INVESTOR LETTER
Dear Investor,
Thank you for your interest in 1st Electric Vehicle Corp. ("FEVC," or the "Company"). This is the first of four documents we will be giving you. Please read them carefully.
This offering is made pursuant to, among other sections, Regulation D, Rule 506 of the Securities Act of 1933, as amended. Following this letter is the Private Placement Memorandum or ("Disclosure Document"), the Subscription Agreement, and the Investor Questionnaire in relation to this Offering.
Please understand that the $ figures are forward looking best estimates and may not reflect the true expenses of FEVC in its start up phase. The error rate could be significant.
Also understand that at this time FEVC is still in development stages and even though operations have commenced, the shares in the private company are kept low with 5,400,000 shares of common stock outstanding. The shares will also be illiquid until the company becomes a publicly t 646f58g raded entity. Even though the Company plans to eventually go public, no assurance exists at this time, that the Company will be able to satisfy its short and long terms goals as pertains to adequate financing, and other contingencies.
For the above reasons at this time you should not invest in FEVC if you cannot afford to lose all of part of your investment, and in all cases you should only invest risk capital and it should never exceed 5% of your net worth. All of your investment could be lost through no fault of the Company. The Company will slowly emerge from its current phase to full operations.
Once you have read and understood all the documents attached, and if you still wish to invest in FEVC then please sign and return a hard copy of the signed Subscription Agreement, and Investor (Purchaser's Questionnaire), to our offices. At that point ____ will bank your check and have our attorneys issue you your share certificates.
You will be able to obtain information about the company at all times by calling (___)___-_____.
Thank you for your interest in FEVC.
Name: Jeffrey Troncone
Title: President & CEO
Company: 1st Electric Vehicle Corp.
Dated ____________, 200___
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND UP TO DATE. WE MAY COMPLETE OR AMEND THIS PROSPECTUS FURTHER WITHOUT NOTICE. THIS PROSPECTUS IS PURSUANT TO REGULATION D RULE 506 OF THE SECURITIES AND EXCHANGE COMMISSION. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE OR TERRITORY WHERE THE OFFER OR SALE IS NOT PERMITTED.
600,000 Shares
Each Share of Common Stock at $5.00 per Share
There is no Trading Symbol, as
1ST ELECTRIC VEHICLE CORP. is NOT a publicly traded entity
Price to Underwriting Proceeds to the
Investors Discount Company
Per Share $5.00 $0 $_____________
Total Offering 600,000 Shares $0 $_____________
"Best Efforts" Basis Offering with a minimum investment of 5,000 shares by each investor.
This Investment involves a High Degree of Risk. You Should Purchase Shares Only If You Can Afford a Complete Loss. See "Risk Factors" Beginning on Page 4.
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.
1ST ELECTRIC VEHICLE CORP.
Address,
Phone number,
Jeffrey Troncone
TABLE OF CONTENTS
PROSPECTUS SUMMARY 03
SUMMARY FINANCIAL DATA 04
RISK FACTORS 05
USE OF PROCEEDS 07
DILUTION 07
SELECTED FINANCIAL DATA 08
MANAGEMENT'S DISCUSSION/ANALYSIS 09
BUSINESS 09
MANAGEMENT 11
EXECUTIVE COMPENSATION 15
INDEMNIFICATION 15
ARRANGEMENTS WITH OFFICERS/DIRECTORS/KEY 16
PRIOR OFFERINGS 16
PRINCIPAL SHAREHOLDERS 16
MARKET FOR COMMON EQUITY /RELATED 17
DESCRIPTION OF SECURITIES 17
LITIGATION 18
LEGAL MATTERS 18
TAX ASPECTS / OTHER MATERIAL FACTORS 18
ADDITIONAL INFORMATION 19
SUBSCRIPTION PROCEDURE/AGREEMENT 20
INVESTOR'S QUESTIONNAIRE/QUALIFICATIONS 28
This brief summary highlights selected information from the Prospectus. It does not contain all of the information that is important to you. We urge you to read the entire Prospectus before considering investing in any common stock of our Company.
Overview
1st Electric Vehicle Corp. ("FEVC") is a specialized sales organization focused within the automotive industry. It has been awarded the enviable position of exclusive global marketing agent for a revolutionary line of vehicles having technology that represents a quantum leap forward in terms of fuel efficiency, while reducing emissions to virtually nil, as compared to conventional automobiles on the road today. The vehicle incorporates various technologies, which include both proprietary and commercially available, in order to achieve the dramatic efficiencies described above. Such technologies include, but are not limited to, composite materials integration, battery storage and power management, fuel combustion, motor design, and energy transfer.
FEVC has entered into an agreement with Zero Automobiles, Ltd., the developer of a revolutionary line of vehicles, which is slated to be sold under the name of Flash. The initial vehicle being developed is a small 4-passenger electric-drive vehicle that will have a range of at least 500 miles, and fuel efficiency equating to in excess of 200 MPG, yet it will perform like a sports car! Furthermore, it will not need to be plugged in, as all required electrical energy is generated on board. The vehicle is planned to go into production in the summer of 2008.
Because the design of the vehicle enables it to be assembled through an extremely simplistic process, manufacturing is reduced to simple assembly. The facility requirements amount to what is essentially a warehouse equipped with little more than three-phase electric to accommodate a high-powered air compressor, necessary to operate air tools. No expensive robotics or mechanized equipment is required, nor is a painting facility required, as the body panels are all pre-pigmented. These features dramatically reduce the cost of establishing a manufacturing presence anywhere in the world to a minute fraction of what a conventional automobile manufacturing facility would cost to establish and equip.
ZERO has elected to rapidly extend the presence of its brand by utilizing a licensing model, permitting local licensees to manufacture and sell the Flash line of vehicles on an exclusive basis for their designated markets. ZERO believes this model will help establish ZERO as a global brand in a fraction of the time, and at a fraction of the cost.
The business model for FEVC is to generate revenue through the marketing and sale of exclusive licenses to manufacture and/or distribute Flash vehicles on a territorial basis worldwide, subject to certain exclusions. FEVC shall earn immediate income by retaining 50% of the net revenue derived from any licensing fees it generates, and 30% of the ongoing royalty revenue, giving it a per vehicle income which shall endure indefinitely, for as long as the vehicles are produced under the licensing agreement. Over time, FEVC should receive an increasing stream of passive income as additional territories are sold, and production and/or distribution increases within each market as the brand establishes itself and grows. In other words, these results are cumulative and FEVC's annual revenue stream reflects the aggregate total production volume of all the facilities it has licensed. As much of FEVC's income is passive royalty revenue, it is not subject to many operational costs and risks experienced by most businesses.
1st
Electric Vehicle Corp. was formed in ________________ , _________ and is a
Mission Statement
To make a material difference in the world by helping to establish and distribute automotive technology around the world that would help the environment by dramatically reducing greenhouse gas emissions, in addition to helping countries reduce their dependence upon foreign oil, as applicable, and the use of petroleum in general.
Development of Operations, and Current Status
FEVC is currently engaged in limited marketing activities at this time. This is predominantly due to Management's decision to wait for the developer's completion of the 6 vehicles ("PPV-2"), which will be the cars actually used in the testing for EU and US certification, such that it can demonstrate the vehicles to potential licenses, as may be required.
Notwithstanding the above, management has already entered into preliminary discussions with several potential licensees, including 4 of the initially targeted markets. Among those initially targeted markets, FEVC has secured one Memorandum of Understanding from a private equity group intending to secure the Flash manufacturing and distribution rights for its country, and to serve as ZERO's beta manufacturing facility. Other discussions are under way and currently at various stages of progress.
FEVC expects the completion of the PPV-2 vehicles by the end of March of this year. Once completed, FEVC will move forward to solidify agreements with any initial licensees, as well as begin to "officially" roll out its marketing plan.
FEVC's 24-month goal is to secure licensing agreements in markets with sufficient manufacturing and distribution capabilities to produce and sell 100,000 units per year. Assuming FEVC were to reach that goal, and at that production level regardless of the timeframe, without taking into account its share of licensing fees, Management estimates that its share of recurring royalty revenue would be in the range of $150 - 200 per car.
The Company is offering 600,000 shares of its Common stock at a price of Euro 5.00 per share. Of the 20,000,000 shares authorized, a total of 600,000 shares are immediately available to interested investors through this offering.
If the entire offering is sold, the Company will receive Euro 3,000,000. In addition, the Company will pay for printing, legal, and accounting and other fees and expenses in relation to this offering. For more details see "Use of Proceeds" on page 6.
SUMMARY FINANCIAL INFORMATION
The Company was incorporated in the State of Nevada in June of 2007. The Company is a development stage company that has been elevated to basic operations as of the date of this offering. Research, development, and starting operations on behalf of the Company has so far been funded by the Company's officers/founders, who have elected in agreement with the Company to invest their venture capital and time in exchange for a loan agreement as well as equity participation. The total amount invested by the founders from inception to date, is approximately $_________ USD and the total equity owned is _________________ shares.
Before you consider purchasing any Common Stock offered in this Prospectus, you should carefully consider all of the following risk factors with the rest of the Prospectus. We do not consider this list of risk factors as an exhaustive list. This Prospectus also contains forward-looking statements that are based on current expectations and information available to the Company on the date of the Prospectus. We assume no obligation to update any such forward-looking statements. These forward-looking statements involve risks and uncertainties, including those below and others not listed. Our actual results could differ materially from those anticipated in such forward-looking statements.
Lack of Revenue. The Company needs additional capital and currently has limited revenues. It lacks a constant and continual flow of revenue and it cannot guarantee that it will receive adequate funding to be able to finance its planned activities. The Company is looking for revenue sources on an on-going basis, and it has identified such sources, however, the Company can't guarantee future contracts and/or revenues.
Because of the Company's need for additional capital to fund its present activities, and to provide for further activities, the lack of consistent revenue could adversely affect its future prospects.
Ability to Profit from Operations and Additional Capital Needs. The Company's ability to make a profit depends on its ability to obtain and/or secure adequate financing. This will ensure completion and full integration of the Company's plans, including educating the appropriate communities, marketing and advertising.
The Company does not currently have sufficient capital to fully develop its operations and there can be no assurance that it will be successful in obtaining the required funds to finance its long-term capital needs, except as applicable to this private placement offering.
Title to the Patent(s), Rights of Ownership.
FEVC holds no patents and has no entitlement to the rights of ownership to the intellectual property associated with the Flash vehicle line.
Retention and Attraction of Key Personnel. The Company's future success depends, in large part, on its ability to retain and attract highly qualified personnel. The Company's success in retaining its present staff and in attracting additional qualified personnel depends on many factors, including the Company's ability to provide them with competitive compensation arrangements, equity participation and other benefits. The Company can make no assurances that it can hire or retain such necessary personnel.
Regulatory Concerns. Government regulations in addition to local taxation structure can vary greatly from country to country, as pertaining to the sale of motor vehicles. Accordingly government regulation may be a considerable risk factor.
Share Price Arbitrarily Determined. The price of the 600,000 shares of common stock offered was arbitrarily determined based upon discussion within the Company's Board of Directors. The price has no relationship to our assets or shareholders' equity or any other criterion of value.
Dilution. Investors shall sustain a substantial dilution in book value, as of the completion of the Offering, See "Dilution" below.
Indemnification of Officers and Directors for Securities Liabilities. Our Bylaws provide that we may indemnify any Director, Officer, agent and/or employee as to those liabilities and on those terms and conditions as are specified in the Nevada Corporation Law. Additionally, we may purchase and maintain insurance on behalf of any such persons whether or not we would have the power to indemnify such person against the liability insured against. The foregoing could result in substantial expenditures by the Company and prevent any recovery from such Officers, Directors, agents and employees for losses incurred by the Company as a result of their actions.
Cumulative
Voting, Preemptive Rights and Control. Our Common Stock does not have
preemptive rights. This means that if
you purchase shares in this offering, you may be further diluted in your
percentage ownership of the Company if additional shares are issued in the
future. Furthermore, cumulative voting
in the election of Directors is not provided for. Therefore, the holders of a majority of the
shares of Common Stock, present in person or by proxy, will be able to elect
all of the Company's Board members. (Does this need to be changed
with
Potential Future Sales/Liquidity of the Company's Shares. There are 5,400,000 shares of the Company's Common Stock presently issued and outstanding. The Company has 20,000,000 shares authorized, 600,000 of which are immediately available to investors through this offering. The Company is a Nevada privately held corporation, and issuance of any of its shares represents part ownership in that corporation. There has not been, nor is there now a forum available for the sale of the Company's shares, other than through this offering or through the private exchange of investors and shareholders. It is the Company's intention to restructure the corporation into a publicly traded entity through an Initial Public Offering (IPO), a merger and/or reorganization with a public shell, or any other venue available to the Company, in order to provide its current and future shareholders with an opportunity to sell, liquidate, exchange or convert their shares. However, there is no assurance that the Company will be successful in ensuring a publicly trading opportunity for the existing and/or offered shares herein to its investors. Each and every investor in this offering should consider the risks herein and appreciate the speculative nature of any investment as provided for herein. (if applicable)
No Dividends. The Company has not paid cash dividends on its Common Stock. The Company does not anticipate the payment of cash dividends in the future. The Company currently intends to retain all of its earnings, if any, to finance its future development and operations. (if applicable)
USE OF PROCEEDS
The Company's gross proceeds from the completion of this Offering will aggregate $3,000,000. The Company intends, after payment of offering costs, to apply these proceeds in approximately the following manner. However, the numbers in the table are only estimates. The Company may allocate the proceeds differently if it feels it is in the best interests of the Company.
Commissions, Finder's Fees $
Accounting, Legal, Consulting $
Use of Proceeds not Associated with Offering Costs Amount Percentage
Research and development $
Secretarial/computer/web services $
Salaries $
Equipment $
Advertising, Reproduction costs $
Meetings, Presentations $
(above, if applicable)
The balance of the Proceeds will be used by the Company for other miscellaneous overhead expenses, in connection with its plans and in the best interest of the Company. Management believes that the funding anticipated herein will be sufficient to bring the Company to the point whereby it will have enough positive income from operations so as to not require additional funding. However, no assurances can be given that circumstances may develop whereby the Company may be required to seek additional capital to further finance its operations as necessary. In such instance, the Company is hopeful it will be able to attract the necessary funding to continue its operations through additional future funding activities.
As of _____ _______ ______ ________, the Company had ______________ shares of Common Stock outstanding, with a net tangible book value of $.001 per share.
Assuming the sale of all of the Shares, no other changes to the Company's financial position, and after deduction of commissions and the estimated Offering expenses to be paid by the Company, the net tangible book value of the Company would be $_______________ or approximately $_____ per share. This represents an immediate dilution of $_____ per share to new investors and an immediate increase in the net tangible book value of shares held by present shareholders of $___________ per share.
"Net tangible book value" is the amount that results from subtracting the total liabilities, deferred costs, and intangible assets of the Company from its total assets. "Dilution" is the difference between the public offering price and the net tangible book value of the shares immediately after the offering. Additionally, dilution is calculated based on book value of the Company's assets, which may not necessarily reflect the actual market value of such assets.
The following table illustrates the per share dilution:
Offering price per Share: $ 5.00
Net tangible book value (1) at ___________ before Offering: $
Pro forma net tangible book value at ____________
after Offering (2): $
Dilution expressed as a percentage of the Offering Price: __________ ______ ____ _
(1) Assumes sale of the total offering, of which there can be no guarantee. See "RISK FACTORS."
(2) Used for demonstration purposes to explain dilution effect to new and existing shareholders.
The following Selected Financial Information is qualified in its entirety by reference to and should be read in conjunction with, the Financial Statements, related Notes, and "MANAGEMENT'S DISCUSSION AND ANALYSIS OF CERTAIN RELEVANT FACTORS" included below in this Prospectus.
The Company is a Nevada Corporation, incorporated in the State of Nevada in June of 2007. The Company's fiscal year end is December 31st.
There have been limited net earnings or losses, profits or P/E values, due to the Company's development stage.
The Capitalization of the Company before this Offering is as follows:
20,000,000 shares authorized, 5,400,000 issued and outstanding, and $20,000 in Company debt.
The Capitalization of the Company assuming the completion of the Offering in full:
20,000,000 shares authorized, 6,000,000 shares issued and outstanding, $______________ in net offering proceeds.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF CERTAIN RELEVANT FACTORS
Provided the offering herein is completed in full, the Company does not anticipate having any cash flow or liquidity problems within the next 12 months.
The Company does not have any outstanding loan, note, lease, or creditor obligations, accounts payable older than ninety days, judgements, liens, settlement obligations, or any liabilities other than the founders/officers loans.
If the company is able to secure enough capital to fund its operations and further secure long term interest and funding through a reorganization, merger, Initial Public Offering (IPO) or whatever other venue available to the Company, it may then be able to provide its investors with a publicly traded forum for the sale of the Company's securities. Conversion from a private company to a public company will have a significant impact on the Company's future business operations. Such a move will also facilitate raising additional capital in the public arena.
Once future contracts are secured, significant demand for the Company's service is considered likely. It may be necessary to hire an international sales force, which will necessitate additional expenditure of funds. That is why the Company is carefully considering the public marketplace for long term funding of its business operations. Upon the completion of the total Offering, management believes that the Company shall have sufficient cash to conduct its operations for a period of at least 12 months. At that time, the Company will reassess its financial position in the light of its current operations and then determine whether to seek additional funding. No assurance can be given that funding on acceptable terms will be available at such time.
The Company is currently in discussions with several different financial sources including investment banking firms to explore if significant funding can be made available past the first 12 months of operations, if necessary. Further equity financings will steadily dilute the percentage ownership of the shares of existing shareholders, as well as the investors from this offering.
The securities being offered herein are common stock shares with no cumulative rights, no special voting rights, no anti-dilution clauses, no preference as to interest or dividends, and no preemptive rights to purchase any new issue of shares.
This is a private offering. All securities in a private offering are understood to be illiquid. Although an investor has the right to offer his/her shares back to the Company at any time, the Company is not obligated to purchase the shares. Shares in private companies generally have a limited or no secondary market.
The company expects that the offerees will only spend risk capital that they can afford to lose, and does expect the investors to remain invested with the Company for at least a year. In the event that the Company becomes a public company, then depending upon the amount of time that the investor has owned his shares (at least six months), such shares may be saleable on the over-the-counter market or the NASDAQ BB, as applicable.
In General
What kind of impact do you think a vehicle would have in the marketplace if it provides seating for 4 passengers, operates on a 100% electric-drive system which emits virtually zero emissions, has a range of approximately 500 miles, does not need to be plugged in, and is expected to be priced under $25,000 retail (in the United States, as an example)?
Zero Automobiles, Ltd. ("ZERO") was formed to address the burgeoning market for alternative-types of vehicles. A convergence of numerous factors has gone from what was once an insignificant niche opportunity, to the forefront of public, governmental and media attention. This is a ground floor opportunity to participate in what we believe will be a significant transformation of the automobile industry. Various technologies vying to become the new "green solution" and market success story include hybrid vehicles, hydrogen fuel cell vehicles, hybrid electric vehicles (both with and without plug-in capability), and electric vehicles. Interestingly enough, each of the aforementioned technologies utilizes electric motor technology in full or in part to drive the vehicle. Regardless of which technology emerges as the leader, it would seem clear that the solution would involve the continued development of electric-drive systems, and the support systems to power them.
Enter The Flash. ZERO's "Flash" electric vehicle, as it has been named, was designed to address the current concerns over the environment, while at the same time, meet drivers' expectations and beyond. The Flash is a 100% electric drive vehicle; however it is technically classified as a hybrid electric vehicle. To its credit however, there is no need to have to plug in the vehicle, and drivers will not have to worry about where to charge their vehicle. In fact, the car will not require its user to change their lifestyle in any way. This is a significant factor, because as we all know, people are relatively resistant to change. Accordingly, we view this as a major market advantage.
To adequately evaluate any investment relating to the potential success of Flash vehicles, one must first understand the car itself. That is, understand the qualities and capabilities of the car, and how they culminate into what we feel represents a QUANTUM LEAP in vehicle efficiency, over anything else in the marketplace.
Essentially, through an aggregation of various technologies (both proprietary and commercially available), and a maximization of the efficiencies achieved in several areas, the car appears to be 2 - 3 years out in front of the competition, based upon a review of available literature.
There is much media coverage today surrounding the development of electric and alternative vehicles, with many such developers seeking out the spotlight. Zero Automobiles has instead adopted a policy of "stealth" (quiet and unseen) with regard to its technologies, stage of development, and quite frankly, its existence. We believe the best way to maintain our competitive advantage is to not let anyone see us coming. An added benefit to this philosophy is that we are less likely to have "roadblocks" possibly put in place by any of the major automotive companies with vested interests in maintaining the status quo, and which would otherwise be adversely affected by the introduction of a vehicle having the capabilities the Flash car will bring to market.
A 4-passenger 100% electric-drive vehicle that does not have to be plugged in, having a 2 + 2 configuration (Other model configurations will be made available shortly after the introduction of the vehicle to the market)
Will meet NHTSA and EPA criteria to be classified as a Zero Emission Vehicle (ZEV)
Mileage that will equate to the equivalent of +/- 200 MPG
A vehicle range capable of 500 miles without any external assistance
Acceleration of 0 - 60 in less than 9 seconds
Top speed of approximately 90 miles per hour
A revolutionary drivetrain system that will enable either front wheel or rear wheel drive configurations.
"Drive by wire" Digital Can Bus system, with a single wire threaded throughout the car providing all of the electrical service.
Cutting-edge battery system, capable of going from a completely discharged state to an 80% charge in less than 2 minutes of charging.
Has both generative and regenerative power systems
o Whenever the car is not consuming electricity, it is producing it
o A proprietary "fuel cell" technology that provides power generating efficiencies approximately 40% greater than the capabilities of any other comparable system that we know of.
o A regenerative braking system that mimics the feel of power brakes while recharging the batteries. Brake pads effectively become a back-up system used during hard braking.
A touch screen computer controlled console, controlling all aspects of the vehicle
o Operations information center
o Satellite Navigation
o Bluetooth, iPod, and USB-port ready
o Stereo/MP3 with speaker placement optimized by sound engineer
Solid-state air conditioning and heating system
Suspension system developed by Formula 1 race car engineers, based upon the technologies used in Formula 1 race cars
Composite and lightweight structural materials
Safety cage designed in composite
Driver and passenger airbags, with optional side curtains to become available
An anticipated US crash test rating of 4 - 5 stars
"Paint-less" body panels (available in several colors) that are scratch resistant
Removable rear seats provide substantial storage area
Car is 100% recyclable
Well-appointed interior
o Leather seating
o Refrigerated cup holders
o Suede-like ceiling liner
o Power windows
Two main criteria were aimed at in designing the vehicle, and the way it would be manufactured: "modular simplicity" and "affordable scalability." What the term "modular simplicity" means is that the assembly process of the vehicle should be extremely simple, requiring little more than the bolting-together and fastening of various sub-assemblies provided by sub-contractors. The term "affordable scalability" refers to utilizing a relatively low cost facility, which can be equipped at minimal cost, and up and running from start-to-finish within a few months. In this manner, we believe duplication (as well as increased capacity) can be readily accomplished anywhere in the world.
The actual assembly facility structure that would be required would amount to little more than a warehouse. Other than partitioning some areas for office workers and supply rooms, install steel shelving along the production lines for parts and supplies, and do a custom painting of the floor to facilitate the flow of work and materials throughout the assembly process, there is little else necessary to get a facility up and running. There are no mechanized assembly lines or robotics required, only a high output air compressor system and electricity to power the hand tools needed for assembly. The building would house multiple "lines" whereby teams of three workers could assemble the vehicle station by station as the car is moved along the floor on a dolly until it is completed at the end of the line. As simplistic as this may sound, according to the developer of the Flash, this manufacturing technique has been well tested as a development process and in the full-scale production of 10,000 units per month.
In order to maximize the leverage that can be achieved based upon its simplistic and affordable manufacturing model, ZERO is adopting a business strategy similar to that of franchise operators. ZERO will own and operate a corporate manufacturing facility to be located in the UK. This facility will manufacture vehicles for both Europe and the United States. Additionally, it will serve as the operating model by which international expansion will be achieved through licensing and duplication. Instead of incurring the costs and risks associated with increasing manufacturing capacity to export vehicles to various markets, ZERO instead intends to generate licensing fees upfront and/or establish joint-venture partnerships and shift the burden, expense, and risk of establishing facilities to the local licensee or joint venture partner.
In its role as licensor, ZERO will provide the plans, training, and ongoing support necessary to assure that licensees achieve and maintain the quality standards established by ZERO corporate, as well as to effectuate the system properly in order to maximize their own revenues. With expansion through licensing, ZERO can expect to achieve global market penetration and international brand recognition in a relatively short timeframe, far shorter than would otherwise be possible.
ZERO will expand globally by selling manufacturing and distribution rights to select markets throughout the world through an exclusive marketing agreement formed with First Electric Vehicle Corporation, LLC ("FEVC"). Under the terms of the agreement, FEVC shall be the exclusive global marketing agent and will provide all marketing activities. Under the terms of the agreement, FEVC will receive a 50% revenue share of the net fees generated from licensing and 30% of the ongoing royalty revenue. The "licensing model" is deemed by management to enable FEVC to earn substantial front-end revenues, achieve significant and sustainable long-term residual income, and provide the ability to do so with absolute minimal risk - only its marketing costs.
In its capacity as the exclusive licensing agent, FEVC will identify and solicit potential licensees throughout the world, in an effort to rapidly multiply the international areas of distribution for Flash vehicles, thereby creating global awareness and recognition for the brand. This will be accomplished through various marketing activities which will likely include but are not limited to participating in international automobile trade shows, networking throughout the automotive community, the use of regional consultants throughout the world, and through international trade initiatives sponsored by various governmental agencies seeking to attract manufacturing in general. This will likely involve the targeting of countries having an interest in developing environmentally sound transportation, or those looking to lessen their dependence on foreign oil. Without any official marketing efforts whatsoever, FEVC has already had indications of interest expressed by financially capable parties interested in securing licensing rights for China, India, Morocco, and the Middle East.
Once FEVC has secured operational funding, it will officially commence its international marketing efforts to identify new foreign parties for the sale of exclusive licenses to manufacture and distribute Flash vehicles in various targeted markets. International sales activities are expected to commence by the spring of 2008.
In August of 2007, ZERO unveiled its PPV-1 (Pre-Production Vehicle 1) to members of FEVC, at a meeting orchestrated to evidence the vehicle to the party who ultimately secured the exclusive North, South, and Central American distribution rights for Flash vehicles. A distribution agreement was entered into shortly after the visit. A preliminary version of the workable vehicle is expected by the end of March, which will be known as PPV-2. This is the version that will be lab and field-tested (including crash tests), and once satisfactory test results of PPV-2 have been completed, any necessary changes or modifications will be made. Based upon the conclusions drawn from the testing and incorporating any changes resulting therein, the final iteration of the vehicle prior to production, the PPV-3 vehicle will be made. This is the final version of the vehicle that will actually go into production, and will be the basis for making the production tooling.
While we have tried to be conservative in our estimates regarding timeframes, unanticipated supply problems or delays can affect these estimates. Barring any unforeseen difficulties, Vehicle production is expected to commence by June or July of 2008. Site selection for the company's main assembly facility is already underway in the UK. FEVC has already introduced a potential licensee for Morocco, and talks are underway for the establishment of a facility in that country.
At this time, and without any marketing efforts whatsoever, ZERO already has pending orders in the UK for 3,500 cars, and a contractual minimum of 1,000 cars in the U.S. Additionally, ZERO is consulting with other local distribution channels which are indicating substantial interest; however since those situations are still in negotiation, the names and other relevant terms are not available for disclosure at this time.
Regarding Flash Vehicles
FEVC currently holds an agreement with ZERO to act as its Exclusive Agent to sell manufacturing and distribution licensing worldwide, subject to certain exclusions. These exclusions represent areas in which ZERO had previously entered into distribution agreements. The area of exception generally covers North and South America. Additionally, ZERO reserves the right to enter into a direct distribution arrangement for its operations-based market, the United Kingdom, as well as the right to contract with markets not already established by FEVC. With the funding anticipated herein, FEVC intends to negotiate a modification and upgrade of the terms of its contract to include "Exclusive Right to Sell," in exchange for financial consideration. Such a transaction would thereby eliminate ZERO's right to contract any market independently of FEVC. Management cannot assure that it will be successful in obtaining such modification.
Regarding the Global Automotive Market
In the automotive marketplace, in most countries, there are a myriad of choices for a consumer to make when selecting a vehicle to purchase. As the business model for FEVC is global licensing of a line of Electric Vehicles ("EV"), you must consider the competition on a global level.
In a broad sense, Flash vehicles compete with every other vehicle for the consumer's hard earned money as a means of transportation. Obviously, the competition in each market can differ greatly, depending on the country, as the manufacturers, which serve each country, can vary greatly. Within each individual market, the pricing can also vary dramatically, based upon the needs of each particular market, the economics of each particular market, and the consumer demand within those markets. The same can also be said of the types of vehicles offered in each market, as those offerings are designed to cater to the specific needs of each market. Accordingly, it is very difficult to summarize the competition for FEVC's Flash vehicles in a broad sense, as by its very nature, manufacturers and their offerings differ greatly from one country to another. So who is the competition for Flash vehicles?
Because of the growing global concerns over the environmental effects of carbon emissions, as well as the economic factors created by the escalating worldwide demand for oil, and its correlating rise in price, a substantial interest in alternative types of vehicles is emerging worldwide. It is these specific concerns that the Flash vehicle line was designed to address. I believe that it is the vehicles that are emerging into the marketplace that address these same concerns that are the competition for Flash. After all, people buying these cars are people who for the most part, are paying a premium to address these very concerns. Accordingly an analysis of environmentally conscious, oil-dependence reducing vehicles would best define the competition for Flash.
This emerging market can best be demonstrated by the rapid growth
of Hybrid Vehicles over the last few years. This category of vehicles can
essentially be described as vehicles that are of parallel design; that is, they
have the capacity for both internal combustion engine as well as electric drive
capability. Toyota has managed to far and away dominate this market with its
Prius offering. Since they introduced the line in 1997, and in the U.S. in
2004, the growth has been steady and dramatic. By 2007 Toyota had already sold
in excess of 1 million of the vehicles. In 2007, the Prius was the most fuel
efficient offering in the
Numerous other "global" car manufacturers have attempted to follow suit with hybrid offerings, fearing to be left behind in the emerging trend toward "greener" vehicles, but all combined do not even come close to the success of Toyota in this market segment. Such major manufacturers would include, but are not limited to Ford, General Motors, Honda, and Nissan, which have all introduced hybrid versions of existing models. Hybrid car sales statistics for 2007 in the U.S. have indicated an increase of 37.9% over 2006, demonstrating the dramatic growth of this segment of the market. This segment can be further characterized as vehicles that achieve higher fuel economy as compared to their traditional versions, as well as providing the perceived benefit of reduced emissions.
The growth of the hybrid market has only served to demonstrate the extent of the growing demand for vehicles with increased fuel efficiency and reduced emissions. The evolution of this trend has led to continued innovation in the field and more particularly, the re-emergence of a focus on electric powered vehicles. Generally speaking, electrically powered vehicles promise zero emissions (and/or reduced emissions if you take into consideration any fossil fuels that might have gone into the production of the electricity that charged the vehicle), as well as the capability of achieving the equivalence of 100+ miles per gallon.
As there is no clear dominance by any manufacturer in the electric vehicle segment of the market on a global basis. While certain countries in Europe such as the United Kingdom, France, and Italy have been utilizing EV's for several years, none have managed to extend their presence internationally to any great extent. Additionally, EV's would be a relatively new option in most markets. The major reason for this is that until recently, technology has limited the capability of EV's. More specifically, battery technology has severely limited the range and speed of vehicles. In most instances, electric vehicles are not even capable of highway speeds, and are limited in range to 40 miles (64 kilometers) or less. As these limitations greatly reduce the utility and practicality of such vehicles, the acceptance and utilization by the mass market has been relatively limited.
Due to recent and evolving advances in technology, this is all about to change. Recent advances in battery technology and nanotechnology, most notably with lithium ion and other lithium compounds, have made possible the development of vehicles that can achieve highway speeds and extend a vehicle's range to levels that would make the widespread adoption of such vehicles commercially viable. Depending upon the hardware configuration, electric vehicles currently being developed now have the technology necessary to attain the speeds required by most drivers to consider purchasing an EV, as well as provide a sufficient enough range to make them practical. The Flash vehicle is such a vehicle, and it is in this segment that we believe Flash will emerge as a leader.
As there are no mass-market electric vehicles in the world with the capabilities necessary for widespread adoption, as described above, currently in production, market leadership is up for grabs and upstarts as well as majors are looking to seize the opportunity.
Because of the size of major manufacturers, and with their extensive bureaucracy and vast infrastructure that goes along with such scope, moving quickly to market is no easy task. Also, with strong reputations to protect and shareholders to appease, these manufacturers are virtually forced to take a conservative approach to the development of such revolutionary vehicles. They can ill afford to make a mistake. In spite of this, major manufacturers such as General Motors, Toyota, Ford, Mitsubishi, Subaru, Honda, and Renault-Nissan, amongst others have all developed or are developing EV concept cars. Since concept cars generally take many years (if ever) to get into production, we will only consider the cars that the manufacturers have openly stated are planned for introduction by 2010, or sooner.
The highest profile of any "next generation" EV offering by a major manufacturer would be General Motors' Chevy Volt. It is a plug-in series hybrid; that is it is entirely powered by electric, but it also offers an internal combustion engine powered onboard generator, also known as an auxiliary power unit ("APU"), to charge the batteries and extend the range of the vehicle once the power in the batteries has diminished to a certain level. GM is looking to achieve 40 miles or so of battery-electric power before needing the assistance of the APU. Overall, the vehicle is expected to have a range of 640 miles, fuel economy of 150 MPG, and a top speed of 120 MPH. The Volt would be a 4-passenger vehicle that GM is expecting to get to market by the end of 2010, that is, if it can get its battery technology worked out in time. GM is hoping to bring the vehicle to market with an MSRP of $30,000 or less. Additionally, GM has made indications that they may introduce a Plug-in version of the Saturn Vue Hybrid by the end of 2009.
Toyota is also involved with a relatively high-profile move toward the evolution of EV's. With the commercial success of the Prius hybrid vehicle, many people have sought to convert the vehicle to a PHEV, through independent aftermarket contractors. Because of the popularity of the Prius, conversions have garnered some media attention, with resulting claims of 100+ miles per gallon. In light of the media attention, Toyota received much pressure to offer a Plug-in version of the Prius directly, and recently announced that it was in fact working on such a vehicle that it plans to bring to market in 2009.
Another major manufacturer in motion to deliver an EV by late 2009 is Mitsubishi, with their iMiEV vehicle. According to available literature, they have indicated that the car would be a small 4-passenger purely electric vehicle and have a range of approximately 100 miles, with a top speed of 81 mph. While the car is small and relatively limited in its capabilities as compared to the plug-in hybrid versions being readied for market, according to sources in the media, it is expected to be offered at a very affordable target price in the neighborhood of $12,000.
Honda is no stranger to the alternative vehicle realm, and is often considered to be the "greenest" of the major manufacturers, however they have expressed no real interest in entering the plug-in hybrid market. On the other hand, they expect to make a big push in 2009 with traditional hybrid models. Given the limitations of that technology, none will likely approach the 100-MPG threshold, and are therefore not deemed by management to be a competitive factor within this niche.
The Renault-Nissan Alliance recently signed Memorandum of Agreement ("MOU") with an ambitious start-up, Project Better Place, whose purpose is to promote the widespread adoption electric vehicles worldwide, as well as building out the "charging" infrastructure necessary to accomplish that goal. The MOU provided for the introduction of electric vehicles into the Israeli market starting in 2011, which would be the first country to attempt such an endeavor, and serve as the model for future countries to follow. Under the agreement, Renault will supply the electric vehicles, while Project Better Place will construct and operate an Electric Recharge Grid across the entire country. No specific indications have been made as yet regarding the cost and/or capabilities of the vehicles Renault will be developing. While the project does not anticipate vehicles until 2011, it is included in this summary since it is a high-profile, well-funded operation of international scope aimed at promoting the development and use of electric vehicles, and as such worthy of note.
Several of the global manufacturers mentioned also have investments in electric vehicles powered by Hydrogen fuel cells. While it is interesting technology, and emits virtually no emissions, these vehicles are nowhere near being commercially viable for mass-market introduction. Furthermore, there is virtually no fueling infrastructure in place, and the investment necessary to do so would be absolutely staggering. Accordingly, management feels that this technology does not present any threat of competition for the foreseeable future.
In spite of the size and resources of the major global manufacturers, it is arguable that the real competition - at least in the short-term, will come from small, independent start-ups. Innovation often comes from such companies, as they are not restricted by top-heavy bureaucracy, or existing commitments to outdated infrastructure. Several such companies have emerged and garnered much publicity for their endeavors, and are characterized by novel advancements in automotive technology.
The most notable of the Start-up electric car, based upon the amount of publicity it has achieved, is the Silicon Valley venture, Tesla Motors. Tesla has developed a high-end sports car that is entirely battery powered, and as such must be plugged-in to be charged. They are using a proprietary Lithium ion battery system, enabling the car to reach speeds of 125 MPH, acceleration of 0-60 in under 4 seconds, and a driving range of up to 225 miles. Fairly well capitalized, Tesla is currently building a manufacturing facility in New Mexico with the intention of producing at least 10,000 vehicles per year. The initial sports car model is priced at just under $100,000. Plans are underway to develop a more affordable 4-door, 5-passenger model that is slated for introduction in 2009. The estimated price for this vehicle is $50,000 - 70,000 and as such, would still be beyond the means of most people. Management has not learned of any plans for international expansion or licensing, and because its pricing targets a more affluent consumer, management does not consider it a significant competitor within the niche for the foreseeable future.
Fisker Automotive, another start-up entrant into the EV marketplace, unveiled its initial vehicle, the Fisker Karma in January, 2008. The Karma is a very attractive high-end vehicle with a hardware configuration similar to that of the Chevy Volt and Flash vehicle. Accordingly, the car is 100% electric drive, with an onboard APU to extend the range afforded by the batteries alone. The Karma is a luxury entrant to the market, with an anticipated price planned to be around $80,000 when it is introduced into the market in 2009. While it is too expensive to be deemed a direct competitor of the Flash, it will likely present formidable competition to the Tesla.
Another fairly prominent electric car company is the Think City, owned by Think Global and based in Norway. This is another venture funding-backed company with aspirations of becoming the world's largest manufacturer of electric vehicles. They are bringing to market a small battery powered 2-seat minicar in 2008, which would be capable of a top speed of 100 km/h, and have a range of 180 km. The Think utilizes a modular type of design in order to facilitate ease of assembly. The differentiating factor with the Think is that they plan to sell the car and lease the batteries separately. Think Global ultimately plans to market this car internationally, and because of its ease of assembly attributes, international licensing for manufacturing may come into play in the future. However, considering the limitations imposed by the necessity of "plugging-in" combined with the additional cost of a battery lease, FEVC management does not believe Think's business model will prove to be effective enough to achieve any substantial global success.
Other small manufacturers currently producing electric vehicles include Zenn Motor Company, Miles Automotive Group, and Zap are all marketers of low speed (also known as Neighborhood Electric Vehicles, "NEV") electric cars. Typically such vehicles are capable of approximately 25 MPH or so, and a range of 35 - 45. NEV's have limited market appeal, and are not practical enough for widespread mass-market adoption. Each of these companies has "highway capable" vehicles in development, none of which are likely to be introduced until at least 2009. There is not enough information available to determine the likelihood that the companies will meet their goals and actually introduce such vehicles, let alone assess their possibility to compete in international markets at this time.
It is believed that there are other industry participants of various sizes, including numerous small start-ups, which are in the process of developing electric vehicles but either too little information is available to accurately assess their offerings, or the companies are not deemed to be effective competitors within the niche.
There is another emerging technology for a zero emission vehicle that is not powered by electric, but rather, is powered by compressed air. The "Air Car" as it is known, comes from the French-based company, MDI. An interesting concept, their line promises a top speed of 68 MPH, and a range of approximately 150 miles. From a practical perspective, an infrastructure of high-pressure air stations would need to be developed in order to deliver a rather enviable 3-minute charge, at a targeted price of 1.5 Euros. However, without such a facility, depending upon the voltage of the power supply and model vehicle, by utilizing the cars compressor, the company claims recharging time can take up to 5.5 hours.
MDI utilizes a licensing business model, similar to that of FEVC. MDI is seeking international licensees to manufacture and distribute vehicles utilizing its technology worldwide. Available resources indicate that they have already signed exclusive licensing deals in several countries, including a high profile transaction with Tata Motors, in India. Tata is the largest vehicle manufacturer in India, and is reported to have paid the equivalent in US Dollars of $27 Million in that licensing transaction. Tata expected to market the car in 2008, but recently conflicting information allegedly coming from a Tata executive says it might be pushed back as much as 2 years. Furthermore, the executive added that the company would only discuss the price point and its launch date when it is ready to launch.
Employees
The Company currently has 2 employees. Upon completion of the Offering, the Company anticipates having a total of 4 or more employees at such time as PPV-2 has been achieved and can facilitate product demonstrations to potential licensees. Additional personnel needs are also met and better-suited through the use of outside consultants. There are no labor relations at this time. The Company anticipates providing salary and stock options to its employees.
Properties
The
Company currently maintains an office located in the
Research and Development
As FEVC is by its very nature a sales and marketing company, there is no research and development work conducted by FEVC.
Directors and Executive Officers of Registrant.
The following schedule sets forth the name of each director and officer of the Company and the nature of all positions, and offices with the Company presently held by them. Each director has been elected until the next meeting of shareholders of the Company, or until his successor shall have been elected and qualified. No officer has a specified term or employment agreement at this time.
The executive officers and directors of the Company are as follows:
Name Position Held
Jeffrey Troncone President, CEO
Mr. Troncone, age 55, has an extensive background in advertising, media, and sales. He has spent the last 2 ½ years working for Visionary Vehicles, a company formed to import the first cars into the US that were manufactured in China, but designed specifically for the US market. Mr. Troncone was a key executive with the company, having headed up the dealer development department, and in that capacity established relationships with hundreds of dealers across the country. During his tenure, Mr. Troncone played a key role in the financing of Visionary and was instrumental in securing in excess of $10 Million in working capital, as well as being integral in sourcing multiple offers in excess of $100 Million in equity funding for that venture.
Alfred V. Greco Jr. Vice President
Alfred Greco Jr., age 43, has been a career entrepreneur. He has owned and operated several private companies, the most recent of which was a consulting company focused in marketing, which operated from 1992 - 2007. He has been involved in marketing and financial consulting for companies ranging from advertising to mortgage services and is presently in the business of automobile import. Additionally, he has helped finance companies ranging from start-ups to public companies, one of which is now listed on the AMEX exchange. Mr. Greco is a graduate of Fordham University's Business School, with a BS degree in finance.
EXECUTIVE COMPENSATION
The following table sets forth the remuneration paid or accrued by the Company since inception to its officers and directors, and to all officers and directors as a group.
|
Name |
Capacities in Which Employee Serves |
Cash Compensation |
Securities Compensation |
|
Jeffrey Troncone |
President, CEO | ||
|
All, as a group |
INDEMNIFICATION
The Company's Bylaws provide that the Company's directors and officers will be indemnified to the fullest extent permitted by Nevada Corporation Law, however, such indemnification shall not apply to acts of intentional misconduct; a knowing violation of law; or, any transaction where an officer or director personally received a benefit in money, property, or services to which to the director was not legally entitled.
All persons possessing proprietary information have read and signed a Non-Disclosure Agreement. In the event of death or disability, all directors are replaceable with qualified, talented individuals. No life insurance has been purchased by the Company on behalf of any of its Officers or Directors, but this may be considered in the future.
At this point no director salaries have been taken despite the large amount of work in forming the Company and the large amount of research and development. Also, at the point when the Company can afford its Officers, it is expected that they will draw a salary to a specified limit. Once the Company is in production and sales, it is expected that all company officers, directors, and key personnel and any sales force that may be employed by that time, may receive commissions for contracts secured and serviced.
There are no contractual obligations and no employment agreements at the time between the Company and any of its Officers or Directors. However, as the Company is reshaped from a private licensing company to an operational public company with income which could be very significant, new executives including CEO, CFO, COO, VP marketing, VP operations, Advisory Board, etc., is envisaged and a series of contracts will be established for new senior level executives of the Company.
In a previous transaction, Mr. Troncone, among others, was instrumental in securing a Distributor for Flash vehicles in the United States, which ultimately resulted in the Distributor obtaining the exclusive distribution rights to North, and South America. For his role in that transaction, Mr. Troncone has been promised an equity interest in the distribution company.
The Company has not completed any offering of its securities in any form prior to this offering.
The following table sets forth certain information regarding beneficial ownership of the Company's Common Stock as of the date of this prospectus, and as adjusted to reflect the sale of the total amount of Units offered by this Prospectus, (i) by each person (or group of affiliated persons) who is known by the Company to own beneficially five percent (5%) or more of the Company's Common Stock, (ii) each of the Named Executive Officers, (iii) by each of the Company's directors and director designates, and (iv) by all directors, director designates and executive officers as a group. The Company believes that the persons and entities named in the table have sole voting and investment power with respect to all shares of Common Stock shown as beneficially owned by them, subject to community property laws, where applicable.
|
Name and Relationship |
Number of |
Percentage |
Percentage |
|
|
Common |
of class before |
Of class after |
||
|
Shares |
This offering |
This offering |
||
|
Officers & Directors * | ||||
|
Other Shareholders |
(* and related entities?)- do we need to figure Frank in at this point?
Market Information
The Company is a ____________ privately held corporation, and issuance of any of its shares represents part ownership in that corporation. There has not been, nor is there now a forum available for the sale of the Company's shares, other than through this offering or through the private exchange of investors and shareholders. It is the Company's intention to restructure the corporation into a publicly traded entity through an Initial Public Offering (IPO), a merger and/or reorganization with a public shell, or any other venue available to the Company, in order to provide its current and future shareholders with an opportunity to sell, liquidate, exchange or convert their shares. However, there is no assurance that the Company will be successful in ensuring a publicly trading opportunity for the existing and/or offered shares herein to its investors. Each and every investor in this offering should consider the risks herein and appreciate the speculative nature of any investment as provided for herein.
Shareholders
As of ____________________, the Company had approximately ___________ shares of common stock outstanding, held by officers, directors and other interested shareholders.
The Company has __________ shares of common stock authorized, of which _________ are currently issued and outstanding. The holders of the Company's Common Stock are entitled to one vote per share on each matter submitted to a vote at any meeting of shareholders.
Shares of Common Stock do not carry cumulative voting rights and, therefore, a majority of the outstanding Common Stock will be able to elect the entire Board of Directors and, if they do so, minority shareholders would not be able to elect any members to the Board of Directors.
Shareholders of the Company have no preemptive rights to acquire additional shares of Common Stock or other securities. The Common Stock is not subject to redemption and carries no subscription or conversion rights. In the event of liquidation of the Company, the shares of Common Stock are entitled to share equally in corporate assets after satisfaction of all liabilities. The shares of Common Stock, when issued, will be fully paid and non-assessable.
There are no outstanding options, warrants or rights to purchase shares of the Company's Common Stock, other than as disclosed in this Prospectus and as made available to shareholders through this offering and in connection to this offering.
(if applicable)
Upon completion of this offering the Company will have outstanding __________ shares of Common Stock, none of which will be readily available for sale, transfer, liquidation, conversion, etc.
At this time, the company does not have a shares issuing agent, and will issue shares directly to investors.
The Company, nor any of its officers or directors are presently a party to any material litigation, nor to the knowledge of management, is any material litigation threatened. To the best of the knowledge of the Officers and Directors, no investigations of felonies, misfeasance in office or securities investigations are either pending or threatened at the present time. None of the Officers and Directors of the Company have now, or had in the last five years any petition for bankruptcy, receivership, or a similar insolvency filed.
Legal matters in connection with the Shares offered herein will be addressed to the Company's legal counsel, as shown below:
The Company's Legal Counsel:
Sierchio Greco & Greco, LLP
199 Main Street Suite 706
White Plains, NY 10601
If the company increases in value, and thus experience an increasing share value, like any other growth company, if short-term gains are exercised, then that will trigger an individual tax burden. If only an initial investment were taken out then no tax consequences would occur until such an action by the investor occurred. Shares that appreciate in a company suffer no taxable event until such time as the investment is reduced or liquidated. Holding shares for the long term is a non-taxable event. The deferred tax will be taken out on the difference between the cost basis expressed in relation to the appreciated value of the shares. The difference between these two values will be taxed as unearned taxable income.
All of the material factors either adverse or positive for the Company have been discussed previously. Events that randomly occur cannot be assessed until such time as they might occur. Such things as an unexpected reduction in disease, war, large-scale tragedies etc are both unpredictable and uncertain.
Each investor who invests in the Company will be provided with this document, the subscription agreement, the Investor's (Purchaser) Questionnaire & Qualification, and the cover "Investor's Letter". In addition, if investors invest in the Company, they will be provided with a stock certificate testifying to their owning stock in the Company, which certificate to be provided by the Company, or its authorized agent.
Every investor of record will be advised immediately if the Company becomes a public company, and they will be advised as to the availability of liquidity of their investment.
1st ELECTRIC VEHICLE CORP.
Subscription Procedure
Please answer all questions. If the answer is "none" or "not applicable," please so state.
INFORMATION REQUIRED OF EACH PROSPECTIVE INVESTOR:
Name:_____ _______ ______ _______________ Age:______________
Social Security Number:_______________ No. of Dependents:________
Marital Status:_____ _______ ______ ________ Citizenship:______________
Residence Address and Telephone Number:
__________ ______ ____ __________ ______ ____ ____
State in which you:
Are licensed to drive?_____ _______ ______ _______
Are licensed to vote? _____ _______ ______ _______
Are registered to vote?_____ _______ ______ ______
File income tax returns?____________________
Employer and Position:__________ ______ ____ ________________
Each prospective investor for the shares will be required to complete, execute and
return to the Company the following documents included with the Offering:
1. SUBSCRIPTION AGREEMENT: Complete all the open lines, date and sign where indicated.
PURCHASER QUESTIONNAIRE: Complete, date and sign the Purchaser Questionnaire attached to the Subscription Agreement. All questionnaire items must be completed.
Return
the completed forms with payment in full by check of $_____ per Share
subscribed for (_____) shares or $_________ investment), payable to
"_______________" The subscription amount, Subscription Agreement and
Purchaser Questionnaire should be returned to
__________ ______ ____ __________ ______ ____ ______________, __________ ______ ____ __________ ______ ____ _______________.
SUBSCRIPTION AGREEMENT
(Insert
Company Name
Address)
Gentlemen:
The undersigned is writing to advise you of the following terms and conditions under which the undersigned hereby offers to subscribe (the "Offer") for shares of Common Stock, ("Common Stock"), of _____ _______ ______ ________, (the "Company"). The Company may issue up to _____ _______ ______ _______ shares of Common Stock in this offering. The offering is being conducted on a "best efforts" basis, and completion of this offering is not subject to the purchase of a minimum number of shares of Common Stock by investors. The maximum offering is for __________ ______ ____ ___ Dollars (USD$__________).
Subscription
Subject to the terms and conditions hereinafter set forth in this Subscription shares of Agreement, the undersigned hereby offers to purchase Common Stock for an aggregate purchase price of $____________.
If the Offer is accepted, the shares of Common Stock shall be paid for by the delivery of $_____________ by cash, check or money order payable to the order of ___________________, which is being delivered contemporaneously herewith.
Conditions to Offer.
The Offering is made subject to the following conditions: (i) that you shall have the right to accept or reject this Offer, in whole or in part, for any reason whatsoever; (ii) that the undersigned agrees to comply with the terms of this Subscription Agreement and to execute and deliver any and all further documents necessary to become a shareholder in the Company; and (iii) this offering will terminate on ____________________, unless extended by the Company.
Acceptance of this Offer shall be deemed given by the countersigning of this Subscription Agreement on behalf of the Company.
Representations and Warranties of the Undersigned.
The undersigned, in order to induce the Company to accept this Offer, hereby warrants and represents as follows:
(A) The undersigned has sufficient liquid assets to sustain a loss of the undersigned's entire investment.
(B) (i) The undersigned represents that he (or she) is an Accredited Investor as that term is defined in Regulation D promulgated under the Securities Act of 1933, as amended (the "Act"). In general, an "Accredited Investor" is deemed to be an institution 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 spouse or (ii) The undersigned, alone or together with his purchaser representative, has significant knowledge and experience in financial matters to evaluate the merits and risks of an investment in the Shares and is able to bear the economic risk of the investment. The foregoing suitability standards may be altered or waived by the Company, in its sole discretion, as to any particular investor, without notice of any kind.
(C) The Company has not made any other representations or warranties to the undersigned with respect to the Company or rendered any investment advice except as contained herein or in the Company's Offering.
(D) The undersigned has not authorized any person or institution to act as his Purchaser Representative (as that term is defined in Regulation D of the General Rules and Regulations under the Act) in connection with this transaction. The undersigned has consulted with such independent legal counsel or other advisors as he has deemed appropriate to assist the undersigned in evaluating his proposed investment in the Company.
(E) The undersigned represents that he (i) has adequate means of providing for his current financial needs and possible personal contingencies, and has no need for liquidity of investment in the Company; (ii) can afford (a) to hold unregistered securities for an indefinite period of time in the event the jurisdiction of the undersigned's domicile restricts disposition of unregistered securities and (b) sustain a complete loss of the entire amount of the subscription; and (iii) has not made an overall commitment to investments which are not readily marketable which is disproportionate so as to cause such overall commitment to become excessive;
(F) The undersigned has been afforded the opportunity to ask questions of, and receive answers from the officers and/or directors of the Company acting on its behalf concerning the terms and conditions of this transaction and to obtain any additional information, to the extent that the Company possesses such information or can acquire it without unreasonable effort or expense, necessary to verify the accuracy of the information furnished; and has availed himself of such opportunity to the extent he considers appropriate in order to permit him to evaluate the merits and risks of an investment in the Company. It is understood that all documents, records and books pertaining to this investment have been made available for inspection, and that the books and records of the Company will be available upon reasonable notice for inspection by investors during reasonable business hours at its principal place of business.
(G) The undersigned acknowledges that the Common Stock has not been registered under the Act in reliance on an exemption for transactions by an issuer not involving a public offering, and further understands that the undersigned is purchasing the Common Stock without being furnished any prospectus setting forth all of the information that would be required to be furnished under the Act.
(H) The undersigned further acknowledges that this offering has not been passed upon or the merits thereof endorsed or approved by any state or federal authorities.
(I) The Common Stock being subscribed for is being acquired solely for the account of the undersigned for personal investment and not with a view to, or for resale in connection with, any distribution in any jurisdiction where such sale or distribution would be precluded. By such representation, the undersigned means that no other person has a beneficial interest in the Common Stock subscribed for hereunder, and that no other person has furnished or will furnish directly or indirectly, any part of or guarantee the payment of any part of the consideration to be paid to the Company in connection therewith. The undersigned does not intend to dispose of all or any part of the Common Stock except in compliance with the provisions of the Act and applicable state securities laws and understands that the Common Stock is being offered pursuant to a specific exemption under the provisions of the Act, which exemption(s) depends, among other things, upon the compliance with the provisions of the Act.
(J) The undersigned understands that sales of the Common Stock may in certain jurisdictions be subject to restrictions imposed under securities laws of the applicable states. The undersigned further represents and agrees that the undersigned will not sell, transfer, pledge or otherwise dispose of or encumber the Common Stock except pursuant to the rules and regulations under applicable state securities laws, and prior to any such sale, transfer, pledge, disposition or encumbrance, the undersigned will, if requested, furnish the Company and its transfer agent with an opinion of counsel satisfactory to the Company in form and substance that registration under applicable state securities laws is not required.
(K) The undersigned hereby agrees that the Company may insert the following or similar legend on the face of the certificates evidencing shares of Common Stock if required in compliance with state securities laws:
"These securities have not been registered under any state securities laws and may not be sold or otherwise transferred or disposed of except pursuant to an effective registration statement under any applicable state securities laws, or an opinion of counsel satisfactory to counsel to the Company that an exemption from registration under any applicable state securities laws is available."
The undersigned certifies that each of the foregoing representations and warranties set forth in subsections (A) through (K) inclusive of this Section 3 are true as of the date hereof and shall survive such date.
Indemnification.
The undersigned understands that the Common Stock acquired as a result of the subscription right provided in Section 1 hereof is being offered without registration under the Act and applicable state securities laws and in reliance upon the exemption for transactions by an issuer not involving any public offering; that the availability of such exemption is, in part, dependent upon the truthfulness and accuracy of the representations made by the undersigned herein; that the Company will rely on such representations in accepting any subscriptions for the Common Stock and that the Company may take such steps as it considers reasonable to verify the accuracy and truthfulness of such representations in advance of accepting or rejecting the undersigned's subscription. The undersigned agrees to indemnify and hold harmless the Company against any damage, loss, expense or cost, including reasonable attorneys' fees, sustained as a result of any misstatement or omission on the undersigned's part.
Specific State Legends.
FOR RESIDENTS OF THE STATE OF : (INSERT STATE SPECIFIC PROVISIONS AS APPLICABLE HERE)
FOR RESIDENTS OF ALL STATES: THE SHARES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF CERTAIN STATES AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. THE INTERESTS ARE SUBJECT IN VARIOUS STATES TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SAID ACT AND SUCH LAWS PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE SHARES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OF ADEQUACY OF THE OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
No Waiver.
Notwithstanding any of the representations, warranties, acknowledgments or agreements made herein by the undersigned, the undersigned does not thereby or in any manner waive any rights granted to the undersigned under federal or state securities laws.
Revocation.
The undersigned agrees that he shall not cancel, terminate or revoke this Subscription Agreement or any agreement of the undersigned made hereunder other than as set forth under Section 4 above, and that this Subscription Agreement shall survive the death or disability of the undersigned.
Termination of Subscription Agreement.
If the Company elects to cancel this Subscription Agreement, provided that it returns to the undersigned, without interest and without deduction, all sums paid by the undersigned, this Offer shall be null and void and of no further force and effect, and no party shall have any rights against any other party hereunder.
Miscellaneous.
(A) All notices or other communications given or made hereunder shall be in writing and shall be mailed by registered or certified mail, return receipt requested, postage prepaid, to the undersigned at his address set forth below and to __________ ______ ____ __ __________ ______ ____ __________ ______ ____ ______________
(B) This Subscription Agreement constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and may be amended only by a writing executed by all parties.
(C) The provisions of this Subscription Agreement shall survive the execution thereof.
10. Certification.
The undersigned certifies that he has read this entire Subscription Agreement and that every statement on his part made and set forth herein is true and complete.
IN WITNESS WHEREOF, the undersigned has executed this Subscription Agreement on the date his signature has been subscribed and sworn to below.
The Shares are to be issued in (check one box):
Print Name of Investor
individual name Print Name of Joint Investor
(If applicable)
joint tenants with
rights of survivorship _____ _______ ______ ________
Signature of Investor
tenants in the entirety
corporation (an officer must sign) _____ _______ ______ ________
Signature of Joint Investor
partnership (all general partners must sign
Accepted as of the ___________ day of _____________, 200__
(Insert Company Name)
By: __________ ______ ____ _
Authorized Officer
PURCHASER QUESTIONNAIRE
Gentlemen:
The information contained herein is being furnished to the Company in order that it may determine whether offers of subscriptions for the Common Stock may be made to me. I understand that the information is needed for you to determine whether you have reasonable grounds to believe that I am an Accredited Investor as that term is defined in Regulation D promulgated under the Act, or am otherwise qualified to make an investment in the Company in accordance with the investment standards established by the Company, and that I have such knowledge and experience in financial and business matters that I am capable of evaluating the merits and risks of the proposed investment in the Company. I understand that (a) you will rely on the information contained herein for purposes of such determination, (b) the Common Stock will not be registered under the Act in reliance upon the exemptions from registration afforded under the Act, (c) the Common Stock will not be registered under the securities laws of any state in reliance upon similar exemptions, and (d) this questionnaire is not an offer to purchase the Common Stock in any case where such offer would not be legally permitted.
Information contained in this questionnaire will be kept confidential by the Company and its agents, employees or representatives. I understand, however, that the Company may have the need to present it to such parties as it deems advisable in order to establish the applicability under any federal or state securities laws of an exemption from registration.
In accordance with the foregoing, the following representations and information are hereby made and furnished
5. Business Address and Telephone Number:__________ ______ ____ ___
6. Business or professional education and the degrees received are as follows:
School Degree Year Received
7. (a) Individual income during 200__: ______$ 50,000- $100,000
(exclusive of spouse's ______$100,000- $200,000
income) ______ over $200,000
(b) Individual income during 200__: ______$ 50,000- $100,000
(exclusive of spouse's ______$100,000- $200,000
income) ______ over $200,000
(c) Estimated income during 200__: ______$ 50,000- $100,000
(exclusive of spouse's ______$100,000- $200,000
income) ______ over 200,000
(d) Joint income, with spouse, ______$100,000- $300,000
during 200__ ______ over $300,000
(e) Joint income, with spouse, ______$100,000- $300,000
during 200__ ______ over $300,000
(f) Estimated joint income, ______$100,000- $300,000
with spouse, for 200__ ______ over $300,000
8. Estimated net worth ______ over $1,000,000
(may include joint net
worth with spouse)
Are you involved in any litigation, which, if an adverse decision occurred, would materially affect your financial condition? Yes______ No______ If yes, please provide details:
I consider myself to be an experienced and sophisticated investor or am advised by a qualified advisor, all as required under the various securities laws and regulations: Yes______ No______
I understand the full nature and risk of an investment in the Common Stock, and I can afford the complete loss of my entire investment. Yes______ No______
1 am able to bear the economic risk of an investment in the Common Stock for an indefinite period of time and understand that an investment in the Common Stock is illiquid. Yes______ No______
I further understand that should I exercise my right to acquire the Common Stock, I will be required to agree not to dispose of the Common Stock except in compliance with the Act or any other conditions contained in the accompanying Subscription Agreement. Yes______ No______
Have you participated in other private placements of securities? Yes______ No______
I understand that the Company will be relying on the accuracy and completeness of my responses to the foregoing questions and I represent and warrant to the Company as follows:
(i) The answers to the above questions are complete and correct and may be relied upon by the Company whether the offering in which I propose to participate is exempt from registration under the Act and the securities laws of certain states;
(ii) I will notify the Company immediately of any material change in any statement made herein occurring prior to the closing of any purchase by me of an interest in the Company; and,
(iii) I have sufficient knowledge and experience in financial and business matters to evaluate the merits and risks of the prospective investment; I am able to bear the economic risk of the investment and currently could afford a complete loss of such investment.
IN WITNESS WHEREOF, I have executed this Purchaser Questionnaire this _______day of _________ , 200__, and declare that it is truthful and correct to the best of my knowledge.
Signature of Prospective Investor
Signature of Prospective Investor
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