As
filed
with the Securities and Exchange Commission, December 10, 2007
Registration
No. _____
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
SB-2
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
ORIGINOIL,
INC.
(Exact
name of registrant as specified in its charter)
Nevada
(State
or Other Jurisdiction of
Incorporation
or Organization)
|
3999
(Primary
Standard Industrial
Classification
Code Number)
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26-0287664
(IRS
Employer
Identification
No.)
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2020
Century Park East, 14
th
Floor
Los
Angeles, CA 93117
(404)
202-6944
(Address
and telephone number of registrant’s principal offices)
T
Riggs Eckelberry
Chief
Executive Officer
ORIGINOIL,
INC.
2020
Century Park East, 14
th
Floor
Los
Angeles, CA 93117
(404)
202-6944
(Name,
address and telephone number of agent for service)
Copies
to:
Gregory
Sichenzia, Esq.
Sichenzia
Ross Friedman Ference LLP
61
Broadway
New
York, NY 10006
(212)
930-9700
(212)
930-9725 Fax
Approximate
date of commencement of proposed sale to the public: As soon as practical after
the Registration Statement becomes effective.
If
any
securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, other
than securities offered only in connection with dividend or interest
reinvestment plans, check the following box:
x
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.
o
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.
o
If
delivery of the prospectus is expected to be made pursuant to Rule 434, please
check the following box.
o
Title
of each class
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Proposed
maximum
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Amount
of
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of
securities to
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Amount
to be
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Proposed
offering
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aggregate
offering
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registration
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be
registered
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price
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fee
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Common
Stock (1)
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32,001,455
shares
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$
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0.10
per share
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$
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3,200,145.50
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$
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98.24
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Total:
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32,001,455
shares
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$
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3,200,145.50
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$
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98.24
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(1)
32,001,455 shares of common stock offered by selling shareholders
The
proposed offering price per share for the selling security holders was estimated
solely for the purpose of calculating the registration fee pursuant to Rule
457
of Regulation C.
Registrant
hereby amends this Registration Statement on such date or dates as may be
necessary to delay its effective date until the Registrant shall file a further
amendment which specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of the Securities
Act of 1933 or until the Registration Statement shall become effective on such
date as the Commission, acting pursuant to said Section 8(a), may
determine.
The
information in this prospectus is not complete and may be changed. We may not
sell these securities and the selling security holders may not sell these
securities until the registration statement filed with the Securities and
Exchange Commission is effective. This prospectus is not an offer to sell these
securities and is not soliciting an offer to buy these securities in any state
where the offer or sale is not permitted.
PRELIMINARY
PROSPECTUS
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Subject to Completion dated December 10,
2007
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32,001,455
SHARES OF COMMON STOCK BY SELLING SHAREHOLDERS
$0.10
Per Share
This
prospectus relates to 32,001,455 shares of common stock of OriginOil, Inc.,
a
Nevada corporation. These shares have already been issued to the selling
security holders in private placement transactions which were exempt from the
registration and prospectus delivery requirements of the Securities Act of
1933,
as amended. We will not receive any of the proceeds from the sale of those
shares being sold by the selling security holders. The selling security holders
may sell their shares in sales in the open market or in privately negotiated
transactions.
The
resale of the shares or the sale of new shares is not being underwritten. The
selling security holders may sell or distribute the shares, from time to time,
depending on market conditions and other factors, through underwriters, dealers,
brokers or other agents, or directly to one or more purchasers. The offering
price may be the market price prevailing at the time of sale or a privately
negotiated price. Pursuant to the registration rights granted by us to the
selling security holders, we are obligated to register the shares held by the
selling security holders. We are paying substantially all expenses incidental
to
registration of the shares.
There
is
no public trading market for our securities, and if a market develops for our
securities, it will most likely be limited, sporadic and highly volatile. If
no
market develops, you will not be able to resell your shares
publicly.
Your
investment in our units involves a high degree of risk. See “Risk Factors”
starting on page ___ for certain information you should consider before you
purchase the shares.
Neither
the Securities and Exchange Commission nor any state securities commission
has
approved or disapproved of these securities or passed upon the accuracy or
adequacy of this prospectus. Any representation to the contrary is a criminal
offense.
The
date
of this prospectus is ___________, 2007
TABLE
OF CONTENTS
Prospectus
Summary
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5
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Risk
Factors
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6
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Special
Note Regarding Forward-Looking Statements
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Use
of Proceeds
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10
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Market
for Common Equity and Related Stockholder Matters
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10
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Determination
of Offering Price
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10
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Dilution
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Management's
Discussion and Analysis of Financial Condition and Results of
Operations
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11
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Description
of Business
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14
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Description
of Property
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15
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Legal
Proceedings
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15
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Directors,
Executive Officers, Promoters and Control Persons
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16
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Executive
Compensation
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17
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Certain
Relationships and Related Transactions
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17
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Security
Ownership of Certain Beneficial Owners and Management
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18
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Description
of Securities
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18
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Selling
Security Holders
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19
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Plan
of Distribution
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26
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Limitation
of Liability and Indemnification of Officer and Directors;
Insurance
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27
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Disclosure
of Commission Position on Indemnification for Securities Act
Liabilities
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27
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Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
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28
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Legal
Matters
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28
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Experts
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28
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Additional
Information
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28
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Financial
Statements
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You
should rely only on the information contained in this prospectus. We have not
authorized anyone to provide you with information different from that which
is
contained in this prospectus. This prospectus may be used only where it is
legal
to sell these securities. The information in this prospectus may only be
accurate on the date of this prospectus, regardless of the time of delivery
of
this prospectus or of any sale of securities.
This
summary highlights information contained elsewhere in this prospectus. This
summary does not contain all of the information you should consider before
investing in our common stock. You should read the entire prospectus carefully,
especially the “Risk Factors” section and our financial statements and the
related notes appearing at the end of this, before deciding to invest in our
common stock. As used throughout this prospectus, the terms “Origin,”
“OriginOil”, the “Company,” “we,” “us,” and “our” refer to OriginOil,
Inc.
ORIGINOIL,
INC.
Our
business focuses on developing a technology that it believes can transform
algae
into an alternative to petroleum. The Company’s patent-pending OriginOil System
is an advanced bioreactor (growth vessel) system where microalgae can be rapidly
grown and cracked to extract algae oil for fuel and chemical production. The
OriginOil System can be configured to have many bioreactors for high volume
round-the-clock oil production.
Our
principal executive offices are located at
2029
Century Park East, 14
th
Floor,
Los Angeles, California 90067
.
Our
telephone number is (404) 202-6944. Our website address is www.originoil.com.
Our website and the information contained on our website are not
incorporated into this prospectus or the registration statement of which it
forms a part. Further, our references to the URLs for these websites are
intended to be inactive textual references only.
Our
Corporate History
OriginOil
was incorporated in the State of Nevada on June 1, 2007.
We
have
only been engaged in our current and proposed business operations since June
2007, and to date, we have been primarily involved in research and development
activities.
About
this offering
This
prospectus relates to a total of 32,001,455 shares of common stock of OriginOil,
Inc., a Nevada corporation.
An
aggregate of up to 32,001,455 shares of our common stock may be offered and
sold
pursuant to this Prospectus by the selling security holders. The selling
security holders acquired these shares from us in a series of private placements
conducted between June 2007 and October 2007.
On
July
12, 2007, we closed on a private placement offering in which we sold an
aggregate of 28,000,000 shares of our common stock to certain accredited
purchasers for aggregate gross proceeds of $420,000.
Additionally,
on November 19, 2007, we closed on a private placement offering in which we
sold
an aggregate of 14,180,050 shares of our common stock to certain accredited
purchasers for aggregate gross proceeds of $1,418,005.
Number
of shares outstanding after this offering
There
are
currently 143,430,050 shares of our common stock issued and outstanding. We
have
no other securities issued or outstanding.
Estimated
use of proceeds
We
will
not receive any of the proceeds resulting from the sale of the shares held
by
the selling security holders.
RISK
FACTORS
You
should carefully consider the following risk factors in evaluating our business
before you buy any of our common stock. Buying our common stock is speculative
and involves many risks. You should not buy our common stock unless you can
afford to lose the entire amount of your investment.
Risks
related to OriginOil’s financial results:
WE
ARE A RECENTLY FORMED DEVELOPMENT STAGE COMPANY THAT HAS NOT ACHIEVED PROFITABLE
OPERATIONS. IF OUR BUSINESS PLAN FAILS, YOU MAY LOSE YOUR ENTIRE INVESTMENT.
Our
independent auditors, HJ Associates & Consultants, LLP, certified public
accountants, have expressed substantial doubt concerning our ability to continue
as a going concern. From inception to September 30, 2007, our net losses have
been $207,978. Since we have no record of profitable operations, there is high
a
possibility that you may suffer a complete loss of your investment.
OUR
LIMITED OPERATING HISTORY DOES NOT AFFORD INVESTORS A SUFFICIENT HISTORY ON
WHICH TO BASE AN INVESTMENT DECISION.
Our
Company was formed in June 2007 and is currently developing a new technology
that has not yet gained market acceptance. There can be no assurance that at
this time we will operate profitably or that we will have adequate working
capital to meet our obligations as they become due.
Investors
must consider the risks and difficulties frequently encountered by early stage
companies, particularly in rapidly evolving markets. Such risks include the
following:
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need
for acceptance of products;
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ability
to continue to develop and extend brand
identity;
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ability
to anticipate and adapt to a competitive
market;
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ability
to effectively manage rapidly expanding
operations;
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amount
and timing of operating costs and capital expenditures relating to
expansion of our business, operations, and infrastructure;
and
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dependence
upon key personnel.
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We
cannot
be certain that our business strategy will be successful or that we will
successfully address these risks. In the event that we do not successfully
address these risks, our business, prospects, financial condition, and results
of operations could be materially and adversely affected.
OUR
INDEPENDENT AUDITORS HAVE EXPRESSED SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO
CONTINUE AS A GOING CONCERN, WHICH MAY HINDER OUR ABILITY TO OBTAIN FUTURE
FINANCING AND WHICH MAY FORCE US TO CEASE OPERATIONS.
In
their
report dated November 30, 2007, our independent auditors stated that our
financial statements for the period ended June 30, 2007 were prepared
assuming that we would continue as a going concern. Our ability to continue
as a
going concern is an issue raised as a result of recurring losses from operations
and cash flow deficiencies since our inception. We continue to experience net
losses. Our ability to continue as a going concern is subject to our ability
to
generate a profit and/or obtain necessary funding from outside sources,
including obtaining additional funding from the sale of our securities,
increasing sales or obtaining loans and grants from various financial
institutions where possible. If we are unable to continue as a going concern,
you may lose your entire investment.
ORIGINOIL
IS AT AN EARLY STAGE OF DEVELOPMENT AND HAS A LIMITED OPERATING
HISTORY
OriginOil
was formed in 2007 operating as a private company formed under the laws of
the
state of Nevada. As such, it has a limited operating history upon which you
can
base an evaluation of its business and prospects. As a start-up company in
the
early stage of development, there are substantial risks, uncertainties, expenses
and difficulties that OriginOil is subject to. You should consider an investment
in OriginOil in light of these risks, uncertainties, expenses and difficulties.
To address these risks and uncertainties, OriginOil must do the
following:
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Successfully
execute its business strategy;
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Respond
to competitive developments; and
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Attract,
integrate, retain and motivate qualified
personnel.
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OriginOil
may be unable to accomplish one or more of these objectives, which could cause
its business to suffer. In addition, accomplishing one or more of these
objectives might be very expensive, which could harm its financial
results.
OUR
REVENUES ARE DEPENDENT UPON ACCEPTANCE OF OUR PRODUCTS BY THE MARKET; THE
FAILURE OF WHICH WOULD CAUSE US TO CURTAIL OR CEASE OPERATIONS.
We
believe that virtually all of our revenues will come from the sale or license
of
our products. As a result, we will continue to incur substantial operating
losses until such time as we are able to generate revenues from the sale or
license of our products. There can be no assurance that businesses and customers
will adopt our technology and products, or that businesses and prospective
customers will agree to pay for or license our products. In the event that
we
are not able to significantly increase the number of customers that purchase
or
license our products, or if we are unable to charge the necessary prices or
license fees, our financial condition and results of operations will be
materially and adversely affected.
Risks
related to OriginOil’s business:
ORIGINOIL
WILL NEED TO INCREASE THE SIZE OF ITS ORGANIZATION, AND MAY EXPERIENCE
DIFFICULTIES IN MANAGING GROWTH.
OriginOil
is a small company with minimal employees as of September 30, 2007. We expect
to
experience a period of significant expansion in headcount, facilities,
infrastructure and overhead and anticipates that further expansion will be
required to address potential growth and market opportunities. Future growth
will impose significant added responsibilities on members of management,
including the need to identify, recruit, maintain and integrate managers. Our
future financial performance and our ability to compete effectively will depend,
in part, on our ability to manage any future growth effectively.
WE
ARE SUBJECT TO COMPLIANCE WITH SECURITIES LAW, WHICH EXPOSES US TO POTENTIAL
LIABILITIES, INCLUDING POTENTIAL RESCISSION RIGHTS.
We
have
offered and sold our common stock to investors pursuant to certain exemptions
from the registration requirements of the Securities Act of 1933, as well as
those of various state securities laws. The basis for relying on such exemptions
is factual; that is, the applicability of such exemptions depends upon our
conduct and that of those persons contacting prospective investors and making
the offering. We have not received a legal opinion to the effect that any of
our
prior offerings were exempt from registration under any federal or state law.
Instead, we have relied upon the operative facts as the basis for such
exemptions, including information provided by investors themselves.
If
any
prior offering did not qualify for such exemption, an investor would have the
right to rescind its purchase of the securities if it so desired. It is possible
that if an investor should seek rescission, such investor would succeed. A
similar situation prevails under state law in those states where the securities
may be offered without registration in reliance on the partial preemption from
the registration or qualification provisions of such state statutes under the
National Securities Markets Improvement Act of 1996. If investors were
successful in seeking rescission, we would face severe financial demands that
could adversely affect our business and operations. Additionally, if we did
not
in fact qualify for the exemptions upon which it has relied, we may become
subject to significant fines and penalties imposed by the SEC and state
securities agencies.
THE
AVAILABILITY OF A LARGE NUMBER OF AUTHORIZED BUT UNISSUED SHARES OF COMMON
STOCK
MAY, UPON THEIR ISSUANCE, LEAD TO DILUTION OF EXISTING
STOCKHOLDERS.
We
are
authorized to issue 500,000,000 shares of common stock, $.0001 par value per
share, of which, as of November 19, 2007, 143,430,050 shares of common stock
were issued and outstanding. These shares may be issued by our Board of
Directors without further stockholder approval. The issuance of large numbers
of
shares, possibly at below market prices, is likely to result in substantial
dilution to the interests of other stockholders. In addition, issuances of
large
numbers of shares may adversely affect the market price of our common
stock.
WE
MAY NEED ADDITIONAL CAPITAL THAT COULD DILUTE THE OWNERSHIP INTEREST OF
INVESTORS.
We
require substantial working capital to fund our business. If we raise additional
funds through the issuance of equity, equity-related or convertible debt
securities, these securities may have rights, preferences or privileges senior
to those of the rights of holders of our common stock and they may experience
additional dilution. We cannot predict whether additional financing will be
available to us on favorable terms when required, or at all. Since our
inception, we have experienced negative cash flow from operations and expect
to
experience significant negative cash flow from operations in the future. The
issuance of additional common stock by our management, may have the effect
of
further diluting the proportionate equity interest and voting power of holders
of our common stock, including investors in this offering.
THE
COMPANY MAY BE UNABLE TO MANAGE ITS GROWTH OR IMPLEMENT ITS EXPANSION
STRATEGY.
The
Company may not be able to develop its product and service offerings or
implement the other features of its business strategy at the rate or to the
extent presently planned. The Company’s projected growth will place a
significant strain on the Company’s administrative, operational and financial
resources. If the Company is unable to successfully manage its future growth,
establish and continue to upgrade its operating and financial control systems,
recruit and hire necessary personnel or effectively manage unexpected expansion
difficulties, the Company’s financial condition and results of operations could
be materially and adversely affected.
WE
MAY NOT BE ABLE TO SUCCESSFULLY DEVELOP AND COMMERCIALIZE OUR TECHNOLOGIES
WHICH
WOULD RESULT IN CONTINUED LOSSES AND MAY REQUIRE US TO CURTAIL OR CEASE
OPERATIONS.
We
are
currently developing our technology and a commercial product. We have not
generated any revenues and we are unable to project when we will achieve
profitability, if at all. As is the case with any new technology, we expect
the
development process to continue. We cannot assure that our engineering resources
will be able to develop the product fast enough to meet market requirements.
We
can also not assure that our product will gain market acceptance and that we
will be able to successfully commercialize the technologies. The failure to
successfully develop and commercialize the technologies would result in
continued losses and may require us to curtail or cease operations.
OUR
ABILITY TO PRODUCE AND DISTRIBUTE COMMERCIALLY VIABLE BIO-FUEL IS UNPROVEN,
WHICH COULD HAVE A DETRIMENTAL EFFECT ON OUR ABILITY TO GENERATE OR SUSTAIN
REVENUES.
The
technologies we will use to transform algae into a new form of oil have never
been utilized on a commercial basis. The OriginOil System, through our Quantum
Fracturing technology, while intended to create a new bio-fuel feedstock for
many products such as diesel, gasoline, jet fuel, plastics and solvents, is
in
fact a new bio-fuel that may never achieve technical or commercial viability.
All of the tests conducted to date by us with respect to the technology have
been performed in a limited scale environment and the same or similar results
may not be obtainable at competitive costs on a large-scale commercial basis.
We
have never utilized technology under the conditions or in the volumes that
will
be required for us to be profitable and cannot predict all of the difficulties
that may arise. The technology, when used, may require further research,
development, regulatory approvals, environmental permits, design and testing
prior to commercialization. Accordingly, our technology may not perform
successfully on a commercial basis and may never generate any revenues or be
profitable.
OUR
BUSINESS DEPENDS ON PROPRIETARY TECHNOLOGY THAT WE MAY NOT BE ABLE TO PROTECT
AND MAY INFRINGE ON THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS.
Our
success will depend, in part, on our technology’s commercial viability and on
the strength of our intellectual property rights.
The
technology is not patented and the only intellectual property rights that exist
at present, if any, are trade secret rights. However, trade secrets are
difficult to protect and others could independently develop substantially
equivalent technology, otherwise gain access to trade secrets relating to the
technology, Accordingly, we may not be able to protect the rights to our trade
secrets. In addition, our agreements with our employees, consultants, advisors,
customers and strategic partners restricting the disclosure and use of trade
secrets, inventions and confidential information relating to the technology
may
not provide meaningful protection in the event of unauthorized use or
disclosure.
We
recently filed a U.S. patent application. It could take several years for the
applications to be processed. However, patent protection may not be obtainable
for the technology whether in the U.S. or internationally.
Alternatively,
any protection that is obtained may not be broad enough to be effective and
of
value, or it may not withstand challenges as to validity and
enforceability.
Third
parties may assert that the technology, or the products we or our customers
or
partners
commercialize
using the technology, infringes upon their proprietary rights. We have yet
to
complete an infringement analysis and, even if such an analysis were available
at the current time, it is virtually impossible for us to be certain that no
infringement exists, particularly in our case where our products have not yet
been fully developed.
We
may
need to acquire additional licenses from third parties in order to avoid
infringement. Any required license may not be available to us on acceptable
terms, or at all.
We
could
incur substantial costs in defending ourselves in suits brought against us
for
alleged infringement of another party’s intellectual property rights as well as
in enforcing our rights against others, and if we are found to infringe, the
manufacture, sale and use of our or our customers’ or partners’ products could
be enjoined. Any claims against us, with or without merit, would likely be
time-consuming, requiring our management team to dedicate substantial time
to
addressing the issues presented. Furthermore, the parties bringing claims may
have greater resources than we do.
TECHNOLOGICAL
CHANGE MAY MAKE OUR PRODUCTS OBSOLETE OR DIFFICULT TO SELL AT A
PROFIT.
To
date,
the market for alternative fuel technology systems and equipment has not, to
our
knowledge, been characterized by rapid changes in technology. However, there
can
be no assurance that new products or technologies, presently unknown to
management, will not, at any time in the future and without warning, render
our
technology less competitive or even obsolete. Technology advances claimed by
current competitors may ultimately prove to make our systems obsolete. Major
companies, academic and research institutions, or others, for example, could
develop new fuels or new devices which could be installed at the original
equipment manufacturer level and which could potentially render our systems
obsolete. Moreover, our technology could be susceptible to being analyzed and
reconstructed by an existing or potential competitor. Although the Company
may
be the license holder of certain United States patents respecting its
proprietary system, we may not have the financial resources to successfully
defend such patent, were it to become necessary, by bringing patent infringement
suits against parties that have substantially greater resources than those
available to us.
In
addition, competitors may develop technology and systems that can be sold and
installed at a lower per unit cost. There can be no assurance that we will
have
the capital resources available to undertake the research which may be necessary
to upgrade our equipment or develop new devices to meet the efficiencies of
changing technologies. Our inability to adapt to technological change could
have
a materially adverse effect on our results of operations.
WE
DO NOT MAINTAIN THEFT OR CASUALTY INSURANCE, LIABILITY OR PROPERTY INSURANCE
COVERAGE AND THEREFORE WE COULD INCUR LOSSES AS A RESULT OF AN UNINSURED LOSS.
We
do not
maintain theft, casualty insurance, liability or property insurance coverage.
We
cannot assure that we will not incur uninsured liabilities and losses as a
result of the conduct of our business. Any such uninsured or insured loss or
liability could have a material adverse affect on our results of operations.
IF
WE LOSE KEY EMPLOYEES AND CONSULTANTS OR ARE UNABLE TO ATTRACT OR RETAIN
QUALIFIED PERSONNEL, OUR BUSINESS COULD SUFFER.
Our
success is highly dependent on our ability to attract and retain qualified
scientific, engineering and management personnel. We are highly dependent on
our
management, including T Riggs Eckelberry, who has been critical to the
development of our technology and business. The loss of the services of Mr.
Eckelberry could have a material adverse effect on our operations. We do not
have an employment agreement with Mr. Eckelberry. Accordingly, there can be
no
assurance that he will remain associated with us. His efforts will be critical
to us as we continue to develop our technology and as we attempt to transition
from a development state company to a company with commercialized products
and
services. If we were to lose Mr. Eckelberry, or any other key employees or
consultants, we may experience difficulties in competing effectively, developing
our technology and implementing our business strategies.
THE
LOSS OF STRATEGIC RELATIONSHIPS USED IN THE DEVELOPMENT OF OUR PRODUCTS AND
TECHNOLOGY COULD IMPEDE OUR ABILITY TO COMPLETE OUR PRODUCT AND RESULT IN A
MATERIAL ADVERSE EFFECT CAUSING THE BUSINESS TO SUFFER.
We
may
rely on strategic relationships with technology development partners to provide
technology. A loss of these relationships for any reason could cause us to
experience difficulties in completing the development of our product and
implementing our business strategy. There can be no assurance that we could
establish other relationships of adequate expertise in a timely manner or at
all.
Risks
related to OriginOil’s common stock and its market value:
OUR
STOCK WILL LIKELY BE SUBJECT TO THE PENNY STOCK RULES, WHICH IMPOSE SIGNIFICANT
RESTRICTIONS ON BROKER-DEALERS AND MAY AFFECT THE RESALE OF OUR
STOCK.
A
penny
stock is generally a stock that:
|
is
not listed on a national securities exchange or NASDAQ,
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is
listed in the "pink sheets" or on the NASD OTC Bulletin
Board,
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has
a price per share of less than $5.00 and
|
|
|
|
is
issued by a company with net tangible assets less than $5
million.
|
The
penny
stock trading rules impose additional duties and responsibilities upon
broker-dealers and salespersons effecting purchase and sale transactions in
common stock and other equity securities, including:
|
·
|
determination
of the purchaser's investment
suitability,
|
|
·
|
delivery
of certain information and disclosures to the purchaser,
and
|
|
·
|
receipt
of a specific purchase agreement before effecting the purchase
transaction.
|
Many
broker-dealers will not effect transactions in penny stocks, except on an
unsolicited basis, in order to avoid compliance with the penny stock trading
rules. In the event our common stock becomes subject to the penny stock trading
rules,
|
·
|
such
rules may materially limit or restrict the ability to resell our
common
stock, and
|
|
·
|
the
liquidity typically associated with other publicly traded equity
securities may not exist.
|
Because
of the significant restrictions on trading penny stocks, a public market may
never emerge for our securities. If this happens, you may never be able to
publicly sell your shares.
USE
OF PROCEEDS
We
will
not receive any proceeds for those shares sold by selling
shareholders.
MARKET
FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS
Market
Information
Currently,
there is no public market for our stock. Our securities are not listed for
trading on any exchange or quotation service. We are not required to comply
with
the disclosure policies of any exchange or quotation service. The requirements
to which we would be subject if our securities were so listed typically include
the timely disclosure of a material change or fact with respect to our affairs
and the making of required filings.
111,428,595
shares of our common stock could potentially be sold pursuant to Rule 144
promulgated under the Securities Act of 1933.
Currently,
Rule 144 provides, among other things, that persons holding restricted
securities for a period of one year may each sell, assuming all of the
conditions of Rule 144 are satisfied, in brokerage transactions every three
months an amount of restricted securities equal to one percent of our
outstanding shares of common stock, or the average weekly reported volume of
trading during the four calendar weeks preceding the filing of a notice of
proposed sale, whichever is greater. Rule 144 also provides that, after holding
such securities for a period of two years, a non-affiliate of the company may
sell those securities without restriction, other than the requirement that
we
are current with respect to our information reporting requirements.
The
SEC
announced on November 15, 2007 that, effective January 15, 2008, the holding
period for the resale of restricted securities of reporting companies will
be
shortened from one year to six months. Additionally, the SEC substantially
simplified Rule 144 compliance for non-affiliates by allowing non-affiliates
of
reporting companies to freely resell restricted securities after satisfying
a
six-month holding period (subject only to the Rule 144(c) public information
requirement until the securities have been held for one year) and by allowing
non-affiliates of non-reporting companies to freely resell restricted securities
after satisfying a 12-month holding period.
There
are
no outstanding options or warrants to purchase, or securities convertible into,
shares of our common stock. There are no outstanding shares of our common stock
that we have agreed to register under the Securities Act of 1933 for sale by
security holders.
Holders
of the Common Stock
As
of the
date of this registration statement, we have 143,430,050 shares of our $.0001
par value common stock issued and outstanding. There are approximately 212
shareholders of record that hold our common stock.
Dividends
We
have
never declared nor paid any cash dividends on our common stock. For the
foreseeable future, we intend to retain any earnings to finance the operation
and expansion of our business, and we do not anticipate declaring or paying
any
dividends on our common stock. Dividends are declared at the sole discretion
of
our Board of Directors.
DETERMINATION
OF OFFERING PRICE
We
have
proposed a selling price of $0.10 per share. The offering price has no
relationship to any established criteria of value, such as book value or
earnings per share. Consequently, we cannot determine what the actual value
of
our common stock will be either now or at the time of sale. The selling security
holders may sell all or a portion of their shares in the over-the-counter market
at prices prevailing at the time of sale, or related to the market price at
the
time of sale, or at other negotiated prices.
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND
RESULTS OF OPERATIONS
Some
of
the information in this prospectus contains forward-looking statements that
involve substantial risks and uncertainties. You can identify these statements
by forward-looking words such as "may," "expect," "anticipate," "believe,"
"estimate" and "continue," or similar words. You should read statements that
contain these words carefully because they:
·
|
discuss
our future expectations;
|
·
|
contain
projections of our future results of operations or of our financial
condition; and
|
·
|
state
other "forward-looking"
information.
|
We
believe it is important to communicate our expectations. However, there may
be
events in the future that we are not able to accurately predict or over which
we
have no control. Our actual results and the timing of certain events could
differ materially from those anticipated in these forward-looking statements
as
a result of certain factors, including those set forth under "Risk Factors,"
"Business" and elsewhere in this prospectus. See "Risk Factors."
OVERVIEW
Our
business focuses on developing a technology that it believes can transform
algae
into an alternative to petroleum. The Company’s patent-pending OriginOil System
is an advanced bioreactor (growth vessel) system where microalgae can be rapidly
grown and cracked to extract algae oil for fuel and chemical production. The
OriginOil System can be configured to have many bioreactors for high volume
round-the-clock oil production.
We
intend
to be a technology provider to the growing alternative energy and biofuel
industry. Therefore, while we intend to sell complete algae oil production
systems, we will also pursue co-ventures and licensing agreements with
large-scale producers. As a technology company, we do not plan on becoming
a
marketer of end products such as biodiesel and other fuels.
We
were
incorporated in the State of Nevada on June 1, 2007. Our principal executive
offices are located at
2029
Century Park East, 14
th
Floor,
Los Angeles, California 90067
.
Our
telephone number is (404) 202-6944. Our website address is www.originoil.com.
Our fiscal year end is December 31.
Critical
Accounting Policies
Our
discussion and analysis of our financial condition and results of operations
are
based upon our financial statements, which have been prepared in accordance
with
accounting principles generally accepted in the United States of America. The
preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues
and
expenses, and related disclosures of contingent assets and liabilities. On
an
ongoing basis, we evaluate our estimates, including those related to impairment
of property, plant and equipment, intangible assets, deferred tax assets and
fair value computation using the Black Scholes option pricing model. We base
our
estimates on historical experience and on various other assumptions, such as
the
trading value of our common stock and estimated future undiscounted cash flows,
that we believe to be reasonable under the circumstances, the results of which
form the basis for making judgments about the carrying value of assets and
liabilities that are not readily apparent from other sources. Actual results
may
differ from these estimates under different assumptions or conditions; however,
we believe that our estimates, including those for the above-described items,
are reasonable.
Revenue
Recognition
Revenue on product sales is
recognized when persuasive evidence of an
arrangement exists, such as when a purchase order or contract is
received from the customer, the selling price is fixed, title to the goods
has changed and there is a reasonable assurance of collection of the
sales proceeds. We obtain written purchase authorizations from
our customers for a specified amount of product at a specified price
and consider delivery to have occurred at the time
of shipment. Revenue is recognized at shipment and we
record a reserve for estimated sales returns, which
is reflected as a reduction of revenue at the time of revenue recognition.
We defer revenue on products sold directly to the consumer with a fifteen day
right of return. Revenue is recognized upon the expiration of the right of
return.
Revenues
from research and development activities relating to firm fixed-price
contracts are generally recognized on the percentage-of-completion
method of accounting as costs are incurred (cost-to-cost basis).
Revenues from research and development activities relating to
cost-plus-fee contracts include costs incurred plus a portion of
estimated fees or profits based on the relationship of costs incurred to
total estimated costs. Contract costs include all direct
material and labor costs and an allocation of allowable
indirect costs as defined by each contract, as periodically adjusted to
reflect revised agreed upon rates. These rates are subject to audit by the
other party.
Use
of Estimates
In
accordance with accounting principles generally accepted in the United States,
management utilizes estimates and assumptions that affect the reported amounts
of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements as well as the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. These estimates and assumptions relate to
recording net revenue, collectibility of accounts receivable, useful lives
and
impairment of tangible and intangible assets, accruals, income taxes, inventory
realization, stock-based compensation expense and other factors. Management
believes it has exercised reasonable judgment in deriving these estimates.
Consequently, a change in conditions could affect these estimates.
Fair
Value of Financial Instruments
The
Company's cash, cash equivalents, investments, accounts receivable and accounts
payable are stated at cost which approximates fair value due to the short-term
nature of these instruments.
Recently
Issued Accounting Pronouncements
In
December 2004, the Financial Accounting Standards Board issued two FASB Staff
Positions - FSP FAS 109-1, Application of FASB Statement 109 "Accounting for
Income Taxes" to the Tax Deduction on Qualified Production Activities Provided
by the American Jobs Creation Act of 2004, and FSP FAS 109-2 Accounting and
Disclosure Guidance for the Foreign Earnings Repatriation Provision within
the
American Jobs Creation Act of 2004. Neither of these affected the Company as
it
does not participate in the related activities.
In
May
2005, the FASB issued FASB Statement No. 154, “Accounting Changes and Error
Corrections.” This new standard replaces APB Opinion No. 20, “Accounting
Changes, and FASB Statement No. 3, Reporting Accounting Changes in Interim
Financial Statements,” and represents another step in the FASB’s goal to
converge its standards with those issued by the IASB. Among other changes,
Statement 154 requires that a voluntary change in accounting principle be
applied retrospectively with all prior period financial statements presented
on
the new accounting principle, unless it is impracticable to do so. Statement
154
also provides that (1) a change in method of depreciating or amortizing a
long-lived non-financial asset be accounted for as a change in estimate
(prospectively) that was effected by a change in accounting principle, and
(2)
correction of errors in previously issued financial statements should be termed
a “restatement.” The new standard is effective for accounting changes and
correction of errors made in fiscal years beginning after December 15, 2005.
Early adoption of this standard is permitted for accounting changes and
correction of errors made in fiscal years beginning after June 1, 2005. The
Company has evaluated the impact of the adoption of Statement 154 and does
not
believe the impact will be significant to the Company's overall results of
operations or financial position
Liquidity
and Capital Resources
As
of
September 30, 2007, we had $870,593 of working capital as compared to a working
deficit of $(31,265) from inception (June 1, 2007) through June 30, 2007. This
increase of $901,858 was due primarily to private placements of shares of common
stock pursuant to Subscription Agreements which we entered into with accredited
and/or institutional buyers.
Cash
flow
used in operating activities was $145,363 for the three months ended September
30, 2007, as compared to cash used of $46,199 from inception (June 1, 2007)
through June 30, 2007. This increase of $99,164 was primarily attributable
to an
increase in professional fees and salaries.
Cash
provided from financing activities during the three months ended September
30,
2007 was $985,750 as compared to $97,563 from inception (June 1, 2007) through
June 30, 2007. From inception to September 30, 2007, we received a total of
$1,083,313 from the sale of shares of common stock through private placements
pursuant to Subscription Agreements which we entered into with accredited and/or
institutional buyers.
Our
financial statements for the period June 30, 2007 have been prepared under
the
assumption that we will continue as a going concern. Our independent registered
public accounting firm has issued their report dated November 30, 2007 that
included an explanatory paragraph expressing substantial doubt in our ability
to
continue as a going concern without additional capital becoming available.
Our
ability to continue as a going concern ultimately is dependent on our ability
to
generate a profit which is dependent upon our ability to obtain additional
equity or debt financing, attain further operating efficiencies and, ultimately,
to achieve profitable operations. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
PLAN
OF OPERATION AND FINANCING NEEDS
Our
business focuses on developing a technology that it believes can transform
algae
into an alternative to petroleum. We plan to productize this technology and
thereafter focus our efforts on establishing algae producer alliances and global
market distribution by 2010.
Initially,
we will build a series of test systems and carry out test scenarios to determine
what configurations are most effective in improving the algae growth and
extraction processes. We will document these as best practices for
cost-effective production. We will also look for opportunities to develop
additional intellectual property around these processes.
We
have
budgeted $300,000 and six months for this testing, documentation and further
invention. This includes the test equipment. One additional full-time employee
and a part-time contractor will be required to execute this phase.
Once
this
is done, we will negotiate co-ventures and partnerships with algae producers
and
refiners. We will seek these partnerships throughout the world. We have budgeted
$400,000 for the negotiation and implementation of these ventures. Existing
staff will carry out the negotiations and oversee the implementations. We expect
these ventures to generate some limited revenue but the amount is not
known.
After
contingencies, we expect to complete the year’s operations with $300,000
remaining in cash. This will enable us to keep a reserve as we pursue additional
financing for the second and subsequent years of operation.
Operating
Expenses
Operating
expenses for the three months ended September 30, 2007 and from inception
(June1, 2007) through September 30, 2007 were $156,702 and $209,883
respectively, and consisted primarily of general and administrative
expenses.
Net
Loss
Our
net
loss for the three months ended September 30, 2007, and from inception (June
1,
2007) through September 30, 2007 were $154,800 and $207,978 respectively.
Currently the Company is in its development stage and had no
revenues.
Off-Balance
Sheet Arrangements
We
do not
have any off balance sheet arrangements that are reasonably likely to have
a
current or future effect on our financial condition, revenues, results of
operations, liquidity or capital expenditures.
DESCRIPTION
OF BUSINESS
The
Company was incorporated in the State of Nevada on June 1, 2007.
We
have
only been engaged in our current and proposed business operations since June
2007, and to date, we have been primarily involved in research and development
activities. Accordingly, we have no operating history, nor have we achieved
any
revenues to date.
Overview
of Business
OriginOil,
Inc. is developing a technology that it believes can transform algae into an
alternative to petroleum. The Company’s patent-pending OriginOil System is an
advanced bioreactor (growth vessel) system where microalgae can be rapidly
grown
and cracked to extract algae oil for fuel and chemical production. The OriginOil
System can be configured to have many bioreactors for high volume
round-the-clock oil production.
There
are
three primary challenges in cultivating algae for oil:
1.
Algae
growth is dependent on a calm fluid environment; it does not like agitation.
One
of the primary challenges is how to optimally introduce carbon dioxide (CO2)
and
nutrients needed by the growing algae culture without disrupting or
over-aerating it.
2.
Algae
requires light as a source of energy to fuel its growth and oil production
facilities. Algae cultivation systems need to cost-effectively and evenly
distribute light within the algae culture.
3.
Algae
organisms are protected by a tough cell wall. That wall must be cracked - an
energy-expensive process - to extract the oil. The challenge is to maximize
oil
yield by cracking as many of the algae cells as possible with the smallest
amount of energy.
Within
the OriginOil System is the Company’s patent pending technology, Quantum
Fracturing™. The technology, based on the science of mass transfer and fluid
fracturing, addresses these primary challenges. In Quantum Fracturing, water,
carbon dioxide and other nutrients are ‘fractured’ (alternatively, ‘micronized’)
to create a slurry of micron-sized bubbles, which is then injected into the
algae culture growing in a lower-pressure bioreactor. This process achieves
improved distribution of nutrients in the algae culture without excessive fluid
disruption or aeration. Pressure differentials between the two zones
substantially increase contact and exchange between the micronized nutrients
and
the algae culture. We believe that it is this increased contact interface that
we can exploit to enable very high absorption of CO2 and nutrients in the
growth
phase
and very efficient cracking of the cell membranes in the
extraction
phase.
The
OriginOil System starts with the Quantum Fracturing Unit injecting a micronized
nutrient mix into an incubated algae culture in each bioreactor. Inside the
bioreactor, a proprietary rod and paddle mechanism continuously diffuses the
algae/nutrient mix for best nutrient contact and access to light for all algae
cells.
Inside
the bioreactor is an intricate network of low energy light emitting diodes
(LED)
and other lighting technologies that are placed close to the algae culture
and
controlled through a light diffuser to ensure proper distribution. We believe
this greatly enhances the energy and growth efficiency of our bioreactor.
Once
it
has reached the desired level of oil potential, the mature algae is harvested.
In this process the system causes the algae cells to rotate and float to the
top
of the water line where they can be collected for extraction.
In
extraction, the Quantum Fracturing Unit again goes to work, fracturing a
solution of proprietary catalysts that is injected into the extraction tank.
The
fracturing effect is so intense that it can create an ultrasonic effect that
literally “cracks” the algae cell wall open and releases the oil.
We
believe that using Quantum Fracturing, the amount of energy used to crack the
algae is many times less than other extraction technologies.
Next,
the
oil, water and remaining algae mass are separated. The water is recycled back
into the system, the oil is packaged for refining and distribution, and the
algae mass can be used for other environmentally-friendly applications like
ethanol, animal feed, and construction materials.
Marketing
Strategy
We
plan
to market our technology to help producers scale systems from the smallest
single bioreactor unit to large refinery scale operations. As part of our
marketing plan, we will target existing energy and fuel producers who desire
a
replacement for petroleum in their production of gasoline, diesel, jet fuel,
heating oil and other products.
Our
marketing communications strategy will include media and analyst communication,
on-line promotions, weblogs, and selected trade show attendance. We will be
using every opportunity to place our brand in general and industry specific
publications, using press releases, white papers and authored articles and
Internet publications.
Compliance
with Environmental Laws and Regulations
Our
operations are subject to local, state and federal laws and regulations
governing
environmental quality and pollution control
.
To
date, our compliance with these regulations has had no material effect on our
operations, capital, earnings, or competitive position, and the cost of such
compliance has not been material. We are unable to assess or predict at this
time what effect additional regulations or legislation could have on our
activities.
Manufacturing
and Distribution
The
Company will use licensing and partnering strategies to enter the market. The
Company intends to manufacture and distribute its technology through licensing
agreements and partnering strategies with unidentified third
parties.
Intellectual
Property
We
have
filed a patent application
with
the
U.S. Patent and Trademark Office
to
protect the intellectual property rights for “Algae Growth System for Oil
Production”. The inventors listed on the patent application are Nicholas
Eckelberry and T Riggs Eckelberry, the Company’s founders. The Company is listed
as the assignee.
Competition
We
have
identified other companies producing algae for the purpose of creating
feedstocks for fuel. Several of these companies have advertised technology
which
they claim will enable the efficient production of algal oil and other algae
culture derivatives. There is no guarantee that our company’s technology will
produce more efficiently or cost-effectively than these other
technologies.
The
market for the manufacture, marketing and the sale of alternative fuels is
highly competitive. Such competition could drive up the cost of retaining
qualified engineers, chemists and other key employees, as well as other
operating expenses. Moreover, if production capacity in the industry increases
faster than demand for alternative fuels, sales prices could be depressed.
Increases in the alternative energies as well as falling oil prices may
negatively affect demand and the competitive position of our technology.
Competition
from other alternative fuels will likely increase if prices of energy on the
commodities markets, including oil and bio-diesel, rise, as they have in recent
years. Additionally, new companies are constantly entering the market, thus
increasing the competition. This could also have a negative impact on us or
our
customers’ ability to obtain additional capital from investors. Larger foreign
owned and domestic companies which have been engaged in the alternative energy
business for substantially longer periods of time may have access to greater
financial and other resources. These companies may have greater success in
the
recruitment and retention of qualified employees, as well as in conducting
their
own fuel manufacturing and marketing operations, which may give them a
competitive advantage.
In
addition, actual or potential competitors may be strengthened through the
acquisition of additional assets and interests. If we or our customers are
unable to compete effectively or adequately respond to competitive pressures,
this may materially adversely affect our results of operation and financial
condition.
Facilities
Our
principal offices are located at
2029
Century Park East, 14
th
Floor,
Los Angeles, California 90067
.
Employees
As
of the
date of this Form SB-2, the Company has 2 full-time employees. The Company
has
not experienced any work stoppages and the Company considers relations with
its
employees to be good.
DESCRIPTION
OF PROPERTY
Our
principal offices are located at
2029
Century Park East, 14
th
Floor,
Los Angeles, California 90067
.
We rent
space on a month to month basis in a corporate office center and the rent is
$211.25 monthly.
LEGAL
PROCEEDINGS
From
time
to time we may be a defendant and plaintiff in various legal proceedings arising
in the normal course of our business. We are currently not a party to any
material pending legal proceedings or government actions, including any
bankruptcy, receivership, or similar proceedings. In addition, management is
not
aware of any known litigation or liabilities involving the operators of our
properties that could affect our operations. Should any liabilities incurred
in
the future, they will be accrued based on management’s best estimate of the
potential loss. As such, there is no adverse effect on our financial position,
results of operations or cash flow at this time. Furthermore, Management of
the
Company does not believe that there are any proceedings to which any director,
officer, or affiliate of the Company, any owner of record of the beneficially
or
more than five percent of the common stock of the Company, or any associate
of
any such director, officer, affiliate of the Company, or security holder is
a
party adverse to the Company or has a material interest adverse to the
Company.
MANAGEMENT
DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Our
directors and executive officers will manage our business.
A
list of
our current officers and directors appears below. The directors are elected
annually by the shareholders. They do not presently receive any fees or other
remuneration for their services as directors, although they are reimbursed
for
expenses associated with attending meetings of the board of directors. The
board
of directors appoints our officers.
Name
|
|
Age
|
|
Position
|
T
Riggs Eckelberry
|
|
55
|
|
Chief
Executive Officer and Director
|
Nicholas
Eckelberry
|
|
51
|
|
Director
|
Ivan
Ivankovich
|
|
41
|
|
Director
|
Executive
Biographies
T
Riggs Eckelberry - Chief Executive Officer and President
T
Riggs
Eckelberry, co-inventor of the Company’s technology, brings his veteran
technology management skills to the alternative energy sector. As President
and
COO of CyberDefender Corporation from 2005 to 2006, he was instrumental in
building the company and its innovative product line, helping to achieve initial
funding and a public company filing. From 2001 to mid-2005, he helped launch
and
turn around technology companies as founder and President of TechTransform,
a
technology consulting firm. In 2004, he was a key member of the team that turned
around YellowPages.com, resulting in its sale for $100 million to SBC/BellSouth.
In 2003, he helped make Panda Software a key player in the US market as the
General Manager of its US unit. During the high tech boom of the 1990s, he
was
responsible for the global brand success of the software product, CleanSweep;
as
Chief Operating Officer of MicroHouse Technologies, he drove record sales and
a
modernization of the company’s technology, helping to achieve a successful sale
of the company to Earthweb; and as VP Marketing of venture-backed TriVida,
he
was a key member of the team that commercialized the company’s technology and
achieved the sale of this technology company to BeFree, Inc. (now part of
ValueClick: VCLK).
Nicholas
Eckelberry - Director
Nicholas
Eckelberry, the Company’s Director of Development, is the lead inventor of the
Company’s technology to transform algae into oil. He has been a technology
inventor and entrepreneur for over 30 years. In 1978, he personally drove the
adoption of a technology for in-ear sound monitoring. Most recently, from 2005
to 2006, he was the President of APS Inc., the research and development arm
of
Mag Power Ltd. From 2002 to 2005, he was a consultant to various alternative
energy companies in the areas of business and capital formation. In 2003, he
launched Nano-Cal, a product line based around a unique biological form of
calcium. In 2001, he was granted a patent for the mixing of fluids at micron
level levels for mixing applications.
Ivan
Ivankovich - Director
Ivan
Ivankovich has over 19 years of financial and operational expertise. He is
currently a consulting Chief Financial Officer and advisor to several technology
companies. From 2005 to 2006, he served as the managing director of VisionPoint
Capital, a boutique investment bank, advising clients in the middle market.
From
2003 to 2005, he served as the Chief Financial Officer of YellowPages.com,
an
on-line directory of national and local merchants. Prior to YellowPages.com,
from 2001 to 2003, he served as Vice President of Portfolio Operations at
Platinum Equity, a global acquisition firm where he managed and operated certain
of its portfolio companies. Over the years, he also served as a senior financial
executive for venture-backed companies such as, HealthAllies and TriVida
Corporation, which was acquired by Befree Inc. (now part of ValueClick: VCLK).
He started his career with Ernst & Young in their audit practice in Los
Angeles. A Certified Public Accountant and a member of the California Society
of
CPAs, he earned his B.A. in Business Economics with an emphasis in accounting
from the University of California, Santa Barbara.
Board
of Directors:
The
Directors of the Company are elected by the vote of a majority in interest
of
the holders of the voting stock of the Company and hold office until the
expiration of the term for which he or she was elected and until a successor
has
been elected and qualified.
A
majority of the authorized number of directors constitutes a quorum of the
Board
for the transaction of business. The directors must be present at the meeting
to
constitute a quorum. However, any action required or permitted to be taken
by
the Board may be taken without a meeting if all members of the Board
individually or collectively consent in writing to the action.
Directors
receive compensation for their services and reimbursement for their expenses
as
shall be determined from time to time by resolution of the Board. The Company’s
directors currently do not receive monetary compensation for their service
on
the Board of Directors.
Code
of Ethics
We
have
not adopted a Code of Ethics within the meaning of Item 406(b) of Regulation
S-B
of the Securities Exchange Act of 1934.
EXECUTIVE
COMPENSATION
The
following table sets forth the cash compensation (including cash bonuses) paid
or accrued by us to our Chief Executive Officer and our four most highly
compensated officers other than the Chief Executive Officer from inception
(June
1, 2007) to September 30, 2007:
Name
and Principal Position
|
|
Year
|
|
Salary
|
|
Bonus
|
|
Option
Awards
|
|
Non-Equity
Incentive Plan Compensation
|
|
Change
in Pension Value and Non-Qualified Deferred Compensation Earnings
($)
|
|
All
other Compensation
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T.
Riggs Eckelberry
Chief
Executive Officer
|
|
|
2007
|
|
|
80,000
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
80,000
|
|
Director
Compensation
None
of
the directors have received compensation for their respective services rendered
to the Company.
Employment
Agreements
The
Company currently has no employment agreements with its executive
officers.
Employee
Benefit Plans
The
Company has no employee benefit plans.
Stock
Option Plan
The
Company has no stock option plan.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
The
Company is currently not party to any related party transactions.
SECURITY
OWNERSHIP OF DIRECTORS AND OFFICERS
AND
CERTAIN BENEFICIAL OWNERS
The
following table sets forth certain information regarding the beneficial
ownership of our common stock as of November 19, 2007, by (i) each
director, (ii) each executive officer, (iii) all directors and
executive officers as a group, and (iv) each person who beneficially owns
more than five percent of our common stock. Beneficial ownership is determined
in accordance with the rules of the SEC. The percentage ownership of each
beneficial owner is based on 143,430,050 outstanding shares of common stock.
Except as indicated, each person listed below has sole voting and investment
power with respect to the shares set forth opposite such person’s
name.
Name
and Title of Beneficial Owner
|
|
Number
of Shares
Beneficially
Owned(1)
|
|
Percentage
Ownership
|
|
|
|
|
|
|
|
T.
Riggs Eckelberry
|
|
|
40,000,000
|
|
|
27.9
|
%
|
Chief
Executive Officer, and Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nicholas
Eckelberry
|
|
|
15,000,000
|
|
|
10.5
|
%
|
Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ivan
Ivankovich
|
|
|
1,000,000
|
|
|
0.7
|
%
|
Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Directors
and executive officers
|
|
|
56,000,000
|
|
|
39.0
|
%
|
as
a group (3 persons)
|
|
|
|
|
|
|
|
(1)
|
Unless
otherwise indicated and subject to applicable community property
laws, to
our knowledge each stockholder named in the table possesses sole
voting
and investment power with respect to all shares of common stock,
except
for those owned jointly with that person’s
spouse.
|
DESCRIPTION
OF SECURITIES
Common
Stock
The
Company is authorized to issue 500,000,000 shares of Common Stock, par value
$.0001 per share. As of the date of this Registration Statement, the Company
had
143,430,050 shares of Common Stock outstanding.
The
holders of the shares of Common Stock have equal ratable rights to dividends
from funds legally available therefore, when, as and if declared by the Board
of
Directors and are entitled to share ratably in all of the assets of the Company
available for distribution to holders of Common Stock upon the liquidation,
dissolution or winding up of the affairs of the Company. Holders of shares
of
Common Stock do not have preemptive, subscription or conversion rights.
Holders
of shares of Common Stock are entitled to one vote per share on all matters
which shareholders are entitled to vote upon at all meetings of shareholders.
The holders of shares of Common Stock do not have cumulative voting rights,
which mean that the holders of more than 50% of the Company’s outstanding voting
securities can elect all of the directors of the Company.
The
payment by the Company of dividends, if any, in the future rests within the
discretion of its Board of Directors and will depend, among other things, upon
the Company’s earnings, capital requirements and financial condition, as well as
other relevant factors. The Company has not paid any dividends since its
inception and does not intend to pay any cash dividends in the foreseeable
future, but intends to retain all earnings, if any, for use in its
business.
Transfer
Agent
The
Company’s transfer agent is ComputerShare Trust Company, 350 Indiana Street,
Suite 800, Golden Colorado 80401.
SELLING
SECURITY HOLDERS
We
are
registering 32,001,455 shares in this offering. We will not receive any of
the
proceeds from the sale of those shares being sold by the selling security
holders. All of these shares have already been issued to the selling security
holders in private placement transactions which were exempt from the
registration and prospectus delivery requirements of the Securities Act of
1933.
The selling security holders may sell their shares in sales in the open market
or in privately negotiated transactions.
All
costs, expenses and fees in connection with the registration of the selling
stockholders' shares will be borne by us. All brokerage commissions, if any,
attributable to the sale of shares by selling stockholders will be borne by
selling stockholders.
The
following table sets forth the number of shares that the selling security
holders may offer for sale from time to time. The shares offered for sale
constitute all of the shares known to us to be beneficially owned by the selling
security holders. None of the selling security holders has held any position
or
office with us, except as specified in the following table. Other than the
relationships described below, none of the selling security holders had or
have
any material relationship with us.
SELLING
STOCKHOLDERS
The
table
below sets forth information concerning the resale of the shares of common
stock
by the selling stockholders. We will not receive any proceeds from the resale
of
the common stock by the selling stockholders. We will receive proceeds from
the
exercise of the warrants. Assuming all the shares registered below are sold
by
the selling stockholders, none of the selling stockholders will continue to
own
any shares of our common stock.
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 beneficially owned by each person, the number of shares of common
stock that may be sold in this offering and the number of shares of common
stock
each person will own after the offering, assuming they sell all of the shares
offered.
|
|
Shares
Beneficially Owned
Prior
to the Offering
|
|
|
|
Shares
Beneficially Owned
After
the Offering(1)
|
|
Name
|
|
Number
|
|
Percent
|
|
Total
Shares
Registered
|
|
Number
|
|
Percent
|
|
Abdellah
El Hajoui
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Adam
E. Marquis
|
|
|
15,500
|
|
|
*
|
|
|
15,500
|
|
|
0
|
|
|
0
|
|
Alcaro
Family LP
|
|
|
16,000
|
|
|
*
|
|
|
16,000
|
|
|
0
|
|
|
0
|
|
Alexander
Claus Wahnsiedler
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Alexei
Gavriline
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Amy
A. Pietrofesa
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Andrew
Berk
|
|
|
18,500
|
|
|
*
|
|
|
18,500
|
|
|
0
|
|
|
0
|
|
Andries
J.H. Van Schalkwyk
|
|
|
15,500
|
|
|
*
|
|
|
15,500
|
|
|
0
|
|
|
0
|
|
Andromeda
Trumbull
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Angelo
Soriano and Angelica Soriano
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Ann
Thaw
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Arden
S. Law
|
|
|
16,500
|
|
|
*
|
|
|
16,500
|
|
|
0
|
|
|
0
|
|
Arthur
Altounian and Kelli Altounian
|
|
|
22,350
|
|
|
*
|
|
|
22,350
|
|
|
0
|
|
|
0
|
|
B&B
Family Trust (2)
|
|
|
23,500
|
|
|
*
|
|
|
23,500
|
|
|
0
|
|
|
0
|
|
Blair
Capital, Inc. (3)
|
|
|
3,500,000
|
|
|
2.44
|
%
|
|
3,500,000
|
|
|
0
|
|
|
0
|
|
Blaise
Holdings, LLC (4)
|
|
|
23,500
|
|
|
*
|
|
|
23,500
|
|
|
0
|
|
|
0
|
|
Blumhouse
Productions, Inc. (5)
|
|
|
23,500
|
|
|
*
|
|
|
23,500
|
|
|
0
|
|
|
0
|
|
Bradford
Creger or Sheri Creger,
Trustees
of B&S Creger Living Trust
DTD
10/30/04 (6)
|
|
|
33,500
|
|
|
*
|
|
|
33,500
|
|
|
0
|
|
|
0
|
|
Bradley
A. Waller & Charlotte Waller
|
|
|
18,000
|
|
|
*
|
|
|
18,000
|
|
|
0
|
|
|
0
|
|
Brian
Altounian
|
|
|
25,750
|
|
|
*
|
|
|
25,750
|
|
|
0
|
|
|
0
|
|
Byron
Knight
|
|
|
23,500
|
|
|
*
|
|
|
23,500
|
|
|
0
|
|
|
0
|
|
Chad
Fitzgerald & Jennifer Fitzgerald
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Charles
Jeannel
|
|
|
23,500
|
|
|
*
|
|
|
23,500
|
|
|
0
|
|
|
0
|
|
Cheryl
D. Hilliard Separate
Property
Trust, September 13, 2005 (7)
|
|
|
63,500
|
|
|
*
|
|
|
63,500
|
|
|
0
|
|
|
0
|
|
Cheryl
Kennard
|
|
|
15,500
|
|
|
*
|
|
|
15,500
|
|
|
0
|
|
|
0
|
|
Chris
Jennings and Sheri Jennings
|
|
|
16,000
|
|
|
*
|
|
|
16,000
|
|
|
0
|
|
|
0
|
|
Chris
Miller
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Christopher
Marquis
|
|
|
49,500
|
|
|
*
|
|
|
49,500
|
|
|
0
|
|
|
0
|
|
Chuck
M. Liu
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Colin
Friend
|
|
|
18,500
|
|
|
*
|
|
|
18,500
|
|
|
0
|
|
|
0
|
|
Colin
Miyajima
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Dane
H. Madsen L.P.
|
|
|
16,000
|
|
|
*
|
|
|
16,000
|
|
|
0
|
|
|
0
|
|
Daniel
Pitlik
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Daniel
S. Spear
|
|
|
113,500
|
|
|
*
|
|
|
113,500
|
|
|
0
|
|
|
0
|
|
Darius
Madjzoub and Mahnaz Madjzoub
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
David
D. Lee
|
|
|
25,900
|
|
|
*
|
|
|
25,900
|
|
|
0
|
|
|
0
|
|
David
Diekmann
|
|
|
16,600
|
|
|
*
|
|
|
16,600
|
|
|
0
|
|
|
0
|
|
David
H. Naves
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
David
Ohman and Desiree Ohman
|
|
|
18,500
|
|
|
*
|
|
|
18,500
|
|
|
0
|
|
|
0
|
|
David
Pitlik
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Denise
Cheng
|
|
|
16,200
|
|
|
*
|
|
|
16,200
|
|
|
0
|
|
|
0
|
|
Dennis
H. Peterson
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Derek
Johansen & Susan McConnell
|
|
|
18,500
|
|
|
*
|
|
|
18,500
|
|
|
0
|
|
|
0
|
|
Diane
L. Griffith
|
|
|
16,500
|
|
|
*
|
|
|
16,500
|
|
|
0
|
|
|
0
|
|
Dongqi
Tan
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Donna
J. Altounian, Inc. Profit Sharing Plan (8)
|
|
|
17,500
|
|
|
*
|
|
|
17,500
|
|
|
0
|
|
|
0
|
|
Dorothy
Sarkozy
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Douglas
C. O'Rear
|
|
|
113,500
|
|
|
*
|
|
|
113,500
|
|
|
0
|
|
|
0
|
|
Drew
Bolton
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
E.S.
Lippert
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Edan
and Melinda Portaro
|
|
|
16,000
|
|
|
*
|
|
|
16,000
|
|
|
0
|
|
|
0
|
|
Edward
Bouryng & Esther Bouryng
|
|
|
33,500
|
|
|
*
|
|
|
33,500
|
|
|
0
|
|
|
0
|
|
EGATNIV,
LLC (9)
|
|
|
38,500
|
|
|
*
|
|
|
38,500
|
|
|
0
|
|
|
0
|
|
Elizabeth
Swolgaard
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Emmanuel
C. Vasilomanolakis
|
|
|
16,000
|
|
|
*
|
|
|
16,000
|
|
|
0
|
|
|
0
|
|
Entrust
Administration FBO Homero Garcia IRA # 33142 (10)
|
|
|
16,000
|
|
|
*
|
|
|
16,000
|
|
|
0
|
|
|
0
|
|
Epic
Innovations (11)
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Eric
D. Spratt
|
|
|
17,500
|
|
|
*
|
|
|
17,500
|
|
|
0
|
|
|
0
|
|
Erik
C. Brandin
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Evan
Rubin
|
|
|
17,500
|
|
|
*
|
|
|
17,500
|
|
|
0
|
|
|
0
|
|
Ezra
Freedman
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Four
T's (12)
|
|
|
21,000
|
|
|
*
|
|
|
21,000
|
|
|
0
|
|
|
0
|
|
Franklin
Frazer and Amy Frazer
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Franklyn
E. De Foe
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Gary
Saxer
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Gary
Wien
|
|
|
21,000
|
|
|
*
|
|
|
21,000
|
|
|
0
|
|
|
0
|
|
Genevieve
Del Lusher
|
|
|
23,500
|
|
|
*
|
|
|
23,500
|
|
|
0
|
|
|
0
|
|
Gerardo
Broussi
|
|
|
16,000
|
|
|
*
|
|
|
16,000
|
|
|
0
|
|
|
0
|
|
Grant
Parisi
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Greg
Diekmann
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Haggis
Family Trust (13)
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Hal
Grussmeyer & Teri Grussmeyer
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Hilton
T. Brown
|
|
|
16,500
|
|
|
*
|
|
|
16,500
|
|
|
0
|
|
|
0
|
|
Howard
H. Thaw
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Howard
K. Brodwin
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Hye
Sook Jo
|
|
|
18,500
|
|
|
*
|
|
|
18,500
|
|
|
0
|
|
|
0
|
|
Hyman
Kanner
|
|
|
19,500
|
|
|
*
|
|
|
19,500
|
|
|
0
|
|
|
0
|
|
Invest
West Financial Corp. (14)
|
|
|
113,500
|
|
|
*
|
|
|
113,500
|
|
|
0
|
|
|
0
|
|
J.D.
Kensington, LLC (15)
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Jack
Waltrip and Gigi Spratley
|
|
|
16,500
|
|
|
*
|
|
|
16,500
|
|
|
0
|
|
|
0
|
|
James
Standaert
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Janie
Jordan & John Jordan
|
|
|
15,500
|
|
|
*
|
|
|
15,500
|
|
|
0
|
|
|
0
|
|
Jason
C. Spratt & Jennifer L. Tellefsen
|
|
|
20,500
|
|
|
*
|
|
|
20,500
|
|
|
0
|
|
|
0
|
|
Jason
M. Gustafson
|
|
|
23,300
|
|
|
*
|
|
|
23,300
|
|
|
0
|
|
|
0
|
|
Jason
Sabolic
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Jean-Louis
Kindler
|
|
|
23,500
|
|
|
*
|
|
|
23,500
|
|
|
0
|
|
|
0
|
|
Jeff
Morreale
|
|
|
18,500
|
|
|
*
|
|
|
18,500
|
|
|
0
|
|
|
0
|
|
Jennifer
Cheng
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Jerry
Darakjian
|
|
|
18,500
|
|
|
*
|
|
|
18,500
|
|
|
0
|
|
|
0
|
|
Jessica
Gordon
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Joel
S. Picker
|
|
|
16,500
|
|
|
*
|
|
|
16,500
|
|
|
0
|
|
|
0
|
|
John
A. Sanderson
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
John
C. Beifuss
|
|
|
3,613,500
|
|
|
2.52
|
%
|
|
3,613,500
|
|
|
0
|
|
|
0
|
|
John
C. Diekmann & Betty J. Diekmann TRS of The Diekman Trust Agreement
Dated November 29, 1991 (16)
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
John
Hayward
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
John
Hui
|
|
|
28,500
|
|
|
*
|
|
|
28,500
|
|
|
0
|
|
|
0
|
|
John
Lund
|
|
|
28,500
|
|
|
*
|
|
|
28,500
|
|
|
0
|
|
|
0
|
|
Jon
E. von Gunten
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Joseph
Ball and Pam Ball
|
|
|
18,500
|
|
|
*
|
|
|
18,500
|
|
|
0
|
|
|
0
|
|
Joshua
Smith and Emily Smith
|
|
|
18,500
|
|
|
*
|
|
|
18,500
|
|
|
0
|
|
|
0
|
|
Julie
Rogers
|
|
|
17,500
|
|
|
*
|
|
|
17,500
|
|
|
0
|
|
|
0
|
|
Justin
Gordon
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Justin
J. Parisi
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Justin
Krauss
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Kari
Negri
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Karl
Adler
|
|
|
15,500
|
|
|
*
|
|
|
15,500
|
|
|
0
|
|
|
0
|
|
Kathleen
M. Spear
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Kathryn
Bailey
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Katrina
Muniz
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Kenneth
M. Nepove
|
|
|
143,500
|
|
|
*
|
|
|
143,500
|
|
|
0
|
|
|
0
|
|
Kenneth
Schneider
|
|
|
15,900
|
|
|
*
|
|
|
15,900
|
|
|
0
|
|
|
0
|
|
Kerry
Ward
|
|
|
23,500
|
|
|
*
|
|
|
23,500
|
|
|
0
|
|
|
0
|
|
Kevin
Burke & Kim Burke
|
|
|
15,500
|
|
|
*
|
|
|
15,500
|
|
|
0
|
|
|
0
|
|
Kevin
J. Miller
|
|
|
18,500
|
|
|
*
|
|
|
18,500
|
|
|
0
|
|
|
0
|
|
Kimberlee
Beifuss
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Kohanya
Ranch
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Larry
A. Woodard
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Larry
Velez and Lorrie Velez
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Lawrence
de Almeida
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Lewis
D. Roth and Karen L. Graham
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Linda
D. Lombardo
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Lisa
CS Wong, Revocable Trust (17)
|
|
|
23,500
|
|
|
*
|
|
|
23,500
|
|
|
0
|
|
|
0
|
|
Lloyd
Sax
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Louis
E. Law
|
|
|
30,000
|
|
|
*
|
|
|
30,000
|
|
|
0
|
|
|
0
|
|
Marc
Eckelberry
|
|
|
15,800
|
|
|
*
|
|
|
15,800
|
|
|
0
|
|
|
0
|
|
Marcus
Dantus
|
|
|
16,000
|
|
|
*
|
|
|
16,000
|
|
|
0
|
|
|
0
|
|
Margaret
Shannon Lietz
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Maria
A. Bruzzese
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Mark
J. Richardson
|
|
|
38,500
|
|
|
*
|
|
|
38,500
|
|
|
0
|
|
|
0
|
|
Martin
Gordon & Marie Gordon
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Martin
Leufray III
|
|
|
16,500
|
|
|
*
|
|
|
16,500
|
|
|
0
|
|
|
0
|
|
Martin
Roy Mervel
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Matthew
Kou
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Michael
B. Roberts & Nancy E. Simmons
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Michael
Berlin
|
|
|
15,500
|
|
|
*
|
|
|
15,500
|
|
|
0
|
|
|
0
|
|
Michael
Brown and Linda
Engelsiepen
JTWROS
|
|
|
16,500
|
|
|
*
|
|
|
16,500
|
|
|
0
|
|
|
0
|
|
Michael
Evans Jr
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Michael
J. McKinney and Lee L. McKinney
|
|
|
28,500
|
|
|
*
|
|
|
28,500
|
|
|
0
|
|
|
0
|
|
Michael
Pitlik
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Mike
Muncy
|
|
|
23,500
|
|
|
*
|
|
|
23,500
|
|
|
0
|
|
|
0
|
|
Mikel
Delzangles
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
M-Venture,
Inc.
|
|
|
10,500
|
|
|
*
|
|
|
10,500
|
|
|
0
|
|
|
0
|
|
Nelson
Custom Travel, Inc. (18)
|
|
|
23,500
|
|
|
*
|
|
|
23,500
|
|
|
0
|
|
|
0
|
|
Patrick
D. Morgan - Revocable Inter Vivos Trust (19)
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Paul
G.W. Fetscher
|
|
|
38,500
|
|
|
*
|
|
|
38,500
|
|
|
0
|
|
|
0
|
|
Paula
Joukhadar
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Peggy
Lickert
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Peter
Wolfgang Schlicht
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Peterson
Family Trust (20)
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Phillip
C. Colson
|
|
|
16,500
|
|
|
*
|
|
|
16,500
|
|
|
0
|
|
|
0
|
|
Pierre
Tauzinat
|
|
|
23,500
|
|
|
*
|
|
|
23,500
|
|
|
0
|
|
|
0
|
|
Portofino
Capital Inc. (21)
|
|
|
38,555
|
|
|
*
|
|
|
38,555
|
|
|
0
|
|
|
0
|
|
Ralph
Ribaya
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Ramin
Ramhormozi and Jennifer E. Romeyn
|
|
|
18,500
|
|
|
*
|
|
|
18,500
|
|
|
0
|
|
|
0
|
|
Ray
Lawson
|
|
|
23,500
|
|
|
*
|
|
|
23,500
|
|
|
0
|
|
|
0
|
|
Reed
A. Hatkoff
|
|
|
18,500
|
|
|
*
|
|
|
18,500
|
|
|
0
|
|
|
0
|
|
Reid
Harrison
|
|
|
31,500
|
|
|
*
|
|
|
31,500
|
|
|
0
|
|
|
0
|
|
Renee
Duke
|
|
|
15,400
|
|
|
*
|
|
|
15,400
|
|
|
0
|
|
|
0
|
|
Reza
Nabavian
|
|
|
16,500
|
|
|
*
|
|
|
16,500
|
|
|
0
|
|
|
0
|
|
Ricardo
DeVengoechea
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Robert
Christopher De Sales
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Robert
D. King and Pamela M. King
|
|
|
16,500
|
|
|
*
|
|
|
16,500
|
|
|
0
|
|
|
0
|
|
Robert
DeFoe and Beth DeFoe
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Robin
Cheng and Miranda Cheng
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Royce
Shimanmoto
|
|
|
18,500
|
|
|
*
|
|
|
18,500
|
|
|
0
|
|
|
0
|
|
Russell
D. Wong, Revocable Trust (22)
|
|
|
43,500
|
|
|
*
|
|
|
43,500
|
|
|
0
|
|
|
0
|
|
Scott
D. Picker
|
|
|
15,900
|
|
|
*
|
|
|
15,900
|
|
|
0
|
|
|
0
|
|
Scott
Gordon
|
|
|
4,000
|
|
|
*
|
|
|
4,000
|
|
|
0
|
|
|
0
|
|
Scott
Piwonka-Totten
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Sean
P. McElroy
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Shane
Barr
|
|
|
23,500
|
|
|
*
|
|
|
23,500
|
|
|
0
|
|
|
0
|
|
Simon
Bowler
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Simon
C. Crane
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Simone
Rayden
|
|
|
23,500
|
|
|
*
|
|
|
23,500
|
|
|
0
|
|
|
0
|
|
Stanley
B. Levy
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Stephanie
Schestag
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Steven
C. Bartling and Yvonne C. Bartling
|
|
|
23,500
|
|
|
*
|
|
|
23,500
|
|
|
0
|
|
|
0
|
|
Steven
Marc Ferry
|
|
|
16,500
|
|
|
*
|
|
|
16,500
|
|
|
0
|
|
|
0
|
|
Susan
Ashbrook
|
|
|
18,500
|
|
|
*
|
|
|
18,500
|
|
|
0
|
|
|
0
|
|
Tener
Riggs Eckelberry
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
The
Mostafa-Karimbeik-Hamedani Family Trust (23)
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
The
Prodigious Proclivities Inc. Retirement Trust DTD 01/01/2003
(24)
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Thomas
O. Lind
|
|
|
15,500
|
|
|
*
|
|
|
15,500
|
|
|
0
|
|
|
0
|
|
Thunder
Innovations, LLC (25)
|
|
|
7,000,000
|
|
|
4.88
|
%
|
|
7,000,000
|
|
|
0
|
|
|
0
|
|
Toni
R. Cina
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Tram
Richards
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Trisha
Speer
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Virginia
Parisi
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Virginia
Parisi as custodian for the benefit of Trevor Bolton
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
Viviane
Amyoony
|
|
|
15,300
|
|
|
*
|
|
|
15,300
|
|
|
0
|
|
|
0
|
|
W.
Alan Wallace
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
William
C. Miller and Lisa A. Miller
|
|
|
15,000
|
|
|
*
|
|
|
15,000
|
|
|
0
|
|
|
0
|
|
William
E. Beifuss, Jr. and Alice Beifuss
|
|
|
7,006,000
|
|
|
4.88
|
%
|
|
7,006,000
|
|
|
0
|
|
|
0
|
|
William
F. Povondra Jr.
|
|
|
16,500
|
|
|
*
|
|
|
16,500
|
|
|
0
|
|
|
0
|
|
William
J. Goode
|
|
|
15,500
|
|
|
*
|
|
|
15,500
|
|
|
0
|
|
|
0
|
|
Wings
Fund, Inc. (26)
|
|
|
7,000,000
|
|
|
4.88
|
%
|
|
7,000,000
|
|
|
0
|
|
|
0
|
|
Total
|
|
|
32,001,455
|
|
|
|
|
|
32,001,455
|
|
|
|
|
|
|
|
*
Less
than 1%
(1)
|
Assumes
that all securities will be sold.
|
|
|
(2)
|
In
accordance with Rule 13d-2 under the Securities Exchange Act of 1934,
Robert S. Leff and Buckita Leff, as trustee, may be deemed a control
person of the shares owned by such entity, with final voting power
and
investment control over such shares.
|
|
|
(3)
|
In
accordance with Rule 13d-2 under the Securities Exchange Act of 1934,
Neil
C.Sullivan may be deemed a control person of the shares owned by
such
entity, with final voting power and investment control over such
shares.
|
|
|
(4)
|
In
accordance with Rule 13d-2 under the Securities Exchange Act of 1934,
Daniel R. Blaise may be deemed a control person of the shares owned
by
such entity, with final voting power and investment control over
such
shares.
|
|
|
(5)
|
In
accordance with Rule 13d-2 under the Securities Exchange Act of 1934,
Jason Blum may be deemed a control person of the shares owned by
such
entity, with final voting power and investment control over such
shares.
|
|
|
(6)
|
In
accordance with Rule 13d-2 under the Securities Exchange Act of 1934,
Bradford Creger and Sheri Creger, as trustees, may be deemed a control
person of the shares owned by such entity, with final voting power
and
investment control over such shares.
|
|
|
(7)
|
In
accordance with Rule 13d-2 under the Securities Exchange Act of 1934,
Cheryl D. Hilliard, as trustee, may be deemed a control person of
the
shares owned by such entity, with final voting power and investment
control over such shares.
|
(8)
|
In
accordance with Rule 13d-2 under the Securities Exchange Act of 1934,
Donna J. Altounian may be deemed a control person of the shares owned
by
such entity, with final voting power and investment control over
such
shares.
|
|
|
(9)
|
In
accordance with Rule 13d-2 under the Securities Exchange Act of 1934,
Seth
Farbman may be deemed a control person of the shares owned by such
entity,
with final voting power and investment control over such shares.
|
|
|
(10)
|
In
accordance with Rule 13d-2 under the Securities Exchange Act of 1934,
Homero Garcia may be deemed a control person of the shares owned
by such
entity, with final voting power and investment control over such
shares.
|
|
|
(11)
|
In
accordance with Rule 13d-2 under the Securities Exchange Act of 1934,
Scott Gordan may be deemed a control person of the shares owned by
such
entity, with final voting power and investment control over such
shares.
|
|
|
(12)
|
In
accordance with Rule 13d-2 under the Securities Exchange Act of 1934,
Bruce Tashjian, Edward Tashjian Jr., Greg Tashjian and Bryan Tashjian
may
be deemed a control person of the shares owned by such entity, with
final
voting power and investment control over such shares.
|
|
|
(13)
|
In
accordance with Rule 13d-2 under the Securities Exchange Act of 1934,
Paul
E. Haggis & Deborah Haggis, as trustees, may be deemed a control
person of the shares owned by such entity, with final voting power
and
investment control over such shares.
|
|
|
(14)
|
In
accordance with Rule 13d-2 under the Securities Exchange Act of 1934,
Matthew Marquis may be deemed a control person of the shares owned
by such
entity, with final voting power and investment control over such
shares.
|
|
|
(15)
|
In
accordance with Rule 13d-2 under the Securities Exchange Act of 1934,
Jonathan Alcaro may be deemed a control person of the shares owned
by such
entity, with final voting power and investment control over such
shares.
|
|
|
(16)
|
In
accordance with Rule 13d-2 under the Securities Exchange Act of 1934,
John
C. Diekmann & Betty J. Diekmann, as trustees, may be deemed a control
person of the shares owned by such entity, with final voting power
and
investment control over such shares.
|
|
|
(17)
|
In
accordance with Rule 13d-2 under the Securities Exchange Act of 1934,
Lisa
CS Wong, as trustee, may be deemed a control person of the shares
owned by
such entity, with final voting power and investment control over
such
shares.
|
|
|
(18)
|
In
accordance with Rule 13d-2 under the Securities Exchange Act of 1934,
David Rappel may be deemed a control person of the shares owned by
such
entity, with final voting power and investment control over such
shares.
|
|
|
(19)
|
In
accordance with Rule 13d-2 under the Securities Exchange Act of 1934,
Patrick D. Morgan, as trustee may be deemed a control person of the
shares
owned by such entity, with final voting power and investment control
over
such shares.
|
|
|
(20)
|
In
accordance with Rule 13d-2 under the Securities Exchange Act of 1934,
Dennis Peterson and Maria Bruzzese, as trustees, may be deemed a
control
person of the shares owned by such entity, with final voting power
and
investment control over such shares.
|
|
|
(21)
|
In
accordance with Rule 13d-2 under the Securities Exchange Act of 1934,
Neil
C. Sullivan may be deemed a control person of the shares owned by
such
entity, with final voting power and investment control over such
shares.
|
|
|
(22)
|
In
accordance with Rule 13d-2 under the Securities Exchange Act of 1934,
Russell D. Wong, as trustee, may be deemed a control person of the
shares
owned by such entity, with final voting power and investment control
over
such shares.
|
|
|
(23)
|
In
accordance with Rule 13d-2 under the Securities Exchange Act of 1934,
Mostafa Karimbeik-Hamedani, as trustee, may be deemed a control person
of
the shares owned by such entity, with final voting power and investment
control over such shares.
|
|
|
(24)
|
In
accordance with Rule 13d-2 under the Securities Exchange Act of 1934,
Michael Siteman, as trustee, may be deemed a control person of the
shares
owned by such entity, with final voting power and investment control
over
such shares.
|
|
|
(25)
|
In
accordance with Rule 13d-2 under the Securities Exchange Act of 1934,
Elaine Lei may be deemed a control person of the shares owned by
such
entity, with final voting power and investment control over such
shares.
|
(26)
|
In
accordance with Rule 13d-2 under the Securities Exchange Act of 1934,
Karen M. Graham may be deemed a control person of the shares owned
by such
entity, with final voting power and investment control over such
shares.
|
PLAN
OF DISTRIBUTION
This
prospectus relates to a total of 32,001,455 shares of common stock of OriginOil,
Inc., a Nevada corporation.
An
aggregate of up to 32,001,455 shares of our common stock may be offered and
sold
pursuant to this Prospectus by the selling security holders. The selling
security holders acquired these shares from us in a series of private placements
conducted between June and Novmeber of 2007. We will not receive any of the
proceeds resulting from the sale of the shares held by the selling security
holders.
We
have
proposed a fixed selling price of $0.10 per share. Non-affiliated selling
shareholders must sell at this price until a public market is established for
our shares or until the prevailing market dictates otherwise. At such time,
the
selling security holders may sell our common stock in the over-the-counter
market; on any securities exchange on which our common stock is or becomes
listed or traded; in negotiated transactions; or otherwise. The selling security
holders may sell our common stock at market prices prevailing at the time of
sale, or at prices related to the market price, or at other negotiated prices.
The shares will not be sold in an underwritten public offering.
The
32,001,455 shares may be sold directly or through brokers or dealers. Each
of
the selling security holders and any broker-dealers participating in their
sales
of our stock may be deemed underwriters within the meaning of Section 2(11)
of
the Securities Act of 1933. Any profit on the sale of shares by the selling
security holders and any commissions or discounts given to participating
broker-dealers may be deemed underwriting commissions or discounts. Underwriters
must comply with time and volume restrictions on sales of stock under Rule
144
of the Securities Act of 1933. Rule 144 restricts sales by underwriters,
brokers, dealers and affiliates of the registrant. Subject to Rule 144, any
selling security holders who are deemed underwriters would be prevented from
selling their shares for a period of one year after the shares were paid for
and
would not be able to sell more that 10% of the total outstanding shares during
any ninety day period. These regulations could impact the ability of the
shareholders to sell their shares.
Penny
Stock Regulation
Our
common stock is subject to Securities and Exchange Commission rules regulating
broker-dealer transactions in penny stocks. Penny stocks are generally equity
securities with a price of less than $5.00, other than securities registered
on
certain national securities exchanges or quoted on the NASDAQ system, provided
that current price and volume information with respect to transactions in those
securities is provided by the exchange or system. The penny stock rules require
a broker-dealer, before a transaction in a penny stock, to deliver a
standardized risk disclosure document prepared by the Securities and Exchange
Commission, which contains the following:
·
|
a
description of the nature and level of risk in the market for penny
stocks
in both public offerings and secondary
trading;
|
·
|
a
description of the broker's or dealer's duties to the customer and
of the
customer’s rights and remedies with respect to violation of such
duties;
|
·
|
a
brief, clear, narrative description of a dealer market, including
bid and
ask prices for penny stocks and the significance of the spread between
the
bid and ask price;
|
·
|
a
toll-free telephone number for inquiries on disciplinary
actions;
|
·
|
definitions
of significant terms in the disclosure document or in the conduct
of
trading in penny stocks; and
|
·
|
such
other information in such form—including language, type, size and
format—as the Securities and Exchange Commission shall require by rule or
regulation.
|
Before
effecting any transaction in a penny stock, the broker-dealer must also provide
the customer the following:
·
|
the
bid and ask quotations for the penny
stock;
|
·
|
the
compensation of the broker-dealer and its salesperson in the
transaction;
|
·
|
the
number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the
market
for such stock; and
|
·
|
monthly
account statements showing the market value of each penny stock held
in
the customer's account.
|
In
addition, the penny stock rules require that before a transaction in a penny
stock not otherwise exempt from those rules, the broker-dealer must make a
special written determination that the penny stock is a suitable investment
for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitability statement.
These disclosure requirements may have the effect of reducing the trading
activity in the secondary market for a stock that becomes subject to the penny
stock rules. Holders of shares of our common stock may have difficulty selling
those shares because our common stock will probably be subject to the penny
stock rules.
Limitation
of Liability and Indemnification of Officers and Directors;
Insurance
Our
Articles of Incorporation limit the liability of directors to the maximum extent
permitted by Nevada law. Nevada law provides that directors of a corporation
will not be personally liable for monetary damages for breach of their fiduciary
duties as directors, except liability for:
|
|
any
breach of their duty of loyalty to the corporation or its
shareholders;
|
|
|
acts
or omissions not in good faith or which involve intentional misconduct
or
a knowing violation of law;
|
|
|
unlawful
payments of dividends or unlawful stock repurchases or redemptions;
or
|
|
|
any
transaction from which the director derived an improper personal
benefit.
|
Our
Bylaws provide that we will indemnify our directors, officers, employees and
other agents to the fullest extent permitted by law. We believe that
indemnification under our Bylaws covers at least negligence and gross negligence
on the part of indemnified parties. Our Bylaws also permit us to secure
insurance on behalf of any officer, director, employee or other agent for any
liability arising out of his or her actions in connection with their services
to
us, regardless of whether our Bylaws permit such indemnification.
There
is
no pending litigation or proceeding involving any of our directors or officers
as to which indemnification is required or permitted, and we are not aware
of
any threatened litigation or proceeding that may result in a claim for
indemnification.
Insofar
as an indemnification for liabilities arising under the Securities Act, may
be
permitted for directors, officers or persons controlling us pursuant to the
foregoing provisions, we have been informed that in the opinion of the
Securities and Exchange Commission each indemnification is against public policy
as expressed in the Securities Act and is therefore unenforceable.
DISCLOSURE
OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
Our
articles of incorporation provide that no director or officer shall be
personally liable for damages for breach of fiduciary duty for any act or
omission unless such acts or omissions involve intentional misconduct, fraud,
knowing violation of law, or payment of dividends in violation of Section 78.300
of the Nevada Revised Statutes.
Our
bylaws provide that we shall indemnify any and all of our present or former
directors and officers, or any person who may have served at our request as
director or officer of another corporation in which we own stock or of which
we
are a creditor, for expenses actually and necessarily incurred in connection
with the defense of any action, except where such officer or director is
adjudged to be liable for negligence or misconduct in performance of duty.
To
the extent that a director has been successful in defense of any proceeding,
the
Nevada Revised Statutes provide that he shall be indemnified against reasonable
expenses incurred in connection therewith.
To
the
extent that indemnification may be available to our directors and officers
for
liabilities arising under the Securities Act of 1933, we have been advised
that,
in the opinion of the Securities and Exchange Commission, such indemnification
is against public policy and therefore unenforceable. If a claim for
indemnification against such liabilities—other than our paying expenses incurred
by one of our directors or officers in the successful defense of any action,
suit or proceeding—is asserted by one of our directors or officers in connection
with the securities being registered in this offering, we will, unless in the
opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
indemnification by us is against public policy as expressed in the Act, and
we
will be governed by the final adjudication of such issue.
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
LEGAL
MATTERS
The
validity of the common stock offered hereby will be passed upon for OriginOil,
Inc. by Sichenzia Ross Friedman Ference LLP, 61 Broadway New York, New York
10006.
EXPERTS
The
financial statements as of for OriginOil, Inc. included in this prospectus
and
elsewhere in the registration statement have been audited by HJ Associates
&
Consultants, LLP, an independent registered public accounting firm, as indicated
in their reports with respect thereto, and are included herein in reliance
upon
the authority of said firm as experts in auditing and accounting in giving
said
reports.
ADDITIONAL
INFORMATION
We
have
filed with the Securities and Exchange Commission a registration statement
on
Form SB-2, which includes exhibits, schedules and amendments, under the
Securities Act, with respect to this offering of our securities. Although this
prospectus, which forms a part of the registration statement, contains all
material information included in the registration statement, parts of the
registration statement have been omitted as permitted by rules and regulations
of the Securities and Exchange Commission. We refer you to the registration
statement and its exhibits for further information about us, our securities
and
this offering. The registration statement and its exhibits, as well as our
other
reports filed with the Securities and Exchange Commission, can be inspected
and
copied at the Securities and Exchange Commission’s public reference room at 100
F Street, N.E., Washington, D.C. 20549-1004. The public may obtain information
about the operation of the public reference room by calling the Securities
and
Exchange Commission at 1-800-SEC-0330. In addition, the Securities and Exchange
Commission maintains a web site at http://www.sec.gov, which contains the Form
SB-2 and other reports, proxy and information statements and information
regarding issuers that file electronically with the Securities and Exchange
Commission.
ORIGINOIL,
INC.
|
(A
Development Stage Company)
|
FINANCIAL
STATEMENTS
|
September
30, 2007
|
ORIGINOIL,
INC.
(A
Development Stage Company)
BALANCE
SHEET
SEPTEMBER
30, 2007
(UNAUDITED)
ASSETS
|
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
Cash
& cash equivalents
|
|
$
|
891,751
|
|
Advances
to employees
|
|
|
500
|
|
|
|
|
|
|
Total
Current Assets
|
|
|
892,251
|
|
|
|
|
|
|
OTHER
ASSETS
|
|
|
|
|
Trademark
|
|
|
4,467
|
|
Security
deposit
|
|
|
650
|
|
|
|
|
|
|
Total
Other Assets
|
|
|
5,117
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
$
|
897,368
|
|
|
|
|
|
|
LIABILITIES
AND SHAREHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
Accrued
expenses
|
|
$
|
8,364
|
|
Credit
card payable
|
|
|
526
|
|
Payroll
taxes payable
|
|
|
12,768
|
|
|
|
|
|
|
TOTAL
LIABILITIES
|
|
|
21,658
|
|
|
|
|
|
|
SHAREHOLDERS'
DEFICIT
|
|
|
|
|
Preferred
stock, $.0001 par value;
|
|
|
|
|
50,000
authorized preferred shares
|
|
|
|
|
Common
stock, $.0001 par value;
|
|
|
|
|
500,000,000
authorized common shares
|
|
|
|
|
129,250,000
shares issued and outstanding
|
|
|
12,925
|
|
Additional
Paid in Capital
|
|
|
432,763
|
|
Common
stock payable
|
|
|
638,000
|
|
Deficit
accumulated during the development stage
|
|
|
(207,978
|
)
|
|
|
|
|
|
TOTAL
SHAREHOLDERS' DEFICIT
|
|
|
875,710
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND SHAREHOLDERS' DEFICIT
|
|
$
|
897,368
|
|
The
accompanying notes are an integral part of these financial
statements
ORIGINOIL,
INC.
(A
Development Stage Company)
STATEMENTS
OF OPERATIONS
(UNAUDITED)
|
|
|
|
From
Inception
|
|
|
|
|
|
June
1,
|
|
|
|
Three
Months
Ended
|
|
2007
through
|
|
|
|
September
30,
2007
|
|
September
30,
2007
|
|
|
|
|
|
|
|
REVENUE
|
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
TOTAL
COST & ADMINISTRATIVE EXPENSES
|
|
|
156,702
|
|
|
209,883
|
|
|
|
|
|
|
|
|
|
LOSS
FROM OPERATIONS BEFORE OTHER INCOME
|
|
|
(156,702
|
)
|
|
(209,883
|
)
|
|
|
|
|
|
|
|
|
OTHER
INCOME
|
|
|
|
|
|
|
|
Interest
income
|
|
|
2,277
|
|
|
2,280
|
|
Interest
expense
|
|
|
(375
|
)
|
|
(375
|
)
|
|
|
|
|
|
|
|
|
TOTAL
OTHER INCOME
|
|
|
1,902
|
|
|
1,905
|
|
|
|
|
|
|
|
|
|
NET
LOSS
|
|
$
|
(154,800
|
)
|
$
|
(207,978
|
)
|
|
|
|
|
|
|
|
|
BASIC
AND DILUTED LOSS PER SHARE
|
|
$
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED-AVERAGE
COMMON SHARES OUTSTANDING
|
|
|
|
|
|
|
|
BASIC
AND DILUTED
|
|
|
6,866,848
|
|
|
|
|
The
accompanying notes are an integral part of these financial
statements
ORIGINOIL,
INC.
(A
Development Stage Company)
STATEMENT
OF SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
Additional
|
|
Common
|
|
during
the
|
|
|
|
|
|
Common
stock
|
|
Paid-in
|
|
Stock
|
|
Development
|
|
|
|
|
|
Shares
|
|
Amount
|
|
Capital
|
|
Payable
|
|
Stage
|
|
Total
|
|
Balance
at June 30, 2007
|
|
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
22,563
|
|
$
|
-
|
|
$
|
22,563
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of founders shares in September 2007 for cash (90,250,000 common
shares
issued at $0.0025 per share ) (unaudited)
|
|
|
90,250,000
|
|
|
9,025
|
|
|
13,538
|
|
|
(22,563
|
)
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common shares in September 2007 for cash (11,000,000 common
shares
issued at $0.00025 per share ) (unaudited)
|
|
|
11,000,000
|
|
|
1,100
|
|
|
1,650
|
|
|
-
|
|
|
-
|
|
|
2,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common shares in September 2007 for cash (28,000,000 common
shares
issued at $0.015 per share ) (unaudited)
|
|
|
28,000,000
|
|
|
2,800
|
|
|
417,200
|
|
|
-
|
|
|
-
|
|
|
420,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
to be issued (unaudited)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
638,000
|
|
|
-
|
|
|
638,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributed
capital by investor (unaudited)
|
|
|
-
|
|
|
-
|
|
|
375
|
|
|
-
|
|
|
-
|
|
|
375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss for the period ended September 30, 2007 (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(207,978
|
)
|
|
(207,978
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at September 30, 2007 (unaudited)
|
|
|
129,250,000
|
|
$
|
12,925
|
|
$
|
432,763
|
|
$
|
638,000
|
|
$
|
(207,978
|
)
|
$
|
875,710
|
|
The
accompanying notes are an integral part of these financial
statements
ORIGINOIL,
INC.
(A
Development Stage Company)
STATEMENTS
OF CASH FLOWS
(UNAUDITED)
|
|
|
|
From
Inception
|
|
|
|
|
|
June
1,
|
|
|
|
Three
Months
Ended
|
|
2007
through
|
|
|
|
September
30,
2007
|
|
September
30,
2007
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
Net
loss
|
|
$
|
(154,800
|
)
|
$
|
(207,978
|
)
|
Adjustment
to reconcile net loss to net cash
|
|
|
|
|
|
|
|
used
in operating activities
|
|
|
|
|
|
|
|
Contributed
capital by investor
|
|
|
375
|
|
|
375
|
|
(Increase)
Decrease in:
|
|
|
|
|
|
|
|
Prepaid
expenses
|
|
|
15,000
|
|
|
-
|
|
Advances
to officers
|
|
|
2,250
|
|
|
(500
|
)
|
Other
assets
|
|
|
(4,467
|
)
|
|
(5,117
|
)
|
Increase
(Decrease) in:
|
|
|
|
|
|
|
|
Accounts
payable
|
|
|
(11,612
|
)
|
|
-
|
|
Accrued
expenses
|
|
|
8,364
|
|
|
8,364
|
|
Credit
card payable
|
|
|
248
|
|
|
526
|
|
Payroll
taxes payable
|
|
|
(721
|
)
|
|
12,768
|
|
|
|
|
|
|
|
|
|
NET
CASH USED IN OPERATING ACTIVITIES
|
|
|
(145,363
|
)
|
|
(191,562
|
)
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
Proceeds
from note payable
|
|
|
-
|
|
|
75,000
|
|
Payment
of loan payable
|
|
|
(75,000
|
)
|
|
(75,000
|
)
|
Proceeds
from investors to purchase common stock
|
|
|
615,437
|
|
|
638,000
|
|
Proceeds
for issuance of common stock
|
|
|
445,313
|
|
|
445,313
|
|
|
|
|
|
|
|
|
|
NET
CASH PROVIDED BY FINANCING ACTIVITIES
|
|
|
985,750
|
|
|
1,083,313
|
|
|
|
|
|
|
|
|
|
NET
INCREASE IN CASH
|
|
|
840,387
|
|
|
891,751
|
|
|
|
|
|
|
|
|
|
CASH,
BEGINNING OF PERIOD
|
|
|
51,364
|
|
|
-
|
|
|
|
|
|
|
|
|
|
CASH,
END OF PERIOD
|
|
$
|
891,751
|
|
$
|
891,751
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
Interest
paid
|
|
$
|
-
|
|
$
|
-
|
|
Taxes
paid
|
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
SCHEDULE OF NON-CASH TRANSACTIONS
|
|
|
|
|
|
|
|
Contributed
capital by investor
|
|
$
|
375
|
|
|
|
|
The
accompanying notes are an integral part of these financial
statements
ORIGINOIL,
INC.
(A
Development Stage Company)
NOTES
TO
FINANCIAL STATEMENTS-UNAUDITED
SEPTEMBER
30, 2007
1.
ORGANIZATION
AND LINE OF BUSINESS
Organization
OriginOil,
Inc. (the "Company") was incorporated in the state of Nevada on June 1, 2007.
The Company, based in Los Angeles, California, began operations on June 1,
2007
to develop and market a renewable oil technology .
The
accompanying interim unaudited financial statements have been prepared in
accordance with accounting principles generally accepted in the United States
for interim financial information and pursuant to the rules and regulations
of
the Securities and Exchange Commission. Accordingly, they do not include
all of
the information and footnotes required by accounting principles generally
accepted in the United States for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the period ended September 30, 2007 are not necessarily indicative
of the results that may be expected for the year ending December 31, 2007.
For
further information, refer to the audited financial statements for the period
ended June 30, 2007 and the notes thereto included in the Company’s
Report.
Line
of
Business
The
Company is currently in the stage of developing a
technology that will transform algae, the most promising source of renewable
oil, into a competitor to petroleum.
The
technology was invented by the two founders, Nicholas Eckelberry and T Riggs
Eckelberry. By the terms of their Employee Confidentiality and Inventions
Agreements, their inventions are the company’s property. The technology will
produce "new oil" from algae,
through
a cost-effective, high-speed manufacturing process. This supply of new oil
can
be used for many products such as diesel, gasoline, jet fuel, plastics and
solvents without the global warming effects of petroleum.
Going
Concern
The
accompanying financial statements have been prepared on a going concern basis
of
accounting, which contemplates continuity of operations, realization of assets
and liabilities and commitments in the normal course of business. The
accompanying financial statements do not reflect any adjustments that might
result if the Company is unable to continue as a going concern. The Company
does
not generate significant revenue, and has negative cash flows from operations,
which raise substantial doubt about the Company’s ability to continue as a going
concern. The ability of the Company to continue as a going concern and
appropriateness of using the going concern basis is dependent upon, among
other
things, additional cash infusion. The Company has obtained funds from its
shareholders since its’ inception through the period ended September 30, 2007.
Management believes this funding will continue, and has also obtained funding
from new investors in the amount of $1,083,313. Management believes the existing
shareholders and the prospective new investors will provide the additional
cash
needed to meet the Company’s obligations as they become due, and will allow the
development of its core of business.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This
summary of significant accounting policies of OriginOil, Inc. is presented
to
assist in understanding the Company’s financial statements. The financial
statements and notes are representations of the Company’s management, which is
responsible for their integrity and objectivity. These accounting policies
conform to accounting principles generally accepted in the United States
of
America and have been consistently applied in the preparation of the financial
statements.
ORIGINOIL,
INC.
(A
Development Stage Company)
NOTES
TO
FINANCIAL STATEMENTS-UNAUDITED
SEPTEMBER
30, 2007
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Development
Stage Activities and Operations
The
Company has been in its initial stages of formation and for the period ended
September 30, 2007, had no revenues. FASB #7 defines a development stage
activity as one in which all efforts are devoted substantially to establishing
a
new business and even if planned principal operations have commenced, revenues
are insignificant.
Revenue
Recognition
The
Company will recognize revenue when services are performed, and at the time
of
shipment of products, provided that evidence of an arrangement exists, title
and
risk of loss have passed to the customer, fees are fixed or determinable,
and
collection of the related receivable is reasonably assured. To date, the
Company
has had no revenues and is in the development stage.
Cash
and Cash Equivalent
The
Company considers all highly liquid investments with an original maturity
of
three months or less to be cash equivalents.
Loss
per Share Calculations
The
Company adopted Statement of Financial Standards (“SFAS”) No. 128 for the
calculation of “Loss per Share”. SFAS No. 128 dictates the calculation of basic
earnings per share and diluted earnings per share. Basic earnings per share
is
computed by dividing income available to common shareholders by the
weighted-average number of common shares available. Diluted earnings per
share
is computed similar to basic earnings per share except that the denominator
is
increased to include the number of additional common shares that would have
been
outstanding if the potential common shares had been issued and if the additional
common shares were dilutive. The Company’s diluted loss per share is the same as
the basic loss per share for the period ended September 30, 2007 as the
inclusion of any potential shares would have had an anti-dilutive effect
due to
the Company generating a loss.
|
During
the period ended September 30, 2007, the Company issued 90,250,000
founders shares of common stock at a price of $0.00025 for cash
of
$22,563; 11,000,000 shares of common stock issued through a private
placement at the price of $0.00025 for cash of $2,750; 28,000,000
shares
of common stock were issued through a private placement at a price
of
$0.015 for cash of $420,000; the private placement was made pursuant
to
Rule 506 of Regulation D promulgated under section 4(2) of the
Securities
Act of 1933, as amended; the Company received $638,000 for the
purchase of
6,380,000 shares of common stock at a price of $0.10 per
share.
|
|
During
the period ended September 30, 2007, the Company repaid the investor
loan
in the amount of $75,000. The interest of $375 was forgiven was
by the
related party.
|
|
During
November 2007, the Company issued 14,180,050 shares of common stock
for
$0.10 per share in the amount of $1,418,005, pursuant to a private
placement made pursuant to Rule 506 of Regulation D promulgated
under
section 4(2) of the Securities Act of 1933, as
amended.
|
ORIGINOIL,
INC.
|
(A
Development Stage Company)
|
FINANCIAL
STATEMENTS
|
June
30, 2007
|
Report
of Independent Registered Public Accounting Firm
To
the
Board of Directors
OriginOil,
Inc.
(A
Development Stage Company)
Los
Angeles, California
We
have
audited the balance sheet of OriginOil, Inc. (a development stage company)
as of
June 30, 2007, and the related statements of operations, stockholders’ equity,
and cash flows for the period from inception on June 1, 2007 through
June 30,
2007. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We
conducted our audit in accordance with 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 audit provided
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 OriginOil, Inc. (a development
stage company) as of June 30, 2007, and the results of its operations
and its
cash flows for the period from inception on June 1, 2007 through June
30, 2007,
in conformity with U.S. generally accepted accounting principles.
The
accompanying financial statements have been prepared assuming that the
Company
will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company has not generated any revenue, and has negative
cash
flows from operations, which raise substantial doubt about the Company’s ability
to continue as a going concern
.
Management’s plans in regards to these matters are also described in Note 1. The
financial statements do not include any adjustments that might result
from the
outcome of this uncertainty.
HJ
Associates & Consultants, LLP
Salt
Lake
City, UT
November
30, 2007
ORIGINOIL,
INC.
(A
Development Stage Company)
BALANCE
SHEET
JUNE
30,
2007
ASSETS
|
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
Cash
& cash equivalents
|
|
$
|
51,364
|
|
Prepaid
expenses
|
|
|
15,000
|
|
Advances
to officers
|
|
|
2,750
|
|
|
|
|
|
|
Total
Current Assets
|
|
|
69,114
|
|
|
|
|
|
|
TOTAL
OTHER ASSETS
|
|
|
|
|
Security
deposit
|
|
|
650
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
$
|
69,764
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND SHAREHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
Accounts
payable
|
|
$
|
11,612
|
|
Credit
card payable
|
|
|
278
|
|
Payroll
taxes payable
|
|
|
13,489
|
|
Loan
payable, related party
|
|
|
75,000
|
|
|
|
|
|
|
TOTAL
LIABILITIES
|
|
|
100,379
|
|
|
|
|
|
|
SHAREHOLDERS'
DEFICIT
|
|
|
|
|
Preferred
stock, $.0001 par value;
|
|
|
|
|
50,000
authorized preferred shares
|
|
|
|
|
Common
stock, $.0001 par value;
|
|
|
|
|
500,000,000
authorized common shares
|
|
|
|
|
Common
stock subscription payable
|
|
|
22,563
|
|
Deficit
accumulated during the development stage
|
|
|
(53,178
|
)
|
|
|
|
|
|
TOTAL
SHAREHOLDERS' DEFICIT
|
|
|
(30,615
|
)
|
|
|
|
|
|
TOTAL
LIABILITIES AND SHAREHOLDERS' DEFICIT
|
|
$
|
69,764
|
|
The
accompanying notes are an integral part of these financial
statements
ORIGINOIL,
INC.
(A
Development Stage Company)
STATEMENT
OF OPERATIONS
|
|
|
|
From
Inception
|
|
|
|
|
|
June
1, 2007
|
|
|
|
Period
Ended
|
|
through
|
|
|
|
June
30, 2007
|
|
June
30, 2007
|
|
|
|
|
|
|
|
REVENUE
|
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
TOTAL
COST & ADMINISTRATIVE EXPENSES
|
|
|
53,181
|
|
|
53,181
|
|
|
|
|
|
|
|
|
|
LOSS
FROM OPERATIONS BEFORE OTHER INCOME
|
|
|
(53,181
|
)
|
|
(53,181
|
)
|
|
|
|
|
|
|
|
|
OTHER
INCOME
|
|
|
|
|
|
|
|
Interest
income
|
|
|
3
|
|
|
3
|
|
|
|
|
|
|
|
|
|
TOTAL
OTHER INCOME
|
|
|
3
|
|
|
3
|
|
|
|
|
|
|
|
|
|
NET
LOSS
|
|
$
|
(53,178
|
)
|
$
|
(53,178
|
)
|
The
accompanying notes are an integral part of these financial
statements
ORIGINOIL,
INC.
(A
Development Stage Company)
STATEMENT
OF SHAREHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
Additional
|
|
Common
|
|
during
the
|
|
|
|
|
|
Common
stock
|
|
Paid-in
|
|
Stock
|
|
Development
|
|
|
|
|
|
Shares
|
|
Amount
|
|
Capital
|
|
Payable
|
|
Stage
|
|
Total
|
|
Balance
at June 1, 2007
|
|
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
to be issued
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
22,563
|
|
|
-
|
|
|
22,563
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss for the period ended June 30, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(53,178
|
)
|
|
(53,178
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at June 30, 2007
|
|
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
22,563
|
|
$
|
(53,178
|
)
|
$
|
(30,615
|
)
|
The
accompanying notes are an integral part of these financial
statements
ORIGINOIL,
INC.
(A
Development Stage Company)
STATEMENT
OF CASH FLOWS
|
|
|
|
From
Inception
|
|
|
|
|
|
June
1, 2007
|
|
|
|
Period
Ended
|
|
through
|
|
|
|
June
30, 2007
|
|
June
30, 2007
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
Net
loss
|
|
$
|
(53,178
|
)
|
$
|
(53,178
|
)
|
Adjustment
to reconcile net loss to net cash
|
|
|
|
|
|
|
|
used
in operating activities
|
|
|
|
|
|
|
|
(Increase)
Decrease in:
|
|
|
|
|
|
|
|
Prepaid
expenses
|
|
|
(15,000
|
)
|
|
(15,000
|
)
|
Deposits
|
|
|
(650
|
)
|
|
(650
|
)
|
Advances
to Officers
|
|
|
(2,750
|
)
|
|
(2,750
|
)
|
Increase
(Decrease) in:
|
|
|
|
|
|
|
|
Accounts
payable
|
|
|
11,612
|
|
|
11,612
|
|
Credit
card payable
|
|
|
278
|
|
|
278
|
|
Payroll
taxes payable
|
|
|
13,489
|
|
|
13,489
|
|
|
|
|
|
|
|
|
|
NET
CASH USED IN OPERATING ACTIVITIES
|
|
|
(46,199
|
)
|
|
(46,199
|
)
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
Proceeds
from loan payable
|
|
|
75,000
|
|
|
75,000
|
|
Proceeds
from investors to purchase common stock
|
|
|
22,563
|
|
|
22,563
|
|
|
|
|
|
|
|
|
|
NET
CASH PROVIDED BY FINANCING ACTIVITIES
|
|
|
97,563
|
|
|
97,563
|
|
|
|
|
|
|
|
|
|
NET
INCREASE IN CASH
|
|
|
51,364
|
|
|
51,364
|
|
|
|
|
|
|
|
|
|
CASH,
BEGINNING OF PERIOD
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
CASH,
END OF PERIOD
|
|
$
|
51,364
|
|
$
|
51,364
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
Interest
paid
|
|
$
|
-
|
|
$
|
-
|
|
Taxes
paid
|
|
$
|
-
|
|
$
|
-
|
|
The
accompanying notes are an integral part of these financial
statements
ORIGINOIL,
INC.
(A
Development Stage Company)
NOTES
TO
FINANCIAL STATEMENTS
JUNE
30,
2007
1.
ORGANIZATION
AND LINE OF BUSINESS
Organization
OriginOil,
Inc. (the "Company") was incorporated in the state of Nevada on June 1, 2007.
The Company, based in Los Angeles, California, began operations on June 1,
2007
to develop and market a renewable oil technology .
Line
of Business
The
Company is currently in the stage of developing a
technology that will transform algae, the most promising source of renewable
oil, into a competitor to petroleum. Our technology will produce "new oil"
from algae, through a cost-effective, high-speed manufacturing process. This
supply of new oil can be used for many products such as diesel, gasoline,
jet
fuel, plastics and solvents without the global warming effects of petroleum.
Going
Concern
The
accompanying financial statements have been prepared on a going concern basis
of
accounting, which contemplates continuity of operations, realization of assets
and liabilities and commitments in the normal course of business. The
accompanying financial statements do not reflect any adjustments that might
result if the Company is unable to continue as a going concern. The Company
does
not generate significant revenue, and has negative cash flows from operations,
which raise substantial doubt about the Company’s ability to continue as a going
concern. The ability of the Company to continue as a going concern and
appropriateness of using the going concern basis is dependent upon, among
other
things, additional cash infusion. The Company has obtained funds from its
shareholders since its’ inception through the period ended June 30, 2007.
Management believes this funding will continue, and has also obtained funding
from new investors in the amount of $25,313. Management believes the existing
shareholders and the prospective new investors will provide the additional
cash
needed to meet the Company’s obligations as they become due, and will allow the
development of its core of business.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This
summary of significant accounting policies of OriginOil, Inc. is presented
to
assist in understanding the Company’s financial statements. The financial
statements and notes are representations of the Company’s management, which is
responsible for their integrity and objectivity. These accounting policies
conform to accounting principles generally accepted in the United States
of
America and have been consistently applied in the preparation of the financial
statements.
Development
Stage Activities and Operations
The
Company has been in its initial stages of formation and for the period ended
June 30, 2007, had insignificant revenues. FASB #7 defines a development
stage
activity as one in which all efforts are devoted substantially to establishing
a
new business and even if planned principal operations have commenced, revenues
are insignificant.
Revenue
Recognition
The
Company will recognize revenue when services are performed, and at the time
of
shipment of products, provided that evidence of an arrangement exists, title
and
risk of loss have passed to the customer, fees are fixed or determinable,
and
collection of the related receivable is reasonably assured. To date, the
Company
has had no revenues and is in the development stage.
ORIGINOIL,
INC.
(A
Development Stage Company)
NOTES
TO
FINANCIAL STATEMENTS
JUNE
30,
2007
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Cash
and Cash Equivalent
The
Company considers all highly liquid investments with an original maturity
of
three months or less to be cash equivalents.
Use
of
Estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that
affect the amounts reported in the accompanying financial statements.
Significant estimates made in preparing these financial statements include
the
estimate of useful lives of property and equipment, the deferred tax valuation
allowance, and the fair value of stock options. Actual results could differ
from
those estimates.
Property
and Equipment
Property
and equipment will be stated at cost, and will be depreciated using the modified
accelerated cost recovery system (macrs) method over 3-10 years.
Fair
Value of Financial Instruments
SFAS
No.
107, “Disclosures About Fair Value of Financial Instruments”, requires
disclosure of the fair value information, whether or not recognized in the
balance sheet, where it is practicable to estimate that value. As of June
30,
2007, the amounts reported for cash, accounts receivable, accounts payable,
accrued interest and other expenses, and notes payable approximate the fair
value because of their short maturities.
Loss
per Share Calculations
The
Company adopted Statement of Financial Standards (“SFAS”) No. 128 for the
calculation of “Loss per Share”. SFAS No. 128 dictates the calculation of basic
earnings per share and diluted earnings per share. Basic earnings per share
is
computed by dividing income available to common shareholders by the
weighted-average number of common shares available. Diluted earnings per
share
is computed similar to basic earnings per share except that the denominator
is
increased to include the number of additional common shares that would have
been
outstanding if the potential common shares had been issued and if the additional
common shares were dilutive. The Company’s diluted loss per share is the same as
the basic loss per share for the period ended June 30, 2007 as the inclusion
of
any potential shares would have had an anti-dilutive effect due to the Company
generating a loss.
Income
Taxes
The
Company uses the liability method of accounting for income taxes. Deferred
tax
assets and liabilities are recognized for the future tax consequences
attributable to financial statements carrying amounts of existing assets
and
liabilities and their respective tax bases and operating loss and tax credit
carry-forwards. The measurement of deferred tax assets and liabilities is
based
on provisions of applicable tax law. The measurement of deferred tax assets
is
reduced, if necessary, by a valuation allowance based on the amount of tax
benefits that, based on available evidence, is not expected to be
realized.
Advertising
Costs
The
Company expenses the cost of advertising and promotional materials when
incurred. Total advertising costs were $5,100 for the period ended June 30,
2007.
Recently
Issued Accounting Pronouncements
In
December 2002, the Financial Accounting Standards Board (“FASB”) issued SFAS
148, Accounting for Stock-Based Compensation - Transition and Disclosure.
This
Statement amends SFAS 123, Accounting for Stock-Based Compensation, to provide
alternative methods of transition for a voluntary change to the fair value
based
method of accounting for stock-based employee compensation. In addition,
this
Statement amends the disclosure requirements of Statement 123 to require
prominent disclosures in both annual and interim financial statements about
the
method of accounting for stock-based employee compensation and the effect
of the
method used on the reported results.
ORIGINOIL,
INC.
(A
Development Stage Company)
NOTES
TO
FINANCIAL STATEMENTS
JUNE
30,
2007
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recently
Issued Accounting Pronouncements (continued)
In
November 2004, the FASB issued SFAS No. 151 "Inventory Costs, an amendment
of
ARB No. 43, Chapter 4. The amendments made by Statement 151 clarify that
abnormal amounts of idle facility expense, freight, handling costs, and wasted
materials (spoilage) should be recognized as current-period charges and require
the allocation of fixed production overheads to inventory based on the normal
capacity of the production facilities. The guidance is effective for inventory
costs incurred during fiscal years beginning after June 15, 2005. Earlier
application is permitted for inventory costs incurred during fiscal years
beginning after November 23, 2004. The Company has evaluated the impact of
the
adoption of SFAS 151, and does not believe the impact will be significant
to the
Company's overall results of operations or financial position.
In
December 2004, the FASB issued Statement of Financial Accounting Standards
No.
123R, Share-based Payment. SFAS 123R revises SFAS 123 and supersedes APB
25.
SFAS 123R will be effective for the period ending December 31, 2006, and
applies
to transactions in which an entity exchanges its equity instruments for goods
or
services and also applies to liabilities an entity may incur for goods or
services that are to follow a fair value of those equity instruments. Under
SFAS
123R, we will be required to follow a fair value approach using an
option-pricing model, such as the Black Scholes option valuation model, at
the
date of a stock option grant. The deferred compensation calculated under
the
fair value method would then be amortized over the respective vesting period
of
the stock option. The adoption of SFAS 123R is expected to have a material
impact on our results of operations.
In
December 2004, the FASB issued SFAS No.153, "Exchanges of Nonmonetary Assets,
an
amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions."The
amendments made by Statement 153 are based on the principle that exchanges
of
nonmonetary assets should be measured based on the fair value of the assets
exchanged. Further, the amendments eliminate the narrow exception for
nonmonetary exchanges of similar productive assets and replace it with a broader
exception for exchanges of nonmonetary assets that do not have commercial
substance. Previously, Opinion 29 required that the accounting for an exchange
of a productive asset for a similar productive asset or an equivalent interest
in the same or similar productive asset should be based on the recorded amount
of the asset relinquished. Opinion 29 provided an exception to its basic
measurement principle (fair value) for exchanges of similar productive assets.
The Board believes that exception required that some nonmonetary exchanges,
although commercially substantive, be recorded on a carryover basis. By focusing
the exception on exchanges that lack commercial substance, the Board believes
this Statement produces financial reporting that more faithfully represents
the
economics of the transactions. The Statement is effective for nonmonetary
asset
exchanges occurring in fiscal periods beginning after June 15, 2005. Earlier
application is permitted for nonmonetary asset exchanges occurring in fiscal
periods beginning after the date of issuance. The provisions of this Statement
shall be applied prospectively. The Company has evaluated the impact of the
adoption of SFAS 153, and does not believe the impact will be significant
to the
Company's overall results of operations or financial position.
|
In
December 2004, the Financial Accounting Standards Board issued
two FASB
Staff Positions - FSP FAS 109-1, Application of FASB Statement
109
"Accounting for Income Taxes" to the Tax Deduction on Qualified
Production
Activities Provided by the American Jobs Creation Act of 2004,
and FSP FAS
109-2 Accounting and Disclosure Guidance for the Foreign Earnings
Repatriation Provision within the American Jobs Creation Act of
2004.
Neither of these affected the Company as it does not participate
in the
related activities.
|
ORIGINOIL,
INC.
(A
Development Stage Company)
NOTES
TO
FINANCIAL STATEMENTS
JUNE
30,
2007
Recently
Issued Accounting Pronouncements (continued)
In
March
2005, the SEC released Staff Accounting Bulletin No. 107, “Share-Based Payment”
(“SAB 107”), which provides interpretive guidance related to the interaction
between SFAS 123(R) and certain SEC rules and regulations. It also provides
the
SEC staff’s views regarding valuation of share-based payment arrangements. In
April 2005, the SEC amended the compliance dates for SFAS 123(R), to allow
companies to implement the standard at the beginning of their next fiscal
year,
instead of the next reporting period beginning after June 15, 2005. Management
is currently evaluating the impact SAB 107 will have on our condensed financial
statements.
In
March
2005, the FASB issued FASB Interpretation No. 47, “Accounting for Conditional
Asset Retirement Obligations” (“FIN 47”). FIN 47 provides guidance relating to
the identification of and financial reporting for legal obligations to perform
an asset retirement activity. The Interpretation requires recognition of
a
liability for the fair value of a conditional asset retirement obligation
when
incurred if the liability’s fair value can be reasonably estimated. FIN 47 also
defines when an entity would have sufficient information to reasonably estimate
the fair value of an asset retirement obligation. The provision is effective
no
later than the end of fiscal years ending after December 15, 2005. The Company
will adopt FIN 47 beginning the first period ending June 30, 2007, and does
not
believe the adoption will have a material impact on its financial position
or
results of operations or cash flows.
In
May
2005, the FASB issued FASB Statement No. 154, “Accounting Changes and Error
Corrections.” This new standard replaces APB Opinion No. 20, “Accounting
Changes, and FASB Statement No. 3, Reporting Accounting Changes in Interim
Financial Statements,” and represents another step in the FASB’s goal to
converge its standards with those issued by the IASB. Among other changes,
Statement 154 requires that a voluntary change in accounting principle be
applied retrospectively with all prior period financial statements presented
on
the new accounting principle, unless it is impracticable to do so. Statement
154
also provides that (1) a change in method of depreciating or amortizing a
long-lived non-financial asset be accounted for as a change in estimate
(prospectively) that was effected by a change in accounting principle, and
(2)
correction of errors in previously issued financial statements should be
termed
a “restatement.” The new standard is effective for accounting changes and
correction of errors made in fiscal years beginning after December 15, 2005.
Early adoption of this standard is permitted for accounting changes and
correction of errors made in fiscal years beginning after June 1, 2005 .
The
Company has evaluated the impact of the adoption of Statement 154 and does
not
believe the impact will be significant to the Company's overall results of
operations or financial position.
In
February of 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid
Financial Instruments”, which is intended to simplify the accounting and improve
the financial reporting of certain hybrid financial instruments (i.e.,
derivatives embedded in other financial instruments). The statement amends
SFAS
No. 133, “Accounting for Derivative Instruments and Hedging Activities”, and
SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities—a replacement of FASB Statement No. 125.” SFAS
No. 155 is effective for all financial instruments issued or acquired after
the
beginning of an entity's first fiscal year that begins after September 15,
2006.. The Company is currently evaluating the impact SFAS No. 155 will have
on
its financial statements, if any.
ORIGINOIL,
INC.
(A
Development Stage Company)
NOTES
TO
FINANCIAL STATEMENTS
JUNE
30,
2007
At
June
30, 2007, the Company’s authorized stock consists of 500,000,000 shares of
common stock, par value $0.001 per share. During the period ended June 30,
2007,
the Company issued no shares; the Company received $22,563 for the purchase
of
90,250,000 shares of common stock at a price of $0.0025 per share.
|
The
Company leased office space for a three month term expiring on
September
30, 2007. The rent paid for the period ended June 30, 2007was
$211.
|
|
At
June 30, 2007, the Company had net operating loss carry-forwards
of
approximately $59,139 that may be offset against future taxable
income
from the year 2007 through 2027. No tax benefit has been reported
in the
June 30,2007 financial statements since the potential tax benefit
is
offset by a valuation allowance of the same
amount.
|
|
The
income tax provision differs from the amount of income tax determined
by
applying the U.S. federal income tax rate to pretax income from
continuing
operations for the period ended June 30, 2007 due to the
following:
|
|
|
2007
|
|
Book
Income
|
|
$
|
(20,739
|
)
|
Meals
& Entertainment
|
|
|
15
|
|
Valuation
Allowance
|
|
|
20,724
|
|
|
|
|
|
|
|
|
$
|
-
|
|
|
Deferred
taxes are provided on a liability method whereby deferred tax
assets are
recognized for deductible differences and operating loss and
tax credit
carry-forwards and deferred tax liabilities are recognized for
taxable
temporary differences. Temporary differences are the difference
between
the reported amounts of assets and liabilities and their tax
bases.
Deferred tax assets are reduced by a valuation allowance when,
in the
opinion of management, it is more likely than not that some portion
or all
of the deferred tax assets will not be realized. Deferred tax
assets and
liabilities are adjusted for the effects of changes in tax laws
and rates
on the date of enactment.
|
Net
deferred tax liabilities consist of the following components as of June
30,
2007:
|
|
2007
|
|
Deferred
tax assets:
|
|
|
|
NOL
Carryover
|
|
$
|
20,724
|
|
|
|
|
|
|
Deferred
tax liabilites:
|
|
|
|
|
Depreciation
|
|
|
-
|
|
|
|
|
|
|
Less
Valuation Allowance
|
|
|
(20,724
|
)
|
|
|
|
|
|
Net
deferred tax asset
|
|
$
|
-
|
|
|
Due
to the change in ownership provisions of the Tax Reform Act of
1986, net
operating loss carry-forwards for Federal income tax reporting
purposes
are subject to annual limitations. Should a change in ownership
occur, net
operating loss carryforwards may be limited as to use in future
years.
|
ORIGINOIL,
INC.
(A
Development Stage Company)
NOTES
TO
FINANCIAL STATEMENTS
JUNE
30,
2007
During
the period ended June 30, 2007, an Investor loaned the Company $75,000 for
operating expenses. The loan bears interest at the rate of 6% per annum.
The
balance at June 30, 2007 was $75,000. The principal and interest is due August
31, 2007
|
During
July 2007, the Company repaid the investor loan in the amount of
$75,000.
The interest was forgiven by the related
party.
|
|
During
August 2007, the Company issued 101,000,000 shares of common stock
for
$0.00025 per share in the amount of $25,250, pursuant to a private
placement made pursuant to Rule 506 of Regulation D promulgated
under
section 4(2) of the Securities Act of 1933, as
amended.
|
|
During
August 2007, the Company issued 28,000,000 shares of common stock
for
$0.015 per share in the amount of $420,000, pursuant to a private
placement made pursuant to Rule 506 of Regulation D promulgated
under
section 4(2) of the Securities Act of 1933, as
amended.
|
|
During
August 2007, the Company placed an offering of 6,380,000 shares
of common
stock at a price of $0.10 per share through a private
placement.
|
ORIGINOIL,
INC.
32,001,455
Shares
Common
Stock
$0.001
Par Value
By
Selling Shareholders
PROSPECTUS
December
10, 2007
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our
articles of incorporation provide that no director or officer shall be
personally liable for damages for breach of fiduciary duty for any act or
omission unless such acts or omissions involve intentional misconduct, fraud,
knowing violation of law, or payment of dividends in violation of Section 78.300
of the Nevada Revised Statutes.
Our
bylaws provide that we shall indemnify any and all of our present or former
directors and officers, or any person who may have served at our request as
director or officer of another corporation in which we own stock or of which
we
are a creditor, for expenses actually and necessarily incurred in connection
with the defense of any action, except where such officer or director is
adjudged to be liable for negligence or misconduct in performance of duty.
To
the extent that a director has been successful in defense of any proceeding,
the
Nevada Revised Statutes provide that he shall be indemnified against reasonable
expenses incurred in connection therewith.
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the Company pursuant
to the foregoing provisions, or otherwise, the Company has been advised that
in
the opinion of the Securities and Exchange Commission such indemnification
is
against public policy and is, therefore, unenforceable.
Item
25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The
following table sets forth the expenses in connection with this Registration
Statement. We will pay all expenses of the offering. All of such expenses are
estimates
,
other
than the filing fees payable to the Securities and Exchange
Commission.
Commission
Filing Fee
|
|
$
|
98.24
|
|
Legal
Fees and Expenses
|
|
|
40,000.00
|
*
|
Accounting
Fees and Expenses
|
|
|
20,000.00
|
*
|
Blue
Sky Fees and Expenses
|
|
|
10,000.00
|
*
|
Miscellaneous
|
|
|
5,000.00
|
*
|
TOTAL
|
|
$
|
75,098.24
|
*
|
*
Estimated
Item
26. RECENT SALES OF UNREGISTERED SECURITIES
In
July
2007 the Company completed a private placement for up to 28,000,000 shares
of
common stock of the Company at a price of $0.015 per share for an aggregate
sum
of $420,000.00
On
November 19, 2007 the Company completed a private placement for 14,180,050
shares of common stock of the Company at a price of $0.10 per share for an
aggregate sum of $1,418,005.
All
of
the above offerings and sales were deemed to be exempt under rule 506 of
Regulation D and Section 4(2) of the Securities Act of 1933, as amended. No
advertising or general solicitation was employed in offering the securities.
The
offerings and sales were made to a limited number of persons, all of whom were
accredited investors, business associates of OriginOil or executive officers
of
OriginOil, and transfer was restricted by OriginOil in accordance with the
requirements of the Securities Act of 1933. In addition to representations
by
the above-referenced persons, we have made independent determinations that
all
of the above-referenced persons were accredited or sophisticated investors,
and
that they were capable of analyzing the merits and risks of their investment,
and that they understood the speculative nature of their investment.
Furthermore, all of the above-referenced persons were provided with access
to
our Securities and Exchange Commission filings. Except as expressly set forth
above, the individuals and entities to whom we issued securities as indicated
in
this section of the registration statement are unaffiliated with
us.
Item
27. EXHIBITS
The
following exhibits are included in this registration statement:
SEC
Ref. No.
|
|
Title
of Document
|
|
Location
|
3.1
|
|
Articles
of Incorporation
|
|
Attached
|
|
|
|
|
|
3.3
|
|
By-laws
|
|
Attached
|
|
|
|
|
|
5.1
|
|
Legal
Opinion of Sichenzia Ross Friedman Ference LLP
|
|
Attached
|
|
|
|
|
|
10.1
|
|
Form
of Subscription Agreement, dated July 11, 2007
|
|
Attached
|
|
|
|
|
|
10.2
|
|
Form
of Subscription Agreement, dated August 2007
|
|
Attached
|
|
|
|
|
|
23.1
|
|
Consent
of Sichenzia Ross Friedman Ference LLP (attached as part of Exhibit
5.1)
|
|
|
|
|
|
|
|
23.2
|
|
Consent
of HJ Associates & Consultants, LLP
|
|
Attached
|
The
undersigned registrant hereby undertakes to:
(1)
File,
during any period in which offers or sales are being made, a post-effective
amendment to this registration statement to:
(i)
Include any prospectus required by Section 10(a)(3) of the Securities Act of
1933, as amended (the "Securities Act");
(ii)
Reflect in the prospectus any facts or events which, individually or together,
represent a fundamental change in the information in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of the 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 a prospectus
filed with the Commission pursuant to Rule 424(b) under the Securities Act
if,
in the aggregate, the changes in volume and price represent no more than a
20%
change in the maximum aggregate offering price set forth in the "Calculation
of
Registration Fee" table in the effective registration statement,
and
(iii)
Include any additional or changed material information on the plan of
distribution.
(2)
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.
(3)
File
a post-effective amendment to remove from registration any of the securities
that remain unsold at the end of the offering.
(4)
For
determining liability of the undersigned small business issuer under the
Securities Act to any purchaser in the initial distribution of the securities,
the undersigned undertakes that in a primary offering of securities of the
undersigned small business issuer pursuant to this registration statement,
regardless of the underwriting method used to sell the securities to the
purchaser, if the securities are offered or sold to such purchaser by means
of
any of the following communications, the undersigned small business issuer
will
be a seller to the purchaser and will be considered to offer or sell such
securities to such purchaser:
(i)
Any
preliminary prospectus or prospectus of the undersigned small business issuer
relating to the offering required to be filed pursuant to Rule 424;
(ii)
Any
free writing prospectus relating to the offering prepared by or on behalf of
the
undersigned small business issuer or used or referred to by the undersigned
small business issuer;
(iii)
The
portion of any other free writing prospectus relating to the offering containing
material information about the undersigned small business issuer or its
securities provided by or on behalf of the undersigned small business issuer;
and
(iv)
Any
other communication that is an offer in the offering made by the undersigned
small business issuer to the purchaser.
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 such
indemnification is against public policy as expressed in the Securities Act
and
is, therefore, unenforceable.
In
the
event that a claim for indemnification against such 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 such 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 whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
SIGNATURES
In
accordance with the requirements of the Securities Act of 1933, OriginOil,
Inc.
certifies that it has reasonable ground to believe that it meets all of the
requirements of filing on Form SB-2 and authorizes this Registration Statement
to be signed on its behalf, in the City of Los Angeles, State of California,
on
December 10, 2007.
|
|
|
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ORIGINOIL,
INC.
|
|
|
|
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By:
|
/s/
T Riggs Eckelberry
|
|
T
Riggs Eckelberry
|
|
Chief
Executive Officer (Principal Executive Officer)
and
Acting Chief Financial Officer
(Principal
Accounting and Financial Officer)
|
Pursuant
to the requirements of the Securities Act of 1933, this registration statement
or amendment has been signed below by the following persons in the capacities
and on the dates indicated.
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Date: December
10, 2007
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By:
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/s/ T
Riggs Eckelberry
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T
Riggs Eckelberry
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|
Director
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Date: December
10, 2007
|
By:
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/s/ Nicholas
Eckelberry
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Nicholas
Eckelberry
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Director
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Date:
December 10, 2007
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By:
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/s/ Ivan
Ivankovich
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Ivan
Ivankovich
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Director
|
BYLAWS
OF
ORIGINOIL,
INC.
Effective
as of
June
1, 2007
BYLAWS
OF
ORIGINOIL,
INC.
ARTICLE
1
OFFICES
Section
1.1
Offices
.
OriginOil, Inc., a Nevada corporation, (the “Corporation”), may have offices at
such places both within and without the State of Nevada as the board of
directors of the Corporation (the “Board of Directors”) may from time to time
determine or the business of the Corporation may require.
ARTICLE
2
MEETINGS
OF STOCKHOLDERS
Section
2.1
Annual
Meeting
.
An
annual meeting of the stockholders for the election of directors shall be held
at such place either within or without the State of Nevada as shall be
designated on an annual basis by the Board of Directors and stated in the notice
of the meeting. Meetings of stockholders for any other purpose may be held
at
such time and place, within or without the State of Nevada, as shall be stated
in the notice of the meeting or in a duly executed waiver of notice thereof.
Any
other proper business may be transacted at the annual meeting.
Section
2.2
Notice
of Annual Meeting
.
Written
notice of the annual meeting stating the place, if any, date, hour of the
meeting and the means of remote communications, if any, by which stockholders
and proxy holders may be deemed to be present in person and vote at such meeting
shall be given to each stockholder entitled to vote at such meeting not less
than ten nor more than sixty days before the date of the meeting.
Section
2.3
Voting
List
.
The
officer who has charge of the stock ledger of the Corporation shall prepare
and
make, or cause a third party to prepare and make, at least ten days before
every
meeting of stockholders, a complete list of the stockholders entitled to vote
at
the meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting for a period of at least ten days prior to the meeting:
(a) on a reasonably accessible electronic network, provided that the
information required to gain access to such list is provided with the notice
of
the meeting, or (b) during ordinary business hours, at the principal place
of business of the Corporation. If the meeting is to be held at a place, then
the list shall be produced and kept at the time and place of the meeting during
the whole time thereof, and may be inspected by any stockholder who is present.
If the meeting is to be held solely by means of remote communication, then
the
list shall also be open to the examination of any stockholder during the whole
time of the meeting on a reasonably accessible electronic network, and the
information required to access such list shall be provided with the notice
of
the meeting.
Section
2.4
Special
Meetings
.
Special
meetings of the stockholders of this Corporation, for any purpose or purposes,
unless otherwise prescribed by statute or by the articles of incorporation
of
the Corporation (as amended from time to time, the “Articles of Incorporation”),
shall be called by the President or Secretary of the Corporation at the request
in writing of (a) a majority of the members of the Board of Directors or
(b) holders of at least ten percent of the total voting power of all
outstanding shares of stock of the Corporation then entitled to vote, and may
not be called absent such a request. Such request shall state the purpose or
purposes of the proposed meeting.
Section
2.5
Notice
of Special Meetings
.
As soon
as reasonably practicable after receipt of a request as provided in Section
2.4
,
written
notice of a special meeting, stating the place, if any, date (which shall be
not
less than ten nor more than sixty days from the date of the notice), hour and
the means of remote communication, if any, by which stockholders and proxy
holders may be deemed to be present in person and vote at such special meeting
and the purpose or purposes for which the special meeting is called, shall
be
given to each stockholder entitled to vote at such special meeting.
Section
2.6
Scope
of Business at Special Meeting
.
Business transacted at any special meeting of stockholders shall be limited
to
the purposes stated in the notice.
Section
2.7
Quorum
.
The
holders of a majority of the stock issued and outstanding and entitled to vote
thereat, present in person or by means of remote communication, if any, or
represented by proxy, shall constitute a quorum at all meetings of stockholders
of the Corporation for the transaction of business, except as otherwise provided
by statute or by the Articles of Incorporation. If, however, such quorum shall
not be present or represented at any meeting of the stockholders, the chairman
of the meeting or the stockholders entitled to vote thereat, present in person
or by means of remote communication, if any, or represented by proxy, shall
have
the power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented.
At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting
as
originally notified. If the adjournment is for more than thirty days, or if
after the adjournment a new record date is fixed for the adjourned meeting,
a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting as provided in Section 2.5
.
Section
2.8
Qualifications
to Vote
.
The
stockholders of record on the books of the Corporation at the close of business
on the record date as determined by the Board of Directors and only such
stockholders shall be entitled to vote at any meeting of stockholders or any
adjournment thereof; provided, however, that the Board of Directors may fix
a
new record date for any adjourned meeting.
Section
2.9
Record
Date
.
The
Board of Directors may fix a record date for the determination of the
stockholders entitled to notice of or to vote at any stockholders’ meeting and
at any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise any rights in respect of
any
change, conversion or exchange of stock or for the purpose of any other lawful
action. The record date shall not be more than sixty nor less than ten days
before the date of such meeting, and not more than ten days prior to any action
without a meeting. If no record date is fixed by the Board of Directors, the
record date for determining stockholders entitled to notice of or to vote at
a
meeting of stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or if notice is waived, at the
close
of business on the day next preceding the day on which the meeting is held.
A
determination of stockholders of record entitled to notice of or to vote at
a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for any adjourned
meeting.
Section
2.10
Action
at Meetings
.
When a
quorum is present at any meeting, the vote of the holders of a majority of
the
shares of stock having voting power present in person, by means of remote
communication, if any, or represented by proxy shall decide any question brought
before such meeting, unless the question is one upon which by express provision
of applicable law or of the Articles of Incorporation, a different vote is
required, in which case such express provision shall govern and control the
decision of such question.
Section
2.11
Voting
and Proxies
.
Unless
otherwise provided in the Articles of Incorporation and subject to applicable
law, each stockholder shall, at every meeting of the stockholders of the
Corporation, be entitled to one vote in person, by means of remote
communication, if any, or by proxy, for each share of the capital stock having
voting power held by such stockholder, but no proxy shall be voted on or after
three years from its date, unless the proxy provides for a longer period. Each
proxy shall be revocable unless expressly provided therein to be irrevocable
and
unless and for so long and only to the extent it is coupled with an interest
sufficient at law to support an irrevocable power.
Section
2.12
Action
by Stockholders Without a Meeting
.
Unless
otherwise provided in the Articles of Incorporation, any action required to
be
taken at any annual or special meeting of stockholders of the Corporation,
or
any action which may be taken at any annual or special meeting of such
stockholders, may be taken without a meeting, without prior notice and without
a
vote, if a consent or consents in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted
and shall be delivered to the Corporation by delivery to its registered office
in the State of Nevada (by hand or by certified or registered mail, return
receipt requested), to its principal place of business or to an officer or
agent
of the Corporation having custody of the book in which proceedings of meetings
of stockholders are recorded. Prompt notice of the taking of corporate action
without a meeting by less than unanimous written consent shall be given to
those
stockholders who have not consented in writing and who, if the action had been
taken at a meeting, would have been entitled to notice of the meeting if the
record date for such meeting had been the date that written consents signed
by a
sufficient number of stockholders to take the action were delivered to the
Corporation by delivery to its registered office in the State of Nevada (by
hand
or by certified or registered mail, return receipt requested), to its principal
place of business or to an officer or agent of the Corporation having custody
of
the book in which proceedings or meetings of stockholders are
recorded.
ARTICLE
3
DIRECTORS
Section
3.1
Powers
.
The
business of the Corporation shall be managed by or under the direction of the
Board of Directors, which may exercise all such powers of the Corporation and
do
all such lawful acts and things as are not by applicable law or by the Articles
of Incorporation or by these bylaws of the Corporation (as in effect from time
to time, the “Bylaws”), directed or required to be exercised or done by the
stockholders.
Section
3.2
Number;
Election; Tenure and Qualification
.
The
number of directors which shall constitute the whole Board of Directors shall
be
fixed from time to time by resolution of the Board of Directors;
provided
that the
number of directors shall be not less than three nor more than five. With the
exception of the first Board of Directors, which shall be elected by the
incorporator of the Corporation, and except as provided in the Articles of
Incorporation or in Section 3.3
,
the
directors shall be elected at the annual meeting of stockholders by a plurality
vote of the shares represented in person, by means of remote communication,
if
any, or by proxy and each director elected shall hold office until his or her
successor is elected and qualified unless he or she shall resign, become
disqualified, disabled, or otherwise removed. Directors need not be
stockholders.
Section
3.3
Vacancies
and Newly Created Directorships
.
Unless
otherwise provided in the Articles of Incorporation, vacancies and newly created
directorships resulting from any increase in the authorized number of directors
may be filled by a majority of the directors then in office, though less than
a
quorum, or by a sole remaining director. The directors so chosen shall serve
until the next annual election and until their successors are duly elected
and
qualified, unless he or she shall resign, become disqualified, disabled, or
otherwise removed. If there are no directors in office, then an election of
directors may be held in the manner provided by applicable law.
Section
3.4
Location
of Meetings
.
The
Board of Directors may hold meetings, both regular and special, either within
or
without the State of Nevada.
Section
3.5
Meeting
of Newly Elected Board of Directors
.
The
first meeting of each newly elected Board of Directors shall be held immediately
following the annual meeting of stockholders and no notice of such meeting
shall
be necessary to the newly elected directors in order legally to constitute
the
meeting; provided that a quorum shall be present. In the event such meeting
is
not held at such time, the meeting may be held at such time and place as shall
be specified in a notice given in the manner specified for special meetings
of
the Board of Directors, or as shall be specified in a written waiver signed
by
all of the directors.
Section
3.6
Regular
Meetings
.
Regular
meetings of the Board of Directors may be held without notice at such time
and
at such place, if any, as shall from time to time be determined by the Board
of
Directors; provided that any director who is absent when such a determination
is
made shall be given notice of such location, if any.
Section
3.7
Special
Meetings
.
Special
meetings of the Board of Directors may be called by the Chairman of the Board
of
Directors, if there be one, President of the Corporation or any director on
two
days’ notice to each director by mail or overnight courier service or one days’
notice to each director by telephone, facsimile, telegram or by a form of
electronic transmission consented to by director to whom notice is given or
such
shorter notice as the person or persons calling such meeting may deem necessary
or appropriate in the circumstance. Notice may be waived in accordance with
Section 78.375 of the Nevada Revised Statutes (as in effect from time to
time, the “NRS”).
Section
3.8
Quorum
and Action at Meetings
.
At all
meetings of the Board of Directors, a majority of the directors then in office
shall constitute a quorum for the transaction of business, and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the Articles of Incorporation. If a
quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be
present.
Section
3.9
Action
Without a Meeting
.
Unless
otherwise restricted by the NRS, the Articles of Incorporation or the Bylaws,
any action required or permitted to be taken at any meeting of the Board of
Directors or of any committee thereof may be taken without a meeting if all
members of the Board of Directors or committee, as the case may be, consent
thereto in writing or by electronic transmission, and the writing or writings
or
electronic transmission or transmissions are filed with the minutes of
proceedings of the Board of Directors or such committee. Such filing shall
be in
paper form (including a paper copy of an electronic transmission) if the minutes
are maintained in paper form and shall be in electronic form if the minutes
are
maintained in electronic form.
Section
3.10
Telephonic/Electronic
Meeting
.
Unless
otherwise restricted by the Articles of Incorporation or the Bylaws, members
of
the Board of Directors, or any committee designated by the Board of Directors,
may participate in a meeting of the Board of Directors, or any committee, by
means of conference telephone or other communications equipment by means of
which all persons participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person at the
meeting.
Section
3.11
Committees
.
The
Board of Directors may designate one or more committees, each committee to
consist of one or more of the directors of the Corporation. The Board of
Directors may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting
of
the committee. In the absence or disqualification of a member of a committee,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not such member or members constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board of Directors,
or in the Bylaws of the Corporation, shall have and may exercise all the powers
and authority of the Board of Directors in the management of the business and
the affairs of the Corporation, and may authorize the seal of the Corporation
to
be affixed to all papers which may require it; but no such committee shall
have
the power or authority in reference to the following matters: (a) approving
or adopting, or recommending to the stockholders, any action or matter expressly
required by this chapter to be submitted to stockholders for approval or
(b) adopting, amending or repealing any bylaw of the
Corporation.
Section
3.12
Committee
Authority
.
Any
such committee, to the extent allowed by law and provided in the resolution
of
the Board of Directors, shall have and may exercise all the powers and authority
of the Board of Directors in the management of the business and affairs of
the
Corporation. Such committee or committees shall have such name or names as
may
be determined from time to time by resolution adopted by the Board of
Directors.
Section
3.13
Committee
Minutes
.
Each
committee shall keep regular minutes of its meetings and report the same to
the
Board of Directors when required to do so by the Board of
Directors.
Section
3.14
Directors
Compensation
.
Unless
otherwise restricted by the Articles of Incorporation or the Bylaws, the Board
of Directors shall have the authority to fix the compensation of directors.
The
directors may be paid their expenses, if any, of attendance at each meeting
of
the Board of Directors and may be paid a fixed sum for attendance at each
meeting of the Board of Directors or a stated salary as director. No such
payment shall preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor. Members of special or standing
committees may be allowed like compensation for attending committee
meetings.
Section
3.15
Resignation
.
Any
director or officer of the Corporation may resign at any time. Each such
resignation shall be made in writing or by electronic transmission and shall
take effect at the time specified therein, or, if no time is specified, at
the
time of its receipt by either the Board of Directors, the President of the
Corporation or the Secretary of the Corporation. The acceptance of a resignation
shall not be necessary to make it effective unless expressly so provided in
the
resignation.
Section
3.16
Removal
.
Unless
otherwise restricted by the Articles of Incorporation, the Bylaws or applicable
law, any director or the entire Board of Directors may be removed, with or
without cause, by the holders of a majority of shares entitled to vote at an
election of directors.
ARTICLE
4
NOTICES
Section
4.1
Notice
to Directors and Stockholders
.
Whenever, under the provisions of applicable law, the Articles of Incorporation
or the Bylaws, notice is required to be given to any director or stockholder,
it
shall not be construed to mean personal notice, but such notice may be given
in
writing, by mail, addressed to such director or stockholder, at his or her
address as it appears on the records of the Corporation, with postage thereon
prepaid, and such notice shall be deemed to be given at the time when the same
shall be deposited in the United States mail or, by a form of electronic
transmission consented to by stockholder or director to whom notice is given.
An
affidavit of the Secretary or an Assistant Secretary or of the transfer agent
or
other agent of the Corporation that the notice has been given shall in the
absence of fraud, be prima facie evidence of the facts stated therein. Notice
to
directors may also be given by telephone, facsimile, telegram or electronic
transmission.
Section
4.2
Waiver
.
Whenever notice is required to be given under applicable law, the Articles
of
Incorporation or the Bylaws, a written waiver, signed by the person or persons
entitled to said notice, or a waiver by electronic transmission by the person
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto. The written waiver or any waiver by electronic
transmission need not specify the business to be transacted at, nor the purpose
of, any regular or special meeting of the stockholders, directors, or members
of
a committee of directors. Attendance of a person at a meeting shall constitute
a
waiver of notice of such meeting, except when the person attends a meeting
for
the express purpose of objecting at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Attendance at the meeting is not a waiver of any right to object
to
the consideration of matters required by the NRS to be included in the notice
of
the meeting but not so included, if such objection is expressly made at the
meeting.
ARTICLE
5
OFFICERS
Section
5.1
Enumeration
.
The
officers of the Corporation shall be chosen by the Board of Directors and shall
include a President, a Secretary, a Chief Financial Officer and such other
officers with such other titles as the Board of Directors shall determine.
The
Board of Directors may elect from among its members a Chairman or Chairmen
of
the Board and a Vice Chairman of the Board. The Board of Directors may also
choose one or more Vice Presidents and Assistant Secretaries. Any number of
offices may be held by the same person, unless the Articles of Incorporation
or
the Bylaws otherwise provide.
Section
5.2
Election
.
The
Board of Directors at its first meeting after each annual meeting of
stockholders shall elect a President, a Secretary, a Chief Financial Officer
and
such other officers with such other titles as the Board of Directors shall
determine.
Section
5.3
Appointment
of Other Agents
.
The
Board of Directors may appoint such other officers and agents as it shall deem
necessary, who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time by
the
Board of Directors.
Section
5.4
Compensation
.
The
salaries of all officers of the Corporation shall be fixed by the Board of
Directors or a committee thereof. The salaries of agents of the Corporation
shall, unless fixed by the Board of Directors, be fixed by the President or
any
Vice President of the Corporation.
Section
5.5
Tenure
.
The
officers of the Corporation shall hold office until their successors are elected
and qualify or until such officer’s earlier resignation or removal. Any officer
elected or appointed by the Board of Directors may be removed at any time by
the
affirmative vote of a majority of the directors of the Board of Directors.
Any
vacancy occurring in any office of the Corporation shall be filled by the Board
of Directors.
Section
5.6
Chairman
of the Board and Vice-Chairman of the Board
.
The
Chairman of the Board, if any, shall preside at all meetings of the Board of
Directors and of the stockholders of the Corporation at which he or she shall
be
present. The Chairman shall have and may exercise such powers as are, from
time
to time, assigned to the Chairman by the Board of Directors and as may be
provided by law. In the absence of the Chairman of the Board, the Vice Chairman
of the Board, if any, shall preside at all meetings of the Board of Directors
and of the stockholders of the Corporation at which the Vice Chairman shall
be
present. The Vice Chairman shall have and may exercise such powers as are,
from
time to time, assigned to such person by the Board of Directors and as may
be
provided by law.
Section
5.7
President
.
The
President shall be the Chief Executive Officer of the Corporation unless such
title is assigned to another officer of the Corporation; in the absence of
a
Chairman and Vice Chairman of the Board, the President shall preside as the
chairman of meetings of the stockholders of the Corporation and the Board of
Directors; and the President shall have general and active management of the
business of the Corporation and shall see that all orders and resolutions of
the
Board of Directors are carried into effect. The President or any Vice President
shall execute bonds, mortgages and other contracts requiring a seal, under
the
seal of the Corporation, except where required or permitted by law to be
otherwise signed and executed and except where the signing and execution thereof
shall be expressly delegated by the Board of Directors to some other officer
or
agent of the Corporation.
Section
5.8
Vice
President
.
In the
absence of the President or in the event of the President’s inability or refusal
to act, the Vice President, if any (or in the event there be more than one
Vice
President, the Vice Presidents in the order designated by the Board of
Directors, or in the absence of any designation, then in the order of their
election) shall perform the duties of the President, and when so acting shall
have all the powers of and be subject to all the restrictions upon the
President. The Vice President shall perform such other duties and have such
other powers as the Board of Directors may from time to time
prescribe.
Section
5.9
Secretary
.
The
Secretary shall attend all meetings of the Board of Directors and all meetings
of the stockholders of the Corporation and record all the proceedings of the
meetings of the Corporation and of the Board of Directors in a book on
electronic record to be kept for that purpose and shall perform like duties
for
the standing committees when required. The Secretary shall give, or cause to
be
given, notice of all meetings of the stockholders of the Corporation and special
meetings of the Board of Directors, and shall perform such other duties as
may
be prescribed by the Board of Directors or President, under whose supervision
the Secretary shall be subject. The Secretary shall have custody of the
corporate seal of the Corporation and the Secretary, or an Assistant Secretary,
shall have authority to affix the same to any instrument requiring it and when
so affixed, it may be attested by the Secretary’s signature or by the signature
of such Assistant Secretary. The Board of Directors may give general authority
to any other officer to affix the seal of the Corporation and to attest the
affixing by such officer’s signature.
Section
5.10
Assistant
Secretary
.
The
Assistant Secretary, or if there be more than one, the Assistant Secretaries
in
the order determined by the Board of Directors (or if there be no such
determination, then in the order of their election) shall, in the absence of
the
Secretary or in the event of the Secretary’s inability or refusal to act,
perform the duties and exercise the powers of the Secretary and shall perform
such other duties and have such other powers as the Board of Directors may
from
time to time prescribe.
Section
5.11
Chief
Financial Officer
.
The
Chief Financial Officer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the Corporation
in
such depositories as may be designated by the Board of Directors and the Board
of Directors may, by resolution, delegate such power of designation to any
officer or officers of the Corporation. The Chief Financial Officer shall
disburse the funds of the Corporation as may be ordered by the Board of
Directors or any officer of the Corporation to whom the Board of Directors
may,
by resolution, delegate such power, taking proper vouchers for such
disbursements, and shall, upon request, render to the President and the Board
of
Directors, an account of all such transactions as Chief Financial Officer and
of
the financial condition of the Corporation. If required by the Board of
Directors, Chief Financial Officer shall give the Corporation a bond (which
shall be renewed every six years) in such sum and with such surety or sureties
as shall be satisfactory to the Board of Directors for the faithful performance
of the duties of the Chief Financial Officer’s office and for the restoration to
the Corporation, in case of the Chief Financial Officer’s death, resignation,
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in the possession or under the control of the
Chief Financial Officer that belongs to the Corporation.
ARTICLE
6
CAPITAL
STOCK
Section
6.1
Certificates
.
The
shares of capital stock of the Corporation shall be represented by a
certificate, unless and until the Board of Directors adopts a resolution
permitting shares to be uncertificated. Certificates shall be signed by, or
in
the name of the Corporation by, (a) the President or any Vice President, and
(b) the Secretary or an yAssistant Secretary, certifying the number of
shares owned by such stockholder in the Corporation.
Section
6.2
Signature
.
Any of
or all of the signatures on a certificate may be facsimile. In case any officer,
transfer agent or registrar who has signed or whose facsimile or conformed
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it
may
be issued by the Corporation with the same effect as if such person were such
officer, transfer agent or registrar at the date of issue.
Section
6.3
Lost
Certificates
.
The
Board of Directors may direct a new certificate or certificates to be issued
in
place of any certificate or certificates theretofore issued by the Corporation
alleged to have been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the person claiming the certificate of stock to be lost, stolen
or destroyed. When authorizing such issue of a new certificate or certificates,
the Board of Directors may, in its discretion and as a condition precedent
to
the issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or such owner’s legal representative, to advertise
the same in such manner as it shall require and/or to give the Corporation
a
bond in such sum as it may direct as indemnity against any claim that may be
made against the Corporation with respect to the certificate alleged to have
been lost, stolen or destroyed.
Section
6.4
Transfer
of Stock
.
Upon
surrender to the Corporation or the transfer agent of the Corporation of a
certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignation or authority to transfer, it shall be the duty of the
Corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books. Upon receipt
of
proper transfer instructions from the registered owner of uncertificated shares
such uncertificated shares shall be canceled and issuance of new equivalent
uncertificated shares or certificated shares shall be made to the person
entitled thereto and the transaction shall be recorded upon the books of the
Corporation.
Section
6.5
Record
Date
.
In
order that the Corporation may determine the stockholders entitled to notice
of
or to vote at any meeting of stockholder or any adjournment thereof, or to
express consent to corporate action in writing without a meeting, or entitled
to
receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion
or exchange of stock or for the purpose of any other lawful action, the Board
of
Directors may fix, in advance, a record date, which shall not be more than
sixty
nor less than ten days before the date of such meeting, nor more than sixty
days
prior to any other action. A determination of stockholders of record entitled
to
notice of or to vote at a meeting of stockholders shall apply to any adjournment
of the meeting; provided, however, that the Board of Directors may fix a new
record date for any adjourned meeting.
Section
6.6
Registered
Stockholders
.
The
Corporation shall be entitled to recognize the exclusive right of a person
registered on its books as the owner of shares to receive dividends, and to
vote
as such owner, and to hold liable for calls and assessments a person registered
on its books as the owner of shares, and shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part
of
any other person, whether or not it shall have express or other notice thereof,
except as otherwise provided by the laws of the State of Nevada.
ARTICLE
7
GENERAL
PROVISIONS
Section
7.1
Dividends
.
The
Board of Directors, subject to the applicable provisions, if any, of the
Articles of Incorporation and the NRS, may declare and pay dividends upon the
capital stock of the Corporation. Dividends may be paid in cash, in property
or
in shares of capital stock, subject to the provisions of the Articles of
Incorporation. Before payment of any dividend, there may be set aside out of
any
funds of the Corporation available for dividends such sum or sums as the Board
of Directors from time to time, in their absolute discretion, deem proper as
a
reserve or reserves to meet contingencies, or for equalizing dividends, or
for
repairing or maintaining any property of the Corporation, or for such other
purposes as the Board of Directors shall deem conducive to the interest of
the
Corporation, and the Board of Directors may modify or abolish any such reserve
in the manner in which it was created.
Section
7.2
Checks
.
All
checks or demands for money and notes of the Corporation shall be signed by
such
officer or officers or such other person or persons as the Board of Directors
may from time to time designate.
Section
7.3
Fiscal
Year
.
The
fiscal year of the Corporation shall be fixed by resolution of the Board of
Directors.
Section
7.4
Seal
.
The
Board of Directors may adopt a corporate seal having inscribed thereon the
name
of the Corporation, the year of its organization and the words “Corporate Seal,
Nevada.” The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
Section
7.5
Loans
.
The
Board of Directors of this Corporation may, without stockholder approval,
authorize loans to, or guaranty obligations of, or otherwise assist, including,
without limitation, the adoption of employee benefit plans under which loans
and
guarantees may be made, any officer or other employee of the Corporation or
of
any of its subsidiaries, including any officer or employee who is a director
of
the Corporation or any of its subsidiaries, whenever, in the judgment of the
Board of Directors, such loan, guaranty or assistance may reasonably be expected
to benefit the Corporation. The loan, guaranty or other assistance may be with
or without interest, and may be unsecured, or secured in such manner as the
Board of Directors shall approve, including, without limitation, a pledge of
shares of stock of the Corporation.
ARTICLE
8
INDEMNIFICATION
Section
8.1
Scope
.
The
Corporation shall, to the fullest extent permitted by the NRS, as it may be
amended and supplemented from time to time, or any other applicable provision
or
law, indemnify any director, officer, employee or agent of the Corporation,
against expenses (including attorneys’ fees), judgments, fines, amounts paid in
settlement and/or other matters referred to in or covered by that section,
by
reason of the fact that such person is or was a director, officer, employee
or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another Corporation, partnership,
joint venture, trust or other enterprise.
Without
limiting the generality of the foregoing, the Corporation is authorized to
provide indemnification of agents in excess of that otherwise permitted by
sections 78.7502 and 78.751 of the Nevada General Corporation Law for those
agents of the Corporation for breach of duty to the Corporation and its
stockholders; provided, however, that the Corporation is not authorized to
provide indemnification of any agent for any acts or omissions or transactions
from which a director may not be relieved of liability as set forth in section
78.037(1) of the NRS.
Section
8.2
Advancing
Expenses
.
Expenses (including attorneys’ fees) incurred by a present or former director or
officer of the Corporation in defending a civil, criminal, administrative or
investigative action, suit or proceeding by reason of the fact that such person
is or was a director, officer, employee or agent of the Corporation (or is
or
was serving at the request of the Corporation as a director, officer, employee
or agent of another Corporation, partnership, joint venture, trust or other
enterprise) shall be paid by the Corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of such director or officer to repay such amount if it shall ultimately
be determined that such person is not entitled to be indemnified by the
Corporation as authorized by relevant provisions of the NRS or other applicable
provision or law; provided, however, the Corporation shall not be required
to
advance such expenses to a director (i) who commences any action, suit or
proceeding as a plaintiff unless such advance is specifically approved by a
majority of the Board of Directors, or (ii) who is a party to an action,
suit or proceeding brought by the Corporation and approved by a majority of
the
Board of Directors which alleges willful misappropriation of corporate assets
by
such director, disclosure of confidential information in violation of such
director’s fiduciary or contractual obligations to the Corporation, or any other
willful and deliberate breach in bad faith of such director’s duty to the
Corporation or its stockholders.
Section
8.4
Continuing
Obligation
.
The
provisions of this
Article
8
shall
be
deemed to be a contract between the Corporation and each director of the
Corporation who serves in such capacity at any time while this bylaw is in
effect, and any repeal or modification thereof shall not affect any rights
or
obligations then existing with respect to any state of facts then or theretofore
existing or any action, suit or proceeding theretofore or thereafter brought
based in whole or in part upon any such state of facts.
Section
8.5
Nonexclusive
.
The
indemnification and advancement of expenses provided for in this
Article
8
shall
(a) not be deemed exclusive of any other rights to which those indemnified
may be entitled under any bylaw, agreement or vote of stockholders or
disinterested directors or otherwise, both as to action in such person’s
official capacity and as to action in another capacity while holding such
office, (b) continue as to a person who has ceased to be a director and
(c) inure to the benefit of the heirs, executors and administrators of such
a person.
Section
8.6
Other
Persons
.
In
addition to the indemnification rights of directors, officers, employees, or
agents of the Corporation, the Board of Directors in its discretion shall have
the power on behalf of the Corporation to indemnify any other person made a
party to any action, suit or proceeding who the Corporation may indemnify under
Section 78.7502 of the NRS or other applicable provision or
law.
ARTICLE
9
AMENDMENTS
Section
9.1
Amendments
.
Except
as otherwise provided in the Articles of Incorporation, the Bylaws may be
altered, amended or repealed, or new Bylaws may be adopted, by the holders
of a
majority of the outstanding voting shares of the Corporation or by the Board
of
Directors, when such power is conferred upon the Board of Directors by the
Articles of Incorporation, at any regular meeting of the stockholders or of
the
Board of Directors or at any special meeting of the stockholders or of the
Board
of Directors if notice of such alteration, amendment, repeal or adoption of
new
Bylaws be contained in the notice of such special meeting. If the power to
adopt, amend or repeal Bylaws is conferred upon the Board of Directors by the
Articles of Incorporation, it shall not divest or limit the power of the
stockholders to adopt, amend or repeal Bylaws.
CERTIFICATE
OF SECRETARY
I,
the
undersigned, do hereby certify:
1.
That
I am
the duly elected and acting Secretary of
OriginOil,
Inc.
,
a
Nevada corporation; and
2.
That
the
foregoing bylaws constitute a true copy of the bylaws of said corporation as
duly adopted by the Board of Directors thereof.
IN
WITNESS WHEREOF, I have hereunto subscribed my name this ____ day of June ,
2007.
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/s/
Riggs Eckelberry
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Riggs
Eckelberry, Secretary
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SUBSCRIPTION
AGREEMENT
ORIGINOIL,
INC.
OriginOil,
Inc. (the "Company")
has
authorized for sale to the subscribers set forth on the signature page attached
hereto an aggregate of 101,250,000 shares of common stock (“Shares”), $.0001 par
value common stock (“Common Stock”). T
he
undersigned hereby subscribes for
__________
shares
(the “Shares”) of common stock at a price of $_________ per share, representing
a total purchase price of $_________ (the “Subscription Price”).
The
undersigned agrees to pay the aggregate Subscription Price for the Shares being
purchased hereunder. The entire purchase price is due and payable upon the
submission of this Subscription Agreement and shall be payable by wire transfer
or check.
The
Company has the right to reject this subscription in whole or in
part.
The
undersigned acknowledges that the Shares being purchased hereunder and its
component securities will not be registered under the Securities Act of 1933
(the "Act"), or the securities laws of any state (the “State Acts”), in reliance
upon an exemption from the registration requirements of the Act and the State
Acts; that absent an exemption from registration contained in the Act and the
State Acts, the Shares, would require registration; and that the Company's
reliance upon such exemptions is based, in material part, upon the undersigned's
representations, warranties, and agreements contained in this Subscription
Agreement (the "Subscription Documents").
1.
The
undersigned represents, warrants, and agrees as follows:
a.
The
undersigned agrees that this Subscription Agreement is and shall be
irrevocable.
b.
The
undersigned is intimately involved with the operations of the Company and
understands its business operations (the “Business”). The undersigned has been
given the opportunity to ask questions of, and receive answers from, the Company
concerning the terms and conditions of this Offering and the Business and to
obtain such additional information, to the extent the Company possesses such
information or can acquire it without unreasonable effort or expense, necessary
to verify the accuracy of same as the undersigned reasonably desires in order
to
evaluate the investment. The undersigned understands the Business, and the
undersigned has had the opportunity to discuss any questions regarding the
Business with his counsel or other advisor. The undersigned has received no
representations or warranties from the Company and its Business, its employees,
agents or attorneys, in making this investment decision. The undersigned does
not desire to receive any further information.
c.
The
undersigned is aware that the purchase of the Shares is a speculative investment
involving a high degree of risk, that there is no guarantee that the undersigned
will realize any gain from this investment, and that the undersigned could
lose
the total amount of this investment.
d.
The
undersigned understands that no federal or state agency has made any finding
or
determination regarding the fairness of the Shares for investment, or any
recommendation or endorsement of the Share.
e.
The
undersigned is purchasing the Shares for the undersigned's own account, with
the
intention of holding the Shares with no present intention of dividing or
allowing others to participate in this investment or of reselling or otherwise
participating, directly or indirectly, in a distribution of the Shares, and
shall not make any sale, transfer, or pledge thereof without registration under
the Act and any applicable securities laws of any state or unless an exemption
from registration is available under those laws.
f.
The
undersigned represents that if an individual, he has adequate means of providing
for his or her current needs and personal and family contingencies and has
no
need for liquidity in this investment in the Shares. The undersigned has no
reason to anticipate any material change in his or her personal financial
condition for the foreseeable future.
g.
The
undersigned is financially able to bear the economic risk of this investment,
including the ability to hold the Shares indefinitely, or to afford a complete
loss of his investment in the Shares.
h.
The
undersigned represents that the undersigned's overall commitment to investments
which are not readily marketable is not disproportionate to the undersigned's
net worth, and the undersigned's investment in the Shares will not cause such
overall commitment to become excessive. The undersigned understands that the
statutory basis on which the Shares are being sold to the undersigned and others
would not be available if the undersigned's present intention were to hold
the
Shares for a fixed period or until the occurrence of a certain event. The
undersigned realizes that in the view of the Securities and Exchange Commission,
a purchase now with a present intent to resell by reason of a foreseeable
specific contingency or any anticipated change in the market value, or in the
condition of the Company, or that of the industry in which the business of
the
Company is engaged or in connection with a contemplated liquidation, or
settlement of any loan obtained by the undersigned for the acquisition of the
Shares, and for which such Shares may be pledged as security or as donations
to
religious or charitable institutions for the purpose of securing a deduction
on
an income tax return, would, in fact, represent a purchase with an intent
inconsistent with the undersigned's representations to the Company, and the
Commission would then regard such sale as a sale for which the exemption from
registration is not available. The undersigned will not pledge, transfer or
assign this Subscription Agreement.
i.
The
undersigned represents that the funds provided for this investment are either
separate property of the undersigned, community property over which the
undersigned has the right of control, or are otherwise funds as to which the
undersigned has the sole right of management. The undersigned is purchasing
the
Shares with the funds of the undersigned and not with the funds of any other
person, firm, or entity and is acquiring the Shares for the undersigned's
account. No person other than the undersigned has any beneficial interest in
the
Shares being purchased hereunder.
j.
The
address shown under the undersigned's signature at the end of this Subscription
Agreement is the undersigned's principal residence if he or she is an
individual, or its principal business address if it is a corporation or other
entity.
l.
The
undersigned has such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of an investment in the
Shares.
m.
The
undersigned acknowledges that the certificates for the Shares which the
undersigned will receive will contain a legend substantially as
follows:
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THE
SECURITIES WHICH ARE REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT").
THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND NOT
WITH A
VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, TRANSFERRED,
MADE
SUBJECT TO A SECURITY INTEREST, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF UNLESS AND UNTIL REGISTERED UNDER THE SECURITIES ACT
OF 1933
(THE "ACT"), AS AMENDED, OR EVIDENCE SATISFACTORY TO THE COMPANY
THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER SUCH
ACT.
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The
undersigned further acknowledges that a stop transfer order will be placed
upon
the certificates for the securities in accordance with the Act. The undersigned
further acknowledges that the Company is under no obligation to aid the
undersigned in obtaining any exemption from registration
requirements.
n.
The
undersigned represents that he is an “accredited investor” as that term is
defined under the Act.
o.
The
undersigned understands that, the Company intends to offer additional shares
of
common stock in one or more private offerings (the Private Offerings”). After
the completion of the Private Offerings, the Company intends to file with the
Securities and Exchange Commission (“SEC”) an SB-2 registration statement (the
“Registration Statement”) to register certain shares of common stock sold in its
Private Offerings and to exercise its reasonable best efforts to cause the
Registration Statement to become effective. The Company has also agreed to
request a broker-dealer to file the approval application with the National
Association of Securities Dealers, Inc. (the “NASD”) to secure the listing or
quotation of its Common Stock on the Over the Counter Bulletin Board market
maintained by the NASD.
As
inducement to the purchasers of the Private Offerings and to NASD market makers
to establish a public market for the common stock, the undersigned hereby agrees
that from the date hereof and until two (2) years after the Registration
Statement is declared effective by the SEC (the “Lock-up Term”), the undersigned
will not sell or offer to sell any unregistered shares of the Company’s common
stock which the undersigned owns as may be permitted pursuant to Rule 144
promulgated under the Act.
Any
shares of common stock acquired by the undersigned in the Private Offerings
and
included in the Registration Statement will not be subject to the lock-up
provisions of this Agreement.
Once
the
Lock-up Term has expired, the undersigned will be entitled to piggyback
registration rights. If the Company proposes to file a registration statement
under the Act with respect to an offering for its own account of any class
of
its equity securities (other than a registration statement on Form S-8 (or
any
successor form) or any other registration statement relating solely to employee
benefit plans or filed in connection with an exchange offer, a transaction
to
which Rule 415 (or any successor provision) under the Act applies to an offering
of securities solely to the Company’s existing shareholders), then the Company
shall in each case give written notice of such proposed filing to the
undersigned as soon as practicable (but no later than 20 business days) before
the anticipated filing date, and such notice shall offer the undersigned the
opportunity to register such number of Founders Shares the undersigned may
request. The undersigned shall so advise the Company in writing within 10
business days after the date on which the Company’s notice is given, setting
forth the number of Shares for which registration is requested. If the Company’s
offering is to be an underwritten offering, the Company shall use its reasonable
best efforts to cause the managing underwriter to permit the undersigned to
include the requested of Shares in such offering on the same terms and
conditions as any similar securities of the Company included therein. Once
the
registration statement is declared effective by the SEC, the undersigned will
not sell or distribute more than 25% of their Shares included in the
registration every ninety (90) days.
In
furtherance of the foregoing, the Company and its transfer agent and registrar
are hereby authorized to decline to remove restrictive legends from any share
certificates held by the undersigned if such removal would constitute a
violation or breach of this Agreement. An appropriate restrictive legend
describing the Lock-up Term and this Agreement may be affixed to the certificate
representing the Shares.
2.
The
undersigned expressly acknowledges and agrees that the Company is relying upon
the undersigned's representations contained in the Subscription Documents.
3.
The
Company has been duly and validly incorporated and is validly existing and
in
good standing as a corporation under the laws of the State of Nevada. The
Company represents that it has all requisite power and authority, and all
necessary authorizations, approvals and orders required as of the date hereof
to
enter into this Subscription Agreement and to be bound by the provisions and
conditions hereof.
4.
Except
as
otherwise specifically provided for hereunder, no party shall be deemed to
have
waived any of his or its rights hereunder or under any other agreement,
instrument or papers signed by any of them with respect to the subject matter
hereof unless such waiver is in writing and signed by the party waiving said
right. Except as otherwise specifically provided for hereunder, no delay or
omission by any party in exercising any right with respect to the subject matter
hereof shall operate as a waiver of such right or of any such other right.
A
waiver on any one occasion with respect to the subject matter hereof shall
not
be construed as a bar to, or waiver of, any right or remedy on any future
occasion. All rights and remedies with respect to the subject matter hereof,
whether evidenced hereby or by any other agreement, instrument, or paper, will
be cumulative, and may be exercised separately or concurrently.
5.
The
parties have not made any representations or warranties with respect to the
subject matter hereof not set forth herein, and this Subscription Agreement,
together with any instruments or documents executed simultaneously herewith
in
connection with this offering, constitutes the entire agreement between them
with respect to the subject matter hereof. All understandings and agreements
heretofore had between the parties with respect to the subject matter hereof
are
merged in this Subscription Agreement and any such instruments and documents,
which alone fully and completely expresses their agreement.
6.
This
Subscription Agreement may not be changed, modified, extended, terminated or
discharged orally, but only by an agreement in writing, which is signed by
all
of the parties to this Subscription Agreement.
7.
The
parties agree to execute any and all such other further instruments and
documents, and to take any and all such further actions reasonably required
to
effectuate this Subscription Agreement and the intent and purposes
hereof.
8.
This
Subscription Agreement shall be governed by and construed in accordance with
the
laws of the State of New York and the undersigned hereby consents to the
jurisdiction of the courts of the State of New York and the United States
District Courts situated therein.
EXECUTION
BY SUBSCRIBER
$______
($________ per share)
–
____
shares
Exact
Name in Which Title is to be Held
(Signature)
Name
and
Title (if applicable)
Address:
Number and Street
Social
Security Number or Tax Identification Number
Accepted
this 11th day of July, 2007 on behalf of OriginOil, Inc.
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By:
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T
Riggs
Eckelberry
,
CEO
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SUBSCRIPTION
AGREEMENT
SUBSCRIPTION
AGREEMENT (this “Agreement”) made as of the last date set forth on the signature
page hereof between
OriginOil,
Inc. (the “Company”), and the undersigned (the “Subscriber”).
WITNESSETH:
WHEREAS,
the Company is conducting a private offering (the “Offering”) consisting of up
to 1
5,000,000
shares of common stock, par value $.0001 per share (“Shares”); and
WHEREAS,
the Subscriber desires to purchase that number of Shares set forth on the
signature page hereof on the terms and conditions hereinafter set
forth.
NOW,
THEREFORE, in consideration of the premises and the mutual representations
and
covenants hereinafter set forth, the parties hereto do hereby agree as
follows:
I.
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SUBSCRIPTION
FOR SHARES AND REPRESENTATIONS BY
SUBSCRIBER
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1.1
Subject
to the terms and conditions hereinafter set forth and in the Confidential
Offering Memorandum dated August 3, 2007 (such memorandum, together with all
amendments thereof and supplements and exhibits thereto, the “Memorandum”), the
Subscriber hereby irrevocably subscribes for and agrees to purchase from the
Company such number of Shares, and the Company agrees to sell to the Subscriber
as is set forth on the signature page hereof, at a per share price equal to
$0.10 per Share. The purchase price is payable by personal or business check
or
money order made payable to “OriginOil, Inc.” contemporaneously with the
execution and delivery of this Agreement by the Subscriber. Subscribers may
also
pay the subscription amount by, wire transfer of immediately available funds
to:
Name:
OriginOil,
Inc.
Bank:
Account:
Wiring
ABA:
1.2
The
Subscriber recognizes that the purchase of the Shares involves a high degree
of
risk including, but not limited to, the following: (a) the Company remains
a
development stage business with limited operating history and requires
substantial funds in addition to the proceeds of the Offering; (b) an investment
in the Company is highly speculative, and only investors who can afford the
loss
of their entire investment should consider investing in the Company and the
Shares; (c) the Subscriber may not be able to liquidate its investment; (d)
transferability of the Shares (sometimes hereinafter collectively referred
to as
the “Securities”) is extremely limited; (e) in the event of a disposition, the
Subscriber could sustain the loss of its entire investment; (f) the Company
has
not paid any dividends since its inception and does not anticipate paying any
dividends; and (g) the Company may issue additional securities in the future
which have rights and preferences that are senior to those of the Common Stock.
Without limiting the generality of the representations set forth in Section
1.5
below, the Subscriber represents that the Subscriber has carefully reviewed
the
section of the Memorandum captioned “Risk Factors.”
1.3
The
Subscriber represents that the Subscriber is an “accredited investor” as such
term is defined in Rule 501 of Regulation D (“Regulation D”) promulgated under
the Securities Act of 1933, as amended (the “Securities Act”), as indicated by
the Subscriber’s responses to the questions contained in Article VII hereof, and
that the Subscriber is able to bear the economic risk of an investment in the
Shares.
1.4
The
Subscriber hereby acknowledges and represents that (a) the Subscriber has
knowledge and experience in business and financial matters, prior investment
experience, including investment in securities that are non-listed, unregistered
and/or not traded on a national securities exchange nor on the National
Association of Securities Dealers, Inc. (the “NASD”) automated quotation system
(“NASDAQ”), or the Subscriber has employed the services of a “purchaser
representative” (as defined in Rule 501 of Regulation D), attorney and/or
accountant to read all of the documents furnished or made available by the
Company both to the Subscriber and to all other prospective investors in the
Shares to evaluate the merits and risks of such an investment on the
Subscriber’s behalf; (b) the Subscriber recognizes the highly speculative nature
of this investment; and (c) the Subscriber is able to bear the economic risk
that the Subscriber hereby assumes.
1.5
The
Subscriber hereby acknowledges receipt and careful review of this Agreement,
the
Memorandum (which includes the Risk Factors), including all exhibits thereto,
and any documents which may have been made available upon request as reflected
therein (collectively referred to as the “Offering Materials”) and hereby
represents that the Subscriber has been furnished by the Company during the
course of the Offering with all information regarding the Company, the terms
and
conditions of the Offering and any additional information that the Subscriber
has requested or desired to know, and has been afforded the opportunity to
ask
questions of and receive answers from duly authorized officers or other
representatives of the Company concerning the Company and the terms and
conditions of the Offering.
1.6
(
a)
In
making
the decision to invest in the Shares the Subscriber has relied solely upon
the
information provided by the Company in the Offering Materials. To the extent
necessary, the Subscriber has retained, at its own expense, and relied upon
appropriate professional advice regarding the investment, tax and legal merits
and consequences of this Agreement and the purchase of the Shares hereunder.
The
Subscriber disclaims reliance on any statements made or information provided
by
any person or entity in the course of Subscriber’s consideration of an
investment in the Shares other than the Offering Materials.
(b)
The
Subscriber represents that (i) the Subscriber was contacted regarding the sale
of the Shares by the Company (or an authorized agent or representative thereof)
with whom the Subscriber had a prior substantial pre-existing relationship
and
(ii) no Shares were offered or sold to it by means of any form of general
solicitation or general advertising, and in connection therewith, the Subscriber
did not (A) receive or review any advertisement, article, notice or other
communication published in a newspaper or magazine or similar media or broadcast
over television or radio, whether closed circuit, or generally available; or
(B)
attend any seminar meeting or industry investor conference whose attendees
were
invited by any general solicitation or general advertising.
1.7
The
Subscriber hereby represents that the Subscriber, either by reason of the
Subscriber’s business or financial experience or the business or financial
experience of the Subscriber’s professional advisors (who are unaffiliated with
and not compensated by the Company or any affiliate or selling agent of the
Company, directly or indirectly), has the capacity to protect the Subscriber’s
own interests in connection with the transaction contemplated
hereby.
1.8
The
Subscriber hereby acknowledges that the Offering has not been reviewed by the
United States Securities and Exchange Commission (the “SEC”) nor any state
regulatory authority since the Offering is intended to be exempt from the
registration requirements of Section 5 of the Securities Act pursuant to
Regulation D promulgated thereunder. The Subscriber understands that the
Securities have not been registered under the Securities Act or under any state
securities or “blue sky” laws and agrees not to sell, pledge, assign or
otherwise transfer or dispose of the Securities unless they are registered
under
the Securities Act and under any applicable state securities or “blue sky” laws
or unless an exemption from such registration is available.
1.9
The
Subscriber understands that the Securities comprising the Shares have not been
registered under the Securities Act by reason of a claimed exemption under
the
provisions of the Securities Act that depends, in part, upon the Subscriber’s
investment intention. In this connection, the Subscriber hereby represents
that
the Subscriber is purchasing the Securities for the Subscriber’s own account for
investment and not with a view toward the resale or distribution to others.
The
Subscriber, if an entity, further represents that it was not formed for the
purpose of purchasing the Securities.
1.10
The
Subscriber understands that there is no public market for the Common Stock
and
that no market may develop for any of such Securities. The Subscriber
understands that even if a public market develops for such Securities, Rule
144
(“Rule 144”) promulgated under the Securities Act requires for non-affiliates,
among other conditions, a one-year holding period prior to the resale (in
limited amounts) of securities acquired in a non-public offering without having
to satisfy the registration requirements under the Securities Act. The
Subscriber understands and hereby acknowledges that the Company is under no
obligation to register any of the Securities under the Securities Act or any
state securities or “blue sky” laws other than as set forth in Article V.
1.11
The
Subscriber consents to the placement of a legend on any certificate or other
document evidencing the Securities that such Securities have not been registered
under the Securities Act or any state securities or “blue sky” laws and setting
forth or referring to the restrictions on transferability and sale thereof
contained in this Agreement. The Subscriber is aware that the Company will
make
a notation in its appropriate records with respect to the restrictions on the
transferability of such Securities. The legend to be placed on each certificate
shall be in form substantially similar to the following:
“THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY STATE SECURITIES OR “BLUE
SKY LAWS,” AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED ABSENT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR
COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT, OR UNLESS THE COMPANY
HAS
RECEIVED AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY AND
ITS
COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.”
1.12
The
Subscriber understands that the Company will review this Agreement and is hereby
given authority by the Subscriber to call Subscriber’s bank or place of
employment or otherwise review the financial standing of the Subscriber; and
it
is further agreed that the Company, at its sole discretion, reserves the
unrestricted right, without further documentation or agreement on the part
of
the Subscriber, to reject or limit any subscription, to accept subscriptions
for
fractional Shares and to close the Offering to the Subscriber at any time and
that the Company will issue stop transfer instructions to its transfer agent
with respect to such Securities.
1.13
The
Subscriber hereby represents that the address of the Subscriber furnished by
Subscriber on the signature page hereof is the Subscriber’s principal residence
if Subscriber is an individual or its principal business address if it is a
corporation or other entity.
1.14
The
Subscriber represents that the Subscriber has full power and authority
(corporate, statutory and otherwise) to execute and deliver this Agreement
and
to purchase the Shares. This Agreement constitutes the legal, valid and binding
obligation of the Subscriber, enforceable against the Subscriber in accordance
with its terms.
1.15
If
the
Subscriber is a corporation, partnership, limited liability company, trust,
employee benefit plan, individual retirement account, Keogh Plan, or other
tax-exempt entity, it is authorized and qualified to invest in the Company
and
the person signing this Agreement on behalf of such entity has been duly
authorized by such entity to do so.
1.16
The
Subscriber acknowledges that if he or she is a Registered Representative of
an
NASD member firm, he or she must give such firm the notice required by the
NASD’s Rules of Fair Practice, receipt of which must be acknowledged by such
firm in Section 7.4 below.
1.17
The
Subscriber acknowledges that at such time, if ever, as the Securities are
registered (as such term is defined in Article V hereof), sales of the
Securities will be subject to state securities laws.
1.18
(a
)
The
Subscriber agrees not to issue any public statement with respect to the
Subscriber’s investment or proposed investment in the Company or the terms of
any agreement or covenant between them and the Company without the Company’s
prior written consent, except such disclosures as may be required under
applicable law or under any applicable order, rule or regulation.
(b)
The
Company agrees not to disclose the names, addresses or any other information
about the Subscribers, except as required by law; provided, that the Company
may
use the name of the Subscriber for any offering or in any registration statement
filed pursuant to Article V in which the Subscriber’s shares are
included.
1.19
The
Subscriber agrees to hold the Company and its directors, officers, employees,
affiliates, controlling persons and agents and their respective heirs,
representatives, successors and assigns harmless and to indemnify them against
all liabilities, costs and expenses incurred by them as a result of (a) any
sale
or distribution of the Securities by the Subscriber in violation of the
Securities Act or any applicable state securities or “blue sky” laws; or (b) any
false representation or warranty or any breach or failure by the Subscriber
to
comply with any covenant made by the Subscriber in this Agreement (including
the
Confidential Investor Questionnaire contained in Article VII herein) or any
other document furnished by the Subscriber to any of the foregoing in connection
with this transaction.
II.
|
REPRESENTATIONS
BY AND COVENANTS OF THE COMPANY
|
The
Company hereby represents and warrants to the Subscriber that:
2.1
Organization,
Good Standing and Qualification
.
The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada and has full corporate power and authority
to conduct its business.
2.2
Capitalization
and Voting Rights
.
The
Company has authorized 500,000,000 shares of Common Stock, par value $.0001
per
share, of which 129,250,000 shares are outstanding as of the date hereof. Except
as set forth in the Offering Materials, there are no outstanding options,
warrants, agreements, convertible securities, preemptive rights or other rights
to subscribe for or to purchase any shares of capital stock of the Company.
Except as set forth in the Offering Materials and as otherwise required by
law,
there are no restrictions upon the voting or transfer of any of the shares
of
capital stock of the Company pursuant to the Company’s Articles of Incorporation
(the “Articles of Incorporation”), By-Laws or other governing documents or any
agreement or other instruments to which the Company is a party or by which
the
Company is bound.
2.3
Authorization;
Enforceability
.
The
Company has all corporate right, power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby. All corporate
action on the part of the Company, its directors and stockholders necessary
for
the (i) authorization execution, delivery and performance of this Agreement
by
the Company; and (ii) authorization, sale, issuance and delivery of the
Securities contemplated hereby and the performance of the Company’s obligations
hereunder has been taken. This Agreement has been duly executed and delivered
by
the Company and constitutes a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, subject
to laws of general application relating to bankruptcy, insolvency and the relief
of debtors and rules of law governing specific performance, injunctive relief
or
other equitable remedies, and to limitations of public policy. The Common Stock,
when issued and fully paid for in accordance with the terms of this Agreement,
will be validly issued, fully paid and nonassessable. The issuance and sale
of
the Common Stock contemplated hereby will not give rise to any preemptive rights
or rights of first refusal on behalf of any person which have not been waived
in
connection with this offering.
2.4
No
Conflict; Governmental Consents
.
(a)
The
execution and delivery by the Company of this Agreement and the consummation
of
the transactions contemplated hereby will not result in the violation of any
material law, statute, rule, regulation, order, writ, injunction, judgment
or
decree of any court or governmental authority to or by which the Company is
bound, or of any provision of the Articles of Incorporation or By-Laws of the
Company, and will not conflict with, or result in a material breach or violation
of, any of the terms or provisions of, or constitute (with due notice or lapse
of time or both) a default under, any lease, loan agreement, mortgage, security
agreement, trust indenture or other agreement or instrument to which the Company
is a party or by which it is bound or to which any of its properties or assets
is subject, nor result in the creation or imposition of any lien upon any of
the
properties or assets of the Company.
(b)
No
consent, approval, authorization or other order of any governmental authority
is
required to be obtained by the Company in connection with the authorization,
execution and delivery of this Agreement or with the authorization, issue and
sale of the Shares, except such filings as may be required to be made with
the
SEC, NASD, NASDAQ and with any state or foreign blue sky or securities
regulatory authority.
2.5
Licenses
.
Except
as otherwise set forth in the Memorandum, the Company has sufficient licenses,
permits and other governmental authorizations currently required for the conduct
of its business or ownership of properties and is in all material respects
in
compliance therewith.
2.6
Litigation
.
The
Company knows of no pending or threatened legal or governmental proceedings
against the Company which could materially adversely affect the business,
property, financial condition or operations of the Company or which materially
and adversely questions the validity of this Agreement or any agreements related
to the transactions contemplated hereby or the right of the Company to enter
into any of such agreements, or to consummate the transactions contemplated
hereby or thereby. The Company is not a party or subject to the provisions
of
any order, writ, injunction, judgment or decree of any court or government
agency or instrumentality which could materially adversely affect the business,
property, financial condition or operations of the Company. There is no action,
suit, proceeding or investigation by the Company currently pending in any court
or before any arbitrator or that the Company intends to initiate.
2.7
Disclosure
.
The
information set forth in the Offering Materials as of the date hereof contains
no untrue statement of a material fact nor omits to state a material fact
necessary in order to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
2.8
Investment
Company
.
The
Company is not an “investment company” within the meaning of such term under the
Investment Company Act of 1940, as amended, and the rules and regulations of
the
SEC thereunder.
2.9
Intellectual
Property
.
(i)
To
the
best of its knowledge, the Company owns or possesses sufficient legal rights
to
all patents, trademarks, service marks, trade names, copyrights, trade secrets,
licenses, information and other proprietary rights and processes necessary
for
its business as now conducted and as presently proposed to be conducted, without
any known infringement of the rights of others. Except as disclosed in the
Memorandum, there are no material outstanding options, licenses or agreements
of
any kind relating to the foregoing proprietary rights, nor is the Company bound
by or a party to any material options, licenses or agreements of any kind with
respect to the patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information and other proprietary rights and processes
of any other person or entity other than such licenses or agreements arising
from the purchase of “off the shelf” or standard products. The Company has not
received any written communications alleging that the Company has violated
or,
by conducting its business as presently proposed to be conducted, would violate
any of the patents, trademarks, service marks, trade names, copyrights or trade
secrets or other proprietary rights of any other person or entity.
(ii)
Except
as
disclosed in the Memorandum, the Company is not aware that any of its employees
is obligated under any contract (including licenses, covenants or commitments
of
any nature) or other agreement, or subject to any judgment, decree or order
of
any court or administrative agency, that would interfere with their duties
to
the Company or that would conflict with the Company’s business as presently
conducted.
(iii)
Neither
the execution nor delivery of this Agreement, nor the carrying on of the
Company’s business by the employees of the Company, nor the conduct of the
Company’s business as presently conducted, will, to the Company’s knowledge,
conflict with or result in a breach of the terms, conditions or provisions
of,
or constitute a default under, any contract, covenant or instrument under which
any employee is now obligated.
(iv)
To
the
Company’s knowledge, no employee of the Company, nor any consultant with whom
the Company has contracted, is in violation of any term of any employment
contract, proprietary information agreement or any other agreement relating
to
the right of any such individual to be employed by, or to contract with, the
Company because of the nature of the business conducted by the Company; and
to
the Company’s knowledge the continued employment by the Company of its present
employees, and the performance of the Company’s contracts with its independent
contractors, will not result in any such violation. The Company has not received
any written notice alleging that any such violation has occurred. Except as
described in the Memorandum, no employee of the Company has been granted the
right to continued employment by the Company or to any compensation following
termination of employment with the Company except for any of the same which
would not have a material adverse effect on the business of the Company. The
Company is not aware that any officer, key employee or group of employees
intends to terminate his, her or their employment with the Company, nor does
the
Company have a present intention to terminate the employment of any officer,
key
employee or group of employees.
2.10
Title
to Properties and Assets; Liens, Etc
.
The
Company has good and marketable title to its properties and assets, including
the properties and assets reflected in the most recent balance sheet included
in
the Financial Statements, and good title to its leasehold estates, in each
case
subject to no mortgage, pledge, lien, lease, encumbrance or charge, other than
(a) those resulting from taxes which have not yet become delinquent; (b) liens
and encumbrances which do not materially detract from the value of the property
subject thereto or materially impair the operations of the Company; and (c)
those that have otherwise arisen in the ordinary course of business. The Company
is in compliance with all material terms of each lease to which it is a party
or
is otherwise bound.
2.11
Obligations
to Related Parties
.
Except
as described in the Memorandum, there are no obligations of the Company to
officers, directors, stockholders, or employees of the Company other than (a)
for payment of salary or other compensation for services rendered, (b)
reimbursement for reasonable expenses incurred on behalf of the Company and
(c)
for other standard employee benefits made generally available to all employees
(including stock option agreements outstanding under any stock option plan
approved by the Board of Directors of the Company). Except as may be disclosed
in the Memorandum, the Company is not a guarantor or indemnitor of any
indebtedness of any other person, firm or corporation.
III.
|
TERMS
OF SUBSCRIPTION
|
3.1
There
is
no requirement that any minimum number of Shares be sold and therefore no escrow
will be established for subscription funds. Subscription funds may be deposited
by the Company directly into its operating account for use as described in
this
Confidential Offering Memorandum.
3.2
Certificates
representing the Common Stock purchased by the Subscriber pursuant to this
Agreement will be prepared for delivery to the Subscriber within 15 business
days following the Closing at which such purchase takes place. The Subscriber
hereby authorizes and directs the Company to deliver the certificates
representing the Common Stock purchased by the Subscriber pursuant to this
Agreement directly to the Subscriber’s residential or business address indicated
on the signature page hereto.
IV.
|
CONDITIONS
TO OBLIGATIONS OF THE
SUBSCRIBERS
|
4.1
The
Subscriber’s obligation to purchase the Shares at the Closing at which such
purchase is to be consummated is subject to the fulfillment on or prior to
such
Closing of the following conditions, which conditions may be waived at the
option of each Subscriber to the extent permitted by law:
(a)
Covenants
.
All
covenants, agreements and conditions contained in this Agreement to be performed
by the Company on or prior to the date of such Closing shall have been performed
or complied with in all material respects.
(b)
No
Legal Order Pending
.
There
shall not then be in effect any legal or other order enjoining or restraining
the transactions contemplated by this Agreement.
(c)
No
Law
Prohibiting or Restricting Such Sale
.
There
shall not be in effect any law, rule or regulation prohibiting or restricting
such sale or requiring any consent or approval of any person, which shall not
have been obtained, to issue the Securities (except as otherwise provided in
this Agreement).
5.1
Definitions
.
As used
in this Agreement, the following terms shall have the following
meanings.
(a)
The
term
“Holder” shall mean any person owning or having the right to acquire Registrable
Securities or any permitted transferee of a Holder.
(b)
The
terms
“register,” “registered” and “registration” refer to a registration effected by
preparing and filing a registration statement or similar document in compliance
with the Securities Act, and the declaration or order of effectiveness of such
registration statement or document.
(c)
The
term
“Registrable Securities” shall mean: (i) the Common Stock; and (ii) any other
shares of Common Stock with respect to which the Company has granted or may
in
the future grant registration rights pursuant to separate agreements; provided,
however, that securities shall only be treated as Registrable Securities if
and
only for so long as they (A) have not been disposed of pursuant to a
registration statement declared effective by the SEC; (B) have not been sold
in
a transaction exempt from the registration and prospectus delivery requirements
of the Securities Act so that all transfer restrictions and restrictive legends
with respect thereto are removed upon the consummation of such sale; (C) are
held by a Holder or a permitted transferee of a Holder pursuant to Section
5.10;
and (D) may not be disposed of under Rule 144(k) under the Securities Act
without restriction.
5.2
Piggy-Back
Registration
.
The
Holders will be entitled to “piggy-back” registration rights of the shares of
Common Stock on registration statements (other than on Form S-8, S-4 or similar
Forms) filed by the Company for certain Shares purchase by the Holder
(“Piggy-Back Rights”). Piggy-back Rights will include the first 15,000 Shares
purchased by the Holder plus 10% of all additional Shares purchased by the
Holder. The Company shall use its best efforts to cause such Registration
Statement to become effective as soon as possible.
5.3
Registration
Procedures
.
Whenever required under this Article V to include Registrable Securities in
a
Company registration statement, the Company shall, as expeditiously as
reasonably possible:
(a)
Use
best
efforts to (i) cause such registration statement to become effective, and (ii)
cause such registration statement to remain effective until the earliest to
occur of (A) such date as the sellers of Registrable Securities (the “Selling
Holders”) have completed the distribution described in the registration
statement and (B) such time that all of such Registrable Securities are no
longer, by reason of Rule 144(k) under the Securities Act, required to be
registered for the sale thereof by such Holders. The Company will also use
its
best efforts to, during the period that such registration statement is required
to be maintained hereunder, file such post-effective amendments and supplements
thereto as may be required by the Securities Act and the rules and regulations
thereunder or otherwise to ensure that the registration statement does not
contain any untrue statement of material fact or omit to state a fact required
to be stated therein or necessary to make the statements contained therein,
in
light of the circumstances under which they are made, not misleading; provided,
however, that if applicable rules under the Securities Act governing the
obligation to file a post-effective amendment permits, in lieu of filing a
post-effective amendment that (i) includes any prospectus required by Section
10(a)(3) of the Securities Act or (ii) reflects facts or events representing
a
material or fundamental change in the information set forth in the registration
statement, the Company may incorporate by reference information required to
be
included in (i) and (ii) above to the extent such information is contained
in
periodic reports filed pursuant to Section 13 or 15(d) of the Exchange Act
in
the registration statement.
(b)
Prepare
and file with the SEC such amendments and supplements to such registration
statement, and the prospectus used in connection with such registration
statement, as may be necessary to comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such
registration statement.
(c)
Make
available for inspection upon reasonable notice during the Company’s regular
business hours by each Selling Holder, any underwriter participating in any
distribution pursuant to such registration statement, and any attorney,
accountant or other agent retained by such Selling Holder or underwriter, all
financial and other records, pertinent corporate documents and properties of
the
Company, and cause the Company’s officers, directors and employees to supply all
information reasonably requested by any such Selling Holder, underwriter,
attorney, accountant or agent in connection with such registration
statement.
(d)
Furnish
to the Selling Holders such numbers of copies of a prospectus, including a
preliminary prospectus as amended or supplemented from time to time, in
conformity with the requirements of the Securities Act, and such other documents
as they may reasonably request in order to facilitate the disposition of
Registrable Securities owned by them.
(e)
Use
best
efforts to register and qualify the securities covered by such registration
statement under such other federal or state securities laws of such
jurisdictions as shall be reasonably requested by the Selling Holders; provided,
however, that the Company shall not be required in connection therewith or
as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions, unless the Company
is
already subject to service in such jurisdiction and except as may be required
by
the Securities Act.
(f)
In
the
event of any underwritten public offering, enter into and perform its
obligations under an underwriting agreement, in usual and customary form, with
the managing underwriter of such offering. Each Selling Holder participating
in
such underwriting shall also enter into and perform its obligations under such
an agreement.
(g)
Notify
each Holder of Registrable Securities covered by such registration statement,
at
any time when a prospectus relating thereto is required to be delivered under
the Securities Act, (i) when the registration statement or any post-effective
amendment and supplement thereto has become effective; (ii) of the issuance
by
the SEC of any stop order or the initiation of proceedings for that purpose
(in
which event the Company shall make every effort to obtain the withdrawal of
any
order suspending effectiveness of the registration statement at the earliest
possible time or prevent the entry thereof); (iii) of the receipt by the Company
of any notification with respect to the suspension of the qualification of
the
Registrable Securities for sale in any jurisdiction or the initiation of any
proceeding for such purpose; and (iv) of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then
existing.
(h)
Cause
all
such Registrable Securities registered hereunder to be listed on each securities
exchange or quotation service on which similar securities issued by the Company
are then listed or quoted or, if no such similar securities are listed or quoted
on a securities exchange or quotation service, apply for qualification and
use
best efforts to qualify such Registrable Securities for inclusion on the New
York Stock Exchange, American Stock Exchange or listing on a quotation system
of
the National Association of Securities Dealers, Inc.
(i)
Provide
a
transfer agent and registrar for all Registrable Securities registered pursuant
hereunder and CUSIP number for all such Registrable Securities, in each case
not
later than the effective date of such registration.
(j)
Cooperate
with the Selling Holders and the managing underwriters, if any, to facilitate
the timely preparation and delivery of certificates representing the Registrable
Securities to be sold, which certificates will not bear any restrictive legends;
and enable such Registrable Securities to be in such denominations and
registered in such names as the managing underwriters, if any, shall request
at
least two business days prior to any sale of the Registrable Securities to
the
underwriters.
(k)
In
connection with an underwritten offering, cause the officers of the Company
to
provide reasonable assistance in the preparation of, any “road show”
presentation to potential investors as the managing underwriter may determine.
(l)
Comply
with all applicable rules and regulations of the SEC and make generally
available to its security holders earning statements satisfying the provisions
of Section 11(a) of the Securities Act and Rule 158 thereunder (or any similar
rule promulgated under the Securities Act) no later than 50 calendar days after
the end of any 3-month period (or 105 calendar days after the end of any
12-month period if such period is a fiscal year) (i) commencing at the end
of
any fiscal quarter in which Registrable Securities are sold to underwriters
in a
firm commitment or best efforts underwritten offering, and (ii) if not sold
to
underwriters in such an offering, commencing on the first day of the first
fiscal quarter of the Company, after the effective date of a registration
statement, which statements shall cover said period.
(m)
If
the
offering is underwritten and at the request of any Selling Holder, use its
best
efforts to furnish on the date that Registrable Securities are delivered to
the
underwriters for sale pursuant to such registration: (i) opinions dated such
date of counsel representing the Company for the purposes of such registration,
addressed to the underwriters and the transfer agent for the Registrable
Securities so delivered, respectively, to the effect that such registration
statement has become effective under the Securities Act and such Registrable
Securities are freely tradable, and covering such other matters as are
customarily covered in opinions of issuer’s counsel delivered to underwriters
and transfer agents in underwritten public offerings and (ii) a letter dated
such date from the independent public accountants who have certified the
financial statements of the Company included in the registration statement
or
the prospectus, covering such matters as are customarily covered in accountants’
letters delivered to underwriters in underwritten public offerings.
5.4
Furnish
Information
.
It
shall be a condition precedent to the obligation of the Company to take any
action pursuant to this Article V with respect to the Registrable Securities
of
any Selling Holder that such Holder shall furnish to the Company such
information regarding the Holder, the Registrable Securities held by the Holder,
and the intended method of disposition of such securities as shall be reasonably
required by the Company to effect the registration of such Holder’s Registrable
Securities.
5.5
Registration
Expenses
.
The
Company shall bear and pay all Registration Expenses incurred in connection
with
any registration, filing or qualification of Registrable Securities with respect
to registration pursuant to Section 5.2 for each Holder, but excluding
underwriting discounts and commissions relating to Registrable Securities and
excluding any professional fees or costs of accounting, financial or legal
advisors to any of the Holders.
5.6
Underwriting
Requirements
.
In
connection with any offering involving an underwriting of shares of the
Company’s capital stock, the Company shall not be required under Section 5.2 to
include any of the Holders’ Registrable Securities in such underwriting unless
they accept the terms of the underwriting as agreed upon between the Company
and
the underwriters selected by it (or by other persons entitled to select the
underwriters), and then only in such quantity as the underwriters determine
in
their sole discretion will not jeopardize the success of the offering by the
Company. If the total amount of securities, including Registrable Securities,
requested by stockholders to be included in such offering exceeds the amount
of
securities sold other than by the Company that the underwriters determine in
their sole discretion is compatible with the success of the offering, then
the
Company shall be required to include in the offering only that number of such
securities, including Registrable Securities, which the underwriters determine
in their sole discretion will not jeopardize the success of the offering (the
securities so included to be apportioned pro rata among the selling stockholders
according to the total amount of securities entitled to be included therein
owned by each selling stockholder or in such other proportions as shall mutually
be agreed to by such selling stockholders). For purposes of the preceding
parenthetical concerning apportionment, for any selling stockholder who is
a
holder of Registrable Securities and is a partnership or corporation, the
partners, retired partners and stockholders of such holder, or the estates
and
family members of any such partners and retired partners and any trusts for
the
benefit of any of the foregoing persons shall be deemed to be a single “selling
stockholder,” and any pro-rata reduction with respect to such “selling
stockholder” shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
“selling stockholder,” as defined in this sentence.
5.7
Delay
of Registration
.
No
Holder shall have any right to obtain or seek an injunction restraining or
otherwise delaying any such registration as the result of any controversy that
might arise with respect to the interpretation or implementation of this
Article.
5.8
Indemnification
.
In the
event that any Registrable Securities are included in a registration statement
under this Article V:
(a)
To
the
extent permitted by law, the Company will indemnify and hold harmless each
Holder, any underwriter (as defined in the Securities Act) for such Holder
and
each person, if any, who controls such Holder or underwriter within the meaning
of the Securities Act or the Exchange Act, against any losses, claims, damages,
or liabilities (joint or several) to which they may become subject under the
Securities Act, or the Exchange Act, insofar as such losses, claims, damages,
or
liabilities (or actions in respect thereof) arise out of or are based upon
any
of the following statements, omissions or violations (collectively a
“Violation”): (i) any untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (ii) the omission
to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation by the
Company of the Securities Act, the Exchange Act, or any rule or regulation
promulgated under the Securities Act, or the Exchange Act, and the Company
will
pay to each such Holder, underwriter or controlling person, as incurred, any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this Section 5.8(a)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability, or action if such settlement is effected without the consent of
the
Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage, liability,
or action to the extent that it arises out of or is based upon a Violation
which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by any such Holder,
underwriter or controlling person.
(b)
To
the
extent permitted by law, each Selling Holder will indemnify and hold harmless
the Company, each of its directors, each of its officers, each person, if any,
who controls the Company within the meaning of the Securities Act, any
underwriter, any other Holder selling securities in such registration statement
and any controlling person of any such underwriter or other Holder, against
any
losses, claims, damages, or liabilities (joint or several) to which any of
the
foregoing persons may become subject, under the Securities Act, or the Exchange
Act, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each case
to
the extent (and only to the extent) that such Violation occurs in reliance
upon
and in conformity with written information furnished by such Holder expressly
for use in connection with such registration; and each such Holder will pay,
as
incurred, any legal or other expenses reasonably incurred by any person intended
to be indemnified pursuant to this Section 5.8(b), in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided
,
however
,
that
the indemnity agreement contained in this Section 5.8(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Holder, which consent
shall not be unreasonably withheld;
provided
,
further,
that, in
no event shall any indemnity under this Section 5.8(b) exceed the greater of
the
cash value of the (i) gross proceeds from the Offering received by such Holder
or (ii) such Holder’s investment pursuant to this Agreement as set forth on the
signature page attached hereto.
(c)
Promptly
after receipt by an indemnified party under this Section 5.8 of notice of the
commencement of any action (including any governmental action), such indemnified
party shall, if a claim in respect thereof is to be made against any
indemnifying party under this Section 5.8, deliver to the indemnifying party
a
written notice of the commencement thereof and the indemnifying party shall
have
the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly notified, to assume
the defense thereof with counsel selected by the indemnifying party and approved
by the indemnified party (whose approval shall not be unreasonably withheld);
provided, however, that an indemnified party (together with all other
indemnified parties which may be represented without conflict by one counsel)
shall have the right to retain one separate counsel, with the fees and expenses
to be paid by the indemnifying party, if representation of such indemnified
party by the counsel retained by the indemnifying party would be inappropriate
due to actual or potential differing interests between such indemnified party
and any other party represented by such counsel in such proceeding. The failure
to deliver written notice to the indemnifying party within a reasonable time
of
the commencement of any such action, if prejudicial to its ability to defend
such action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 5.8, but the omission so to deliver written
notice to the indemnifying party will not relieve it of any liability that
it
may have to any indemnified party otherwise than under this Section
5.8.
(d)
If
the
indemnification provided for in this Section 5.8 is held by a court of competent
jurisdiction to be unavailable to an indemnified party with respect to any
loss,
liability, claim, damage, or expense referred to therein, then the indemnifying
party, in lieu of indemnifying such indemnified party hereunder, shall
contribute to the amount paid or payable by such indemnified party as a result
of such loss, liability, claim, damage, or expense in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the
one
hand and of the indemnified party on the other in connection with the statements
or omissions that resulted in such loss, liability, claim, damage, or expense
as
well as any other relevant equitable considerations. The relative fault of
the
indemnifying party and of the indemnified party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the alleged omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party
and
the parties’ relative intent, knowledge, access to information, and opportunity
to correct or prevent such statement or omission.
(e)
Notwithstanding
the foregoing, to the extent that the provisions on indemnification and
contribution contained in an underwriting agreement entered into in connection
with an underwritten public offering are in conflict with the foregoing
provisions, the provisions in such underwriting agreement shall
control.
(f)
The
obligations of the Company and Holders under this Section 5.8 shall survive
the
completion of the Offering.
5.9
Reports
Under Securities Exchange Act of 1934
.
With a
view to making available to the Holders the benefits of Rule 144 and any other
rule or regulation of the SEC that may at any time permit a Holder to sell
securities of the Company to the public without registration or pursuant to
a
registration on Form S-3, the Company agrees to:
(a)
make
and
keep public information available, as those terms are understood and defined
in
Rule 144, at all times after 90 days after the effective date of the
registration statement;
(b)
file
with
the SEC in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act; and
(c)
furnish
to any Holder, so long as the Holder owns any Registrable Securities, forthwith
upon request (i) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company, and (ii)
such other information as may be reasonably requested in availing any Holder
of
any rule or regulation of the SEC which permits the selling of any such
securities without registration or pursuant to such form.
5.10
Permitted
Transferees
.
The
rights to cause the Company to register Registrable Securities granted to the
Holders by the Company under this Article V may be assigned in full by a Holder
in connection with a transfer by such Holder of its Registrable Securities
if:
(a) such Holder gives prior written notice to the Company; (b) such
transferee agrees to comply with the terms and provisions of this Agreement;
(c) such transfer is otherwise in compliance with this Agreement; and
(d) such transfer is otherwise effected in accordance with applicable
securities laws. Except as specifically permitted by this Section 5.10, the
rights of a Holder with respect to Registrable Securities as set out herein
shall not be transferable to any other Person, and any attempted transfer shall
cause all rights of such Holder therein to be forfeited.
6.1
The
Subscriber understands that the Company may file with the Securities and
Exchange Commission ("SEC") a registration statement on Form SB-2 (the
"Registration Statement") to register certain shares of the Company’s common
stock and to exercise its reasonable best efforts to cause the Registration
Statement to become effective. The Company may also request a broker-dealer
to
file with the National Association of Securities Dealers (the "NASD") to secure
the listing or quotation of its Common Stock on the Over the Counter Bulletin
Board market maintained by the National Association of Securities Dealers,
Inc.
6.2
Pursuant
to Section 5.2 of this Agreement, the Subscriber has been granted piggy-back
registration rights for the first 15,000 Shares purchased plus 10% of all
additional Shares purchased in this Offering (the “Registration Shares”). Shares
that Subscriber purchases in this Offering that do not qualify as Registration
Shares will be subject to the lock-up provision in Section 6.3 below.
6.3
As
an
inducement to NASD market makers to establish a public market for the common
stock, the Subscriber hereby agrees that from the date of the Confidential
Offering Memorandum and until one (1) year after the Registration Statement
is
declared effective by the SEC, the Subscriber will not exercise any rights
to
sell any unregistered shares of the Company's Common Stock as may be permitted
under SEC Rule 144.
7.1
Any
notice or other communication given hereunder shall be deemed sufficient if
in
writing and sent by registered or certified mail, return receipt requested,
or
delivered by hand against written receipt therefor, addressed as
follows:
if
to the
Company, to it at:
OriginOil,
Inc.
2029
Century Park East, 14th Floor
Los
Angeles, CA 90067
Attn:
T
Riggs Eckelberry, Chief Executive Officer
With
a
copy to:
Sichenzia
Ross Friedman Ference LLP
61
Broadway, 32
nd
Floor
New
York,
NY 10006
Attn:
Gregory Sichenzia, Esq.
if
to the
Subscriber, to the Subscriber’s address indicated on the signature page of this
Agreement.
Notices
shall be deemed to have been given or delivered on the date of mailing, except
notices of change of address, which shall be deemed to have been given or
delivered when received.
7.2
Except
as
otherwise provided herein, this Agreement shall not be changed, modified or
amended except by a writing signed by the parties to be charged, and this
Agreement may not be discharged except by performance in accordance with its
terms or by a writing signed by the party to be charged.
7.3
Subject
to the provisions of Section 5.10, this Agreement shall be binding upon and
inure to the benefit of the parties hereto and to their respective heirs, legal
representatives, successors and assigns. This Agreement sets forth the entire
agreement and understanding between the parties as to the subject matter hereof
and merges and supersedes all prior discussions, agreements and understandings
of any and every nature among them.
7.4
Upon
the
execution and delivery of this Agreement by the Subscriber, this Agreement
shall
become a binding obligation of the Subscriber with respect to the purchase
of
Common Stock as herein provided, subject, however, to the right hereby reserved
by the Company to enter into the same agreements with other subscribers and
to
add and/or delete other persons as subscribers.
7.5
NOTWITHSTANDING
THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY ANY OF THE PARTIES HERETO,
THE
PARTIES EXPRESSLY AGREE THAT ALL THE TERMS AND PROVISIONS HEREOF SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEVADA
WITHOUT REGARD TO SUCH STATE’S PRINCIPLES OF CONFLICTS OF LAW. IN THE EVENT THAT
A JUDICIAL PROCEEDING IS NECESSARY, THE SOLE FORUM FOR RESOLVING DISPUTES
ARISING OUT OF OR RELATING TO THIS AGREEMENT IS THE SUPREME COURT OF THE STATE
OF NEVADA IN AND FOR CLARK COUNTY OF NEVADA OR THE FEDERAL COURTS FOR SUCH
STATE
AND COUNTY, AND ALL RELATED APPELLATE COURTS, THE PARTIES HEREBY IRREVOCABLY
CONSENT TO THE JURISDICTION OF SUCH COURTS AND AGREE TO SAID VENUE.
7.6
In
order
to discourage frivolous claims the parties agree that unless a claimant in
any
proceeding arising out of this Agreement succeeds in establishing his claim
and
recovering a judgment against another party (regardless of whether such claimant
succeeds against one of the other parties to the action), then the other party
shall be entitled to recover from such claimant all of its/their reasonable
legal costs and expenses relating to such proceeding and/or incurred in
preparation therefor.
7.7
The
holding of any provision of this Agreement to be invalid or unenforceable by
a
court of competent jurisdiction shall not affect any other provision of this
Agreement, which shall remain in full force and effect. If any provision of
this
Agreement shall be declared by a court of competent jurisdiction to be invalid,
illegal or incapable of being enforced in whole or in part, such provision
shall
be interpreted so as to remain enforceable to the maximum extent permissible
consistent with applicable law and the remaining conditions and provisions
or
portions thereof shall nevertheless remain in full force and effect and
enforceable to the extent they are valid, legal and enforceable, and no
provisions shall be deemed dependent upon any other covenant or provision unless
so expressed herein.
7.8
It
is
agreed that a waiver by either party of a breach of any provision of this
Agreement shall not operate, or be construed, as a waiver of any subsequent
breach by that same party.
7.9
The
parties agree to execute and deliver all such further documents, agreements
and
instruments and take such other and further action as may be necessary or
appropriate to carry out the purposes and intent of this Agreement.
7.10
This
Agreement may be executed in two or more counterparts each of which shall be
deemed an original, but all of which shall together constitute one and the
same
instrument.
7.11
Nothing
in this Agreement shall create or be deemed to create any rights in any person
or entity not a party to this Agreement, except (a) for the holders of
Registable Securities.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
VIII.
|
CONFIDENTIAL INVESTOR
QUESTIONNAIRE
|
8.1
The
Subscriber represents and warrants that he, she or it comes within one category
marked below, and that for any category marked, he, she or it has truthfully
set
forth, where applicable, the factual basis or reason the Subscriber comes within
that category. ALL INFORMATION IN RESPONSE TO THIS SECTION WILL BE KEPT STRICTLY
CONFIDENTIAL. The undersigned agrees to furnish any additional information
which
the Company deems necessary in order to verify the answers set forth
below.
Category
A ____
|
The
undersigned is an individual (not a partnership, corporation, etc.)
whose
individual net worth, or joint net worth with his or her spouse,
presently
exceeds $1,000,000.
|
Explanation.
In calculating net worth you may include equity in personal property and real
estate, including your principal residence, cash, short-term investments, stock
and securities. Equity in personal property and real estate should be based
on
the fair market value of such property less debt secured by such
property.
Category
B ____
|
The
undersigned is an individual (not a partnership, corporation, etc.)
who
had an income in excess of $200,000 in each of the two most recent
years,
or joint income with his or her spouse in excess of $300,000 in each
of
those years (in each case including foreign income, tax exempt income
and
full amount of capital gains and losses but excluding any income
of other
family members and any unrealized capital appreciation) and has a
reasonable expectation of reaching the same income level in the current
year.
|
Category
C ____
|
The
undersigned is a director or executive officer of the Company which
is
issuing and selling the Securities.
|
Category
D ____
|
The
undersigned is a bank; a savings and loan association; insurance
company;
registered investment company; registered business development company;
licensed small business investment company (“SBIC”); or employee benefit
plan within the meaning of Title 1 of ERISA and (a) the investment
decision is made by a plan fiduciary which is either a bank, savings
and
loan association, insurance company or registered investment advisor,
or
(b) the plan has total assets in excess of $5,000,000 or (c) is a
self
directed plan with investment decisions made solely by persons that
are
accredited investors. (describe entity)
|
|
________________________________________________________________
|
|
________________________________________________________________
|
Category
E ____
|
The
undersigned is a private business development company as defined
in
section 202(a) (22) of the Investment Advisors Act of 1940. (describe
entity)
|
|
________________________________________________________________
|
|
________________________________________________________________
|
Initials
________
Category
F ____
|
The
undersigned is either a corporation, partnership, California or Nevada?
business trust, or non-profit organization within the meaning of
Section
501(c)
(3)
of the Internal Revenue Code, in each case not formed for the specific
purpose of acquiring the Common Stock and with total assets in excess
of
$5,000,000. (describe entity)
|
|
________________________________________________________________
|
|
________________________________________________________________
|
Category G ____
|
The
undersigned is a trust with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the Securities, where
the
purchase is directed by a “sophisticated investor” as defined in
Regulation 506(b)(2)(ii) under the Act.
|
Category H ____
|
The undersigned is an entity (other
than a
trust) in which all of the equity owners are “accredited investors” within
one or more of the above categories.
|
|
________________________________________________________________
|
|
________________________________________________________________
|
The
undersigned agrees that the undersigned will notify the Company at any time
on
or prior to the Closing Date in the event that the representations and
warranties in this Agreement shall cease to be true, accurate and
complete.
8.2
SUITABILITY
(please
answer each question)
(a)
For
an
individual Subscriber, please describe your current employment, including the
company by which you are employed and its principal business:
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
(b)
For
an
individual Subscriber, please describe any college or graduate degrees held
by
you:
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
(c)
For
all
Subscribers, please list types of prior investments:
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
(d)
For
all
Subscribers, please state whether you have participated in other
private
placements
before:
YES
o
NO
o
(e)
If
your
answer to question (d) above was “YES”, please indicate frequency of such prior
participation in
private
placements
of:
|
|
Public
Companies
|
|
Private
Companies
|
Frequently
|
|
________________________
|
|
________________________
|
Occasionally
|
|
________________________
|
|
________________________
|
Never
|
|
________________________
|
|
________________________
|
(f)
For
individual Subscribers, do you expect your current level of income to
significantly decrease in the foreseeable future:
YES
o
NO
o
(g)
For
trust, corporate, partnership and other institutional Subscribers, do you expect
your total assets to significantly decrease in the foreseeable future:
(h)
For
all
Subscribers, do you have any other investments or contingent liabilities which
you reasonably anticipate could cause you to need sudden cash requirements
in
excess of cash readily available to you:
(i)
For
all
Subscribers, are you familiar with the risk aspects and the non-liquidity of
investments such as the securities for which you seek to subscribe?
YES
o
NO
o
(j)
For all
Subscribers, do you understand that there is no guarantee of financial return
on
this investment and that you run the risk of losing your entire
investment?
8.3
MANNER
IN WHICH TITLE IS TO BE HELD
.
(circle
one)
(a)
Individual
Ownership
(b)
Community
Property
(c)
Joint
Tenant with Right of Survivorship (both parties must sign)
(d)
Partnership*
(e)
Tenants
in Common
(f)
Company*
(g)
Trust*
(h)
Other*
*If
Securities are being subscribed for by an entity, the attached Certificate
of
Signatory must also be completed.
8.4
NASD
AFFILIATION
.
Are
you
affiliated or associated with an NASD member firm (please check
one):
Yes
o
No
o
If
Yes,
please describe:
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
*If
Subscriber is a Registered Representative with an NASD member firm, have the
following acknowledgment signed by the appropriate party:
The
undersigned NASD member firm acknowledges receipt of the notice required by
Article 3, Sections 28(a) and (b) of the Rules of Fair Practice.
_________________________________
Name
of
NASD Member Firm
By:
______________________________
Authorized
Officer
Date:
____________________________
8.5
The
undersigned is informed of the significance to the Company of the foregoing
representations and answers contained in the Confidential Investor Questionnaire
contained in this Article VII and such answers have been provided under the
assumption that the Company will rely on them.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
NUMBER
OF SHARES __________ X $0.10 = $__________ (the “Purchase
Price”)
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|
|
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Signature
|
|
|
Signature
(if purchasing jointly)
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|
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Name
Typed or Printed
|
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Name
Typed or Printed
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Title
(if Subscriber is an Entity)
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Title
(if Subscriber is an Entity)
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Entity
Name (if applicable)
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Entity
Name (if applicable
|
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|
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|
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|
City,
State and Zip Code
|
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|
City,
State and Zip Code
|
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Telephone-Residence
|
|
|
Telephone-Residence
|
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Facsimile-Residence
|
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Facsimile-Residence
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Telephone-Business
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Telephone-Business
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Facsimile-Business
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Facsimile-Business
|
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Tax
ID # or Social Security #
|
|
|
Tax
ID # or Social Security #
|
|
|
|
|
Name in which
securities
should be issued:
|
|
|
___________________________________
|
Dated:
_________________
,
2007
This
Subscription Agreement is agreed to and accepted as of
________________
,
2007.
|
|
|
|
OriginOil,
Inc.
|
|
|
|
|
By:
|
|
|
Name:
T Riggs Eckelberry
|
|
Title:
President and CEO
|
CERTIFICATE
OF SIGNATORY
(To
be
completed if Shares are
being
subscribed for by an entity)
I,
____________________________, am the ____________________________ of
__________________________________________ (the “Entity”).
I
certify
that I am empowered and duly authorized by the Entity to execute and carry
out
the terms of the Subscription Agreement and to purchase and hold the Common
Stock, and certify further that the Subscription Agreement has been duly and
validly executed on behalf of the Entity and constitutes a legal and binding
obligation of the Entity.
IN
WITNESS WHEREOF, I have set my hand this ________ day of _________________,
2007