SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Natural Gas Fueling and Conversion Inc.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization)
(Primary Standard Industrial Classification Code Number)
(I.R.S. Employer Identification Number)
7135 Collins Avenue, No. 624
Miami Beach, FL 33141
Tel.: (305) 865-8193
(Address, including zip code, and telephone number,
including area code, of registrant’s principal executive offices)
I. Andrew Weeraratne
7135 Collins Avenue, No. 624
Miami Beach, FL 33141
Tel.: (305) 865-8193
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to :
Sunny J. Barkats, Esq.
18 East 41 st Street, 14 th Floor
New York, NY 10017
Fax: (646) 607-5544
As soon as practicable after this registration statement becomes effective
(Approximate date of commencement of proposed sale to the public)
If any of the 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 check the following box: R
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company:
|Large accelerated filer||¨||Accelerated filer||¨|
|Non-accelerated filer||¨||Smaller reporting company||R|
CALCULATION OF REGISTRATION FEE
Title of Each Class of
Securities to be Registered
|Class A Common Stock, par value $0.0001 per share||10,000,000||$||3.00||$||30,000,000||$||3,864.00|
|(1)||To the extent permitted by Rule 416, this registration statement also covers such additional number of shares of Class A common stock as may be issuable in the event of stock splits, stock dividends or similar transactions.|
|(2)||The registration fee for securities is based on an estimate of the aggregate offering price of the securities, assuming the sale of the securities at the midpoint of the high and low anticipated offering prices set forth in the prospectus, and such estimate is solely for the purpose of calculating the registration fee pursuant to Rule 457.|
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, 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 until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED __________, 2013
Natural Gas Fueling and Conversion Inc.
10,000,000 shares of Class A Common Stock
This is the initial offering of shares of Class A common stock (the “Common Stock”) of Natural Gas Fueling and Conversion Inc. (the “Company,” “we,” “us” or “our”). We are offering up to a total of 10,000,000 shares of our Common Stock on a self-underwritten basis, at an offering price of $3.00 per share. There is no minimum offering. All proceeds received by us from the sale of the shares of Common Stock offered hereby will be deposited into our corporate account and will immediately be available for our use (See “Use of Proceeds”).
This offering is being conducted on a “best efforts” self-underwritten basis. We are not paying any underwriting commissions in this offering. Our Common Stock will be offered and sold on our behalf by our officers and directors. The intended methods of communication with potential investors include, without limitation, telephone calls and personal contacts. Our officers and directors will not receive any commissions or proceeds from the offering for selling the shares on our behalf. For a description of the plan of distribution of these shares, please see page 36 of this prospectus.
Before this offering, there has been no public market for shares of our Common Stock. We plan to have our shares of Common Stock listed on the Over-the-Counter Bulletin Board (the “OTCBB”). To be quoted on the OTCBB, a market maker must apply to make a market in our Common Stock. We do not have any agreements or understanding with any market makers to date to file an application on our behalf and there is no guarantee that a market maker will file an application on our behalf.
The shares of our Common Stock will be offered from the date of this prospectus until __________, 2014. In our sole discretion, we may extend the offering period for up to an additional 90 days. The offering will terminate on the earlier of that date, when all the shares have been sold or when our board of directors decides that it is in our best interests to terminate the offering prior the completion of the sale of shares offered by this prospectus.
We are a development stage company and have limited operations. To date we have been involved primarily in organizational and initial capital raising activities. You should only purchase shares if you can afford a loss of your investment. Our independent registered public accounting firm has issued an audit opinion which includes a going concern opinion as to the Company’s future operations.
We are an “emerging growth company” as defined under the federal securities laws and, as such, may elect to comply with certain reduced public company reporting requirements for future filings.
Investing in our Common Stock involves a high degree of risk. See “Risk Factors” beginning on page 4 of this prospectus.
Neither the U.S. Securities and Exchange Commission (the “SEC”) nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is __________, 2013
TABLE OF CONTENTS
|ABOUT THIS PROSPECTUS||1|
|SUMMARY OF THE OFFERING||2|
|SUMMARY FINANCIAL INFORMATION||3|
|CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION||10|
|MARKET PRICE OF AND DIVIDENDS OF THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS||11|
|DESCRIPTION OF SECURITIES||11|
|USE OF PROCEEDS||13|
|DETERMINATION OF OFFERING PRICE||14|
|MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS||16|
|CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS||34|
|SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT||35|
|PLAN OF DISTRIBUTION||36|
|WHERE YOU CAN FIND ADDITIONAL INFORMATION||37|
|DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES||38|
ABOUT THIS PROSPECTUS
You should only rely on the information contained in this document or to which we have referred you. We have not authorized anyone to provide you with information otherwise. If anyone provides you with different or inconsistent information, you should not rely on it. We are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted.
We maintain our web site at www.NGFCE.com . Information on such web site is not considered a part of this prospectus.
Unless specifically set forth to the contrary, when used in this prospectus the terms “Natural Gas Fueling and Conversion Inc.” , “we”, “us”, “our” and similar terms refer to Natural Fueling and Conversion Inc., a Florida corporation.
We are a newly formed, development stage company. Our primary business is to construct, own and operate combined gasoline, diesel and liquefied natural gas (LNG), and compressed natural gas (CNG), vehicle fueling and service stations in the United States along with garages to retrofit gasoline and diesel driven vehicles (that we also call vehicle conversion division) to run on LNG or CNG (also called NG vehicles). Our initial primary focus will be distributing gasoline and diesel, but we will also have LNG and CNG available for natural gas (NG) driven vehicles as we think NG vehicles will be as common as gasoline-driven vehicles in the future. Therefore, we may acquire existing gasoline and diesel fueling stations and expand them to include NG fueling. In some stations we plan to build (or acquire and expand), we may have gasoline and LNG only and in some stations we may have gasoline and CNG only and in some stations we may have the means to distribute gasoline, diesel, LNG and CNG. We will make that decision based on different factors such as the demand for LNG and/or CNG in each location and easy access to LNG and CNG supplies. We believe that NG business will go through significant changes in the near future and we will have a research department dedicated to our company adopting those changes as they evolve.
We also plan to construct, own and operate liquefaction factories to convert NG from gaseous state to liquefied LNG (through a process of cooling NG) to be distributed to our own fueling stations and also to fueling stations owned by other independent owners and companies. CNG is produced by applying compression to NG and we may have the ability to compress NG to CNG in some fueling stations itself to distribute CNG to vehicles driven by CNG. As we expand our business, we plan to have our own standalone NG to CNG conversion factory and distribute CNG to individual stations to be sold to retail customer.
Our vehicle conversion business will be conducted through a joint venture relationship with Shenzhen HJ Technology Company Ltd. (“HJT”), which is currently operating a series of factories converting vehicles to operate on LNG and CNG in the Peoples’ Republic of China (“PRC” or “China”) and also conduct extensive research and development on the Gas Intelligent Electric Control System that HJT has patented along with production and marketing of automobile software and components. HJT is the majority shareholder of High Tech Fueling Service and Distribution Inc. (HFSD), a U.S. holding company, which is planning on conducting similar operations in the PRC as our intended business model. The major shareholders and some of the directors of the Company are also significant shareholders and directors of HFSD, and thus we consider HJT a related party.
Our operations to date have been limited to our organizational activities and early stage implementation of our business plan. We do not have any revenue generating operations and we are dependent upon the proceeds from this offering to continue to implement our business plan.
Our principal executive offices are located at 7135 Collins Avenue, No. 624, Miami Beach, FL 33141 and our telephone number is (305) 865-8193. Our fiscal year end is September 30.
We are an “emerging growth company” under the federal securities laws and will be subject to reduced public company reporting requirements.
SUMMARY OF THE OFFERING
|Securities Offered:||Up to 10,000,000 shares of the Company’s Common Stock.|
|Offering Price:||$3.00 per share.|
|Offering Period:||From the date of this prospectus until __________, 2014, unless extended by us for an additional 90 days, unless extended by the Company in its sole discretion.|
|Proceeds to the Company:||$30,000,000, assuming the maximum number of shares are sold in the offering and prior to factoring in the expenses of this offering, which we estimate to be approximately $40,000.|
|Use of Proceeds:||We will use the net proceeds of this offering to build combined gasoline, LNG and CNG fueling service stations, and for working capital purposes (see “Use of Proceeds” on page 13).|
|Common Stock Outstanding Prior to the Offering:||12,600,000 shares of Common Stock.|
|Common Stock Outstanding After the Offering:||22,600,000 assuming all of the shares of Common Stock offered in this prospectus are sold.|
|Trading Symbol:||There is currently no public market for our Common Stock. Assuming we have a successful offering, we plan to have our shares of Common Stock quoted on the OTCBB. To be quoted on the OTCBB, a market maker must apply to make a market in our Common Stock. We do not have any agreements or understanding with any market maker and to file an application on our behalf and there is no guarantee that a market maker will file an application on our behalf.|
|Risk Factors:||Investing in our Common Stock involves a high degree of risk. Please refer to the sections “Risk Factors” and “Dilution” before making an investment in our Common Stock.|
SUMMARY FINANCIAL INFORMATION
The following summary financial data should be read in conjunction with the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Financial Statements and Notes thereto, included elsewhere in this prospectus.
For the Period
(October 2, 2013)
October 31, 2013
|Statement of Operations|
|Cost of Revenues||$||-0-|
|General and Administrative Expenses||$||15,100|
|Total Operating Expenses||$||15,100|
October 31, 2013
|Balance Sheet Data|
An investment in our Common Stock involves a significant degree of risk. You should not invest in our Common Stock unless you can afford to lose your entire investment. You should consider carefully the following risk factors and other information in this prospectus before deciding to invest in our Common Stock.
Risks Related to this Offering
WE ARE DEPENDENT UPON THE PROCEEDS OF THIS OFFERING TO PROVIDE FUNDS TO DEVELOP OUR BUSINESS. BECAUSE THIS IS A BEST-EFFORTS OFFERING, THERE ARE NO ASSURANCES WE WILL RAISE SUFFICIENT CAPITAL TO ENABLE US TO DEVELOP OUR BUSINESS.
We are dependent upon the proceeds from this offering to provide funds for the development of our business. If we sell less than all of the shares of our Common Stock offered hereby, we will have significantly less funds available to us to implement our business strategy, and our ability to generate any revenues may be adversely affected. While this offering seeks to raise a portion of the capital we will need, this is a best efforts offering with no minimum and there are no assurances we will sell all or any portion of the shares of our Common Stock offered hereby. Even if we sell all of the shares offered hereby, we cannot guarantee prospective investors that we will ever generate any significant revenues or report profitable operations, or that our revenues will not decline in future periods. We do not have any firm commitments to provide capital and we anticipate that we will have certain difficulties raising capital given the development stage of our company, and the lack of a public market for our securities. Accordingly, we cannot assure you that additional working capital as needed will be available to us upon terms acceptable to us. If we do not raise funds as needed, our ability to continue to implement our business model is in jeopardy and we may never be able to achieve profitable operations. In that event, our ability to continue as a going concern is in jeopardy and you could lose all of your investment in our company.
OUR MANAGEMENT HAS FULL DISCRETION AS TO THE USE OF PROCEEDS FROM THIS OFFERING.
We presently anticipate that the net proceeds from this offering will be used the purposes set forth under “Use of Proceeds” appearing elsewhere in this prospectus. We reserve the right, however, to use the net proceeds from this offering for other purposes not presently contemplated which we deem to be in our best interests in order to address changed circumstances and opportunities. As a result of the foregoing, investors in the shares of Common Stock offered hereby will be entrusting their funds to our management, upon whose judgment and discretion the investors must depend.
Risks Related Our Business
WE HAVE A LIMITED OPERATING HISTORY THAT YOU CAN USE TO EVALUATE US, AND THE LIKELIHOOD OF OUR SUCCESS MUST BE CONSIDERED IN LIGHT OF THE PROBLEMS, EXPENSES, DIFFICULTIES, COMPLICATIONS AND DELAYS FREQUENTLY ENCOUNTERED BY A SMALL DEVELOPING COMPANY.
We were incorporated in the State of Florida in October 2013. We have no significant assets or financial resources. The likelihood of our success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered by a small developing company starting a new business enterprise and the highly competitive environment in which we will operate. Since we have a limited operating history, we cannot assure you that our business will be profitable or that we will ever generate sufficient revenues to meet our expenses and support our anticipated activities.
THE LIKELIHOOD OF OUR ABILITY TO OPERATE MUST BE CONSIDERED IN LIGHT OF THE PROBLEMS, EXPENSES, DIFFICULTIES, COMPLICATIONS AND DELAYS THAT WE ENCOUNTER, SUCH AS OUR LACK OF BUSINESS AND LACK OF CAPITAL.
We were incorporated in Florida in October 2013. Our lack of business and lack of capital seriously threaten our ability to operate. The likelihood of our ability to continue to operate must be considered in light of the problems, expenses, difficulties, complications and delays that we encounter, such as our lack of capital. Becoming a public company may provide us with the ability to raise money and finance our operations until and if our revenues increase. If we are not successful in becoming a publicly reporting company and raising the necessary capital to continue to operate or cannot overcome the difficulties, complications and delays, such as our lack of capital, we will no longer be able to operate.
We WILL require GOVERNMENT REGULATORY approvals and WILL HAVE TO abide by environment regulations enforced by THE Environmental Protection Agency in OPERATING OUR vehicle conversion division, and we may find it too costly or unable to get such clearance to successfully conduct BUSINESS.
Our current business plan anticipates the Company operating a division focused on converting vehicles that currently run on gasoline and diesel to run on natural gas. In the United States, the Environmental Protection Agency (EPA) has complex regulations that we have to abide by in order to conduct the vehicle conversion business and we may find those regulations to be prohibitively costly, possibly requiring us to charge our potential customers higher fees in order to be competitive. In the event that EPA regulations are too costly or we do not receive EPA clearance to operate the vehicle conversion business, we will not be able to effectively carry out our business plan and our results of operation will be adversely affected.
THE SUCCESS OF OUR BUSINESS MODEL IS DEPENDENT UPON OUR ABILITY TO IDENTIFY LOCATIONS THAT WILL GENERATE SUBSTANTIAL NG VEHICLE TRAFFIC IN ORDER TO BUILD AND OPERATE NG SERVICE STATIONS PROFITABLY, EITHER DIRECTLY BY US OR THROUGH FRANCHISEES.
The first significant piece of the Company’s business plan is to build and operate NG refueling and service stations to generate revenue. As vehicles in the United States that run on NG are still limited, a significant market for our services may not develop. In the event that the NG car market does not develop in the United States or we are not able to identify suitable locations for our NG refueling and service stations, we will not be able to effectively carry out our business plan and our results of operations will materially adversely affected.
WE MAY NEED ADDITIONAL FINANCING WHICH WE MAY NOT BE ABLE TO OBTAIN ON ACCEPTABLE TERMS. ADDITIONAL CAPITAL RAISING EFFORTS IN FUTURE PERIODS MAY BE DILUTIVE TO OUR THEN CURRENT SHAREHOLDERS OR RESULT IN INCREASED INTEREST EXPENSE IN FUTURE PERIODS.
We may be required to raise additional working capital in order to fully implement our business model. Our future capital requirements, however, depend on a number of factors, including our operations, the financial condition of an acquisition target and its needs for capital, our ability to grow revenues from other sources, our ability to manage the growth of our business and our ability to control our expenses. If we raise additional capital through the issuance of debt, this will result in increased interest expense. If we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our company held by existing shareholders will be reduced and those shareholders may experience significant dilution. In addition, new securities may contain certain rights, preferences or privileges that are senior to those of the shares of Common Stock. We cannot assure that we will be able to raise the working capital as needed in the future on terms acceptable to us, if at all. If we do not raise funds as needed, we will be unable to fully implement our business model, fund our ongoing operations or grow our company.
The Chief Executive Officers and two other executive officers of our company are involved as executive officers of another related company that is currently setting up an identical operation in China. Thus a conflict of interest may arise with their duties to both companies .
Andrew Weeraratne, the Company’s Chief Executive Officer and member of the Company’s board of directors, as well as the majority shareholder of the Company, is also the president, a director and significant shareholder of another company, High Tech Fueling Service and Distribution Inc. (“HFSD”), a U.S. holding company that is planning on setting up NG stations and factories in China. Our President, Eugene Nichols and our Chief Financial Officer, Robert Sanford, are also executive officers of HFSD and therefore they may have a conflict of interest related to the time they have to devote to the management of each of these companies that may be detrimental to the Company’s shareholders.
Our Joint Venture partner in OUR PLANNED vehicle conversion division, Shenzhen HJ Technology Co. Ltd. (“HJT”), in Shenzhen, China, is majority-owned and managed by a related party and that relationship may create an appearance of non-independence and POTENTIAL INVESTORS MAY VIEW THE RELATIONSHIP as a possible conflict of interest WHICH may deter them from investing in our company.
HJT, our joint-venture partner in our planned vehicle conversion division, is majority owned by Mr. Ren Xianling, the current Chief Executive Officer of HJT and Ms. Liang Gexi, the Managing Director of HJT, whom are also the Chief Executive Officer and Vice President of Administration, respectively, of HFSD. HFSD is concurrently setting up a similar operation to the Company in China. In addition, the executive officers of the Company are also executive officers of HFSD. These issues may appear to potential investors as detrimental and as a result they may choose not to invest in our company.
OUR MANAGEMENT MAY BE UNABLE TO IDENTIFY LOCATIONS TO BUILD A FUELING AND SERVICE STATION AND/OR EFFECTIVELY INTEGRATE OUR MANAGEMENT STYLE TO OUR FRANCHISEES AND THUS WE MAY BE UNABLE TO FULLY REALIZE THE ANTICIPATED BENEFITS OF SETTING UP FRANCHISES WHICH MAY AFFECT OUR GROWTH.
We are subject to various risks associated with our growth strategy, including the risk that we will be unable to identify suitable locations and franchise partners. Any future expansion plans will be subject to a number of challenges, including:
|·||the diversion of management time and resources and the potential disruption of our ongoing business;|
|·||difficulties in maintaining uniform standards, controls, procedures and policies;|
|·||unexpected costs and time associated with upgrading both the internal accounting systems as well as educating each of their staffs as to the proper collection and recordation of financial data;|
|·||potential unknown liabilities associated with franchising operations the difficulty of retaining key alliances on attractive terms with partners and suppliers; and|
|·||the difficulty of retaining and recruiting key personnel and maintaining employee morale.|
WE MAY ACQUIRE NG STATIONS ALREADY IN OPERATION IN EXCHANGE FOR STOCK OF OUR COMPANY, AND SUCH ACQUISITION EFFORTS IN FUTURE PERIODS MAY BE DILUTIVE TO OUR THEN CURRENT SHAREHOLDERS.
Our business model may result in the issuance of our securities to consummate certain acquisitions in the future. As a result, the percentage ownership of our company held by existing shareholders will be reduced and those shareholders may experience significant dilution. In addition, new securities may contain certain rights, preferences or privileges that are senior to those of our common stock. As we will generally not be required to obtain the consent of our shareholders before entering into acquisition transactions, shareholders are dependent upon the judgment of our management in determining the number of, and characteristics of stock issued as consideration in an acquisition.
WE ARE DEPENDENT ON CERTAIN KEY PERSONNEL AND THE LOSS OF THESE KEY PERSONNEL COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Our success is, to a certain extent, attributable to the management, sales and marketing and operational expertise of key personnel who will perform key functions in the operation of our business. The loss of one or more of these key employees could have a material adverse effect upon our business, financial condition and our results of operations could be adversely impacted.
If the prices of CNG and LNG do not remain sufficiently below the prices of gasoline and diesel, potential customers will have less incentive to purchase NG vehicles, which would decrease demand for CNG and LNG and reduce our POTENTIAL growth.
NG vehicles cost more than comparable gasoline or diesel powered vehicles because of the components needed for a vehicle to use NG add to a vehicle’s base cost. If the prices of CNG and LNG do not remain sufficiently below the prices of gasoline or diesel, operators may be unable to recover the additional costs of acquiring or converting to NG vehicles in a timely manner, and they may choose not to use natural gas vehicles. Our ability to offer CNG and LNG fuel to our customers at lower prices than gasoline and diesel depends in part on NG prices remaining lower, on an energy equivalent basis, than oil prices. If the price of oil, gasoline and diesel declines, it will make it more difficult for us to offer our customers discounted prices for CNG and LNG and maintain an acceptable margin on our sales. Recent and significant volatility in oil and gasoline prices demonstrate that it is difficult to predict future transportation fuel costs. In addition, any new regulations imposed on NG extraction, particularly on extraction of NG from shale formations, could increase the costs of gas production or make it more costly to produce NG, which could lead to substantial increases in the price of natural gas. Reduced prices for gasoline and diesel fuel may cause potential customers to delay or reject converting their fleets to run on NG. In that event, sales of NG fuel and vehicles would be slowed and our business would suffer.
The volatility of natural gas prices could adversely impact the adoption of CNG and LNG vehicle fuel and our business.
In the recent past, the price of NG has been volatile, and this volatility may continue. Increased NG prices affect the cost to us of NG and will adversely impact our projected operating margins in cases where we have committed to sell NG at a fixed price without an effective futures contract in place that fully mitigates the price risk or where we otherwise cannot pass the increased costs on to our customers. In addition, higher natural gas prices may cause CNG and LNG to cost as much as or more than gasoline and diesel generally, which would adversely impact the adoption of CNG and LNG as a vehicle fuel and consequently our business.
Our growth is influenced by government incentives and mandates for clean burning fuels and alternative fuel vehicles. The failure to pass new legislation with incentive programs may adversely affect our business.
The NG business is influenced by federal, state and local government tax credits, rebates, grants and similar incentives that promote the use of NG and Renewable Natural Gas (RNG) as a vehicle fuel, as well as bylaws, rules and regulations that require reductions in carbon emissions. The absence of these programs and incentives could have a detrimental effect on the NG vehicle and fueling industry, and as a result our projected revenue and related financial performance may be adversely affected.
Our growth depends in part on environmental regulations and programs mandating the use of cleaner burning fuels, and modification or repeal of these regulations may adversely impact our business.
Our business depends in part on environmental regulations and programs that promote or mandate the use of cleaner burning fuels, including NG and RNG for vehicles. Industry participants with a vested interest in gasoline and diesel, many of which have substantially greater resources than we do, invest significant time and money in an effort to influence environmental regulations in ways that delay or repeal requirements for cleaner vehicle emissions. Further, economic difficulties may result in the delay, amendment or waiver of environmental regulations due to the perception that they impose increased costs on the transportation industry that cannot be absorbed in a challenging economy. The delay, repeal or modification of federal or state regulations or programs that encourage the use of cleaner vehicles could also have a detrimental effect on NG vehicle industry, which, in turn, could slow our growth and adversely affect our business.
We face increasing competition from oil and gas companies, fuel providers, refuse companies, industrial gas companies, NG utilities and other organizations that have far greater resources and brand awareness than US.
A significant number of established businesses, including oil and gas companies, refuse collectors, NG utilities and their affiliates, industrial gas companies, station owners, fuel providers and other organizations have entered or are planning to enter the NG fuels market. Many of these current and potential competitors have substantially greater financial, marketing, research and other resources than we have. If we are not able to successfully compete with these entities are results of operations will be materially adversely affected.
If there are advances in other alternative vehicle fuels or technologies, or if there are improvements in gasoline, diesel or hybrid engines, demand for NG vehicles may decline and our business may suffer.
Technological advances in the production, delivery and use of alternative fuels that are, or are perceived to be, cleaner, more cost-effective or more readily available than CNG, LNG or RNG have the potential to slow adoption of NG vehicles. Advances in gasoline and diesel engine technology, especially hybrids, may offer a cleaner, more cost-effective option and make fleet customers less likely to convert their fleets to NG. Technological advances related to ethanol or biodiesel, which are increasingly used as an additive to, or substitute for, gasoline and diesel fuel, may slow the need to diversify fuels and affect the growth of the NG vehicle market. Use of electric heavy duty trucks or the perception that electric heavy duty trucks may soon be widely available and provide satisfactory performance in heavy duty applications may reduce demand for heavy duty LNG trucks. In addition, hydrogen and other alternative fuels in experimental or developmental stages may eventually offer a cleaner, more cost-effective alternative to gasoline and diesel than NG. Advances in technology that slow the growth of or conversion to NG vehicles, or which otherwise reduce demand for NG as a vehicle fuel, will have an adverse effect on our business. Failure of NG vehicle technology to advance at a sufficient pace may also limit its adoption and our ability to compete with other businesses providing alternative fuels and alternative fuel vehicles.
Our ability to obtain LNG is constrained by fragmented and limited production and increasing competition for LNG supply. if we are required to supply LNG from distant locations and cannot pass these costs through to our customers, our projected operating margins will decrease on those sales due to our increased transportation costs.
Production of LNG is fragmented and limited. It may be difficult for us to obtain LNG without interruption and near our projected markets at competitive prices or at all. If we are unable to purchase enough of LNG to meet customer demand, we may be liable to our potential customers for penalties and lose customers. Competition for LNG supply is escalating. If we experience an LNG supply interruption or LNG demand exceeds available supply, or if we have difficulty entering or maintaining relationships with contract carriers to deliver LNG on our behalf, our ability to expand LNG sales to new customers will be limited, our relationships with potential customers may be disrupted and our results of operations may be adversely affected. Furthermore, because transportation of LNG is relatively expensive, if we are required to supply LNG from distant locations and cannot pass these costs through to our customers, our projected operating margins will decrease on those sales due to our increased transportation costs.
Risks Related to Our Common Stock
OUR MAJORITY STOCKHOLDER OWNs 4,000,000 Shares of our class A common stock and 7,000,000 shares of our CLASS B common stock. Because of the voting preference granted to holders of series b common stock, the majority shareholder currently holders voting rights equal to holding 74,000,000 shares of class A common stock, which represents APPROXIMATELY 89.59% of the CURRENT outstanding voting stock of the company. The majority shareholder’s interests may differ from yours and he WILL BE able to exert significant influence over our corporate decisions, including a change of control.
As of November 26, 2013, Mr. I. Andrew Weeraratne, our Chief Executive Officer, holds 4,000,000 shares of Common Stock and 7,000,000 shares of Class B common stock, which gives him voting rights equal to 74,000,000 shares of Common Stock because of the 10:1 voting preference granted to the series of Class B common stock. Assuming a full subscription of this offering for 10,000,000 shares of Common Stock, Mr. Weeraratne will control approximately 80% of the Company’s outstanding voting stock. As a result, he will be able to influence or control matters requiring approval by our stockholders, including the election of directors and the approval of mergers, acquisitions or other extraordinary transactions. Mr. Weeraratne may have interests that differ from yours and may vote in a way with which you disagree and that may be adverse to your interests. This concentration of ownership may have the effect of delaying, preventing or deterring a change of control of our company, could deprive our stockholders of an opportunity to receive a premium for their stock as part of a sale of our company and may affect the potential market price of our stock. Conversely, this concentration may facilitate a change in control at a time when you and other investors may prefer not to sell.
THE OFFERING PRICE OF THE SHARES of COMMON STOCK WAS ARBITRARILY DETERMINED, AND THEREFORE SHOULD NOT BE USED AS AN INDICATOR OF THE FUTURE MARKET PRICE OF THE COMMON STOCK. THEREFORE, THE OFFERING PRICE BEARS NO RELATIONSHIP TO THE ACTUAL VALUE OF THE COMPANY, AND MAY MAKE OUR SHARES DIFFICULT TO SELL.
The offering price for the shares of Common Stock was arbitrarily determined. The facts considered in determining the offering price were our financial condition and prospects, our limited operating history and the general condition of the securities market. The offering price is not an indication of and is not based upon the actual value of the Company. The offering price bears no relationship to the book value, assets or earnings of the Company or any other recognized criteria of value. The offering price should not be regarded as an indicator of a future market price of the Common Stock.
If we fail to establish and maintain an effective system of internal control, we may not be able to report our financial results accurately or to prevent fraud. Any inability to report and file our financial results accurately and timely could harm our reputation and adversely impact the trading price of our Common Stock.
Effective internal control is necessary for us to provide reliable financial reports and prevent fraud. If we cannot provide reliable financial reports or prevent fraud, we may not be able to manage our business as effectively as we would if an effective control environment existed, and our business and reputation with investors may be harmed. As a result, our small size and any current internal control deficiencies may adversely affect our financial condition, results of operation and access to capital. We have not performed an in-depth analysis to determine if in the past un-discovered failures of internal controls exist, and may in the future discover areas of our internal control that need improvement.
THERE IS NO ASSURANCE OF A PUBLIC MARKET OR THAT THE COMMON STOCK WILL EVER TRADE ON A RECOGNIZED EXCHANGE, THEREFORE, YOU MAY BE UNABLE TO LIQUIDATE YOUR INVESTMENT IN OUR STOCK.
There is no established public trading market for our Common Stock. Our shares of Common Stock are not and have not been listed or quoted on any exchange or quotation system. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, nor can there be any assurance that such an application for quotation will be approved or that a regular trading market will develop or that if developed, will be sustained. In the absence of a trading market, an investor may be unable to liquidate his or her investment.
A DTC “Chill” on the electronic clearing of trades in our securities in the future may affect the liquidity of our stock and our ability to raise capital.
Because our common stock is considered a “penny stock,” there is a risk that the Depository Trust Company (“DTC”) may place a “chill” on the electronic clearing of trades in our securities. This may lead some brokerage firms to be unwilling to accept certificates and/or electronic deposits of our stock and other securities and also some may not accept trades in our securities altogether. A future DTC chill would affect the liquidity of our securities and make it difficult to purchase or sell our securities in the open market. It may also have an adverse effect on our ability to raise capital because investors may be unable to easily resell our securities into the market. Our inability to raise capital on terms acceptable to us, if at all, could have a material and adverse effect on our business and operations.
WE DO NOT EXPECT TO PAY DIVIDENDS FOR SOME TIME, WHICH COULD RESULT IN NO RETURN ON YOUR INVESTMENT.
We have never declared or paid cash dividends on our common stock. We currently intend to retain our earnings, if any, to provide funds for the operation and expansion of our business and, therefore, do not anticipate declaring or paying cash dividends in the foreseeable future. Any payment of future dividends will be at the discretion of the Company’s board of directors and will depend upon, among other things, our earnings, financial condition, capital requirements, level of indebtedness, contractual restrictions with respect to the payment of dividends and other relevant factors of our operations.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
Various statements in this prospectus contain or may contain forward-looking statements that are subject to known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements were based on various factors and were -derived from utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including those discussed under “Risk Factors,” which could cause our actual results to differ from those projected in any forward-looking statements we make.
Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements and readers should carefully review this prospectus in its entirety, including the risks described in “Risk Factors.” Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. These forward-looking statements speak only as of the date of this prospectus, and you should not rely on these statements without also considering the risks and uncertainties associated with these statements and our business.
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
(a) Market Information
There is presently no public market for our shares of Common Stock. We anticipate applying for quoting of our Common Stock on the OTCBB upon the effectiveness of the registration statement of which this prospectus forms apart. However, we can provide no assurance that our shares of Common Stock will be quoted on the OTCBB or, if quoted, that a public market will materialize.
As of November 26, 2013, the Company had 20 shareholders of its Common Stock.
We have never paid cash dividends on our Common Stock. Payment of dividends will be within the sole discretion of our board of directors and will depend, among other factors, upon our earnings, capital requirements and our operating and financial condition. In addition, under Florida law, we may declare and pay dividends on our Common Stock either out of our surplus, as defined in the relevant Florida statutes, or if there is no such surplus, out of our net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. If, however, the capital of our company, computed in accordance with the relevant Florida statutes, has been diminished by depreciation in the value of our property, or by losses, or otherwise, to an amount less than the aggregate amount of the capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets, we are prohibited from declaring and paying out of such net profits any dividends upon any shares of our capital stock until the deficiency in the amount of capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets shall have been repaired.
(d) Securities authorized for issuance under equity compensation plans
There are no assurances we will satisfy either the quantitative or qualitative listing standards to list our Common Stock on any major stock exchange, or that any exchange will otherwise approve a listing application. Therefore, unless we are qualified to be listed on a major stock exchange, we will attempt to have our Common Stock quoted on the OTCBB, until we establish a minimum bid price for our stock. Unlike a major stock e xchange such as NYSE MKT or NASDAQ, which has specific quantitative and qualitative listing and maintenance standards, the OTCBB is an interdealer quotation service which facilitates quotation of unlisted securities. The OTCBB does not have any listing standards, other than such company must be current in its public disclosure. To be quoted on the OTCBB, a market maker must apply to make a market in our Common Stock. As of the date of this prospectus, we have not made any arrangement with any market maker to apply to make a market in our Common Stock and there can be no assurance that a market will develop or be maintained in our Common Stock. There is no assurance that the shares of our Common Stock will ever be quoted on the OTCBB.
DESCRIPTION OF SECURITIES
We are authorized to issue an aggregate number of 300,000,000 shares of capital stock, of which (i) 230,000,000 shares are Common Stock, $0.0001 par value per share; (ii) 60,000,000 shares are Class B common stock, par value $0.0001 per share; and (iii) 10,000,000 shares of blank-check preferred stock, $0.0001 par value per share.
Class A Common Stock
We are authorized to issue 230,000,000 shares of Common Stock. As of November 26, 2013, 12,600,000 shares of the Common Stock are issued and outstanding.
Each share of Common Stock shall have one (1) vote per share for all purposes. Our common stock does not provide a preemptive or conversion right and there are no redemption or sinking fund provisions or rights. Holders of our Common Stock are not entitled to cumulative voting for election of the Company’s board of directors.
The holders of our Common Stock are entitled to dividends out of funds legally available when and as declared by our board of directors. Our board of directors has never declared a dividend and does not anticipate declaring a dividend in the foreseeable future.
Class B Common Stock
We are authorized to issue 60,000,000 shares of Class B common stock. As of November 26, 2013, 7,000,000 shares of Class B common stock are issued and outstanding.
Each share of Class B common stock shall entitle the holder to ten (10) votes for each one vote per share of the Common Stock, and with respect to that vote, shall be entitled to notice of any stockholders’ meeting in accordance with the Company’s bylaws, and shall be entitled to vote, together as a single class with the holders of Common Stock with respect to any question or matter upon which the holders of Common Stock have the right to vote. Class B common stock shall also entitle a holder to vote as a separate class as set forth in the Company’s bylaws.
The holders of our Class B common stock are entitled to dividends out of funds legally available when and as declared by our board of directors at the same rate per share as the Common Stock. Our board of directors has never declared a dividend and does not anticipate declaring a dividend in the foreseeable future.
Each share of Class B common stock is convertible into one (1) share of Common Stock, subject to adjustment, at any time at the option of the holder.
All outstanding shares of Class B common stock are duly authorized, validly issued, fully paid and non-assessable. So long as any shares of Class B common stock are outstanding, we have agreed not to take the following actions without the prior written consent of the holders of at least a majority of the voting power of the then outstanding Class B common stock:
|·||sell, convey or otherwise dispose of or encumber all or substantially all of our assets, or merger with or consolidate with another corporation, other than our wholly-owned subsidiary, or effect any transaction or series of transactions in which more than 50% of the voting power of our company is transferred or disposed of;|
|·||alter or change any of the rights of the Class B common stock or increase or decrease the number of shares authorized;|
|·||authorize or obligate our company to authorize any other equity security or security which is convertible or exercisable into an equity security of our company which has rights, preferences or privileges which are superior to, on a parity with or similar to the Class B common stock;|
|·||redeem or repurchase any of our securities;|
|·||amend our articles of incorporation; or|
|·||change the authorized number of our board of directors.|
We are authorized to issue up to 10,000,000 shares of preferred stock, par value $0.0001 per share, in one or more classes or series within a class as may be determined by our board of directors, who may establish, from time to time, the number of shares to be included in each class or series, may fix the designation, powers, preferences and rights of the shares of each such class or series and any qualifications, limitations or restrictions thereof. Any preferred stock so issued by the board of directors may rank senior to other existing classes of capital stock with respect to the payment of dividends or amounts upon liquidation, dissolution or winding up of us, or both. Moreover, while providing desirable flexibility in connection with possible acquisitions and other corporate purposes, under certain circumstances, the issuance of preferred stock or the existence of the unissued preferred stock might tend to discourage or render more difficult a merger or other change of control. Currently, no shares of our preferred stock have been designated any rights and we have no shares of preferred stock issued and outstanding.
There are no outstanding warrants to purchase our securities.
There are no outstanding options to purchase our securities.
Transfer Agent and Registrar
Our transfer agent is VStock Transfer. They are located at 77 Spruce Street, Suite 201, Cedarhurst, NY 11516. Their telephone number is (212) 828-8436 and their facsimile number is (646) 536-3179.
USE OF PROCEEDS
This offering is being made on a “best efforts” self-underwritten basis. There are no underwriting commissions involved in this offering. The shares of our Common Stock are being offered and sold on our behalf by our officers and directors who will not receive any commissions or proceeds from the offering for their efforts in this offering.
As there is no minimum offering, we cannot estimate how much in proceeds we will receive from the sale of the shares of our Common Stock offered hereby. The table below sets forth the expected use of proceeds if:
|·||25% of the shares offered hereby are sold;|
|·||50% of the shares offered hereby are sold; and|
|·||100% of the shares offered hereby are sold.|
These three offering scenarios below are presented for illustrative purposes only and the actual amount of proceeds received, if any, may differ. THE USE OF PROCEEDS IS NET OF THE OFFERING EXPENSES, WHICH WILL INCLUDE LEGAL, ACCOUNTING, PRINTING, FILING FEES, EDGAR FEES, TRANSFER AGENT FEES AND BLUE SKY FEES. ONCE THESE ARE ESTIMATED, WE CAN THEN DETERMINE THE NET PROCEEDS AT EACH LEVEL AND THE WORKING CAPITAL. IT WOULD BE FIXED REGARDLESS OF THE AMOUNT OF GROSS PROCEEDS.
|Sale of||Sale of||Sale of|
|Use of Proceeds||(25%)||(50%)||(100%)|
|Offering expenses (1)||$||40,000||$||40,000||$||40,000|
|Construct fueling service stations (2)||$||5,800,000||$||11,600,000||$||17,400,000|
|Working capital (3)||$||1,660,000||$||3,360,000||$||12,560,000|
|Total Funds Remaining||$||0||$||0||$||0|
|(1)||Offering expenses include legal, accounting, SEC filing fees and costs, EDGAR fees, blue sky, transfer agent fees and other direct costs associated with this offering. We expect to pay the offering costs from cash on hand and the proceeds of this offering.|
|(2)||We estimate the costs of building a gasoline and diesel fueling service station along with a convenience store, to be approximately $2.5 million and adding both LNG and CNC storage and dispensers will cost to be another $3.8 million and adding a vehicle retrofitting garages to be about an additional $2 million bringing our total cost to be about $5.8 million per self-built combined gasoline and NG station. The actual number of fueling service stations and retrofitting garages, we will be able to construct and operate will be dependent upon the net proceeds we receive from the sale of the shares of Common Stock offered hereby.|
Our cost estimations are based on the research we have done via the internet and the discussions we had with construction contractors and those who are insiders of natural gas trade. For equipment cost to be installed in the NG stations and factories we consulted equipment suppliers including Croystar USA. Also we used statistics of other NG stations currently in operation, as provided by a few business brokers in the business of selling existing gasoline and diesel stations, to establish the operational cost and profitability of gasoline and diesel fueling stations in the United States. Instead of building a gasoline station, we may choose to acquire an existing gasoline and diesel station with enough space to expand it to accommodate LNG and CNG fueling capabilities. The cost of such acquisition and expansion, we believe, will be quite similar to what we have stated above.
It is possible that these estimations may change materially during the course of the projects. In the event the actual costs are higher than we presently estimate, we will be required to reduce the estimated number of fueling service stations we will be able to construct using the proceeds of this offering.
|(3)||Includes funds for general overhead and operating expenses, as well and fees and costs associated with an application to list our Common Stock on a major stock exchange.|
We believe the anticipated proceeds of this offering, together with cash on hand and projected cash flow from operating activities, will allow us to conduct our operations for at least the next 24 months if only 25% of the shares offered hereby are sold and for at least 60 months if the maximum number of shares of Common Stock are sold.
DETERMINATION OF OFFERING PRICE
Before this offering, there has been no public trading market for our shares of Common Stock, and we cannot give any assurance to you that an active secondary market might develop or will be sustained after this offering. The price of the shares of Common Stock we are offering has been determined solely by us, as there is no underwriter involved in this offering, and, as such, is arbitrary in that the price does not necessarily bear any relationship to our assets, earnings, book value or other criteria of value, and may not be indicative of the price that may prevail in the public market. No third-party valuation or appraisal has ever been prepared for our business. Among the factors we considered in setting a price were, without one factor being materially more important than the others):
|·||our internal future expectations of our operations and financial performance;|
|·||our limited operating history, as well as the other numerous obstacles we face in operating and expanding our business, as described in the “Risk Factors” section of this prospectus;|
|·||the amount of capital to be contributed by purchasers in this offering in proportion to the number of shares Common Stock and Class B common stock to be retained by our existing shareholders; and|
|·||our cash requirements to run our business over the next 12 to 60 months.|
Dilution represents the difference between the offering price and the net tangible book value per share of common equity immediately after completion of this offering. Net tangible book value is the amount that results from subtracting our total liabilities and intangible assets from our total assets. Dilution arises mainly as a result of our arbitrary determination of the offering price of the shares of Common Stock being offered. Dilution of the value of the shares of Common Stock you purchase is also a result of the lower net tangible book value of the shares held by our existing shareholders.
As of November 26, 2013, the net tangible book value of our shares of common equity, which includes our Common Stock and Class B common stock, was approximately $0.0091 based upon combined outstanding shares of Common Stock and shares of Class B common stock. The following table provides information regarding:
|·||the net tangible book value per share of common equity before and after this offering;|
|·||the amount of the increase in the net tangible book value per share of common equity attributable to the purchase of the shares of Common Stock being offered hereby; and|
|·||the amount of the immediate dilution from the public offering price which will be absorbed by purchasers in this offering.|
The following table presents information assuming the sale of:
|·||25% of the shares offered hereby;|
|·||50% of the shares offered hereby; and|
|·||100% of the shares offered hereby.|
These three dilution scenarios below are presented for illustrative purposes only and the actual amount of dilution to purchasers in this offering may differ based upon the number of shares of Common Stock sold in this offering.
|Net tangible book value per share of common equity prior to offering||0.0091||0.0091||0.0091|
|Net tangible book value per share of common equity after offering||0.3456||0.6154||1.0182|
|Increase in net book value per share of common equity due to offering||0.3365||0.6063||1.0091|
|Dilution (offering price of $3.00 less net book value per share of common equity) to investors purchasing shares of Common Stock in this offering.||2.5440||2.3846||1.9818|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL STATEMENTS
AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION OF OUR PLAN OF OPERATION SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND RELATED NOTES TO THE FINANCIAL STATEMENTS INCLUDED ELSEWHERE IN THIS REGISTRATION STATEMENT. THIS DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT RELATE TO FUTURE EVENTS OR OUR FUTURE FINANCIAL PERFORMANCE. THESE STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE OUR ACTUAL RESULTS, LEVELS OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, LEVELS OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY THESE FORWARD-LOOKING STATEMENTS. THESE RISKS AND OTHER FACTORS INCLUDE, AMONG OTHERS, THOSE LISTED UNDER “FORWARD-LOOKING STATEMENTS” AND “RISK FACTORS” AND THOSE INCLUDED ELSEWHERE IN THIS REGISTRATION STATEMENT.
We are a newly formed, development stage company, established to construct and manage a chain of combined gasoline, diesel and NG fueling and service stations and conversion factories to convert NG to LNG and CNG along with conversion factories to retrofit vehicles currently using gasoline or diesel fuel to also run on NG in the United States. We may also expand our operation to a few foreign nations in partnership with local investors and management in those nations. The vehicle conversion division of NGFC also will be a joint venture operation between NGFC and Shenzhen HJ Technology Co. Ltd. (HJT), a company that is currently in vehicle conversion business in China.
We were recently formed and all activity to date has been related to formation of our business, formulation of our business plan, raising initial capital and initial start-up operations such as investigating potential sites for our natural gas motor vehicle fueling stations, reviewing zoning and environmental regulations relating to such stations, investigating sources of supply for natural gas, liquid natural gas and compressed natural gas fueling stations and researching the machinery and equipment needed for those stations, identifying potential contractors for building stations, researching the U.S. Environmental Protection Agency (EPA) regulations regarding vehicle conversion and identifying consulting firms who can get our vehicle conversion division certified by EPA to successfully conduct business and our management focusing on development of our proposed financing. Our ability to proceed with our plan to develop and build the few initial stations depends upon our obtaining adequate financial resources through this offering. As of November 26, 2013, we had not incurred any material costs or expenses other than those associated with the formation and financing of our company.
Plan of Operation
Below is a brief description of the activities which we have established to achieve the opening of our initial three combined gasoline and NG fueling service stations and factories to retrofit vehicles to run on NG. These activities were undertaken by our officers.
The following activities have already been accomplished:
|·||Located 3 existing gasoline fueling stations to acquire and expand to add NG fueling;|
|·||Engaged a business broker to look for a series of appropriate stations to acquire;|
|·||Located a potential site to build a LNG station to fuel trucks;|
|·||Engaged a construction company “Cryostar USA” to give us an estimate on building NG fueling stations or expanding current gasoline stations to add NG fueling stations; and|
|·||Consulted with Cryostar on providing, installing and testing of the NG filling station equipment.|
Management believes that we will require approximately $17.4 million of available capital to acquire three existing gasoline and diesel combined stations and add NG fueling capabilities along with garages to retrofit vehicles to run on NG, which we hope to receive from the proceeds of this offering. Upon the availability of such proceeds, we will take the following activities to begin our initial three gasoline, diesel and NG fueling service stations. We estimate that these activities will be completed and the station opened for business on the following approximated schedule after the availability of such capital:
|·||acquiring an existing gasoline and diesel fueling stations (approx. 30 days);|
|·||reviewing or setting up the current accounting systems, internal control and other procedures (approx. 15 days);|
|·||consult with professionals to plan for expansion of the station to add vehicle conversion garage and NG fueling bays (approx. 60 days);|
|·||interview and engage a construction contractor (approx. 15 days);|
|·||construction of the structural buildings (approx. 90 days);|
|·||installation and testing of equipment which is obtained from an equipment supplier selected through bidding (approx. 30 days);|
|·||hire and train employees (approx. 15 days); and|
|·||obtain final approval of all relevant government agencies and test operation of the stations (approx. 30 days).|
Liquidity and Capital Resources
We will require approximately $5.8 million of available capital for each proposed fueling service station along with convenience stores and about $2 million for a vehicle retrofitting station. If such capital does not become available from the proceeds of this offering or other sources we will continue development stage operations for the next 12 months from available cash on hand while seeking additional sources of capital. There can be no assurance that such additional capital will be available.
If we succeed in opening one or more combined gasoline and CNG and LNG fueling service stations and vehicle retrofitting garages, we anticipate that fuel sales at such stations and fees we will make from retrofitting vehicles to run on gasoline and NG will generate sufficient cash flow to support our operations for the next 12 months. However, this is based on our assumption of achieving significant sales of fuel and from conversion division at our stations and there can be no assurance that such sales levels will be achieved. Therefore, we may require additional financing through loans and other arrangements, including the sale of additional equity. There can be no assurance that such additional financing will be available, or if available, can be obtained on satisfactory terms. To the extent that any such financing involves the sale of our equity securities, the interests of our then existing shareholders, including the investors in this offering, could be substantially diluted. In the event that we do not have sufficient capital to support our operations we may have to curtail our operations.
Our officers will provide daily management of our company, including administration, financial management, production, marketing and sales. We will also engage other employees and service organizations to provide services as the need for them arise. These could include services such as computer systems, sales, marketing, advertising, public relations, cash management, accounting and administration.
Upon the effective date of the registration statement of which this prospectus is a part, we will be subject to certain reporting and other compliance requirements of a publicly reporting company. We will be subject to certain costs for such compliance which private companies may not choose to make. We have identified such costs as being primarily for audits, legal advice, filing expenses, financial and reporting controls and shareholder communications and estimate the cost to be approximately $200,000 annually. We expect to pay such costs from a combination of cash on hand, the proceeds of this offering and cash generated by product sales.
There can be no assurance that we will be able to successfully develop and open any combined gasoline and NG fueling service stations and vehicle retrofitting garages, or otherwise implement any portion of our long term business strategy. We believe that we can control the operating and general and administrative expenses of our operations to be within the cash available from this offering and from the sales which we may make at any fueling service stations we open. If our initial operations indicate that our business can establish and fulfill a demand for CNG and LNG fueling service stations and converting vehicles to run on NG on a basis which will lead to establishment of a profitable business we may seek additional sources of cash to grow the business. We do not currently have any commitments from customers for the use of our proposed fueling service stations or for additional financing.
Off Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that we are required to disclose pursuant to these regulations. In the ordinary course of business, we enter into operating lease commitments, purchase commitments and other contractual obligations. These transactions are recognized in our financial statements in accordance with generally accepted accounting principles in the United States.
Critical Accounting Policies
The preparation of financial statements requires management to utilize estimates and make judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. These estimates are based on historical experience and on various other assumptions that management believes to be reasonable under the circumstances. The estimates are evaluated by management on an ongoing basis, and the results of these evaluations form a basis for making decisions about the carrying value of assets and liabilities that are not readily apparent from other sources. Although actual results may differ from these estimates under different assumptions or conditions, management believes that the estimates used in the preparation of our financial statements are reasonable. The critical accounting policies affecting our financial reporting are summarized in Note 2 to the financial statements included elsewhere in this prospectus.
Recent Accounting Pronouncements
We determined that all other issued, but not yet effective accounting pronouncements are inapplicable or insignificant to us and once adopted are not expected to have a material impact on our financial position.
Anticipated Future Trends
Due to increase in future supply of NG, we expect NG prices to stay below the prices of gasoline and diesel in the future, making it more attractive for consumers to use NG powered vehicles. We also expect global governments to encourage using NG as an alternative fuel and continue to give both direct and indirect subsidies in the form of tax credits to encourage use of natural gas. We also expect the EPA to make the process of conversion of vehicles to NG to be less stringent as this technology develops further and as the benefits of using NG becomes more readily apparent.
We were incorporated in the State of Florida on October 2, 2013, to construct and manage a chain of combined gasoline and NG fueling/service stations and conversion factories to convert NG to LNG and CNG, along with conversion factories to convert vehicles to run on NG in the United States. We may also expand our operation to several foreign nations in partnership with local investors and management in those nations and have begun discussions to do so, but so far have not made any formal agreements. We may also acquire currently operating gasoline and diesel fueling stations, along with convenience stores, with space to expand the operation to include LNG and CNG fueling.
Our planned vehicle conversion division will be a joint-venture operation between us and HJT, in Shenzhen, China, which is currently in the business of converting petroleum based vehicles to operate on NG in China. HJT is a well-established and profitable enterprise that specializes in the research, development, production and marketing of automobile software and components, and has been focusing on the technology of alternative energy for vehicles. After years of testing and perfecting a proprietary process, HJT had its first breakthrough in 2000 with its patented “Gas Intelligent Electronic Control System” (GIECS), a system for converting petroleum based vehicles to run on CNG or LNG. HJT’s GIECS system, according to HJT management, is a market leader in this technology that is widely used throughout China and exported abroad. Currently, HTJ, according to HJT management, has 20 conversion factories which install conversion kits to convert petroleum-based vehicles to run on CNG/LNG.
The Market for Vehicle Fuels
According to the U.S. Department of Energy’s Energy Information Administration (EIA), the United States consumed an estimated 175 billion gallons of gasoline and diesel in 2006, and demand is expected to grow at an annual rate of 1.4% to 250 billion gallons by 2030. Gasoline and diesel comprise the vast majority of vehicle fuel currently consumed in the United States, while CNG, LNG and other alternative fuels represent less than 3% of this consumption, according to the EIA. Alternative fuels, as defined by the U.S. Department of Energy (DOE), include natural gas, ethanol, propane, hydrogen, biodiesel, electricity and methanol.
In recent years, domestic prices for gasoline and diesel fuel have increased significantly, largely as a result of higher crude oil prices in the global market and limited refining capacity. Crude oil prices have been affected by increased demand from developing economies such as China and India, global political issues, weather-related supply disruptions and other factors. Industry analysts believe that crude oil producers will continue to face challenges to find and produce crude oil reserves in quantities sufficient to meet growing global demand, and that the costs of finding crude oil will increase. Some analysts predict that crude oil prices will remain at high levels compared to historical standards. Limited domestic refining capacity is also expected to continue to impact gasoline and diesel prices.
We believe that crude oil, gasoline and diesel prices that are high relative to historical averages, combined with increasingly stringent federal, state and local air quality regulations have created a favorable market opportunity for alternative vehicle fuels in the United States. NG as an alternative fuel has been widely used for many years in other parts of the world such as in Europe and Latin America, based on the number of NG vehicles in operation in those regions. The Gas Vehicle Report estimated that there were approximately 150,000 NG vehicles in the United States, compared to approximately five million worldwide as of December 31, 2006.
According to Cummins Westport web site, currently there are approximately 1,200 CNG fueling stations in the United States. This number is miniscule when compared with the total number of gasoline fueling stations in the United States which, a ccording to National Petroleum News, equals approximately 168,000 gasoline fueling stations as of 2004.
Natural Gas as an Alternative Fuel for Vehicles
We believe that NG is an attractive alternative to gasoline and diesel for vehicle fuel in the United States because it is cheaper, cleaner and safer than gasoline or diesel. In addition, almost all NG consumed in the United States and Canada is produced from U.S. and Canadian sources. According to the EIA, in 2006, there were approximately 43 billion cubic feet or 300 million gasoline gallon equivalents of NG consumed in the United States for vehicle use, which is nearly double the amount consumed in 2000.
NG vehicles use internal combustion engines similar to those used in gasoline or diesel powered engines. A natural gas vehicle uses airtight storage cylinders to hold CNG or LNG, specially designed fuel lines to deliver NG to the engine. NG fuels have higher octane content than gasoline or diesel, and the acceleration and other performance characteristics of NG vehicles are similar to those of gasoline or diesel powered vehicles of the same weight and engine class. NG vehicles, whether they run on CNG or LNG, are refueled using a hose and nozzle that makes an airtight seal with the vehicle’s gas tank. For heavy-duty vehicles, NG versions operate more quietly than diesel powered vehicles. According to Deere & Company (John Deere), the decibels generated by running one diesel engine equal the decibels generated by running nine NG engines.
Almost any current make or model passenger car, truck, bus or other vehicle is capable of being manufactured or modified to run on NG. However, in North America only a limited number of models of NG vehicles are available. Only Honda offers a factory built NG passenger vehicle, a version of its Civic 4-door sedan called the GX. A limited number of other passenger vehicles and light-duty trucks are available through small volume manufacturers. These manufacturers offer current model vehicles made by others that they have been modified to use NG and which have been certified to meet federal and state emissions and safety standards. Some GM and Ford models are now certified, including the Ford Crown Victoria, Ford E Van and GM Savanna/Express Van. Modifications involve removing the gasoline storage and fuel delivery system and replacing it with high pressure fuel storage cylinders and fuel delivery lines.
Heavy-duty NG vehicles are manufactured by traditional original equipment manufacturers. These manufacturers offer some of their standard model vehicles with NG engines and components, which they make or purchase from engine manufacturers. Cummins, Inc. and John Deere manufacture NG engines for medium and heavy-duty fleet applications, including transit buses, refuse trucks, delivery trucks and street sweepers. We believe that use of NG as a vehicle fuel has major benefit, because NG is cleaner for environment, cheaper to the consumer and safer than gasoline carrying vehicles to operate.
Sources of Revenue
Initially, we anticipate our main source of revenue to be derived from self-constructed (or acquired gasoline stations) combined gasoline and NG fueling stations and vehicle conversion garages, and from the convenience stores we plan to build on the premises. As we expand, we also expect to generate income from NG to LNG and CNG conversion factories and franchised fueling and franchised vehicle conversion garages.
We estimate that we will require approximately $3.8 million of capital to build a combined gasoline and NG fueling station and convenience store, and another $2 million to build the service station to convert vehicles to run on LNG and CNG. We estimate the cost to acquire an established gasoline and diesel fueling station with a convenience store and expand the operation to add LNG and CNG fueling and vehicle conversion to be similar to the above stated cost.
If we are successful with this offering, we plan to use the proceeds received to build three combined gasoline and NG fueling stations (or acquire existing gasoline stations and expand them to include NG fueling), along with gasoline to NG vehicle conversion garages and convenience stores at each location. Because NG vehicles are not yet common in the United States, we plan to provide gasoline at our three planned fueling stations until such time that NG run vehicles are as prevalent or more prevalent than gasoline vehicles.
If our strategy is successful, we believe the Company will generate enough cash flow from the first three stations to pay for the maintenance of those stations and also to meet the cash flow needs of our corporate office. However, we will have to raise more funds to expand the operation and plan to do that by further equity offerings and debt offerings. There is no certainty that we will be successful in raising money from additional offerings even if we are successful with our planned offerings.
Due to increase in future supply of NG, we expect NG prices to stay below the prices of gasoline and diesel making it more attractive for consumers to use NG powered vehicles. We also expect due to the benefits of environmental issues, with NG being one of the cleanest energy sources, global governments to encourage using NG as an alternative fuel and continue to give both direct and indirect subsidies in the form of tax credits etc. to encourage use of NG. We also expect the EPA to make the process of conversion of vehicles to NG to be less stringent as this technology develops further and as the benefits of using NG is more apparent.
Environmental Conditions and NG Consumption
Due to tremendous decades of growth in the emerging nations, the world is fast becoming polluted. According to a study conducted by Cornell University examining more than 120 published papers on the effects of population growth, malnutrition and various kinds of environmental degradation on human diseases, and according to a report by World Health Organization in March 2007, pollution has become the number one enemy of the population in many emerging nations with air, water and soil pollution contributing to malnourishment, dieses and deaths to about 3.7 billion people. According to the above studies air pollution from smoke and various chemicals kills three million people a year. Therefore, the governments in emerging nations are encouraging entrepreneurs to come up with ways to reduce carbon emissions and carbon footprints, often working even as venture capital partners through their state-owned investment funds. Such cooperation from the governments, we believe, will enable the Company to eventually expand our operation to several emerging nations.
According to the EPA, the cleaner burning NG fuel reduces combustion by products over petroleum and diesel, cutting carbon monoxide emissions by an estimated 90% to 97%, nitrogen dioxide emissions by 35% to 60%, and reduces carbon dioxide emissions by an estimated 25% to 30%. The automotive industry could potentially take a giant step forward to reduce air-pollution and lower energy costs globally by using NG, and further, will provide the Company and companies like ours the opportunity to fulfill the potential growth in demand of NG.
The Company plans to construct, or acquire and expand, combined gasoline and NG fueling stations, NG conversion factories and vehicle conversion factories and manage those stations through our in-house management team as part of our operating strategy as we begin our business. We plan to franchise some of our fueling stations along with vehicle conversion garages to qualified franchisees who we will train to manage those locations. We also plan to acquire existing gasoline stations that we plan to expand to include NG fueling bays and vehicle conversion garages. The Company has divided the planned structure of its operations into six divisions, as follows:
|(1)||Self-Constructed CNG/LNG factories;|
|(2)||Self-Constructed Gasoline and CNG/LNG Fueling Stations;|
|(3)||Self-Constructed Vehicle Conversion Factories;|
|(4)||Franchised Gasoline and CNG/LNG Fueling stations;|
|(5)||Franchised Vehicle Conversion Factories; and|
|(6)||Acquired Fueling/Service Stations expanded to sell NG.|
We plan to sell both CNG and LNG in our planned fueling stations. NG comes in gaseous state and has to be either compressed as CNG or liquefied as LNG to be used by vehicles. CNG is generally used in automobiles and other light to medium duty vehicles as an alternative to gasoline. CNG is produced from natural gas that is supplied by local utilities to CNG vehicle fueling stations, where it is compressed and dispensed into vehicles in gaseous form. LNG is generally used in trucks and other medium to heavy-duty vehicles as an alternative to diesel, typically where a vehicle must carry a greater volume of fuel. LNG is natural gas that is super cooled at a liquefaction facility to -162 degrees Celsius (-260 degrees Fahrenheit) until it condenses into a liquid, which takes up about 1/600th of its original volume as a gas.
As we begin our operation, we plan to buy LNG and CNG from other distributors but as part of our expansion plan, we plan to set up our own LNG and CNG factories where we will buy NG in gaseous state from local utility companies and then convert NG to LNG and CNG to be distributed to our fueling stations. In the future, when we have the funds to build LNG and CNG factories, we plan to own our own fleet of trucks to distribute both LNG and CNG to our fueling stations.
LNG is more suitable for long-distanced driving than CNG since LNG takes lesser space to store in a vehicle. LNG producing is more complex than the production of CNG. LNG production includes reducing the temperature of the gas to approximately -200 degrees Fahrenheit when being stored at 100 psi on a vehicle. LNG is stored in a vacuum insulated tank to assure it remains super cold for long periods of time. If LNG were to warm up, it would build pressure in the storage tank and automatically vent into the atmosphere. Once in the atmosphere it would quickly disperse into the stratosphere because it is much lighter than air. Cost of building an LNG factory to liquefy NG to LNG, to distribute such LNG to fueling stations, we have estimated to be about $80 million. Thus we expect to build LNG factories at a later stage of our operation. Further, as technology in the NG business develops, we believe that we may be able to find alternative and less expensive ways of converting NG to LNG that can be used to fuel vehicles in our stations.
CNG is most common NG used in vehicles because it is relatively easy to produce. The CNG is produced by compressing CNG to a pressure of 3,600 pounds per square inch (psi). CNG is stored in small diameter cylinders, specially designed for high pressure. A CNG tank can fit in the same space as a gasoline tank, but unfortunately it will only provide about one-fourth the driving range as the gasoline tank. In some cases, CNG tanks are added to a vehicle in addition to the existing gasoline tank. This duel fuel application allows the driver to operate the vehicle on natural gas and then switch to gasoline in the event a natural gas station is out of range. Cost of building an independent CNG factory to convert NG to CNG to be distributed to fueling stations, we estimate to be about $3.5 million. We plan to build the CNG factory at a later stage of our operation.
Vehicle Conversion Division
Our planned vehicle conversion division will be a joint-venture operation between us and HJT, in Shenzhen, China, which is currently in the business of converting petroleum based vehicles to operate on NG in China. Established in 1996, HJT specializes in the research, development, production and marketing of automobile software and components, and has been focusing on the technology of alternative energy for automobiles. In 2000, HJT patented its “Gas Intelligent Electronic Control System” (GIECS), a system for converting petroleum-based vehicles to run on CNG.
The GIECS system is a cutting-edge technology for CNG conversion that also works with LNG and Liquefied Petroleum Gas (LPG) (NG to imply both). Using GIECS as the infrastructure, HJT developed the diesel/CNG (LNG) dual-fuel conversion kits for diesel vehicles, and the gasoline/LPG/CNG/LNG bi-fuel conversion kits for gasoline vehicles.
HJT’s diesel/CNG (or LNG) dual-fuel system is a unique technology in China, and was certified by the Chinese government as the “National Key New Product” and “The Key New Product of Guangdong Province” in 2005. The system is widely used in Sichuan Province, Xinjiang Province, Hunan Province, Hebei Province and exported abroad. The widespread distribution network that HJT has created ensures that the product is available on the markets through a specialized service that guarantees maximum customer satisfaction. Currently, HJT has 20 locations throughout China where they install devices to convert petroleum based vehicles to run on CNG/LNG.
In the United States, vehicle conversion is regulated by the EPA that adds to the cost of conversion process. Currently, we are discussing with consulting firms who specialize in clearing EPA inspections and certifications for converted vehicles and conversion kits and plan to engage these entities to provide us those services.
Why Natural Gas?
NG, in the most widely used sense, refers to the hydrocarbon-rich combustible gas stored in the deeper layer of Earth’s stratum, as opposed to oilfield-associated gas, of the NG family coexisting with petroleum. NG has transformed from organic matters hundreds of millions years ago. Its main component is methane and depending on the difference in the geological forming conditions, contains different amounts of low-carbon alkane like ethane, propane, butane, pentane, hexane and carbon dioxide, nitrogen, hydrogen sulfide. NG has been an important energy source, widely used in domestic and industrial areas.
NG in a gaseous state under atmospheric pressure will turn into CNG and to a liquid state when being cooled to make LNG. Compared with gaseous-state NG, CNG/LNG is more energy-concentrated and also can significantly reduce space and costs needed in storage and transportation. As a clean and efficient energy, LNG has been increasingly favored by many countries as a primary energy source.
According to U.S. Energy Information Administration, Global dry natural gas production increased between 110% between 1980 and 2010 from 53 trillion cubic feet (Tcf) in 1980 to 112 Tcf in 2010. Many countries have realized CNG/LNG’s importance in diversifying energy sources and improving energy consumption structure, and according to EIA, the number of CNG/LNG fueling stations built in Japan, the United States, Korea and Europe are expanding rapidly. Multinational petroleum companies also have begun setting up CNG/LNG stations as part of their expansion strategy.
In 2011, the U.S. Energy Information Administration (EIA) reported that world natural gas consumption was approximately 114 trillion cubic feet. At that level of consumption, the world has over 116 years of NG from the current global NG reserves and the assessed shale gas resources. China leads the world in shale gas resources according to the EIA, but the U.S. leads the world in shale gas production, with the world’s second largest resources of shale gas. NG vehicles have acquired much wider market recognition due to their environmental friendliness and cost-efficiency. Especially in the last 20 years, the NG auto-industry has increased significantly in developed economies. According to EIA, to date, more than 30,000 NG stations have been built around the world. We believe these numbers will increase significantly in the future, offering companies like ours the opportunity to capitalize on that demand using our technology.
Change in World Natural Gas Production by Region, 2008–2035 (Trillion cubic feet)
Estimated by the US Energy Information Administration
OECD stands for the Organization for Economic Co-operation and Development. Established in 1948, it consists of 30 countries that are high-income producing countries which are considered developed.
Economic Factor—NG vs. Gasoline and Diesel
The following factors, according to Reuters, are driving up the demand for LNG vehicles:
|·||Recent global discoveries of massive shale gas reserves (China is the largest reserve in the world), along with more innovative drilling techniques (e.g. “fracking” has boosted LNG supplies). However, more infrastructures are necessary to utilize the increased supply; and|
|·||China will embark on a bold strategy to encourage auto companies to manufacture at least 1.5 million NG-powered vehicles in the country by 2015. If this turns into reality, China could transform into the world’s largest market for NG automobiles . LNG vehicles can reduce carbon emissions, since it’s a cleaner and cheaper burning fuel.|
The Benefits of Using Liquefied Natural Gas as a Diesel Alternative
|·||Lower Fuel Cost: Conversion cost can be paid back over a short period (Truck conversion cost $10,000);|
|·||Lower Emissions: LNG has lower greenhouse gas and particulate emissions compared with diesel; and|
|·||Lower Noise Levels: Much quieter than normal diesel engines.|
Governments of emerging nations, such as the Chinese government, are doing all it can to encourage entrepreneurs to come up with ways to reduce carbon emissions and carbon footprints, often working as venture capital partners through their state-owned investment funds. City governments in China have implemented policies to encourage the industrialization of CNG passenger cars, LNG heavy-duty trucks and engines, LPG engines and direct-injection LNG engines.
Since the central government began to implement NG policies in pilot cities across the country, China has developed a domestic industry for NG products. In 2010, more than 60 NG vehicle manufacturers produced over 150,000 NG vehicles, and approximately 20 engine manufacturers had capacity to produce 1.0 million NG engines annually. Within the passenger car market, taxis are the target segment for NG engines because of the potential for operational cost savings.
The Following are examples of benefits to retail consumer in the United States and in two other major industrial nations in Asia, China and Japan, using NG (in the form of LNG and CNG) as opposed to petroleum and diesel fuels. These are approximate comparisons as many variables, including the model of the vehicles being measured, are factored into these comparisons.
Illustrative Cost/Benefit of NG vs. Alternative Fuel Usage in USA
As published by Los Angeles Times On Line web, Tim Conlon, president and general manager of California Yellow Cab, has pointed out that in Orange County, California per gallon equivalent of CNG is almost $2 less than the price of a gallon of traditional fuel. Mr. Conlon believes, such savings added to the increased infrastructure support, makes sense for them to go with the CNG-powered Transit Connect Taxis.
Illustrative Cost/Benefit of NG vs. Alternative Fuel Usage in China
According to the data provided by Inner Mongolia report, if a heavy truck consumes 40L petrol or diesel and run 100,000 kilometers (KM) will spend about 300,000 RMB based on the average cost of petrol/diesel being 7.5 RMB/Liter. The same 100,000 KM could be run with 40 Cubic meter of LNG costing 149,200 RMB. Thus using LNG will save 150,800 RMB (about $23,673) per 100,000 KM in Inner Mongolia in China, according to that study.
Illustrative Cost/Benefit of NG vs. Alternative Fuel Usage in Japan
In Japan, in February 2010, HANA Engineering, a Japanese company in the business of making conversion kits to convert petroleum based cars to run on NG, fitted a Honda Civic with proper engine parts to run on gasoline and then on LNG and on CNG and came up with the following findings:
They filled the gas tank with $100.00 worth of gasoline and drove the Honda Civic for an “X” number of miles and then ran the same distance using LNG and CNG. They reported that the same distance can be run for $40.00 using CNG and for $70.00 using LNG.
LNG is safer than petrol or diesel since LNG combustion point is about 650 centigrade while about 260 degrees C for diesel and petrol.
Current and Trend in Future NG prices
Although China has the biggest NG reserves underground, due to lack of ability to exploit them to keep up with the unanticipated demand caused by recent market reforms, China has been importing NG from other nations mainly from North America and Australia where they have superior techniques to exploit their reserves. Once China begins to extract their own NG for domestic use, we believe, the NG prices may go down further in the global market.
Growth in NG as a Transportation Fuel
|·||Currently, transit vehicles (buses, taxis, airport shuttles) are the largest users of natural gas;|
|·||The fastest growing Natural Gas Vehicle (NGV) segment is waste collection and transfer vehicles;|
|·||NGV Global, the international NGV body, estimates there will be more than 50 million NGVs worldwide within the next ten years, or about 9% of the world transportation fleets;|
|·||Industry data shows that vehicular natural gas nearly doubled between 2003 and 2009. In 2010, NG displaced more than 350 million gasoline gallon equivalents; and|
|·||According to NGV Global , the number of NGVs in use worldwide by the end of 2011 had grown to 15.2 million. Global NGV sales, according to Pike Research , are expected to rise at a compound annual growth rate (CAGR) of 7.9% to reach 19.9 million vehicles by 2016. NGVs have been most successful in the Middle East and Latin America, especially so in countries that lack a high capacity to refine oil.|
According to the Gas Vehicle Report, below are the top ten countries that use natural gas run vehicles:
% of Total NGVs
Five-Year Growth Strategy
Provided this offering is successful, we will use part of the funds received to begin constructing one to three combined gasoline and NG fueling service stations along with vehicle conversion garages and convenience stores. We plan to use that as our model and the base to market and expand our operation. While the construction is being progressed we plan to do further equity and bond offerings to meet the cost of expansion. Additional strategies include:
|(1)||Aggressively look for potentially ideal locations to set up new fueling and service stations along with vehicle conversion garages throughout the United States;|
|(2)||Acquisition of exiting gas service stations to add CNG/LNG bays, offering a combination of both;|
|(3)||Generate revenue through franchising fees for CNG/LNG fueling/service stations;|
|(4)||Build conversion plants to convert NG to CNG/LNG, contiguous with CNG/LNG fueling/service stations (1 LNG conversion plant for 20 stations); and|
|(5)||Expand business model to emerging growth countries.|
Tax Incentives and Government Grants
There are numerous U.S. federal and state government tax incentives, laws and regulations and programs and grants available to promote purchase and use of NG vehicles and sale of NG as alternative fuel. Incentives are typically available to offset the cost of acquiring NG vehicles or converting vehicles to use NG, constructing NG fueling stations and selling CNG or LNG.
The market for vehicular fuels is highly competitive. The biggest competition for CNG, LNG and other alternative fuels is gasoline and diesel, the production, distribution and sale of which are dominated by large integrated oil companies. The vast majority of vehicles in the United States are powered by gasoline or diesel. There is no assurance that we can compete effectively against other fuels, or that significant competitors will not enter the NG fuel market.
Within the United States, we believe the largest enterprises engaged in CNG sales are: (i) Trillium USA/Pinnacle CNG, a privately held provider of CNG fuel infrastructure and fueling services, which focuses primarily on transit fleets in California, Arizona and New York, and (ii) Hanover Compressor Company, a large publicly-traded international provider of NG compressors and related equipment, which focuses its CNG vehicle fuel business primarily on transit fleets in California, Maryland, Massachusetts and Washington D.C. These companies are significant competitors in the market for transit fleets.
Within the U.S. LNG market, one of the largest competitors is Earth Biofuels, Inc., a public company that distributes LNG in the western United States. Another major competitor, Clean Energy Fuels Corporation, one of the biggest natural gas owners and operators in the United States. They own, operate or supply over 300 CNG and LNG fueling stations. In addition, potential entrants to the market for natural gas vehicle fuels include the large integrated oil companies, other retail gasoline marketers and natural gas utility companies. The integrated oil companies produce and sell crude oil and natural gas, and they refine crude oil into gasoline and diesel. They and other retail gasoline marketers own and franchise retail stations that sell gasoline and diesel fuel. In international markets integrated oil companies and other established fueling companies sell CNG at a number of their vehicle fueling stations that sell gasoline and diesel. Natural gas utility companies own and operate the local pipeline infrastructure that supplies natural gas to retail, commercial and industrial customers.
In addition, potential entrants to the market for NG vehicle fuels include the large integrated oil companies, other retail gasoline marketers and natural gas utility companies. The integrated oil companies produce and sell crude oil and NG, and they refine crude oil into gasoline and diesel. They and other retail gasoline marketers own and franchise retail stations that sell gasoline and diesel fuel. In international markets, integrated oil companies and other established fueling companies sell CNG at a number of their vehicle fueling stations that sell gasoline and diesel. NG utility companies own and operate the local pipeline infrastructure that supplies NG to retail, commercial and industrial customers.
Our vehicle conversion division will face, significant competition, including from incumbent technologies, and in particular increased competition with respect to spark-ignited NG engine original equipment manufacturers in China and aftermarket kit providers in Europe. As the market for NG engine products continues to grow this competition may increase. New developments in technology may negatively affect the development or sale of some or all of our products or make our products uncompetitive or obsolete. Other companies, many of which have substantially greater customer bases, businesses and financial and other resources than us, are currently engaged in the development of products and technologies that are similar to, or may be competitive with, certain of our products and technologies. In addition, the terms of some of our joint venture agreement with HJT allows for the potential for the introduction of competing products in certain markets by our joint venture partner.
Each of our target markets in vehicle conversion is currently serviced by existing manufacturers with existing customers and suppliers using proven and widely accepted technologies. Many existing manufacturers have or had NG engine programs and could develop new engines without our help or components, using more conventional technologies or technologies from competitive companies. Currently, Westport Innovations Inc. (“Westport”) is the leading manufacturer of low-emission engine and fuel system technologies utilizing gaseous fuels. Its technology and products enable light, medium, heavy-duty and high horsepower petroleum-based fuel engines to use primarily NG and alternative fuels. Westport’s technology and products enable light (less than 5.9 litre), medium (5.9 to 8.9 litre), heavy-duty (11 to 16 litre) and high-horsepower (greater than 16 litre) petroleum-based fuel engines to use primarily NG, giving users a cleaner and generally less expensive alternative fuel based on a more abundant natural resource. Through their partnerships and direct sales efforts, they sell a large number of NG and propane engines and fuel systems to customers in various nations. Westport also has strategic relationships with the world’s top four engine producers or has strategic relationships with the world’s top truck producers, as well as the world’s top automotive manufacturers. Westport may get into converting the used vehicles to run on NG using their superior technology and capital and may make the small start-up companies such as us competing to convert used vehicles to run on NG no longer profitable to operate.
It is possible that any of these current competitors, in any of our divisions of operation, and other competitors who may enter the market in the future, may create product and service offerings that will make it impossible for us to capture any market segment. Many of these companies have far greater financial and other resources and name recognition than us. Entry or expansion by these companies into the market segment we target for NG vehicle fuels and vehicle conversion may reduce our profit margins, limit our customer base and restrict our expansion opportunities.
Background on Clean Air Regulation
Federal Clean Air Act – The Federal Clean Air Act provides a comprehensive framework for air quality regulation in the United States. Many of the federal, state and local air pollution control programs regulating vehicles and stationary sources have their basis in Title I or Title II of the Federal Clean Air Act.
Title I of the Federal Clean Air Act charges the EPA with establishing uniform “National Ambient Air Quality Standards” for criteria air pollutants anticipated to endanger public health and welfare. States in turn have the primary responsibility under the Federal Clean Air Act for meeting these standards. If any area within a particular state fails to meet these standards for a criteria air pollutant, the state must develop an implementation plan and local agencies must develop air quality management plans for achieving these standards. Many state programs regulating stationary source emissions, vehicle pollution or mobile sources of pollution are developed as part of a state implementation plan. For mobile sources, two criteria pollutants in particular are of concern: ozone and particulate matter. As components of state implementation plans, individual states have also adopted diesel fuel standards intended to reduce nitric oxide and nitrogen dioxide (collectively, “NO x ”)and particulate matter emissions. Texas and California, for example, have both adopted low- NO x diesel programs. Additionally, many state implementation plans and some quality management plans include vehicle fleet requirements specifying the use of low emission or alternative fuels in government vehicles.
Title II of the Federal Clean Air Act authorizes the EPA to establish emission standards for vehicles and engines. Diesel fueled heavy duty trucks and buses have recently accounted for substantial portions of NO x and particulate matter emissions from mobile sources, and diesel emissions have received significant attention from environmental groups and state agencies. Further, the 2007 Highway Rule seeks to limit emissions from diesel fueled trucks and buses on two fronts: new tailpipe standards requiring significantly reduced NO x and particulate matter emissions for new heavy duty diesel engines, and new standards requiring refiners to produce low sulfur diesel fuels that will enable more extensive use of advanced pollution control technologies on diesel engines.
The 2007 Highway Rule’s tailpipe standards apply to new diesel engines. Specifically, new particulate matter standards took effect in the model year 2007 and new NO x standards were phased in between 2007 and 2010. The rule’s fuel standards call for a shift by U.S. refiners and importers from low sulfur diesel, with a sulfur content of 500 parts per million (ppm), to ultra-low sulfur diesel, with a sulfur content of 15 ppm. The rule, which effects a transition to ultra-low sulfur diesel, required refiners to begin producing ultra-low sulfur diesel fuels on June 1, 2006.
Although the majority of state air pollution control regulations are components of state implementation plans developed pursuant to Title I of the Federal Clean Air Act, states are not precluded from developing their own air pollution control programs under state law. For example, the California Air Resources Board and the South Coast Air Quality Management District have promulgated a series of airborne toxic control measures under California law, several of which are directed toward reducing emissions from diesel fueled engines.
Although the federal government has not adopted any laws that comprehensively regulate greenhouse gas emissions, the EPA is developing regulations that would regulate these pollutants under the Clean Air Act.
Government Regulation and Environmental Matters
Certain aspects of our operations are subject to regulation under federal, state, local and foreign laws. If we were to violate these laws or if the laws or enforcement proceedings were to change, it could have a material adverse effect on our business, financial condition and results of operations. Regulations that significantly impact our operations are described below:
CNG and LNG stations – to construct a CNG or LNG fueling station, we must obtain a facility permit from the local fire department and either we or a third party contractor must be licensed as a general engineering contractor. The installation of each CNG and LNG fueling station must be in accordance with federal, state and local regulations pertaining to station design, environmental health, accidental release prevention, above-ground storage tanks, hazardous waste and hazardous materials. We are also required to register with certain state agencies as a retailer/wholesaler of CNG and LNG.
Transfer of LNG – Federal Safety Standards require each transfer of LNG to be conducted in accordance with specific written safety procedures. These procedures must be located at each place of transfer and must include provisions for personnel to be in constant attendance during all LNG transfer operations.
LNG Liquefaction Plants – To build and operate LNG liquefaction plants, we must apply for facility permits or licenses to address many factors, including storm water and wastewater discharges, waste handling and air emissions related to production activities or equipment operations. The construction of LNG plants must also be approved by local planning boards and fire departments.
As of November 26, 2013, we have two full time employees. We plan to hire additional full time employees upon completion of this offering.
Our principal executive offices are located at the residence of Mr. Weeraratne, our Chief Executive Officer, who currently provides this space to us at no charge. The address of our executive office is 7135 Collins Avenue, No. 624, Miami Beach, FL 33141. Following the completion of this offering, we expect to relocate our principal executive offices to an office building in Miami, Florida.
We are currently not involved in litigation that we believe will have a materially adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our company’s or our company’s subsidiaries’ officers or directors in their capacities as such, in which an adverse decision is expected to have a material adverse effect.
Directors and Executive Officers
The following individuals serve as our executive officers and members of our board of directors:
|James C. New||68||Chairman of the Board of Directors|
|I. Andrew Weeraratne||63||Chief Executive Officer, Director|
|Eugene Nichols||67||President, Secretary, Treasurer, Director|
|Robert C. Sanford||59||Chief Financial Officer|
|Bo G. Engberg||66||Director|
James C. New, age 68, Chairman of the Board of Directors
Mr. New has served as Chairman of the Board of Directors since inception. Mr. New has over 20 years of experience in the healthcare industry, and currently serves as the Chairman of the Board of Directors of Aurora Diagnostics, LLC (“Aurora”), a company that he co-founded in July 2006 and which has grown to approximately $269 million in revenue in 2011. He also served as Aurora’s Chief Executive Officer and President from 2006 until his retirement in September 2011. Prior to joining Aurora, Mr. New was a private investor from 2003 to 2006. He served as the President, Chief Executive Officer and Chairman of AmeriPath, an anatomic pathology laboratory company, from January 1996 through 2003. Prior to joining AmeriPath, Mr. New served as the President, Chief Executive Officer, and a director of RehabClinics, an outpatient rehabilitation company Mr. New had his bachelor’s degree in Allegheny College in 1967 and got an MBA from Gannon University in 1971.
I. Andrew Weeraratne, age 63, Chief Executive Officer, Director
Mr. Weeraratne has served as our Chief Executive Officer and member of our board of directors since inception. Since February 2000, Mr. Weeraratne has served as President of Passaerelle Corp., a private investment company on a part-time basis while managing a few private investment partnerships on a full time basis. Mr. Weeraratne was Chief Financial Officer of China Direct, Inc. (Nasdaq: CDII) from February 2009 to May 2009. From August 2004 to December 2008, Mr. Weeraratne acted as a financial consultant working in a variety of industries including work with the Embassy of the United States of America in Iraq as a financial advisor to form an Iraqi Accounting Association to introduce International Accounting Standards to Iraq as part of a plan to privatize state-owned enterprises after the Iraq war. From December 1998 to February 2000, Mr. Weeraratne was the Chief Financial Officer of National Lampoon, Inc. (formerly known as J2 Communications), a provider of branded comedic content. Mr. Weeraratne has been a Florida licensed Certified Public Accountant since 1981. He is also an author, and wrote a book entitled Uncommon Commonsense Steps to Super Wealth, where he illustrates how some people beginning with very little ended up in the list of richest people on earth by focusing only one out of four ways to make their wealth. Currently, Mr. Weeraratne is working also as the President of a related organization, High Tech Fueling, Service and Distribution Inc. which is planning on setting up NG fueling stations and factories to convert NG to LNG and CNG in China. Mr. Weeraratne devotes approximately 90% of his time to our business and affairs. Mr. Weeraratne received a B.S. in Accounting from Jones College and is a Certified Public Accountant in the State of Florida.
Eugene Nichols, age 67, President, Secretary, Treasurer, Director
Mr. Nichols has served as our Vice President, Secretary, Treasurer and a director since inception. Mr. Nichols has over 30 years of sales, management and marketing experience with a Fortune 100 company. Since 1999, along with his wife Evelyn Nichols, he has owned and operated Informa Training Partners, a healthcare related sales training company located in Walpole, Massachusetts. He began his professional career as a sales representative at Beecham Massengill in Bristol, Tennessee, where he was employed from 1972 to 1976. From May 1976 until October 2002, he was employed with Abbott Diagnostic holding various positions including sales executive, sales trainer, district manager and director advertising and communication. Currently, Mr. Nichols is working as Vice President Marketing and Sales, for a related organization, High Tech Fueling, Service and Distribution Inc. which is planning on setting up NG fueling stations and factories to convert NG to LNG and CNG in China. Mr. Nichols devotes approximately 90% of his time to our business and affairs. Mr. Nichols graduated with a bachelor’s degree in Business Administration from Auburn University in 1972.
Robert C. Sanford, age 59, Chief Financial Officer
Mr. Sanford has served as our Chief Financial Officer since inception. Mr. Sanford is a certified public accountant licensed in Florida. He has over 30 years of accounting, financial and auditing experience. His experience includes auditing SEC registered companies, due diligence investigations related to acquisitions, designing internal controls and managing Sarbanes-Oxley implementations, including several in China, SEC reporting, financial analysis, process improvement, cost management, and document preparation and negotiations involving bank loans, acquisitions and divestitures. Industries covered include transportation, multi-unit retail, shipping, chemical processing, manufacturing, and convenience stores with gas pumps. Since September 2010, Mr. Sanford has been an executive consulting to Interfoods of America, Inc., the largest U.S. franchisee of Popeye’s Restaurants, where he provided consulting advice on accounting and financial analysis. From 2004 until September 2010, he was a manager with Accretive Solutions, a national professional services firm, and from 2001 until 2004, he was a partner and vice president with RSB Consulting, LLC, a business management consulting firm based in Orlando, Florida. From 1991 until 2001, Mr. Sanford owned Sanford & Associates, CPAs. Mr. Sanford started his career as an audit manager at Grant Thornton LLP, a national public accounting firm. Currently Mr. Sanford is working also as the Chief Financial Officer for a related organization, High Tech Fueling, Service and Distribution Inc. which is planning on setting up NG fueling stations and factories to convert NG to LNG and CNG in China. Mr. Sanford devotes approximately 10% of his time to our business and affairs. He graduated from the University of Louisville with a degree in business commerce.
Bo G. Engberg, age 66, Director
Mr. Engberg joined as a director of our company on October 12, 2013. He began his career in sales, in 1972, with Electrolux A.B. (NASDAX OMX, Stockholm), the leading manufacturer of household appliances in Sweden and then joined their international division in 1974. At that time Getinge A.B., which currently is the leading manufacturer of infection control equipment, was a division of Electrolux. In 1979, Mr. Engberg was recruited by Getinge group to focus on infection control equipment as a sales director. He continued as the Director of Sales of Getinge (currently the biggest medical and pharmaceutical company in Sweden, a public company listed on NASDAX OMX, Stockholm) for the next 41 years relocating to a few places in the world. Mr. Engberg retired in April of 2013. He is fluent in English, Spanish, Portuguese, French, German, Italian and Swedish. Mr. Engberg obtained a bachelor’s degree in Electrical Engineering from Zimmermanska Technical Institute in Vasteras, Sweden in 1970.
The following is a discussion for each director of the specific experience, qualifications, attributes or skills that our board of directors to conclude that the individual should be serving as a director of our company.
James C. New – Mr. New’s extensive career in leadership positions, his successful track record as a private, entrepreneur and board member were factors considered by the Board. Specifically, the Board viewed favorably his roles at Aurora Diagnostics, LLC, AmeriPath and RehabClincs, his experience in founding a successful company and three years as a private investor in reaching their conclusion.
I. Andrew Weeraratne – Mr. Weeraratne’ s experience as a chief financial officer for public companies in a variety of industries, together with his international experience were factors considered by the board of directors. Specifically, the board of directors viewed favorably his roles at China Direct, Inc., Passerelle Corp., National Lampoon, Inc., Business Resource Exchange, as a financial advisor working with the Embassy of the United States of America in Iraq, and as a CPA in private practice in reaching their conclusion.
Eugene Nichols – Mr. Nichols’s career as an entrepreneur and his involvement in various start-ups were factors considered by the board of directors. Specifically, the board of directors viewed favorably his roles at Communication Exchange Inc., Visa Exchange Inc., Foxfire Golf Course, Power Management Electrical Consultants and Informa Training Partners in reaching their conclusion.
Bo G. Engberg – Mr. Engberg’s long sales career with one major Swedish public company that is a leader in international market and his fluency in various languages and cultures were factors considered by the board of directors. Specifically, the board of directors viewed his leadership skills in rising through the ranks at Getinge group in reaching their conclusion.
In addition to each of the individual skills and background described above, the board of directors also concluded that each of these individuals will continue to provide knowledgeable advice to our other directors and to senior management on numerous issues facing our company and on the development and execution of our strategy.
We expect to expand our board of directors in the future to include additional independent directors. In adding additional members to our board of directors, we will consider each candidate’s independence, skills and expertise based on a variety of factors, including the person’s experience or background in management, finance, regulatory matters and corporate governance. Further, when identifying nominees to serve as director, we expect that our board of directors will seek to create a board of directors that is strong in its collective knowledge and has a diversity of skills and experience with respect to accounting and finance, management and leadership, vision and strategy, business operations, business judgment, industry knowledge and corporate governance.
We have not established standard compensation arrangements for our directors and the compensation payable to each individual for their service on our Board will be determined from time to time by our board of directors based upon the amount of time expended by each of the directors on our behalf. Currently, executive officers of our company who are also members of the board of directors do not receive any compensation specifically for their services as directors.
Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics that applies to our executive officers and any other persons performing similar functions. This Code provides written standards that we believe are reasonably designed to deter wrongdoing and promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships, and full, fair, accurate, timely and understandable disclosure in reports we file with the SEC. A copy of our Code of Business Conduct and Ethics has been filed with the SEC as an exhibit to the registration statement of which this prospectus is a part.
Committees of our Board of Directors and the Role of our Board in Risk Oversight
Our board of directors has determined that the separation of the offices of chairman of the board and principal executive officers enhances board independence and oversight and facilitates the communication between senior management and the board of directors regarding risk oversight, which the board of directors believes strengthens its risk oversight activities. Moreover, the separation of the chairman of the board and principal executive officer will allow the principal executive officer to better focus on his responsibilities of running the company, enhancing shareholder value and expanding and strengthening our business while allowing the chairman of the board to lead the board of directors in its fundamental role of providing advice to and independent oversight of management. Mr. Weeraratne serves as our Chief Executive Officer, which is our principal executive officer, and as one of the three members of our board of directors. Mr. New is considered an independent director under the definition in the NYSE MKT Company Guide, but we do not have a “lead” independent director. The board of directors oversees our business affairs and monitors the performance of management. In accordance with our corporate governance principles, the board of directors does not involve itself in day-to-day operations. Our independent director keeps himself informed through discussions with our executive officers and by reading the reports and other materials that we may send him and by participating in board of directors meetings.
We have not established any committees, including an Audit Committee, a Compensation Committee or a Nominating Committee, any committee performing a similar function. The functions of those committees are being undertaken by board of directors as a whole. Because we only have one independent director, we believe that the establishment of these committees would be more form over substance.
We do not have a policy regarding the consideration of any director candidates which may be recommended by our shareholders, including the minimum qualifications for director candidates, nor has our board of directors established a process for identifying and evaluating director nominees. Further, when identifying nominees to serve as director, while we do not have a policy regarding the consideration of diversity in selecting directors, however, at such time as we expand our board of directors, our board of directors will seek to create a board of directors that is strong in its collective knowledge and has a diversity of skills and experience with respect to accounting and finance, management and leadership, vision and strategy, business operations, business judgment, industry knowledge and corporate governance. We have not adopted a policy regarding the handling of any potential recommendation of director candidates by our shareholders, including the procedures to be followed. Our board of directors has not considered or adopted any of these policies as we have never received a recommendation from any shareholder for any candidate to serve on our board of directors. Given our relative size and lack of directors and officers insurance coverage, we do not anticipate that any of our shareholders will make such a recommendation in the near future. While there have been no nominations of additional directors proposed, in the event such a proposal is made, all members of our board of directors will participate in the consideration of director nominees. In considering a director nominee, it is likely that our board of directors will consider the professional and/or educational background of any nominee with a view towards how this person might bring a different viewpoint or experience to our board of directors.
Mr. Weeraratne is considered an “audit committee financial expert” within the meaning of Item 401(e) of Regulation S-K. In general, an “audit committee financial expert” is an individual member of the audit committee or board of directors who:
|·||understands generally accepted accounting principles and financial statements;|
|·||is able to assess the general application of such principles in connection with accounting for estimates, accruals and reserves;|
|·||has experience preparing, auditing, analyzing or evaluating financial statements comparable to the breadth and complexity to our financial statements;|
|·||understands internal controls over financial reporting; and|
|·||understands audit committee functions.|
Our securities are not quoted on an exchange that has requirements that a majority of our board members be independent and we are not currently otherwise subject to any law, rule or regulation requiring that all or any portion of our board of directors include “independent” directors, nor are we required to establish or maintain an Audit Committee or other committee of our board of directors.
We are a newly formed entity and have not paid compensation to our executive officers or key employees since inception, nor do we have any employment agreements with any of the executive officers at this time.
Limitation on Liability
The Florida Business Corporation Act permits, but does not require, corporations to indemnify a director, officer or control person of the corporation for any liability asserted against her and liability and expenses incurred by her in her capacity as a director, officer, employee or agent, or arising out of her status as such, if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the corporation, and, unless the articles of incorporation provide otherwise, whether or not the corporation has provided for indemnification in its articles of incorporation. Our articles of incorporation have no separate provision for indemnification of directors, officers, or control persons.
Insofar as the limitation of, or indemnification for, liabilities arising under the Securities Act of 1933, as amended (the “Securities Act”), may be permitted to directors, officers, or persons controlling us pursuant to the foregoing, or otherwise, we have been advised that, in the opinion of the SEC, such limitation or indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. I. Andrew Weeraratne, our Chief Executive Officer, is also the President and a director of High Tech Fueling and Distribution Inc. (HFSD). We operate our vehicle conversion division in joint venture with HJT who is the majority shareholder of HFSD.
Mr. James New, our Chairman of the Board of Directors, is also the Chairman of the Board of Directors of HFSD.
Mr. Eugene Nichols, our President, Secretary and Treasurer and Director, is also a director of HFSD.
Mr. Rob Sanford, our Chief Financial Officer, is also the Chief Financial Officer of HFSD.
Mr. New and Mr. Engberg are considered independent within NYSE MKT’s director independence standards pursuant to the NYSE MKT Company Guide.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table presents information concerning the beneficial ownership of the shares of our Common Stock as of November 26, 2013, by: (i) each of our named executive officers and current directors, (ii) all of our current executive officers and directors as a group and (iii) each person we know to be the beneficial owner of 5% of more of our outstanding shares of common stock. Unless otherwise specified, the address of each beneficial owner listed in the table is c/o Natural Gas Fueling and Conversion Inc., 7135 Collins Avenue, No. 624, Miami Beach, Florida 33141.
Number of Shares of
Class A Common Stock
Beneficially Owned (1)
Percent of Class A
|Officers and Directors|
I. Andrew Weeraratne (3)
Chief Executive Officer, Director
James C. New
Chairman of the Board of Directors
Robert C. Sanford
Chief Financial Officer
|All Directors and Officers as a Group (5 persons)||6,350,000||50.40||%|
|Gerry Ambrose (4)||750,000||5.95||%|
|All Directors, Officers and 5% Holders as a Group (6 persons)||7,100,000||56.35||%|
|(1)||A person is deemed to be the beneficial owner of securities that can be acquired by such a person within 60 days from November 26, 2013, upon exercise of options, warrants or convertible securities. Each beneficial owner’s percentage ownership is determined by assuming that options, warrants and convertible securities that are held by such a person (but not those held by any other person) and are exercisable within 60 days from that date have been exercised.|
|(2)||Based on 12,600,000 shares of common stock outstanding as of November 26, 2013. These percentages have been rounded for convenience.|
|(3)||Mr. Weeraratne also owns 7,000,000 shares of Class B common stock, which has 10:1 voting rights and is convertible into shares of Common Stock on a 1:1 basis at the option of the holder.|
|(4)||Mr. Ambrose’s address is located at 105 Playa Rienta Way, Palm Beach Gardens, FL 33418.|
PLAN OF DISTRIBUTION
We are offering up to a total of 10,000,000 shares of Common Stock on a self-underwritten basis at an offering price of $3.00 per share. There is no minimum offering and no minimum number of shares must be sold before we use the proceeds. Proceeds will not be returned to investors if we sell less than all of the 10,000,000 shares of our Common Stock being offered in this prospectus. The proceeds from the sales of the shares will be paid directly to us by a subscriber for our Common Stock and will not be placed in an escrow account.
There is currently no public trading market for shares of our Common Stock, and we cannot give any assurance to you that the shares offered by this prospectus can be resold for at least the offered price if and when an active secondary market might develop, or that a public market for our Common Stock will be sustained even if one is ultimately developed.
We are offering the shares of our Common Stock directly to the public until __________, 2014, which is ____ days from the date of this prospectus. We reserve the right to extend the offering period for up to an additional 90 days. If we decide to extend the offering for this additional period, we will file a post-effective amendment to our registration statement of which this prospectus is a part informing you of this extension. There are no minimum purchase requirements for each individual investor.
This is a self-underwritten offering. This prospectus forms a part of a registration statement that permits our officers and directors to sell the shares of our Common Stock directly to the public, with no commission or other remuneration payable to them for any shares they sell. There are no plans or arrangements to enter into any contracts or agreements to sell the shares of Common Stock utilizing a broker or dealer. Our officers and directors will sell the shares of Common Stock and intend to offer them to friends, family members and business acquaintances. In offering the securities on our behalf, our officers and directors will rely on the safe harbor from broker/dealer registration set out in Rule 3a4-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which sets forth those conditions under which a person associated with an issuer may participate in the offering of the issuer’s securities and not be deemed to be a broker/dealer.
Section 15(g) of the Securities Exchange Act of 1934 – “penny stock” disclosure
Our shares of Common Stock are “penny stock” covered by Section 15(g) of the Exchange Act, and Rules 15g-1 through 15g-6 promulgated under the Exchange Act. They impose additional sales practice requirements on broker/dealers who sell securities to persons other than established customers and accredited investors, which are generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouses. For transactions covered by these rules, the broker/dealer must make a special suitability determination for the purchase and have received the purchaser’s written agreement to the transaction prior to the sale. Consequently, the rules may affect the ability of broker/dealers to sell our securities and also may affect your ability to resell your shares.
Section 15(g) also imposes additional sales practice requirements on broker/dealers who sell penny stock. These rules require a one-page summary of certain essential items. The items include the risk of investing in penny stocks in both public offerings and secondary marketing; terms important to an understanding of the function of the penny stock market, such as “bid” and “offer” quotes, a dealers “spread” and broker/dealer compensation; the broker/dealer compensation, the broker/dealer’s duties to its customers, including the disclosures required by any other penny stock disclosure rules; the customers’ rights and remedies in cases of fraud in penny stock transactions; and the Financial Industry Regulatory Authority’s toll-free telephone number and the central number of the North American Securities Administrators Association (NASAA), for information on the disciplinary history of broker/dealers and their associated persons. Rules 15g-1 through 15g-6 which apply to broker/dealers but not our company are summarized as follows:
|·||Rule 15g-1 exempts a number of specific transactions from the scope of the penny stock rules;|
|·||Rule 15g-2 declares unlawful broker/dealer transactions in penny stock unless the broker/dealer has first provided to the customer a standardized disclosure document;|
|·||Rule 15g-3 provides that it is unlawful for a broker/dealer to engage in a penny stock transaction unless the broker/dealer first discloses and subsequently confirms to the customer current quotation prices or similar market information concerning the penny stock in question;|
|·||Rule 15g-4 prohibits broker/dealers from completing penny stock transactions for a customer unless the broker/dealer first discloses to the customer the amount of compensation or other remuneration received as a result of the penny stock transaction;|
|·||Rule 15g-5 requires that a broker/dealer executing a penny stock transaction, other than one exempt under Rule 15g-1, disclose to its customer, at the time of or prior to the transaction, information about the sales person’s compensation; and|
|·||Rule 15g-6 requires broker/dealers selling penny stock to provide their customers with monthly account statements.|
The application of the penny stock rules may affect your ability to resell your shares of Common Stock because many brokers are unwilling to buy, sell or trade penny stock as a result of the additional sales practices imposed upon them which are described in this section.
No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.
The validity of the securities offered by this prospectus will be passed upon for us by JSBarkats, PLLC.
Our financial statements as of October 31, 2013, and for the period of inception (October 2, 2013) to October 31, 2013, included in this prospectus have been audited by MaloneBailey, LLP, independent registered public accounting firm, as indicated in their report with respect thereto, and have been so included in reliance upon the report of such firm given on their authority as experts in accounting and auditing.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the SEC the registration statement on Form S-1 under the Securities Act for the Common Stock offered by this prospectus. This prospectus, which is a part of the registration statement, does not contain all of the information in the registration statement and the exhibits filed with it, portions of which have been omitted as permitted by SEC rules and regulations. For further information concerning us and the securities offered by this prospectus, we refer to the registration statement and to the exhibits filed with it. Statements contained in this prospectus as to the content of any contract or other document referred to are not necessarily complete. In each instance, we refer you to the copy of the contracts and/or other documents filed as exhibits to the registration statement.
This registration statement on Form S-1, including exhibits, is available over the Internet at the SEC’s web site at http://www.sec.gov. You may also read and copy any document we file with the SEC at its public reference facilities:
Public Reference Room Office
100 F. Street, N.E., Room 1580
Washington, D.C. 20549
You may also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Room 1580, Washington D.C. 20549. Callers in the United States can also call 1-202-551-8090 for further information on the operations of the public reference facilities.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Our directors and officers are indemnified as provided by Florida law and our bylaws. We have agreed to indemnify each of our directors and certain officers against certain liabilities, including liabilities under the Securities Act. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the provisions described above, or otherwise, we have been advised that in the opinion of the SEC 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 our payment of expenses incurred or paid by our director, officer or controlling person 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, 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 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.
We have been advised that in the opinion of the SEC indemnification for liabilities arising under the Securities Act 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 is asserted by one of our directors, officers, or controlling persons in connection with the securities being registered, we will, unless in the opinion of our legal counsel the matter has been settled by controlling precedent, submit the question of whether such indemnification is against public policy to a court of appropriate jurisdiction. We will then be governed by the court’s decision.
Report of Independent Registered Public Accounting Firm
To the Board of Directors
Natural Gas Fueling and Conversion Inc.
Miami Beach, Florida
We have audited the accompanying balance sheets of Natural Gas Fueling and Conversion Inc. (“the Company”), as of October 31, 2013, and the related statements of expenses, changes in stockholder’s equity and cash flows for the period from October 2, 2013 (inception) through October 31, 2013. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with 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 consolidated financial statements are free of material misstatements. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of October 31, 2013, and the results of its consolidated operations and its consolidated cash flows the period from October 2, 2013 (inception) through October 31, 2013, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has not generated any revenue since inception and has incurred losses from operations for the period from October 2, 2013 (inception) through October 31, 2013. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ MALONEBAILEY, LLP
November 27, 2013
Natural Gas Fueling and Conversion, Inc.
(A Development Stage Company)
|Total current assets||136,300|
|LIABILITIES AND STOCKHOLDERS' EQUITY|
|Advances- related parties||$||90|
|Preferred stock: $.0001 par value; 10,000,000 shares authorized, no shares issued and outstanding|
|Class A Common stock: $.0001 par value; 230,000,000 shares authorized, 11,100,000 shares issued and outstanding||1,110|
|Class B Common stock: $.0001 par value; 60,000,000 shares authorized, 7,000,000 shares issued and outstanding||700|
|Additional Paid-in Capital||149,500|
|Deficit accumulated during the development stage||(15,100||)|
|Total Stockholders' Equity||136,210|
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY||$||136,300|
The accompanying notes are an integral part of the financial statements.
Natural Gas Fueling and Conversion, Inc.
(A Development Stage Company)
Statements of Operations
From October 2, 2013
|General and administrative||15,100|
|Total operating expenses||15,100|
|LOSS FROM OPERATIONS||(15,100||)|
|BASIC AND DILUTED LOSS PER COMMON SHARE||$||(0.00||)|
BASIC AND DILUTED WEIGHTED AVERAGE
NUMBER OF COMMON SHARES OUTSTANDING
The accompanying notes are an integral part of the financial statements.
Natural Gas Fueling and Conversion, Inc.
(A Development Stage Company)
Statement of Stockholders’ Equity
For the period from October 2, 2013 (Inception) through October 31, 2013
|Common Stock Class A||Common Stock Class B||Paid in||Accumulated||Stockholders'|
|Balance at inception||-||-||-||-||-||-|
|Common stock issued for cash - founders||6,100,000||610||-||-||-||610|
|Common stock issued for cash - founders||-||-||7,000,000||700||-||700|
|Common stock issued for cash||5,000,000||500||-||-||149,500||150,000|
|Balance, October 31, 2013||11,100,000||1,110||7,000,000||700||149,500||(15,100||)||136,210|
The accompanying notes are an integral part of the financial statements.
Natural Gas Fueling and Conversion, Inc.
(A Development Stage Company)
Statements of Cash Flows
From October 2, 2013
|Net Cash Used in Operating Activities||(15,100||)|
|Proceeds from advances- related party||90|
|Proceeds from the sale of common stock||151,310|
|Net Cash Provided by Financing Activities||151,400|
|NET INCREASE (DECREASE) IN CASH||136,300|
|CASH AT BEGINNING OF PERIOD||-|
|CASH AT END OF PERIOD||$||136,300|
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION|
|CASH PAID FOR:|
The accompanying notes are an integral part of the financial statements.
NATURAL GAS FUELING AND CONVERSION INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 – DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Natural Gas Fueling and Distribution Inc. (the “Company”) was incorporated in State of Florida on October 2, 2013, and plans to construct and operate combined gasoline, diesel and natural gas (NG) fueling and service stations with convenience stores along with factories to retrofit vehicles to run on NG in the United States. We also plan to acquire currently operating gasoline and diesel fueling stations and add NG bays to introduce NG fueling by expanding those stations. Also we plan to build factories to convert NG to liquefied natural gas (LNG) and compressed natural gas (CNG).
Since inception on October 2, 2013, the Company has primarily been involved in conducting research and development, business planning and capital-raising activities.
Basis of Presentation
The accompanying audited financial statements include all accounts of the Company and in the opinion of management, reflect all adjustments, which include all normal recurring adjustments, necessary to state fairly the Company’s financial position, results of operations and cash flows for the period from inception (October 2, 2013) to October 31, 2013. This financial statement period is not an indicative of the results to be expected for the year ending September 30, 2014, or for any other interim period in future.
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
Fiscal Year End
The Company has chosen September 30 as its fiscal year end.
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make 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 and revenues and expenses recorded during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid instruments purchased with a maturity of three months or less and money market accounts to be cash equivalents. The Company had no cash equivalents at October 31, 2013.
The Company accounts for income taxes in accordance with accounting guidance now codified as FASB ASC Topic 740, “Income Taxes,” which requires that the Company recognize deferred tax liabilities and assets based on the differences between the financial statement carrying amounts and the tax basis of assets and liabilities, using enacted tax rates in effect in the years the differences are expected to reverse. Deferred income tax benefit (expense) results from the change in net deferred tax assets or deferred tax liabilities. A valuation allowance is recorded when it is more likely than not that some or all deferred tax assets will not be realized.
Basic and Diluted Net Loss Per Share
The Company computes loss per share in accordance with “ASC-260,” “Earnings per Share”, which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. As of October 31, 2013, the Company had no potential dilutive shares outstanding.
Research and Development
Costs incurred in connection with the development of new products and manufacturing methods are charged to selling, general and administrative expenses as incurred.
The Company complies with Statement of Financial Accounting Standard ASC 915-15 and the U.S. Securities and Exchange Commission Exchange Act 7 for its characterization of the Company as development stage.
Recently Issued Accounting Pronouncements
We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.
NOTE 3 – GOING CONCERN
The financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has not generated any revenues and has incurred losses since inception resulting in an accumulated deficit of $15,100 as of October 31, 2013, and further losses are anticipated in the development of its business which raises substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with the private placement of common stock.
NOTE 4 – EQUITY
We have 300,000,000 authorized shares of capital stock, which consists of (i) 230,000,000 shares of Class A common stock, par value $0.0001 per share; (ii) 60,000,000 shares of Class B common stock, par value $0.0001 per share; and (iii) 10,000,000 shares of blank-check preferred stock, par value of $0.0001 per share.
The holders of Class A common stock shall be entitled to one vote per share and shall be entitled to dividends as shall be declared by our Board of Directors from time to time.
Each share of Class B common stock shall entitle the holder thereof to 10 votes for each one vote per share of Class A common stock, and with respect to such vote, shall be entitled, notwithstanding any provision hereof, to notice of any stockholders’ meeting in accordance with the bylaws of this corporation, and shall be entitled to vote, together as a single class with holders of Class A common stock with respect to any question or matter upon which holders of Class A common stock have the right to vote. Class B common stock shall also entitle the holders thereof to vote as a separate class as set forth herein and as required by law. Holders of Class B common stock shall be entitled to dividends as shall be declared by our Board of Directors from time to time at the same rate per share as the Class A common stock. The holders of the Class B common stock shall have the right to convert each one of their shares to one share of Class A common stock automatically by surrendering the shares of Class B common stock to us.
On October 22, 2013, we circulated a private offering memorandum for sale to persons who qualify as accredited investors and to a limited number of sophisticated investors, on a “best-efforts” basis, up to a maximum of 7,500,000 shares of the Company’s Class A common stock (the “Shares”) at a purchase price of $0.03 per share (the “Purchase Price”). The minimum individual investment is $15,000, with the stipulation, in our sole discretion, to accept subscriptions for lesser amounts and also with the stipulation that the, funds received from all subscribers to be released to us upon acceptance of the subscriptions by us. This offering is being made pursuant to Rule 506 of Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities Act”), seeking exemption from the registration requirements of federal security laws. As of October 31, 2013, the Company sold 500,000 shares of Class A common stock each to ten subscribers at the Purchase Price for an aggregate offering amount of $150,000.
On October 2, 2013, the Company issued 5,600,000 shares of Class A common stock as founders’ shares for total proceeds of $560.00. On October 10, 2013, the Company issued 500,000 shares of Class A common stock as founders’ shares for total proceeds of $50.00.
On October 2, 2013, the Company issued 7,000,000 Class B common shares as founders’ shares to the President for total proceeds of $700.00.
NOTE 5 – INCOME TAXES
As of October 31, 2013 the Company had net operating loss carry forwards of $15,100 that may be available to reduce future years’ taxable income through 2032. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.
Components of net deferred tax assets, including a valuation allowance, are as follows at October 31, 2013.
Deferred tax assets:
|Net operating loss carryforward||$||15,100|
|Total deferred tax assets||5,285|
|Less: valuation allowance||(5,285||)|
|Net deferred tax assets||-|
In assessing the recovery of the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the periods in which those temporary differences become deductible. Management considers the scheduled reversals of future deferred tax assets, projected future taxable income, and tax planning strategies in making this assessment. As a result, management determined it was more likely than not the deferred tax assets would not be realized as of October 31, 2013.
NOTE 6 – SUBSEQUENT EVENTS
In November 2013, three (3) investors purchased a total of 1,500,000 Class A common shares at $0.03 cents per share.
NATURAL GAS FUELING AND CONVERSION INC.
10,000,000 SHARES OF CLASS A COMMON STOCK
No dealer, sales representative or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus and, if given or made, such information or representation must not be relied upon as having been authorized by the company or any of the underwriters. This prospectus does not constitute an offer of any securities other than those to which it relates or an offer to sell, or a solicitation of any offer to buy, to any person in any jurisdiction where such an offer or solicitation would be unlawful. Neither the delivery of this prospectus nor any sale made hereunder shall, under any circumstances, create an implication that the information set forth herein is correct as of any time subsequent to the date hereof.
Until _________, 2014 (90 days after the date of this prospectus), all dealers effecting transactions in the registered securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligations to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
INFORMATION NOT REQUIRED IN PROSPECTUS
Other Expenses of Issuance and Distribution
The estimated expenses of this offering in connection with the issuance and distribution of the securities being registered, all of which are to be paid by the Company, are as follows:
|Securities and Exchange Commission Filing Fee||$||3,864|
|Legal Fees and Expenses||$||20,000||*|
|Accounting Fees and Expenses||$||10,000||*|
Indemnification of Directors and Officers.
The Florida Business Corporation Act permits, but does not require, corporations to indemnify a director, officer or control person of the corporation for any liability asserted against her and liability and expenses incurred by her in her capacity as a director, officer, employee or agent, or arising out of her status as such, if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the corporation, and, unless the articles of incorporation provide otherwise, whether or not the corporation has provided for indemnification in its articles of incorporation. Our articles of incorporation have no separate provision for indemnification of directors, officers, or control persons.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling our company pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the act and is therefore unenforceable.
Recent Sales of Unregistered Securities.
The following are all issuances of securities by the registrant since its formation in October 2013, which were not registered under the Securities Act. In each of these issuances the recipient represented that he or she was acquiring the shares for investment purposes only, and not with a view towards distribution or resale except in compliance with applicable securities laws. No general solicitation or advertising was used in connection with any transaction, and the certificate evidencing the securities that were issued contained a legend restricting their transferability absent registration under the Securities Act or the availability of an applicable exemption therefrom. Unless specifically set forth below, no underwriter participated in the transaction and no commissions were paid in connection with the transactions.
Between October 2, 2013 and October 20, 2013, we issued 6,100,000 shares of our Common Stock and 7,000,000 shares of our Class B common stock to our founders and initial directors in connection with the formation and organization of the Company. Each of the recipients was an accredited or sophisticated investor and the issuances were exempt from registration under the Securities Act in reliance on an exemption provided by Section 4(2).
Between October 22, 2013 and November 25, 2013, we issued 6,500,000 shares of our Common Stock valued at $0.03 cents per share to 13 investors. This offering was made pursuant to Rule 506 of Regulation D. We filed a notice of an exempt offering of securities on Form D with the SEC on November 6, 2013, with reference to this offering. A form of the offering documentation is attached as an exhibit to this prospectus.
Exhibits and Financial Statement Schedules.
|3.1||Articles of Incorporation of Natural Gas Fueling and Conversion Inc. *|
|3.2||Bylaws of Natural Gas Fueling and Conversion Inc. *|
|5.1||Opinion of JSBarkats, PLLC **|
|10.1||Form of Subscription Agreement *|
|10.2||Preliminary Joint Venture Agreement *|
|14.1||Code of Business Conduct and Ethics *|
|23.1||Consent of MaloneBailey, LLP *|
|23.2||Consent of Counsel (included in Exhibit 5.1) **|
* filed herewith
** to be filed by amendment
The undersigned registrant hereby undertakes:
|1.||To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement, to:|
|(i)||include any prospectus required by Section 10(a)(3) of the Securities Act;|
|(ii)||reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and|
|(iii)||To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.|
|2.||That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.|
|3.||To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.|
|4.||that insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant, the registrant has been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registration of expenses incurred or paid by a director, officer or controlling person to 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 of 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.|
|5.||That, for the purpose of determining liability under the Securities Act to any purchaser, if the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.|
|6.||That, for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant 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 registrant 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 registrant relating to the offering required to be filed pursuant to Rule 424 (§ 230.424 );|
|(ii)||Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;|
|(iii)||The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and|
|(iv)||Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.|
Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Miami Beach, State of Florida on November 27, 2013.
|Natural Gas Fueling and Conversion Inc.|
|By:||/s/ I. Andrew Weeraratne|
|Name: I. Andrew Weeraratne|
|Title: Chief Executive Officer|
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints I. Andrew Weeraratne, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) and supplements to this registration statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the U.S. Securities and Exchange Commission, and hereby grants to such attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
|/s/ I. Andrew Weeraratne||Chief Executive Officer (PEO), Director||November 27, 2013|
|I. Andrew Weeraratne|
|/s/ James C. New||Chairman of the Board of Directors||November 27, 2013|
|James C. New|
|/s/ Eugene Nichols||President, Secretary, Treasurer, Director||November 27, 2013|
|/s/ Robert C. Sanford||Chief Financial Officer (PFO and PAO)||November 27, 2013|
|Robert C. Sanford|
|/s/ Bo G. Engberg||Director||November 27, 2013|
|Bo G. Engberg|
The name of this Corporation shall be: Natural Gas Fueling and Conversion, Inc.
PRINCIPAL OFFICE AND MAILING ADDRESS
The principal office and mailing address of the Corporation is 7135 Collins Avenue, No. 624, Miami Beach, Florida 33141.
NATURE OF BUSINESS AND POWERS
The general nature of the business to be transacted by this Corporation shall be to engage in any and all lawful business permitted under the laws of the United States and the State of Florida.
The maximum number of shares that this Corporation shall be authorized to issue and have outstanding at any one time shall be Three Hundred Million (300,000,000) shares of which (1) 230,000,000 shares have been designated as Class A Common Stock, par value $.0001 per share, (2) 60,000,000 shares have been designated as Class B Common Stock, par value $.0001 per share, and (3) 10,000,000 shares of Preferred Stock, par value of $.0001 per share.
The Class A Common Stock shall be designated as follows:
|1.||Designation and Number of Shares . The Class A Common Stock shall be designated “Class A Common Stock” of a par value of $.0001 each, and the number of shares constituting the Class A Common Stock shall be 230,000,000 shares.|
|2.||Voting Rights . The holders of Class A Common Stock shall be entitled to one vote per share.|
|3.||Dividends . Holders of Class A Common Stock shall be entitled to dividends as shall be declared by the Corporation’s Board of Directors from time to time.|
The Class B Common Stock shall be designated as follows:
|1.||Designation and Number of Shares . The Class B Common Stock shall be designated “Class B Common Stock” of a par value of $.0001 each, and the number of shares constituting the Class B Common Stock shall be 60,000,000 shares.|
|2.||Voting Rights . Each share of Class B Common Stock shall entitle the holder thereof to 10 votes for each one vote per share of Class A Common Stock, and with respect to such vote, shall be entitled, notwithstanding any provision hereof, to notice of any stockholders’ meeting in accordance with the bylaws of this Corporation, and shall be entitled to vote, together as a single class with holders of Class A Common Stock with respect to any question or matter upon which holders of Class A Common Stock have the right to vote. Class B Common Stock shall also entitle the holders thereof to vote as a separate class as set forth herein and as required by law.|
|3.||Dividends . Holders of Class B Common Stock shall be entitled to dividends as shall be declared by the Corporation’s Board of Directors from time to time at the same rate per share as the Class A Common Stock.|
|4.||Conversion Rights . The holders of the Class B Common Stock shall have the following rights with respect to the conversion of the Class B Common Stock into shares of Class A Common Stock:|
A. General . Each share of Class B Common Stock is convertible into one (1) share of Class A Common Stock, subject to adjustment as provided hereinafter (the “Conversion Ratio”) at any time by the holder thereof. Class A Ordinary Shares are not convertible into Class B Ordinary Shares under any circumstances. The conversion of Class B Common Shares to Class A Common Shares shall be effected by way of compulsory repurchase by the Company of the relevant Class B Common Shares and issuance of equal number of new Class A Common Shares by the Company.
B. Adjustments to Conversion Radio . In the event the Corporation shall (i) make or issue a dividend or other distribution payable in Class A Common Stock; (ii) subdivide outstanding shares of Class A Common Stock into a larger number of shares; or (iii) combine outstanding shares of Class A Common Stock into a smaller number of shares, the Conversion Radio shall be adjusted appropriately by the Corporation’s Board of Directors.
C. Capital Reorganization or Reclassification . If the Class A Common Stock issuable upon the conversion of the Class B Common Stock shall be changed into the same or different number of shares of any class or classes of stock, whether by capital reorganization, reclassification or otherwise (other than a subdivision or combination of shares or stock dividend), then in each such event, the holder of each share of Class B Common Stock shall have the right thereafter to convert such share into the kind and amount of shares of stock and other securities and property receivable upon such capital reorganization, reclassification or other change by holders of the number of shares of Class A Common Stock into which such shares of Class B Common Stock might have been converted immediately prior to such capital reorganization, reclassification or other change.
D. Exercise of Conversion . To exercise its conversion privilege, a holder of Class B Common Stock shall surrender the certificate or certificates representing the shares being converted to the Corporation at its principal office, and shall give written notice to the Corporation at that office that such holder elects to convert such shares. The certificate or certificates for shares of Class B Common Stock surrendered for conversion shall be accompanied by proper assignment thereof to the Corporation or in blank. The date when such written notice is received by the Corporation, together with the certificate or certificates representing the shares of Class B Common Stock being converted, shall be the “Conversion Date.” As promptly as practicable after the Conversion Date, the Corporation shall issue and shall deliver to the holder of the shares of Class B Common Stock being converted or on its written order, such certificate or certificates as it may request for the number of whole shares of Class A Common Stock issuable upon the conversion of such shares of Class B Common Stock in accordance with the provision hereof. Such conversion shall be deemed to have been effected immediately prior to the close of business on the conversion Date, and at such time the rights of the holder as holder of the converted shares of Class B Common Stock shall cease, and the person or persons in whose name or names any certificate or certificates for shares of Class A Common Stock shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of the shares of Class A Common Stock represented thereby. The Corporation shall pay any taxes payable with respect to the issuance of Class A Common Stock upon conversion of the Class B Common Stock, other than any taxes payable with respect to income by the holders thereof.
E. Partial Conversion . In the event some, but not all, of the shares of Class B Common Stock represented by a certificate or certificates surrendered by a holder are converted, the Corporation shall execute and deliver to or on the order of the holder, at the expense of the Corporation, a new certificate representing the number of shares of Class B Common Stock which were not converted.
F. Consolidation, Merger, Exchange, Etc . In case the Corporation shall enter into any consolidation, merger, combination, statutory share exchange or other transaction in which the Common Shares are exchanged for or changed into other stock or securities, money and/or any other property, then in any such case the Class B Common Stock shall at the same time be similarly exchange or changed into Class A common shares of the surviving entity providing the holders of such common shares with (to the extent possible) the same relative rights and preferences as the Class B Common Stock.
|5.||Sale or Transfer of Class B Common Stock . Holders of Class B Common Stock may sell or transfer any or all of their shares of Class B Common Stock to any party, who will be subject to the same rights, conditions and obligations as described herein.|
|6.||Protective Provisions So long as any shares of Class B Common Stock are outstanding, this Corporation shall not without first obtaining the written approval of the holders of at least a majority of the voting power of the then outstanding shares of such Class B Common Stock:|
A. sell, convey, or otherwise dispose of or encumber all or substantially all of its property or business or merge into or consolidate with any other corporation (other than a wholly-owned subsidiary corporation) or effect any transaction or series of related transactions in which more than fifty percent (50%) of the voting power of the Corporation is transferred or disposed;
B. alter or change the rights, preferences or privileges of the Class B Common Stock;
C. increase or decrease the total number of authorized shares of Class B Common Stock;
D. authorize or issue, or obligate itself to issue, any other equity security, including any other security convertible into or exercisable for any equity security having rights, preferences or privileges over, or being on a parity with or similar to, the Class B Common Stock;
E. redeem, purchase or otherwise acquire (or pay into or set aside for a sinking fund for such purpose) any security of this Corporation;
F. amend this Corporation’s Articles of Incorporation or bylaws; or
G. change the authorized number of directors of the Corporation.
|7.||Liquidation . Upon liquidation and winding up of the Corporation, the shares of Class B Common Stock shall be entitled to receive on a per share basis the amount payable with respect to the shares of Class A Common Stock as if its shares of Class B Common Stock were converted into Class A Common Stock.|
The Preferred Stock shall be designated as follows:
|1.||Designation and Number of Shares . The Preferred Stock shall be designated as “Preferred Stock” of a par value of $.0001 per share, and the number of shares constituting the Preferred Stock shall be 10,000,000 shares.|
|2.||Classes and Series . Classes and series of the Preferred Stock may be created and issued from time to time, with such designations, preferences, conversion rights, cumulative, relative, participating, optional or other rights, including voting rights, qualifications, limitations or restrictions thereof as shall be stated and expressed in the resolution or resolutions providing for the creation and issuance of such classes or series of Preferred Stock as adopted by the Board of Directors.|
TERM OF EXISTENCE
This Corporation shall have perpetual existence.
INITIAL OFFICERS AND DIRECTORS
The number of directors to constitute the Board of Directors shall be such number as fixed by a resolution adopted by the Board of Directors and initially shall be one in number:
The name and address of the initial officer and the director is:
Indrajith A Weeraratne Chief Executive Officer
Indrajith A Weeraratne Director
7135Collins Ave, No. 624
Miami Beach, FL 33141
REGISTERED AGENT AND
REGISTERED OFFICE IN FLORIDA
The Registered Agent and the street address of the initial Registered Office of this Corporation in the State of Florida shall be:
Indrajith A. Weeraratne
7135 Collins Avenue, No. 624
Miami Beach, Florida 33141
The name and the address of the Incorporator is:
Indrajith A. Weeraratne
7135 Collins Avenue, No. 624
Miami Beach, Florida 33141
To the fullest extent permitted by the Florida Business Corporation Act, the Corporation shall indemnify, or advance expenses to, any person made, or threatened to be made, a party to any action, suit or proceeding by reason of the fact that such person (i) is or was a director of the Corporation; (ii) is or was serving at the request of the Corporation as a director of another corporation, provided that such person is or was at the time a director of the Corporation; or (iv)is or was serving at the request of the Corporation as an officer of another Corporation, provided that such person is or was at the time a director of the corporation or a director of such other corporation, serving at the request of the Corporation. Unless otherwise expressly prohibited by the Florida Business Corporation Act, and except as otherwise provided in the previous sentence, the Board of Directors of the Corporation shall have the sole and exclusive discretion, on such terms and conditions as it shall determine, to indemnify, or advance expenses to, any person made, or threatened to be made, a party to any action, suit, or proceeding by reason of the fact such person is or was an officer, employee or agent of the Corporation as an officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise. No person falling within the purview of this paragraph may apply for indemnification or advancement of expenses to any court of competent jurisdiction.
IN WITNESS WHEREOF, the Corporation has caused this Articles of Incorporation to be duly adopted by its Board of Directors on September 27, 2013 and approved by its shareholders in accordance with the provisions of Section 607.0602 of the Florida Business Corporation Act, and to be executed in its corporate name this 30th day of September 2013.
|Natural Gas Fueling and Conversion, Inc.|
|By:||/s/ Indrajith A. Weeraratne|
|Indrajith A. Weeraratne,|
|Incorporator/Chief Executive Officer|
CERTIFICATE DESIGNATING REGISTERED AGENT
AND OFFICE FOR SERVICE FOR PROCESS
Natural Gas Fueling and Conversion, Inc. a corporation existing under the laws of the State of Florida with its principal office and mailing address at 7135 Collins Avenue, No. 624, Miami Beach, Florida 33141 has named Indrajith A. Weeraratne, whose address is 7135 Collins Avenue, No. 624, Miami Beach, Florida 33141 as its agent to accept service of process within the State of Florida.
Having been named to accept service of process for the above-named Corporation, at the place designated in this Certificate, I hereby accept the appointment as Registered Agent, and agree to comply with all applicable provisions of law. In addition, I hereby state that I am familiar with and accept the duties and responsibilities as Registered Agent for said Corporation.
|/s/ Indrajith A. Weeraratne|
|Indrajith A. Weeraratne|
|7135 Collins Avenue, No. 624|
|Miami Beach, Florida 33141|
Natural Gas Fueling and Conversion Inc.
|1.1||Registered Office and Registered Agent : The registered office of the corporation shall be the same as listed on the articles of incorporation and at such place as may be fixed from time to time by the Board of Directors upon filing of such notices as may be required by law, and the registered agent shall have a business office identical with such registered office.|
|1.2||Other Offices : The Corporation may have other offices within or outside the State of incorporation at such place or places as the Board of Directors may from time to time determine.|
|2.1||Meeting Place : All meetings of the shareholders shall be held the registered office of the corporation, or at such place as shall be determined from time to time by the Board of Directors, and the place at which any such meeting shall be held shall be stated in the notice of the meeting.|
|2.2||Annual Meeting Time : The annual meeting of the shareholders for the election of directors and for the transaction of such other business as may properly come before the meeting, shall be held each year on January 15th at the hour of 10 AM, if not a legal holiday, and if a legal holiday, then on the day following, at the same hour, or January 31 of every year if no other meeting time is specifically appointed.|
|2.3||Annual Meeting - Order of Business : At the annual meeting of shareholders, the order of business shall be as follows:|
|(a)||Calling of the meeting to order.|
|(b)||Proof of notice of meeting (or filing of waiver).|
|(c)||Reading of minutes of last annual meeting.|
|(d)||Report of officers.|
|(e)||Reports of committees.|
|(f)||Election of directors.|
|2.4||Special Meetings : Special meetings of the shareholders for any purpose may be called at any time by the President, Board of Directors, or the holders of not less than one-twenty of all shares entitled to vote at the meeting.|
|(a)||Notice of the time and place of an annual meeting of shareholders shall be given by delivering personally or by mailing a written or printed notice of the same, at least ten days, and not more than fifty days, prior to the meeting, to each shareholder of record entitled to vote at such meeting.|
|(b)||At least ten days and not more than fifty days prior to the meeting, written or printed notice of each special meeting, and the purpose or purposes for which the meeting is called, shall be delivered personally, or mailed to each shareholder of record entitled to vote at such meeting.|
|2.6||Voting Record : At least ten days before each meeting of shareholders, a complete record of the shareholders entitled to vote at such meeting, or any adjournment thereof, shall be made, arranged in alphabetical order, with the address of and number of shares held by each, which record shall be kept on file at the registered office of the corporation for a period of ten days prior to the meeting. The records shall be kept open at the time and place of such meeting for the inspection of any shareholder.|
|2.7||Quorum : Except as otherwise required by law:|
|(a)||A quorum at any annual or special meeting of shareholders shall consist of shareholders representing, either in person or by proxy, a majority of the outstanding capital stock of the corporation, entitled to vote at such meeting.|
|(b)||The voters of a majority in interest of those present at any properly called meeting or adjourned meeting of shareholders at which a quorum as in this paragraph defined is present, shall be sufficient to transact business.|
|2.8||Closing of Transfer Books and Fixing Record Date : For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders, or any adjournment thereof, or entitled to receive payment of any dividend, the Board of Directors may provide that the stock transfer books shall be closed for a stated period not to exceed fifty days nor be less than ten days preceding such meeting. In lieu of closing the stock transfer books, the Board of Directors may fix in advance a record date for any such determination of shareholders, such date to be not more than fifty days, and, in case of a meeting of shareholders, not less than ten days prior to the date on which the particular action requiring such determination of shareholders is to be taken.|
|2.9||Proxies : A shareholder may vote either in person or by proxy executed in writing by the shareholder, or his duly authorized attorney-in-fact. No proxy shall be valid after eleven months from the date of its execution, unless otherwise provided in the proxy.|
|2.10||Action by Shareholders Without a Meeting : Any action required or which may be taken at a meeting of shareholders of the corporation, may be taken at a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the shareholders entitled to vote with respect to the subject matter thereof. Such consent shall have the same force and effect as a unanimous vote of the shareholders.|
|2.11||Waiver of Notice : A waiver of notice required to be given any shareholder, signed by the person or persons entitled to such notice, whether before or after the time stated therein for the meeting, shall be equivalent to the giving of such notice.|
|3.1||Certificates : Certificates of stock shall be issued in numerical order, and each shareholder shall be entitled to a certificate signed by the President, or a Vice President, and the Secretary or Assistant Secretary, and may be sealed with the seal of the corporation or a facsimile thereof The signatures of such officers may be facsimiles if the certificate is manually signed on behalf of the transfer agent, or registered by a registrar, other than the corporation itself or an employee of the corporation. If an officer who has signed or whose facsimile signature has been placed upon such certificate ceases to be an officer before the certificate is used, it may be issued by the corporation with the same effect as if the person were an officer on the date of issue.|
|3.2||Transfer : Transfers of stock shall be made only upon the stock transfer books of the corporation, kept at the registered office of the corporation or at its principal place of business, or at the office of its transfer agent or registrar; and before a new certificate is issued. the old certificate shall be surrendered for cancellation. The Board of Directors may, by resolution, open a share register in any state of the United States, and may employ an agent or agents to keep such register, and to record transfers or shares therein.|
|3.3||Registered Owner : Registered shareholders shall be treated by the corporation as the holders in fact of the stock standing in their respective names and the corporation shall not be bound to recognize any equitable or other claim to or interest in any share on the part of any other person, whether or not it shall have express or other notice thereof, except as expressly provided below or by the laws of the State of incorporation. The Board of Directors may adopt by resolution a procedure whereby a shareholder of the corporation may certify in writing to the corporation that all or a portion of the shares registered in the name of such shareholder are held for the account of a specified person or persons. The resolution shall set forth:|
|(a)||The classification of shareholder who may certify;|
|(b)||The purpose or purposes for which the certification may be made;|
|(c)||The form of certification and information to be contained therein;|
|(d)||If the certification is with respect to a record date or closing of the stock transfer books, the date within which the certification must be received by the corporation; and|
|(e)||Such other provisions with respect to the procedure as are deemed necessary or desirable.|
Upon receipt by the corporation of a certification complying with the procedure, the persons specified in the certification shall be deemed, for the purpose or purposes set forth in the certification, to be the holders of record of the number of shares specified in place of the shareholder making the certification.
|3.4||Mutilated, Lost, or Destroyed Certificates : In case of any mutilation, loss or destruction of any certificate of stock, another may be issued in its place on proof of such mutilation, loss or destruction. The Board of Directors may impose conditions on such issuance and may require the giving of a satisfactory bond or indemnity to the corporation in such sum as they might determine or establish such other procedures as they deem necessary.|
|3.5||Fractional Shares or Scrip : The Corporation may:|
|(a)||Issue fractions of a share which shall entitle the holder to exercise voting rights, to receive dividends thereon, and to participate in any of the assets of the corporation in the event of liquidation;|
|(b)||Arrange for the disposition of fractional interests by those entitled thereto;|
|(c)||Pay in cash the fair market value of fractions of a share as of the time when those entitled to receive such shares are determined; or|
|(d)||Issue script in registered or bearer form which shall entitle the holder to receive a certificate for the full share upon surrender of such script aggregating a full share.|
|3.6||Shares of Another Corporation : Shares owned by the corporation in another corporation, domestic or foreign, may be voted by such officer, agent or proxy as the Board of Directors may determine or, in the absence of such determination, by the President of the Corporation.|
Board of Directors
|4.1||Numbers and Powers : The management of all the affairs, property and interest of the corporation shall be vested in the Board of Directors, consisting of one person who shall be elected for a term of one year, and shall hold office until their successors are elected and qualified. Directors need not be shareholders or residents of the State of incorporation. In addition to the powers and authorities granted by these Bylaws, and the Articles of Incorporation expressly conferred upon it, the Board of Directors may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the Articles of Incorporation or by these Bylaws directed or required to be exercised or done by the shareholders.|
|4.2||Change of Number : The number of directors may at any time be increased or decreased by amendment of these Bylaws, but no decrease shall have the effect of shortening the term of any incumbent director.|
|4.3||Vacancies : All vacancies in the Board of Directors, whether caused by resignation, death or, otherwise, may be filled by the affirmative vote of a majority of the remaining directors though less than a quorum of the Board of Directors. A director elected to fill any vacancy shall hold office for the unexpired term of his predecessor and until his successor is elected and qualified. Any directorship to be filled by reason of an increase in the number of directors may be filled by the Board of Directors for a term of office continuing only until the next election of directors by the shareholders.|
|4.4||Removal of Directors : At a meeting of shareholders called expressly for that purpose, the entire Board of Directors, or any member thereof, may be removed by a vote of the holders of a majority of shares then entitled to vote at an election of such shareholders.|
|4.5||Regular Meetings : Regular meetings of the Board of Directors or any committee may be held without notice at the registered office of the corporation or at such place or places, either within or without the State of Washington, as the Board of Directors or such committee, as the case may be, may from time to time designate. The annual meeting of the Board of Directors shall be held without notice immediately after the adjournment of the annual meeting of shareholders.|
|4.6||Special Meetings : Special meetings of the Board of Directors may be held at any place and at any time and may be called by the Chairman of the Board, the President, Vice President, Secretary or Treasurer, or any two or more directors.|
|4.7||Notice of Meetings : Unless the Articles of Incorporation provide otherwise, any regular meeting of the Board of Directors may be held without notice of the date, time, place, or purpose of the meeting. Any special meeting of the Board of Directors may preceded by at least two days' notice of the date, time, and place of the meeting, but not of its purpose, unless the Articles of Incorporation of these Bylaws require otherwise. Notice may be given personally, by facsimile, by mail, or in any other manner allowed by law. Oral notification shall be sufficient only if a written record of such notice is included in the Corporation's minute book. Notice shall be deemed effective at the earliest of. (a) receipt; (b) delivery to the proper address or telephone number of the directors as shown in the Corporation's records; or (c) five days after its deposit in the United States mail, as evidenced by the postmark, if correctly addressed and mailed with first-class postage prepaid. Notice of any meeting of the Board of Directors may be waived by any director at any time, by a signed writing, delivered to the Corporation for inclusion in the minutes, either before or after the meeting. Attendance or participation by a director at a meeting unless the director promptly objects to holding the meeting or to the transaction of any business on the grounds that the meeting was not lawfully convened and the director does not thereafter vote for or assent to action taken at the meeting.|
|4.8||Quorum : A majority of the whole Board of Directors shall be necessary at all meetings to constitute a quorum for the transaction of business.|
|4.9||Waiver of Notice : Attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends for the express purpose of objecting to the transaction of any business because the meeting was not lawfully called or convened. A waiver of notice signed by the director or directors, whether before or after the time stated for the meeting, shall be equivalent to the giving of notice.|
|4.10||Registering Dissent : A director who is present at a meeting of the Board of Directors at which action on a corporate matter is taken shall be presumed to have assented to such action unless his dissent shall be entered in the minutes of the meeting, or unless he shall file his written dissent to such action with the person acting as the secretary of the meeting, before the adjournment thereof, or shall forward such dissent by registered mail to the Secretary of the corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action.|
|4.11||Executive and Other Committees : Standing or special committees may be appointed from its own number by the Board of Directors from time to time and the Board of Directors may from time to time invest such committees with such powers as it may see fit, subject to such conditions as may be prescribed by such Board. An Executive Committee may be appointed by resolution passed by a majority of the full Board of Directors. It shall have and exercise all of the authority of the Board of Directors, except in reference to amending the Articles of Incorporation, adopting a plan of merger or consolidation, recommending sale, lease or exchange or other disposition of all or substantially all the property and assets of the corporation otherwise than in the equal and regular course of business, recommending a voluntary dissolution or a revocation thereof, or amending the Bylaws. All committees so appointed shall keep regular minutes of the transactions of their meetings and shall cause them to be recorded in books kept for that purpose in the office of the corporation. The designation of any such committee and the delegation of authority thereto, shall not relieve the Board of Directors, or any member thereof, of any responsibility imposed by law.|
|4.12||Remuneration : No stated salary shall be paid directors, as such, for their service, but by resolution of the Board of Directors. A fixed sum and expenses of attendance, if any, may be allowed for attendance at each regular or special meeting of such Board; provided, that nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity and receiving compensation therefore. Member of standing or special committees may be allowed like compensation for attending committee meetings.|
|4.13||Loans : No loans shall be made by the corporation to the directors, unless first approved by the holders of two-thirds of the voting shares. No loans shall be made by the corporation secured by its’ own shares.|
|4.14||Action by Directors Without a Meeting : Any action required or which may be taken without a meeting of the directors, or of a committee thereof, may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the directors, or all of the members of the committee, as the case may be. Such consent shall have the same effect as a unanimous vote.|
|4.15||Action of Directors by Communications Equipment : Any action required or which may be taken at a meeting of directors, or of a committee thereof, may be taken by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other at the same time.|
|5.1||Designations : The officers of the corporation shall be a Chief Executive Officer, a President, one or more Vice-Presidents (one of more of whom may be Executive Vice-President), a Secretary and a Treasurer, and such Assistant Secretaries and Assistant Treasurers as the Board may designate, who shall be elected for one year by the directors at their first meeting after the annual meeting of shareholders, and who shall hold office until their successors are elected and qualified. Any two or more offices may be held by the same person, except the offices of President and Secretary.|
|5.2||The Chief Executive Officer (CEO): The CEO shall be in charge of day to day operation of the business and will make decisions to manage the business as approved by the Board of Directors.|
|5.2a.||The President : The president shall preside at all meetings of shareholders and directors, shall have general supervision of the affairs of the corporation, and shall perform all other duties as are incident to his office or are properly required of him by the Board of Directors.|
|5.3||Vice President : During absence or disability of the President, the Executive Vice-Presidents in the order designated by the Board of Directors, shall exercise all functions of the President. Each Vice-President shall have such powers and discharge such duties as may be assigned to him from time to time by the Board of Directors.|
|5.4||Secretary and Assistant Secretaries : The Secretary shall issue notices for all meetings, except for notices for special meetings of shareholders and special meetings of the directors which are called by the requisite number of shareholders or directors, shall keep the minutes of all meetings, shall have charge of the seal and the corporate books, shall make such reports and perform other duties as are incident to his office, or are properly required of him by the Board of Directors. The Assistant Secretary, or Assistant Secretaries in the order designated by the Board of Directors, shall perform all of the duties of the Secretary during the absence or disability of the Secretary, and at other times may perform such duties as are directed by the President or the Board of Directors.|
|5.5||The Treasurer : The Treasurer shall have the custody of all moneys and securities of the corporation and shall keep regular books on account. He shall disburse funds of the corporation in payment of the just demands against the corporation or as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the Board of Directors from time to time as may be required of him, an account of all his transactions as Treasurer and of the financial conditions to his office or that are properly required of him by the Board of Directors. The Assistant Treasurer, or Assistant Treasurers in the order designated by the Board of Directors, shall perform all of the duties of the Treasurer in the absence or disability of the Treasurer, and at other times may perform such other duties as are directed by the President or the Board of Directors.|
|5.6||Delegation : In the case of absence or inability to act of any officer of the corporation and of any person herein authorized to act in his place, the Board of Directors may from time to time delegate the powers or duties of such officer to any other officer or any director or other person whom it may select.|
|5.7||Vacancies : Vacancies in any office arising from any cause may be filled by the Board of Directors at any regular or special meeting of the Board.|
|5.8||Other Officers : Directors may appoint such other officers and agents as they shall deem necessary or expedient with 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.|
|5.9||Loans : No loans shall be made by the corporation to any officer, unless first approved by the holders of two-thirds of the voting shares.|
|5.10||Term - Removal : The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer or agent elected or appointed by the Board of Directors may be removed at any time, without cause, by the affirmative vote of a majority of the whole Board of Directors, but such removal shall be without prejudice to the contract rights, if any, of the person so removed.|
|5.11||Bonds : The Board of Directors may, by resolution, require any and all of the officers to give bonds to the corporation, with sufficient surety or sureties, conditioned for the faithful performance of the duties of their respective offices, and to comply with such other conditions as may from time to time be required by the Board of Directors.|
|5.12||Salaries : The salaries of the officers shall be fixed from time to time by the Board of Directors, and no officer shall be prevented from receiving such salary by reason of the fact that he is also a director of the corporation.|
Dividends and Finance
|6.1||Dividends : Dividends may be declared by the Board of Directors and paid by the corporation out of the unreserved and unrestricted earned surplus of the corporation, or out of the unreserved and unrestricted net earnings of the current fiscal year, or in treasury shares of the corporation, subject to the conditions and limitations imposed by the State of incorporation. The stock transfer books may be closed for the payment of dividends during such periods of not exceeding fifty days, as from time to time may be fixed by the Board of Directors. The Board of Directors, however, without closing the books of the corporation, may declare dividends payable only to holders of record at the close of business, on any business day not more than fifty days prior to the date on which the dividend is paid.|
|6.2||Reserves : Before making any distribution of earned surplus, there may be set aside out of the earned surplus of the corporation such sum or sums as the directors from time to time in their absolute discretion deem expedient dividends, or for maintaining any property of the corporation, or for any other purpose, and earned surplus of any year not set apart until otherwise disposed of by the Board of Directors.|
|6.3||Depositories : The moneys of the corporation shall be deposited in the name of the corporation in such bank or trust company or trust companies as the Board of Directors shall designate, and shall be drawn out only by check or other order for payment of money signed by such persons and in such manner as may be determined by resolution of the Board of Directors.|
Except as may otherwise be required by law, any notice to any shareholder or director may be delivered personally or by mail. If mailed, the notice shall be deemed to have been delivered when deposited in the United States mail, addressed to the addressee at his last known address in the records of the corporation, with postage thereon prepaid.
The corporate seal of the corporation shall be in such form and bear such inscription as may be adopted by resolution of the Board of Directors, or by usage of the officers on behalf of the corporation. The procurement of a corporate seal shall be discretionary only, and is not required.
Books and Records
The corporation shall keep correct and complete books and record of accounts and shall keep minutes of the proceedings of its shareholders and Board of Directors, and shall keep at its registered office or principal place of business, or at the office of its transfer agent or registrar, a record of its shareholders, giving the names and addresses of all shareholders and the number and class of the shares held by each. Any books, records, and minutes may be in written form or any other form capable of being converted into written form within a reasonable time.
Special Corporate Acts
|10.1||Execution of Written Instruments : Contracts, deeds, documents, and instruments shall be executed by the President alone unless the Board of Directors shall, in a particular situation, designate another procedure for their execution.|
|10.2||Signing of Checks or Notes : Checks, notes, drafts, and demands for money shall be signed by the officer or officers from time to time designated by the Board of Directors.|
|10.3||Indemnification of Directors and Officers : The corporation shall indemnify any and all directors or officers or former directors or former officers or any person who may have served at its request as a director or officer of the corporation or of any other corporation in which it is a creditor, against expenses actually or necessarily incurred by them in connection with the defense or settlement of any action, suit, or proceeding brought or threatened in which they, or any of them, are or might be made parties, or a party, by reason of being or having been directors or officers or a director or an officer of the corporation, or of such other corporation. This indemnification shall not apply, however, to matter as to which such director or officer or former director or officer or person shall be adjudged in such action, suit, or proceeding to be liable for negligence or misconduct in the performance of duty. Such indemnification shall not be deemed exclusive of other rights to which those indemnified may be entitled, under any law, bylaw, agreement, vote of shareholders, or otherwise.|
|11.1||By Shareholders : These Bylaws may be altered, amended or repealed by the affirmative vote of a majority of the voting stock issued and outstanding at any regular or special meeting of the shareholders.|
|11.2||By Directors : The Board of Directors shall have the power to make, alter, amend and repeal the Bylaws of this corporation. However any such alteration, amendment, or repeal of the Bylaws, may be changed or repealed by the holders of a majority of the stock entitled to vote at any shareholders meeting.|
|11.3||Emergency Bylaws : The Board of Directors may adopt emergency Bylaws, Bylaws: subject to repeal or change by action of the shareholders, which shall be operative during any emergency in the conduct of business of the corporation resulting from an attack on the United States or any nuclear or atomic disaster.|
Adopted by resolution of the Corporation's Board of Directors or incorporator on this 3rd day of October, 2013.
/s/ Indrajith Andrew Weeraratne
Indrajith Andrew Weeraratne
This SUBSCRIPTION AGREEMENT (the “ Agreement ”) is made as of this ___ day of ________________, 2013, by and between Natural Gas Fueling and Conversion Inc., a Florida corporation (“ NGFC ” or the “ Company ”), and the undersigned set forth on the signature page hereto (the “ Subscriber ”).
WHEREAS , the Company intends to obtain subscriptions for the purchase and sale, in a private placement transaction (the “ Offering ”) pursuant to Regulation D promulgated under the Securities Act of 1933, as amended (the “ Act ”), of an aggregate of 7,500,000 shares (the “ Shares ” or the “ Securities ”) of the Company’s Class A common stock, par value $0.0001 per share (the “ Common Stock ”), on the terms and conditions hereinafter set forth, and the Subscriber desires to acquire that number of Shares set forth on the signature page hereof.
NOW, THEREFORE , for and in consideration of the promises and the mutual covenants hereinafter set forth, and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
1. Subscription Procedure .
(a) Subject to the terms and conditions hereinafter set forth, the Subscriber hereby subscribes for and agrees to purchase from the Company such number of Shares as is set forth upon the signature page hereof at a purchase price of $0.03 per share (the “ Purchase Price ”). The Company agrees to sell such Shares to the Subscriber for the Purchase Price (the “ Offering ”).
(b) The subscription period will begin as of October 22, 2013, and will terminate (if the closing date has not earlier occurred) at 5:00 PM Eastern Time on November 30, 2013, unless extended by the Company (the “ Termination Date ”). The Shares will be offered on a “best efforts” basis as more particularly set forth in a Confidential Private Placement Memorandum and any supplements thereto (the “ Offering Memorandum ”). The final Offering Memorandum will be provided to Subscribers in the Offering no later than two days prior to the Termination Date. The consummation of the Offering is subject to the satisfaction of a number of conditions to be further described in the Offering Memorandum, one or more of which conditions may not occur.
(c) The certificates for the shares bearing the name of the Subscriber will be delivered by the Company no later than sixty (60) days following the closing date. The Subscriber hereby authorizes and directs the Company to deliver the Shares to be issued to such Subscriber pursuant to this Agreement to the residential or business address indicated in the Investor Questionnaire, attached hereto as Exhibit A .
(d) The Purchase Price for the Shares purchased hereunder shall be paid by certified check, payable to Natural Gas Fueling and Conversion Inc. , or by wire transfer pursuant to the following instructions:
|Account Name:||Natural Gas Fueling and Conversion Inc.|
(e) The Company, in its sole discretion, may reject any subscription, in whole or in part, or terminate or withdraw the Offering in its entirety at any time prior to a closing in relation thereto. The Company is not required to allocate among investors on a pro rata basis in the event of an over-subscription.
2. Representations and Covenants of the Subscriber . The Subscriber hereby represents and warrants to the Company as follows:
(a) The Subscriber recognizes that the purchase of Securities involves a high degree of risk in that (i) the Company will need additional capital to operate its business but has no assurance of additional necessary capital; (ii) 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 Securities; (iii) an investor may not be able to liquidate his or her investment; (iv) transferability of the Securities is extremely limited; (v) an investor could sustain the loss of his or her entire investment; and (vi) the Company is and will be subject to numerous other risks and uncertainties, including without limitation, significant and material risks relating to the Company’s business, and the industries, markets and geographic regions in which the Company will compete, as well as risks associated with the Offering contained in the Offering Memorandum.
(b) The Subscriber acknowledges that he or she has prior investment experience, including without limitation, investments in non-listed and non-registered securities, or he or she has employed the services of an investment advisor, attorney and/or accountant to read all of the documents furnished or made available by the Company to him or her and to all other prospective investors in the Securities and to evaluate the merits and risks of such an investment on his or her behalf, and that he or she recognizes the highly speculative nature of this investment.
(c) The Subscriber acknowledges that (i) the Company is newly formed and yet to begin its operation and as such, may have losses for the foreseeable future; (ii) there are significant restrictions on the transferability of the Shares, including but not limited to: (A) the Shares will not be, and the Subscriber will have no right to require that the Shares be registered under the Act or any state securities laws, and (B) there is no public market for the Shares and none is expected to develop, and accordingly, it may not be possible for the Subscriber to liquidate the Subscriber’s investment in the Company; (iii) no federal or state agency has made any findings as to the fairness of the terms of the Offering; and (iv) any projections or predictions that may have been made available to the Subscriber are based on estimates, assumptions and forecasts which may prove to be incorrect; and no assurance is given that actual results will correspond with the results contemplated by the various projections.
(d) The Subscriber acknowledges receipt and careful review of the Offering Memorandum, this Agreement, and the attachments hereto and thereto (collectively, the “ Offering Documents ”) and hereby represents that he or she has been furnished or given access by the Company during the course of this Offering with or to all information regarding the Company and its financial condition and results of operations which he or she had requested or desired to know; that all documents which could be reasonably provided have been made available for his or her inspection and review; that he or she has been afforded the opportunity to ask questions of and receive answers from duly authorized representatives of the concerning the terms and conditions of the Offering, and any additional information which he or she had requested.
(e) The Subscriber acknowledges that this Offering of Shares may involve tax consequences, and that the contents of the Offering Documents do not contain tax advice or information. The Subscriber acknowledges that he or she must retain his or her own professional advisors to evaluate the tax and other consequences of an investment in the Securities.
(f) The Subscriber represents that the Securities are being purchased for his or her own account, for investment and not for distribution or resale to others. The Subscriber agrees that he or she will not sell or otherwise transfer any of the securities comprising the Securities unless they are registered under the Act or unless an exemption from such registration is available and, upon the Company’s request, the Company receives an opinion of counsel reasonably satisfactory to the Company confirming that an exemption from such registration is available for such sale or transfer.
(g) The Subscriber understands that the Company will review this Agreement and the Investor Questionnaire and, if the Subscriber is a natural person, the Company is hereby given authority by the undersigned to call his or her bank or place of employment. The Subscriber further authorizes the Company to review the financial standing of the Subscriber; and the Subscriber agrees that the Company reserves the unrestricted right to reject or limit any subscription and to close the offer at any time.
(h) The Subscriber hereby represents that the address of Subscriber furnished by him at the end of this Agreement and in the Investor Questionnaire is the Subscriber’s principal residence if he or she is an individual or its principal business address if it is a corporation or other entity.
(i) The Subscriber hereby represents that, except as set forth in the Offering Documents, no representations or warranties have been made to the Subscriber by the Company or its agents, employees or affiliates and in entering into this transaction, the Subscriber is not relying on any information, other than that contained in the Offering Documents and the results of independent investigation by the Subscriber.
(j) The Subscriber agrees that he or she will purchase securities in the Offering only if his or her intent at such time is to make such purchase for investment purposes and not with a view toward resale.
(k) If the undersigned Subscriber is a partnership, corporation, trust or other entity, such partnership, corporation, trust or other entity further represents and warrants that: (i) it was not formed for the purpose of investing in the Company; (ii) it is authorized and otherwise duly qualified to purchase and hold the Securities; and (iii) that this Agreement has been duly and validly authorized, executed and delivered and constitutes the legal, binding and enforceable obligation of the Subscriber.
(l) If the Subscriber is not a United States person, such Subscriber hereby represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection with any invitation to subscribe for the Shares or any use of this Agreement, including (i) the legal requirements within its jurisdiction for the purchase of the Shares, (ii) any foreign exchange restrictions applicable to such purchase, (iii) any governmental or other consents that may need to be obtained, and (iv) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale or transfer of the Securities. Such Subscriber’s subscription and payment for, and his or her continued beneficial ownership of the Securities, will not violate any applicable securities or other laws of the Subscriber’s jurisdiction.
(m) The Subscriber acknowledges that (i) the Offering Memorandum contains material, non-public information concerning the Company within the meaning of Regulation FD promulgated by the SEC, and (ii) the Subscriber is obtaining such material, non-public information solely for the purpose of considering whether to purchase the Shares pursuant to a private placement that is exempt from registration under the Act. In accordance with Regulation FD and other applicable provisions of the Securities Laws, the Subscriber agrees to keep such information confidential and not to disclose it to any other person or entity except the Subscriber’s legal counsel, other advisors and other representatives who have agreed (i) to keep such information confidential, (ii) to use such information only for the purpose set forth above, and (iii) to comply with applicable securities laws with respect to such information. In addition, the Subscriber further acknowledges that the Subscriber and such legal counsel, other advisors and other representatives are prohibited from trading in the Company’s securities while in possession of material, non-public information and agrees to refrain from purchasing or selling securities of the Company until such material, non-public information has been publicly disseminated by the Company. The Subscriber agrees to indemnify and hold harmless the Company and its officers, directors, employees and affiliates and each other person, if any, who controls any of the foregoing, against any loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all expenses whatsoever reasonably incurred in investigating, preparing or defending against any litigation commenced or threatened or any claim whatsoever) arising out of or based upon any false representation or warranty by the Subscriber, or the Subscriber’s breach of, or failure to comply with, any covenant or agreement made by the Subscriber herein or in any other document furnished by the Subscriber to the Company or its officers, directors, employees or affiliates or each other person, if any, who controls any of the foregoing in connection with this transaction.
(n) The Subscriber understands and acknowledges that (i) the Securities are being offered and sold to Subscriber without registration under the Act in a private placement that is exempt from the registration provisions of the Act under Section 4(2) of the Act and (ii) the availability of such exemption depends in part on, and that the Company will rely upon the accuracy and truthfulness of, the foregoing representations, and such Subscriber hereby consents to such reliance.
(o) That the undersigned certifies, under penalty of perjury, (i) that the social security or Tax Identification Number set forth herein is time, correct and complete, and (ii) that the undersigned is not subject to backup withholding either because the undersigned has not been notified that the undersigned is subject to backup withholding as a result of a failure to report all interest or dividends, or the Internal Revenue Service has notified the undersigned that the undersigned is no longer subject to backup withholding.
3. Representations by the Company . The Company represents and warrants to the Subscriber that:
(a) Organization and Authority . The Company and each of its subsidiaries, if applicable, (i) is a corporation and company, respectively, validly existing and in good standing under the laws of the jurisdiction of its incorporation and formation, respectively, (ii) has all requisite corporate power and company power, respectively, and authority to own, lease and operate its properties and to carry on its business as presently conducted, and (iii) has all requisite corporate power and company power, respectively, and authority to execute, deliver and perform their obligations under this Agreement and the Offering Documents being executed and delivered by it in connection herewith, and to consummate the transactions contemplated hereby and thereby.
(b) Qualifications . The Company is duly qualified to do business as a foreign corporation and foreign company, respectively, and is in good standing in all jurisdictions where such qualification is necessary and where failure so to qualify could have a material adverse effect on the business, properties, operations, condition (financial or other), results of operations or prospects of the Company and its subsidiaries, taken as a whole.
(c) Capitalization of the Company . As of the date hereof, the authorized capital stock of the Company consists of 230,000,000 shares of Common Stock, par value $0.0001 per share. There are no additional outstanding options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exchangeable for, or giving any person any right to subscribe for or acquire from the Company, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any subsidiary is or may become bound to issue additional shares of Common Stock, or securities or rights convertible or exchangeable into shares of Common Stock. Except as described in the Offering Documents, the issuance and sale of the Shares will not obligate the Company to issue shares of Common Stock or other securities to any person (other than the Subscribers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under such securities. None of the outstanding shares of Common Stock or options, warrants, or rights or other securities entitling the holders to acquire Common Stock has been issued in violation of the preemptive rights of any security holder of the Company. No holder of any of the Company’s securities has any rights, “demand,” “piggy-back” or otherwise, to have such securities registered by reason of the intention to file, filing or effectiveness of a registration statement. The Shares to be issued to the Subscriber have been duly authorized, and when issued and paid for in accordance with this Agreement, the Shares will be duly and validly issued, fully paid and non-assessable.
(d) Authorization . The Offering Documents have been duly and validly authorized by the Company. This Agreement, assuming due execution and delivery by the Subscriber, when the Agreement is executed and delivered by the Company, will be, valid and binding obligations of the Company, enforceable in accordance with their respective terms, except as the enforceability hereof and thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to or affecting creditors’ rights generally and general principles of equity, regardless of whether enforcement is considered in a proceeding in equity or at law.
(e) Non-Contravention . The execution and delivery of the Offering Documents by the Company, the issuance of the Shares as contemplated by the Offering Documents and the completion by the Company of the other transactions contemplated by the Offering Documents do not and will not, with or without the giving of notice or the lapse of time, or both, (i) result in any violation of any provision of the articles of incorporation or by-laws or similar instruments of the Company, (ii) conflict with or result in a breach by the Company of any of the terms or provisions of, or constitute a default under, or result in the modification of, or result in the creation or imposition of any lien, security interest, charge or encumbrance upon any of the properties or assets of the Company, (iii) violate or contravene any applicable law, rule or regulation or any applicable decree, judgment or order of any court, United States federal or state regulatory body, administrative agency or other governmental body having jurisdiction over the Company or any of its respective properties or assets that would have a material adverse effect on the business, properties, operations, condition (financial or other), results of operations or prospects of the Company and its subsidiaries, taken as a whole, or the validity or enforceability of, or the ability of the Company to perform its obligations under, the Offering Documents, or (iv) have any material adverse effect on any permit, certification, registration, approval, consent, license or franchise necessary for the Company or its subsidiaries to own or lease and operate any of its properties and to conduct any of its business or the ability of the Company or its subsidiaries to make use thereof.
(f) Information Provided . The Company hereby represents and warrants to the Subscriber that the information set forth in the Offering Memorandum and any other document provided by the Company (or the Company’s authorized representatives) to the Subscriber in connection with the transactions contemplated by this Agreement, does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading, it being understood that for purposes of this Section 3(f), any statement contained in such information shall be deemed to be modified or superseded for purposes of this Section 3(f) to the extent that a statement in any document included in such information which was prepared and furnished to the Subscriber on a later date or filed with the SEC on a later date modifies or replaces such statement, whether or not such later prepared and furnished or filed statement so states.
(g) Absence of Certain Proceedings . The Company is not aware of any action, suit, proceeding, inquiry or investigation before or by any court, public board or body, or governmental agency pending or threatened against or affecting the Company, in any such case wherein an unfavorable decision, ruling or finding would have a material adverse effect on the business, properties, operations, condition (financial or other), results of operations or prospects of the Company, or the transactions contemplated by the Offering Documents or which could adversely affect the validity or enforceability of, or the authority or ability of the Company to perform its obligations under, the Offering Documents; and to the Company’s knowledge there is not pending or contemplated any, and there has been no, investigation by the SEC involving the Company or any current or former directors or officers.
(h) Compliance with Law . The Company is not in violation of or has any liability under any statute, law, rule, regulation, ordinance, decision or order of any governmental agency or body or any court, domestic or foreign, except where such violation or liability would not individually or in the aggregate have a material adverse effect on the business, properties, operations, condition (financial or other), results of operations or prospects of the Company and its subsidiaries, taken as a whole; and to the knowledge of the Company, there is no pending investigation that would reasonably be expected to lead to such a claim.
(i) Tax Matters . The Company has filed all federal, state and local income and franchise tax returns required to be filed and has paid all taxes shown by such returns to be due, and no tax deficiency has been determined adversely to the Company which has had (nor does the Company or any of its subsidiaries have any knowledge of any tax deficiency which, if determined adversely to the Company, might have) a material adverse effect on the business, properties, operations, condition (financial or other), results of operations, or prospects of the Company or any of its subsidiaries, taken as a whole.
4. Indemnification . The Subscriber shall indemnify, defend and hold harmless the Company, and any officers, employees, shareholders, partners, agents, directors or controlling persons of the Company (collectively the “ Indemnified Parties ” and individually an “ Indemnified Party ”) who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, against losses, liabilities and expenses of each Indemnified Party (including attorneys’ fees, judgments, fines and amounts paid in settlement, payable as incurred) incurred by such person or entity in connection with such action, arbitration, suit or proceeding, by reason of or arising from (i) any misrepresentation or misstatement of facts or omission to represent or state facts made by the undersigned, including, without limitation, the information in this Agreement, or (ii) litigation or other proceeding brought by the undersigned against one or more Indemnified Party wherein the Indemnified Party is the prevailing party.
5. Certain Securities Law Matters .
(a) The Shares shall not be sold, assigned, transferred or pledged except upon satisfaction of the conditions specified in this Section 5, which conditions are intended to ensure compliance with the provisions of the Act. The Subscriber will cause any proposed purchaser, assignee, transferee or pledgee of the Shares held by the Subscriber to agree to take and hold such securities subject to the provisions and conditions of this Section 5.
(b) Each certificate representing (i) the Shares and (ii) any other securities issued in respect of the Shares upon any stock split, stock dividend, recapitalization, merger, consolidation or similar event, shall (unless otherwise permitted by the provisions of Section 5(c) below) be stamped or otherwise imprinted with a legend substantially in the following form (in addition to any legend required under applicable state securities laws):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL OR OTHER EVIDENCE REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT. COPIES OF THE AGREEMENT COVERING THE PURCHASE OF THESE SHARES AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE CORPORATION AT THE PRINCIPAL EXECUTIVE OFFICES OF THE CORPORATION.
The Subscriber consents to the Company making a notation on its records and giving instructions to any transfer agent of the Shares in order to implement the restrictions on transfer established in this Section 5.
(c) The Subscriber agrees to comply in all respects with the provisions of this Section 5. Prior to any proposed sale, assignment, transfer or pledge of any Shares, unless there is in effect a registration statement under the Act covering the proposed transfer, the undersigned thereof shall give written notice to the Company of the undersigned’s intention to effect such transfer, sale, assignment or pledge. Each such notice shall describe the manner and circumstances of the proposed transfer, sale, assignment or pledge in sufficient detail, and shall be accompanied, at the undersigned’s expense evidence satisfactory to the Company the effect that the proposed transfer of the Shares may be effected without registration under the Act or applicable state securities law.
6. Specific State Legends .
FOR FLORIDA RESIDENTS : THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE FLORIDA SECURITIES AND INVESTOR PROTECTION ACT IN RELIANCE UPON EXEMPTIVE PROVISIONS CONTAINED THEREIN. SECTION 517.061(11)(a)(5) OF THE FLORIDA SECURITIES AND INVESTOR PROTECTION ACT (THE “ FLORIDA ACT ”) PROVIDES WHEN SALES ARE MADE TO FIVE OR MORE PURCHASERS IN THIS STATE THAT ANY PURCHASER OF SECURITIES IN FLORIDA WHICH ARE EXEMPTED FROM REGISTRATION UNDER SECTION 517.061(11) OF THE FLORIDA ACT MAY WITHDRAW HIS SUBSCRIPTION AGREEMENT AND RECEIVE A FULL REFUND OF ALL MONIES PAID, WITHIN THREE DAYS AFTER THE LATER OF (i) THE DATE HE TENDERS CONSIDERATION OR SUCH SECURITIES AND (ii) THE DATE THIS STATUTORY RIGHT OF RESCISSION IS COMMUNICATED TO HIM. ANY FLORIDA RESIDENT WHO PURCHASES SECURITIES IS ENTITLED TO EXERCISE THE FOREGOING STATUTORY RESCISSION RIGHT BY TELEPHONE, TELEGRAM OR LETTER NOTICE TO THE COMPANY. ANY TELEGRAM OR LETTER SHOULD BE SENT OR POSTMARKED PRIOR TO THE END OF THE THIRD BUSINESS DAY. A LETTER SHOULD BE MAILED BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ENSURE ITS RECEIPT AND TO EVIDENCE THE TIME OF MAILING. ANY ORAL REQUESTS SHOULD BE CONFIRMED IN WRITING.
FOR RESIDENTS OF ALL STATES : IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE PERSON OR ENTITY CREATING THE SECURITIES AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFICE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
7. Miscellaneous .
(a) Any notice or other communication given hereunder shall be deemed sufficient if in writing and sent by registered or certified mail, return receipt requested, addressed to the Company, at Natural Gas Fueling and Conversion Inc., 7135 Collins Avenue, No. 624, Miami Beach, FL 33141, with a copy to (which shall not constitute notice): JSBarkats, PLLC, 18 E. 41 st Street, 14 th Floor, New York, NY 10017, and to the Subscriber at his address indicated on the signature page of this Agreement. Notices shall be deemed to have been given three (3) business days after the date of mailing, except notices of change of address, which shall be deemed to have been given when received.
(b) This Agreement may be amended through a written instrument signed by the Subscriber and the Company.
(c) 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.
(d) 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 Florida.
(e) This Agreement may be executed in counterparts. It shall not be binding upon the Company unless and until it is accepted by the Company. 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 Shares as herein provided; subject, however, to the right hereby reserved to the Company to enter into the same agreements with other subscribers and to add and/or to delete other persons as subscribers. This Agreement may be executed and delivered by facsimile.
(f) 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.
(g) 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.
(h) 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.
[-signature page follows-]
IN WITNESS WHEREOF , the undersigned Subscriber has executed this Subscription Agreement as of the date written below.
|No. of Shares to be Purchased|
|Total Purchase Price ($)||$|
|The Shares are to be issued in|
|(check one box):|
|Print Name of Investor|
|Print Name of Joint Investor (if applicable)|
|o||Joint tenants with rights of survivorship|
|o||Tenants in entirety||Signature of Investor|
|o||Corporation (an officer must sign)|
|Signature of Joint Investor|
|o||Partnership (all general partners must sign)|
|Print Name of Corporation, Partnership or other Institution investor|
Accepted as of this _______ day of ___________________, 2013
NATURAL GAS FUELING AND CONVERSION INC.
|Name: Indrajith Andrew Weeraratne|
|Title: Chief Executive Officer|
PRELIMINARY JOINT VENTURE AGREEMENT
This agreement is between Natural Gas Fueling and Conversion Inc. (NGFC), a Florida corporation and Shenzhen HJ Technology Co. Ltd. (HJT), in Shenzhen, China who is currently in the business of converting petroleum based vehicles to operate on Natural Gas.
|1.||NGFC plans to set up Natural Gas (NG) fueling stations and NG factories to convert NG to LNG and CNG in the USA and along with it set up garages to convert vehicles (VC division) to run on NG in across the United States of America (USA).|
|2.||HJT is a well-established and profitable enterprise (based on the financial statements provided to us, according to HJT management, audited by a Chinese CPA firm, that NGFC has not audited or reviewed) that specializes in the research, development, production and marketing of automobile software and components and has been focusing on the technology of alternative energy for vehicles. After years of testing and perfecting a proprietary process, HJT had its first breakthrough in 2000 with its patented “Gas Intelligent Electronic Control System (GIECS)”, a system for converting Petroleum based vehicles to run on Compressed Natural Gas (CNG) or Liquefied natural Gas (LNG). HJT’s GIECS system, according to HJT management, is a market leader in this technology that is widely used throughout China and exported abroad. According to HJT management, currently, HTJ has 20 conversion factories which install devices to convert Petroleum-based vehicles to run on CNG/LNG.|
|3.||HJT by signing this agreement agrees to be a joint venture partner with NGFC to help set up the VC division of NGFC in the USA, and provide GIECS to be installed in vehicles and train US mechanics in each location to install GIECS in vehicles.|
|4.||HJT will charge NGFC a fee for such services. And that fee will be based on the cost to HJT plus a profit margin based on what the US market will bear allowing NGFC also to maintain a reasonable profit margin and cash flow from the operation of that VC division.|
|5.||HJT and NGFC will discuss having a more permanent relationship in the future whereby HJT will own certain number of shares of NGFC and become full participants in the total business of NGFC for a mutually beneficial consideration.|
|/s/ Ren Xianglin||/s/ I. Andrew Weeraratne|
|Mr. Ren Xianglin||I. Andrew Weeraratne|
|Chief Executive Officer||Chief Executive Officer|
|Shenzhen HJ Technology Co. Ltd.||Natural Gas Fueling and Conversion Inc.|
|Date: October 12, 2013||Date: October 12, 2013|
Natural Gas Fueling and Conversion Inc.
CODE OF BUSINESS CONDUCT AND ETHICS
This Code of Business Conduct and Ethics covers a wide range of business practices and procedures. It does not cover every issue that may arise but it sets out basic principles to guide all employees of Natural Gas Fueling and Conversion Inc., (the "Company"). All of our officers, directors and employees must conduct themselves accordingly and seek to avoid even the appearance of improper behavior. The code should also be provided to and followed by the Company’s agents and representatives, including consultants.
If a law conflicts with a policy in this Code, you must comply with the law. If you have any questions about these conflicts, you should ask your supervisor how to handle the situation.
Those who violate standards in this Code will be subject to disciplinary action, up to and including termination of employment. If you are in a situation that you believe may violate or lead to a violation of this Code, follow the guidelines described in Section 14 of this Code.
|1.||Compliance with Laws, Rules and Regulations|
Obey the law, both in letter and in spirit, is the foundation on which our ethical standards are built. All employees must respect and obey the laws of the cities, states and countries in which we operate. Although not all employees are expected to know the details of these laws, it is important to know enough about them to determine when to seek advice from supervisors, managers or other appropriate personnel.
|2.||Conflicts of Interest|
A “conflict of interest” exists when a person’s private interests interferes in any way with the interests of the Company. A conflict situation can arise when an employee, officer or director takes actions or has interests that may make it difficult to perform his or her Company work objectively and efficiently. Conflicts of interest may also arise when an employee, officer or director, or members of his or her family, receives improper personal benefits as a result of his or her position in the Company. Loans to, or guarantees of obligations of, employees and their family members may create conflicts of interest.
It is almost always a conflict of interest for a Company employee to work simultaneously for a competitor, customer or supplier. You are not allowed to work for a competitor as a consultant or board member. The best policy is to avoid any direct or indirect business connection with our customers, suppliers or competitors, except on our behalf. Conflicts of interest are prohibited as a matter of Company policy, except under guidelines approved by our Board of Directors. Conflicts of interest may not always be clear-cut, so if you have a question, you should consult with higher levels of management. Any employee, officer or director who becomes aware of a conflict or potential conflict should bring it to the attention of a supervisor, manager or other appropriate personnel or consult with the procedures described in Section 14 of this Code.
Employees who have access to confidential information are not permitted to use or share that information for stock trading purposes or for any other purpose except the conduct of our business. All non-public information about the Company should be considered confidential information. To use non-public information for persona financial benefit or to “tip” others who might make an investment decision on the basis of this information is not only unethical but also illegal.
Employees, officer and directors are prohibited from taking for themselves personally, opportunities that are discovered through the use of corporate property, information or position without the consent of the Board of Directors. No employee may use corporate property, information or position for improper personal gain, and no employee may compete with the Company, directly or indirectly.
|5.||Competition and Fair Dealing|
We seek to outperform our competition fairly and honestly. Stealing proprietary information, possessing trade secret information that was obtained without the owner’s consent, or inducing such disclosures by past or present employees of other companies is prohibited. Each officer, director and employee should respect the rights of and deal fairly with the Company’s customers, suppliers, competitors and employees. No employee should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other intentional unfair-dealing practice.
The purpose of business entertainment and gifts in a commercial setting is to create good will and sound working relationships, not to gain unfair advantage with customers. No gift, or entertainment should ever be offered, given, provided or accepted by any Company employee, family member of an employee or agent, unless it (a) is not in cash, (b) is consistent with customary business practices, (c) is not excessive in value, (d) cannot be construed as a bribe or payoff and (e) does not violate any laws or regulations. Please discuss with your supervisor any gifts or proposed gifts that you are not certain are appropriate.
|6.||Discrimination and Harassment|
The diversity of the Company’s employees is a tremendous asset. We are firmly committed to providing equal opportunity in all respects aspects of employment and will not tolerate illegal discrimination or harassment of any kind. Examples include derogatory comments based on racial or ethnic characteristics and unwelcome sexual advances.
|7.||Health and Safety|
The Company strives to provide each employee with a safe and healthy work environment. Each employee has responsibility for maintaining a safe and healthy workplace for all employees by following safety and health rules and practices and reporting accidents, injuries and unsafe equipment, practices or conditions.
Violence and threatening behavior are not permitted. Employees should report to work in condition to perform their duties, free from the influence of illegal drugs or alcohol. The use of alcohol and/or illegal drugs in the workplace will not be tolerated.
The Company requires honest and accurate recording and reporting of information in order to make responsible business decisions. For example, only the true and actual number of hours worked should be reported.
Many employees regularly use business expense accounts, which must be documented and recorded accurately. If you are not sure whether a certain expense is legitimate, ask your supervisor or the Company’s controller or chief financial officer.
All of the Company’s books, records, accounts and financial statements must be maintained in reasonable detail, must appropriately reflect the Company’s transactions and must conform to both applicable legal requirements and to the Company’s systems of accounting and internal controls. Unrecorded or “off the books” funds or assets should not be maintained unless permitted by applicable laws or regulations.
Business records and communications often become public, and we should avoid exaggeration, derogatory remarks, guesswork or inappropriate characterizations of people and companies that can be misunderstood. This applies equally to e-mail, internal memos and formal reports. Records should always be retained or destroyed according to the Company’s record retention policies. In accordance with these policies, in the event of litigation or governmental investigation please consultant your supervisor. All e-mail communications are the property of the Company and employees, officers and directors should not expect that Company or personal e-mail communications are private. All e-mails are the property of the Company. No employee, officer or director shall use Company computers, including to access the internet, for personal or non-Company business.
Employees must maintain the confidentiality of confidential information entrusted to them by the Company or its customers, except when disclosure is required by laws or regulations. Confidential information includes all non-public information that might be of use to competitors, or harmful to the Company or its customers, if disclosed. It also includes information that suppliers and customers have entrusted to us. The obligation to preserve confidential information continues even after employment ends. In connection with this obligation, employees, officers and directors may be required to execute confidentiality agreements confirming their agreement to be bound not to disclose confidential information. If you are uncertain whether particular information is confidential or non-public, please consult your supervisor.
|10.||Protection and Proper Use of Company Assets|
All officers, directors and employees should endeavor to protect the Company’s assets and ensure their efficient use. Theft, carelessness and waste have a direct impact on the Company’s profitability. Any suspected incident of fraud or theft should be immediately reported for investigation. Company equipment should not be used for non-Company business.
The obligation of officers, directors and employees to protect the Company’s assets includes it proprietary information. Proprietary information includes intellectual property such as trade secrets, patents, trademarks and copyrights, as well as business, marketing and service plans, engineering and manufacturing ideas, designs, databases, records, salary information and any unpublished financial data and reports. Unauthorized use or distribution of this information would violate Company policy. It could also be illegal and result in civil or even criminal penalties.
|11.||Payments to Government Personnel|
The Unites States Foreign Corrupt Practices Act prohibits giving anything of value, directly or indirectly, to officials of foreign governments or foreign political candidates in order to obtain or retain business. It is strictly prohibited to make illegal payments to government officials of any country.
In addition, the U. S. government has a number of laws and regulations regarding business gratuities that may be accepted by U. S. government personnel. The promise, offer or delivery to an official or employee of the U. S. government of a gist, favor or other gratuity in violation of these rules would not only violate Company policy, but could also be a criminal offense. State and local governments, as well as foreign governments, may have similar rules.
|12.||Waivers of the Code of Business Conduct and Ethics|
Any waiver of the provisions of this Code may be made only by the Board of Directors and will be promptly disclosed as required by law or stock exchange rule or regulation.
|13.||Reporting any Illegal or Unethical Behavior|
Employees are encouraged to talk with supervisors, managers or Company officials about observed illegal or unethical behavior, and when in doubt about the best course of action in a particular situation. It is the Company’s policy not to allow retaliation for reports of misconduct by others made in good faith by employees. Employees are expected to cooperate in internal investigations of misconduct, and the failure to do so could serve as grounds for termination. Any employee may submit a good faith concern regarding questionable accounting or auditing matters without fear of dismissal or retaliation of any kind.
We must all work to ensure prompt and consistent action against violations of this Code. However, in some situations, it is difficult to know if a violation has occurred. Since we cannot anticipate every situation that may arise, it is important that we have a way to approach a new question or problem. These are steps to keep in mind:
|·||Make sure you have all the facts . In order to reach the rights solutions, we must be as fully informed as possible.|
|·||Ask yourself, what specifically am I being asked to do – does it seem unethical or improper ? This will enable you to focus on the specific question you are faced with, and the alternatives you have. Use your judgment and common sense; if something seems unethical or improper, it probably is.|
|·||Clarify your responsibility and role . In most situations, there is shared responsibility. Are your colleagues informed? It may help to get others involved and discuss the problem.|
|·||Discuss the problem with your supervisor . This is the basic guidance for all situations. In many cases, your supervisor will be more knowledgeable about the question, and will appreciate being brought into the decision-making process. Keep in mind that it is your supervisor’s responsibility to help solve problems. If your supervisor does not or cannot remedy the situation, or you are uncomfortable binging the problem to the attention of your supervisor, bring the issue to the attention of the human resources supervisor, or to an officer of the Company.|
|·||You may report ethical violations in confidence and without fear of retaliation . If your situation requires that your identity be kept secret, your anonymity will be protected. The Company does not permit retaliation of any kind for good faith reports of ethical violations.|
|·||Always ask first – act later . If you are unsure of what to do in any situation, seek guidance before your act .|
CODE OF ETHICS FOR THE CHIEF EXECUTIVE OFFICER AND SENIOR FINANCIAL OFFICERS
Natural Gas Fueling and Conversion Inc., (the "Company") has a Code of Business Conduct and Ethics applicable to all employees, officers and directors of the Company. The Chief Executive Officer (CEO) and senior financial officers of the Company, including its chief financial officer and principal accounting officer, are bound by the provisions set forth therein relating to ethical conduct, conflicts of interest and compliance with law. In addition to the Code of Business Conduct and Ethics, the CEO and senior financial officers of the Company are also subject to the following specific policies:
1. The CEO and senior financial officers are responsible for full, fair, accurate, timely and understandable disclosure in the periodic reports and other filings required to be made by the Company with the Securities and Exchange Commission. Accordingly, it is the responsibility of the CEO and each senior financial officer promptly to bring to the attention of the Board of Directors any material information of which he or she may become aware that affects the disclosures made by the Company in its public filings or otherwise impairs the ability of the Company to make full, fair, accurate, timely and understandable public disclosures.
2. The CEO and each senior financial officer shall promptly bring to the attention of the Company’s Audit Committee any information he or she may have concerning (a) significant deficiencies in the design or operation of internal controls which could adversely affect the Company’s ability to record, process, summarize and report financial data or (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s financial reporting, disclosures or internal controls.
3. The CEO and each senior financial officer shall promptly bring to the attention of the Board of Directors and the Audit Committee any information he or she may have concerning any violation of the Company’s Code of Business Conduct and Ethics, including any actual or apparent conflicts of interest between personal and processional relationships, involving management or other employees who have a significant rule in the Company’s financial reporting, disclosures or internal controls.
4. The CEO and each senior financial officer shall promptly bring to the attention of the Board of Directors and Audit Committee any information he or she may have concerning evidence of a material violation of the securities or other laws, rules or regulations applicable to the Company and the operation of its business, by the Company or any agent thereof, or of violation of the Code of Business Conduct and Ethics or of these additional procedures.
5. The Board of Directors shall determine, or designate appropriate persons to determine, appropriate actions to be taken in the event of violations of the Code of Business Conduct and Ethics of these additional procedures by the CEO and the Company’s senior financial officers. Such actions shall be reasonably designed to deter wrongdoing and to promote accountability for adherence to the Code of Business Conduct and Ethics and to these additional procedures, and shall include written notices to the individual involved that the Board has determined that there has been a violation, censure by the Board, demotion or reassignment of the individual involved, suspension with or without pay or benefits (as determined by the Board) and termination of the individual’s employment. In determining what action is appropriate in a particular case, the Board of Directors or such designee shall take into account all relevant information, including the nature and severity of the violation, whether the violation was a single occurrence or repeated occurrences, whether the violation appears to have been intentional or inadvertent, whether the individual in question had been advised prior to the violation as to the proper course of action and whether or not the individual in question had committed other violations in the past.