0001 par value, and 1,000,000 shares shall be
Preferred Stock, $0.0001 par value, amounting in the aggregate
to $200,100."
RESOLVED, FURTHER, that the Board of Directors of the
Corporation is authorized, in its sole and absolute
discretion, to abandon or alter any portion of the Amendment
at any time without the further approval of the stockholders
of the Corporation; and
RESOLVED, FURTHER, that the Amendment shall be filed with the
Nevada Secretary of State as soon as practicable, subject to
any waiting period required by the Securities and Exchange
Commission or other regulatory authorities.
Approval of the Transfer of Substantially All of the Corporation's Assets
-------------------------------------------------------------------------
RESOLVED, that Triton hereby approves the transfer of
substantially all of the Corporation's assets (the "Transfer")
pursuant to the Restructure Agreement entered into on March
21, 2003 between the Corporation, Triton, Advanced Technology
Industries, Inc. and ATI Nuklear AG; and
RESOLVED, FURTHER, that the Board of Directors of the
Corporation is authorized, in its sole and absolute
discretion, to carry out any aspect of the Transfer without
the further approval of the stockholders of the Corporation.
Authorization of a Reverse Stock Split of the Corporation's
-----------------------------------------------------------
Issued and Outstanding Common Stock
-----------------------------------
of Up To One-for-2000
---------------------
RESOLVED, that the Board of Directors be, and it hereby is,
authorized to effect a reverse stock split in such amount as
it may determine in its discretion, but not to exceed
one-for-2000 (the "Reverse Stock Split"), if the Board of
Directors determines in the exercise of its discretion that
the Reverse Stock Split is in the best interests of the
Corporation and its stockholders; and
RESOLVED, FURTHER, that, notwithstanding Triton's
authorization of the Reverse Stock Split, the Board of
Directors in its sole and absolute discretion may abandon such
proposed Reverse Stock Split without further approval by the
stockholders of the Corporation.
A-2
Approval of Further Acts
------------------------
RESOLVED, that any officer of the Corporation be, and hereby
is, authorized and directed to take such actions and execute
such documents on the Corporation's behalf as may be
appropriate to carry out the purpose of these resolutions.
Date: , 2003 Triton Private Equities Fund, L.P.
--------------------------
By: Triton Capital Management, L.L.C.,
General Partner
By: /s/ JOHN C. TAUSCHE
----------------------------------
John C. Tausche, Managing Member
A-3
EXHIBIT "B" TO THE INFORMATION STATEMENT
RESTRUCTURE AGREEMENT
THIS RESTRUCTURE AGREEMENT (the "Agreement") is entered into on March
21, 2003 (the "Effective Date"), by and among Triton Private Equities Fund, L.P.
("Triton"), Nurescell Inc. ("Nurescell"), Advanced Technology Industries, Inc.
("ATI") and ATI Nuklear AG ("ATI Sub"), with reference to the following facts
and circumstances:
A. Nurescell and ATI Sub have previously entered into a "License
Agreement" dated as of August 15, 2000 (the "License Agreement"), an "Investment
Agreement" dated as of August 17, 2000 (the "Investment Agreement") and a
Modification Agreement dated as of June 11, 2001 (the "Modification Agreement"),
each of which was amended by a "Transaction Restructure Agreement" entered into
as of September 30, 2001 by Nurescell, ATI and ATI Sub (the "2001 Restructure
Agreement"). Under the License Agreement, as amended, Nurescell has licensed to
ATI Sub certain "Technology" (as described in Exhibit 1 to the License
Agreement) in return for specified royalty payments.
B. Nurescell presently owes ATI (i) approximately $176,158 for
short-term cash advances previously made by ATI to Nurescell and (ii) various
sums for legal fees that ATI has paid on Nurescell's behalf. Nurescell is also
indebted to ATI Sub pursuant to a $1 million promissory note (the "ATI Sub
Note"). The ATI Sub Note is secured by (i) 15,000,000 unissued shares of
Nurescell's common stock ("Nurescell Common Stock"), (ii) a first priority
security interest in the Technology and (iii) all royalties due to Nurescell
pursuant to Section 4.3 of the License Agreement (collectively, the
"Collateral"). Nurescell is presently in default with respect to its obligations
to ATI and its obligations to ATI Sub under the ATI Sub Note.
C. Nurescell is indebted to Triton (collectively, the "Nurescell Debt")
pursuant to (i) Nurescell's Series 1999-A 8% Convertible Promissory Note dated
December 15, 1999, which came due as to $335,000 in principal on December 1,
2001 (the "1999 Note"), (ii) Nurescell's Series 2000-A 8% Convertible Promissory
Note dated February 8, 2000, which came due as to $385,000 in principal on
December 1, 2001 (the "2000 Note"), (iii) accrued interest on the 1999 Note and
2000 Note (taking into account Triton's prior conversion of $50,000 of the 1999
Note) and (iv) accrued penalties due to Nurescell's failure to register the
shares underlying the 1999 and 2000 Notes as required by the Registration Rights
Agreements (the "Registration Agreements") between Triton and Nurescell dated
December 15, 1999 and February 8, 2000 (again taking into account Triton's prior
conversion of $50,000 of the 1999 Note). Nurescell is presently in default with
respect to its obligations to Triton in connection with the Nurescell Debt.
D. In light of the fact that Nurescell is unable to satisfy its
obligations to ATI, ATI Sub and Triton, the parties desire to restructure their
relationship so that (i) through conversion into Nurescell Common Stock of at
least a portion of the Nurescell Debt, Triton is able to become the majority
shareholder of Nurescell and control its operations, (ii) Nurescell's Articles
of Incorporation are amended to increase the number of authorized shares so
that, if Triton so desires, Triton is able to convert all of the Nurescell Debt
into Nurescell Common Stock (assuming a conversion price of $0.001 per share)
and (iii) ATI and/or ATI Sub are able to acquire the Technology in return for
(A) cancellation of the ATI Sub Note, the 2001 Restructure Agreement, the
Investment Agreement, the License Agreement, the Modification Agreement and all
other obligations of Nurescell to ATI or ATI Sub (collectively, the "ATI
Obligations") and (B) release of the Collateral for the ATI Sub Note, in each
case on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the representations, warranties and
agreements herein contained, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
B-1
ARTICLE I
CONVERSION OF NURESCELL DEBT AND RELATED MATTERS
------------------------------------------------
1.01 INITIAL TRITON CONVERSION. Immediately after (i) Nurescell's
current Board of Directors adopts resolutions in substantially the form of the
attached Exhibit "A" and (ii) all current directors and officers subsequently
resign from their positions with Nurescell (such resignations being in the form
of the attached Exhibit "B"), Triton shall convert into Nurescell Common Stock
at least that much of the Nurescell Debt as would give Triton a majority of the
then-outstanding shares of Nurescell Common Stock (which is anticipated to
require a conversion for at least 16,070,239 shares). To the extent requested by
Triton, Nurescell shall use its best efforts to assist Triton with the foregoing
conversion (the "Initial Conversion"), including appropriate instructions to
Nurescell's stock transfer agent.
1.02 INCREASE IN AUTHORIZED SHARES. Upon completion of the Initial
Conversion, Nurescell and Triton shall each use their best efforts to (i) amend
Nurescell's Articles of Incorporation to increase the number of authorized
shares (the "Share Increase") to an amount that will at least allow the balance
of the Nurescell Debt to be converted into Nurescell Common Stock (assuming a
conversion price of $0.001 per share) and (ii) prepare, file with the Securities
and Exchange Commission and deliver to Nurescell's shareholders an Information
Statement (the "Information Statement") describing both the Share Increase and
the transfer of the Technology pursuant to this Agreement (the "Technology
Transfer") in the manner required by law. The parties acknowledge and agree that
the Share Increase and the Technology Transfer will become effective 20 days
after the Information Statement has been sent or given to Nurescell's
shareholders. To the extent reasonably requested by Nurescell and/or Triton,
ATI, in its capacity as a Nurescell shareholder, shall cooperate in causing the
Share Increase to become effective.
1.03 SUBSEQUENT TRITON CONVERSIONS. After the Effective Date, Triton
may from time-to-time, in its sole discretion, cause some or all of the
remaining Nurescell Debt to be converted into common stock. To the extent
requested by Triton, Nurescell shall use its best efforts to assist Triton with
each such conversion including, but not limited to, providing confirmation of
the prior approval of such conversion by Nurescell's Board of Directors and
appropriate instructions to Nurescell's stock transfer agent.
ARTICLE II
TRANSFER OF THE TECHNOLOGY AND RELATED MATTERS
----------------------------------------------
2.01 TECHNOLOGY TRANSFER AND OTHER TRANSACTIONS.
(a) On the Closing Date (as defined below), the following
shall automatically occur without any further action of the parties:
(i) as of the Closing Date, Nurescell, ATI and ATI Sub shall
be deemed to have entered into an agreement in the form of the attached Exhibit
"C" (the "Assignment Agreement"), the terms of which shall be incorporated into
this Agreement as of the Closing Date if set forth here in full, pursuant to
which the Technology shall be transferred to ATI Sub in "as is" condition;
(ii) as of the Closing Date, the parties hereto shall be
deemed to have entered into an agreement in the form of the attached Exhibit "D"
(the "Mutual Release"), the terms of which shall be incorporated into this
Agreement as of the Closing Date as if set forth here in full;
(iii) as of the Closing Date, the Collateral for the ATI Sub
Note shall be deemed forever released and neither ATI nor ATI Sub shall have any
further rights with respect thereto (except as provided in clause (i) above);
and
B-2
(iv) as of the Closing Date, the ATI Obligations shall be
cancelled and of no further force and effect.
(b) The parties agree that for all purposes the "Closing Date"
shall be the 23rd day (or if such day is a Saturday, Sunday or holiday, the next
business day thereafter) following the date that the Information Statement has
been sent or given to Nurescell's shareholders; provided, however, that if at
least three (3) days prior to the Closing Date either Triton or ATI shall give
the other a dated written notice (the "Notice") which (i) states that one or
more specified conditions listed in Section 2.02 below (the "Transfer
Conditions") has not been satisfied or waived and (ii) provides the basis for
such statement in reasonable detail, then the Closing Date shall be delayed
until the specified Transfer Condition(s) has been satisfied or waived. In the
event that a Notice is given, the parties shall thereafter reasonably cooperate
to promptly satisfy the Transfer Condition(s) specified therein and the Closing
Date shall be the date upon which the party giving the Notice acknowledges in
writing that the specified Transfer Condition(s) has now been satisfied or
waived (which acknowledgment shall not be unreasonably withheld or delayed);
provided, however, that if such satisfaction or waiver does not occur within
twenty (20) days after the date of the Notice, the party giving the Notice shall
thereafter have the right, in its sole discretion, to terminate this Agreement
if permitted under Section 5.01(b) below.
2.02 CONDITIONS TO TRANSFER AND OTHER TRANSACTIONS. The Transfer
Conditions shall consist of all of the following:
(a) the Initial Conversion shall have occurred;
(b) the Share Increase and the Technology Transfer shall have
been approved by a majority of the outstanding shares of Nurescell Common Stock
and shall have become effective as provided in Section 1.02 above; and
(c) as of the date of satisfaction of the Transfer Condition
in subsection (b) above (the "Satisfaction Date"):
(i) no preliminary or permanent injunction or other order
shall have been issued by any federal or state court of competent jurisdiction
in the United States or by any United States federal or state governmental or
regulatory agency, body or authority which prevents consummation of any material
portion of the transactions con templated by this Agreement and remains in
effect;
(ii) no action or proceeding by any governmental or
regulatory agency, body or authority shall have been commenced or threatened
(and remain pending or threatened) against any party to this Agreement or any of
their respective affiliates, officers or directors seeking to prevent or
challenging any material portion of the transactions contemplated by this
Agreement; and
(iii) no action or proceeding before any federal or state
court of competent jurisdiction in the United States shall have been commenced
(and remain pending) against any party to this Agreement or any of their
respective affiliates, officers or directors seeking to prevent or challenging
any material portion of the transactions contemplated hereby or seeking material
damages in connection therewith.
2.03 STATUS OF THE TECHNOLOGY. ATI and ATI Sub are aware that at such
time as the Technology is transferred pursuant to Section 2.01 above, such
transfer will be in "as is" condition and, except as provided in Section 3.04(c)
below, will be made without representation or warranty of any kind, including
warranties as to marketability and fitness for any particular purpose. ATI and
ATI Sub are fully aware of the extent and nature of the Technology, have fully
investigated all matters with respect thereto and are fully aware of all laws
and regulations which relate to Nurescell's transfer thereof, and,
notwithstanding any other provision of this Agreement, hereby assume all risk
thereof and waive any liability of Nurescell and/or Triton with respect thereto.
In light of ATI Sub's security interest in the Collateral, the parties hereto
agree that the transfer of the Technology pursuant to this Agreement constitutes
a transfer of collateral pursuant to Section 9609 of the California Uniform
Commercial Code.
B-3
2.04 FURTHER ACTS.
(a) Prior to the Closing Date, Triton shall take any action
necessary to vote all of its Nurescell Common Stock in favor of the approval and
authorization of the Share Increase and the Technology Transfer, including
signing a written consent in the form of the attached Exhibit "E."
(b) On the Closing Date, Nurescell shall deliver to ATI Sub
(i) an executed separate assignment document in the form provided by ATI Sub, to
be recorded by ATI Sub with the U.S. Patent and Trademark Office evidencing the
transfer of the Technology to ATI Sub and (ii) all documentation pertaining to
the Technology not previously delivered to ATI or ATI Sub, including, without
limitation, copies of all correspondence to and from examining authorities
regarding the Technology, all patent and prior art searches and all
correspondence with any attorneys involving the preparation or prosecution of
patents relating to the Technology.
(c) After the Closing Date, Triton, Nurescell, ATI and ATI Sub
each agree to promptly perform any acts and execute and deliver any further
documents which may be reasonably requested in order to reflect the transactions
occurring on the Closing Date, including, but not limited to, each party to the
Assignment Agreement and the Mutual Release providing the other parties thereto
with a signed copy of such agreement; provided, however, that each party to such
agreements shall be bound thereby on and after the Closing Date even without
their signature thereon.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PARTIES
---------------------------------------------
3.01 REPRESENTATIONS AND WARRANTIES BY NURESCELL TO TRITON. As an
inducement to Triton to enter into this Agreement and to consummate the
transactions contemplated herein, as of the Effective Date and the Satisfaction
Date, Nurescell hereby represents and warrants to Triton, and agrees, as
follows:
(a) That it is a corporation duly organized, validly existing
and in good standing in the jurisdiction where it was formed and it has the full
power and authority to own, lease and operate its properties and conduct the
busi ness being conducted by it and is duly qualified to transact business and
in good standing in every jurisdiction in which the character of the business
conducted by it makes such qualification necessary.
(b) Except as set forth in the attached Schedule 3.01(b), its
execution, delivery and performance of this Agreement and each other document
provided for or referred to herein has been duly authorized and approved by all
requisite corporate action on its part. Neither the execution nor the delivery
of this Agreement and such other documents, nor the consummation of the
transactions contemplated hereby or thereby, nor compliance with or fulfillment
of the terms and provisions of this Agreement or such other documents, will
conflict with or result in a breach of the terms, conditions or provisions of or
constitute a default under (i) its organizational documents, (ii) any promissory
note of which it is the maker or guarantor, (iii) any law or administrative
regulation applicable to it or its properties or (iv) any indenture, agreement,
mortgage, judgment, order, award, decree or other instrument or restriction to
which it is a party or by which it is bound, or give any party with rights under
any such indenture, agree ment, mortgage, judgment, order, award, decree or
other instrument or restriction the right to terminate, modify or otherwise
change its rights or obligations under such indenture, agreement, mortgage,
judgment, order, award, decree or other instrument or restriction. Except as set
forth in the attached Schedule 3.01(b), no authorization, approval or consent
of, or notice to or filing with, any person or entity or any governmental
department, commission, bureau or agency or other public body or authority is or
will be required for the execution, delivery or performance of this Agreement by
it or for the consummation by it of the transactions contemplated hereby. It has
the full power and authority to do and perform all acts and things required to
be done by it under this Agreement. All corporate acts and other proceedings
required to be taken by it or on its part to authorize it to carry out this
Agreement and such other agreements and instruments as are contemplated hereby
and the transactions contemplated hereby and thereby have been duly and properly
taken. This Agreement constitutes, and such other agreements and instruments
when duly executed (if required) and delivered by it will constitute, legal,
valid and binding obligations and will be enforceable against it in accordance
with their respective terms.
B-4
(c) ATI is the sole owner of the ATI Shares and, except for
(i) the ATI Shares, (ii) ATI Sub's option to acquire shares of Nurescell Common
Stock as set out in the Investment Agreement and (iii) the interests in the
Collateral, neither ATI nor ATI Sub owns or has any right to acquire any
interest in Nurescell.
(d) Except for the License Agreement, the Investment
Agreement, the Modification Agreement, the 2001 Restructure Agreement and the
ATI Sub Note (collectively, the "ATI Agreements") and this Agreement, there are
no written or oral agreements currently in effect or pending between Nurescell
and ATI and/or ATI Sub.
(e) The attached Exhibit "F" accurately reflects each of
Nurescell's accounts payable, other current liabilities, long-term liabilities
and contingent liabilities and obligations as of the Effective Date.
(f) Nurescell does not do business in Nevada and, as shown by
its stock ledger, Nurescell does not have more than 99 shareholders with
addresses in Nevada.
(g) All financial information contained in Nurescell' s Form
10-KSB for the fiscal year ended March 31, 2002 and Form 10-QSB for the quarter
ended September 30, 2002 (collectively, the "SEC Filings") is true and correct
in all material respects and there has been no material change in Nurescell's
financial condition from March 31, 2002 or September 30, 2002 to the Effective
Date. To its best knowledge, other than as set forth in the attached Schedule
3.01(g), it is not aware of any material actual or contingent liabilities of
Nurescell except as set forth in the SEC Filings.
(h) To the best knowledge of its executive officers, except as
set forth on Exhibit "F" or otherwise described in the SEC Filings, it is not
aware of (i) any pending or threatened claims by or against Nurescell by any
person or entity or (ii) any past occurrences which could reasonably be expected
to result in a claim against Nurescell.
(i) It has committed no act or omission which would cause any
person, firm, corporation or other entity to be entitled to any broker's or
finder's fee, commission, or other similar compensation with respect to the exe
cution and delivery of this Agreement or any related agreement, or with respect
to the consummation of the transactions contemplated herein.
(j) No representation or warranty by it herein or in any
document provided by it in connection herewith, and no information disclosed
herein or in any document supplied by it in connection herewith, contains any
untrue statement of a material fact or omits a material fact necessary to make
the statements contained herein or therein not misleading.
3.02 REPRESENTATIONS AND WARRANTIES BY TRITON TO NURESCELL, ATI AND ATI
SUB. As an inducement to Nurescell, ATI and ATI Sub to enter into this Agreement
and to consummate the transactions contemplated herein, as of the Effective Date
and the Satisfaction Date, Triton hereby represents and warrants to Nurescell,
ATI and ATI Sub, and agrees, as follows:
(a) That it is a limited partnership duly organized, validly
existing and in good standing in the State of Delaware.
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(b) Its execution, delivery and performance of this Agreement
and each other document provided for or referred to herein has been duly
authorized and approved by all requisite action on its part. Neither the
execution nor the delivery of this Agreement and such other documents, nor the
consummation of the transactions contemplated hereby or thereby, nor compliance
with or fulfillment of the terms and provisions of this Agreement or such other
documents, will conflict with or result in a breach of the terms, conditions or
provisions of or constitute a default under (i) its organizational documents,
(ii) any promissory note of which it is the maker or guarantor, (iii) any law or
administrative regulation applicable to it or its properties or (iv) any
indenture, agreement, mortgage, judgment, order, award, decree or other
instrument or restriction to which it is a party or by which it is bound. No
authorization, approval or consent of, or notice to or filing with, any person
or entity or any governmental department, commission, bureau or agency or other
public body or authority is or will be required for the execution, delivery or
performance of this Agreement by it or for the consummation by it of the
transactions contemplated hereby. It has the full power and authority to do and
perform all acts and things required to be done by it under this Agreement. All
acts and other proceedings required to be taken by it or on its part to
authorize it to carry out this Agreement and such other agreements and
instruments as are contemplated hereby and the transactions contemplated hereby
and thereby have been duly and properly taken. This Agreement constitutes, and
such other agreements and instruments when duly executed (if required) and
delivered by it will constitute, legal, valid and binding obligations and will
be enforceable against it in accordance with their respective terms.
(c) It has committed no act or omission which would cause any
person, firm, corporation or other entity to be entitled to any broker's or
finder's fee, commission, or other similar compensation with respect to the exe
cution and delivery of this Agreement or any related agreement, or with respect
to the consummation of the transactions contemplated herein.
3.03 REPRESENTATIONS AND WARRANTIES BY ATI AND ATI SUB TO NURESCELL. As
an inducement to Nurescell to enter into this Agreement and to consummate the
transactions contemplated herein, as of the Effective Date and the Satisfaction
Date, ATI and ATI Sub each hereby severally, and not jointly, represent and
warrant to Nurescell, and agree, as follows:
(a) That it is a corporation duly organized, validly existing
and in good standing in the jurisdiction where it was formed.
(b) Its execution, delivery and performance of this Agreement
and each other document provided for or referred to herein has been duly
authorized and approved by all requisite corporate action on its part. Neither
the execution nor the delivery of this Agreement and such other documents, nor
the consummation of the transactions contemplated hereby or thereby, nor
compliance with or fulfillment of the terms and provisions of this Agreement or
such other documents, will conflict with or result in a breach of the terms,
conditions or provisions of or constitute a default under (i) its organizational
documents, (ii) any promissory note of which it is the maker or guarantor, (iii)
any law or administrative regulation applicable to it or its properties or (iv)
any indenture, agreement, mortgage, judgment, order, award, decree or other
instrument or restriction to which it is a party or by which it is bound. No
authorization, approval or consent of, or notice to or filing with, any person
or entity or any governmental department, commission, bureau or agency or other
public body or authority is or will be required for the execution, delivery or
performance of this Agreement by it or for the consummation by it of the
transactions contemplated hereby. It has the full power and authority to do and
perform all acts and things required to be done by it under this Agreement. All
corporate acts and other proceedings required to be taken by it or on its part
to authorize it to carry out this Agreement and such other agreements and
instruments as are contemplated hereby and the transactions contemplated hereby
and thereby have been duly and properly taken. This Agreement constitutes, and
such other agreements and instruments when duly executed (if required) and
delivered by it will constitute, legal, valid and binding obligations and will
be enforceable against it in accordance with their respective terms.
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(c) It has committed no act or omission which would cause any
person, firm, corporation or other entity to be entitled to any broker's or
finder's fee, commission, or other similar compensation with respect to the exe
cution and delivery of this Agreement or any related agreement, or with respect
to the consummation of the transactions contemplated herein.
3.04 REPRESENTATIONS AND WARRANTIES BY NURESCELL TO ATI AND ATI SUB. As
an inducement to ATI and ATI Sub to enter into this Agreement and to consummate
the transactions contemplated herein, as of the Effective Date and the
Satisfaction Date, Nurescell hereby represents and warrants to ATI and ATI Sub,
and agrees, as follows:
(a) That it is a corporation duly organized, validly existing
and in good standing in the State of Nevada.
(b) Except as set forth in the attached Schedule 3.01(b), its
execution, delivery and performance of this Agreement and each other document
provided for or referred to herein has been duly authorized and approved by all
requisite corporate action on its part. Neither the execution nor the delivery
of this Agreement and such other documents, nor the consummation of the
transactions contemplated hereby or thereby, nor compliance with or fulfillment
of the terms and provisions of this Agreement or such other documents, will
conflict with or result in a breach of the terms, conditions or provisions of or
constitute a default under (i) its organizational documents, (ii) any promissory
note of which it is the maker or guarantor, (iii) any law or administrative
regulation applicable to it or its properties or (iv) any indenture, agreement,
mortgage, judgment, order, award, decree or other instrument or restriction to
which it is a party or by which it is bound. Except as set forth in the attached
Schedule 3.01(b), no authorization, approval or consent of, or notice to or
filing with, any person or entity or any governmental department, commission,
bureau or agency or other public body or authority is or will be required for
the execution, delivery or performance of this Agreement by it or for the
consummation by it of the transactions contemplated hereby. It has the full
power and authority to do and perform all acts and things required to be done by
it under this Agreement. All corporate acts and other proceedings required to be
taken by it or on its part to authorize it to carry out this Agreement and such
other agreements and instruments as are contemplated hereby and the transactions
contemplated hereby and thereby have been duly and properly taken. This
Agreement constitutes, and such other agreements and instruments when duly
executed (if required) and delivered by it will constitute, legal, valid and
binding obligations and will be enforceable against it in accordance with their
respective terms.
(c) Nurescell has good title to the Technology, free and clear
of all liens, security interests, claims, rights and encumbrances except those
presently existing in favor of ATI and/or ATI Sub.
(d) It has committed no act or omission which could cause any
person, firm, corporation or other entity to be entitled to any broker's or
finder's fee, commission, or other similar compensation with respect to the exe
cution and delivery of this Agreement or any related agreement, or with respect
to the consummation of the transactions contemplated herein.
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3.05 REPRESENTATIONS AND WARRANTIES BY ATI AND ATI SUB TO TRITON. As an
inducement to Triton to enter into this Agreement and to consummate the
transactions contemplated herein, as of the Effective Date and the Satisfaction
Date, ATI and ATI Sub each hereby severally, and not jointly, represent and
warrant to Triton, and agree, as follows:
(a) That it is a corporation duly organized, validly existing
and in good standing in the jurisdiction where it was formed.
(b) Except as set forth in the attached Schedule 3.05(b), its
execution, delivery and performance of this Agreement and each other document
provided for or referred to herein has been duly authorized and approved by all
requisite corporate action on its part. Neither the execution nor the delivery
of this Agreement and such other documents, nor the consummation of the
transactions contemplated hereby or thereby, nor compliance with or fulfillment
of the terms and provisions of this Agreement or such other documents, will
conflict with or result in a breach of the terms, conditions or provisions of or
constitute a default under (i) its organizational documents, (ii) any promissory
note of which it is the maker or guarantor, (iii) any law or administrative
regulation applicable to it or its properties or (iv) any indenture, agreement,
mortgage, judgment, order, award, decree or other instrument or restriction to
which it is a party or by which it is bound. Except as set forth in the attached
Schedule 3.05(b), no authorization, approval or consent of, or notice to or
filing with, any person or entity or any governmental department, commission,
bureau or agency or other public body or authority is or will be required for
the execution, delivery or performance of this Agreement by it or for the
consummation by it of the transactions contemplated hereby. It has the full
power and authority to do and perform all acts and things required to be done by
it under this Agreement. All corporate acts and other proceedings required to be
taken by it or on its part to authorize it to carry out this Agreement and such
other agreements and instruments as are contemplated hereby and the transactions
contemplated hereby and thereby have been duly and properly taken. This
Agreement constitutes, and such other agreements and instruments when duly
executed (if required) and delivered by it will constitute, legal, valid and
binding obligations and will be enforceable against it in accordance with their
respective terms.
(c) ATI is the sole owner of 4,590,000 shares of Nurescell
Common Stock and, except for (i) those shares, (ii) ATI Sub's option to acquire
shares of Nurescell Common Stock as set out in the Investment Agreement and
(iii) the interests in the Collateral, neither ATI nor ATI Sub owns or has any
right to acquire any interest in Nurescell.
(d) Except for this Agreement and the ATI Agreements, there
are no written or oral agreements currently in effect or pending between
Nurescell and ATI and/or ATI Sub.
(e) It has committed no act or omission which would cause any
person, firm, corporation or other entity to be entitled to any broker's or
finder's fee, commission, or other similar compensation with respect to the exe
cution and delivery of this Agreement or any related agreement, or with respect
to the consummation of the transactions contemplated herein.
ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
-------------------------------
4.01 AGREEMENTS BY ATI AND ATI SUB. ATI and ATI Sub each agree that,
unless otherwise consented to in writing by Triton, during the period from the
Effective Date until the earlier of (i) the Closing Date or (ii) the date this
Agreement is terminated through no fault of ATI or ATI Sub:
(a) They shall not acquire, nor shall they cause or permit any
"affiliate" (as defined in Rule 405 under the Securities Act of 1933; provided
that Nurescell shall not be considered an affiliate) to acquire, any additional
shares of Nurescell or any rights with respect thereto.
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(b) They shall not take any action, nor shall they cause or
permit any affiliate to take any action, against Nurescell with respect to the
ATI Agreements or otherwise.
(c) They shall not transfer any rights with respect to the ATI
Agreements or any shares or other interest in Nurescell.
(d) They shall each use their best efforts to perform or
fulfill all conditions and obligations to be performed or fulfilled by them
under this Agreement so that the transactions contemplated hereby shall be
consummated as soon as practicable. They also agree that they shall each use
their best efforts to cooperate with the other parties hereto so as to cause the
Transfer Conditions to occur as soon as practicable.
4.02 AGREEMENTS BY TRITON. Triton agrees that during the period from
the Effective Date until the earlier of (i) the Closing Date or (ii) the date
this Agreement is terminated through no fault of Triton, it shall (A) use its
best efforts to perform or fulfill all conditions and obligations to be
performed or fulfilled by it under this Agreement so that the transactions
contemplated hereby shall be consummated as soon as practicable, (B) use its
best efforts to cooperate with the other parties hereto so as to cause the
Transfer Conditions to occur as soon as practicable and (C) not take any action
against Nurescell with respect to the 1999 Note, the 2000 Note, the Registration
Agreements, the Securities Purchase Agreement dated as of December 15, 1999, the
Warrant to Purchase Common Stock dated December 15, 1999, the Securities
Purchase Agreement dated as of February 8, 2000, the Warrant to Purchase Common
Stock dated February 8, 2000, the Pledge and Security Agreement dated August 8,
2002, the $26,000 Secured Promissory Note dated August 8, 2002, the $7,650
Unsecured Promissory Note dated August 26, 2002, or otherwise.
4.03 AGREEMENTS BY NURESCELL. Nurescell agrees that during the period
from the Effective Date until the earlier of (i) the Closing Date or (ii) the
date this Agreement is terminated through no fault of Nurescell, Nurescell
shall:
(a) use its best efforts to perform or fulfill all conditions
and obligations to be performed or fulfilled by it under this Agreement so that
the transactions contemplated hereby shall be consummated as soon as
practicable;
(b) use its best efforts to cooperate with the other parties
hereto so as to cause the Transfer Conditions to occur as soon as practicable;
(c) not take any action, nor shall it cause or permit any
affiliate over which Nurescell has control to take any action, against ATI or
ATI Sub with respect to the ATI Agreements or otherwise;
(d) not transfer any rights with respect to the Technology,
the ATI Agreements or other interest in ATI;.
(e) reasonably cooperate with ATI and ATI Sub in the filing
and prosecution of any patent application and other similar filings related to
the protection of the Technology; and
(f) not establish any liens, security interests, claims,
rights and encumbrances against title to the Technology except in favor of ATI
and/or ATI Sub.
4.04 AGREEMENT AS TO LIABILITIES. Nurescell agrees that on and after
the Closing Date, unless otherwise specified in this Agreement or an Exhibit or
Schedule hereto, neither ATI nor ATI Sub shall be liable for any currently
existing or future liabilities of Nurescell.
B-9
ARTICLE V
TERMINATION, AMENDMENT AND SURVIVAL
-----------------------------------
5.01 TERMINATION. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned only:
(a) by mutual consent of each of the parties; or
(b) by one party unilaterally, if (i) there has been a
material breach by another party of any of its representations, warranties or
covenants set forth in this Agreement and such breach has not been cured (or
cure commenced followed by prompt completion) within twenty (20) days after
written notice thereof to such party and (ii) the party seeking termination is
not also in material breach of any of its representations, warranties or
covenants set forth in this Agreement.
5.02 TERMINATION REMEDIES. Notwithstanding termination of this
Agreement, in the event that the transactions described herein are not
consummated due to a material breach of this Agreement by a party, the other
parties shall have all rights and remedies at law and in equity available to it
for such breach, including the right to spe cific performance.
5.03 AMENDMENT AND WAIVER. No waiver or amendment of any provision of
this Agreement shall be effective unless in writing and signed by the party to
be bound. No delay or omission of any party hereto in exercising any right or
remedy hereunder shall constitute a waiver of such right or remedy, and no
waiver as to any obligation shall operate as a continuing waiver or as a waiver
of any subsequent breach.
5.04 SURVIVAL OF TERMS. The provisions of this Section, Articles III,
VI and VII and Sections 1.03, 2.03, 2.04(b) and 2.04(c) shall survive the
Effective Date and the Closing Date and continue in full force and effect at all
times thereafter. In addition, the provisions of this Section, Article VII
(except Section 7.02) and Section 5.02 shall survive the termination of this
Agreement and continue in full force and effect at all times thereafter (with
provisions of Article VI also surviving for purposes of Section 5.02).
ARTICLE VI
INDEMNIFICATION
---------------
6.01 INDEMNIFICATION. At all times after the Effective Date, upon
demand, each party shall indemnify, defend and hold each other applicable party
and such other party's directors, officers, employees, agents, consultants,
advisors, shareholders and affiliates (collectively, the "Indemnified Persons")
harmless from and against any and all costs and expenses (including reasonable
costs of investigation and attorneys' fees) and other losses, liabilities and
damages resulting from any breach by such party of any representation, warranty
or covenant in this Agreement or any Exhibit, Schedule or other document
provided in connection herewith.
6.02 INDEMNIFICATION PROCEDURE. No party shall be required to indemnify
any Indemnified Person with respect to any claim under Section 6.01 above unless
the Indemnified Person seeking indemnification (the "Indemnitee") shall notify
the other party (the "Indemnitor") of such claim, shall provide the Indemnitor
with a copy of any relevant documents with respect to such claim, and shall
otherwise make available to the Indemnitor all relevant material information
with respect to such claim; provided, however, that the Indemnitee's failure to
give notice or to provide copies of documents or to furnish relevant information
shall not constitute a defense (in whole or in part) to any claim by the
Indemnitee against the Indemnitor except and only to the extent that such
failure by the Indemnitee shall result in a material prejudice to the
Indemnitor. The Indemnitor, at its sole cost and expense, shall have the right
to defend against any claim brought by a third party, either in its own name or
in the name of the Indemnitee, as may be required, and the Indemnitee, at its
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sole cost and expense, shall have the right to participate in such defense. The
Indemnitee shall not settle or compromise any third party claim unless it shall
first obtain the written consent of the Indemnitor (provided such consent is not
unreasonably withheld or delayed) or unless suit shall have been instituted
against the Indemnitee and the Indemnitor shall have failed, after the lapse of
a reasonable time after written notice to it of such suit, to take action to
defend the same or unless the Indemnitor shall have failed to notify the
Indemnitee in writing of its intention to contest the claim within twenty (20)
days of the giving of the above notice from the Indemnitee to the Indemnitor.
ARTICLE VII
MISCELLANEOUS
-------------
7.01 COSTS AND EXPENSES. Except as specified in Section 6.01 or 7.11,
all expenses (including attorney's and accountant's fees) in connection with (i)
the preparation and negotiation of this Agreement and the other agreements and
documents referred to herein and (ii) the consummation of the transactions
referred to herein or therein, shall be borne by the party who incurred them.
7.02 FURTHER ASSURANCES. From time to time after the Effective Date and
the Closing Date, each party agrees to promptly perform any acts and execute and
deliver any further documents which may be reasonably requested by another party
in order to consummate more effectively the transactions contemplated hereby.
7.03 NOTICES. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been sufficiently given if personally delivered, telecopied, sent
by overnight courier or deposited in the United States Mail, in a properly
stamped envelope, certified mail, return receipt requested, addressed to the
party to whom it is to be given, at the address set forth below. A notice or
other communication shall be deemed received (i) upon receipt, if personally
delivered, (ii) on the first business day after dispatch, if sent by overnight
courier, (iii) on the first business day after dispatch, if transmitted by
telecopy, and (iv) on the earlier of delivery (as evidenced by the signed return
receipt) or three (3) days after mailing, if sent by certified mail. A party
hereto may change its address by written notice in accordance with this Section.
(a) If to Nurescell, as specified in (b) or (c) below, as applicable.
(b) If to Triton, at:
220 Executive Center
225 North Market Street
Wichita, Kansas 67202
Telecopy number: (316) 267-0204
Attn: John C. Tausche
with a copy to:
David S. Hamilton, Esq.
5699 Kanan Road, #251
Agoura Hills, California 91301
Telecopy number: (818) 879-5449
(c) If to ATI and/or ATI Sub, at:
Advanced Technology Industries, Inc.
Taubenstrasse 20
Berlin, Germany 10117
Telecopy number: 011 49 30 201 77899
Attn: Hans-Joachim Skrobanek
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ATI Nuklear AG
Taubenstrasse 20
Berlin, Germany 10117
Telecopy number: 011 49 30 201 77899
Attn: J.P. Lempert
with copies to:
Reboul, MacMurray, Hewitt & Maynard
45 Rockefeller Plaza
New York, New York 10111
Telecopy number: (212) 841-5725
Attn: Anthony Norris
James Samuelson
2030 Main Street, Suite 1300
Irvine, California 92614
Telecopy number: (949) 260-4799
7.04 ENTIRE AGREEMENT; REPRESENTATIONS AND WARRANTIES. This Agreement,
together with its Exhibits, Schedules and other documents expressly referred to
herein, contains the entire agreement of the parties with respect to its subject
matter and supersedes all prior negotiations, agreements and understandings,
written or oral, with respect to such subject matter. Other than as set forth in
Article III hereof or otherwise contained herein or in any Exhibit, Schedule or
other document delivered pursuant hereto, the parties make no representations or
warranties of any kind, whether express or implied, in connection with the
transactions contemplated hereby.
7.05 SEVERABILITY. Should any part of this Agreement for any reason be
declared invalid or unenforceable, such decision shall not affect the validity
or enforceability of any remaining portion, which remaining portion shall remain
in force and effect, and the application of such part to persons or
circumstances other than those as to which it is held invalid or unenforceable,
and each other term, covenant and condition of this Agreement, shall be valid
and be enforced to the fullest extent permitted by law.
7.06 BINDING EFFECT; BENEFIT. This Agreement and all provisions hereof
shall be binding upon and shall inure only to the benefit of the parties hereto
and their respective successors and permitted assigns; provided, however, that
neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any party hereto without the prior written consent of the
other parties. Except for Indemnified Persons under Article VI, this Agreement
is not intended to confer upon any person or entity other than the parties
hereto any rights or remedies hereunder.
7.07 HEADINGS. The descriptive headings of the Articles and Sections of
this Agreement are inserted for convenience only, do not constitute a part of
this Agreement and shall not affect in any way the meaning or interpretation of
this Agreement.
7.08 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, and all of which together shall be
deemed to be one and the same instrument.
7.09 APPLICABLE LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of California, without regard to the
conflicts of laws rules thereof. The parties agree that the exclusive venue for
resolution of any case or controversy arising out of or in connection with this
Agreement shall be Los Angeles County, California.
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7.10 INTERPRETATION. Each party intends that this Agreement be deemed
and construed to have been jointly prepared by the parties. As a result, the
parties agree that any uncertainty or ambiguity existing herein shall not be
interpreted against any of them. The parties also intend that the rights and
remedies hereunder be cumulative, so that exercise of any one or more of such
rights or remedies shall not preclude the later or concurrent exercise of any
other rights or remedies.
7.11 ATTORNEYS' FEES. If any party to this Agreement shall bring any
action for any relief against any other party hereto arising out of or in
connection with this Agreement or any Exhibit, Schedule or other document in
connection herewith, in addition to all other remedies to which the prevailing
party may be entitled, the losing party shall be required to pay to the
prevailing party a reasonable sum for attorney's fees and costs incurred in
bringing such action and/or enforcing any judgment granted therein, all of which
shall be deemed to have accrued upon the commencement of such action and shall
be paid whether or not such action is prosecuted to judgment. Any judgment or
order entered in such action shall contain a specific provision providing for
the recovery of attorney's fees and costs incurred in enforcing such judgment.
For the purposes of this Section, attorney's fees shall include, without
limitation, fees incurred with respect to the following: (i) post-judgment
motions, (ii) contempt proceedings, (iii) garnishment, levy and debtor and third
party examinations, (iv) discovery and (v) bankruptcy litigation.
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of the parties hereto on the Effective Date.
NURESCELL INC.
By: /s/ JAMES F. SAMUELSON
--------------------------------------
President
By: /s/ JAMES F. SAMUELSON
--------------------------------------
Secretary
TRITON PRIVATE EQUITIES FUND, L.P.
By: Triton Capital Management, L.L.C.,
General Partner
By: /s/ JOHN C. TAUSCHE
-----------------------------------------
John C. Tausche, Member
ADVANCED TECHNOLOGY INDUSTRIES, INC.
By: /s/ HANS-JOACHIM SKROBANEK
President
By: /s/ JAMES SAMUELSON
-----------------------------------------
Secretary
ATI NUKLEAR AG
By: /s/ J.P. LEMPERT
-----------------------------------------
President
B-14
EXHIBIT "A"
ACTION BY UNANIMOUS
WRITTEN CONSENT WITHOUT A MEETING
OF THE BOARD OF DIRECTORS OF
NURESCELL INC.,
A NEVADA CORPORATION
Pursuant to the By-Laws of Nurescell Inc. (the "Corporation"), the
Directors of the Corporation do hereby adopt the following resolutions by
unanimous written consent without a meeting.
APPROVAL OF THE RESTRUCTURE AGREEMENT.
--------------------------------------
WHEREAS, the Corporation has negotiated the terms of a
Restructure Agreement (the "Agreement") between the
Corporation, Advanced Technology Industries, Inc. ("ATI"), ATI
Nuklear AG ("ATI Sub") and Triton Private Equities Fund, L.P.
("Triton") which, among other things, (i) will result in
Triton becoming the majority shareholder of the Corporation
through the conversion of some or all of the "Nurescell Debt"
(as defined in the Agreement) into common stock of the
Corporation and (ii) upon the occurrence of certain
conditions, provides for the cancellation of the Corporation's
agreements with, and obligations to, ATI and ATI Sub in return
for the transfer to ATI or ATI Sub of the Corporation's
"Technology," as defined in the Agreement; and
WHEREAS, the Board has determined that it is in the
Corporation's best interests to enter into and perform the
Agreement on substantially the terms presented to this Board.
NOW, THEREFORE, BE IT RESOLVED, that the Agreement is hereby
approved.
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APPROVAL OF THE TECHNOLOGY TRANSFER.
------------------------------------
WHEREAS, the Board believes that it is in the Corporation's
best interests to transfer to ATI or ATI Sub the Technology in
consideration for the cancellation of the Corporation's debt
to ATI and ATI Sub; and
WHEREAS, the Board has been advised by the Corporation's
management that, in management's opinion, the transfer of the
Technology for the consideration specified in the Agreement is
fair to the Corporation and its shareholders.
NOW, THEREFORE, BE IT RESOLVED, that the transfer of the
Technology to ATI or ATI Sub is hereby approved.
APPROVAL OF TRITON'S STOCK CONVERSIONS.
---------------------------------------
WHEREAS, Triton's conversion of the Nurescell Debt as
described in the Agreement has not yet occurred; and
WHEREAS, the Board has determined that each such conversion
will be in the Corporation's best interests.
NOW, THEREFORE, BE IT RESOLVED, that each and every conversion
of the Nurescell Debt by Triton is hereby approved prior to
the date thereof.
APPROVAL OF CHANGE IN THE BOARD OF DIRECTORS.
---------------------------------------------
WHEREAS, the Corporation is presently authorized to have three
(3) directors; and
WHEREAS, it appears that for the foreseeable future the
Corporation will only have one person willing to serve on its
Board of Directors.
NOW, THEREFORE, BE IT RESOLVED, that Section 2.1 of the
Corporation's Bylaws is hereby deleted in its entirety and
replaced with the following:
"SECTION 2.1 QUALIFICATIONS AND NUMBER. Each director must be
at least 18 years of age. A director need not be a stockholder
of this corporation or a resident of the State of Nevada. The
authorized number of directors as provided in the Articles of
Incorporation shall be not less than one (1) nor more than
five (5). The exact number of authorized directors shall be
one (1) until changed, within the limits specified, by a bylaw
amending this provision, duly adopted by the board of
directors or by a majority of the outstanding shares entitled
to vote; provided, however, that for so long as Triton Private
Equities Fund, L.P. ("Triton") holds a majority of this
corporation's outstanding shares: (i) the board of directors
shall not take any action to increase the number of directors
beyond one (1) unless so directed in writing by Triton, (ii)
within the limits specified above, the size of the board of
directors shall be increased or decreased as directed in
writing by Triton from time to time, in its sole discretion,
and (iii) this Section 2.1 shall be amended only by a majority
of the outstanding shares entitled to vote."
B-16
APPOINTMENT OF REPLACEMENT DIRECTOR.
------------------------------------
WHEREAS, the Corporation is now authorized to have only one
(1) director;
WHEREAS, each of the current directors desires to resign from
all positions with the Corporation; and
WHEREAS, Triton desires that Lawrence Shatsoff be appointed as
a director of the Corporation.
NOW, THEREFORE, BE IT RESOLVED, that Lawrence Shatsoff is
hereby appointed as a director of the Corporation, such
appointment to take effect concurrent with the resignation of
the Corporation's current directors.
APPROVAL OF RELATED MATTERS.
----------------------------
RESOLVED, that any officer of the Corporation be, and hereby
is, authorized and directed to take such actions and execute
such documents on the Corporation's behalf as may be
appropriate to carry out the purpose of these resolutions.
IN WITNESS WHEREOF, the undersigned have executed this action by the
Board of Directors on March 21, 2003.
- -------------------------------- ---------------------------
James Samuelson, Director Shelby T. Brewer, Director
B-17
EXHIBIT "B"
RESIGNATION
-----------
Effective as of March 21, 2003, I hereby resign from all officer
and director positions I now hold with Nurescell Inc. This resignation is not
due to any disagreement with Nurescell Inc.
Dated: March 21, 2003
------------------------------------
B-18
EXHIBIT "C"
ASSIGNMENT OF TECHNOLOGY
------------------------
THIS ASSIGNMENT OF TECHNOLOGY (this "Assignment") between
Nurescell Inc., a Nevada corporation (the "Assignor"), on the one hand, and
Advanced Technology Industries, Inc., a Delaware corporation ("ATI"), and ATI
Nuklear AG, a German corporation (the "Assignee"), is effective as of the
Closing Date and is delivered pursuant to that certain Restructure Agreement,
dated March 21, 2003 among Triton Private Equities Fund, L.P. ("Triton"),
Assignor, ATI, and Assignee (the "Restructure Agreement"). All capitalized terms
used herein and not defined have the meanings assigned to them in the
Restructure Agreement.
RECITALS
--------
A. The Assignor owns certain patents, patent applications, trademarks
and trademark applications relating to a proprietary radiation shielding
technology for use by the nuclear power industry and others who produce, handle
or store radioactive materials. Such patents, patent applications, trademarks
and trademark applications are more specifically listed in Exhibit "1" (the
"Technology").
B. The Technology includes the "Nurescell Technology Material," which
is (i) comprised of a unique composite of materials, (ii) designed for
incorporation into the structural components of new and existing nuclear
reactors and other facilities in order to provide a cost-effective safeguard
from the lethal effect of radiation while achieving a minimal disruption to
existing facilities, and (iii) expected to provide an innovative shielding
material for various other purposes, including nuclear accelerator and defense
research applications.
C. Under the Restructure Agreement, Assignor agreed to assign and
transfer the Technology to Assignee and Assignee and ATI agreed to cancel
certain promissory notes and other obligations of Assignor to Assignee or ATI
upon the satisfaction or waiver of the Transfer Conditions.
D. The parties hereby agree that the Transfer Conditions have been
satisfied and/or waived and wish to consummate the closing of the Restructure
Agreement.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises contained herein, the sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. ASSIGNMENT. Assignor hereby assigns to Assignee all right, title and
interest in and to the Technology, including all improvements, and patent
applications and all divisions and continuations thereof, and all United States
Letters Patents which may be granted thereon and all reissues, reexaminations
and extensions thereof, and all priority rights under all available
international agreements, treaties and conventions for the protection of
intellectual property in its various forms in every participating country, and
all applications for patents (including related rights such as utility-model
registrations, inventor's certificates, and the like) previously or hereafter
filed for such improvements in any foreign countries, and all patents (including
all continuations, divisions, extensions, renewals, substitutes, and reissues
thereof) granted for such improvements in any foreign countries, the trademark
registrations and applications for registration listed in Exhibit "1" attached
hereto, and all goodwill associated with the Technology; and Assignor hereby
authorizes and requests the United States Commissioner of Patents and
Trademarks, and any officials of foreign countries whose duty it is to issue
patents on applications as aforesaid, to issue all patents for such improvements
to Assignee in accordance with the terms of this Assignment.
B-19
2. ENTIRE INTEREST. Assignor hereby covenants that it has full right to
convey the entire interest herein assigned, and that it has not executed, and
will not execute, any agreement in conflict herewith.
3. ASSISTANCE TO ASSIGNEE. Assignor hereby covenants and agrees that it
will communicate to Assignee any facts known to it respecting the improvements
and testify in any legal proceeding, sign all lawful papers, execute all
divisional, continuation, substitute and reissue applications, make all rightful
oaths and generally do everything possible to assist Assignee in obtaining and
enforcing proper patent protection for the improvements in all countries;
provided, however, that Assignee or ATI shall promptly reimburse Assignor for
the reasonable cost of its compliance with this Section.
4. ACCEPTANCE OF ASSIGNMENT. Assignee hereby accepts this Assignment.
5. MISCELLANEOUS.
5.1 GOVERNING LAW. This Assignment shall be governed in all
respects by the laws of the State of California without regard to the conflict
of laws provisions. The parties hereto agree to submit to the exclusive
jurisdiction of the federal and state courts of the State of California with
respect to the interpretation of this Assignment or for the purposes of any
action arising out of or relating to this Assignment.
5.2 SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive the Closing Date. All statements as to
factual matters contained in any certificate or other instrument delivered by on
behalf of Assignor, Assignee or ATI pursuant hereto or in connection with any of
the transactions contemplated hereby shall be deemed to be representations and
warranties of Assignor, Assignee or ATI hereunder solely as of the date of such
certificate or instrument.
5.3 SUCCESSORS AND ASSIGNS. The provisions hereof shall inure
to the benefit of and be binding upon the parties' successors and assigns;
provided, however, that ATI's obligations under Section 5 above shall not be
assigned or otherwise transferred without Assignor's prior written consent.
5.4 ENTIRE AGREEMENT; AMENDMENT. This Assignment, including
any agreements contemplated hereunder, constitutes the full and entire
understanding and agreement between the parties with regard to the subject
matter hereof, and no party shall be liable or bound to any other party in any
manner by any warranties, representations or covenants except as specifically
set forth herein or therein. Except as expressly provided herein, neither this
Assignment nor any term hereof may be amended, waived, discharged or terminated
other than by a written instrument signed by the party against whom enforcement
of any such amendment, waiver, discharge or termination is sought.
5.5 SEVERABILITY. If a court of competent jurisdiction
determines that any provision of this Assignment or the application thereof is
illegal, void or unenforceable, the remainder of this Assignment will continue
in full force and effect and the application of such provision to other persons
or circumstances will be interpreted so as to reasonably effect the intent of
the parties hereto. To the extent practicable, the parties further agree to
replace such void or unenforceable provision of this Assignment with a valid and
enforceable provision that will achieve the economic, business and other
purposes of such void or unenforceable provision as closely as practicable.
5.6 COUNTERPARTS. This Assignment may be executed in
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument. A facsimile copy shall have the same force and effect as the
original.
B-20
WHEREFORE, the undersigned have duly executed this Assignment of
Technology effective as of the Closing Date.
ASSIGNOR:
NURESCELL INC., a Nevada corporation
By:
---------------------------------------
Print Name:
-------------------------------
Title:
------------------------------------
ASSIGNEE:
ATI NUKLEAR AG, a German corporation
By:
---------------------------------------
Print Name:
------------------------------
Title:
------------------------------------
ATI:
ADVANCED TECHNOLOGY INDUSTRIES, INC.,
a Delaware corporation
By:
---------------------------------------
Print Name:
-------------------------------
Title:
------------------------------------
B-21
EXHIBIT 1
LIST OF PATENTS, PATENT APPLICATIONS, TRADEMARKS AND TRADEMARK APPLICATIONS
ASSIGNED
Nurescell Inc.'s Technology to be transferred to ATI Nuklear AG is a
novel material for shielding and internment of radioactive materials and
radioactive waste and attenuation of x-ray energy. The material is designed for
incorporation into the structural components of new and existing nuclear
reactors and other facilities to provide a cost-effective safeguard from the
lethal effects of radiation while achieving minimal disruption of facilities.
The material also may have nuclear accelerator and defense research
applications.
The material demonstrates shielding and physical properties superior to
commonly used shielding materials such as concrete, steel or, in some cases,
lead. The material may be compounded in such a way as to be used either in solid
form or as a viscous liquid for specialized applications. The compound may
include such materials as polyester epoxy, powdered metals, a coloring agent and
polystyrenes in various combinations and ratios.
The Technology is comprised of the patents and patents applications
described in the table below:
Title: NUCLEAR RESISTANCE CELL AND METHODS OF MAKING SAME
Inventor: JOSEPH, ADRIAN
Applicant/Assignee: NURESCELL INC.
COUNTRY CHRM TYPE FILING SER/APPLN. NO. ISSUE PAT. NO. STATUS
MATTER NO. DATE DATE
- ----------------------- --------------- ------- ------------- ------------------- ------------- ------------- ---------------
United States 25869.0020 NE 11/6/1998 09/187,641 5/15/2001 6,232,383 ISSUED
0 W
- ----------------------- --------------- ------- ------------- ------------------- ------------- ------------- ---------------
Argentina 25869.0024 CEQ 11/3/1999 990105569 PENDING
0
- ----------------------- --------------- ------- ------------- ------------------- ------------- ------------- ---------------
Pakistan 25869.0024 CEQ 10/30/199 91399 PENDING
1 9
- ----------------------- --------------- ------- ------------- ------------------- ------------- ------------- ---------------
WIPO (PCT, int'l 25869.0024 CEQ 11/5/1999 PCT/US99/262 NAT
appln) 2 56 PHASE
- ----------------------- --------------- ------- ------------- ------------------- ------------- ------------- ---------------
Peru 25869.0024 CEQ 11/4/1999 1115 PENDING
3
- ----------------------- --------------- ------- ------------- ------------------- ------------- ------------- ---------------
Taiwan 25869.0024 CEQ 11/5/1999 88119344 1/1/2002 NI-147720 ISSUED
4
- ----------------------- --------------- ------- ------------- ------------------- ------------- ------------- ---------------
Venezuela 25869.0024 CEQ 11/5/1999 1999002269 PENDING
5
- ----------------------- --------------- ------- ------------- ------------------- ------------- ------------- ---------------
Brazil 25869.0024 DCA 11/5/1999 PI99067951 PENDING
6
- ----------------------- --------------- ------- ------------- ------------------- ------------- ------------- ---------------
Canada 25869.0024 DCA 11/5/1999 2,316,823 PENDING
7
- ----------------------- --------------- ------- ------------- ------------------- ------------- ------------- ---------------
China 25869.0024 DCA 11/5/1999 99802034.6 PENDING
8
- ----------------------- --------------- ------- ------------- ------------------- ------------- ------------- ---------------
Cuba 25869.0024 DCA 11/5/1999 1672000 ABANDON
9 ED
- ----------------------- --------------- ------- ------------- ------------------- ------------- ------------- ---------------
Czech Republic 25869.0025 DCA 11/5/1999 PV20003697 PENDING
0
- ----------------------- --------------- ------- ------------- ------------------- ------------- ------------- ---------------
European Patent 25869.0025 DCA 11/5/1999 99962712.8 PUBLISHE
1 D
B-22
- ----------------------- --------------- ------- ------------- ------------------- ------------- ------------- ---------------
Hungary 25869.0025 DCA 11/5/1999 PV 1497-2000 PENDING
2
- ----------------------- --------------- ------- ------------- ------------------- ------------- ------------- ---------------
Japan 25869.0025 DCA 11/5/1999 2000581654 PENDING
3
- ----------------------- --------------- ------- ------------- ------------------- ------------- ------------- ---------------
South Korea 25869.0025 DCA 11/5/1999 2000-7007450 PENDING
4
- ----------------------- --------------- ------- ------------- ------------------- ------------- ------------- ---------------
Mexico 25869.0025 DCA 11/5/1999 006528 PENDING
5
- ----------------------- --------------- ------- ------------- ------------------- ------------- ------------- ---------------
Russian Federation 25869.0025 DCA 11/5/1999 2000125887 8/20/2002 3187855 ISSUED
6
- ----------------------- --------------- ------- ------------- ------------------- ------------- ------------- ---------------
Slovak Republic 25869.0025 DCA 11/5/1999 PV149700 PENDING
7
- ----------------------- --------------- ------- ------------- ------------------- ------------- ------------- ---------------
B-23
EXHIBIT "D"
MUTUAL RELEASE AGREEMENT
------------------------
THIS MUTUAL RELEASE AGREEMENT (this "Agreement") is effective as of the
Closing Date among Triton Private Equities Fund, L.P. ("Triton"), a Delaware
limited partnership, Nurescell Inc., a Nevada corporation ("Nurescell"),
Advanced Technology Industries, Inc., a Delaware corporation ("ATI"), and ATI
Nuklear AG, a German corporation ("ATI Sub"), all of whom are hereafter referred
to as the "Parties." This Agreement is delivered pursuant to Section 2.01(a)(ii)
of that certain Restructure Agreement, dated March 21, 2003, among Triton,
Nurescell, ATI and ATI Sub (the "Restructure Agreement"). All capitalized terms
used herein and not defined have the meanings assigned to them in the
Restructure Agreement.
RECITALS
--------
A. Nurescell, ATI and ATI Sub entered into the Restructure Agreement, which
provides for, among other things, the cancellation of, and concomitant
elimination of such Parties' respective obligations to each other under, the
License Agreement, the Investment Agreement, the Modification Agreement, the
2001 Restructure Agreement and the ATI Sub Note.
B. The Parties desire to eliminate all obligations that they may owe to one
another under any agreement or otherwise, except for the Parties' respective
obligations set forth in the Restructure Agreement and, as to Nurescell, the
obligations that it owes to Triton under the 1999 Note, the 2000 Note, the
Registration Agreements, the Securities Purchase Agreement dated as of December
15, 1999, the Warrant to Purchase Common Stock dated December 15, 1999, the
Securities Purchase Agreement dated as of February 8, 2000, the Warrant to
Purchase Common Stock dated February 8, 2000, the Pledge and Security Agreement
dated August 8, 2002, the $26,000 Secured Promissory Note dated August 8, 2002,
the $7,650 Unsecured Promissory Note dated August 26, 2002 and any other
obligations of Nurescell to Triton arising by their mutual consent on or after
August 26, 2002 (collectively, the "Triton Obligations").
AGREEMENT
---------
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, and in consideration of the mutual promises,
covenants and conditions herein contained, the Parties agree as follows:
1. MUTUAL RELEASE.
(a) The Parties hereby, for themselves, their employees, agents,
partners, subsidiaries, affiliates, representatives, successors and assigns,
discharge and release one another, their past and present employees (except
Adrian Joseph), directors, agents, executors, administrators, trustees,
attorneys, partners, insurers, representatives, assigns, predecessors,
successors and related entities (the "Released Parties"), from any and all
claims, damages, actions, judgments, obligations, attorneys' fees, indemnities,
subrogations, duties, demands, controversies and liabilities of every nature at
law or in equity, liquidated, or unliquidated, known or unknown, matured or
unmatured, foreseeable or unforeseeable, which they had or have arising out of
any circumstance, thing, or event alleged occurring contemporaneously with or
prior to the Closing Date, or arising out of the 2001 Restructure Agreement, any
cash advances or loans among one another, the License Agreement, the Investment
Agreement, the Modification Agreement, the ATI Sub Note or any other agreement
or understanding, other than (i) the Restructure Agreement and the Exhibits and
Schedules attached thereto, (ii) solely as to Nurescell, the Triton Obligations
and (iii) to Shelby Brewer and Jim Samuelson for salary, consulting fees, loans
and expenses owed.
B-24
(b) Each party hereby irrevocably covenants to refrain from,
directly or indirectly, asserting any claim or demand, or commencing,
instituting or causing to be commenced, any proceeding of any kind against any
Released Party, based on any matter purported to be released hereby.
2. WAIVER OF UNKNOWN CLAIMS. It is understood and agreed that the
Parties' releases set forth hereinabove extend to all claims of every kind,
nature and description whatsoever, known or unknown, suspected or unsuspected
and any and all rights under the provisions of Section 1542 of the Civil Code of
California or under any comparable statute of any other jurisdiction. The
Parties expressly acknowledge that they are familiar with and expressly waive
and relinquish every right or benefit they have or may have under the provisions
of Section 1542 of the Civil Code of California which reads as follows:
"A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his
settlement with the debtor."
3. ENTIRE AGREEMENT. This Agreement contains the sole, complete and
entire agreement and understanding of the Parties concerning the matters
contained herein and may not be altered, modified, or changed in any manner
except by a writing duly executed by the Parties. No Party is relying on any
representations other than those expressly set forth herein. No conditions
precedent to the effectiveness of this Agreement exists, other than as expressly
provided for herein. There are no oral or written collateral agreements other
than the Restructure Agreement. All prior discussions and negotiations have been
and are merged, integrated into and superseded by this Agreement.
4. WAIVER. The delay or failure of a Party to exercise any right, power
or privilege hereunder, or failure to strictly enforce any breach or default
shall not constitute a waiver with respect thereto; and no waiver of any such
right, power, privilege, breach or default on any one occasion shall constitute
a waiver thereof on subsequent occasion unless clear and express notice thereof
in writing is provided.
5. ATTORNEYS' FEES UPON BREACH. If any action at law or in equity, or
any motion, is brought to enforce this Agreement, the prevailing Party shall be
entitled to all of its costs in bringing and prosecuting said action or motion,
including reasonable attorneys' fees.
6. APPLICABLE LAW. This Agreement shall be construed according to the
laws of the State of California in effect as of the date of execution.
7. ADVICE OF COUNSEL. The Parties represent that prior to the execution
of this Agreement they had the opportunity to seek the benefit of independent
legal counsel of their own selection regarding the substance of this Agreement.
8. REPRESENTATION OF AUTHORITY. Each individual executing this
Agreement on behalf of any Party expressly represents and warrants that he/she
has authority to execute and thereby bind the Party on behalf of which he/she
executes this Agreement to the terms of this Agreement and agrees to indemnify
and hold harmless each other party from any claim that such authority did not
exist.
9. HEADINGS. The headings included in this Agreement are for
convenience only and do not limit, alter, or affect the matters contained in
this Agreement or the paragraphs they encaption.
10. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which together constitute one single document.
11. TELEFACSIMILE SIGNATURES. This Agreement and any documents relating
to it may be executed and transmitted to any other party by telefacsimile, which
telefacsimile shall be deemed to be, and utilized in all respects as, an
original, wet-inked document.
12. DATE OF EXECUTION. The Parties execute this Agreement as of the
Closing Date.
B-25
NURESCELL INC. ADVANCED TECHNOLOGY
INDUSTRIES, INC.
By:___________________________ By:__________________________
Name:_________________________ Name:________________________
Title:________________________ Title:_______________________
TRITON PRIVATE EQUITIES ATI NUKLEAR AG
FUND, L.P.
By: Triton Capital Management, L.L.C.,
General Partner
By:___________________________ By:__________________________
Name:_________________________ Name:________________________
Title:________________________ Title:_______________________
B-26
EXHIBIT "E"
FORM OF SHAREHOLDER CONSENT
---------------------------
WRITTEN CONSENT WITHOUT A MEETING
OF THE SHAREHOLDERS OF
NURESCELL INC.,
A NEVADA CORPORATION
The undersigned shareholders of Nurescell, Inc., a Nevada corporation
(the "Corporation"), do hereby consent to the following actions of the
Corporation:
1. The assignment and transfer of the Technology (as defined in the
Restructure Agreement dated March 21, 2003 by and among the Corporation, Triton
Private Equities Fund, L.P., Advanced Technology Industries, Inc. and ATI
Nuklear AG) to ATI Nuklear AG; and
2. The amendment of the Corporation's Articles of Incorporation to
increase the number of authorized shares of common stock from 50,000,000 to
___________.
This consent is given in accordance with Nevada Revised Statute 78.320(2)
with respect to all shares of the undersigned entitled to vote on this matter.
B-27
EXHIBIT "F"
LIST OF NURESCELL'S LIABILITIES
-------------------------------
Herzog, Fisher, Grayson & Wolfe..............................$25,550.39
U.S. Stock Transfer..........................................$1,250.00
Federal Express..............................................$1,904.23
Arrowhead....................................................$244.94
GE Capital...................................................$6,348.78
Hartford.....................................................$849.88
Standard & Poors.............................................$2,975.00
XO Communications............................................$1,625.36
Office Depot.................................................$807.16
DTC..........................................................$4,285.00
Staples Credit...............................................$673.34
Purchase Power...............................................$415.39
Action Answering.............................................$183.80
GKL Resident.................................................$80.00
DDS..........................................................$43.54
Brakke Schafnitz.............................................$2,214.79
James Eliades................................................$32,750.00
Jerry Quinn..................................................$14,549.29
H. Roy Jeppson...............................................$8,586.50
Rick Van Eyk.................................................$25,167.48
John Hannesson...............................................$4,828.00
Merrill......................................................$5,000.00
Crosby, Heafey, Roach & May..................................$15,932.00
Cingular.....................................................$6,678.40
AT&T.........................................................$1,666.05
Pacific Bell.................................................$67.89
UK Abrasives.................................................$2,446.00
Sprint.......................................................$299.50
Markum & Kliegman............................................$49,628.00
Pitney Bowes.................................................$972.71
AICCO........................................................$300.16
VWR..........................................................$223.80
DHL..........................................................$2,479.40
Property Taxes...............................................$547.00
Sharon Nitka.................................................$10,900.00
B-28
State of Nevada..............................................$500.00
Verizon......................................................$76.35
Stock Group..................................................$549.00
Centerpointe ................................................$345.00
Premier Business Centers ....................................$3,115.00
Corbin & Wirtz...............................................$16,782.00
David Hamilton...............................................$179.00
OC Tax Collector.............................................$547.00
PublicEase...................................................$399.00
Richard Wall.................................................$908.43
TeleExpress..................................................$217.99
Shelby Brewer................................................$38,000.00
John Longenecker.............................................$180,000.00
James Samuelson..............................................$117,335.00
Adrian Joseph................................................$206,465.00
Internal Revenue Service.....................................$9,681.55
B-29
SCHEDULE 3.01(b)
Nurescell requires stockholder approval of the Share Increase and the
Technology Transfer. Nurescell must file an amended Articles of Incorporation
with the Nevada Secretary of State to make the Share Increase effective. It must
also file the Information Statement delivered to its stockholders regarding the
Share Increase and Technology Transfer with the Securities and Exchange
Commission.
SCHEDULE 3.01(g)
Nurescell may have contingent liabilities which could arise from acts or
omissions by Adrian Joseph and/or Dianna Joseph in connection with (i) any
transfer of shares in Nurescell by such persons or their trusts and/or (ii) any
transfer of shares in Nurescell by persons or entities which acquired shares in
Nurescell through Adrian Joseph, Dianna Joseph and/or their trusts.
SCHEDULE 3.05(b)
Nurescell requires stockholder approval of the Share Increase and the
Technology Transfer. Nurescell must file an amended Articles of Incorporation
with the Nevada Secretary of State to make the Share Increase effective. It must
also file the Information Statement delivered to its stockholders regarding the
Share Increase and Technology Transfer with the Securities and Exchange
Commission.
B-30
EXHIBIT "C" TO THE INFORMATION STATEMENT
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A
Amendment No. 1
(MARK ONE)
/X/ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended March 31, 2003
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from __________ to __________
Commission file number: 0-25377
Nurescell Inc.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
Nevada 33-0805583
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
P.O. Box 116, North Haven, CT 06473 (ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES) (ZIP CODE)
Issuer's telephone number: (203) 239-9734
Securities registered under Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which registered
None None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $.0001 par value
(TITLE OF CLASS)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the issuer was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes /X/ No / /
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of issuer's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. / /
Issuer's net loss for its most recent fiscal year (ended March 31,
2003) was $449,328.
The aggregate market value of the voting and non-voting common equity
held by nonaffiliates of the issuer, based upon the average bid and asked price
of such common equity on June 25, 2003, as reported by the OTC Bulletin Board,
was approximately $11,470. Shares of Common Stock held by each officer and
director and by each person who owns 5% or more of the outstanding Common Stock
have been excluded in that such persons may be deemed to be affiliates. This
determination of affiliate status is not necessarily a conclusive determination
for other purposes.
The number of outstanding shares of the issuer's Common Stock on June
25, 2003 was 46,060,025.
Documents incorporated by reference: None.
Transitional Small Business Disclosure Format (CHECK ONE): Yes /X/ No / /
PART I
NOTE: NURESCELL INC. HAS ELECTED TO FOLLOW DISCLOSURE
ALTERNATIVE 2 IN THE PREPARATION OF THIS REPORT.
ITEM 6. DESCRIPTION OF BUSINESS.
- --------------------------------
GENERAL. Nurescell Inc. (the "Company") is a development stage company that
was formed in 1998 for the purpose of developing and commercially exploiting a
proprietary radiation shielding technology (the "Nurescell Technology") for use
by the nuclear power industry and others producing, handling or storing
radioactive materials. The Nurescell Technology material, which is comprised of
a unique composite of materials, was designed for incorporation into the
structural components of new and existing nuclear reactors and other facilities
in order to provide a cost-effective safeguard from the lethal effect of
radiation while achieving a minimal disruption to existing facilities. In
addition, it was expected to provide an innovative shielding material for
various other purposes, including nuclear accelerator and defense research
applications. To date, the Company has failed to generate any significant
revenue from the Nurescell Technology. Having exhausted all of its funding and
without any source of revenue, the Company has been forced to reduce its
operations to a minimal level. On March 21, 2003, the Company entered into a
Restructure Agreement (the "Restructure Agreement") with Triton Private Equities
Fund, L.P. ("Triton"), Advanced Technology Industries, Inc. ("ATI") (a related
party) and ATI's subsidiary, ATI Nuklear AG ("AG"), pursuant to which Triton has
taken control of the Company and the Company will divest itself of the Nurescell
Technology, as described in more detail below.
PRODUCT TESTING AND MARKETING. Since inception, the Company has spent
approximately $475,000 on research and development activities with respect to
the Nurescell Technology. In light of the Restructure Agreement and the
Company's financial condition, the Company has ceased all product testing and
marketing.
INTELLECTUAL PROPERTY RIGHTS. To date, patents for the Nurescell Technology
have been granted in the United States, the Russian Federation and Taiwan. In
addition, the Company has applied for certain other foreign patents and
protection of its intellectual property to the extent appropriate under the
circumstances.
PERSONNEL. From April 1, 2002 until March 21, 2003, the Company had one
full-time employee. Since March 21, 2003, the Company has had no employees, with
the services of Lawrence Shatsoff (the Company's sole director and officer since
that date) being provided pursuant to a consulting agreement between Mr.
Shatsoff, the Company and Triton. See "Item 11. Interest of Management and
Others in Certain Transactions."
THE RESTRUCTURE AGREEMENT. The Restructure Agreement provides for the
transfer by the Company to ATI or AG of all right, title and interest in and to
the Nurescell Technology in return for the cancellation by ATI and AG of all
debts and other obligations owed to either of them by the Company (the "ATI
Obligations"), consisting primarily of a $1 million promissory note, plus
interest, secured by the Nurescell Technology (among other things) and
approximately $200,000 in short-term cash advances and payments made by ATI to
or on behalf of the Company. The agreement also provides for conversion of the
Company's notes payable to Triton, which will give Triton a controlling interest
in the Company.
The Restructure Agreement contains various customary provisions relating to
the Company, ATI and AG. Those provisions include, among other things,
representations and warranties with respect to (i) the execution and
enforceability of the Restructure Agreement and (ii) title to, and absence of
liens on, the Nurescell Technology. The preparation and circulation of an
Information Statement to the Company's stockholders is a condition to the
completion of the Restructure Agreement, and, subject to certain provisions of
the Restructure Agreement, it is expected that such completion will occur 23
days after the Information Statement is sent or given to the Company's
stockholders. At this time, it is anticipated that the transfer of the Nurescell
Technology pursuant to the Restructure Agreement will take place in the third
quarter of 2003. In light of AG's security interest in the Nurescell Technology
in connection with the ATI Obligations, the parties have agreed that the
transfer of the Nurescell Technology pursuant to the Restructure Agreement
constitutes a transfer of collateral pursuant to Section 9609 of the California
Uniform Commercial Code.
2
Following the transfer of the Nurescell Technology, the Company expects to
have essentially no assets. However, after that transfer, as well as certain
anticipated conversions of outstanding debt into Common Stock, it is expected
that the Company will be left with only approximately $100,000 in liabilities.
It is expected that those remaining liabilities will either be settled for cash
using funds provided by Triton or paid with funds provided by a third party in
conjunction with a possible merger or other consolidation with the Company
(which is currently being investigated by Triton). As the transfer of the
Nurescell Technology will involve a transfer of assets in return for
cancellation of certain indebtedness, the Company's current stockholders will
receive no payment as a result of that transfer and will retain their equity
interests in the Company following the consummation of the transaction. For
accounting purposes, the Company will treat the transfer of the Nurescell
Technology as an exchange for the extinguishment of debt.
ITEM 7. DESCRIPTION OF PROPERTY.
- --------------------------------
For a portion of the past fiscal year, the Company's executive offices were
located in rented premises of approximately 300 square feet with a monthly rent
of $357. That lease has since been terminated and the Company now operates out
of the home of Lawrence Shatsoff at no charge. Due to its minimal level of
operations, the Company expects that this arrangement will be sufficient for its
executive offices for the foreseeable future.
ITEM 8. DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES.
- ----------------------------------------------------------------
Set forth below is information regarding the sole director and officer of the
Company. The Company has no employees.
Name Age Positions
---- --- ---------
Lawrence Shatsoff 49 President, Chief Financial
Officer, Secretary and director
Mr. Shatsoff has been the Company's sole director and officer since March 21,
2003, when all of the then existing officers and directors resigned pursuant to
the Restructure Agreement. From June 2001 until December 2002, Mr. Shatsoff was
President of Markland Technologies, Inc., a publicly-held technology company
involved in the sale and marketing of home theater products. Prior to becoming
President of Markland Technologies, Mr. Shatsoff served from June 2000 to June
2001 in various executive capacities and as a director of Corzon, Inc., a
publicly-held telecommunications company. From 1995 to 2000, Mr. Shatsoff was
the Vice President and Chief Operations Officer of DCI Telecom, Inc., a
publicly-held company, and from 1991 to 1994, he served as Vice President and
Chief Operations Officer of Alpha Products, a privately-held computer circuit
board sales and manufacturing company. Mr. Shatsoff also performs independent
management consulting services through his own company, Business Analysis Group,
LLC. Mr. Shatsoff graduated in 1975 from Rider College with a B.S. Degree in
Decision Sciences and Computers.
Subject to prior resignation or removal, the Company's director serves in
that capacity until the next annual meeting of stockholders or until his
successor is elected or appointed and duly qualified. Officers are appointed by
the Board of Directors and serve in that capacity until resignation or removal.
Except as provided in the Restructure Agreement or as agreed upon between Mr.
Shatsoff and Triton, there are no arrangements or understandings between Mr.
Shatsoff and any other person pursuant to which he was selected for his office
or position. Within the past five years (i) no petition under the federal
Bankruptcy Act or any state insolvency law has been filed by or against Mr.
Shatsoff, and no receiver, fiscal agent or similar officer has been appointed by
a court for the business or property of such person, or any partnership in which
such person was a general partner at or within the two years before the time of
such filing, or any corporation or business association of which such person was
an executive officer at or within the past two years and (ii) Mr. Shatsoff has
not been convicted in a criminal proceeding (excluding traffic violations and
other minor offenses).
3
ITEM 9. REMUNERATION OF DIRECTORS AND OFFICERS.
- -----------------------------------------------
EXECUTIVE COMPENSATION. The following table sets out the compensation paid on
a cash basis during the fiscal year ended March 31, 2003 to (i) each of the
Company's three highest paid officers or directors and (ii) the Company's
officers and directors as a group:
Name or Identity of Group Title Compensation
- ------------------------- ----- ------------
John Longenecker Director (1) $ 0 (2)
James Samuelson President, Secretary and
Chief Financial Officer (3) $ 0 (2)
Shelby Brewer Director (3) $ 0 (2)
Lawrence Shatsoff President, Secretary, Chief
Financial Officer and Director (4) $ 0 (4)
(1) Resigned June 15, 2002.
(2) Does not include group life, health, hospitalization or other benefit plans
which do not discriminate in scope, terms or operation in favor of officers or
directors and which are available generally to all salaried employees.
(3) Resigned March 21, 2003.
(4) Has occupied the positions shown since March 21, 2003. Mr. Shatsoff is not
an employee of the Company but receives compensation for his services pursuant
to a consulting agreement with the Company and Triton. See "Item 11. Interest of
Management and Others in Certain Transactions."
STOCK OPTION PLAN. Under the Company's 1998 Stock Option Plan (the "Option
Plan"), all officers and directors of the Company, as well as its employees and
consultants, are eligible to be selected to participate. The purpose of the
Option Plan is to promote the interests of the Company by providing participants
with an inducement to maintain their status with the Company and to further
advance the interests of the Company. Options are granted in consideration of
things such as past and potential future contributions to the Company.
As of March 31, 2003, no options were outstanding under the Option Plan. The
aggregate number of shares of Common Stock deliverable upon the exercise of all
options granted under the Option Plan cannot exceed 360,000 shares. In the event
of any merger, reorganization, recapitalization, stock dividend, stock split or
reverse split or other act or event which effects a restructure of the Company's
Common Stock (but not including the issuance of additional shares of Common
Stock or preferred stock), the total number of shares covered by the Option
Plan, the exercise price, and number of shares covered by outstanding options
granted pursuant to the Option Plan, and the rights, preferences and privileges
incident to such shares will be appropriately adjusted as to any remaining
options. Any shares covered by options granted pursuant to the Option Plan which
expire or are canceled are available for reissuance under the Option Plan.
There is no maximum or minimum number of shares which may be subject to
options granted to any one individual under the Option Plan. The exercise price
of the stock covered by each option is determined at the time of grant;
provided, however, that (i) as to incentive stock options, such exercise price
will not be less than an amount equal to 100% of the "fair value" of the stock
(as determined pursuant to the Option Plan) on the date the option is granted
(110% for options granted to persons who hold 10% or more of the Company's
Common Stock) and (ii) as to all other options, such exercise price will not be
less than an amount equal to 85% of the fair value of the stock on the date the
option is granted. Subject to the express provisions of the Option Plan, the
terms of each option granted under the Option Plan, including the exercise
price, manner of exercise, vesting and duration of each option, shall be as
specified in the applicable option agreement between the Company and the option
holder.
4
The Board of Directors of the Company may amend, suspend or terminate the
Option Plan at any time. Unless terminated sooner, the Option Plan will
terminate on June 15, 2008 and no options may be granted thereafter. No
amendment, suspension or termination of the Option Plan will, without the
consent of the option holder, be made which would alter or impair any rights or
obligations under any option then outstanding. Upon the dissolution or
liquidation of the Company, the Option Plan will terminate, and any option
previously granted thereunder and not yet exercisable in full will also
terminate. In the event, however, that the Company is succeeded by another
corporation, the Option Plan and any remaining options granted thereunder will
be assumed by such successor corporation, subject to such adjustments as may be
necessary due to the capital structure of the successor corporation. It is not
expected that any options will be granted in the future under the Option Plan.
There is no plan currently to change or terminate the Option Plan due to the
Restructure Agreement.
COMPENSATION TO DIRECTORS. Except as noted above, the Company has not
compensated its directors for their services as such, although in the past they
have been granted options under the Option Plan. It is, however, the policy of
the Company to reimburse directors for reasonable expenses incurred in attending
meetings of the Board of Directors.
ITEM 10. SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITY HOLDERS.
- -----------------------------------------------------------------------
COMMON STOCK. The following table sets forth the record ownership of the
Company's Common Stock (the Company's only class of voting stock) as of June 25,
2003 as to (i) each person or entity who owns more than 10% of the Company's
Common Stock, (ii) each person named in the table appearing in "Item 9.
Remuneration of Directors and Officers" and (iii) all officers and directors of
the Company as a group:
Name and Address of Owner Number of Shares Owned (1) Percent of Class (2)
- ------------------------- -------------------------- --------------------
Triton Private Equities Fund, L.P. 30,000,000 (3) 65.1%
225 N. Market St., Suite 333
Wichita, Kansas 67202
John Longenecker 425,900 (3) 0.92%
13380 Pantera Rd.
San Diego, California 92130
James Samuelson -0- (3) N/A
2030 Main Street
Irvine, California 92614
Shelby Brewer 15,568 (3) 0.03%
2151 Jamieson Ave., Suite 1607
Alexandria, Virginia 22314
Lawrence Shatsoff -0- (3) N/A
P.O. Box 116
North Haven, Connecticut 06473
All officers and directors 441,468 (3) 0.95%
as a group (4 persons) (4)
(1) To the Company's knowledge, the persons named in the table have sole voting
and investment power with respect to all shares of Common Stock owned by them,
subject to community property laws where applicable.
(2) Based on 46,060,025 shares of Common Stock outstanding, without taking into
account any shares issuable upon the exercise of outstanding options, warrants
or other rights.
(3) Does not include shares which can be obtained pursuant to the exercise of
options, warrants and other stock acquisition rights, as described in the table
below.
(4) Includes John Longenecker, James Samuelson and Shelby Brewer, who are no
longer officers or directors. See "Item 9. Remuneration of Directors and
Officers" above.
The Company has no class of non-voting securities presently outstanding.
5
OPTIONS, WARRANTS AND OTHER RIGHTS. The following table sets forth the
options, warrants and other rights to acquire securities of the Company which
were held as of June 25, 2003 by (i) each person or entity who owns more than
10% of the Company's Common Stock, (ii) each person named in the table appearing
in "Item 9. Remuneration of Directors and Officers," where the total market
value of securities obtainable by such person under all outstanding options
exceeds $10,000, and (iii) all officers and directors of the Company as a group:
Title and Amount of
Common Stock Called
For by Options, Warrants
Name of Holder And Other Rights Exercise Price Date of Exercise
- -------------- ---------------- -------------- ----------------
Triton Private Equities Fund, L.P. 1,346,108,980(1) (1) (1)
Lawrence Shatsoff (2) (2) (2)
All officers and directors
as a group (4 persons) (3) (2) (2) (2)
(1) Triton holds $305,000 in principal amount of the Company's Series
1999-A Convertible Promissory Note and $385,000 in principal amount of
the Company's Series 2000-A Convertible Promissory Note (collectively,
the "Notes"). The Notes, together with accrued interest thereon and
certain accrued penalties with respect thereto, were convertible into
up to 1,257,188,000 shares of Common Stock as of June 25, 2003. The
conversion amount varies based on a percentage of a specified average
closing bid price of the Common Stock during a specified period prior
to the conversion date. In addition, as of June 25, 2003, Triton had
loaned to the Company or provided for its benefit $87,986 for operating
expenses (the "Operating Loans"). The Operating Loans, together with
accrued interest, are convertible into shares of the Company's Common
Stock at the same rate as the Company's Series 2000-A Convertible
Promissory Note, resulting in up to 88,920,980 shares of Common Stock
being issuable to Triton on the Operating Loans as of June 25, 2003.
(2) For his services to the Company, Mr. Shatsoff is entitled to receive
shares of the Company's Common Stock in an amount to be determined at
some future date by mutual agreement between the Company, Triton and
Mr. Shatsoff. See "Item 11. Interest of Management and Others in
Certain Transactions."
(3) Includes John Longenecker, James Samuelson and Shelby Brewer, who are
no longer officers or directors; however, the options held by such
persons are excluded from the table because the total market value of
securities obtainable by such persons under all outstanding options
does not exceed $50,000.
ITEM 11. INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS.
- -------------------------------------------------------------------
The following is a description of those transactions by the Company in the
past two fiscal years or which are presently proposed in which (i) any Company
director, officer or greater than 10% stockholder (or a relative or spouse
thereof, or any relative of such spouse) has or is to have a direct or indirect
interest and (ii) the amount involved exceeds $50,000.
Pursuant to an agreement with Triton, certain creditors of the Company have
agreed to exchange a total of $722,459 in accounts payable, accrued expenses and
amounts due to stockholders and former officers into an aggregate of 72,245,862
shares of the Company's Common Stock. Of those creditors, five are former
officers or directors of the Company who are owed a total of $571,350 by the
Company for unpaid compensation and/or loans. That amount is exchangeable for
57,135,024 shares of the Company's Common Stock.
On March 21, 2003, the Company entered into the Restructure Agreement with
Triton, ATI and AG, pursuant to which Triton has taken control of the Company
and the Company will divest itself of the Nurescell Technology. ATI is a former
controlling stockholder of the Company. See "Item 6. Description of Business -
The Restructure Agreement."
6
Triton currently holds the Notes, which were issued to Triton in 1999 and
2000 and were convertible into up to 1,257,188,000 shares of the Company's
Common Stock as of June 25, 2003. As of June 25, 2003, Triton had also loaned to
the Company, or provided for its benefit, the Operating Loans, such amounts to
be repaid by the Company under the terms of a Convertible Promissory Note dated
March 21, 2003. The Operating Loans, together with accrued interest, are
convertible into shares of the Company's Common Stock at the same rate as one of
the Notes, resulting in up to 88,920,980 shares of Common Stock being issuable
to Triton as a result of the Operating Loans as of June 25, 2003.
As of April 1, 2003, the Company, Triton and Lawrence Shatsoff entered into a
Consulting Agreement pursuant to which Mr. Shatsoff is to act as an officer and
director of the Company for a one year term (subject to extension at the
Company's option). For his services, Mr. Shatsoff is to be paid $3,000 per month
and is entitled to receive shares of the Company's Common Stock in an amount to
be determined by mutual agreement between the Company, Triton and Mr. Shatsoff.
The agreement is terminable by the Company at any time, with or without cause,
on no more than 30 days prior notice.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS.
- ---------------------------------------------------------------------------
The Company's Common Stock is quoted on the OTC Bulletin Board under the
symbol "NUSL." The following table sets forth the quarterly high and low bids
for the Company's Common Stock as reported by the OTC Bulletin Board for the
past two fiscal years:
Fiscal Year 2002 High* Low*
---------------- ----- ----
First quarter ....................................... $0.51 $0.11
Second quarter ...................................... $0.20 $0.06
Third quarter ....................................... $0.10 $0.02
Fourth quarter ...................................... $0.045 $0.005
Fiscal Year 2003
----------------
First quarter ....................................... $0.045 $0.009
Second quarter ...................................... $0.015 $0.001
Third quarter ....................................... $0.001 $0.001
Fourth quarter ...................................... $0.001 $0.001
* These quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission, and may not represent actual transactions.
The Company has not paid any cash dividends on its Common Stock since its
incorporation and anticipates that, for the foreseeable future, any earnings
will be retained for use in its business. As of June 25, 2003, the number of
record holders of the Company's Common Stock was approximately 280.
For information regarding shares of Common Stock authorized for issuance
under the Company's equity compensation plans, see "Item 9. Remuneration of
Directors and Officers - Stock Option Plan" and "Item 10. Security Ownership of
Management and Certain Security Holders - Options, Warrants and Other Rights."
ITEM 2. LEGAL PROCEEDINGS.
- --------------------------
To the knowledge of management, there is no litigation pending against the
Company.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
- -------------------------------------------------------
None, except as previously reported in the Company's reports on Form 8-K.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
- -------------------------------------------------------------
There were no matters submitted to a vote of security holders during the
quarter ended March 31, 2003.
7
ITEM 5. COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
- -----------------------------------------------------------
Section 16 of the Securities Exchange Act requires that officers and
directors of the Company, as well as those persons who beneficially own more
than 10% of the outstanding Common Stock of the Company, file reports of
security ownership and changes in such ownership on Forms 3, 4 and 5 with the
Securities and Exchange Commission within specified time periods. Based solely
on a review of copies of such reports furnished to the Company, the Company
believes that during the year ended March 31, 2003, such filing requirements
were complied with by its officers, directors and applicable stockholders,
except that Triton filed its report on Form 3 with respect to its acquisition of
Common Stock pursuant to the Restructure Agreement one day late.
ITEM 6. REPORTS ON FORM 8-K.
- ----------------------------
The Company filed no reports on Form 8-K during the quarter ended March 31,
2003.
PART F/S
INDEX TO FINANCIAL STATEMENTS
Page No.
-------
INDEPENDENT AUDITORS' REPORT F-1
BALANCE SHEET F-2
At March 31, 2003
STATEMENTS OF OPERATIONS F-3
For the Years Ended March 31, 2003 and 2002
For the Period from Inception (May 12, 1998) to March 31, 2003
STATEMENTS OF STOCKHOLDERS' DEFICIENCY F-4 - 7
For the Period from Inception (May 12, 1998) to March 31, 2003
STATEMENTS OF CASH FLOWS F-8
For the Years Ended March 31, 2003 and 2002
For the Period from Inception (May 12, 1998) to March 31, 2003
NOTES TO FINANCIAL STATEMENTS F-9 - 22
8
To the Board of Directors and Stockholders
Nurescell Inc.
INDEPENDENT AUDITORS' REPORT
----------------------------
We have audited the accompanying balance sheet of Nurescell Inc. (a development
stage company) (the "Company") as of March 31, 2003, and the related statements
of operations, stockholders' deficiency and cash flows for the years ended March
31, 2003 and 2002 and for the period from inception (May 12, 1998) to March 31,
2003. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit 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. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Nurescell Inc. (a development
stage company) as of March 31, 2003 and 2002, and the results of its operations,
changes in stockholders' deficiency and cash flows for the years then ended and
for the period from inception (May 12, 1998) to March 31, 2003, in conformity
with 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. The Company incurred losses from
operations since inception and, as of March 31, 2003, had a deficit accumulated
during the development stage of $10,895,909 and a working capital deficit of
$4,226,151. In addition, the Company is in default on its convertible notes
payable. As a result of the debt defaults, on March 21, 2003, the Company
entered into a Restructure Agreement in which it agreed to transfer its
technology and only active business. As discussed further in Note 1 to the
financial statements, 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 1. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/S/ MARCUM & KLIEGMAN LLP
New York, New York
[ ], 2003
F-1
NURESCELL INC.
(A Company in the Development Stage)
BALANCE SHEET
MARCH 31, 2003
ASSETS
------
CURRENT ASSETS:
Cash $ 5,125
-------------
TOTAL ASSETS $ 5,125
=============
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
----------------------------------------
CURRENT LIABILITIES:
Convertible notes payable - ATI (related party) $ 1,000,000
Convertible notes payable - Triton (related party) 690,000
Accounts payable 296,399
Due to stockholders and former officers 254,022
Accrued expenses 1,540,855
Unearned revenue 450,000
-------------
TOTAL CURRENT LIABILITIES 4,231,276
-------------
STOCKHOLDERS' DEFICIENCY:
Preferred stock - $0.0001 par value; 1,000,000 shares
authorized; -0- shares issued and outstanding --
Common stock - $0.0001 par value; 50,000,000 shares
authorized; 46,070,238 shares issued and 46,060,025
shares outstanding 4,607
Additional paid-in capital 6,695,151
Treasury stock, at cost - 10,213 shares (30,000)
Deficit accumulated during the development stage (10,895,909)
-------------
TOTAL STOCKHOLDERS' DEFICIENCY (4,226,151)
-------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ 5,125
=============
The accompanying notes are an integral part of these financial statements.
F-2
NURESCELL INC.
(A Company in the Development Stage)
STATEMENTS OF OPERATIONS
For the Years Ended For the Period
March 31, from May 12, 1998
----------------------------- (Date of Inception)
2003 2002 to March 31, 2003
------------- ------------- -------------
SALES $ -- $ -- $ --
COST OF SALES -- -- --
------------- ------------- -------------
GROSS PROFIT (LOSS) -- -- --
------------- ------------- -------------
OPERATING EXPENSES:
Bad debts 25,000 8,700 33,700
General and administrative 51,326 98,084 151,010
------------- ------------- -------------
TOTAL OPERATING EXPENSES 76,326 106,784 184,710
------------ ------------ ------------
LOSS FROM OPERATIONS (76,326) (106,784) (184,710)
------------- ------------- -------------
OTHER INCOME (EXPENSES):
Interest expense (8,313) (4,854) (16,236)
------------- ------------- -------------
TOTAL OTHER EXPENSES (8,313) (4,854) (16,236)
------------- ------------- -------------
LOSS FROM CONTINUING OPERATIONS (84,639) (111,638) (200,946)
LOSS FROM DISCONTINUED OPERATIONS (364,689) (2,206,433) (10,694,963)
------------- ------------- -------------
NET LOSS $ (449,328) $ (2,318,071) $(10,895,909)
============= ============= =============
BASIC AND DILUTED LOSS PER SHARE:
Continuing operations $ (0.01) $ (0.01)
Discontinued operations (0.02) (0.13)
------------- -------------
NET LOSS PER SHARE $ (0.03) $ (0.14)
============= =============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING
Basic and diluted 16,892,156 16,070,238
============= =============
The accompanying notes are an integral part of these financial statements.
F-3
NURESCELL INC.
(A Company in the Development Stage)
STATEMENTS OF STOCKHOLDERS' DEFICIENCY
FOR THE PERIOD FROM INCEPTION (MAY 12, 1998) TO MARCH 31, 2003
(All per shares prices are presented rounded within two decimal places)
Common Stock Additional Stock
-------------------------- Paid-in Subscription
Shares Amount Capital Receivable
------------ ------------ ------------ ------------
Issuance of common stock
Cash - Founding Shareholders
(May and June 1998 at $.001 per share) 2,500,000 $ 250 $ 2,250 $ --
Purchase of Technology
(June 1998 at $.0001) 10,000,000 1,000 (1,000) --
Cash - $1.00 per share (August 1998) 498,000 50 497,950 --
Cash - $5.00 per share, net of
issuance cost (September 1998) 79,000 8 349,992 --
Common stock subscriptions 5,000 -- 25,000 --
Fair value of options granted -- -- 30,000 --
Net loss, as restated for March 31, 1999 -- -- -- --
------------ ------------ ------------ ------------
BALANCE, MARCH 31, 1999 13,082,000 1,308 904,192 --
Issuance of common stock
Consulting/other services (May 1999
through December 1999 at
$1.12 - $3.51 per share) 692,000 69 1,591,138 --
Exercise of stock options
(October 1999 at $.50 per share) 120,000 12 59,988 --
Exercise of stock options
(January 2000 at $1.00 per share) 15,000 2 14,998 --
Exercise of stock options
(March 2000 at $2.00 per share) 10,000 1 19,999 --
Settlement of related party accruals
(January 2000 at $2.13 per share) 524,226 52 1,113,928 --
Award to directors and officers
(January 2000 at $2.13 per share) 734,562 74 1,560,870 --
Cash (April 1999 at $5.00) 14,000 1 69,999 --
Purchase of 10,213 shares of
treasury stock at $2.94 per share -- -- -- --
Fair value of options granted -- -- 691,756 --
Fair value of warrants granted -- -- 102,696 --
Net loss -- -- -- --
------------ ------------ ------------ ------------
BALANCE, MARCH 31, 2000 15,191,788 $ 1,519 $ 6,129,564 --
============ ============ ============ ============
The accompanying notes are an integral part of these financial
statements.
F-4
NURESCELL INC.
(A Company in the Development Stage)
STATEMENTS OF STOCKHOLDERS' DEFICIENCY
FOR THE PERIOD FROM INCEPTION (MAY 12, 1998) TO MARCH 31, 2003
(All per shares prices are presented rounded within two decimal places)
Common Stock Additional Stock
------------------------ Paid-in Subscription
Shares Amount Capital Receivable
----------- ----------- ----------- -----------
BALANCE, MARCH 31, 2000 15,191,788 $ 1,519 $6,129,564 $ --
Issuance of common stock
Exercise of stock options (May 2000
at $1.00 per share) 7,500 1 7,499 --
Exercise of stock options (June 2000
at $0.25 per share) 100,000 10 24,990 (25,000)
Settlement of lawsuit (August 2000
at $1.03 per share) 34,000 3 35,058 --
Settlement of lawsuit (February 2001
at $0.34 per share) 50,000 5 17,185 --
Conversion of debt (August 2000 at
$0.53 per share) 250,000 25 132,475 --
Conversion of debt (January 2001 at
$0.30 per share) 336,950 34 100,000 --
To employee (August 2000 at $0.62
per share) 100,000 10 62,490 --
Fair value of options and warrants granted -- -- 158,890 --
Net loss -- -- -- --
----------- ----------- ----------- -----------
BALANCE, MARCH 31, 2001 16,070,238 1,607 6,668,151 (25,000)
Net loss -- -- -- --
----------- ----------- ----------- -----------
BALANCE, MARCH 31, 2002 16,070,238 1,607 6,668,151 (25,000)
Conversion of debt (March 2003 at
$0.001 per share) 30,000,000 3,000 27,000 --
Write-off of stock subscription receivable -- -- -- 25,000
Net loss -- -- -- --
----------- ----------- ----------- -----------
BALANCE, MARCH 31, 2003 46,070,238 $ 4,607 $6,695,151 $ --
=========== =========== =========== ===========
The accompanying notes are an integral part of these financial
statements.
F-5
NURESCELL INC.
(A Company in the Development Stage)
STATEMENTS OF STOCKHOLDERS' DEFICIENCY
FOR THE PERIOD FROM INCEPTION (MAY 12, 1998) TO MARCH 31, 2003
(All per shares prices are presented rounded within two decimal places)
Treasury Accumulated
Stock Deficit Total
------------ ------------ ------------
Issuance of common stock
Cash - Founding Shareholders
(May and June 1998 at $.001 per share) $ -- $ -- $ 2,500
Purchase of Technology
(June 1998 at $.0001) -- -- --
Cash - $1.00 per share (August 1998) -- -- 498,000
Cash - $5.00 per share, net of
issuance cost (September 1998) -- -- 350,000
Common stock subscriptions -- -- 25,000
Fair value of options granted -- -- 30,000
Net loss, as restated for March 31, 1999 -- (674,526) (674,526)
------------ ------------ ------------
BALANCE, MARCH 31, 1999 -- (674,526) 230,974
Issuance of common stock
Consulting/other services (May 1999
through December 1999 at
$1.12 - $3.51 per share) -- -- 1,591,207
Exercise of stock options
(October 1999 at $.50 per share) -- -- 60,000
Exercise of stock options
(January 2000 at $1.00 per share) -- -- 15,000
Exercise of stock options
(March 2000 at $2.00 per share) -- -- 20,000
Settlement of related party accruals
(January 2000 at $2.13 per share) -- -- 1,113,980
Award to directors and officers
(January 2000 at $2.13 per share) -- -- 1,560,944
Cash (April 1999 at $5.00) -- -- 70,000
Purchase of 10,213 shares of
treasury stock at $2.94 per share (30,000) -- (30,000)
Fair value of options granted -- -- 691,756
Fair value of warrants granted -- -- 102,696
Net loss -- (6,416,192) (6,416,192)
------------ ------------ ------------
BALANCE, MARCH 31, 2000 $ (30,000) $(7,090,718) $ (989,635)
============ ============ ============
The accompanying notes are an integral part of these financial statements.
F-6
NURESCELL INC.
(A Company in the Development Stage)
STATEMENTS OF STOCKHOLDERS' DEFICIENCY
FOR THE PERIOD FROM INCEPTION (MAY 12, 1998) TO MARCH 31, 2003
(All per shares prices are presented rounded within two decimal places)
Treasury Accumulated
Stock Deficit Total
------------- ------------- -------------
BALANCE, MARCH 31, 2000 $ (30,000) $ (7,090,718) $ (989,635)
Issuance of common stock
Exercise of stock options (May 2000
at $1.00 per share) -- -- 7,500
Exercise of stock options (June 2000
at $0.25 per share) -- -- --
Settlement of lawsuit (August 2000
at $1.03 per share) -- -- 35,061
Settlement of lawsuit (February 2001
at $0.34 per share) -- -- 17,190
Conversion of debt (August 2000 at
$0.53 per share) -- -- 132,500
Conversion of debt (January 2001 at
$0.30 per share) -- -- 100,034
To employee (August 2000 at $0.62
per share) -- -- 62,500
Fair value of options and warrants granted -- -- 158,890
Net loss -- (1,037,792) (1,037,792)
------------- ------------- -------------
BALANCE, MARCH 31, 2001 (30,000) (8,128,510) (1,513,752)
Net loss -- (2,318,071) (2,318,071)
------------- ------------- -------------
BALANCE, MARCH 31, 2002 (30,000) (10,446,581) (3,831,823)
Conversion of debt (March 2003 at
$0.001 per share) -- -- 30,000
Write-off of stock subscription receivable -- -- 25,000
Net loss -- (449,328) (449,328)
------------- ------------- -------------
BALANCE, MARCH 31, 2003 $ (30,000) $(10,895,909) $ (4,226,151)
============= ============= =============
The accompanying notes are an integral part of these financial
statements.
F-7
NURESCELL INC.
(A Company in the Development Stage)
STATEMENTS OF CASH FLOWS
For the Period
For the Years Ended from Inception
March 31, (May 12, 1998)
----------------------------- to March 31,
2003 2002 2003
------------- ------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (449,328) $ (2,318,071) $(10,895,909)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation 15,427 15,555 60,145
Bad debts 25,000 8,700 33,700
Inventory write-down 10,022 54,515 64,537
Write-off of intangible assets -- 87,944 87,944
Amortization of discount on notes payable -- -- 556,579
Loss on abandonment of computer software 32,248 -- 39,026
Issuance of stock for services -- -- 4,380,882
Fair value of options and warrants -- -- 880,646
Gain on conversion of debt -- -- (280,000)
Changes in Operating Assets and Liabilities: --
Accounts receivable - related party -- 434,480 (8,700)
Inventory -- (4,645) (64,537)
Prepaid expenses -- 10,132 --
Accounts payable 39,355 101,545 296,399
Accrued expenses 490,855 661,356 1,540,855
Accrued termination fee -- 1,000,000 1,000,000
Unearned income (200,000) (200,000) 450,000
------------- ------------- -------------
NET CASH USED IN OPERATING ACTIVITIES (36,421) (148,489) (1,858,433)
------------- ------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment -- -- (99,171)
Acquisition of intangibles -- (7,059) (87,944)
------------- ------------- -------------
NET CASH USED IN INVESTING ACTIVITIES -- (7,059) (187,115)
------------- ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
(Repayment of) proceeds from overdraft (849) 849 --
Proceeds from sale of common stock -- -- 1,018,000
Prepaid financing costs -- -- (96,349)
Proceeds from stockholder and former officers
loans-net 42,395 140,841 254,022
Proceeds from issuance of convertible notes -- -- 875,000
------------- ------------- -------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 41,546 141,690 2,050,673
------------- ------------- -------------
INCREASE (DECREASE) IN CASH 5,125 (13,858) 5,125
CASH - BEGINNING OF PERIOD -- 13,858 --
------------- ------------- -------------
$ 5,125 $ -- $ 5,125
============= ============= =============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
- --------------------------------------------------
Cash paid during the year for:
Interest $ -- $ -- $ 7,359
============= ============= =============
Income taxes $ -- $ 525 $ 1,600
============= ============= =============
NON CASH FLOW FINANCING ACTIVITY:
Issuance of common stock upon conversion of note payable
$ 30,000 $ -- $ 30,000
============= ============= =============
The accompanying notes are an integral part of these financial
statements.
F-8
NURESCELL INC.
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - BUSINESS AND CONTINUED OPERATIONS
Nurescell Inc. (the "Company") is a development stage company that was formed in
1998 for the purpose of developing and commercially exploiting a proprietary
radiation shielding technology (the "Nurescell Technology") for use by the
nuclear power industry and others producing, handling or storing radioactive
materials. The Nurescell Technology material, which is comprised of a unique
composite of materials, was designed for incorporation into the structural
components of new and existing nuclear reactors and other facilities in order to
provide a cost-effective safeguard from the lethal effect of radiation while
achieving a minimal disruption to existing facilities. In addition, it was
expected to provide an innovative shielding material for various other purposes,
including nuclear accelerator and defense research applications. To date, the
Company has failed to generate any significant revenue from the Nurescell
Technology. Having exhausted all of its funding and without any source of
revenue, the Company has been forced to reduce its operations to a minimal
level. On March 21, 2003, the Company entered into a Restructure Agreement (the
"Restructure Agreement") with Triton Private Equities Fund, L.P. ("Triton"),
Advanced Technology Industries, Inc. ("ATI") (a related party) and ATI's
subsidiary, ATI Nuklear AG ("AG"), pursuant to which Triton has taken control of
the Company and the Company will divest itself of the Nurescell Technology, as
described in more detail below.
The Restructure Agreement provides for the transfer by the Company to ATI or AG
of all right, title and interest in and to the Nurescell Technology in return
for the cancellation by ATI and AG of all debts and other obligations owed to
either of them by the Company (the "ATI Obligations"), consisting primarily of a
$1 million promissory note, plus interest, secured by the Nurescell Technology
(among other things) and approximately $200,000 in short-term cash advances and
payments made by ATI to or on behalf of the Company. The agreement also provides
for conversion of the Company's notes payable to Triton, which will give Triton
a controlling interest in the Company.
The Restructure Agreement contains various customary provisions relating to the
Company, ATI and AG. Those provisions include, among other things,
representations and warranties with respect to (i) the execution and
enforceability of the Restructure Agreement and (ii) title to, and absence of
liens on, the Nurescell Technology. The preparation and circulation of an
Information Statement to the Company's stockholders is a condition to the
completion of the Restructure Agreement, and, subject to certain provisions of
the Restructure Agreement, it is expected that such completion will occur 23
days after the Information Statement is sent or given to the Company's
stockholders. At this time, it is anticipated that the transfer of the Nurescell
Technology pursuant to the Restructure Agreement will take place in the third
quarter of 2003. In light of AG's security interest in the Nurescell Technology
in connection with the ATI Obligations, the parties have agreed that the
transfer of the Nurescell Technology pursuant to the Restructure Agreement
constitutes a transfer of collateral pursuant to Section 9609 of the California
Uniform Commercial Code.
F-9
NURESCELL INC.
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - BUSINESS AND CONTINUED OPERATIONS (Continued)
Following the transfer of the Nurescell Technology, the Company expects to have
essentially no assets. However, after that transfer, as well as certain
anticipated conversions of outstanding debt into common stock, it is expected
that the Company will be left with only approximately $100,000 in liabilities.
It is expected that those remaining liabilities will either be settled for cash
using funds provided by Triton or paid with funds provided by a third party in
conjunction with a possible merger or other consolidation with the Company
(which is currently being investigated by Triton). As the transfer of the
Nurescell Technology will involve a transfer of assets in return for
cancellation of certain indebtedness, the Company's current stockholders will
receive no payment as a result of that transfer and will retain their equity
interests in the Company following the consummation of the transaction. For
accounting purposes, the Company will treat the transfer of the Nurescell
Technology as an exchange for the extinguishment of debt.
The transfer of the Nurescell Technology for the debt does not result in a gain
or loss for this extinguishment transaction in the Company's financial
statements. Accounting Principles Board Opinion ("APB") No. 26 provides that
extinguishment transactions between related parties are a capital transaction.
Any difference between the historical carrying value of the technology asset and
the debt extinguished will be reflected through additional paid-in-capital.
The accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America, which
contemplate continuation of the Company as a going concern. However, as shown in
the accompanying financial statements, the Company is in the development stage
and has incurred losses from operations since inception. As of March 31, 2003,
the Company had an accumulated deficit since inception of $10,895,909. All of
the factors discussed above raise substantial doubt about the Company's ability
to continue as a going concern.
Management's business plan will require additional financing. To support its
operations during the year ended March 31, 2003, the Company borrowed monies
from officers and certain stockholders in the amount of $42,395.
The Company is actively seeking a merger or other business combination with a
private company. The Company's ability to continue as a going concern is
dependent upon additional financing, restructuring its existing liabilities, and
the successful completion of a merger or other business combination. No
assurance can be given that the Company will be successful in locating a
candidate for a merger or other business combination and/or completing such
transaction. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
- ----------------
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements, as well as the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
F-10
NURESCELL INC.
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Taxes
- ------------
Deferred taxes represent the tax effects of differences between the financial
reporting and tax bases of the Company's assets and liabilities at the enacted
tax rates in effect for the years in which the differences are expected to
reverse. The Company evaluates the recoverability of deferred tax assets and
establishes a valuation allowance when it is more likely than not that some
portion or all of the deferred tax assets will not be realized. Income tax
expense consists of the tax payable for the period and the change during the
period in deferred tax assets and liabilities.
Research and Development Costs
- ------------------------------
Research and development costs are expensed as incurred. The amount charged to
research and development for the years ended March 31, 2003 and 2002
approximated $-0- and $404,000, respectively, and is reflected in loss from
discontinued operations in the accompanying statements of operations.
Net Loss Per Common Share
- -------------------------
Basic Earnings Per Share ("EPS") is calculated by dividing income available to
common stockholders (the "numerator") by the weighted average number of common
shares outstanding (the "denominator") during the period. The computation of
diluted EPS is similar to the computation of basic EPS, except that the
denominator is increased to include the number of additional common shares that
would have been outstanding if the dilutive potential common shares (that is,
securities such as options, warrants, convertible securities, or contingent
stock agreements) had been issued. In addition, in computing the dilutive effect
of convertible securities, the numerator is adjusted to add back (a) any
convertible preferred dividends and (b) the after-tax amount of interest
recognized in the period associated with any convertible debt. The computation
of diluted EPS shall not assume conversion, exercise, or contingent issuance of
securities that would have an antidilutive effect on EPS.
Fair Value of Financial Instruments
- -----------------------------------
The reported carrying amount of the Company's cash, convertible notes, accounts
payable, due to stockholders and former officers, accrued expenses and unearned
revenue approximates the estimated fair values due to the short-term maturities
of those financial instruments.
Revenue Recognition
- -------------------
The Company recognizes revenue from licensing and sub-licensing sales when the
following criteria are met (1) persuasive evidence of an arrangement exists, (2)
delivery has occurred, (3) the fee is fixed and determinable, and (4)
collectibility is reasonably assured.
F-11
NURESCELL INC.
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Stock Options and Similar Equity Instruments
- --------------------------------------------
As permitted under SFAS No. 148, "Accounting for Stock-Based Compensation -
Transaction and Disclosure"' which amended SFAS N0. 123, "Accounting for
Stock-Based Compensation", the Company has elected to continue to follow the
intrinsic value method in accounting for its stock-based employee compensation
arrangements as defined by APB No. 25, "Accounting for Stock Issued to
Employees", and related interpretations including FASB Interpretation No. 44,
"Accounting for Certain Transactions Involving Stock Compensation", an
interpretation of APB. 25. No stock-based employee compensation cost is
reflected in operations, as all options granted under those plans have an
exercise price equal to or above the market value of the underlying common stock
on the date of grant. The following table illustrates the effect on net loss and
net loss per share as if the Company had applied the fair value recognition
provisions of SFAS No. 123 to stock-based employee compensation:
For the Year Ended
March 31,
2003 2002
---------------------------
Net loss attributable to common shareholders
As reported $ (449,328) $(2,318,071)
Less: Stock-based employee compensation
expense determined under fair value-based
method for all awards -- --
------------ ------------
Pro forma $ (449,328) $(2,318,071)
============ ============
Basic and diluted net loss per share
As reported
Continuing operations $ (0.01) $ (0.01)
Discontinued operations (0.02) (0.13)
------------ ------------
Net loss per share $ (0.03) $ (0.14)
============ ============
Pro forma
Continuing operations $ (0.01) $ (0.01)
Discontinued operations (0.02) (0.13)
------------ ------------
Net loss per share $ (0.03) $ (0.14)
============ ============
F-12
NURESCELL INC.
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Segment Information
- -------------------
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information," establishes standards for the way public companies report
information about operating segments and related disclosures about products and
services, geographic areas and major customers in annual financial statements.
The Company views its business as principally one segment.
Recent Accounting Pronouncements and Adoption of New Policies
- -------------------------------------------------------------
As of March 31, 2003, the Company has adopted SFAS No. 146, "Accounting for
Costs Associated with Exit or Disposal Activities ("SFAS No. 146")." " SFAS No.
146 requires that a liability for a cost associated with an exit or disposal
activity be recognized when the liability is incurred versus the date an entity
commits to an exit plan under previously existing guidance. SFAS No. 146 also
establishes that fair value is the objective for initial measurement of the
liability. The provisions of this statement are effective for exit or disposal
activities that are initiated after December 31, 2002, with early application
encouraged. The adoption of SFAS No. 146 had no significant impact on the
Company's financial position and results of operations.
In November 2002, the FASB issued FASB Interpretation No. 45 ("FIN 45"),
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others." FIN 45 requires that upon
issuance of a guarantee, the guarantor must recognize a liability for the fair
value of the obligation it assumes under that guarantee. FIN 45 also requires
additional disclosures by a guarantor in its interim and annual financial
statements about the obligations associated with guarantees issued. The
disclosure requirements are effective for financial statements of interim or
annual periods ending after December 15, 2002. The recognition and measurement
provisions are effective on a prospective basis to guarantees issued or modified
after December 31, 2002. The adoption of Fin 45 did not have a material impact
on the Company's financial position and results of operations.
In January 2003, the FASB issued FASB Interpretation No. 46 ("FIN 46"),
"Consolidation of Variable Interest Entities." FIN 46 provides guidance on the
identification of entities for which control is achieved through means other
than through voting rights, variable interest entities, and how to determine
when and which business enterprises should consolidate variable interest
entities. This interpretation applies immediately to variable interest entities
created after January 31, 2003. It applies in the first fiscal year or interim
period beginning after June 15, 2003, to variable interest entities in which an
enterprise holds a variable interest that it acquired before February 1, 2003.
The adoption of this interpretation is not expected to have a material impact on
the Company's financial position and results of operations.
F-13
NURESCELL INC.
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recent Accounting Pronouncements and Adoption of New Policies (Continued)
- -------------------------------------------------------------
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and Equity"("SFAS No.
150"). SFAS No. 150 establishes standards for classification and measurement in
the statement of financial position of certain financial instruments with
characteristics of both liabilities and equity. It requires classification of a
financial instrument that is within its scope as a liability (or an asset in
some circumstances). SFAS No. 150 is effective for financial instruments entered
into or modified after May 31, 2003 and, otherwise, is effective at the
beginning of the first interim period beginning after June 15, 2003. The Company
has not yet determined the impact of adopting SAFS No. 150 on its financial
position and results of operations.
Reclassifications
- -----------------
Certain amounts have been reclassified in the 2002 financial statements to
correspond to the 2003 presentation.
NOTE 3 - PROPERTY AND EQUIPMENT
During the quarter ending March 31, 2003, the Company wrote-off its remaining
property and equipment in the amount of $32,248 due to abandonment by the
Company. However, before abandoning of such assets, depreciation expense for the
years ended March 31, 2003 and 2002 amounted to $15,427 and $15,555,
respectively. Such amounts are reflected in discontinued operations in the
statements of operations.
NOTE 4 - CONVERTIBLE NOTES PAYABLE - ATI (Related Party)
In 2001 the Company executed a $1 million secured convertible promissory note
payable to AG (formerly known as Nurescell AG) bearing interest at 8% per annum,
with principal and interest to be paid in 32 equal monthly payments of $34,805
each, beginning on November 30, 2001. Any remaining principal balance and
accrued interest is due and payable on September 30, 2004. The note is secured
by (i) 15,000,000 shares of the Company's common stock,(ii) a first priority
security interest in the Company's technology and (iii) all royalties due to AG.
The Company did not make scheduled monthly payments and is in default as to the
principal and interest payments. Interest accrued on this note payable for the
year ended March 31, 2003 amounted to $120,000 and is included in accrued
expenses in the accompanying balance sheet (see Note 11).
F-14
NURESCELL INC.
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
NOTE 5 - CONVERTIBLE NOTES PAYABLE - Triton (Related Party)
On December 15, 1999 and February 8, 2000, respectively, the Company signed
convertible promissory notes to Triton, each with a face value of $385,000 and
bearing interest at 8% per annum ("December Note" and "February Note"). Interest
for the December and February Notes was due quarterly beginning March 31, 2000
and June 30, 2000, respectively. Total interest accrued on both notes as of
March 31, 2003 is $191,525. The Company is also liable for certain penalties due
to a breach of a registration rights agreement in connection with above notes.
Total penalties accrued amounted to $550,038 as of March 31, 2003. Both interest
and penalties are included in accrued expenses as of March 31, 2003.
Interest on the notes can be paid in shares of the Company's common stock at the
discretion of the Company, as defined in the agreement. The notes became due and
payable on December 1, 2001. The holder of the notes can convert them to the
Company's common stock at its option, at any time. The holder is entitled to
convert all or a portion of the original principal face amount of each note into
shares of common stock at a conversion price for each share of common stock
equal to the lesser of (a) one hundred twenty-five percent (125%) of the closing
price of the Company's common stock at the date of the note or (b) 95% of the
average of the three lowest bid prices of the Company's common stock for twenty
(20) trading days prior to the conversion date. At March 31, 2003, the Company
is in default as to the principal and interest payable.
On March 21, 2003, pursuant to the Restructure Agreement, Triton converted
$30,000 in principal amount of the December Note into 30,000,000 shares of
common stock at the price of $.001 per share, thus giving Triton approximately
65% of the Company's outstanding common stock and voting control over the
Company. Future additional conversions are planned as described in Note 1.
NOTE 6 - ACCRUED EXPENSES
Accrued expenses consist of the following at March 31, 2003:
Accrued directors' fees $ 58,000
Accrued salary 521,937
Accrued interest and penalties
($861,563 related parties) 875,999
Accrued payroll taxes 5,476
Other advances 79,443
-----------
$1,540,855
===========
Accrued Interest:
Convertible note payable-ATI
(related party) $ 120,000
Convertible note payable-Triton
(related party) 191,525
Accrued penaltie:
Convertible note payable-Triton
(related party) 550,038
-----------
Total related interest and penalties $ 861,563
Accrued interest due to former
officer (non-related) 14,436
-----------
Total accrued interest and penalties $ 875,999
===========
F-15
NURESCELL INC.
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
NOTE 7 - DUE TO STOCKHOLDERS AND FORMER OFFICERS
Due to stockholders and former officers at March 31, 2003 consists of short-term
cash advances of $176,158 from ATI (a major stockholder of the Company to which
the Nurescell Technology is licensed). This advance is non-interest bearing and
payable on demand (see Note 11). Also included in the balance is a $63,877 cash
advance from Mr. Adrian Joseph, a stockholder and former officer of the Company,
payable on demand, and bearing interest at 10% per annum. Interest expense on
this loan for the years ended March 31, 2003 and March 31, 2002 was $6,388 per
year, and accumulated interest of $14,436 included in the accrued expenses at
March 31, 2003 (see Note 6). Also included in the balance is a $15,835 cash
advance from Mr. James Samuelson, a former officer and director of the Company.
This advance is non-interest bearing and is payable on demand.
NOTE 8 - COMMON STOCK
In March 1999, the Company received subscriptions for 5,000 shares of the
Company's common stock at $5 per share. Subsequently, in April 1999, the monies
were received and the stock was issued.
During the year ended March 31, 2000, the Company received $95,000 for the
exercise of 145,000 stock options. In addition, the Company issued 14,000 shares
for $70,000 to outside investors.
From May 1999 to December 1999, the Company issued 692,000 shares to employees
and outside third parties for past services pursuant to consulting agreements
and as approved by the Company's Board of Directors. These shares were valued at
prices ranging from $1.12 to $3.51 per share based upon closing prices of the
Company's common stock on the dates of the agreements.
In January 2000, the Board of Directors approved the issuance of 524,226 shares
of common stock for the payment of past director fees, annual salaries and
various unreimbursed expenses due to officers and directors. In addition, the
Board of Directors approved an award of 734,562 shares of common stock to
officers and directors on that same date. These issuances were valued at
approximately $2.13 per share, based upon the closing price of the Company's
common stock on the date of approval.
During the year ended March 31, 2001, the Company received $7,500 for the
exercise of 7,500 stock options. In addition, the Company issued 100,000 shares
of restricted stock at $0.25 per share and recorded a stock subscription
receivable. Restriction on this stock will not be removed until the $25,000 is
received.
From May to July 2000, the Company borrowed $412,500 from a non-related party.
This debt was converted to 250,000 shares of common stock on August 11, 2000 at
a fair market value of $0.53 per share. The Company recognized a gain on
conversion of debt of $280,000.
F-16
NURESCELL INC.
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
NOTE 8 - COMMON STOCK (Continued)
On August 17, 2000 the Company issued 34,000 shares of common stock with a fair
market value of approximately $1.03 per share in settlement of a lawsuit.
On September 13, 2000 the Company issued a stock bonus to William Wilson, a
former President of the Company. A total of 100,000 shares with a fair market
value of $0.625 per share were issued.
Triton converted a portion of its promissory notes on January 9, 2001 into
336,950 shares of common stock of the Company with a fair market value of
approximately $0.30 per share.
On February 20, 2001, the Company settled a lawsuit by issuing 50,000 shares of
its common stock with a fair market value of approximately $.34 per share.
On March 21, 2003 pursuant to the Restructure Agreement, Triton converted
$30,000 in principal amount of a convertible promissory note previously issued
to Triton by the Company into 30,000,000 shares of common stock at the price of
$.001 per share, thus giving Triton approximately 65% of the Company's
outstanding common stock and voting control over the Company.
Stock Options
- -------------
The Company has a Non-Qualified Stock Option Plan (the "Plan") whereby the
Company may grant options to directors, officers, employees or consultants to
purchase the Company's common stock at the fair market value at the time of
grant. The aggregate number of Company's common shares, which may be granted
under the plan, is 360,000 shares.
The following is a summary of Plan and Non-Plan stock options activity through
March 31, 2003:
Weighted
Average
Number of Shares Prices
---------------- -------------
Balance outstanding at March 31, 1999 484,000 $0.63
Granted 661,000 $1.24
Exercised (145,000) $0.66
Expired - -
---------- -----
Balance outstanding at March 31, 2000 1,000,000 $1.03
Granted 150,000 $0.83
Exercised (107,500) $0.30
Expired (585,000) -
---------- -----
Balance outstanding at March 31, 2001 457,500 $1.46
Granted - -
Exercised - -
Expired (207,500) -
---------- -----
Balance outstanding at March 31, 2002 250,000 $1.64
Granted - -
Exercised - -
Expired (250,000) (1.64)
---------- ------
Balance outstanding at March 31, 2003 - $ -
========== ======
There is no plan currently to change or terminate the Option Plan due to the
Restructure Agreement.
F-17
NURESCELL INC.
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
NOTE 8 - COMMON STOCK (Continued)
Warrants
- --------
The following is a summary of all warrants granted to stockholders, consultants
and others to acquire the Company's common stock through March 31, 2003:
Number of Shares
Subject to Exercise
Warrants Price Range
---------------- --------------
Balance - April 1, 1999 98,000 $1.00
Granted 100,000 $2.25 - $4.00
Exercised - -
--------- ---------------
Balance - March 31, 2000 198,000 $1.00 - $4.00
Granted - -
Exercised - -
Expired - -
--------- ----------------
Balance - March 31, 2001 198,000 $0.50 - $4.00
Granted - -
Exercised - -
--------- ----------------
Balance - March 31, 2002 198,000 $0.50 - $4.00
Granted - -
Exercised - -
Expired (198,000) $(0.50) - $(4.00)
--------- ----------------
Balance - March 31, 2003 - $ -
========= ================
Securities that could potentially dilute basic earnings per share ("EPS") in the
future, and were not included in the computation of diluted EPS because to do so
would have been anti-dilutive for the periods presented, consist of the
following:
Common stock reserved for the conversion of
note payable to ATI 15,000,000
Convertible notes payable (assumed conversion
at March 31, 2003 at a market price of $.001) 1,346,109,000
-------------
Total as of March 31, 2003 1,361,109,000
Subsequent to March 31,2003
Accounts payable, accrued expenses and due to
stockholders & former officers 72,246,000
-------------
1,433,355,000
=============
F-18
NURESCELL INC.
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
NOTE 9 - INCOME TAXES
During the years ended March 31, 2003 and 2002, no provision for taxes was
required, except for minimum state franchise tax, since the Company has recorded
valuation allowances against its net operating loss carryforwards for tax
purposes.
For Federal income tax purposes, approximately $10,000,000 of net operating loss
carryforwards exists to offset future taxable income. These carryforwards expire
in 2015; however utilization may be subject to limitation upon ownership change,
as defined by the Internal Revenue Code. If such a change should occur, the
actual utilization of the Company's net operating loss carryforwards, for tax
purposes, would be limited annually to a percentage of the fair market value of
the Company at the time of such change.
No tax benefit has been reported in the accompanying financial statements,
however, because of the uncertain realization of these benefits. Accordingly, at
March 31, 2003, the $3,400,000 estimated tax benefit of the cumulative
carryforwards has been offset by a valuation allowance of the same amount.
NOTE 10 - OTHER RELATED PARTY TRANSACTION
The Company entered into a consulting contract with one of its former directors
as a means of inducing the director to devote additional time and effort to the
Company over and above the time normally expected of a director. This contract
provided for payments of $2,000 per month to said director under contract, and
has no stated termination date, but is cancelable by either party on 30 days
written notice. The amounts expensed by the Company under this contract were
$6,000 and $24,000 during the years ended March 31, 2003 and 2002 respectively,
and are included in loss from discontinued operations. The total amount due to
this former director for his services as of March 31, 2003 was $48,000 and
included in accrued expenses. This contract was terminated during the quarter
ended June 30, 2002.
F-19
NURESCELL INC.
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
NOTE 11 - ATI NUKLEAR AG (RELATED PARTY)
On August 22, 2000, the Company entered into a joint venture agreement with ATI
to form AG. Pursuant to this agreement, AG was to be owned 51% by the Company
and 49% by ATI. The Company's 51% interest in AG was acquired by it as
additional consideration for granting the license to AG described below. ATI and
the Company agreed to fund AG based on their respective ownership in AG. In
addition, ATI agreed to advance the sum of $1,000,000 to AG in consideration for
its 49% interest therein.
On August 22, 2000, the Company also entered into a licensing agreement (the "AG
License"), whereby the Company granted to AG the exclusive right and license to
market and sell the Nurescell Technology for a period of five years in a
specified territory. The AG License provided for the payment of a license fee of
$1,000,000 to the Company, payable in four installments of $250,000, commencing
upon execution of the AG License and continuing each quarter. The entire
$1,000,000 was to be due at the time that a minimum of $4,000,000 in capital was
raised by AG. The Company recorded this transaction as unearned revenue to be
recognized over a period of 5 years (the term of the AG License). As of March
31, 2003, $550,000 had been recognized as revenue, which leaves unearned revenue
of $450,000 remaining, all of which has been reflected as current in
contemplation of the Restructure Agreement (see Note 1).
In January 2001, ATI acquired 3,500,000 shares of the Company's common stock in
a private transaction. In April 2001, ATI acquired an additional 1,090,000
shares of the Company's common stock in another private transaction. Together,
those transactions gave ATI approximately 29% of the Company's outstanding
common stock.
On June 11, 2001, the Company entered into an agreement to modify the AG License
(the "Modification Agreement"). The Modification Agreement granted to AG an
exclusive, transferable, right and license to market, distribute, sublicense,
sell, transfer and, otherwise, commercially market the Nurescell Technology and
products in the European Union, the British Isles, Russian Federation,
Uzbekistan, Krygikistan, Afghanistan, Pakistan, Kazakhstan, Iran, Turkey,
Ukraine, the Baltic Republics, Georgia, Poland, Hungary, Czech Republic,
Slovakia, Slovenia, Egypt, South Africa, Israel, Algeria, Libya, the UAE, Iraq,
Lebanon, Saudi Arabia and Kuwait.
Under the Modification Agreement, AG was to pay the Company a royalty in the
amount of 8% of the net sales of the Nurescell Technology. In the event that the
technology or products were incorporated into another product, the royalty was
to be computed on the entire price of the products, as well as the coating or
application of the product on another substance or substances. In addition,
under the terms of the Modification Agreement, (i) the Company agreed to assign
to ATI all ownership in AG, which was then renamed ATI Nuklear AG, and (ii) a
convertible promissory note (the "Convertible Note") for all amounts advanced by
AG under the AG License was executed by the Company in the amount of $1,000,000.
As part of the agreement, ATI agreed to continue to finance certain amounts of
the Company's continued monthly operations on a non-interest bearing basis,
advancing a total of $174,310 through March 31, 2003 (see Note 4).
As of September 30, 2001, the Company, ATI and AG modified the Modification
Agreement, the result of which was, among other things, (i) the Company was
released from any and all past, present and future obligations, whether past due
or otherwise, with respect to the funding of AG, (ii) the Company agreed that
all payments required of AG, pursuant to the AG License (other than the 8%
royalty payments), were deemed paid in full, (iii) the Convertible Note was
cancelled and (iv) the Company executed a $1 million secured convertible
promissory note (the "Secured Convertible Note") payable to AG (see Note 4).
A termination fee of $1,000,000 is due under the Secured Convertible Note. This
amount is reflected in discontinued operations in the accompanying statement of
operations for the year ended March 31, 2002.
F-20
NURESCELL INC.
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
NOTE 12 - DISCONTINUED OPERATIONS
In connection with the Restructure Agreement (see Note 1), the Company has
transferred its technology to AG. Accordingly, the Company's operations have
been reflected as discontinued operations in the accompanying statements of
operations.
The following information summarizes the operating results of the Nurescell
Technology for the periods indicated below:
For the Period
For the Year Ended March 31, From May 12, 1998
----------------------------- (Date of Inception)
2003 2002 to March 31, 2003
------------- ------------- -------------
Operating Results:
Revenue - net $ 200,000 $ 204,895 $ 546,661
------------- ------------- -------------
Expenses:
Research and development -- 404,049 472,476
General and administrative
expenses 206,614 515,527 8,306,892
Depreciation expense 15,427 15,555 58,923
Interest expense, net 310,400 476,197 1,491,826
Termination fee -- 1,000,000 1,000,000
Loss on inventory write down -- -- 64,537
Write-off of intangible assets -- -- 87,944
Loss on abandonment of computer
software 32,248 -- 39,026
Gain on conversion of debt -- -- (280,000)
------------- ------------- -------------
Total Expenses 564,689 2,411,328 11,241,624
------------- ------------- -------------
Loss from discontinued
operations $ (364,689) $ (2,206,433) $(10,694,963)
============= ============= =============
Additionally, liabilities associated with the discontinued operations include
the following at March 31, 2003:
Convertible notes payable - ATI (related party) $ 1,000,000
Convertible notes payable - Triton (related party) 690,000
Accounts payable 196,399
Due to stockholders and former officers 254,022
Accrued expenses 1,540,855
Unearned revenue 450,000
-----------
$ 4,131,276
===========
F-21
NURESCELL INC.
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
NOTE 13 - SUBSEQUENT EVENT
On April 1, 2003, the Company entered into a Consulting Agreement with Larry
Shatsoff, d/b/a Business Analysis Group, LLC (the "Consultant"). The Consultant
will act as the President, Secretary, Treasurer and a director of the Company
and perform all duties customarily required or expected in such capacities. As
part of the consideration for this agreement, the Company will pay $3,000 per
month for the term of one year and will issue to the Consultant shares of common
stock in an amount to be determined.
F-22
MANAGEMENT'S DISCUSSION AND ANALYSIS.
- -------------------------------------
THIS SECTION CONTAINS FORWARD-LOOKING STATEMENTS, INCLUDING STATEMENTS
REGARDING THE COMPANY'S PROSPECTS FOR CONTINUED OPERATION AND EXISTENCE AND
STATEMENTS REGARDING THE COMPANY'S PLANS, OBJECTIVES, EXPECTATIONS AND
INTENTIONS. THOSE FORWARD-LOOKING STATEMENTS ARE BASED ON MANAGEMENT'S CURRENT
EXPECTATIONS AND ARE SUBJECT TO A NUMBER OF RISKS, FACTORS AND UNCERTAINTIES
THAT MAY CAUSE ACTUAL RESULTS, EVENTS AND PERFORMANCE TO DIFFER MATERIALLY FROM
THOSE REFERRED TO IN THE FORWARD-LOOKING STATEMENTS. THOSE RISKS, FACTORS AND
UNCERTAINTIES INCLUDE, BUT ARE NOT LIMITED TO, THE COMPANY'S HISTORY OF NET
LOSSES, UNCERTAINTY AS TO THE AVAILABILITY OF REQUIRED FUNDING AND UNCERTAINTY
AS TO THE COMPANY'S ABILITY TO MAINTAIN OPERATIONS AT ANY LEVEL. THE CAUTIONARY
STATEMENTS MADE IN THIS SECTION SHOULD BE READ AS BEING APPLIED TO ALL RELATED
FORWARD-LOOKING STATEMENTS WHEREVER THEY APPEAR IN THIS DOCUMENT.
PLAN OF OPERATION. The Company is a development stage company, with its
operations to date principally consisting of research, development, testing and
marketing of the Nurescell Technology. From inception to March 31, 2003, the
Company obtained approximately $918,000 in financing through the sale of equity
securities in two private offerings and approximately $102,500 through the
exercise of stock options, as well as $770,000 through the issuance of
convertible promissory notes (the "Notes") to Triton. The Company utilized all
of those funds to (i) commence and pursue patent applications for the Nurescell
Technology, (ii) identify, negotiate and finalize suitable research, development
and testing contracts, (iii) identify, negotiate and finalize marketing
consulting contracts and (iv) provide working capital for the ongoing
administrative and financing acquisition costs of the Company.
The Company has incurred losses since inception, including a net loss of
$449,328 for the fiscal year ended March 31, 2003. From May 12, 1998 (inception)
through March 31, 2003, the Company has had a cumulative loss of $10,895,909.
Despite its efforts, the Company has failed to generate any significant
revenue from the Nurescell Technology. Having exhausted all of its funding and
without any source of revenue, the Company has been forced to reduce its
operations to a minimal level. Faced with increasing pressure from Triton
regarding the Company's obligations under the Notes, on March 21, 2003, the
Company entered into the Restructure Agreement pursuant to which Triton has
taken control of the Company and the Company will divest itself of the Nurescell
Technology, as described in more detail in "Item 6. Description of Business -
The Restructure Agreement." At this time, the Company believes that for the
foreseeable future Triton will provide funding for at least minimal Company
operations (including continued reporting under the Securities Exchange Act)
while it determines whether the Company has value as a candidate in a merger or
other business combination (on terms that may or may not be favorable to the
Company's existing stockholders). It is not expected, however, that Triton's
funding will continue indefinitely. Should Triton eventually determine that the
Company has no value that would justify continued funding, it is expected that
the Company will be required to discontinue operations entirely, seek protection
under Federal bankruptcy laws, or both.
RESULTS OF OPERATIONS FOR THE FISCAL YEARS ENDED MARCH 31, 2003 AND 2002.
The Company had net sales of $0 for each of the fiscal years ended March 31,
2003 and March 31, 2002. As the Company has been in the development stage,
revenue generated since inception has been minimal.
9
Operating expenses of $76,326 for the fiscal year ended March 31, 2003 were
significantly lower than the operating expenses of $106,784 for the fiscal year
ended March 31, 2002, due primarily to decreases in general and administrative
expenses which were primarily attributable to a significant decrease in
overhead, including salaries, rent, travel and legal expenses, as the Company
reduced it operations to a minimal level.
Loss from discontinued operations of $364,689 for the fiscal year ended
March 31, 2003 was significantly lower than the loss from discontinued
operations of $2,206,433 for the fiscal year ended March 31, 2002 due to the
fact that the Company reduced its operations to a minimal level in 2003.
Interest expense of $8,313 for the fiscal year ended March 31, 2003 was
higher than the interest expense of $4,854 for the fiscal year ended March 31,
2002 due to the imposition of penalties by Triton for failure to register the
shares of common stock issuable upon conversion of the Notes.
Licensing fees generated revenue of $200,000 in each of the fiscal years
ended March 31, 2003 and 2002. During the fiscal year ended March 31, 2002, the
Company incurred a $1,000,000 termination fee charge from AG.
As a result of the above factors, the net loss for the fiscal year ended
March 31, 2003 was $449,328, or $0.03 per share, as compared to a net loss of
$2,318,071, or $0.14 per share, for the fiscal year ended March 31, 2002.
FINANCIAL POSITION. Total assets decreased from $57,697 at March 31, 2002
to $5,125 at March 31, 2003. The decrease is primarily attributed to
depreciation expense and write-offs of fixed assets and inventories.
Total liabilities increased from $3,889,520 at March 31, 2002 to $4,231,276
at March 31, 2003. The increase is primarily attributed to an increase in
accrued expenses of $490,855, an increase in amounts due to stockholders of
$42,395, and an increase in accounts payable of $39,355, offset in part by a
decrease in unearned revenue of $250,000.
Total stockholders' deficiency increased from $3,831,823 at March 31, 2002
to $4,226,151 at March 31, 2003. The increase was primarily caused by the net
loss of $449,328 for the fiscal year ended March 31, 2003.
LIQUIDITY AND CAPITAL RESOURCES. The Company requires significant funding
for continued operations, even at minimal levels. At this point, the amount of
expenditures required to maintain operations far exceeds existing cash, which
was $5,125 at March 31, 2003.
The Company's cash flow used in operating activities decreased from
$148,489 for the fiscal year ended March 31, 2002 to $36,421 for the fiscal year
ended March 31, 2003. This is primarily attributed to chargebacks to the Company
resulting from an agreement with ATI in March 31, 2002, offset in part by a
decrease in the Company's other operating expenses, such as rent, salaries,
taxes, phone, travel and utilities.
During the fiscal year ended March 31, 2003, the Company has obtained
liquidity primarily from loans from ATI and Triton.
10
The Company's financial statements for the year ended March 31, 2003 have
been prepared assuming the Company will continue as a going-concern. As noted in
this annual report on Form 10-KSB, the presence of significant losses, negative
cash flows and limited working capital, together with the uncertainties
associated with the ability of the Company to obtain additional capital, raise
substantial doubts as to the Company's ability to continue as a going concern.
The Company's ability to continue as a going concern will be questionable until
such time as it is able to generate sufficient revenues in excess of expenses to
sustain its normal business activities. Until that time, the Company will depend
on its ability to raise additional capital through either loans or equity or
debt offerings. There can, however, be no guarantee that such financing will be
obtained or that any additional financing will be available on terms favorable
to the Company or its stockholders, if at all. As noted above, the Company
believes that for the foreseeable future Triton will provide funding for at
least minimal Company operations while it determines whether the Company has
value as a candidate in a merger or other business combination. It is not
expected, however, that Triton's funding will continue indefinitely. Should
Triton eventually determine that the Company has no value that would justify
continued funding, it is expected that the Company will be required to
discontinue operations entirely, seek protection under Federal bankruptcy laws,
or both.
CRITICAL ACCOUNTING POLICIES
The Company's critical accounting policies are those that it believes
require significant judgments, often as a result of the need to make estimates
about the effect of matters that are inherently uncertain.
Revenue Recognition
- -------------------
The Company generally recognizes revenue when persuasive evidence of an
arrangement exists, delivery has occurred, the price is fixed or readily
determinable, and collectibility is probable. The Company recognizes revenue in
accordance with SEC Staff Accounting Bulletin No. 101, "Revenue Recognition in
Financial Statements."
Stock-Based Compensation
- ------------------------
As permitted under SFAS No. 148, "Accounting for Stock-Based Compensation -
Transaction and Disclosure"' which amended SFAS No. 123, "Accounting for
Stock-Based Compensation", the Company has elected to continue to follow the
intrinsic value method in accounting for its stock-based employee compensation
arrangements as defined by Accounting Principles Board Opinion ("APB") No. 25,
"Accounting for Stock Issued to Employees", and related interpretations
including FASB Interpretation No. 44, "Accounting for Certain Transactions
Involving Stock Compensation", an interpretation of APB. 25. No stock-based
employee compensation cost is reflected in operations, as all options granted
under those plans have an exercise price equal to or above the market value of
the underlying common stock on the date of grant.
11
CONTROLS AND PROCEDURES.
- ------------------------
The Company's Chief Executive Officer and Chief Financial Officer has
conducted an evaluation of the Company's disclosure controls and procedures as
of a date (the "Evaluation Date") within 90 days before the filing of this
annual report. Based on his evaluation, the Company's Chief Executive Officer
and Chief Financial Officer has concluded that the Company's disclosure controls
and procedures are effective to ensure that information required to be disclosed
by the Company in reports that it files or submits under the Securities Exchange
Act is recorded, processed, summarized and reported within the time periods
specified in the applicable Securities and Exchange Commission rules and forms.
Subsequent to the Evaluation Date, there were no significant changes in
the Company's internal controls or in other factors that could significantly
affect those controls, nor were any corrective actions required with regard to
significant deficiencies and material weaknesses.
12
PART III
INDEX TO EXHIBITS AND DESCRIPTION OF EXHIBITS.
The following exhibits are included as part of this Report (with the
numbering corresponding to that used in the Company's prior filings on Form
10-QSB):
Exhibit Number Description
-------------- -----------
3.1 Articles of Incorporation, as amended (1)
3.2 Bylaws (1)
4.1 Form of $385,000 Series 1999-A Convertible Promissory Note
due December 1, 2001 (2)
4.2 Form of $385,000 Series 2000-A Convertible Promissory Note
due December 1, 2001 (3)
4.3 Secured Promissory Note dated September 30, 2001 for
$1,000,000 from the Company to ATI Nuklear AG (4)
4.4 Securities Purchase Agreement between the Company and
Triton Private Equities Fund, L.P. dated December 15, 1999
(2)
4.5 Securities Purchase Agreement between the Company and
Triton Private Equities Fund, L.P. dated February 8, 2000
(3)
4.6 Registration Rights Agreement between the Company and
Triton Private Equities Fund, L.P. dated December 15, 1999
(2)
4.7 Registration Rights Agreement between the Company and
Triton Private Equities Fund, L.P. dated February 8, 2000
(3)
4.8 Promissory Note dated April 6, 2000 for $165,000 from the
Company to the Glenn A. Cramer Separate Property Trust (3)
4.9 Promissory Note dated May 1, 2000 for $82,500 from the
Company to the Glenn A. Cramer Separate Property Trust (3)
4.10 Promissory Note dated June 1, 2000 for $82,500 from the
Company to the Glenn A. Cramer Separate Property Trust (3)
10.1 Consulting Agreement between the Company and John
Longenecker dated June 26, 1998 (1)
10.2 Form of Stock Option Agreement between the Company and its
officers and directors (1)
10.3 1998 Stock Option Plan (1)
10.4 Form of Indemnification Agreement between the Company and
its officers and directors (1)
10.5 Consulting Agreement between the Company and Shelby T.
Brewer dated December 1, 1999 (3)
10.6 Investment Agreement between the Company and Nurescell AG
dated August 17, 2000 (5)
10.7 License Agreement between the Company and Nurescell AG
dated as of August 15, 2000 (5)
10.8 Registration Rights Agreement between the Company and
Nurescell AG dated August 15, 2000 (5)
13
10.9 Modified License Agreement between the Company and
Advanced Technology Industries, Inc. Dated as of June 11,
2001(6)
10.10 Transaction Restructure Agreement between the Company,
Advanced Technology Industries, Inc. and ATI Nuklear AG
dated as of September 30, 2001(4)
10.11 Restructure Agreement between the Company, Triton Private
Equities Fund, L.P., Advanced Technology Industries, Inc.
and ATI Nuklear AG dated as of March 21, 2003 (7)
10.12 Convertible Promissory Note dated March 21, 2003 from the
Company to Triton Private Equities Fund, L.P.
10.13 Consulting Agreement dated as of April 1, 2003 between the
Company, Larry Shatsoff and Triton Private Equities Fund,
L.P.
99.1 Certificate of the Company's Chief Executive Officer and
Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
- -------------
(1) Incorporated by reference from the Company's Registration Statement on
Form 10-SB (File No. 0- 25377).
(2) Incorporated by reference from the Company's Report on Form 10-QSB for
the quarter ended December 31, 1999 (File No. 0-25377)
(3) Incorporated by reference from the Company's Report on Form 10-KSB for
the year ended March 31, 2000 (File No. 0-25377)
(4) Incorporated by reference from the Company's Report on Form 10-QSB for
the quarter ended September 30, 2001 (File No. 0-25377)
(5) Incorporated by reference from the Company's Report on Form 10-QSB for
the quarter ended September 30, 2000 (File No. 0-25377)
(6) Incorporated by reference from the Company's Report on Form 10-QSB for
the quarter ended June 30, 2001 (File No. 0-25377)
(7) Incorporated by reference from the Company's Report on Form 10-QSB for
the quarter ended December 31, 2002 (File No. 0-25377)
14
SIGNATURES
In accordance with the Section 13 or 15(d) of the Exchange Act, the
registrant has caused this amended report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: September [ ], 2003 NURESCELL, INC.
By: /s/ LAWRENCE SHATSOFF
--------------------------------
Lawrence Shatsoff, President and
Chief Financial Officer
In accordance with the Exchange Act, this amended report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
/s/ LAWRENCE SHATSOFF President, Chief Financial September [ ], 2003
- ---------------------------- Officer, Secretary and Director
Lawrence Shatsoff
15
EXHIBIT "D" TO THE INFORMATION STATEMENT
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 10-QSB
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended June 30,
2003
|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
Commission file number 0-25377
NURESCELL INC.
A Nevada Corporation IRS Employer Identification No.:
33-0805583
Principal Executive Offices:
P.O. Box 116
North Haven, CT 06473
(203) 239-9734
Check whether the registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes |X| No |_|
Number of shares of common stock outstanding at August 11, 2003: 46,060,025
Transitional Small Business Disclosure Format: Yes |X| No |_|
NURESCELL INC.
(A DEVELOPMENT STAGE COMPANY)
INDEX TO FORM 10-QSB
JUNE 30, 2003
Page Nos.
---------
PART I - FINANCIAL INFORMATION
ITEM 1. - Financial Statements 2-11
ITEM 2. - Management's Discussion and Analysis or Plan of Operation 12-13
ITEM 3. - Controls and Procedures 14
PART II - OTHER INFORMATION
ITEM 2. - Changes in Securities 14
ITEM 3. - Defaults Upon Senior Securities 14
ITEM 5. - Other Information 14
ITEM 6. - Exhibits and Reports on Form 8-K 15-16
Signatures and Required Certification 17-18
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
NURESCELL INC.
(A Company in the Development Stage)
CONDENSED BALANCE SHEET
(UNAUDITED)
JUNE 30, 2003
ASSETS
------
TOTAL ASSETS $ --
=============
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
----------------------------------------
CURRENT LIABILITIES:
Cash overdraft $ 4,475
Convertible notes payable - ATI (related party) 1,000,000
Convertible notes payable - Triton (related party) 690,000
Accounts payable 303,059
Due to stockholders and former officers 254,022
Accrued expenses and other current liabilities 1,671,692
Unearned revenue 400,000
-------------
TOTAL LIABILITIES 4,323,248
STOCKHOLDERS' DEFICIENCY:
Preferred stock - $0.0001 par value; 1,000,000 shares
authorized; -0- shares issued and outstanding --
Common stock - $0.0001 par value; 50,000,000 shares
authorized; 46,070,238 shares issued and 46,060,025
shares outstanding 4,607
Additional paid-in capital 6,695,151
Treasury stock, at cost - 10,213 shares (30,000)
Deficit accumulated during the development stage (10,993,006)
-------------
TOTAL STOCKHOLDERS' DEFICIENCY (4,323,248)
-------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ --
=============
See accompanying notes to condensed financial statements.
2
NURESCELL INC.
(A Company in the Development Stage)
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three Months Ended For the Period
June 30, from May 12, 1998
----------------------------- (Date of Inception)
2003 2002 to June 30, 2003
------------- ------------- -------------
SALES $ -- $ -- $ --
COST OF SALES -- -- --
------------- ------------- -------------
GROSS PROFIT -- -- --
------------- ------------- -------------
OPERATING EXPENSES:
Bad debt -- -- 33,700
General and administrative 65,915 65,967 216,925
------------- ------------- -------------
TOTAL OPERATING EXPENSES 65,915 65,967 250,625
------------- ------------- -------------
LOSS FROM OPERATIONS (65,915) (65,967) (250,625)
OTHER INCOME (EXPENSE):
Interest expense -- -- (16,236)
------------- ------------- -------------
LOSS FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES (65,915) (65,967) (266,861)
PROVISION FOR INCOME TAXES -- -- --
------------- ------------- -------------
LOSS FROM CONTINUING OPERATIONS (65,915) (65,967) (266,861)
LOSS FROM DISCONTINUED OPERATIONS (31,182) (33,086) (10,726,145)
------------- ------------- -------------
NET LOSS $ (97,097) $ (99,053) $(10,993,006)
============= ============= =============
BASIC AND DILUTED LOSS PER SHARE:
Continued operations $ (0.00) $ (0.00)
Discontinued operations (0.00) (0.00)
------------- -------------
NET LOSS PER SHARE $ (0.00) $ (0.00)
============= =============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING
Basic and diluted 46,060,025 16,060,025
============= =============
See accompanying notes to condensed financial statements.
3
NURESCELL INC.
(A Company in the Development Stage)
STATEMENTS OF STOCKHOLDERS' DEFICIENCY
FOR THE PERIOD FROM INCEPTION (MAY 12, 1998) TO JUNE 30, 2003
Common Stock Additional Stock
-------------------------- Paid-in Subscription
Shares Amount Capital Receivable
------------ ------------ ------------ ------------
Issuance of common stock
Cash - Founding Shareholders
(May and June 1998 at $.001 per
share) 2,500,000 $ 250 $ 2,250 $ --
Purchase of Technology
(June 1998 at $.0001) 10,000,000 1,000 (1,000) --
Cash - $1.00 per share (August 1998) 498,000 50 497,950 --
Cash - $5.00 per share, net of
issuance cost (September 1998) 79,000 8 349,992 --
Common stock subscriptions 5,000 -- 25,000 --
Fair value of options -- -- 30,000 --
Net loss, as restated for March 31, 1999 -- -- -- --
------------ ------------ ------------ ------------
BALANCE, MARCH 31, 1999 13,082,000 1,308 904,192 --
Issuance of common stock
Consulting services (May 1999
through December 1999 at
$1.12 - $3.50 per share) 692,000 69 1,591,138 --
Exercise of stock options
(October 1999 at $.50 per share) 120,000 12 59,988 --
Exercise of stock options
(January 2000 at $1.00 per share) 15,000 2 14,998 --
Exercise of stock options
(March 2000 at $2.00 per share) 10,000 1 19,999 --
Settlement of related party accruals
(January 2000 at $2.13 per share) 524,226 52 1,113,928 --
Award to directors and officers
(January 2000 at $2.13 per share) 734,562 74 1,560,870 --
Cash (April 1999 at $5.00) 14,000 1 69,999 --
Purchase of 10,213 shares of
treasury stock at $2.94 per share -- -- -- --
Fair value of options -- -- 691,756 --
Fair value of warrants -- -- 102,696 --
Net loss -- -- -- --
------------ ------------ ------------ ------------
BALANCE, MARCH 31, 2000 15,191,788 $ 1,519 $ 6,129,564 --
============ ============ ============ ============
See accompanying notes to condensed financial statements.
4
NURESCELL INC.
(A Company in the Development Stage)
STATEMENTS OF STOCKHOLDERS' DEFICIENCY
FOR THE PERIOD FROM INCEPTION (MAY 12, 1998) TO JUNE 30, 2003
Treasury Accumulated
Stock Deficit Total
------------ ------------ ------------
Issuance of common stock
Cash - Founding Shareholders
(May and June 1998 at $.001 per share) $ -- $ -- $ 2,500
Purchase of Technology
(June 1998 at $.0001) -- -- --
Cash - $1.00 per share (August 1998) -- -- 498,000
Cash - $5.00 per share, net of
issuance cost (September 1998) -- -- 350,000
Common stock subscriptions -- -- 25,000
Fair value of options -- -- 30,000
Net loss, as restated for March 31, 1999 -- (674,526) (674,526)
------------ ------------ ------------
BALANCE, MARCH 31, 1999 -- (674,526) 230,974
Issuance of common stock
Consulting services (May 1999
through December 1999 at
$1.12 - $3.50 per share) -- -- 1,591,207
Exercise of stock options
(October 1999 at $.50 per share) -- -- 60,000
Exercise of stock options
(January 2000 at $1.00 per share) -- -- 15,000
Exercise of stock options
(March 2000 at $2.00 per share) -- -- 20,000
Settlement of related party accruals
(January 2000 at $2.13 per share) -- -- 1,113,980
Award to directors and officers
(January 2000 at $2.13 per share) -- -- 1,560,944
Cash (April 1999 at $5.00) -- -- 70,000
Purchase of 10,213 shares of
treasury stock at $2.94 per share (30,000) -- (30,000)
Fair value of options -- -- 691,756
Fair value of warrants -- -- 102,696
Net loss -- (6,416,192) (6,416,192)
------------ ------------ ------------
BALANCE, MARCH 31, 2000 $ (30,000) $(7,090,718) $ (989,635)
============ ============ ============
See accompanying notes to condensed financial statements.
5
NURESCELL INC.
(A Company in the Development Stage)
STATEMENTS OF STOCKHOLDERS' DEFICIENCY
FOR THE PERIOD FROM INCEPTION (MAY 12, 1998) TO JUNE 30, 2003
Common Stock Additional Stock
------------------------ Paid-in Subscription
Shares Amount Capital Receivable
----------- ----------- ----------- -----------
BALANCE, MARCH 31, 2000 15,191,788 $ 1,519 $6,129,564 $ --
Issuance of common stock
Exercise of stock options (May 2000
at $1.00 per share) 7,500 1 7,499 --
Exercise of stock options (June 2000
at $0.25 per share) 100,000 10 24,990 (25,000)
Settlement of lawsuit (August 2000
at $1.03 per share) 34,000 3 35,058 --
Settlement of lawsuit (February 2001
at $0.34 per share) 50,000 5 17,185 --
Conversion of debt (August 2000 at
$0.53 per share) 250,000 25 132,475 --
Conversion of debt (January 2001 at
$0.29 per share) 336,950 34 100,000 --
To employee (August 2000 at $0.62
per share) 100,000 10 62,490 --
Fair value of options and warrants -- -- 158,890 --
Net loss -- -- -- --
BALANCE, MARCH 31, 2001 16,070,238 1,607 6,668,151 --
Net loss -- -- -- --
----------- ----------- ----------- -----------
BALANCE, MARCH 31, 2002 16,070,238 1,607 6,668,151 (25,000)
Conversion of debt (March 2003 at
$.001 per share) 30,000,000 3,000 27,000 --
Write-off of stock subscription
receivable -- -- -- 25,000
Net loss -- -- -- --
----------- ----------- ----------- -----------
BALANCE, MARCH 31, 2003 46,070,238 4,607 6,695,151 --
Net loss -- -- -- --
----------- ----------- ----------- -----------
BALANCE, JUNE 30, 2003 46,070,238 $ 4,607 $6,695,151 $ --
=========== =========== =========== ===========
See accompanying notes to condensed financial statements.
6
NURESCELL INC.
(A Company in the Development Stage)
STATEMENTS OF STOCKHOLDERS' DEFICIENCY
FOR THE PERIOD FROM INCEPTION (MAY 12, 1998) TO JUNE 30, 2003
Treasury Accumulated
Stock Deficit Total
------------- ------------- -------------
BALANCE, MARCH 31, 2000 $ (30,000) $ (7,090,718) $ (989,635)
Issuance of common stock
Exercise of stock options (May 2000
at $1.00 per share) -- -- 7,500
Exercise of stock options (June 2000
at $0.25 per share) -- -- --
Settlement of lawsuit (August 2000
at $1.03 per share) -- -- 35,061
Settlement of lawsuit (February 2001
at $0.34 per share) -- -- 17,190
Conversion of debt (August 2000 at
$0.53 per share) -- -- 132,500
Conversion of debt (January 2001 at
$0.29 per share) -- -- 100,034
To employee (August 2000 at $0.62
per share) -- -- 62,500
Fair value of options and warrants -- -- 158,890
Net loss -- (1,037,792) (1,037,792)
------------- ------------- -------------
BALANCE, MARCH 31, 2001 (30,000) (8,128,510) (1,513,752)
Net loss -- (2,318,071) (2,318,071)
------------- ------------- -------------
BALANCE, MARCH 31, 2002 (30,000) (10,446,581) (3,831,823)
Conversion of debt (March 2003 at
$.001 per share) -- -- 30,000
Write-off of stock subscription
receivable -- -- 25,000
Net loss -- (449,328) (449,328)
------------- ------------- -------------
BALANCE, MARCH 31, 2003 (30,000) (10,895,909) (4,226,151)
Net loss -- (97,097) (97,097)
------------- ------------- -------------
BALANCE, JUNE 30, 2003 $ (30,000) $(10,993,006) $ (4,323,248)
============= ============= =============
See accompanying notes to condensed financial statements.
7
NURESCELL INC.
(A Company in the Development Stage)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Period
For the Three Months Ended from Inception
June 30, (May 12, 1998)
----------------------------- to June 30,
2003 2002 2003
------------- ------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (97,097) $ (99,053) $(10,993,006)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation -- 3,889 60,145
Bad debts -- -- 33,700
Inventory write-down -- -- 64,537
Write-off of intangible assets -- -- 87,944
Amortization of discount on notes payable -- -- 556,579
Loss on abandonment of computer software -- -- 39,026
Issuance of stock for services and -- -- 4,380,882
settlement -- -- 880,646
Fair value of options and warrants -- -- (280,000)
Gain on conversion of debt -- --
Changes in Assets (Increase) Decrease:
Accounts receivable - related party -- -- (8,700)
Inventory -- -- (64,537)
Prepaid expenses -- -- --
Changes in Liabilities Increase (Decrease):
Accounts payable 6,660 (22,407) 303,059
Accrued expenses 130,189 161,350 1,671,692
Accrued termination fee -- -- 1,000,000
Unearned revenue (50,000) (50,000) 400,000
------------- ------------- -------------
NET CASH USED IN OPERATING ACTIVITIES (9,600) (6,221) (1,868,033)
------------- ------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment -- -- (99,171)
Acquisition of intangibles -- -- (87,944)
------------- ------------- -------------
NET CASH USED IN INVESTING ACTIVITIES -- -- (187,115)
------------- ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from overdraft 4,475 -- 4,475
Proceeds from sale of common stock -- -- 1,018,000
Prepaid financing costs -- -- (96,349)
Proceeds from stockholder and officers loan -
net -- 7,000 254,022
Proceeds from issuance of convertible notes -- -- 875,000
------------- ------------- -------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 4,475 7,000 2,055,148
------------- ------------- -------------
(DECREASE) INCREASE IN CASH (5,125) 779 --
CASH (OVERDRAFT) - BEGINNING OF YEAR 5,125 (849) --
------------- ------------- -------------
(OVERDRAFT) CASH - END OF YEAR $ -- $ (70) $ --
============= ============= =============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
- --------------------------------------------------
Cash paid during the year for:
Interest $ -- $ -- $ 7,359
============= ============= =============
Income taxes $ -- $ 525 $ 1,600
============= ============= =============
See accompanying notes to condensed financial statements.
8
NURESCELL INC.
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - MANAGEMENT REPRESENTATION
The financial statements included herein have been prepared by Nurescell Inc.
(the "Company"), without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information normally included in the
financial statements prepared in accordance with generally accepted accounting
principles have been omitted pursuant to such rules and regulations. However,
the Company believes that the disclosures are adequate to make the information
presented not misleading. It is suggested that the financial statements be read
in conjunction with the audited financial statements and notes for the fiscal
year ended March 31, 2003 included in the Company's annual report on Form
10-KSB. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation, have been
included. The interim results are not necessarily indicative of the results for
the full year.
NOTE 2 - GOING CONCERN
The Company has accumulated net losses of $10,993,006 and a shareholders'
deficiency of $4,323,248 as of June 30, 2003. The Company's capacity to operate
as a going-concern is dependent on its ability to obtain adequate financing to
fund its operations until the Company is able to generate commercial revenues
sufficient to fund ongoing operations. These factors, among others, raise
substantial doubt about the Company's ability to continue as a going concern.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
NOTE 3 - NEW PRONOUNCEMENTS
On May 15, 2003, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) 150, "Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and Equity". SFAS 150
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability (or an asset in some circumstances). SFAS 150 affects the
issuer's accounting for three types of freestanding financial instruments.
- - Mandatory redeemable shares, which the issuing company is obligated to buy
back in exchange for cash or other assets.
- - Instruments that do or may require the issuer to buy back some of its shares
in exchange for cash or other assets; includes put options and forward purchase
contracts.
- - Obligations that can be settled with shares, the monetary value of which is
fixed, tied solely or predominantly to a variable such as a market index, or
varies inversely with the value of the issuers' shares.
9
NURESCELL INC.
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
NOTE 3 - NEW PRONOUNCEMENTS (Continued)
SFAS 150 does not apply to features embedded in a financial instrument that is
not a derivative in its entirety. Most of the guidance in SFAS 150 is effective
for all financial instruments entered into or modified after May 31, 2003, and
otherwise is effective at the beginning of the first interim period beginning
after June 15, 2003. The Company has not yet completed its analysis of SFAS 150;
however, it believes that it is currently substantially in compliance with the
requirements of SFAS 150.
NOTE 4 - DISCONTINUED OPERATIONS
In a Restructure Agreement dated March 21, 2003 between the Company, Triton
Private Equities Fund, L.P. ("Triton"), Advanced Technology Industries, Inc.
("ATI") and ATI Nuklear AG ("AG"), the Company has agreed to transfer its
technology to AG upon the occurrence of certain conditions. Accordingly, the
Company's operations have been reflected as discontinued operations in the
accompanying statements of operations.
The following information summarizes the operating results of the Company's
technology for the periods indicated below:
For the Period
For the Three Months from
Ended June 30, May 12, 1998
----------------------------- (Inception) to
2003 2002 June 30, 2003
------------- ------------- -------------
Operating Results:
Revenue - net $ 50,000 $ 50,000 $ 596,661
------------- ------------- -------------
Expenses:
Research and development -- -- 472,476
General and administrative
expenses -- -- 8,306,892
Depreciation expense -- 3,889 58,923
Interest expense, net 81,182 79,197 1,573,008
Termination fee -- -- 1,000,000
Loss on inventory write down -- -- 64,537
Write-off of intangible assets -- -- 87,944
Loss on abandonment of
Computer software -- -- 39,026
Gain on conversion of debt -- -- (280,000)
------------- ------------- -------------
Total Expenses 81,182 83,086 11,322,806
------------- ------------- -------------
Loss from Discontinued
Operations $ (31,182) $ (33,086) $(10,726,145)
============= ============= =============
10
NURESCELL INC.
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - DISCONTINUED OPERATIONS (Continued)
Additionally, liabilities associated with the discontinued operations include
the following at June 30, 2003:
Convertible notes payable - ATI (related party) $1,000,000
Convertible notes payable - Triton (related party) 690,000
Accounts payable 203,059
Due to stockholders and former officers 254,022
Accrued expenses 1,671,692
Unearned revenue 400,000
----------
$4,218,773
==========
NOTE 5 - ACCRUED EXPENSES
Accrued expenses consist of the following at June 30, 2003:
Accrued directors' fees $ 58,000
Accrued salary 521,937
Accrued interest and penalties (Related parties) 957,174
Accrued payroll taxes 5,476
Other advances 129,105
----------
$1,671,692
==========
NOTE 6 - DEFAULTS UPON SENIOR SECURITIES
On December 15, 1999 and February 8, 2000, respectively, the Company issued
convertible promissory notes to Triton, each with a face value of $385,000 and
bearing interest at 8% per annum. As of June 30, 2003, the combined outstanding
principal balance of those notes was $690,000. On December 1, 2001, the Company
defaulted with respect to those notes. The parties expect to remedy the default
pursuant to the terms of the Restructure Agreement
11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
- -------------------------------------------------------------------
THIS SECTION CONTAINS FORWARD-LOOKING STATEMENTS, INCLUDING STATEMENTS REGARDING
THE COMPANY'S PROSPECTS FOR CONTINUED OPERATION AND EXISTENCE AND STATEMENTS
REGARDING THE COMPANY'S PLANS, OBJECTIVES, EXPECTATIONS AND INTENTIONS. THOSE
FORWARD-LOOKING STATEMENTS ARE BASED ON MANAGEMENT'S CURRENT EXPECTATIONS AND
ARE SUBJECT TO A NUMBER OF RISKS, FACTORS AND UNCERTAINTIES THAT MAY CAUSE
ACTUAL RESULTS, EVENTS AND PERFORMANCE TO DIFFER MATERIALLY FROM THOSE REFERRED
TO IN THE FORWARD-LOOKING STATEMENTS. THOSE RISKS, FACTORS AND UNCERTAINTIES
INCLUDE, BUT ARE NOT LIMITED TO, THE COMPANY'S HISTORY OF NET LOSSES,
UNCERTAINTY AS TO THE AVAILABILITY OF REQUIRED FUNDING AND UNCERTAINTY AS TO THE
COMPANY'S ABILITY TO MAINTAIN OPERATIONS AT ANY LEVEL. THE CAUTIONARY STATEMENTS
MADE IN THIS SECTION SHOULD BE READ AS BEING APPLIED TO ALL RELATED
FORWARD-LOOKING STATEMENTS WHEREVER THEY APPEAR IN THIS DOCUMENT. THIS SECTION
SHOULD BE READ IN CONJUNCTION WITH THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB
FOR THE FISCAL YEAR ENDED MARCH 31, 2003.
PLAN OF OPERATION.
The Company is a development stage company, with its operations to date
principally consisting of research, development, testing and marketing of its
radiation shielding technology (the "Nurescell Technology"). From inception to
June 30, 2003, the Company obtained approximately $918,000 in financing through
the sale of equity securities in two private offerings and approximately
$102,500 through the exercise of stock options, as well as $875,000 through the
issuance of convertible promissory notes (the "Notes") to Triton Private
Equities Fund, L.P. ("Triton"). In addition, the Company has received $254,022
in advances from shareholders and former officers through June 30, 2003. The
Company utilized all of those funds to (i) commence and pursue patent
applications for the Nurescell Technology, (ii) identify, negotiate and finalize
suitable research, development and testing contracts, (iii) identify, negotiate
and finalize marketing consulting contracts and (iv) provide working capital for
the ongoing administrative and financing acquisition costs of the Company.
The Company has incurred losses since inception, including a net loss of $97,097
for the three months ended June 30, 2003. From May 12, 1998 (inception) through
June 30, 2003, the Company has had a cumulative loss of $10,993,006.
Despite its efforts, the Company has failed to generate any significant revenue
from the Nurescell Technology. Having exhausted all of its funding and without
any source of revenue, the Company has been forced to reduce its operations to a
minimal level. Faced with increasing pressure from Triton regarding the
Company's obligations under the Notes, on March 21, 2003, the Company entered
into a Restructure Agreement (the "Restructure Agreement") with Triton, Advanced
Technology Industries, Inc. ("ATI") and ATI's subsidiary, ATI Nuklear AG,
pursuant to which Triton has taken control of the Company and the Company will
divest itself of the Nurescell Technology (which is now expected to occur in the
fourth quarter of 2003). At this time, the Company believes that for the
foreseeable future Triton will provide funding for at least minimal Company
operations (including continued reporting under the Securities Exchange Act of
1934) while it determines whether the Company has value as a candidate in a
merger or other business combination (on terms that may or may not be favorable
to the Company's existing shareholders). It is not expected, however, that
Triton's funding will continue indefinitely. Should Triton eventually determine
that the Company has no value that would justify continued funding, it is
expected that the Company will be required to discontinue operations entirely,
seek protection under federal bankruptcy laws, or both.
RESULTS OF OPERATIONS FOR THE THREE-MONTH PERIODS ENDED JUNE 30, 2003 AND 2002.
The Company had net sales of $0 for both the three-month period ended June 30,
2003 and the three-month period ended June 30, 2002. As the Company has been in
the development stage, revenue generated since inception has been minimal.
Operating expenses of $65,915 for the three-month period ended June 30, 2003
were almost the same as the operating expenses of $65,967 for the three-month
period ended June 30, 2002. Those operating expenses reflect an ongoing
reduction in general and administrative expenses, which is primarily
attributable to significant decreases in overhead, including salaries, rent,
travel and legal expenses, as the Company continues its operations at a minimal
level.
12
Interest expense of $81,182 for the three-month period ended June 30, 2003 was
$1,985 higher than the interest expense of $79,197 for the three-month period
ended June 30, 2002 due to the imposition of penalties by Triton for failure to
register the shares of common stock issuable upon conversion of the Notes.
Licensing fees generated revenue of $50,000 in the three months ended June 30,
2003 and 2002.
As a result of the above factors, the net loss for the three-month period ended
June 30, 2003 was $97,097, or $.002 per share, as compared to a net loss of
$99,053, or $.006 per share, for the three-month period ended June 30, 2002.
FINANCIAL POSITION.
Total assets decreased from $5,125 at March 31, 2003 to $0 at June 30, 2003. The
decrease is primarily attributed to general and administrative expenses.
Total liabilities increased from $4,231,276 at March 31, 2003 to $4,323,248 at
June 30, 2003. The increase is primarily attributed to an increase in accrued
expenses of $130,189 and an increase in accounts payable of $6,660, offset in
part by a decrease in unearned revenue of $50,000.
Shareholders' deficit increased from $4,226,151] at March 31, 2003 to $4,323,248
at June 30, 2003. The increase was caused by the net loss of $97,097 for the
three-month period ended June 30, 2003.
LIQUIDITY AND CAPITAL RESOURCES.
The Company requires significant funding for continued operations, even at
minimal levels. At this point, the amount of expenditures required to maintain
operations far exceeds existing cash, which was $0 at June 30, 2003.
The Company's cash flow used in operating activities decreased from $6,221 for
the three-month period ended June 30, 2002 to $9,600 for the three-month period
ended June 30, 2003. This is primarily attributed to chargebacks to the Company
resulting from an agreement with ATI, offset in part by a decrease in the
Company's other operating expenses, such as rent, salaries, taxes, phone,
travel, and utilities.
During the three-month period ended June 30, 2003, the Company has obtained
liquidity primarily from cash advances from Triton.
The Company's financial statements for the quarter ended June 30, 2003 have been
prepared assuming the Company will continue as a going-concern. As noted in the
Company's financial statements for the year ended March 31, 2003, as filed with
the Company's report on Form 10-KSB for that period, the presence of significant
losses, negative cash flows and limited working capital, together with the
uncertainties associated with the ability of the Company to obtain additional
capital, raise substantial doubts as to the Company's ability to continue as a
going-concern. The Company's ability to continue as a going-concern will be
questionable until such time as it is able to generate sufficient revenues in
excess of expenses to sustain its normal business activities. Until that time,
the Company will depend on its ability to raise additional capital through
either loans or equity or debt offerings. There can, however, be no guarantee
that such financing will be obtained or that any additional financing will be
available on terms favorable to the Company or its shareholders, if at all. As
noted above, the Company believes that for the foreseeable future Triton will
provide funding for at least minimal Company operations while it determines
whether the Company has value as a candidate in a merger or other business
combination. It is not expected, however, that Triton's funding will continue
indefinitely. Should Triton eventually determine that the Company has no value
that would justify continued funding, it is expected that the Company will be
required to discontinue operations entirely, seek protection under federal
bankruptcy laws, or both.
13
ITEM 3. CONTROLS AND PROCEDURES.
- ---------------------------------
The Company's Chief Executive Officer and Chief Financial Officer has conducted
an evaluation of the Company's disclosure controls and procedures as of a date
(the "Evaluation Date") within 90 days before the filing of this quarterly
report. Based on his evaluation, the Company's Chief Executive Officer and Chief
Financial Officer has concluded that the Company's disclosure controls and
procedures are effective to ensure that information required to be disclosed by
the Company in reports that it files or submits under the Securities Exchange
Act of 1934 is recorded, processed, summarized and reported within the time
periods specified in the applicable Securities and Exchange Commission rules and
forms.
Subsequent to the Evaluation Date, there were no significant changes in the
Company's internal controls or in other factors that could significantly affect
those controls, nor were any corrective actions required with regard to
significant deficiencies and material weaknesses.
PART II
OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES.
- -------------------------------
The Company has privately issued 30,000,000 shares of common stock to Triton.
Such issuance was made pursuant to Triton's March 21, 2003 conversion of $30,000
of a $385,000 convertible promissory note previously issued to Triton. The
convertible promissory note was issued in December 1999 pursuant to Rule 506 of
Regulation D and Section 4(6) of the Securities Act of 1933 in a negotiated
transaction. Triton is an accredited investor.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
- -----------------------------------------
On December 15, 1999 and February 8, 2000, respectively, the Company issued the
Notes to Triton, each with a face value of $385,000 and bearing interest at 8%
per annum. As of June 30, 2003, the outstanding principal balance on the Notes
was $690,000. On December 1, 2001, the Company defaulted with respect to the
Notes. The parties expect to remedy the default pursuant to the terms of the
Restructure Agreement
ITEM 5. OTHER INFORMATION.
- --------------------------
On July 29, 2003, the Company filed a Registration Statement on Form S-8
registering up to 80,000,000 shares of common stock for issuance pursuant to its
2003 Stock Compensation Plan (the "Plan"). The purpose of the Plan is to enable
the Company to offer those officers, directors, employees and consultants who
have provided, or may in the future provide, services to the Company an
opportunity to acquire common stock in lieu of a cash payment for those
services. It is anticipated that of the 80,000,000 shares reserved for the Plan,
72,245,862 shares will initially be issued to certain persons who are owed a
total of $722,458 for services previously rendered as officers, directors,
employees or consultants of the Company.
14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
- ------------------------------------------
(a) The following Exhibits are attached hereto:
Exhibit Number Description
-------------- -----------
3.1 Articles of Incorporation, as amended (1)
3.2 Bylaws (1)
4.1 Form of $385,000 Series 1999-A Convertible Promissory
Note due December 1, 2001 (2)
4.2 Form of $385,000 Series 2000-A Convertible Promissory
Note due December 1, 2001 (3)
4.3 Secured Promissory Note dated September 30, 2001 for
$1,000,000 from the Company to ATI Nuklear AG (4)
4.4 Securities Purchase Agreement between the Company and
Triton Private Equities Fund, L.P. dated December 15,
1999 (2)
4.5 Securities Purchase Agreement between the Company and
Triton Private Equities Fund, L.P. dated February 8,
2000 (3)
4.6 Registration Rights Agreement between the Company and
Triton Private Equities Fund, L.P. dated December 15,
1999 (2)
4.7 Registration Rights Agreement between the Company and
Triton Private Equities Fund, L.P. dated February 8,
2000 (3)
4.8 Promissory Note dated April 6, 2000 for $165,000 from
the Company to the Glenn A. Cramer Separate Property
Trust (3)
4.9 Promissory Note dated May 1, 2000 for $82,500 from the
Company to the Glenn A. Cramer Separate Property Trust
(3)
4.10 Promissory Note dated June 1, 2000 for $82,500 from
the Company to the Glenn A. Cramer Separate Property
Trust (3)
10.1 Consulting Agreement between the Company and John
Longenecker dated June 26, 1998 (1)
10.2 Form of Stock Option Agreement between the Company and
its officers and directors (1)
10.3 1998 Stock Option Plan (1)
10.4 Form of Indemnification Agreement between the Company
and its officers and directors (1)
10.5 Consulting Agreement between the Company and Shelby T.
Brewer dated December 1, 1999 (3)
10.6 Investment Agreement between the Company and Nurescell
AG dated August 17, 2000 (5)
10.7 License Agreement between the Company and Nurescell AG
dated as of August 15, 2000 (5)
10.8 Registration Rights Agreement between the Company and
Nurescell AG dated August 15, 2000 (5)
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10.9 Modified License Agreement between the Company and
Advanced Technology Industries, Inc. Dated as of June
11, 2001(6)
10.10 Transaction Restructure Agreement between the Company,
Advanced Technology Industries, Inc. and ATI Nuklear
AG dated as of September 30, 2001(4)
10.11 Restructure Agreement between the Company, Triton
Private Equities Fund, L.P., Advanced Technology
Industries, Inc. and ATI Nuklear AG dated as of March
21, 2003 (7)
10.12 Convertible Promissory Note dated March 21, 2003 from
the Company to Triton Private Equities Fund, L.P. (8)
10.13 Consulting Agreement dated as of April 1, 2003 between
the Company, Larry Shatsoff and Triton Private
Equities Fund, L.P. (8)
10.14 2003 Stock Compensation Plan (9)
99.1 Certificate of Nurescell Inc. Chief Executive Officer
and Chief Financial Officer pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
(1) Incorporated by reference from the Company's Registration Statement on
Form 10-SB (File No. 0- 25377).
(2) Incorporated by reference from the Company's Report on Form 10-QSB for
the quarter ended December 31, 1999 (File No. 0-25377)
(3) Incorporated by reference from the Company's Report on Form 10-KSB for
the year ended March 31, 2000 (File No. 0-25377)
(4) Incorporated by reference from the Company's Report on Form 10-QSB for
the quarter ended September 30, 2001 (File No. 0-25377)
(5) Incorporated by reference from the Company's Report on Form 10-QSB for
the quarter ended September 30, 2000 (File No. 0-25377)
(6) Incorporated by reference from the Company's Report on Form 10-QSB for
the quarter ended June 30, 2001 (File No. 0-25377)
(7) Incorporated by reference from the Company's Report on Form 10-QSB for
the quarter ended December 31, 2002 (File No. 0-25377)
(8) Incorporated by reference from the Company's Report on Form 10-KSB for
the year ended March 31, 2003 (File No. 0-25377)
(9) Incorporated by reference from the Company's Registration Statement on
Form S-8 (File No. 333-107430)
(b) No reports on Form 8-K were filed during the Company's fiscal
quarter ended June 30, 2003.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
has caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Date: August 12, 2003 NURESCELL, INC.
By: /s/ LAWRENCE SHATSOFF
--------------------------------
Lawrence Shatsoff, President and
Chief Financial Officer
17