OMB APPROVAL
OMB Number: 3235-0418
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ARMOR ELECTRIC, INC.
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(Name of small business issuer in its charter)
FLORIDA 9995 65-0853784
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation organization) Classification Code Number) Identification No.)
201 Lomas Santa Fe, Suite #420, Solana Beach, CA 92075 (858) 720-0354
(Address and telephone number of principal executive offices)
Thomas A. Braun
Braun and Company
702 - 777 Hornby Street
Vancouver, BC V6Z 1S2
(604) 605-0507 (telephone) (604) 605-0508 (facsimile)
(Name, address and telephone number of agent for service)
Approximate date of proposed sale to the public: From time to time after this
Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. [ ]
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH PROPOSED PROPOSED
CLASS OF AMOUNT(1) MAXIMUM MAXIMUM AMOUNT
SECURITIES TO TO BE OFFERING AGGREGATE REGISTRATION
BE REGISTERRED REGISTERRED PRICE PER UNIT OFFERING PRICE FEE
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Shares of Common
Stock, par value
$0.001 5,200,000 $0.10 (2) $520,000 $61.20
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Shares of Common
Stock, par value
$0.001 5,700,000 $0.15 (3) $855,000 $100.64
Total Fee Due: $ 161.84
(1) All 10,900,000 shares registered pursuant to this registration statement
are to be offered by the selling shareholders. Pursuant to Rule 416 under
the Securities Act, this registration statement also covers such number of
additional shares of common stock to prevent dilution resulting from stock
splits, stock dividends and similar transactions pursuant to the terms of
the warrants referenced below.
(2) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(c) under the Securities Act, using the average of
the high and low price as reported on the Over the Counter Bulletin Board
on March 29, 2005.
(3) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(c) and Rule 457(g) under the Securities Act, using
the price at which the warrants may be exercised.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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PROSPECTUS
ARMOR ELECTRIC, INC.
10,900,000 SHARES OF COMMON STOCK
This prospectus relates to an aggregate of up to 10,900,000 shares of our
common stock, which may be offered by the selling shareholders identified in
this prospectus for their own account. Of such shares, 5,200,000 shares were
outstanding as of March 29, 2005, and 5,700,000 shares are issuable upon
exercise of warrants that we have issued to the Selling Security Holders. Our
filing of the registration statement, of which this prospectus is a part, is
intended to satisfy our obligations to certain of the Selling Security Holders
to register for resale the shares issued to them and the shares issuable upon
exercise of the warrants issued to them. The Selling Security Holders may sell
common stock from time to time in the principal market on which the stock is
traded at the prevailing market price or in negotiated transactions.
2
The issuance of the shares and warrants by the Company to the
Selling Security Holders was exempt from the registration requirements of the
Securities Act of 1933 (the "Securities Act"). See "SELLING SECURITY HOLDERS" on
page 12.
The Selling Security Holders may sell these shares that they acquire
from time to time in brokers' transactions, negotiated transactions, or
otherwise at prevailing market prices or privately negotiated prices. We will
not receive any proceeds from the sale of the shares by these selling
shareholders. We did, however, receive proceeds from the sale of the shares and
may receive proceeds in the event that some or all of the warrants held by the
selling shareholders are exercised. From the sale of the shares, we received
$520,000. If all of the warrants are exercised, we expect to receive $855,000.
However, the Selling Security Holders may choose to exercise or not exercise any
number of the warrants, so we cannot accurately estimate what proceeds we may
receive from the exercise of the warrants. See "USE OF PROCEEDS" on page 11.
We will pay all expenses of the registration of the shares, except
brokerage commissions and transfer taxes, which will be paid by the Selling
Security Holders. We estimate that the expenses will be $101,662.
Our common stock is listed on the Over the Counter Bulletin Board under
the symbol "ARME.OB". The last reported sales price per share of our common
stock, as reported by the Over the Counter Bulletin Board on May 4, 2005 was
$0.09.
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INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 8.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The Date of this Prospectus is: May 4, 2005.
3
TABLE OF CONTENTS
PART I
Notice About Forward-Looking Statements ................................. 4
Summary Information & Risk Factors ..................................... 5
Use of Proceeds ......................................................... 11
Selling Security Holders ................................................ 12
Plan of Distribution .................................................... 14
Legal Proceedings ....................................................... 16
Directors, Executive Officers, Promoters and Control Persons ............ 17
Security Ownership of Certain Beneficial Owners and Management .......... 20
Description of Securities................................................ 22
Interest of Named Experts and Counsel.................................... 24
Disclosure of Commission Position on Indemnification for
Securities Act Liabilities .............................................. 24
Certain Relationships and Related Transactions .......................... 25
Description of Business ................................................. 25
Management's Discussion and Analysis or Plan of Operation ............... 25
Description of Property ................................................. 30
Market for Common Equity and Related Stockholder Matters ................ 31
Executive Compensation................................................... 31
Financial Statements..................................................... 32
Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure ................................................ 32
PART II
Indemnification of Directors and Officers ............................... 32
Other Expenses of Issuance and Distribution ............................. 35
Recent Sales of Unregistered Securities ................................. 28
Exhibit Index............................................................ 35
Undertakings............................................................. 36
Signatures............................................................... 38
PART I
NOTICE ABOUT FORWARD-LOOKING STATEMENTS
This prospectus, any supplement to this prospectus and the documents
incorporated by reference include "forward-looking statements". To the extent
that the information presented in this prospectus discusses financial
projections, information or expectations about our business plans, results of
operations, products or markets, or otherwise makes statements about future
events, such statements are forward-looking. Such forward-looking statements can
be identified by the use of words such as "intends", "anticipates", "believes",
"estimates", "projects", "forecasts", "expects", "plans" and "proposes".
Although we believe that the expectations reflected in these forward-looking
statements are based on reasonable assumptions, there are a number of risks and
uncertainties that could cause actual results to differ materially from such
forward-looking statements. These include, among others, the cautionary
statements in the "Risk Factors" on page 8 of this prospectus and "Management's
Discussion and Analysis or Plan of Operation" on page 25 of this prospectus.
These cautionary statements identify important factors that could cause actual
results to differ materially from those described in the forward-looking
statements. When considering forward-looking statements in this prospectus, you
should keep in mind the cautionary statements in the "Risk Factors" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" sections, and other sections of this prospectus.
4
The statements contained in this Registration Statement that are not
purely historical are forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934, including, without limitation, statements regarding our expectations,
objectives, anticipations, plans, hopes, beliefs, intentions or strategies
regarding the future.
All forward-looking statements included in this document are based on
information available to us on the date hereof, and we assume no obligation to
update any such forward-looking statements. It is important to note that our
actual results could differ materially from those included in such
forward-looking statements. Factors that could cause actual results to differ
materially from the forward looking statements include, but are not limited to,
the following: (1) we may not be able to obtain necessary financing; (2) our
potential products may not meet product performance specifications; (3) our
potential products may be unable to compete successfully in either existing or
new markets; (4) availability and future costs of materials and other operating
expenses; (5) weakness in the global economy and changing market conditions,
together with general economic conditions affecting our target industries, could
cause the our operating results to fluctuate; (6) the risks involved in our
operations and potential future sales; and (7) disclosure controls cannot
prevent all error and all fraud. For a more detailed explanation of such risks,
please see the section entitled "Risk Factors" beginning on page 8 of this
Registration Statement. Such risks, as well as such other risks and
uncertainties as are detailed in our SEC reports and filings for a discussion of
the factors that could cause actual results to differ materially from the
forward- looking statements. Given these uncertainties, readers are cautioned
not to place undue reliance on the forward-looking statements.
The following discussion should be read in conjunction with the audited
consolidated financial statements and the notes included in this Registration
Statement and the section entitled "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included in this Registration
Statement.
SUMMARY INFORMATION AND RISK FACTORS
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY HIGHLIGHTS SELECTED INFORMATION CONTAINED ELSEWHERE
IN THIS PROSPECTUS. BECAUSE THIS IS A SUMMARY, IT MAY NOT CONTAIN ALL THE
INFORMATION YOU SHOULD CONSIDER BEFORE INVESTING IN OUR SECURITIES. BEFORE
MAKING AN INVESTMENT DECISION, YOU SHOULD READ THE ENTIRE PROSPECTUS CAREFULLY,
INCLUDING THE "RISK FACTORS" SECTION, BEGINNING ON PAGE 8, THE FINANCIAL
STATEMENTS AND THE NOTES TO THE FINANCIAL STATEMENTS.
FINANCIAL SUMMARY INFORMATION
The following table sets forth selected financial information, which should be
read in conjunction with the information set forth under "Management Discussion
and Analysis" and the accompanying consolidated Financial Statements of the
Company and related notes included elsewhere in this prospectus.
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INCOME STATEMENT DATA (UNAUDITED)
SIX MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, 2004 DECEMBER 31, 2003
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Revenue $0 $0
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Expenses $15,354 $3,571
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Loss per share less than $0.01 less than $0.01
per share per share
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Net Losses ($15,354) ($3,571)
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Working capital increased from a deficit of $26,841 in June 30, 2003 to a
deficit of $35,965 in December 31, 2004.
5
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BALANCE SHEET DATA DECEMBER 31, 2004 JUNE 30, 2004
(UNAUDITED) (AUDITED)
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Working Capital ($35,965) ($26,841)
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Total Assets $553 $553
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Total Liabilities $36,518 $27,394
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Shareholders Equity ($35,965) ($26,841)
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DESCRIPTION OF BUSINESS
Armor Electric, Inc. (the "Company" or "Armor") is in the business of developing
the distribution rights to electric vehicle and electric propulsion systems
The Company is in the business of developing certain manufacturing and
distribution rights to electric vehicle and electric propulsion systems. The
Company is in the development stage and currently has no products approved for
sale or use. The Company may not be able to sell significant quantities of its
product even if it is able to develop and commercially market products. The
Company's long-term viability, growth, and profitability will depend upon
successful development, commercialization and significant sales of the Company's
potential future products.
The Company, a development stage company, was incorporated on June 5, 1998 under
the laws of the State of Florida, under the name Armor Software, Inc. having the
stated purpose of engaging in any lawful practice or activity. On August 30,
1998, the shareholders of the Company approved an amendment to the Articles of
Incorporation, changing the name of the Company to Armor Enterprises, Inc. and
the amended articles were filed with the State of Florida on August 31, 1998. On
June 4, 2004 the Company approved an amendment to the Articles of Incorporation
changing the name of the Company to Armor Electric Inc. The amended articles
were filed with the State of Florida on June 7, 2004.
6
The Company's Articles of Incorporation provide for authorized capital of one
hundred and ten million (110,000,000) shares of which one hundred million
(100,000,000) are $0.001 par value Common Stock and ten million (10,000,000) are
$0.001 par value preferred stock.
The Company's original intention upon formation was to develop privacy
encryption software for the Internet. The Company was unable to raise enough
capital to finance its research and development of the software while other
larger companies began addressing privacy issues, making the Company's proposed
software obsolete. After efforts to develop the business failed, all efforts
were abandoned in mid 2000.
The Company then began to consider and investigate potential business
opportunities.
On April 27, 2004, the Company entered into an Asset Purchase Agreement (the
"Agreement") with Nova Electric Systems Inc. (the "Nova"). Nova owns the rights
to the use of technologies being developed to produce electronic propulsion and
battery power systems for electric powered vehicles. The Company is now engaged
in developing the distribution rights of Nova but has not yet produced,
distributed or sold anything. For more information on the Agreement with Nova,
please see "Plan of Operation on page 26.
The Company's principal executive offices are located at: 201 Lomas Santa Fe,
Suite #420, Solana Beach, CA 92075.
THE OFFERING
Common stock offered by selling 10,900,000 shares, assuming full exercise of
shareholders (including shares the warrants: 5,200,000 shares of common
underlying warrants) stock and 5,700,000 shares of common stock
issuable to the Selling Security Holders
upon exercise of their warrants. This number
represented approximately 30.25% of our
current outstanding stock as of February 23,
2005. (1)
Common stock to be outstanding 46,931,681 shares (assuming full exercise of
after the offering the warrants)
Minimum number of shares to be None
sold in this offering
Proceeds to Armor We will not receive proceeds from the resale
of shares by the selling shareholders. If
all warrants are fully exercised, we will
receive approximately $855,000 in cash from
the warrant holders.
Use of proceeds Working capital
Over the Counter Bulletin Board ARME.OB
Symbol
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(1) Based on 36,031,681 shares of common stock outstanding as of February 23,
2005.
As of May 4, 2005, the company's common stock was trading at a price of $0.09
per share.
7
RISK FACTORS
The business of the Company involves a number of risks and uncertainties that
could cause actual results to differ materially from results projected in any
forward-looking statement, or statements, made in this report. These risks and
uncertainties include, but are not necessarily limited to the risks set forth
below. The Company's securities are speculative and investment in the Company's
securities involves a high degree of risk and the possibility that the investor
will suffer the loss of the entire amount invested. The business of the Company
involves a number of risks and uncertainties that could cause actual results to
differ materially from results projected in any forward-looking statement, or
statements, made in this registration statement or other report by the Company.
These risks and uncertainties include, but are not limited to the risks set
forth below. The Company's securities are speculative and investment in the
Company's securities involves a high degree of risk and the possibility that the
investor will suffer the loss of the entire amount invested.
BECAUSE WE ARE CURRENTLY A DEVELOPMENT STAGE COMPANY, WE HAVE NO PRODUCTS
AVAILABLE FOR SALE OR USE AND MAY LACK THE FINANCIAL RESOURCES NEEDED TO BRING
PRODUCTS TO MARKET.
The Company is in the business of developing certain manufacturing and
distribution rights to electric vehicle and electric propulsion systems. The
Company is in the development stage and currently has no products approved for
sale or use. The Company may not be able to sell significant quantities of its
product even if it is able to develop and commercially market products. The
Company's long-term viability, growth, and profitability will depend upon
successful development, commercialization and significant sales of the Company's
future products.
BECAUSE WE HAVE A LIMITED OPERATING HISTORY ON WHICH AN EVALUATION OF OUR
PROSPECTS CAN BE MADE, WE MAY NOT BE ABLE TO EFFECTIVELY MANAGE THE DEMANDS
REQUIRED OF A NEW BUSINESS IN THE ELECTRIC VEHICLE AND ELECTRIC PROPULSION
SYSTEMS INDUSTRY.
The Company has a limited operating history upon which an evaluation of its
prospects can be made. There can be no assurance that the Company will
effectively execute its business plan or manage the growth of its business, or
that the Company's future operating and financial forecast will be met. Future
development and operating results will depend on many factors, including access
to adequate capital, the development of marketable products, the demand for the
Company's products, the level of product and price competition, the Company's
success in setting up and expanding distribution channels, and whether the
Company can control costs. Some of these factors are beyond the control of the
Company. In addition, the Company's future prospects must be considered in light
of the risks, expenses, and difficulties frequently encountered in establishing
a new business in the electric vehicle and electric propulsion systems industry
(the "Industry"), which is characterized by intense competition, rapid
technological change, potential product liability and significant regulation.
8
BECAUSE WE HAVE A HISTORY OF LOSSES AND ANTICIPATE CONTINUED LOSSES THROUGH OUR
DEVELOPMENT STAGE, WE MAY LACK THE FINANCIAL STABILITY REQUIRED TO CONTINUE
OPERATIONS.
Since inception, the Company has suffered recurring losses and has not earned
any revenues to date. The Company incurred a loss of $18,369 USD for the year
ended June 30, 2004 and a loss of $11,110 during the year ended June 30, 2003.
Since inception , the Company incurred losses of $83,785. The Company has funded
its operations through the issuance of common stock since inception, in order to
meet its strategic objectives. The Company anticipates that losses will continue
until such time, if ever, as the Company is able to generate sufficient revenues
to support its operations. The Company's ability to generate revenue primarily
depends on its success in completing the development and successful
commercialization of products. There can be no assurance that the Company will
ever achieve profitable operations.
BECAUSE THE LIFE CYCLE OF ELECTRONIC PRODUCTS ARE DIFFICULT TO PREDICT, EVEN IF
WE WERE TO INTRODUCE A PRODUCT TO THE MARKET WE MAY NOT BE ABLE TO GAIN MARKET
ACCEPTANCE OF THE PRODUCT.
The life cycle of the products that the Company plans to develop is difficult to
predict. Failure to gain timely market acceptance of its products would have a
material adverse effect on the Company's ability to generate revenue, and would
have a material adverse effect on the Company's business, financial condition
and results of operations.
BECAUSE WE ARE SIGNIFICANTLY SMALLER THAN THE MAJORITY OF OUR NATIONAL
COMPETITORS WE MAY LACK THE FINANCIAL RESOURCES NEEDED TO CAPTURE MARKET SHARE.
The market in which the Company intends to operate is dominated by several large
firms with established products, and the Company's success is dependant upon
acceptance of its products by consumers as reliable, safe and cost-effective. It
may be difficult or impossible for the Company to achieve such acceptance of its
products in view of these market conditions. In addition, the Company's
competitors are more financially stable than the Company and have significant
resources for research, development and marketing available to them. Thus it is
likely that they will be quicker to market than the Company, with products that
will compete with the Company's potential products in the future. The Company's
competitors already have established products on the market that would directly
compete with any potential future products of the Company. Moreover, even if the
Company successfully brings any product to market ahead of its competitors,
established competitors could quickly bring products to market that would
compete. Market acceptance of the Company's products may be influenced by new
products or technologies that come to market, which could render the Company's
products obsolete or prohibitively expensive.
9
BECAUSE WE HAVE NOT EARNED ANY REVENUES FROM OPERATIONS, OUR CAPITAL
REQUIREMENTS HAVE BEEN MET THROUGH FINANCINGS AND IT IS NOT CERTAIN WE WILL BE
ABLE TO CONTINUE TO FIND FINANCING TO MEET OUR OPERATING REQUIREMENTS.
The Company's capital requirements have been and will continue to be
significant. The Company will be dependant on future financing to fund its
research and development as well as other working capital requirements.
In the event that the Company's plans change, its assumptions change or prove
inaccurate, or its capital resources prove to be insufficient to fund
operations, the Company could be required to seek additional financing sooner
than currently anticipated, or in greater amounts than is currently anticipated.
Any inability to obtain additional financing when needed would have a material
adverse effect on the Company, including possibly requiring the Company to
significantly curtail or possibly cease its operations. In addition, any future
equity financing may involve substantial dilution to the Company's existing
shareholders.
BECAUSE PRODUCT LIABILITY EXISTS IN THE INDUSTRY AND INSURANCE IS EXPENSIVE AND
DIFFICULT TO OBTAIN, THE COMPANY MAY BE EXPOSED TO LARGE LAWSUITS.
The Company's business exposes it to potential product liability risks, which
exist in the testing, manufacturing, marketing and sale of electric vehicle and
electric propulsion systems. While the Company will take precautions it deems to
be appropriate to avoid product liability suits against it, there can be no
assurance that it will be able to avoid significant product liability exposure.
Product liability insurance for the Industry is generally expensive, to the
extent it is available at all. The Company has not yet sought to obtain product
liability coverage. The Company intends to obtain such coverage when it is
apparent that the products developed by the Company will be marketable. There
can be no assurance that it will be able to obtain such coverage on acceptable
terms, or that any insurance policy will provide adequate protection against
potential claims. A successful product liability claim brought against the
Company may exceed any insurance coverage secured by the Company, and could have
a material adverse effect on the Company's results or ability to continue
marketing its products.
BECAUSE OUR STOCK IS LISTED ON THE OTCBB AND NOT A LARGER OR MORE RECOGNIZED
EXCHANGE, INVESTORS MAY FIND IT DIFFICULT TO SELL THEIR SHARES OR OBTAIN
ACCURATE QUOTATIONS FOR SHARE PRICES.
The Company's common stock is listed on the OTCBB. Investors may find it more
difficult to dispose of, or to obtain accurate quotations as to the market value
of, the Company's common stock than would otherwise be the case were the
Company's common stock listed on a more recognized stock exchange or quotation
service. In addition, trading in the Company's common stock is currently subject
to certain rules under the Exchange Act, which require additional disclosure by
broker-dealers in connection with any trades involving a stock defined as a
"penny stock." Penny stocks are generally non-Nasdaq equity securities with a
10
market price less than $5.00 per share. The penny stock rules require
broker-dealers selling penny stocks to make certain disclosures about such
stocks to purchasers thereof, and impose sales practice restrictions on
broker-dealers in certain penny stock transactions. The additional burdens
imposed upon broker-dealers by these rules may discourage them from effecting
transactions in the Company's common stock, which could limit the liquidity of
the common stock and the ability of the Company's Security Holders to sell their
stock in the secondary market.
Trade of these shares is restricted. These securities have not been registered
with the securities and exchange commission or the securities commission of any
state in reliance upon an exemption from registration under the securities act
of 1933, as amended (the "securities act"), and, accordingly, may not be offered
or sold except pursuant to an effective registration statement under the
securities act or pursuant to an available exemption from, or in a transaction
not subject to, the registration requirements of the securities act and in
accordance with applicable state securities laws as evidenced by a legal opinion
of counsel to the transferor to such effect, the substance of which shall be
reasonably acceptable to the company.
GOING CONCERN RISK
There is doubt as to our ability to continue as a going concern based on our
past operating losses. There can be no assurances that the capital required to
fulfill the business plan of the Company can be obtained on terms favorable to
the Company.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the shares by the
Selling Stock Holders pursuant to this prospectus. However, we have received
$520,000 from the sale of the units containing 1 common share and 1 common share
purchase warrant and we may receive up to an additional $855,000 from the
exercise of warrants held by the Selling Security Holders. This figure assumes
that all of the warrants are exercised. There is no guarantee that all or any
warrants will be exercised or that the Company will receive any proceeds. The
proceeds, if any, would be used for general corporate purposes including, as a
priority, working capital.
The foregoing represents the Company's intentions based upon its present plans
and business conditions. The occurrence of unforeseen events or changes in
business conditions, however, could result in applying the proceeds from the
exercise of the warrants in a manner other than as described in this prospectus.
11
DETERMINATION OF OFFERING PRICE
The selling shareholders will sell at prevailing market prices or privately
negotiated prices. The Company's common shares are quoted on the OTC Bulletin
Board under the stock symbol "ARME".
SELLING SECURITY HOLDERS
This prospectus covers the offer and sale by the Selling Security Holders of up
to 5,200,000 shares of Common Stock and an additional 5,700,000 shares of Common
Stock issuable upon exercise of outstanding warrants, which were issued pursuant
to private placement transactions occurring between February 8 and April 18,
2005. The warrants have an exercise price of $0.15.
Except as stated below, none of the Selling Security Holders had any
relationship with us in the past three years:
Cheryl Spousta-Schertzer is our Vice-President of Operations.
Granite Financial Inc. is a broker-dealer who received its securities from us as
compensation for acting as a placement agent.
In the purchase agreements, each of the Selling Security Holders represented
that it had acquired the shares for investment purposes only and with no present
intent of distributing those shares, except in compliance with all applicable
securities law. In addition, each of the Selling Shareholders represented
whether he or she qualifies as an accredited investor as such term is defined in
Rule 501 of the SECURITIES ACT.
Other than to Granite Financial Group, Inc. ("Granite"), no brokerage or
finder's fees or commissions are or will be payable by the Company to any
broker, financial advisor or consultant, finder, placement agent, investment
banker, bank or other person with respect to the private placement transactions.
The table below sets forth information concerning the resale of the shares of
common stock by the Selling Security Holders. We will not receive any proceeds
from the resale of the common stock by the Selling Security Holders. We will
receive proceeds from the exercise of the warrants, if they are exercised. The
following table also sets forth the name of each person who is offering the
resale of shares of common stock by this prospectus, the number of shares of
common stock that may be sold in this offering and the number of shares that
each person will own after the offering, assuming each person sells all of the
shares offered. The number of shares beneficially owned is determined in
accordance with Rule 13d-3 of the SECURITIES EXCHANGE ACT of 1934, and the
information is not necessarily indicative of beneficial ownership for any other
purpose. Under such rule, beneficial ownership includes any shares as to which
the Selling Security Holder has sole or shared voting power or investment power
and also and shares the Selling Security Holder has the right to acquire within
60 days. Percentages are based on a total of 36,031,681 shares of common stock
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outstanding on February 23, 2005. Shares of common stock subject to options and
warrants currently exercisable or convertible, or exercisable or convertible
within 60 days of February 23, 2005, are deemed outstanding for computing the
percentage of the Selling Security Holder holding such option or warrant but are
not deemed outstanding for computing the percentage of any other Selling
Security Holder.
SELLING SECURITY HOLDER SHARES OF WARRANTS TOTAL AMOUNT TO BE
- ----------------------- --------- -------- ----- ------------
COMMON STOCK HELD BEFORE BENEFICIAL OFFERED FOR THE
------------ ----------- ---------- ---------------
BEFORE OFFERING OWNERSHIP SECURITY HOLDER'S
------ -------- --------- -----------------
OFFERING ACCOUNT
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DUECK, HANS 100,000 100,000 200,000 200,000
EDBLAD, HANS 100,000 100,000 200,000 200,000
HALVORSON, GEORGE 100,000 100,000 200,000 200,000
JOHNSON, RON 100,000 100,000 200,000 200,000
KISH, LOUIS (1)* 200,000 200,000 400,000 400,000
KLINGBEIL, GARRY 50,000 50,000 100,000 100,000
KUETTEL, SACHA 100,000 100,000 200,000 200,000
MOULTHROP, MICHELLE 50,000 50,000 100,000 100,000
PLUMMER, WALTER 50,000 50,000 100,000 100,000
PORCELLATO, RAMON 100,000 100,000 200,000 200,000
SEARLE, DAN 200,000 200,000 400,000 400,000
SOROKOVSKY, ALEXANDER 100,000 100,000 200,000 200,000
SOROROVSKY, NICK & HELEN GALINA 100,000 100,000 200,000 200,000
SOUHAIL, ABI FARRAGE 50,000 50,000 100,000 100,000
SPOUSTA-SCHERTZER, CHERYL, 100,000 100,000 200,000 200,000
VP of Operations
ZINKIL, ROY 100,000 100,000 200,000 200,000
KARP, SAMMUEL 1,000,000 1,000,000 2,000,000 2,000,000
LABRECHE, ROBERT 400,000 400,000 800,000 800,000
SCHREIBER, DANIEL 1,000,000 1,000,000 2,000,000 2,000,000
STEIN, RANDALL 200,000 200,000 400,000 400,000
ZEMER, JACK & SANDY 1,000,000 1,000,000 2,000,000 2,000,000
GRANITE Financial Inc. none 260,000 260,000 260,000
Broker/Dealer and
Placement Agent
13
As of February 23, 2005, there were 36,031,681 shares of the common stock issued
and outstanding. The number of shares of Common Stock to be issued and
outstanding after the offering will be 46,931,681, based on all Shares
registered under this prospectus actually being issued.
The Selling Security Holders hold 5,200,000 shares of the Company's common stock
as of the date of this prospectus and may hold up to 10,900,000 shares of the
Company's common stock if all of the warrants are exercised. However, the
Selling Security Holders may choose not to exercise any or all of the warrants
to obtain any or all of the underlying stock. Furthermore, the Selling Security
Holders may also retain or sell the shares they obtain through the purchase of
the units or may obtain through the exercise of any or all of the warrants.
Therefore, no definitive estimate as to the number of the Company's shares that
will be held by the Selling Security Holders after the offering can be provided.
PLAN OF DISTRIBUTION
The Selling Security Holders (the "SELLING SECURITY HOLDERS") of the
common stock ("COMMON STOCK") of Armor Electric Inc., a Florida corporation (the
"COMPANY") and any of their pledgees, assignees and successors-in-interest may,
from time to time, sell any or all of their shares of Common Stock on any stock
exchange, market or trading facility on which the shares are traded or in
private transactions. These sales may be at fixed or negotiated prices. The
Selling Security Holders may use any one or more of the following methods when
selling shares:
o ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
o block trades in which the broker-dealer will attempt to sell the
shares as agent but may position and resell a portion of the block
as principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
o an exchange distribution in accordance with the rules of the
applicable exchange;
o privately negotiated transactions;
o settlement of short sales entered into after the date of this
prospectus;
o broker-dealers may agree with the Selling Security Holders to sell
a specified number of such shares at a stipulated price per share;
o a combination of any such methods of sale;
14
o through the writing or settlement of options or other hedging
transactions, whether through an options exchange or otherwise; or
o any other method permitted pursuant to applicable law.
The Selling Security Holders may also sell shares under Rule 144 under
the Securities Act of 1933, as amended (the "SECURITIES ACT"), if available,
rather than under this prospectus.
Broker-dealers engaged by the Selling Security Holders may arrange for
other brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the Selling Security Holders (or, if any
broker-dealer acts as agent for the purchaser of shares, from the purchaser) in
amounts to be negotiated, but, except as set forth in a supplement to this
Prospectus, in the case of an agency transaction not in excess of a customary
brokerage commission in compliance with NASDR Rule 2440; and in the case of a
principal transaction a markup or markdown in compliance with NASDR IM-2440.
In connection with the sale of the Common Stock or interests therein,
the Selling Security Holders may enter into hedging transactions with
broker-dealers or other financial institutions, which may in turn engage in
short sales of the Common Stock in the course of hedging the positions they
assume. The Selling Security Holders may also sell shares of the Common Stock
short and deliver these securities to close out their short positions, or loan
or pledge the Common Stock to broker-dealers that in turn may sell these
securities. The Selling Security Holders may also enter into option or other
transactions with broker-dealers or other financial institutions or the creation
of one or more derivative securities which require the delivery to such
broker-dealer or other financial institution of shares offered by this
prospectus, which shares such broker-dealer or other financial institution may
resell pursuant to this prospectus (as supplemented or amended to reflect such
transaction).
The Selling Security Holders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. Each Selling Stockholder has
informed the Company that it does not have any written or oral agreement or
understanding, directly or indirectly, with any person to distribute the Common
Stock. In no event shall any broker-dealer receive fees, commissions and markups
which, in the aggregate, would exceed eight percent (8%).
The Company is required to pay certain fees and expenses incurred by
the Company incident to the registration of the shares. The Company has agreed
to indemnify the Selling Security Holders against certain losses, claims,
damages and liabilities, including liabilities under the Securities Act.
15
Because Selling Security Holders may be deemed to be "underwriters"
within the meaning of the Securities Act, they will be subject to the prospectus
delivery requirements of the Securities Act. In addition, any securities covered
by this prospectus which qualify for sale pursuant to Rule 144 under the
Securities Act may be sold under Rule 144 rather than under this prospectus.
Each Selling Stockholder has advised us that they have not entered into any
written or oral agreements, understandings or arrangements with any underwriter
or broker-dealer regarding the sale of the resale shares. There is no
underwriter or coordinating broker acting in connection with the proposed sale
of the resale shares by the Selling Security Holders.
We agreed to keep this prospectus effective until the earlier of (i)
the date on which the shares may be resold by the Selling Security Holders
without registration and without regard to any volume limitations by reason of
Rule 144(e) under the Securities Act or any other rule of similar effect or (ii)
all of the shares have been sold pursuant to the prospectus or Rule 144 under
the Securities Act or any other rule of similar effect. The resale shares will
be sold only through registered or licensed brokers or dealers if required under
applicable state securities laws. In addition, in certain states, the resale
shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any
person engaged in the distribution of the resale shares may not simultaneously
engage in market making activities with respect to the Common Stock for a period
of two business days prior to the commencement of the distribution. In addition,
the Selling Security Holders will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, including Regulation M,
which may limit the timing of purchases and sales of shares of the Common Stock
by the Selling Security Holders or any other person. We will make copies of this
prospectus available to the Selling Security Holders and have informed them of
the need to deliver a copy of this prospectus to each purchaser at or prior to
the time of the sale.
LEGAL PROCEEDINGS
None
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following table sets forth the name, age, and position of the executive
officers and directors of the Company as of the date of this registration
statement. The directors were appointed until the Company's next annual general
meeting or until a successor is elected and qualifies to be a director of the
Company:
16
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Directors and Executive Officers of the Company, their respective ages and
percentage of time during regular business hours that is devoted to the Company
are as follows:
Name Time Age Position
- ---- --- ---- ---------
Merrill Moses 100% 51 President and Director
Harj Manhas 25% 36 Secretary, Treasurer and Director
Thom Eggertson 25% 50 Director
Cheryl Spousta-Schertzer 50% 48 Vice President of Operations
and Director
LaRoy Orr 25% 52 VP of Marketing and
Finance and Director
All directors hold office until the next annual meeting of Security Holders and
until their successors have been duly elected and qualified. There are no
agreements with respect to the election of directors. The Company has not
compensated its directors for service on the Board of Directors or any committee
thereof. As of the date hereof, no director has accrued any expenses or
compensation. Officers are appointed annually by the Board of Directors and each
executive officer serves at the discretion of the Board of Directors. The
Company does not have any standing committees at this time.
No director, Officer, affiliate or promoter of the Company has, within the past
five years, filed any bankruptcy petition, been convicted in or been the subject
of any pending criminal proceedings, or is any such person the subject or any
order, judgment or decree involving the violation of any state or federal
securities laws.
(b) Identification of Certain Significant Employees.
Strategic matters and critical decisions are handled by the directors and
executive officers of the Company.
(c) Family Relationships. None
BUSINESS EXPERIENCE
The following is a brief account of the business experience during at least the
past five years of each director and executive officer of the Company, including
principal occupations and employment during that period and the name and
principal business of any corporation or other organization in which such
occupation and employment were carried on.
17
- -------------------------------- -----------------------------------------------
Name Principal occupation and related experience
- -------------------------------- -----------------------------------------------
MERRILL MOSES, PRESIDENT AND After finishing Brigham Young University,
DIRECTOR majoring in business and finance, Mr. Moses
attached himself to the business community. By
the age of 23, he had owned eight restaurants
and a variety of business ventures including
one of the originators of a major automotive
franchise called Jiffy Lube. As CEO and
President of M&M Foods and M&M Enterprises, he
focused on financial procurement, asset
accounting, debt serving, personnel management,
and equity financing industries. After leaving
these companies in 1979 and 1980, Merrill went
on to participate in the establishment and
operation of several public and private Natural
Resource Companies. In 1982, he formed Bonafied
Financial Management Company, (BFM), a
financial planning corporation and
investment-banking firm. Merrill worked as an
international merchant for the importation of
products and commodities to and from Asia
including China, Hong Kong, Indonesia, and
Taiwan. In 1994, Merrill Moses created the
Mortgage Banking Firm Cambridge Home Loans,
which is a wholly owned subsidiary of another
company formed by Mr. Moses, Cambridge
Financial Services. Cambridge currently employs
over 80 people and is financing in the two
hundred and fifty million dollar a year arena
with expectations of significant growth and
expansion in the near future. Its head office
is located in Solana Beach, California. Mr.
Moses currently serves as the President and CEO
of both companies.
- -------------------------------- -----------------------------------------------
HARJ MANHAS, SECRETARY, From 1997 to the present, Harj Manhas has
TREASURER AND DIRECTOR served as Vice President and Director of Secura
Investments Inc., a privately owned Investment
firm that was established in 1995 to fund
start-up corporations. Mr. Manhas primary roles
in the Company is to provide financial advice,
analyze projects and the running of day to day
operations.
From 1999 to the present, Mr. Manhas has also
been serving as Vice President of Corporate
Finance and Director of Surge Technologies,
Inc, a manufacturer of surge protection
products used in telecommunications networks
which protect telephone and other communication
lines from harmful voltage transients. Mr.
Manhas primary roles with Surge Technologies is
to provide corporate finance management, handle
investor relations and some running of the day
to day operations of the company.
- -------------------------------- -----------------------------------------------
18
- -------------------------------- -----------------------------------------------
Mr. Manhas is a graduate from the SAIT
Mechanical Engineering Design Program in
Calgary, Alberta.
- -------------------------------- -----------------------------------------------
THOM EGGERTSON, DIRECTOR From 1999 to the present Thom Eggertson has
been engaged in accounting and financial
services on a contractual basis for a variety
of clients including White Iron Group, as
interim Controller for a TV program production
company and post-production house; VSS Sleep
Systems Inc., as CFO for a bed frame
manufacturer; Secura Investments Inc.,
providing long term strategic direction
analysis, evaluation of a telecommunications
business opportunity and preparation of a
business plan; Surge Technologies Inc.,
providing financing strategies, management
information system development, business plan
preparation and assistance in completing the
year end as interim CFO; Comvillage Inc., as
CFO for this internet browser development
company; Xpressnet Ltd., providing
organizational planning and preparation of a
financing proposal for a provider of DSL and
wireless high speed internet access; WCW Inc.,
providing an operational review of a mattress
manufacturer in Hoosick Falls, New York; and
SoftSource Computing Inc., as CFO for a
reseller of software, computer solutions and
hardware to large corporations.
Mr. Eggertson has a Bachelor of Commerce degree
from the University of Alberta. He received his
Chartered Accountant designation in 1979 and
his Chartered Financial Analyst designation in
1992.
- -------------------------------- -----------------------------------------------
CHERYL SPOUSTA SCHERTZER During the past twenty-six years, Ms.
VP OPERATIONS, DIRECTOR Spousta-Schertzer has served in various
executive roles within the finance, law,
computer, semiconductor and telecommunications
industries, including playing a key role as a
participant and negotiator in the 255 million
dollar sale of Silicon Systems Inc. to TDK
Japan.
With over 18 years in the high-tech industry,
Ms. Spousta-Schertzer has extensive experience
in investor, customer, and supplier contract
negotiations. She has negotiated contracts and
corrective action with various companies in the
United States, Japan, Singapore, Korea,
Philippines, Taiwan and Ireland. As Silicon
Systems' vice president of corporate
reliability and quality assurance, and vice
president of worldwide assembly and test
operations, Ms. Spousta-Schertzer had full
profit and loss responsibility for a
multimillion-dollar operational budget.
- -------------------------------- -----------------------------------------------
19
- -------------------------------- -----------------------------------------------
Additional responsibilities included, internal
and external audits, warranty returns, product
and test engineering, reliability engineering,
quality assurance, failure analysis,
configuration management, and manufacturing for
facilities located in Tustin, California and
Singapore. Her Singapore role included full
authority for contract negotiation as a
"pioneer" partner company with the Singapore
Economic Development Board.
- -------------------------------- -----------------------------------------------
LAROY ORR, Mr. Orr possesses a strong background in the
VP OF MARKETING AND FINANCE real estate, marketing, finance and mining
AND DIRECTOR industries. In the past, Mr. Orr has had
extensive experience in obtaining
venture capital for several enterprises. Since
1978, Mr. Orr has been involved in residential
real estate development and commercial real
estate sales and financing. He has managed
sales of several million dollars worth of real
estate during this period. Mr. Orr attended
Ricks College and Brigham Young University
Business Finance.
- -------------------------------- -----------------------------------------------
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
BENEFICIAL OWNERS OF FIVE PERCENT (5%) OR GREATER, OF THE COMPANY'S COMMON
STOCK.
The following sets forth information with respect to ownership by holders of
more than five percent (5%) of the Registrant's common stock known by the
Registrant based on 36,031,681 shares issued and outstanding as at February 23,
2005.
- ------------------- --------------------- -------------------------
Name and Number and type of Percentage of Class
Address security
- ------------------- --------------------- -------------------------
NOVA ELECTRIC Common restricted 58.3%
SYSTEMS INC 21,000,000 shares
201 Lomas Santa
Fe, Suite #420,
Solana Beach, CA
92075
- ------------------- --------------------- -------------------------
20
- ------------------- --------------------- -------------------------
Cede & Co. Common Free 27.7%
P.O.BOX 222, 9,987,350
BOWLING GREEN shares
STATION
NEW YORK NY
10274
- ------------------- --------------------- -------------------------
THE COMPANY'S COMMON STOCK BENEFICIALLY OWNED BY EACH OFFICER AND DIRECTOR, AND
BY ALL DIRECTORS AND OFFICERS AS A GROUP
The following sets forth information with respect to the Company's common stock
beneficially owned by each Officer and Director, and by all Directors and
Officers as a group. The percentages are based on 36,031,681 shares issued and
outstanding as at February 23, 2005.
- ----------------------- ---------------------------------- --------------------- -------------------------
Name and Address Positions held (e.g., director, Number, type and Percentage of Class
officer, promoter and/or percentage of
principal holder) and the date securities
of obtaining that position
- ----------------------- ---------------------------------- --------------------- -------------------------
Merrill Moses, President and Director 1,100,000 3%
201 Lomas Santa Fe,
Suite #420, Solana Common
Beach, CA 92075 Restricted
Shares
0 warrants 0%
- ----------------------- ---------------------------------- --------------------- -------------------------
Harj Manhas, Secretary, Treasurer and 0 0
201 Lomas Santa Fe, Director
Suite #420, Solana
Beach, CA 92075
- ----------------------- ---------------------------------- --------------------- -------------------------
21
- ----------------------- ---------------------------------- --------------------- -------------------------
Thom Eggertson, Director 0 0
201 Lomas Santa Fe,
Suite #420, Solana
Beach, CA 92075
- ----------------------- ---------------------------------- --------------------- -------------------------
Cheryl Spousta VP of Operations and Director 120,000 0.3%
Schertzer, Common
201 Lomas Santa Fe, Restricted
Suite #420, Solana shares
Beach, CA 92075
100,000 warrants 1.8%
- ----------------------- ---------------------------------- --------------------- -------------------------
LaRoy Orr, VP of Marketing and Finance and 0 0
Solana Beach, CA Director
- ----------------------- ---------------------------------- --------------------- -------------------------
Total as a group before offering 1,220,000 Shares (3.4%) (assuming the exercise
of the warrants) 0 Options, 100,000 warrants (1.8%)
DESCRIPTION OF SECURITIES
As at February 23, 2005, 36,031,681 shares of the common stock issued and
outstanding. The authorized capital stock of the Company consists of 100,000,000
shares of Common Stock with a par value of $.001 per share, and 10,000,000
shares of Preferred Stock with a par value of $.001 per share.
Upon liquidation, dissolution or winding up of the corporation, whether
voluntary or involuntary, the holders of common stock are entitled to share
PRO-RATA in all net assets available for distribution to Security Holders after
payment to creditors. The common stock is not convertible or redeemable and has
no preemptive, subscription or conversion rights. Each outstanding share of
common stock is entitled to one vote on all matters submitted to a vote of
Security Holders. There are no cumulative voting rights. All outstanding shares
of Common Stock are validly authorized and issued, fully paid and
non-assessable. The Board of Directors is authorized to issue additional shares
of Common Stock not to exceed the amount authorized by the Company's Articles of
Incorporation, on such terms and conditions and for such consideration as the
Board may deem appropriate without further stockholder action.
22
There are no provisions in the Company's articles or by-laws that would delay,
defer or prevent a change in control of the Company.
The above description concerning the Capital Stock of the Company does not
purport to be complete. Reference is made to the Company's Articles of
Incorporation and Bylaws which are available for inspection upon proper notice
at the Company's offices and are available on the Internet as an exhibit to the
Company's Form 10-SB12G as filed on January 6, 2003. As well, the applicable
statutes of the State of Florida also provide a more complete description
concerning the rights and liabilities of Security Holders.
VOTING AND PREEMPTIVE RIGHTS
Each holder of Common stock is entitled to one vote per share on all matters on
which such Security Holders are entitled to vote. Since the shares of Common
Stock do not have cumulative voting rights, the holders of more than fifty
percent of the shares voting for the election of directors can elect all the
directors if they choose to do so and, in such event, the holders of the
remaining shares will not be able to elect any person to the Board of Directors.
Holders of the Common stock of the Company do not have preemption rights.
DIVIDEND POLICY
Holders of the Company's Common Stock are entitled to dividends if declared by
the Board of Directors out of funds legally available therefore. The Company
does not anticipate the declaration or payment of any dividends in the
foreseeable future. We intend to retain earnings, if any, to finance the
development of the Company's business. Future dividend policy will be subject to
the discretion of the Board of Directors and will be contingent upon future
earnings, if any, the Company's financial condition, capital requirements,
general business conditions and other factors. Therefore, there can be no
assurance that any dividends of any kind will ever be paid.
STOCK TRANSFER AGENT
The Company's Transfer Agent is Holladay Stock Transfer, Inc., 2939 North 67th
Place Scottsdale AZ 85251.
SHARES ELIGIBLE FOR FUTURE SALE
Following the effective date of this registration statement, the 10,900,000
shares of common stock registered in this offering will be freely tradable
without restrictions under the SECURITIES ACT. Shares held by our "affiliates"
(officers, directors or 10% shareholders) are being registered hereunder.
Prior to the effective date of this registration statement, the 10,900,000
shares of common stock to be registered in this offering will be restricted
under the Securities Act. In general, under Rule 144 of the SECURITIES ACT, as
currently in effect, any of our affiliates and any person or persons whose sales
are aggregated who has beneficially owned his or her restricted shares for at
23
least one year, may be entitled to sell in the open market within any
three-month period a number of shares of common stock that does not exceed 1% of
the then outstanding shares of our common stock. Sales under Rule 144 are also
affected by limitations on manner of sale, notice requirements, and availability
of current public information about us. Non-affiliates who have held their
restricted shares for two years may be entitled to sell their shares under Rule
144 without regard to any of the above limitations, provided they have not been
affiliates for the three months preceding any sale.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None
INTEREST OF NAMED EXPERTS AND COUNSEL
ACCOUNTANTS
Our unaudited financials statements for the quarter ended December 31, 2004 and
our audited financial statements for the fiscal year ending June 30, 2004 have
been included in this prospectus in reliance upon Braverman International, P.C.
of Prescott, Arizona as experts in accounting and auditing.
LEGAL MATTERS
Certain legal matters in connection with this offering will be passed upon for
us by our counsel, Thomas A. Braun. 300,000 common shares were registered in the
name of Thomas Braun Law Corp. pursuant to a Fee Agreement. These shares were
registered under the Securities Act of 1933 under Form S-8 on February 16, 2005.
Other than as stated above, no expert or counsel named in this prospectus as
having certified any part of this prospectus or having given an opinion on the
validity of the securities being registered or upon other legal matters in
connection with the offering was employed on a contingency basis or had, or is
to receive, in connection with the offering, a substantial interest, directly or
indirectly, in the Company or any of its parents or subsidiaries. Nor was any
such person connected with the Company, or any of its parents or subsidiaries,
as a promoter, managing or principle underwriter, voting trustee, director,
officer or employee.
DISCLOSURE of COMMISSION POSITION of INDEMNIFICATION for SECURITIES ACT
LIABILITIES
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to our directors, officers and controlling persons, we have been
advised that in the opinion of the SEC, the indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification for liabilities (other than the
24
payment by us of expenses incurred or paid by our directors, officers or
controlling persons in the successful defense of any action, suit or
proceedings) is asserted by the director, officer, or controlling person in
connection with any securities being registered, we will, unless in the opinion
of our counsel the matter has been settled by controlling precedent, submit to
court of appropriate jurisdiction the question whether the indemnification by us
is against public policy as expressed in the Securities Act and will be governed
by the final adjudication of the issues.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None
DESCRIPTION OF BUSINESS
The Company currently has no employees.
Product Background
The Company currently has no products approved for sale or use and will not be
able to sell any products until such time, if ever, as it develops, produces,
distributes and commercially markets products.
There are many risks, expenses and difficulties frequently encountered in
establishing a new business in the electronics and transportation industry,
which is characterized by intense competition, rapid technological change,
litigious competitors, potential product liability and government regulation.
The market in which the Company intends to operate is dominated by a number of
large firms with large sums of money for research and development. The Company's
success is dependant upon the successful development of products and acceptance
of its products by consumers as reliable, safe and cost-effective. The market
for the Company's potential products is subject to frequent introduction of new
products and designs.
FOR MORE INFORMATION ON RISKS, PLEASE SEE PAGE 8 OF THIS PROSPECTUS.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion contains forward-looking statements that are subject to
significant risks and uncertainties. There are several important factors that
could cause actual results to differ materially from historical results and
percentages and results anticipated by the forward-looking statements. The
Company has sought to identify the most significant risks to its business, but
cannot predict whether or to what extent any of such risks may be realized nor
can there be any assurance that the Company has identified all possible risks
that might arise. Investors should carefully consider all of such risks before
making an investment decision with respect to the Company's stock.
25
Overview
The Company is a development stage company in the business of developing certain
distribution rights to electric vehicle and electric propulsion systems.
Plan of Operation
The Company has had no operations since inception and is financially dependent
on its shareholders, who have financed its existence to date.
For the near term, the Company continues to develop the rights it was assigned
by Nova Electric Systems Inc., ("Nova") through an asset purchase agreement
dated April 27, 2004. Nova is in the business of developing and marketing
electronic propulsion and battery power systems for electric powered vehicles.
Under the asset purchase agreement with Nova, the Company issued 21,000,000
Common Shares in the capital stock of the Company. Under the asset purchase
agreement, the Company also agreed to pay, upon obtaining financing, $650,000
USD. The Company had not paid or recorded any of this contingent consideration
pursuant to the asset purchase agreement as of the end of the quarter ended
December 31, 2004 because it had not yet acquired the necessary financing, as
provided for in the agreement.
Financing for the above additional consideration was arranged during the first
calendar quarter of 2005 through two private placements of the Company's common
stock totaling $520,000. Substantial stock offering and legal fees in connection
with this financing were also incurred. The stock sold through the two private
placements are the shares that are being registered in this prospectus.
Through an agreement with NuAge Electric Inc., Nova holds the rights for the use
of certain proprietary technology to install electric propulsion systems on a
variety of electric powered vehicles to include, but not limited to, mountain
bikes, regular cycles, children's cycle toys and riding vehicles, recreation ATV
units, scooters, motorcycles, go-karts, NEV (Neighborhood Electric Vehicle)
cars, race cars, regular passenger cars, buses and all other types of two and
three wheeled vehicles, water craft and in addition, a wide variety of other
vehicles and products.
26
Nova has also acquired the rights from NuAge Electric Inc., to certain
agreements between NuAge and the largest bicycle manufacturer in the world, Hero
Cycles in India, for the joint venture to manufacture and distribute many of the
electric powered two and three wheel vehicles in India and for distribution from
the Hero manufacturing facilities worldwide.
The Nova Business Plan details a number of electric powered vehicles built as
prototype working models at the Las Vegas facility and it is the intent of Nova
to work closely with their strategic partner, NuAge to continue to develop a
wide variety of commercially viable vehicles and products there.
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
The Company has incurred operating losses during the six months ended December
31, 2004, the Company had a loss of $15,354 compared to a loss of $3,571 for the
six months ended December 31, 2003.
The Company's main focus during the three months ended December 31, 2004 has
been continued development of the marketing rights acquired from Nova Electric
Systems Inc.
General and Administrative Expenses
General and administrative expenses during the six months ended December 31,
2004 were $15,354 compared to $3,571 for the six months ended December 31, 2003.
The increase in 2004 is due primarily to increases in payroll expenses and
accounting fees.
Liquidity and Capital Resources
Since inception, the Company has financed its operations from private financing.
The company has suffered recurring losses from operations and has a working
capital deficiency of $35,965 (current assets less current liabilities).
Financing
The Company's capital requirements have not been significant in the past but the
Company anticipates it will increase as development and product launch begins.
27
Cash Requirements and Need For Additional Funds
In its attempts to develop the Company's marketing strategy and launch a
product, the Company anticipates it will require approximately $1,500,000.00 in
the coming year. To satisfy these cash requirements, the Company will likely
have to raise additional funds in the coming year. There are no assurances that
the Company will be able to obtain the additional financing.
CONTROLS AND PROCEDURES
The registrant's Principal executive officers and principal financial officer,
based on their evaluation of the registrant's disclosure controls and procedures
(as defined in Rules 13a-14 (c) of the Securities Exchange Act of 1934) as of
December 31, 2004 have concluded that the registrants' disclosure controls and
procedures are adequate and effective to ensure that material information
relating to the registrants and their consolidated subsidiaries is recorded,
processed, summarized and reported within the time periods specified by the
SEC's rules and forms, particularly during the period in which this quarterly
report has been prepared.
The registrants' principal executive officers and principal financial officer
have concluded that there were no significant changes in the registrants'
internal controls or in other factors that could significantly affect these
controls subsequent to December 31, 2004 the date of their most recent
evaluation of such controls, and that there was no significant deficiencies or
material weaknesses in the registrant's internal controls.
Recent Sales of Unregistered Securities
Between February 8 and April 18, 2005, in private placement transactions under
Regulation D and Regulations S of the SECURITIES ACT, 1933, the Company sold
5,200,000 shares of Common Stock and 5,460,000 common share purchase warrants to
the Selling Security Holders. The warrants have an exercise price of $0.15 and
an expiry date of February 22, 2012. These shares and the shares that will be
issued when and if thee warrants are exercised, are the shares that are being
registered in this prospectus.
Granite Financial Inc. ("Granite") is a broker-dealer who received 260,000 of
the warrants with an exercise price of $0.15 and an expiry date of February 22,
2012 as compensation for acting as a placement agent in the private placement
transactions. Other than the warrants issued to Granite, no brokerage or
finder's fees or commissions were paid by the Company to any broker, financial
advisor or consultant, finder, placement agent, investment banker, bank or other
Person with respect to the private placement transactions.
Gross proceeds to the Company from the private placement transaction was
$520,000. Approximate expenses relating to the transactions are estimated at
$101,662. Therefore, net proceeds are estimated at $418,338. These proceeds will
be used for paying off the amount due under the Nova Agreement (see pages 26 and
27) and to pay operating expenses.
28
During the three months ended December 31, 2004, the Company did not issue any
unregistered securities but did cancel 502,000 restricted shares of common stock
for marketing services at $.23 per share for a total of $115,460. These shares
had been issued on August 2, 2004 for services to be performed over a five month
period. These shares were cancelled due to non performance of the services.
Accordingly, this transaction resulted in the reversal of all amounts previously
recorded for compensation deferred and expensed in the financial statements.
DEFAULTS UPON SENIOR SECURITIES
None
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
REPORTS TO SECURITY HOLDERS
The Company is subject to the reporting and other requirements of the Securities
Exchange Act of 1934 and we will furnish to our shareholders annual reports
containing financial statements audited by our independent auditors and to make
available quarterly reports containing unaudited financial statements for each
of the first three quarters of each year.
The public may read and copy any materials that we file with the SEC at the
SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549.
The public may obtain information on the operation of the Public Reference Room
by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that
contains reports, proxy and information statements, and other information
regarding our electronic filings with the SEC. The address of that site is
http://www.sec.gov. Other information may be obtained from our website at
http://www.armorelectric.com.
WARRANTS
As at February 7, before the private placement offerings described in this
registration statement, the Company had no outstanding warrants to purchase
common shares.
STOCK-BASED COMPENSATION (Options)
A 2005 Incentive Stock Option Plan has been developed by the Board of Directors
of the Company for employees, consultants, directors, and other persons
associated with the Company. Awards under the plan may take the form of
incentive stock options, non-qualified stock options, stock awards, restricted
shares or cash awards as determined by the Board of Directors. A maximum of 5
29
million shares will be reserved for issuance under the plan but the plan has not
yet been approved by shareholders and the shares underlying the options have not
yet been registered. There is a strong possibility that the 2005 Incentive Stock
Option Plan may never come into effect.
On the date of this prospectus, May 5, 2005, the Company had no options
outstanding.
CASH POSITION
At December 31, 2004, the Company had no cash nor cash equivalents compared to a
cash position of $3,140 at December 31, 2003. The decrease in the Company's cash
position is due to the beginning of increased operations within the Company.
The Company is raising additional funds through equity financings via the
private placements described in this registration statement, as it needs to
raise capital to fund operations over the long-term.
ACCOUNTS PAYABLE & ACCRUED LIABILITIES
Accounts payable and accrued liabilities decreased in the six months ended
December 31, 2004 to $36,518 compared to $27,394 on June 30, 2004.
CASH REQUIREMENTS AND NEED FOR ADDITIONAL FUNDS
In order to meet its business objectives, the Company will require approximately
US $1,500,000 in the coming year. These funds could be provided through any
combination of the exercise of existing warrants and options and/or through
subsequent rounds of financing.
DESCRIPTION OF PROPERTY
(a) Real Estate None
(b) Plant and Equipment None
Real Property
The Company owns no real property. It conducts all of its business from its
leased facility in Solana Beach, California where its headquarters are located.
The lease on the office extends to November 2006 at a cost of $995.00 per month.
Intellectual Property and Intangibles - None
Patents- None
Domain Names - armorelectric.com
Trademarks - None
30
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock is listed on the OTCBB under the symbol "ARME".
Prices reported represent prices between dealers, do not include markups,
markdowns or commissions and do not necessarily represent actual transactions.
The market for the Company's shares has been sporadic and at times very limited.
The following table sets forth high and low bid quotations of the Company's
common stock for the quarters ended from December 31, 2003 to December 31, 2004:
Price Range of
Common Stock
------------
Quarter Ended High Low
- ------------- ---- ---
December 31, 2003 0.15 0.01
March 31, 2004 0.50 0.04
June 30, 2004 1.56 0.17
September 30, 2004 0.75 0.18
December 31, 2004 0.31 0.07
March 31, 2005 0.17 0.08
As of February 23, 2005, the Company had approximately 36,031,681shares issued
and outstanding.
No dividends on outstanding common stock ever have been paid within the
Company's history. The Company does not anticipate or intend upon paying
dividends for the foreseeable future.
EXECUTIVE COMPENSATION
The Company has not paid any salaries or other compensation to its officers,
directors or employees since inception. Further, the Company has not entered
into an employment agreement with any of its officers, directors or any other
persons and no such agreements are anticipated in the immediate future.
The Company has not had a bonus, profit sharing, or deferred compensation plan
for the benefit of its employees, officers or directors.
Section 16(a) of the Securities Exchange Act of 1934, as amended (The "Exchange
Act"), requires the Registrant's officers and directors, and persons who own
more than 10% of a registered class of the Registrant's equity securities, to
file reports of ownership and changes in ownership of equity securities of the
Registrant with the Securities and Exchange Commission and NASDAQ. Officers,
directors and greater-than 10% shareholders are required by the Securities and
Exchange Commission regulation to furnish the Registrant with copies of all
Section 16(a) that they file.
31
Some of the officers and directors of the Company will not devote more than a
portion of their time to the affairs of the Company. There will be occasions
when the time requirements of the Company's business conflict with the demands
of their other business and investment activities. Such conflict may require
that the company attempt to employ additional personnel. There is no assurance
that the services of such persons will be available or that they can be obtained
upon terms favorable to the Company.
FINANCIAL STATEMENTS
The response to this Item is included as a separate Exhibit to this report.
Please see pages F-1 through F-10.
CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
In connection with the audits of the most recent fiscal years and any interim
period preceding resignation, no disagreements exist with any former accountant
on any matter of accounting principles or procedure, which disagreements if not
resolved to the satisfaction of the former accountant would have caused them to
make reference in connection with their report to the subject matter of the
disagreement(s).
DEALER PROSPECTUS DELIVERY OBLIGATION
Until 90 days after effective date of this document, all dealers that effect
transactions in these securities whether or not participating in this offering
may be required to deliver a prospectus. This is in addition to the dealer's
obligation to deliver a prospectus when acting as underwriters and with respect
to their unsold allotments or subscriptions.
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 607.0850, Florida Statutes, grants a corporation the power to indemnify
its directors, officers, employees, and agents for various expenses incurred
resulting from various actions taken by its directors, officers, employees, or
agents on behalf of the corporation. In general, if an individual acted in good
faith and in a manner he reasonably believed to be in, or not opposed to, the
best interests of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe the action was unlawful, then the
corporation has the power to indemnify said individual who was or is a party to
any proceeding (including, in the absence of an adjudication of liability
(unless the court otherwise determines), any proceeding by or in the right of
32
the corporation) against liability expenses, including counsel fees, incurred in
connection with such proceeding, including any appeal thereof (and, as to
actions by or in the right of the corporation, against expenses and amounts paid
in settlement not exceeding, in the judgment of the board of directors, the
estimated expense of litigating the proceeding to conclusion, actually and
reasonably incurred in connection with the defense or settlement of such
proceeding, including any appeal thereof). To the extent that a director,
officer, employee, or agent has been successful on the merits or otherwise in
defense of any proceeding, he shall be indemnified against expenses actually and
reasonably incurred by him in connection therewith. The term "proceeding"
includes any threatened, pending, or completed action, suit, or other type of
proceeding, whether civil, criminal, administrative, or investigative and
whether formal or informal.
Any indemnification in connection with the foregoing, unless pursuant to a
determination by a court, shall be made by the corporation upon a determination
that indemnification is proper in the circumstances because the individual has
met the applicable standard of conduct. The determination shall be made (i) by
the board of directors by a majority vote of a quorum consisting of directors
who are not parties to such proceeding; (ii) by majority vote of a committee
duly designated by the board of directors consisting solely of two or more
directors not at the time parties to the proceeding; (iii) by independent legal
counsel selected by the board of directors or such committee; or (iv) by the
shareholders by a majority vote of a quorum consisting of shareholders who are
not parties to such proceeding. Evaluation of the reasonableness of expenses and
authorization of indemnification shall be made in the same manner as the
determination that indemnification is permissible. However, if the determination
of permissibility is made by independent legal counsel, then the directors or
the committee shall evaluate the reasonableness of expenses and may authorize
indemnification. Expenses incurred by an officer or director in defending a
civil or criminal proceeding may be paid by the corporation in advance of the
final disposition of the proceeding upon receipt of an undertaking by or on
behalf of the director or officer to repay such amount if he is ultimately found
not to be entitled to indemnification by the corporation. Expenses incurred by
other employees and agents may be paid in advance upon such terms or conditions
that the board of directors deems appropriate.
Section 607.0850 also provides that the indemnification and advancement of
expenses provided pursuant to that Section are not exclusive, and a corporation
may make any other or further indemnification or advancement of expenses of any
of its directors, officers, employees, or agents, under any bylaw, agreement,
vote of shareholders or disinterested directors, or otherwise, both as to action
in his official capacity and as to action in another capacity while holding such
office. However, indemnification or advancement of expenses may not be made if a
judgment or other final adjudication established that the individual's actions,
or omissions to act, were material to the cause of action so adjudicated and
constitute (i) a violation of the criminal law (unless the individual had
reasonable cause to believe his conduct was lawful or had no reasonable cause to
believe his conduct was unlawful); (ii) a transaction from which the individual
derived an improper personal benefit; (iii) in the case of a director, a
circumstance under which the liability provisions of Section 607.0834 are
applicable; or (iv) willful misconduct or a conscious disregard for the best
interests of the corporation in a proceeding by or in the right of the
33
corporation to procure a judgment in its favor in a proceeding by or in the
right of a shareholder. Indemnification and advancement of expenses shall
continue as, unless otherwise provided when authorized or ratified, to a person
who has ceased to be a director, officer, employee, or agent and shall inure to
the benefit of the heirs, executors, and administrators of such person, unless
otherwise provided when authorized or ratified.
Section 607.0850 further provides that unless the corporation's articles of
incorporation provide otherwise, then notwithstanding the failure of a
corporation to provide indemnification, and despite any contrary determination
of the board or of the shareholders in the specific case, a director, officer,
employee, or agent of the corporation who is or was a party to a proceeding may
apply for indemnification or advancement of expenses, or both, to the court
conducting the proceeding, to the circuit court, or to another court of
competent jurisdiction. On receipt of an application, the court, after giving
any notice that it considers necessary, may order indemnification and
advancement of expenses, including expenses incurred in seeking court-ordered
indemnification or advancement of expenses, if it determines that (i) the
individual is entitled to mandatory indemnification under Section 607.0850 (in
which case the court shall also order the corporation to pay the director
reasonable expenses incurred in obtaining court-ordered indemnification or
advancement of expenses); (ii) the individual is entitled to indemnification or
advancement of expenses, or both, by virtue of the exercise by the corporation
of its power under Section 607.0850; or (iii) the individual is fairly and
reasonably entitled to indemnification or advancement of expenses, or both, in
view of all the relevant circumstances, regardless of whether the person met the
standard of conduct set forth in Section 607.0850. Further, a corporation is
granted the power to purchase and maintain indemnification insurance.
The Company's articles of incorporation also provide as follows:
ARTICLE VIII INDEMNIFICATION OF OFFICERS AND DIRECTORS This corporation shall
have the power, in its By-Laws or in any resolution of its Security Holders or
directors, to undertake to indemnify the officers and directors of this
corporation against any contingency or peril as may be determined to be in the
best interests of this corporation, and in conjunction therewith to procure, at
the expense of this corporation, policies of insurance.
The Company's bylaws do not make provision with respect to indemnification and
insurance of officers and directors. As of the date of this prospectus, there
have been no Security Holders' or directors' resolutions that address the
indemnification and insurance of officers and directors.
INSOFAR AS INDEMNIFICATION FOR LIABILITIES OCCURRING PURSUANT TO THE PROVISIONS
OF THE SECURITIES ACT OF 1933 MAY BE PERMITTED AS TO DIRECTORS, OFFICERS, OR
PERSONS CONTROLLING THE REGISTRANT, THE REGISTRANT HAS BEEN INFORMED THAT IN THE
OPINION OF THE SECURITIES AND EXCHANGE COMMISSION, SUCH INDEMNIFICATION IS
AGAINST PUBLIC POLICY AS EXPRESSED IN THAT ACT AND, THEREFORE, IS UNENFORCEABLE.
34
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Costs of this distribution to the Company are estimated as follows:
Registration Fees $161.84
Federal Taxes $0.00
State Taxes and Fees $0.00
Trustees' and Transfer Agent's Fees $500
Printing and Engraving $0.00
Legal $51,000
Accounting $50,000
Listing Fees $0.00
-----
$101,661.84
- --------------------------------------------------------------------------------
EXHIBITS
Exhibit Number Exhibit Description
- -------------- -------------------
3.1 (1) Articles of Incorporation as filed with the
Florida Secretary of State
3.2 (1) Bylaws
5.1 Opinion on Legality and Consent of Legal Expert
10.1 Securities Purchase Agreement
10.2 Registration Rights Agreement
10.3 Common Stock Purchase Warrant
10.4 Subscription Agreement
23.1 Independent Auditor's Consent
(1) previously filed as exhibits to the Company's Form 10-SB filed January 6,
2003
35
UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission this
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against these liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by the
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether this indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to:
o to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
o reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price
represent no more than 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; o include
any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
2. That for determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time to
be the initial bona fide offering.
36
3. To file a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
4. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission the indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable.
5. In the event that a claim for indemnification against the liabilities,
other than the payment by the Registrant of expenses incurred and paid
by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding, is asserted by
the director, officer or controlling person in connection with the
securities being registered by this registration statement, will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction
the question whether the indemnification by it is against public policy
as expressed in the Securities Act and will be governed by the final
adjudication of the issue.
6. For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1)
or (4) or 497(h) under the Securities Act shall be deemed to be a part
of this Registration Statement as of the time it was declared
effective.
7. For the purposes of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
37
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement on Form SB-2 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Solana Beach, California the 5th day of May,
2005
ARMOR ELECTRIC, INC.
By: /s/ Merrill Moses
----------------------------------
Merrill Moses
President
In accordance with the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates stated.
SIGNATURES TITLE DATE
- ---------- ----- ----
/s/ Merrill Moses President and Director May 5, 2005
- ---------------------
Merrill Moses
/s/ Harj Manhas Secretary,Treasurer May 5, 2005
- --------------------- and Director
Harj Manhas
/s/ Thom Eggertson Director May 5, 2005
- ---------------------
Thom Eggertson
/s/ LaRoy Orr VP of Marketing May 5, 2005
- --------------------- and Finance and Director
LaRoy Orr
/s/ Cheryl Schertzer VP of Operations May 5, 2005
- ---------------------
Cheryl Schertzer
38
ARMOR ELECTRIC, INC.
FINANCIAL STATEMENTS
JUNE 30, 2004
TABLE OF CONTENTS
-----------------
PAGE
----
REPORT OF INDEPENDENT REGISTERED ACCOUNTING FIRM F-1
BALANCE SHEET F-2
STATEMENTS OF OPERATIONS F-3
STATEMENTS OF STOCKHOLDERS' EQUITY F-4
STATEMENTS OF CASH FLOWS F-5
NOTES TO FINANCIAL STATEMENTS F-6
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS
ARMOR ELECTRIC, INC.
SOLANA BEACH, CA
We have audited the accompanying balance sheet of Armor Electric, Inc. (a
Florida corporation in the development stage) as of June 30, 2004, and the
related statements of operations, changes in stockholders' equity (deficit), and
cash flows for each of the years in the two year period then ended. 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 audits.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). 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 audits provide 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 Armor Enterprises, Inc., Inc.,
as of June 30, 2004, and the results of its operations and its cash flows for
each of each of the years in the two year period then ended, in conformity with
accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company is in the development stage and has not commenced
operations. Its ability to continue as a going concern is dependent upon its
ability to develop additional sources of capital, and/or achieve profitable
operations. These conditions raise substantial doubt about its ability to
continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of these uncertainties.
Braverman International, P.C.
Prescott, Arizona
September 29 2004
F-1
ARMOR ELECTRIC, INC.
(A Development Stage Company)
BALANCE SHEETS
DECEMBER 31, JUNE 30,
2004 2004
----------- -----------
ASSETS (unaudited)
-------
CURRENT ASSETS
Funds held in trust by related party $ 553 $ 553
----------- -----------
Total Current Assets 553 553
Deferred charge -- --
----------- -----------
$ 553 $ 553
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
ACCOUNTS PAYABLE $ 3,025 $ 527
Accounts payable-related parties 15,868 15,867
Accrued payroll 17,625 11,000
----------- -----------
Total Current Liabilities 36,518 27,394
----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, par value $.001, 10,000,000 shares
authorized, none issued
Common stock, par value $.001, 100,000,000 shares
authorized,34,717,333 issued and outstanding 34,717 34,717
Paid-in capital 13,103 6,873
(Deficit) accumulated during development stage (83,785) (68,431)
----------- -----------
Total Stockholders' Equity (Deficit) (35,965) (26,841)
----------- -----------
$ 553 $ 553
=========== ===========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-2
ARMOR ELECTRIC, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
CUMMULATIVE
YEAR ENDED SIX MONTHS ENDED FROM
JUNE 30, DECEMBER 31, JUNE 5, 1998
--------------------------------- --------------------------------- (INCEPTION) TO
2004 2003 2004 2003 DECEMBER 31, 2004
--------------- --------------- --------------- --------------- ------------------
(RESTATED) (RESTATED) (unaudited) (unaudited) (unaudited)
REVENUE $ -- $ -- $ -- $ -- $ --
EXPENSES:
General and administrative 18,369 11,110 15,354 3,571 83,785
--------------- --------------- --------------- --------------- ------------------
Total Expenses 18,369 11,110 15,354 3,571 83,785
--------------- --------------- --------------- --------------- ------------------
NET INCOME (LOSS) $ (18,369) $ (11,110) $ (15,354) $ (3,571) $ (83,785)
=============== =============== =============== =============== ==================
NET (LOSS) PER COMMON SHARE-BASIC * * * *
=============== =============== =============== ===============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 34,717,333 34,717,333 34,717,333 34,717,333
=============== =============== =============== ===============
* less than ($.01) per share
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-3
ARMOR ELECTRIC, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
CUMMULATIVE
FROM
YEAR ENDED SIX MONTHS ENDED JUNE 5, 1998
JUNE 30, DECEMBER 31, (INCEPTION) TO
--------- --------- --------- --------- DECEMBER 31,
2004 2003 2004 2003 2004
--------- --------- --------- --------- ---------
(unaudited) (unaudited) (unaudited)
OPERATING ACTIVITIES:
Net (loss) from operations $(18,369) $(11,110) $(15,354) $ (3,571) $(83,785)
Contributions to capital 1,200 1,200 6,230 600 11,030
Capital issued for services -- -- -- -- 15,010
Adjustments to reconcile net (loss) to net
cash used by operating activities:
Changes in:
Trust funds -- 4,685 -- 4,861 (553)
Accounts payable 72 2,725 2,499 -- 3,026
Accrued payroll 3,500 2,500 6,625 1,250 17,625
--------- --------- --------- --------- ---------
Net Cash provided (Used) by Operating Activities (13,597) -- -- 3,140 (37,647)
--------- --------- --------- --------- ---------
FINANCING ACTIVITIES:
Proceeds from sale of common stock -- -- -- -- 15,240
Accounts payable-related parties 13,597 -- -- -- 22,407
--------- --------- --------- --------- ---------
Net Cash provided by Financing Activities 13,597 -- -- -- 37,647
--------- --------- --------- --------- ---------
NET INCREASE IN CASH -- -- -- 3,140 --
CASH, beginning of period -- -- -- -- --
--------- --------- --------- --------- ---------
CASH, end of period $ -- $ -- $ -- $ 3,140 $ --
========= ========= ========= ========= =========
SUPPLEMENTAL CASH FLOWS INFORMATION
Common stock issued in exchange for
shareholder loan $ 6,540 $ 6,540
========= =========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-4
ARMOR ELECTRIC, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(DEFICIT)
ACCUMULATED
COMMON STOCK DURING THE
------------------------ PAID-IN DEVELOPMENT
SHARES AMOUNT CAPITAL STAGE TOTAL
------------ --------- ---------- --------- ----------
Balances, inception -- $ -- $ -- $ -- $ --
(UNAUDITED)
Shares issued January 10, 1998, for services
at $.001 per share 10,500,000 10,500 (5,250) -- 5,250
Net (loss) for the year -- -- -- (5,250) (5,250)
------------ --------- ---------- --------- ----------
BALANCES, JUNE 30, 1998 (UNAUDITED) 10,500,000 10,500 (5,250) (5,250) --
Shares issued August 31, 1998, for cash
at $.001 per share 42,000 42 168 -- 210
Shares issued August 31, 1998, for services
at $.001 per share 1,952,000 1,952 7,808 -- 9,760
Shares issued September 30,1998, for cash
at $.001 per share 2,000 2 8 -- 10
Shares issued October 12,1998, for cash
at $.001 per share 4,000 4 16 -- 20
Net( loss) for the year -- -- -- (10,000) (10,000)
------------ --------- ---------- --------- ----------
BALANCES, JUNE 30, 1999 (UNAUDITED) 12,500,000 12,500 2,750 (15,250) --
Shares issued February 8, 2000 for cash
at $.001 per share 150,000 150 14,850 -- 15,000
Net (loss) for the year -- -- -- (5,275) (5,275)
------------ --------- ---------- --------- ----------
BALANCES, JUNE 30, 2000 (UNAUDITED) 12,650,000 12,650 17,600 (20,525) 9,725
(AUDITED)
Contributed capital-office overhead -- -- 1,200 -- 1,200
Net (loss) for the year -- -- -- (14,155) (14,155)
------------ --------- ---------- --------- ----------
BALANCES, JUNE 30, 2001 12,650,000 12,650 18,800 (34,680) (3,230)
Contributed capital-office overhead -- -- 1,200 -- 1,200
Net (loss) for the year -- -- -- (4,272) (4,272)
------------ --------- ---------- --------- ----------
BALANCES, JUNE 30, 2002 12,650,000 12,650 20,000 (38,952) (6,302)
Contributed capital-office overhead -- -- 1,200 -- 1,200
Shares issued December 18, 2002 @ $.006
per share for shareholder loan 1,067,333 1,067 5,473 -- 6,540
Net (loss) for the year -- -- -- (11,110) (11,110)
------------ --------- ---------- --------- ----------
BALANCES, JUNE 30, 2003 13,717,333 13,717 26,673 (50,062) (9,672)
Contributed capital-office overhead -- -- 1,200 -- 1,200
Shares issued April 27, 2004 @ $.001
per share to acquire marketing rights 21,000,000 21,000 (21,000) -- --
Net (loss) for the year -- -- -- (18,369) (18,369)
------------ --------- ---------- --------- ----------
BALANCES, JUNE 30, 2004 34,717,333 34,717 6,873 (68,431) (26,841)
(UNAUDITED)
Contributed capital-operating expenses -- -- 6,230 -- 6,230
Shares issued August 2, 2004 @ $.23
for marketing services 502,000 502 114,958 -- 115,460
Cancelation of shares isued for marketing
services December 17, 2004 (502,000) (502) (114,958) -- (115,460)
Net (loss) for six months -- -- -- (15,354) (15,354)
------------ --------- ---------- --------- ----------
BALANCES, DECEMBER 31, 2004 (UNAUDITED) 34,717,333 $ 34,717 $ 13,103 $(83,785) $ (35,965)
============ ========= ========== ========= ==========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-5
ARMOR ELECTRIC, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Information as of December 31, 2004, is unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (RESTATED)
HISTORY
Armor Enterprises, Inc. (the Company), formerly Armor Enterprises, Inc. and
Armor Software, Inc., is in the development stage as defined in Financial
Accounting Standards Board Statement No. 7. It is a Florida corporation, formed
on June 5, 1998. Since inception it has had no operations. The Company was
formed with the purpose of developing privacy encryption software for the
Internet. The Company was unable to raise enough capital to finance its research
and development of the software while other larger companies began addressing
privacy issues, making the Company's proposed software obsolete. After efforts
to develop the business failed, all efforts were abandoned in mid 2000. The
Company's fiscal year end is June 30.
On April 27, 2004 the Company acquired the marketing rights to electronic
propulsion and battery power systems for electric powered vehicles which are in
development. The marketing rights consisted of the assignment of various
contracts. The purchase price for these rights was 21 million shares of
restricted common stock of the Company valued by the Board of Directors at the
historical basis to the accounting acquirer which was zero. The issuance of the
shares, which was recorded at par value of $21,000 with an offsetting reduction
of paid in capital of $21,000, caused a change in control of the Company.
GOING CONCERN
The Company's financial statements have been presented on the basis that it is a
going concern, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. It has sustained operating
losses since inception and has a negative working capital and a deficit in
stockholders equity. The Company's ability to continue in existence is dependent
on its ability to develop additional sources of capital, and to achieve
profitable operations. Management's plan is to pursue the sale of products
pursuant to the aforementioned acquired marketing rights. The accompanying
financial statements do not include any adjustments that might result from the
outcome of these uncertainties.
INCOME TAXES
The Company uses the liability method of accounting for income taxes pursuant to
Statement of Financial Accounting Standards Board Opinion No. 109. Under this
method, deferred income taxes are recorded to reflect the tax consequences in
future periods of temporary differences between the tax basis of assets and
liabilities and their financial amounts at year-end.
EARNINGS (LOSS) PER COMMON SHARE
Basic (loss) per common share has been calculated based upon the weighted
average number of common shares outstanding during the period in accordance with
the Statement of Financial Accounting Standards Statement No. 128, "Earnings per
Share". All shares issued at nominal value have been considered as shares
outstanding since inception.
F-6
ARMOR ELECTRIC, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Information as of December 31, 2004, is unaudited)
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
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, the disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from those estimates
and assumptions.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, disclosures about fair
value of financial instruments, defines the fair value of a financial instrument
as the amount at which the instrument could be exchanged in a current
transaction between willing parties. The carrying values of the Company's
financial instruments, which are trust account receivable and shareholder
payable approximate fair values due to the short-term maturities of such
instruments.
NOTE 2 - CONTRIBUTED CAPITAL
Contributed capital from inception to June 30, 2004 was for office overhead of
$100 per month, contributed by management, based on the fair value of such
services. For the six months ended December 31, 2004, additional services were
contributed by management at fair value totaling $6,230, which includes office
overhead of $600, review fees of $3,500 and Edgar filing fees of $2,130.
NOTE 3 - RELATED PARTY TRANSACTIONS
In connection with the acquisition of marketing rights, the Company incurred
$5,000 in legal fees which were billed by the law firm who is a shareholder of
the Company. In addition, the Company was indebted to this same shareholder for
assumption of corporate expenses totaling $10,868 as of June 30, 2004, and
December 31, 2004.
NOTE 4 - INCOME TAXES
For income tax purposes, substantially all deductible expenses incurred to date
must be deferred until the Company commences business, and then they may be
charged against operations over a 60-month period or permanently capitalized.
Since the Company is not in business as of June 30, 2004, accumulated deductible
expenses incurred since inception of approximately $63,631 resulted in a $21,635
deferred tax asset. A valuation allowance of $21,631 has been provided since
there is no assurance of future taxable income. There is no net operating loss
carry-forward at June 30, 2004. Tax deductible losses, when provided, can be
carried forward for 20 years until utilized. The following is an analysis of
deferred tax assets as of June 30, 2004 and 2003:
F-7
ARMOR ELECTRIC, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Information as of December 31, 2004, is unaudited)
Deferred Valuation
Tax Assets Allowance Balance
-------- --------- ----------
Deferred tax assets at June 30, 2003 $15,797 $(15,797) $ -0-
Additions for the year 5,834 (5,834) -0-
-------- --------- ----------
Deferred tax assets at June 30, 2004 $21,631 $(21,631) $ -0-
======== ========= ==========
The following is reconciliation from the expected statutory federal income tax
rate to the Company's actual income tax rate for the years ended December 31:
2004 2003
---- ----
Expected income tax (benefit) at federal statutory tax rate (34%) (34%)
Valuation allowance 34% 34%
Actual income tax (benefit) 0% 0%
For the six months ended December 31, 2004, the additional deferred income tax
benefit and offsetting valuation allowance increased by $5,016 which continues
to not be recognized, as the circumstances for recognition since June 30, 2004
have not changed.
NOTE 5 - COMMITMENTS AND CONTINGENCIES
LITIGATION
- ----------
The Company was a defendant in a small claims court action in the Province of
British Columbia on May 16, 2002, involving two Plaintiffs alleging a $5,000
deposit was not returned to them, which was intended to apply towards the
purchase of common stock of the Company, which was never issued. The Company
claims that no amount was ever received from plaintiffs and filed a response on
June 20, 2002, disputing all allegations. In the opinion of Company counsel, the
claim is a nuisance lawsuit and is confident no liability will result on its
behalf.
NOTE 6 - THE EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS
Below is a listing of the most recent accounting standards and their effect on
the Company.
SFAS 148 ACCOUNTING FOR STOCK-BASED COMPENSATION-TRANSITION AND
DISCLOSURE
Amends FASB 123 to provide alternative methods of transition for an
entity that voluntarily changes to the fair value based method of
accounting for stock-based employee compensation.
F-8
ARMOR ELECTRIC, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Information as of December 31, 2004, is unaudited)
SFAS 149 AMENDMENT OF STATEMENT 133 ON DERIVATIVE INSTRUMENTS AND
HEDGING ACTIVITIES
This Statement amends and clarifies financial accounting and reporting
for derivative instruments, including certain derivative instruments
embedded in other contracts (collectively referred to as derivatives)
and for hedging activities under FASB Statement NO. 133, Accounting
for Derivative Instruments and Hedging Activities.
SFAS 150 FINANCIAL INSTRUMENTS WITH CHARACTERISTICS OF BOTH
LIABILITIES AND EQUITY
This Statement requires that such instruments be classified as
liabilities in the balance sheet. SFAS 150 is effective for financial
instruments entered into or modified after May 31, 2003.
INTERPRETATION NO. 46 (FIN 46)(R)
Effective December 2003, The Financial Accounting Standards Board
revised Fin 46 which required certain variable interest entities to be
consolidated by the primary beneficiary of the entity if the equity
investors in the entity did not have the characteristics of a
continuing financial interest or did not have sufficient equity at
risk for the entity to finance its activities without additional
subordinated financial support from other parties, the determination
to be made on the date an enterprise becomes involved with an entity.
The Company has not invested in any such entities, and does not expect
to do so in the foreseeable future.
The adoption of these new Statements is not expected to have a
material effect on the Company's financial position, results or
operations, or cash flows.
NOTE 7- SUBSEQUENT EVENTS (UNAUDITED)
STOCK OPTION PLANS
During January 2005 the Company's Board of Directors approved the 2005 Incentive
Stock Option Plan and the 2005 Stock Plan.
2005 Incentive Stock Option Plan
This plan was established for employees, consultants, directors, and other
persons associated with the Company. This plan covers incentive stock options,
non-qualified stock options, stock awards, restricted shares or cash awards as
determined by the Board of Directors. A maximum of 5 million shares are
authorized for issuance.
Options are not transferable, will be assigned a price at which the underlying
shares may be purchased when granted, will be assigned a vesting period as
predetermined in the plan for each type of person to whom and when granted, and
will expire 5 years from date of grant or less, depending on the term of office
or engagement.
For Federal income tax purposes, no income tax is applicable to the granting of
incentive stock options or their exercise, provided the exercised shares are
held for a requisite period of time after the date of issuance. Alternative
minimum tax may apply at the time of exercise, however. The Company is not
required to withhold income or other taxes upon the exercise of these options.
F-9
ARMOR ELECTRIC, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Information as of December 31, 2004, is unaudited)
As provided for in Financial Accounting Standards Board opinion No. 123R
effective for small business issuers-as of the beginning of the first fiscal
year that begins after December 15, 2005, all such companies that used the
fair-value-based method for either recognition or disclosure under Statement 123
will apply this statement using a modified version of prospective application.
Under the transition method, compensation cost is recognized on or after the
required effective date for the portion of the outstanding awards for which the
requisite service has not yet been rendered, based on the grant-date fair value
of those awards calculated under Statement 123 for either recognition or pro
forma disclosures. This statement when effective, or earlier adopted, eliminates
the alternative use of APB 25, which used the intrinsic value method, and which
generally resulted in no compensation value when options were issued.
2005 Non-Qualified Stock Plan
The Board authorized up to 3 million shares of the Company's common stock for
issuance to certain persons. There are no restrictions on transferability. These
shares are not qualified under the Federal tax code and are, therefore, taxable
to the recipient and deductible by the Company when issued based on their fair
market value, provided there is no substantial risk of forfeiture. Income and
other taxes are to be withheld and/or paid by the Company at the time of
issuance, which also include employer wage related taxes.
REGISTRATION STATEMENT
During February 2005, the Company filed on Form S-8, a registration statement
with the Securities and Exchange Commission to register 3 million shares.
COMMON STOCK, RESTATED
On August 2, 2004 the Company issued 502,000 restricted shares of common stock
for marketing services at $.23 per share for a total of $115,460. These services
are being performed over a 5 month period ending December 31, 2004, accordingly,
$46,184 was included in expense during the current quarter, and the balance as a
deferred charge as of September 30, 2004.
On December 17, 2004, the above shares were cancelled due to non performance of
the underlying services, accordingly, this transaction resulted in the reversal
and restatement of all amounts previously recorded for compensation deferred and
expensed during the period subsequent to June 30, 2004.
F-10