AQUA POWER SYSTEMS INC. Some of the statements contained in this registration statement on Form 10 (this
"Registration Statement") of
· the success or failure of management's efforts to implement the Company's
business plan;
· the ability of the Company to fund its operating expenses;
· the ability of the Company to compete with other companies that have a
similar business plan;
· the effect of changing economic conditions impacting our plan of operation;
and
· the ability of the Company to meet the other risks as may be described in
future filings with the Securities and Exchange Commission .
Readers are cautioned not to place undue reliance on the forward-looking statements contained herein, which speak only as of the date hereof. We believe the information contained in this Registration Statement to be accurate as of the date hereof. Changes may occur after that date. We will not update that information except as required by law in the normal course of our public disclosure practices.
Corporate History
We were originally incorporated in
Custodianship
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Blank Check Company Status
Many states have enacted statutes, rules and regulations limiting the sale of securities of "blank check" companies in their respective jurisdictions. Management does not intend to undertake any efforts to cause a market to develop in our securities, either debt or equity, until we have successfully concluded a business combination. The Company intends to comply with the periodic reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act") for so long as it is subject to those requirements.
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At present, the Company is a blank check company with no revenues while the Company has plans to pursue new business opportunities or to engage in merger or acquisition opportunities. As a blank check company, any offerings of our securities would need to comply with Rule 419 under the Securities Act. The provisions of Rule 419 apply to every registration statement filed under the Securities Act by a blank check company. Rule 419 requires that the blank check company filing such registration statement to deposit the securities being offered and proceeds of the offering into an escrow or trust account pending the execution of an agreement for an acquisition or merger. In addition, the registrant is required to file a post-effective amendment to the registration statement containing the same information as found in a Form 10 registration statement upon execution of an agreement for such acquisition or merger. The rule provides procedures for the release of the offering funds in conjunction with the post effective acquisition or merger. The Company has no current plans to engage in any such offerings.
Acquisition Opportunities
The Company is a shell company in that it has no or nominal operations and either no or nominal assets. At this time, the Company's purpose is to seek, investigate and, if such investigation warrants, acquire an interest in business opportunities presented to it by persons or firms who or which desire to seek the perceived advantages of an Exchange Act registered corporation. The Company will not restrict its search to any specific business, industry, or geographical location and the Company may participate in a business venture of virtually any kind or nature. This discussion of the proposed business is purposefully general and is not meant to be restrictive of the Company's virtually unlimited discretion to search for and enter into potential business opportunities.
Negotiations with any merger candidate are expected to focus on the percentage of the Company which the target company shareholders would acquire in exchange for all of their shareholdings in the target company. Depending upon certain factors, such as the target company's assets and liabilities, the Company's current shareholders will most likely hold a substantially lesser percentage ownership interest in the Company following any merger or acquisition. The percentage ownership may be subject to significant reduction in the event the Company acquires an operating business with substantial assets. Any merger or acquisition effected by the Company can be expected to have a significant dilutive effect on the percentage of shares held by the Company's then shareholders. Management does not expect to negotiate a cash payment in exchange for the outstanding shares held by non-affiliates.
In applying the foregoing criteria, none of which will be controlling, management will attempt to analyze all factors and circumstances and make a determination based upon reasonable investigative measures and available data. Potentially available business opportunities may occur in many different industries, and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex. Due to the Company's limited capital available for investigation, we may not discover or adequately evaluate adverse facts about the opportunity to be acquired. In addition, we will be competing against other entities that possess greater financial, technical and managerial capabilities for identifying and completing business combinations.
We may seek a business opportunity with entities which have recently commenced operations, or which wish to utilize the public marketplace in order to raise additional capital in order to expand into new products or markets, to develop a new product or service, or for other corporate purposes. We may acquire assets and establish wholly owned subsidiaries in various businesses or acquire existing businesses as subsidiaries.
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16 Acquisition Target Analysis
The analysis of new business opportunities will be undertaken by, or under the supervision of, our officers and directors, or successor management, with such outside assistance as they may deem appropriate. The Company intends to concentrate on identifying preliminary prospective business opportunities, which may be brought to our attention through present associations of the Company's officers and directors. In analyzing prospective business opportunities, the Company will consider such matters as the available technical, financial and managerial resources; working capital and other financial requirements; history of operations, if any; prospects for the future; nature of present and expected competition; the quality and experience of management services which may be available and the depth of that management; the potential for further research, development, or exploration; specific risk factors not now foreseeable but which then may be anticipated to impact the proposed activities of the Company; the potential for growth or expansion; the potential for profit; the perceived public recognition or acceptance of products, services, or trades; name identification; and other relevant factors. The Company will not acquire or merge with any company for which audited financial statements are not available.
The Company will participate in a business opportunity only after the negotiation and execution of appropriate written agreements. Although the terms of such agreements cannot be predicted, generally such agreements will require some specific representations and warranties by all of the parties thereto, will specify certain events of default, will detail the terms of closing and the conditions which must be satisfied by each of the parties prior to and after such closing, will outline the manner of bearing costs, including costs associated with the Company's attorneys and accountants, will set forth remedies on default, and will include miscellaneous other terms.
The Company does not intend to provide its security holders with any complete disclosure documents or audited financial statements concerning an acquisition or merger candidate and its business prior to the consummation of any acquisition or merger transaction. In the event a proposed business combination involves a change in a majority of the directors of the Company, the Company will file and provide to stockholders a Schedule 14F-1, which shall include, information concerning the target company, as required. The Company will file a current report on Form 8-K, as required, within four business days of a business combination which results in the Company ceasing to be a shell company. This Form 8-K will include complete disclosure of the target company, including audited financial statements.
· potential for growth, indicated by new technology, anticipated market
expansion or new products;
· competitive position as compared to other firms of similar size and
experience within the industry segment as well as within the industry as a
whole;
· strength and diversity of management, either in place or scheduled for
recruitment;
· capital requirements and anticipated availability of required funds, to be
provided by the registrant or from operations, through the sale of
additional securities, through joint ventures or similar arrangements or
from other sources; and
· the extent to which the business opportunity can be advanced considering
the availability of both human and economic capital.
The foregoing criteria are not intended to be exhaustive and there may be other criteria that the Company may deem relevant.
In evaluating a prospective business combination, we will conduct as extensive a due diligence review of potential targets as possible given the lack of information which may be available regarding private companies, our limited personnel and financial resources and the relative inexperience of our management with respect to such activities. We believe there are many companies and professionals with significantly more experience than our management that also are seeking business combination targets.
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Due Diligence on Potential Acquisition Targets
We expect that our due diligence will encompass, among other things, meetings with the target business's incumbent management and inspection of its facilities, as necessary, as well as a review of financial and other information which is made available to us. This due diligence review will be conducted either by our management or by unaffiliated third parties we may engage, including but not limited to attorneys, accountants, consultants or other such professionals. At this time, the Company has not specifically identified any third parties that it may engage. The costs associated with hiring third parties as required to complete a business combination may be significant and are difficult to determine as such costs may vary depending on a variety of factors, including the amount of time it takes to complete a business combination, the location of the target company, and the size and complexity of the business of the target company.
Our limited funds and the lack of full-time management will likely make it impracticable to conduct a complete and exhaustive investigation and analysis of a target business before we consummate a business combination. Management decisions, therefore, will likely be made without detailed feasibility studies, independent analysis, market surveys and the like which, if we had more funds available to us, would be desirable. We will be particularly dependent in making decisions upon information provided by the promoters, owners, sponsors or others associated with the target business seeking our participation.
The time and costs required to select and evaluate a target business and to structure and complete a business combination cannot presently be ascertained with any degree of certainty. The amount of time it takes to complete a business combination, the location of the target company, and the size and complexity of the business of the target company, whether current stockholders of the Company will retain equity in the Company, the scope of the due diligence investigation required, the involvement of the Company's auditors in the transaction, possible changes in the Company's capital structure in connection with the transaction, and whether funds may be raised contemporaneously with the transaction are all factors that determine the costs associated with completing a business combination transaction. The time and costs required to complete a business combination can be estimated once a business combination target has been identified. Any costs incurred with respect to the evaluation of a prospective business combination that is not ultimately completed will result in a loss to us.
Marketing Strategy
The Company intends to promote itself privately. The Company anticipates that the selection of a business opportunity in which to participate will be complex and risky. Due to general economic conditions, rapid technological advances being made in some industries and shortages of available capital, management believes that there are numerous firms seeking the perceived benefits of a publicly registered corporation. Such perceived benefits may include facilitating or improving the terms on which additional equity financing may be sought, providing liquidity for incentive stock options or similar benefits to key employees, providing liquidity (subject to restrictions of applicable statutes), for all shareholders, and other factors.
There are different situations for private companies which may make a reverse
merger more attractive to an operating private company than filing its own
registration statement on Form 10. It takes significant time and effort just to
be able to learn to file the necessary documents through the EDGAR database,
especially if the operating company has not invested in filing software to
streamline the process, which is expensive. We believe that small companies are
usually in a hurry to raise capital and some investors require that the private
companies they invest in are or become
The Company has, and will continue to have, little or no capital with which to
provide the owners of business opportunities with any significant cash or other
assets. As of the six months ended
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Effect of an Acquisition on the Company's Current and Future Shareholders
Although there is no guarantee that a merger with a private, operating business would result in any benefit to our current or future shareholders, the Company believes there exists a potential benefit to the shareholders from the consummation of such a merger or acquisition. For example, our common stock may become more attractive to the financial community, resulting in an increased share price and/or greater liquidity. Moreover, if all of the preconditions of Rule 144 promulgated under the Securities Act of 1933, as amended (the "Securities Act"), are met, including the introduction of an operating business, current restricted shareholders may be able to utilize Rule 144 for the sale of their shares. Currently, Rule 144 is not available as further described below in Risk Factors. There is no guarantee that any of these possible benefits will come to fruition.
Other perceived benefits of becoming a publicly traded corporation include, among other things, facilitating or improving the terms on which additional equity financing may be obtained, providing liquidity for the principals of and investors in a business, creating a means for providing incentive stock options or similar benefits to key employees, and offering greater flexibility in structuring acquisitions, joint ventures and the like through the issuance of stock.
In implementing a structure for a particular business acquisition, the Company may become a party to a merger, consolidation, reorganization, joint venture, or licensing agreement with another corporation or entity. It may also acquire stock or assets of an existing business. On the consummation of a transaction, it is probable that the present management and shareholders of the Company will no longer be in control of the Company. In addition, the Company's directors may, as part of the terms of the acquisition transaction, resign and be replaced by new directors without a vote of the Company's shareholders or may sell their stock in the Company. Moreover, management may sell or otherwise transfer its interest in the Company to new management who will then continue the Company business plan of seeking new business opportunities.
It is anticipated that any securities issued in any reorganization would be issued in reliance upon an exemption from registration under applicable federal and state securities laws. In some circumstances, however, as a negotiated element of its transaction, the Company may agree to register all or a part of such securities immediately after the transaction is consummated or at specified times thereafter. If such registration occurs, of which there can be no assurance, it will be undertaken by the surviving entity after the Company has successfully consummated a merger or acquisition.
The present stockholders of the Company will likely not have control of a majority of the voting securities of the Company following a reorganization transaction. As part of such a transaction, all or a majority of the Company's directors may resign and one or more new directors may be appointed without any vote by stockholders.
Government Regulations
The Company intends to conduct its activities so as to avoid being classified as an "investment company" under the Investment Company Act of 1940, as amended (the "1940 Act") and therefore to avoid application of the costly and restrictive registration and other provisions of the 1940 Act and the regulations promulgated thereunder.
As a public company, we will be subject to the reporting requirements of the Exchange Act, which include the preparation and filing of current, quarterly and annual reports on Forms 8-K, 10-Q and 10-K, respectively. The Exchange Act specifically requires that any merger or acquisition candidate comply with all applicable reporting requirements, which include providing audited financial statements to be included within the numerous filings relevant to complying with the Exchange Act.
Plan for the Remainder of the Year
The Company's plan for the remainder of the fiscal year is to identify merger and acquisition candidates, complete one of the aforementioned business combinations, and comply with the reporting requirements of the Exchange Act
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Current Status of Operations
The Company has not expended funds on and has no plans to expend funds or time on product research or development.
Management intends to devote such time as it deems necessary to carry out the Company's affairs. We cannot project the amount of time that our management will actually devote to our plan of operations.
Competition
The Company will remain an insignificant participant among the firms which engage in acquisition opportunities. There are many established venture capital and financial concerns which have significantly greater financial and personnel resources and technical expertise than the Company. In view of the Company's combined extremely limited financial resources and limited management availability, the Company will continue to be at a significant competitive disadvantage compared to the Company's competitors which are also in the business of seeking opportunities to engage in a merger or acquisition with other companies.
Smaller Reporting Company Status
We qualify as a "smaller reporting company" under Rule 12b-2 of the Exchange
Act, which is defined as a company with a public equity float of less than
Employees and Board Members
The Company currently has no employees. The business of the Company will be managed by its officers and directors and such officers or directors which may join the Company in the future, and who may become employees of the Company. The Company does not anticipate a need to engage any fulltime employees at this time.
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Results of Operations for the three months ended
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Results of Operations for the six months ended
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Liquidity and Capital Resources
Operating Activities
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Investing Activities
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Financing Activities
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Plan of Operation
Over the next twelve months, we expect to incur costs and expenses related to:
· maintaining our corporate existence, such as annual fees due to the State
of Nevada ;
· filing periodic reports under the Exchange Act, including filing,
accounting and legal fees;
· investigating and analyzing targets and possibly consummating a business
transaction.
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We expect to incur costs associated with filing reports under the Exchange Act
over the next twelve months of approximately
Once we use all of the funds from our private placement, we will require additional capital to pay operating expenses.
Off-balance Sheet Arrangements
We have not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholders' equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.
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