Changes are Blacklined (====)
As filed with the Securities and Exchange Commission on August 4, 2005
========
Registration No. __________
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________
FORM S-3/A
==========
AMENDMENT NO. 2
===============
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
__________________________
AQUACELL TECHNOLOGIES, INC.
(Exact name of registrant as specified in charter)
Delaware 3590 33-0750453
-------------------- -------------------- --------------------
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification
incorporation Classification Number)
or organization) Code Number)
10410 Trademark Street
Rancho Cucamonga, CA 91730
(909) 987-0456
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
__________________________
James C. Witham
Chief Executive Officer
10410 Trademark Street
Rancho Cucamonga, CA 91730
(909) 987-0456
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
__________________________
Copies to:
Harold W. Paul, Esq.
Harold W. Paul, LLC
1465 Post Road East
Westport, CT 06880
(203) 256-8005
__________________________
Approximate date of commencement of proposed sale to public: As soon as
practicable after this Registration Statement becomes effective and from
time to time thereafter as determined by market conditions.
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. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434 under the Securities Act, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
--------------------------------------------------------------------------------
Proposed Proposed Amount
Title of Each Class of Amount to Be Maximum Maximum of
Securities to Be Registered Offering Aggregate Registra-
Registered Price Offering tion Fee
Per Share(2) Price(2)
--------------------------------------------------------------------------------
Common Stock, par value
$.001 per share (1).... 7,339,902 shares $4.00 $6,218,898.00 $728.85
--------------------------------------------------------------------------------
(1) Includes 4,640,983 shares of common stock issuable upon exercise of
warrants.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act and based upon the average
of the high and low trading price for the common stock on American Stock
Exchange on July 5, 2005 with respect to common stock and pursuant to
Rule 457(i) with respect to common stock underlying warrants.
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 this
Registration Statement shall become effective on such date as the
Commission, acting pursuant to such Section 8(a), may determine.
--------------------------------------------------------------------------------
PROSPECTUS
----------
Subject to Completion
Preliminary Prospectus dated August 4, 2005.
========
7,339,902 Shares
AquaCell Technologies, Inc.
[Company Logo]
Common Stock
The selling stockholders identified in this prospectus may offer from
time to time an aggregate of up to 7,339,902 shares of AquaCell
Technologies, Inc.'s common stock, including 4,640,983 shares underlying
common stock purchase warrants. We will not receive any of the proceeds
from the sale of shares. We may receive funds of up to $5,247,287 upon
the exercise of up to 4,640,983 common stock purchase warrants exercisable
at various prices.
The selling stockholders may offer their shares through public or private
transactions, on or off the American Stock Exchange, at prevailing market
prices or at privately negotiated prices.
Our common stock trades on the American Stock Exchange under the symbol
"AQA". On August 2, 2005, the last reported sale price of our common
========
stock on the American Stock Exchange was $.54 per share.
==
Investing in our common stock involves risks which are described in the
"Risk Factors" section beginning on page 5 of this prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved 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 August 4, 2005.
========
The information in this prospectus is not complete and may be changed.
We have filed a registration statement relating to these shares with
the Securities and Exchange Commission. We cannot sell these shares
until the registration statement becomes effective. This prospectus
is not an offer to sell these receipts and we are not soliciting
offers to buy these shares in any state where such offer or sale is
not permitted.
1
TABLE OF CONTENTS
Page
Where You Can Find More Information ...............................3
Incorporation of Information We File with the SEC .................3
The Company .......................................................5
Risk Factors ......................................................5
Special Note Regarding Forward-looking Statements .................8
Use of Proceeds ...................................................8
Dividend Policy ...................................................8
Selling Stockholders ..............................................9
Plan of Distribution .............................................13
Description of Capital Stock .....................................13
Indemnification for Securities Act Liabilities ...................16
Legal Matters ....................................................16
Experts ..........................................................16
___________________
You should rely only on the information contained or incorporated
by reference in this prospectus. We have not, and the selling
stockholders have not, authorized any other person to provide you with
different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not, and
the selling stockholders are not, making an offer to sell our common
stock in any jurisdiction except where the offer or sale is permitted.
2
WHERE YOU CAN FIND MORE INFORMATION
We are a public company and file annual, quarterly and special
reports, proxy statements and other information with the Securities
and Exchange Commission. You may read and copy any document we file
at the SEC's public reference room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. You can request copies of these documents by
writing to the SEC and paying a fee for the copying cost. Please call
the SEC at 1-800-SEC-0330 for more information about the operation of
the public reference room. Our SEC filings are also available to the
public at the SEC's web site at http://www.sec.gov. The Company's SEC
File Number is 1-16165.
We have filed a registration statement on Form S-3 with the SEC
covering the common stock offered by this prospectus. We refer you to
this registration statement and its exhibits for additional
information about us and our common stock. Copies of the registration
statement may be obtained at the above referenced SEC offices or on
the SEC's web site at www.sec.gov. Our internet address is
www.aquacell.com.
INCORPORATION OF INFORMATION WE FILE WITH THE SEC
The SEC allows us to incorporate by reference the information we
file with them, which means:
. Incorporated documents are considered part of the
prospectus,
. We can disclose important information to you by
referring you to those documents, and
. Information that we file with the SEC will
automatically update and supersede this prospectus.
We incorporate by reference the documents listed below which were
filed with the SEC under the Securities Exchange Act of 1934 (the
"Exchange Act"):
. Annual Report on Form 10-KSB for the fiscal year ended June
30, 2004 filed on September 28, 2004.
. Quarterly Report on Form 10-QSB for the quarter ended
September 30, 2004 filed on November 15, 2004.
. Report on Form 8-K filed on December 3, 2004.
. Quarterly Report on Form 10-QSB for the quarter ended
December 31, 2004 filed on February 14, 2005.
. Report on Form 8-K filed on May 5, 2005.
. Quarterly Report on Form 10-QSB for the quarter ended
March 31, 2005 filed on May 16, 2005.
. Report on Form 8-K filed on June 10, 2005.
. Report on Form 8-K filed on July 6, 2005.
. Report on Form 10-KSB-A for the fiscal year ended
=====================================================
June 30, 2004 filed on August 4, 2005.
==========================================
. Report on Form 10-QSB-A for the quarter ended
=================================================
September 30, 2004 filed on August 4, 2005.
===============================================
. Report on Form 10-QSB-A for the quarter ended
=================================================
March 31, 2005 filed on August 4, 2005.
===========================================
We also incorporate by reference each of the following documents
that we will file with the SEC after the date of this prospectus but
before all the common stock offered by this prospectus has been sold:
. Reports filed under Sections 13(a) and (c) of the
Exchange Act,
. Definitive proxy or information statements filed
under Section 14 of the Exchange Act in connection
with any subsequent stockholders' meeting, and
. Any reports filed under the Section 15(d) of the
Exchange Act.
The Company will provide the aforementioned information upon
written or oral request.
3
You may request a copy of any filings referred to above
(excluding exhibits), at no cost, by contacting us at the following
address and telephone number:
AquaCell Technologies, Inc.
Attention: Karen B. Laustsen
10410 Trademark Street
Rancho Cucamonga, CA 91730
(909) 987-0456
4
THE COMPANY
AquaCell Technologies, Inc. (the "Company") is engaged in the
manufacture and sale of products for water filtration and purification
through our operating subsidiaries, Water Science Technologies, Inc.
and to a lesser extent, Global Water-Aquacell, Inc.
Our flagship product is our patented five-gallon self-refilling
bottle water cooler. We replace traditional five-gallon bottle water
coolers with a permanently installed convenient alternative where
the bottle never needs changing and water bottles no longer need to be
delivered, stored or replaced. In addition, we replace water fountains
where users tend to have greater concerns as to sanitation and water
quality.
Our primary marketing focus for this product is through our
Aquacell Media subsidiary's "Message On The Bottle" in-store
advertising program which places the Company's patented Aquacell
Bottled Water Cooler System into various locations at no cost and
sells targeted advertising on the bottle band of the permanently
attached five-gallon bottle. We have recently placed coolers into
various chain drugstores such as Duane Reade and Rite Aid drugstores,
and are selling advertising to manufacturers of products available for
sale in those locations.
Corporate Information
---------------------
The Company was incorporated in Delaware on March 19, 1997. Our
principal executive offices are located at 10410 Trademark Street,
Rancho Cucamonga, CA 91730 and our telephone number is (909) 987-0456.
Our website can be accessed at www.aquacell.com. The reference to
our website address does not constitute incorporation by reference of
the information contained at the website.
RISK FACTORS
Before you invest in our common stock, you should be aware that
there are risks, including those described below which may affect our
business, financial condition or results of operations. You should
consider carefully these risk factors together with all of the other
information included in this prospectus before you decide to purchase
shares of our common stock.
Risks Relating to Our Business
------------------------------
We have incurred substantial operating losses and an accumulated
deficit. We expect to continue to have operating losses and a growing
accumulated deficit in the future. There is no assurance we will ever
achieve profitability.
Our business operations have generated operating losses since
inception of the business in 1997. For the year ended June 30, 2004,
our business operations generated operating losses of $4,512,000. We
had an accumulated deficit of $17,561,000 at June 30, 2004. For the
nine months ended March 31, 2005, we sustained an additional
operating loss of $2,595,000. Our accumulated deficit as of March 31,
2005 was $20,156,000. We expect to continue to generate net
operating losses while we continue to expand our marketing efforts.
We may not obtain a customer base sufficient to support the costs
of our operations.
We may not become profitable, our cash flow may not become
positive at any time in the foreseeable future, or at all, and we may
not generate sufficient cash flow from product sales to liquidate
liabilities as they become due. In the event that we are unable to
liquidate our liabilities, we may delay or eliminate some expenditures
and we may scale back our planned operations. Accordingly, we
expect to need additional funds to meet our planned obligations, and
we will seek to raise such amounts through a variety of options,
including future cash from operations, borrowings and proceeds from
equity financings. Additional funding may not be available when
needed or on terms acceptable to us. In addition, if we raise
additional funds through the issuance of equity, equity-linked or debt
securities, those securities may have rights, preferences or
privileges senior to those of the rights of our common stock and
our stockholders may experience additional dilution.
5
There is a question about our ability to continue as a going concern.
The report of our independent registered public accounting firm
contains a caution that the Company's significant operating losses and
working capital deficiency for the annual periods ended June 30, 2003
and June 30, 2004 raise substantial doubt about our ability to
continue as a going concern. You are referred to the financial
statements and its accompanying notes for a more detailed discussion
of this issue.
Our water cooler is new and may not be accepted by our target market.
We may not generate increased revenues from sales or advertising.
Our primary product is based upon a permanently attached plastic
bottle with a filtration system. Municipal water passes through the
filter to keep the bottle filled. This is a different approach from
the conventional replaceable five gallon bottle. Our target customers
may not be willing to use our approach which would significantly
hinder our growth potential and would negatively affect our business.
We have recently revised our business plan and our new plan may not
prove successful. We have limited experience in selling advertising
space.
We have changed our business model from a company that only
sells and leases water coolers to one that also places the coolers in
retail chains and sells advertising space on the coolers' replaceable
band. There is no assurance this new plan will prove successful as we
have generated only minimal receivable to date.
The market for bottled water is highly competitive and we compete with
large, well established companies. If we are unable to compete
effectively, the demand for, or prices of, our products may be
reduced.
The bottled water market is intensely competitive. We may not be
able to compete successfully against current or potential competitors
and our failure to do so could seriously harm our business, operating
results and financial condition.
We compete directly with large, well-established companies such
as Nestle (Perrier), Danone (Evian) and Culligan. These and many of
our current and potential competitors have significantly greater
financial, selling and marketing, technical, manufacturing and other
resources than we have. As a result, these competitors may be able to
devote greater resources toward the development, promotion, sale and
support of their products than we can. These companies may introduce
additional products that compete with ours or enter into strategic
relationships to offer complete solutions which we do not currently
offer. In addition, we recently introduced our water cooler to the
market and we have not had enough experience selling the product to
fully assess its competitiveness.
We depend on key personnel and our business prospects may be
diminished if we do not retain those personnel.
Our operations will depend on the efforts of our executive
officers, in particular James C. Witham, our Chairman and Chief
Executive Officer, and Karen B. Laustsen, our President, Chief
Operating Officer and Secretary. We have entered into five year
employment agreements with Mr. Witham and Ms. Laustsen that expire in
February, 2006. Given the small size of the Company and the fact that
our key personnel perform all administrative and marketing functions
for the Company, our business prospects could be diminished if any of
these senior management personnel do not continue in their management
roles and if we are unable to attract and retain qualified
replacements and additional members of management.
6
We may not be able to effectively manage growth and we may increase
our costs without increasing revenues.
If we successfully implement our business strategy, the resulting
growth will place significant demands on our management and internal
controls. Management may not be able to effectively direct us through
a period of significant growth. In particular, the pursuit of our
business strategy will place a significant strain on our managerial,
operational and financial resources. We will need to improve our
financial and management controls, reporting systems and procedures.
We will also need to expand, train and manage our work force
and manage multiple relationships with various suppliers, strategic
partners and other third parties. We will need to continually expand
and upgrade our systems and ensure continued high levels of service,
speedy operation and reliability. If we do not effectively manage such
growth, our business, results of operations and financial condition
may be affected.
Our quarterly results may fluctuate and could fall below the
expectations of securities analysts and investors which may affect our
stock price.
We may experience quarterly fluctuations in operating results.
Accordingly, results for any one quarter will not necessarily be
indicative of the results to be expected for any other quarter or for
any year, and comparable sales for any particular future period may
decrease. In the future, results of operations may fall below the
expectations of public market analysts and investors. In that event,
the price of our common stock would likely decrease. Quarterly sales
and operating results will depend in part on the volume and timing of
orders received and performed within the quarter, which are difficult
to forecast. Any significant delay or cancellation of an order could
effect our operations in any particular period and as a result, our
operating results could prove to be volatile.
Risks Relating to the Offering
------------------------------
Exercise of our outstanding warrants and options and the conversion of
our preferred shares may affect the price of our common stock.
As of July 1, 2005, there were outstanding options to
purchase 1,935,500 shares of common stock, outstanding warrants to
purchase 8,170,679 shares of common stock and 788,000 outstanding
convertible preferred shares. The exercise of the outstanding stock
options and warrants and the conversion of preferred shares will
dilute the percentage ownership of our stockholders. Any sales in
the public market of shares of our common stock underlying the stock
options, warrants and preferred shares may adversely affect prevailing
market prices for our common stock.
We do not intend to pay cash dividends on our common stock in the
future.
We have never paid cash dividends on our common stock and do not
anticipate that any cash dividends will be declared or paid on our
common stock in the foreseeable future. We presently intend to retain
future earnings, if any, to finance the expansion and growth of our
business. Payment of future dividends on our common stock, if any,
will be at the discretion of our board of directors after taking into
account various factors, including our financial condition, operating
results, current and anticipated cash needs and plans for expansion.
We may issue additional shares of stock without your approval,
including shares of other series of preferred stock with superior
liquidation and other rights that may adversely affect your rights.
Our certificate of incorporation authorizes our board of
directors, without any action by our stockholders, to issue up to
10,000,000 shares of "blank check" preferred stock in one or more
series on terms that our board of directors may determine at the time
of issuance including 1,870,000 Series "A" and 4,000,000 Series "B"
preferred shares already designated. In certain instances, a series
of preferred stock could include voting rights, preferences as to
dividends and liquidation, conversion and redemption rights senior to
our common stock.
7
We may not satisfy the Amex listing standard and if we fai l to do so,
our common stock is subject to delisting.
The Company may not satisfy the Amex' maintenance requirements in
the future and as a result may have its common stock de-listed from
the Amex. If the Company fails to maintain its Amex listing, the
ability of stockholders to trade their stock in an efficient market
would be decreased. In November 2004, we received a notice from the
Amex that we do not presently meet its maintenance requirements for
continued listing and we were required to submit a plan as to how we
intend to meet the exchange's listing requirements. Although we have
submitted and are currently in compliance with said plan, we may not
be able to remain in compliance in the future.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
When used in this prospectus and in future filings by the Company
with the Commission, statements identified by the words "believe",
"positioned", "estimate", "project", "target", "continue", "intend",
"expect", "future", "anticipates", and similar expressions express
management's present belief, expectations or intentions regarding
the Company's future performance within the meaning of the Private
Securities Litigation Reform Act of 1995. Readers are cautioned
not to place undue reliance on any such forward-looking statements,
each of which speaks only as of the date made. Such statements are
subject to certain risks and uncertainties that could cause actual
results to differ materially from historical earnings and those
presently anticipated or projected. The Company has no obligations
to publicly release the result of any revisions which may be made to
any forward-looking statements to reflect anticipated or unanticipated
events or circumstances occurring after the date of such statements.
USE OF PROCEEDS
All of the net proceeds from the sale of the common stock of
AquaCell covered by this prospectus will go to the stockholders who
offer and sell their shares. Accordingly, we will not receive any of
the proceeds from the sales of the common stock. AquaCell receives
funds only upon warrant conversions and not from the sale of the
shares offered by the selling stockholders. The warrants held
by the selling stockholders are exercisable at various prices ranging
from $.37 to $4.00. If all warrants are exercised, AquaCell will
receive proceeds of $5,247,287 which would be used for general
corporate purposes.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our common
stock and we currently expect to retain future earnings, if any, to
support operations and to finance the growth and development of our
business. Consequently, we do not anticipate paying cash dividends on
our common stock in the foreseeable future. Payment of future
dividends, if any, will be at the discretion of our board of directors
after taking into account various factors, including our financial
condition, operating results, current and anticipated cash needs and
plans for expansion.
The outstanding Series A preferred stock pays an 8% annual
dividend, payable in cash in quarterly installments until such time as
the preferred shares are converted into common shares.
The outstanding Series B preferred stock pays an $0.08 per share
annual dividend, payable in cash.
8
SELLING STOCKHOLDERS
Pursuant to provisions of warrants issued to certain of the
selling stockholders, we agreed to register the common shares to be
issued upon exercise of warrants held by these stockholders. We
have agreed to keep the registration statement effective for two
years, or until all of the registered shares are sold, whichever
comes first. Our registration of the common stock held by the selling
stockholders and the shares issuable upon exercise of warrants held
by the selling stockholders does not necessarily mean that the
selling stockholders will sell all or any of their shares.
The prospectus covers the offer and sale by each selling
stockholder of common stock owned by the selling stockholder. Set
forth below are (i) the names of each selling stockholder, (ii) the
nature of any position, office or other material relationship that the
selling stockholder has had within the past three years with us, (iii)
the number of shares of common stock and (if one percent or more) the
percentage of common stock beneficially owned as of July 1, 2005
by each selling stockholder to the Company's best knowledge, (iv) the
number of shares that may be offered and sold by or on behalf of each
selling stockholder hereunder, and (v) the amount and (if one percent
or more) the percentage of common stock to be owned by each selling
stockholder upon the completion of the offering if all shares offered
by such selling stockholder are sold. As of the date of this
prospectus 8,170,679 warrants are outstanding and the shares
underlying 4,640,983 of those warrants are being registered in this
offering. Any or all of the shares listed below under the heading
"Shares to be Sold" may be offered for sale by or on behalf of the
selling stockholder.
9
Shares Shares
Beneficially Beneficially
Owned Prior to Owned After
the Offering the Offering
------------------ ------------------
Shares to
Selling Stockholders Number Percent be Sold Number Percent
---------------------------- ---------- ------- --------- ---------- -------
Alpha Capital AG (1) 283,333 1.5 % 283,333 -0- *
Gemini Investment (2) 250,000 1.3 % 250,000 -0- *
Ellis International, Ltd. (3) 219,999 1.2 % 219,999 -0- *
Joseph Giamanco 1,300,000 6.9 % 1,300,000 -0- *
Michael Hamblet 185,500 * 185,500 -0- *
Andrew Smuckler 50,334 * 50,334 -0- *
AS Capital Partners, LLC (4) 256,646 1.4 % 256,646 -0- *
OTAPE Investments, LLC (5) 737,000 3.9 % 737,000 -0- *
Platinum Partners Value (6) 333,333 1.8 % 333,333 -0- *
Anthony Spatacco 34,000 * 34,000 -0- *
TCMP3 Partners, LP (7) 100,700 * 100,700 -0- *
Truk Opportunity Fund (8) 60,000 * 60,000 -0- *
WEC Partners (9) 33,333 * 33,333 -0- *
Provident Premier Master Fund (10) 150,000 * 150,000 -0- *
Gamma Opportunity Capital
Partners, LP (11) 33,333 * 33,333 -0- *
Brighton Capital, Ltd. (12) 684,228 3.6 % 670,638 13,590 *
Harold W. Paul, LLC 205,000 1.1 % 40,000 165,000 *
Innovative Concepts (13) 50,000 * 50,000 -0- *
J. DeKama Associates (14) 150,000 * 150,000 -0- *
Alton Jones 491,066 2.6 % 341,066 150,000 *
Joseph & Nancy Jaffe 41,031 * 1,031 40,000 *
Dennis I. Schneider 82,061 * 2,061 80,000 *
Steven Hitchcock 82,061 * 2,061 80,000 *
Tom Genco 105,154 * 5,154 100,000 *
Raymond & Catherine Fernandez 42,061 * 2,061 40,000 *
Ronald & Susan Farrell 82,061 * 2,061 80,000 *
Alan & Marie Brenner 41,031 * 1,031 40,000 *
Glenn Bergenfield (15) 557,200 3.0 % 337,200 220,000 1.2 %
James & Joan Barton (15) 82,061 * 2,061 80,000 *
Bill & Cathe DiTuro (15) 353,290 1.9 % 170,790 182,500 1.0 %
Dennis C. Josifovich 14,152 * 819 13,333 *
Mountain Extremes Inc. (16) 17,690 * 1,023 16,667 *
Kuekenhof Partners, L.P. (17) 400,000 2.1 % 400,000 -0- *
Kuekenhof Equity Fund, L.P. (17) 400,000 2.1 % 400,000 -0- *
Leonard Bellezza 333,334 1.8 % 333,334 -0- *
Jusdan, LLC (18) 300,000 1.6 % 300,000 -0- *
Rubenstein Investor
Relations, Inc. (19) 100,000 * 100,000 -0- *
---------- --------- ----------
8,640,992 7,339,902 1,301,090
* Less than 1%
10
(1) Konrad Ackerman and Rainer Posch exercise investment and voting control
over the shares held by Alpha Capital AG. Both Mr. Ackerman and Posch
disclaim beneficial ownership of the securities.
(2) The Investment Manager of Gemini Master Fund, Ltd. is Gemini Investment
Strategies, LLC. The Managing Members of Gemini Investment Strategies, LLC
are Mr. Steven W. Winters and Mr. Richard S. Yakomin. As such, Messrs.
Winters and Yakomin may be deemed beneficial owners of the shares. Messrs.
Winters and Yakomin, however, disclaim beneficial ownership of such shares.
(3) Jacob Spinner has sole voting and investment control over the shares held
by Ellis International, Ltd. Mr. Spinner disclaims beneficial ownership of
the securities held by Ellis International, Ltd.
(4) Michael Coughlin has sole voting and investment control over the shares
held by AS Capital Partners, LLC. Mr. Coughlin disclaims beneficial
ownership of the securities held by AS Capital Partners, LLC.
(5) Ira M. Leventhal has sole voting and investment control over the shares
held by OTAPE Investments, LLC. Mr. Leventhal disclaims beneficial
ownership of the securities held by OTAPE Investments, LLC.
(6) Mark Nordlicht has sole voting and investment control over the shares held
by Platinum Partners Value. Mr. Nordlicht disclaims beneficial ownership
of the securities held by Platinum Partners Value.
(7) Steven Slawson and Walter Schenker have voting and investment control over
the shares held by TCMP3 Partners, LP. Messrs. Slawson and Schenker
disclaim beneficial ownership of the securities held by TCMP3 Partners, LP.
(8) Michael E. Fein and Stephen E. Saltstein, as principals of Atoll Asset
Management, LLC, the Managing Member of Truk Opportunity Fund, LLC,
exercise investment and voting control over the securities owned by Truk
Opportunity Fund, LLC. Both Mr. Fein and Mr. Saltzstein disclaim
beneficial ownership of the securities owned by Truk Opportunity Fund, LLC.
(9) Ethan Benovitz, Jaime Hartman and Daniel Saks exercise investment and
voting control over the securities owned by WEC Partners. Messrs.
Benovitz, Hartman, and Saks disclaim beneficial ownership of the securities
owned by WEC Partners.
(10) The Investment Advisor to Provident Premier Master Fund, Ltd. is Gemini
Investment Strategies, LLC. The Managing Members of Gemini Investment
Strategies, LLC are Mr. Steven W. Winters and Mr. Richard S. Yakomin. As
such, Messrs. Winters and Yakomin may be deemed beneficial owners of the
shares. Messrs. Winters and Yakomin, however, disclaim beneficial
ownership of such shares.
(11) The fund for Gamma Opportunity Capital Partners, LP is under the investment
control of Gamma Capital Advisors, Ltd. and its President and Director,
Jonathan P. Knight, PhD. Both Gamma Capital Advisors, Ltd. and Mr. Night
disclaim beneficial ownership of this investment.
(12) Jeffrey Wolin has sole voting and investment control over the shares held
by Brighton Capital Ltd. Mr. Wolin disclaims beneficial ownership of the
securities held by Brighton Capital Ltd.
(13) Michael Dougherty has sole voting and investment control over the shares
held by Innovative Concepts. Mr. Dougherty disclaims beneficial ownership
of the securities held by Innovative Concepts.
(14) Joseph DeKama has sole voting and investment control over the shares held
by J. DeKama Associates. Mr. DeKama disclaims beneficial ownership of the
securities held by J. DeKama Associates.
(15) Mr. Bergenfield, Dr. DiTuro and Mr. Barton are Company directors.
(16) Dennis C. Josifovich has sole voting and investment control over the shares
held by Mountain Extremes, Inc. Mr. Josifovich disclaims beneficial
ownership of the securities held by Mountain Extremes, Inc.
(17) Michael James has sole voting and investment control over the shares held
by Kuekenhof Partners, L.P. and Kuekenhof Equity Fund, L.P. Mr. James
disclaims beneficial ownership of the securities held by Kuekenhof
Partners, L.P. and Kuekenhof Equity Fund, L.P.
(18) Daniel DelGiorno has sole voting and investment control over the shares
held by Jusdan, LLC. Mr. DelGiorno disclaims beneficial ownership of the
securities held by Jusdan, LLC.
(19) Mr. Richard Rubenstein has sole voting and investment control over the
shares held by Rubenstein Investor
11
PLAN OF DISTRIBUTION
We are registering shares of our common stock on behalf of the
selling stockholders. As used in this prospectus, "selling
stockholders" includes donees and pledgees selling shares received
from a named selling stockholder after the date of this prospectus.
We will pay for all costs, expenses and fees in connection with the
registration of the shares. The selling stockholders will pay for all
selling discounts and commissions, if any. The selling stockholders
may offer and sell their shares from time to time in one or more of
the following types of transactions (including block transactions):
. on the American Stock Exchange,
. in privately negotiated transactions,
. through put or call options transactions relating
to the shares,
. through short sales of shares, or
. a combination of such methods of sale.
The selling stockholders may sell their shares at prevailing
market prices, or at privately negotiated prices. Such transactions
may or may not involve brokers or dealers. The selling stockholders
have not entered into any agreements, understanding or arrangements
with any underwriters or broker-dealers regarding the sale of their
shares, nor is there an underwriter or coordinating broker acting
in connection with the proposed sale of shares by the selling
stockholders. The selling stockholders may be deemed underwriters.
To the extent any successor selling stockholder wishes to sell under
this prospectus, the Company will file a prospectus supplement
identifying such successor.
The selling stockholders may offer and sell their shares directly
to purchasers or to or through broker-dealers, which may act as agents
or principals. Such broker-dealers may receive compensation in the
form of discounts, concessions, or commissions from the selling
stockholders and/or the purchasers of shares.
We have agreed to indemnify certain selling stockholders against
certain liabilities, including liabilities arising under the
Securities Act.
Selling stockholders also may resell all or a portion of the
shares in open market transactions in reliance upon Rule 144 under the
Securities Act of 1933, provided they meet the criteria and conform to
the requirements of such rule.
DESCRIPTION OF CAPITAL STOCK
General
-------
Our authorized capital stock consists of 50 million shares of
capital stock, par value $0.001 per share. Currently 40 million of
such shares of capital stock are classified as Common Stock and
10 million are classified as Preferred Stock. On July 1, 2005,
18,880,465 shares of our common stock were outstanding and held by 140
stockholders of record and the Company believes approximately 1,200
holders in the float. Our Restated Certificate of Incorporation
authorizes the Board to classify any of the unissued shares of
authorized Preferred Stock into one or more different classes or
series of Preferred Stock which may be issued from time to time with
such distinctive designations, rights and preferences as may be
determined by the Board. We may issue Preferred Stock for possible
future financings of acquisitions or for general corporate purposes
without any legal requirement that further stockholder authorization
for such issuance be obtained. The issuance of Preferred Stock could
have the effect of making an attempt to gain control of us more
difficult by means of a merger, tender offer, proxy contest or
otherwise. Preferred Stock, if issued, could have a preference on
dividend payments which could affect our ability to make dividend
distributions to the holders of our Common Stock.
12
Common Stock
------------
Dividends. Holders of our Common Stock will be entitled to
dividends declared and payable at such times and in such amounts as
the Board will from time to time determine out of funds legally
available therefore. The rights of holders of our Common Stock to
receive dividends will be subject and subordinate to the rights of any
future holders of Preferred Stock as may be authorized by us.
Liquidation. Upon our liquidation, dissolution or winding up
(either voluntary or involuntary), after payment of liabilities, any
future holders of classes of our Preferred Stock or other senior
stock, as may be authorized by us, will be entitled to receive the
payment of all liquidation and other preference amounts; the holders
of our Common Stock will be entitled to receive our remaining assets
available for distribution to our stockholders pro rata according to
the number of shares held. The following shall not constitute a
liquidation, dissolution or winding up for the foregoing purposes:
. our consolidation or merger with or into another
corporation;
. a merger of any other corporation with or into us
or
. the sale of all or substantially all of our
property or business (other than in connection with
a winding up of our business).
Voting. Each holder of our Common Stock is entitled to one vote
for each share held of record on each matter submitted to vote of
holders of our Common Stock.
Other Rights. There are no preemptive or other subscription
conversion, redemption or sinking fund rights or provisions with
respect to shares of our Common Stock. We hold annual stockholder
meetings, and special meetings may be called by the President or
Secretary or holders of at least 20% of the total voting power of all
outstanding share of our capital stock then entitled to vote or a
majority of the Board. Our Restated Certificate of Incorporation may
be amended in accordance with the Delaware General Corporation Law,
subject to certain limitations set forth therein.
Outstanding Options and Warrants
--------------------------------
As of July 1, 2005, up to 10,106,179 shares of Common Stock
are issuable pursuant to outstanding options and warrants as follows:
. 1,935,500 shares of Common Stock are issuable, in
connection with outstanding options, at a weighted
average exercise price of $.802; and
. 8,170,679 shares of Common Stock are issuable, in
connection with outstanding warrants, at a
weighted average exercise price of $1.51.
Series A Preferred Stock
------------------------
Our Board has designated 1,870,000 shares of our preferred stock
as Series A Preferred Stock, 1,185,000 shares of which were issued to
private placement investors in April and May, 2003, of which 1,115,000
shares have been converted to common stock as of July 1, 2005.
Dividends. The series A preferred stock will pay a cash
dividend, payable quarterly, at the rate of 8% per annum. Dividends
will cumulate if not paid.
Liquidation Preference. The series A preferred stock will have
priority over common stock in the event of liquidation equal to its
stated value, plus accrued and unpaid dividends.
Voluntary Conversion. Each share of the series A preferred stock
will be convertible, at the option of the holder, into one share of
common stock (subject to standard adjustments for stock splits and
dividends).
13
Mandatory Conversion. Each share of the series A preferred stock
automatically converts into common stock if (i) the closing price of
the common stock is at least $1.89 per share (subject to standard
adjustments for stocks, splits and dividends) for 20 consecutive
trading days and (ii) either (a) at least one year has passed since
the issuance of the preferred stock or (b) a registration statement
registering the resale of the common stock issuable upon conversion
has been declared effective by the SEC and the related prospectus
remains current.
Voting. Holders of the series A preferred stock will not have
voting rights until their shares are converted into common stock,
except as required by Delaware Law.
Seniority. We may establish other series of preferred stock
senior to or parri passu with the series A preferred stock.
Series B Preferred Stock
------------------------
Our Board has designated 4,000,000 shares of our preferred stock
as Series B Preferred Stock 718,000 shares of which are outstanding as
of June 2005.
Dividends. The series B preferred stock will pay a cash
dividend, at the rate of $0.08 per share per annum.
Liquidation Preference. The series B preferred stock will have
priority over common stock in the event of liquidation equal to its
stated value, plus accrued and unpaid dividends.
Conversion. Each share of the series B preferred stock will be
convertible, at the option of the holder, into one share of common
stock (subject to standard adjustments for stock splits and dividends)
at any time upon written demand of the holder within the first year.
After one year, any outstanding Preferred B shares shall automatically
convert into common stock.
Voting. Holders of the series B preferred stock will not have
voting rights until their shares are converted into common stock,
except as required by Delaware Law.
Seniority. We may establish other series of preferred stock
senior to or parri passu with the series B preferred stock.
Delaware Law and Certain Charter and By-Law Provisions and
----------------------------------------------------------------------
Antitakeover Effects
--------------------
Delaware Law. We are subject to Section 203 of the Delaware
General Corporation Law, which prevents an "interested stockholder"
(defined in Section 203, generally, as a person owning 15% or more of
a corporation's outstanding voting stock) from engaging in a "business
combination" with a publicly held Delaware corporation for three years
following the date such person became an interested stockholder,
unless: (i) before such person became an interested stockholder, the
board of directors of the corporation approved the transaction in
which the interested stockholder became an interested stockholder or
approved the business combination; (ii) upon consummation of the
transaction that resulted in the interested stockholder becoming an
interested stockholder, the interested stockholder owns at least 85%
of the voting stock of the corporation outstanding at the time the
transaction commenced (subject to certain exceptions); or (iii)
following the transaction in which that person became an interested
stockholder, the business combination is approved by the board of
directors of the corporation and authorized at a meeting of
stockholders by affirmative vote of the holders of 66% of the
outstanding voting stock of the corporation not owned by the
interested stockholder. A "business combination" includes mergers,
stock or asset sales and other transactions resulting in a financial
benefit to the interested stockholder. The provisions of Section 203
could have the effect of delaying, deferring or preventing a change of
control.
14
Certificate of Incorporation and Bylaws. Our restated
certificate of incorporation provides for the division of the board of
directors into three classes with staggered three-year terms. These
provisions result in an increase in the time required for stockholders
to change the composition of the board, and consequently may impede a
change of control.
Transfer Agent, Warrant Agent and Registrar
-------------------------------------------
The transfer agent and registrar for our common stock is
Continental Stock Transfer and Trust Company, New York, New York.
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our articles of incorporation provide that we will indemnify our
officers, directors and other eligible persons to the fullest extent
permitted under the laws of the state of Delaware. We have also
entered into indemnification agreements with each of our current
directors and executive officers which will provide for
indemnification of, and advancement of expenses to, such persons for
expenses and liability incurred by them by reason of the fact that
they are or were a director, officer, or stockholder of the Company.
LEGAL MATTERS
The validity of the common stock offered with this prospectus has
been passed upon for AquaCell Technologies, Inc. by Harold W. Paul,
LLC, Westport, Connecticut.
EXPERTS
Our consolidated financial statements as of June 30, 2004 and for
each of the two fiscal years in the period ended June 30, 2004, which
are incorporated by reference herein from our Annual Report on Form
10-KSB for the year ended June 30, 2004 have been audited by
Wolinetz, Lafazan & Company, PC, independent registered public
accounting firm, as stated in their report, which is also incorporated
by reference herein, and have been so included in reliance upon the
report of such firm given upon their authority as experts in
accounting and auditing.
15
----------------------------------------------------------------------
AquaCell Technologies, Inc.
[Company Logo]
Common Stock
------------
P R O S P E C T U S
Until _______, 2005, all dealers effecting transactions in
the common stock, whether or not participant in this offering,
may be required to deliver a prospectus.
August 4, 2005
========
----------------------------------------------------------------------
16
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The expenses expected to be incurred in connection with the
issuance and distribution of the securities being registered, other
than underwriting compensation, are as set forth below. Except for
the registration fee payable to the Securities and Exchange
Commission, all such expenses are estimated:
Securities and Exchange Commission registration fee ...... $ 728.85
Legal fee ................................................ 23,500.00
Accounting fee ........................................... 3,500.00
Miscellaneous ............................................ 771.15
-----------
Total $ 28,500.00
-----------
-----------
Item 15. Indemnification of Directors and Officers.
Our Restated Certificate of Incorporation obligates us to
indemnify our directors and officers and to pay or reimburse expenses
for such individuals, in advance of the final disposition of a
proceeding, to the maximum extent permitted from time to time by the
Delaware General Corporation Law. With respect to our directors and
officers, the Delaware General Corporation Law permits us to indemnify
any person 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 (other than
an action by us or in the right of us) by reason of the fact that the
person is or was a director, officer, employee or agent of ours, or is
or was serving at our request as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by the person in connection with such action, suit
or proceeding if the person acted in good faith and in a manner the
person reasonably believed to be in or not opposed to our best
interests, and, with respect to any criminal action or proceeding, the
person had no reasonable cause to believe the conduct was unlawful.
The Delaware General Corporation Law also permits us to indemnify any
person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action or suit by us or in the
right of us to procure a judgment in our favor by reason of the fact
that the person is or was a director, officer, employee or agent of
ours, or is or was serving at our request as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by the person in connection with the
defense or settlement of such action or suit if the person acted in
good faith and in a manner the person reasonably believed to be in or
not opposed to our best interests and except that no indemnification
shall be made in respect of any claim, issue or matter as to which
such person is adjudged to be liable to us unless and only to the
extent that the Court of Chancery or the court in which such action or
suit was brought determines upon application that, despite the
adjudication of liability but in view of all the circumstances of the
case, such person is fairly and reasonably entitled to indemnity for
such expenses that the Court of Chancery or such other court deems
proper.
As authorized by the Delaware General Corporation Law, our
Restated Certificate of Incorporation provides that none of our
directors will be personally liable to us or our stockholders for
monetary damages for breach of fiduciary duty as a director except for
liability (i) for any breach of the director's duty of loyalty to us
or our stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law,
(iii) in respect of certain unlawful dividend payments or stock
redemptions or repurchases and (iv) for any transaction from which the
director derives an improper personal benefit. The effect of this
provision is to eliminate our rights and our stockholders' rights
(through stockholders' derivative suits on our behalf) to recover
monetary damages against a director for breach of the fiduciary duty
of care as a director (including breaches resulting from negligent or
grossly negligent behavior) except in the situations described in
clauses (i) through (iv) above. This provision does not limit or
eliminate our rights or the rights of any stockholder to seek
17
nonmonetary relief such as an injunction or rescission in the event of
a breach of a director's duty of care. In addition, our Restated
Certificate of Incorporation provides that if the Delaware General
Corporation Law is amended to authorize the further elimination or
limitation of the liability of a director, then the liability of the
directors shall be eliminated or limited to the fullest extent
permitted by the Delaware General Corporation Law, as so amended.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted for directors, officers and
controlling persons of AquaCell pursuant to the foregoing provisions,
or otherwise, we have been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against
public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable.
Item 16. Exhibits.
See Exhibit Index.
Item 17. Undertakings.
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:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933.
(ii) To 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 the 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 percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the
effective registration statement.
(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.
Provided, however, that paragraphs 1(a) and 1(b) do not apply if the
Registration Statement is on Form S-3 or S-8 and the information
required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to
the Commission by the Company pursuant to Section 13 or Section 15(d)
of the Exchange Act that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, 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, for purposes of determining any liability under the
Securities Act, each filing of the registrant's annual report pursuant
to Section 13(a) or 15(d) of the Exchange Act that is incorporated by
reference in the Registration Statement 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.
18
(5) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to Item 15 of this
registration statement, or otherwise, the registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant hereby certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has
duly caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Rancho
Cucamonga, State of California on August 3, 2005.
========
AQUACELL TECHNOLOGIES, INC.
By: /s/ James C. Witham
-------------------------------
Name: James C. Witham
Title: Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on August 3, 2005.
========
Signatures Title Date
---------- ----- ----
/s/ James C. Witham Chairman of the Board of Directors August 3, 2005
---------------------- and Chief Executive Officer ========
James C. Witham (Principal Executive Officer)
/s/ Karen B. Laustsen Director and President August 3, 2005
---------------------- ========
Karen B. Laustsen
/s/ Gary S. Wolff Director and Chief Financial Officer August 3, 2005
---------------------- (and Principal Accounting Officer) ========
Gary S. Wolff
/s/ Glenn Bergenfield Director August 3, 2005
---------------------- ========
Glenn Bergenfield
/s/ Dr. William DiTuro Director August 3, 2005
---------------------- ========
Dr. William DiTuro
/s/ James Barton Director August 3, 2005
---------------------- ========
James Barton
19
INDEX TO EXHIBITS
Exhibits
--------
5.1 Opinion of Harold W. Paul, LLC on the validity of the common
stock registered hereby*
=
10.1 Form of Water Cooler Placement Agreement*
=
10.2 J. DeKama Consulting Agreement*
=
23.1 Consent of Harold W. Paul, LLC (included in the opinion
delivered under Exhibit 5.1)*
=
23.2 Consent of Wolinetz, Lafazan & Company, PC
* Previously Filed
==================
20