UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 15, 2006
Sunrise USA, Incorporated
(Exact name of registrant as specified in its charter)
Nevada
(State or Other Jurisdiction of Incorporation)
000-50370
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33-1041835
|
|
(Commission File Number)
|
(IRS Employer Identification Number)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
▣ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
▣ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14-12)
▣ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17CFR 240.14d-2(b))
▣ Pre-commencement communications pursuant to Rule 13-e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Pursuant to the Exchange Agreement, Sunrise (i) exchanged Twenty Four Million Seven Hundred Fifty Thousand (24,750,000) shares of its common stock for all of the issued and outstanding capital stock of Pukka, (ii) issued One Million Six Hundred Fifty Thousand (1,650,000) shares of its common stock to Legend Merchant Group, Inc. and (iii) issued Four Million Six Hundred Thousand (4,600,000) shares of its common stock to the holders of warrants for the purchase of Pukka common stock upon the exercise of the warrants at Closing. As a result of the Acquisition, the Pukka equity holders own approximately Ninety-Three and 87/100 percent (93.87%) of the issued and outstanding shares of Sunrise common stock.
In connection with the Acquisition, all directors and officers of Sunrise resigned and new directors and officers designated by Pukka were appointed.
Prior to the Acquisition, Sunrise was a blank check company as defined in Section 7(b)(3) of the Securities Act of 1933 (“Securities Act”). Sunrise is also a shell company as defined in Rule 12b-2 of the Securities Exchange Act of 1934 (“Exchange Act”). Pursuant to Item 2.01(f) of Form 8-K, we are required to include in this Report the information that we would be required to provide if we were filing a general form for registration of securities on Form 10-SB. This information is set forth below in this Item 2.01 and is organized in accordance with the Items set forth in Form 10-SB.
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FORM 10-SB PART I
Item 1. Description of Business.
The Company
Following the Acquisition, the consolidated group consists of Sunrise, Pukka, the principal operating subsidiary, and Red Iron Group, LLC (“RIG”), a consolidated affiliated company of Pukka. Pukka will be treated as the accounting parent of the consolidated group.
Pukka was originally formed as Pukka USA, LLC, a Utah limited liability company, on November 21, 2002. The LLC form of ownership was statutorily converted under Utah law to a Utah corporation, on February 2, 2006.
RIG is a Utah limited liability company commonly controlled by the shareholders and management of Pukka, and is included in the accompanying financial statements as a consolidated affiliate. RIG was formed on April 23, 2003.
Sunrise was incorporated on July 22, 1999 in the State of Nevada as a wholly-owned subsidiary of U.S.A. Sunrise Beverages, Inc., a South Dakota Corporation, and was distributed pare pa su to the shareholders thereof on September 20, 2000.
The accompanying audited consolidated financial statements for the years ending December 31, 2005 and 2004 include the accounts of Pukka USA LLC and its affiliated company RIG for all periods presented.
The accompanying unaudited condensed consolidated financial statements and the pro forma unaudited condensed consolidated financial information all for the six months ending June 30, 2006 include the accounts of Pukka and RIG for all periods presented. The pro forma unaudited condensed consolidated financial information includes the pro-forma effect of the Acquisition had the Acquisition closed as of June 30, 2006.
The Business
Pukka manufactures and distributes recreational electric vehicles and develops electric motor technologies for use in electric motorized vehicles.
Products
The Company’s revenue has been derived from the sale of an electric mini-bike known as the Pukka GX400C. Sales of this product, though originally strong, have declined from $885,046 in 2004 to $231,151 in 2005 and have continued to decline further in 2006. The decline was brought about by the imposition of restrictions by various state and local authorities on the use of unlicensed motorized vehicles on public roads and streets. Though there is no restriction on the use of these products on private property, public roadway restrictions limit their usefulness and serve to reduce the market for products of this type.
Proprietary technology
Pukka’s developing technologies include three (3) provisional patents and one (1) non-provisional patent filed with the U.S. Patent
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(i) a maximum efficiency control device (“MEC”) that will allow an electric motor to run more efficiently by operating at or near it peak operating limit for a higher percentage of total operating time filed on December 1, 2005,
(ii) a hydraulic regenerative braking system (“HRB”) for capturing a moving vehicle’s kinetic energy for use in braking or battery recharging filed on November 3, 2005 and an update on December 12, 2005,
(iii) an integrated extended range propulsion system (“ERT”) linking three drive motors to the same transmission filed on November 3, 2005, and
(iv) a split-rim wheel (“Split-Rim”) that encapsulates a multi-speed planetary gear type transmission for light vehicles having small diameter wheels and small motors filed on October 4, 2004.
All of the foregoing patents were applied for by one or more of Pukka’s founders in 2004 and 2005, and were assigned to Pukka on December 15, 2005.
Competition
Pukka faces intense competition throughout the world for its products and technologies from current manufacturers of two-wheeled vehicles and automobiles as well as from new emerging vehicle manufacturers. On the market today throughout the world there are many reasonable-quality, low-cost, light gasoline-powered vehicles that have proven popular, such as scooters from Kymco and Honda as well as multiple brands from Chinese manufacturers. While the market is growing rapidly, we believe that room exists for additional products, especially high-technology, premium-quality products. Since we believe that cost will be an important factor in gaining market acceptance of any of our products, we intend to manufacture our products in Asia in order to hold down our manufacturing costs.
We will also face heavy competition from both domestic and international companies in terms of commercializingeither on our own or by a licensing arrangement with a car companymicro automobiles that incorporate our proprietary technologies. The Smart Car brand from Europe is a likely competitor or licensee in the micro-car market. GEM, a division of Daimler Chrysler, is another potential competitor or licensee in the micro-car market. Reva, a micro electric car manufactured in India, could be another potential competitor or licensee. Virtually all major car companies are now selling multiple models of hybrid vehicles and all of these companies are continuing in their development efforts towards new hybrid technologies. These companies have greater financial, engineering, manufacturing, and marketing resources than we do. In addition, we face competition from smaller emerging companies that may be focusing their development efforts on technologies similaror even superiorto ours. We are not aware of any of these companies
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Distributing Our Products
We intend to distribute our two-wheeled vehicles through our direct and indirect relationships with motor sports vendors as well as through retail stores. Since 2002, Pukka has established direct relationships with numerous motor-sports vendors in the United States and Canada. Through relationships with manufacturer representative groups we have also established indirect relationships with thousands of additional dealers in the United States and internationally. In addition, we have an ongoing relationship with the Army and Air Force Exchange Serviceone of the largest retailers in the worldwhich sells our products through its system of “PX” stores. Furthermore, one of Pukka’s goals is to develop its technology so as to incorporate it into automobiles for licensing to automobile manufacturers.
Manufacturing
None of our products will incorporate components that we believe will pose sourcing problems. Our primary manufacturing partner is Nortek (Macao Commercial Offshore) Limited (“Nortek”), a company with multiple manufacturing facilities in southeast China. We consider Nortek a close partner and ally since 2002, having built a mutual level of respect and trust. Nortek is the sole manufacturer of Pukka’s current line of products and its principal is an equity holder in Pukka.
Research and Development
Since 2002, the founders have invested more than three years of full-time labor in developing the company’s catalog of intellectual properties as well as its distribution network and manufacturing relationships. However, the Company continues to require additional funding to support its ongoing development of our technologies. In fact, several of our technologies are at early stages of development and require further work before completion. If we fail to invest in research and development, our products could become less competitive and less attractive.
Governmental Regulations
Vehicles intended for use on public roadways must satisfy regulations implemented by the United States Department of Transportation (“DOT”) and by the corresponding agencies in other countries.
Our vehicles are also subject to environmental regulations. In the United States, the Environmental Protection Agency has implemented new engine emissions standards that will go into effect during 2006. It will be difficult, and in many cases impossible, for two-stroke engines to meet these standards. These new standards present a competitive advantage for us, since two-stroke engines power many of our competitors’ light vehicles. None of our products are intended to be powered by two-stroke engines.
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We face intense competition from larger
and financially stronger competitors
We face intense competition for our products and technologies throughout the world from manufacturers of two-wheeled vehicles and automobiles as well as emerging manufacturers. Our competitors are larger, are better financed and have access to existing technologies and production, distribution and financing sources unavailable to us.
We will need additional funding to continue
developing our technology and marketing our products.
The Company requires additional funding to achieve the goals stated in our business plan. In particular, we will need working capital to support continued development of our technologies. If we fail to invest in research and development, our products could become less competitive and less attractive. If we cannot borrow money to cover these costs, we will need to raise additional equity funding. During the past few years the equity and debt securities markets have fluctuated significantly and offerings of those securities have been difficult to complete. As a result, in the future, we may not be able to achieve the additional financing required to fund our operations and investments in research and development. Even if we are able to obtain additional financing, such funding may not be available on favorable terms. A lack of funds on favorable terms could have a material adverse effect on our business, financial condition, and operating results.
We are not generating significant revenues,
and we anticipate losses for the immediate future.
Sunrise was classified as a shell company and, as such, has had little or no revenues or assets during the past few years. Pukka is not yet generating significant revenues, and we do not expect it to become profitable for some time. During the year ended December 31, 2005, Pukka generated revenues of $231,151 and had a net loss of $52,469 (which compares to revenues of $885,046 and net profits of $47,496 for the year ended December 31, 2004). We currently anticipate that cash expenditures during the next 24 months will exceed our operating revenues. If acceptance of our products is slower than we expect, we will incur a larger loss than expected
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We have a limited number of manufacturers.
Due to our limited resources our products are manufactured by a single source. This manufacturer is able to meet our current needs and manufacture desired quantities on a timely basis. If our relationship with this manufacturer was to be discontinued or our needs were to increase, there can be no assurance that this manufacturer could provide the desired quantities of our products or that we would be able to obtain additional reliable manufacturers on a timely and economic basis.
Future sales of our products depend
on whether consumers embrace them.
Our financial success will depend largely on whether we are able to quickly and successfully establish, maintain, and then increase sales of our products. We have assumed that there is a substantial and growing consumer demand for light electric vehicles and other vehicles that offer dramatic fuel efficiencies. To date, we have not commenced retail distribution of our new products. Therefore, we can give no assurances that these products will achieve market acceptance or that such acceptance will occur in a timely manner.
We may experience delays in launching our products.
We may experience delays in bringing our new models to market due to development, manufacturing, or distribution problems. Such delays could adversely affect our ability to capture any meaningful share of the market, could decrease anticipated revenues and could increase our need for additional working capital.
Our business is subject to economic, political,
and other risks associated with international operations.
Our business is subject to risks associated with doing business internationally. Our contract manufacturer’s headquarters and factory are located in China. As a result, we are subject to risks due to changes in foreign currency exchange rates, changes in political or economic conditions, trade-protection measures, import or export licensing requirements, delays in shipping of our product caused by terrorism, potential labor activism, or inclement weather overseas, difficulty in managing widespread manufacturing operations, and less effective protection of intellectual property. China has been faced with political instability in the past and such instability may recur in the future. Such a recurrence could have a material adverse effect on our business.
We may be unable to obtain trademarks and patents
protecting our proprietary technology and assets.
Our ability to compete and operate successfully depends in part on our creating, developing, licensing, or acquiring proprietary technology. For us to operate effectively, this technology needs to be protected. We rely primarily on patent,
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We may be unable to effectively protect our
intellectual assets and proprietary technology
As part of our standard confidentiality procedures we enter into non-disclosure agreements with our employees and consultants. Despite these precautions, other persons could copy or otherwise obtain and use our technology without authorization, or independently develop similar technology.
In addition, effective protection of intellectual property rights is unavailable or limited in certain foreign countries. We cannot assure you that the protection afforded our proprietary rights will be adequate or that our competitors will not independently develop similar technology, duplicate our products and services or design around any patents or other intellectual property rights we hold. Infringement of our intellectual property rights could result in lost revenue opportunities.
We may be subject to claims that we have infringed
the proprietary rights of others.
Although we do not believe that any of our products infringe the proprietary rights of others, we can give no assurances that infringement or invalidity claims (or claims for indemnification resulting from infringement claims) will not be asserted or prosecuted against us, or that any such assertions or prosecutions will not materially adversely affect our business. Regardless of whether any such claims are valid or can be successfully asserted, defending such claims could cause us to incur significant costs and could divert resources away from our other primary business activities. In addition, the assertion of infringement claims could result in court ordered injunctions that prevent us from distributing our products. If any claims or actions are asserted against us, we may seek to obtain a license to the intellectual property rights that are in dispute. Such a license may not be available on reasonable terms, if at all.
Our growth could strain our resources.
We expect to grow at a rate that will place a significant strain on our managerial, operational, and financial resources. To manage this growth, we would have to develop and install operational and financial systems, as well as hire, train, and manage new scientists, engineers and other employees, in addition to independent consultants. Our success depends upon our ability to attract, retain, and motivate key employees, including those in managerial, engineering, marketing, and other roles. We can give no assurances that we will be able to locate and hire the individuals we will need as our business grows.
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The U.S. market for light electric vehicles and hybrid vehicles is in its infancy. As a result, we may be subject to risks that we have not foreseen or fully appreciated. We are subject to all the risks inherent in a small company seeking to develop, market, and distribute new products. The likelihood of our succeeding must be considered in light of the problems, expenses, difficulties, complications, and delays frequently encountered in connection with developing, introducing, marketing, and distributing new products or services in a competitive environment. We cannot guarantee that we will achieve our goals or meet our projections.
Fluctuation in world oil prices may adversely affect us.
Consumer interest in ultra-fuel-efficient vehicles is driven largely by the price of oil and other fossil-based fuels, such as propane and liquid natural gas. If world supplies of these fuels unexpectedly increases, whether due to the discovery of new natural resources, increased refinery capacity, or new and improved supply distribution technologies, consumer interest in hybrid vehicle technologies could drop significantly.
Discovery or the invention of alternative energy sources
could adversely affect us.
The discovery or invention of other alternative energy sources could adversely affect our business. With world-wide interest in alternative transportation solutions on the rise, it is possible that new energy sources may be discovered or invented. Development of a low-cost, clean, and abundant energy source suitable for transportation-size vehicles could negatively affect our business.
Government-imposed restrictions could negatively affect us.
Our products are subject to government-imposed restrictions on use. If national, state, or local governments around the world impose significant restrictions on the use of light vehicles, our business and future prospects could be negatively affected. In fact, the market for our light electric vehicle, the GX400C, has recently decreased due to the passage of laws prohibiting the operation of our product without a license and other laws that prohibit motorized, unlicensed vehicles from operating on public roads.
Risk Factors Related To Our Common Stock and Its Value
There may be future dilution of our common stock
If we sell additional equity or convertible debt securities, those sales could result in additional dilution to our shareholders.
There is no public trading market for our common stock
There has never been any established trading market for our shares of common stock. Once the Securities and Exchange Commission has indicated to us that they have completed their review process, we intend to submit for quotation of our common stock on the OTC
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There may be State Blue-Sky law restrictions
on the resale of our common stock
Under the securities laws of certain states, shares of our common stock may be sold in those states only through registered or licensed brokers or dealers. In addition, in certain states the shares may not be able to be sold unless our common stock has been registered or qualified for sale in that state or an exemption from registration or qualification is available and is complied with.
Our common stock may be considered a penny stock
Broker-dealer practices in connection with transactions in “penny stocks” are regulated by certain penny stock rules adopted by the SEC. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system). It is highly likely that our common stock may be considered a penny stock under the SEC’s rules. Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. The broker-dealer must also make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes subject to the penny stock rules.
Sale of a substantial number of shares of our common stock may cause the
price of our common stock to decline
If our shareholders sell substantial amounts of our common stock in the public market, the market price of our common stock could fall. These sales may also make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate. At the time of this filing, only 367,187 shares of the total of 33,023,543 shares of our issued and outstanding common stock are freely tradable (by reason of a pre-Share Exchange Agreement registration filing by
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Our obligation to register shares of our common stock
may increase the number of shares available for public
trading subject to lock-up/leak-out restrictions
20,406,356 shares of our issued and outstanding common stock are covered by a registration rights agreement and will be freely tradeable upon effectiveness of a registration statement filed in accordance with the terms of such registration rights agreement. The registration rights agreement provides holders of the 20,406,356 shares with a “best efforts” covenant by the Company to register these shares within one year of the closing of the Share Exchange Agreement between Sunrise and Pukka, and it provides these holders with piggyback rights for certain other registration statements the Company voluntarily files. Upon filing of such a registration statement, the number of shares of our common stock available for public trading may increase to a level which may have a depressing effect on our stock price.
12,500,000 shares of the aforementioned 20,406,356 shares are subject to the terms of a lock-up/leak-out agreement pursuant to which the holders of these 12,500,000 shares have agreed to restrict their rights to sell, or otherwise dispose of, any common stock, options, warrants or convertible securities of the Company in accordance with the terms of such lock-up/leak-out agreement. The lock-up/leak-out agreement provides that holders of these 12,500,000 shares will not transfer their shares for a period of 60 days from the first day of a bid/ask market for the Company’s shares of common stock, unless otherwise provided. The lock-up/leak-out agreement permits a daily allotment of shares (in blocks of either 2,500 or 5,000 shares) to be sold by such shareholders, but restricts any sales of shares under the lock-up/leak-out agreement to be made only at the “offer” or “ask” price and in any event for not less than $1.00 per share. The lock-up/leak-out agreement further prohibits the holders of these 12,500,000 shares from engaging in any short selling of these shares. The restrictions imposed by the lock-up/leak-out agreement will terminate 18 months following the closing of the Share Exchange Agreement between Sunrise and Pukka (or earlier in the event of a control change of the Company as described in the lock-up/leak-out agreement).
Dependence on Key Management
The success of the Company depends, to a significant degree, upon the continued service of our management personnel and advisors, and the ability to attract, retain and motivate qualified engineers, research and development personnel, managerial and sales personnel. There can be no assurance that we will be able to retain existing employees or attract, retain and motivate highly- qualified personnel in the future.
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We currently have three (3) employees.
Reports to Security Holders
We are subject to the information and periodic reporting requirements of the Securities Exchange Act of 1934, and in accordance with the Securities Exchange Act of 1934, we file annual, quarterly and special reports, and other information with the SEC. These periodic reports and other information are available for inspection and copying at the SEC’s regional offices, or the SEC’s public reference facilities Washing, D.C. office, 450 Fifth Street, N.W., Washington, D.C. 20549, and on the SEC Internet site at www.sec.gov. You also may request a copy of these filings by writing us at 892 North 340 East, American Fork, UT 84003, or by calling us at(801) 756-5831.
Item 2. Management’s Discussion and Analysis or Plan of Operations
We are a technology company engaged in the development and marketing of electric powered vehicles and products. Our initial product is the GX400C electric mini-bike. A manufacturing company located in Yantian, China manufactured the GX400C for us. Sales of this product, though originally strong, have declined from $885,046 in 2004 to $231,151 in 2005 and have declined further in 2006. We believe the decline was brought about by the imposition of restrictions by various state and local authorities on the use of unlicensed motorized scooters on public roads and streets. Though there is no restriction on the use of these products on private property, public roadway restrictions limit their usefulness and serve to reduce the market for products of this type.
In 2005 our business effort was refocused and devoted principally to the development of our hybrid technology applications, which resulted in our four (4) filings with the U.S. Patent Office.
Results of Operations
We incurred a net loss of $52,469 for the year ended December 31, 2005 and a net loss of $625,024 for the unaudited six months ended June 30, 2006 including stock-based compensation expenses in the six months of $384,408. The stock-based compensation is based on issuing 10,650,000 shares of our common stock and granting warrants for the purchase of 3,600,000 shares of our common stock at a price of $0.001 per share.
Our $52,469 net loss for the year 2005 was in comparison to a net income of $47,496 for the year 2004. The loss was principally due to a decrease in the sale of our GX400C mini-bike. In addition, in 2005, our management invested their effort and our resources to the development of alternative hybrid technology products resulting in our patent filings.
Plan of Operations
During the period since inception of our business, November 2002 to June 30, 2006 we had incurred operating losses totaling $629,997. On June 30, 2006 we had a working capital deficiency of $169,484 and a stockholder’s deficit of $195,216.
The continuation of the Company as a going concern is dependent upon the continued financial support from our shareholders, our
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As of June 30, 2006, we had cash on hand of $16,085 and our liabilities totaled $240,198 with $117,669 owed to our principal executive officers and a shareholder.
Commercial Initiatives
We have four technologies for which we have made patent filings: (1) MEC, (2) HRB, (3) ERT, and (4) split-rim transmission. MEC (Maximum Efficiency Control) is a new paradigm in motor control circuitry. We have completed approximately 50% of the design of this circuitry. MEC is applicable for any size of electric/hybrid vehicle, ranging from two-wheel, scooter-type devices to large industrial vehicles. We expect MEC to be ready for commercialization in summer of 2007. HRB (Hydraulic Regenerative Braking) is a novel approach for making HRB systems relevant to small, three and four-wheeled commuter vehicles. HRB could be ready for commercialization as early as the fourth quarter of 2007 but will most likely be ready in 2008. ERT is a linkage technology that enables three separate drive motors to utilize the same power path into a CVT transmission. ERT is applicable to three and four-wheeled vehicles. ERT design cannot be implemented until MEC and HRB are at a later stage of development. Our split-rim transmission technology is ready for commercialization at any time and is applicable to two and three-wheeled vehicles. Commercialization of all of these technologies will require a substantial input of capital over the next twelve to twenty-four months.
Liquidity and Capital Resources
Since our founding, we have financed our operations from sales and through the sale of our equity securities to investors and from borrowings. We expect to finance operations through the sale of equity in the foreseeable future as we receive minimal revenue from our current business operations. There is no guarantee that we will be successful in arranging financing on acceptable terms.
We have raised equity capital through issuances of common stock and debt. During the six months ended June 30, 2006 we received proceeds of $140,000 from the issuance of common stock and a promissory note.
At June 30, 2006, we had $16,085 cash on hand. Our ability to raise additional capital is affected by trends and uncertainties beyond our control.
Our current operating funds are less than necessary for commercialization of our planned products, and therefore we will need to obtain additional financing in order to complete our business plan. We anticipate that up to $2,000,000 of additional working capital will be required over the next 12 months for market introduction of these products through joint venture partners or otherwise. We do not have sufficient cash on hand to meet these anticipated obligations.
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Pukka does not own any property, and rents office and storage space on a month-to-month basis. On June 15, 2006, Pukka entered into a 5 year lease for approximately 3,000 square feet of stacked office and 4,500 square feet of warehouse space located in Bluffdale Utah. Occupancy of the new premises is expected to occur in September, 2006.
Item 4. Security Ownership of Certain Beneficial Owners and Management
The following table indicates how many shares of our common stock were beneficially owned as of August 15, 2006, by (1) each person known by us to be the owner of more than 5% of our outstanding shares of common stock, (2) our directors, (3) our executive officers, and (4) our directors and executive officers as a group.
In general, “beneficial ownership” includes those shares a director or executive officer has sole or shared power to vote or transfer (whether or not owned directly) and rights to acquire common stock through the exercise of stock options or warrants that are exercisable currently or become exercisable within 60 days. Except as indicated otherwise, the persons named in the table below have sole voting and investment power with respect to all shares shown as beneficially owned by them. We based our calculation of the percentage owned on 33,023,543 shares outstanding on August ___, 2006. The address of each director, executive officer and certain beneficial owners is listed below:
Name and Address
|
Number of Shares |
Percent of Class |
Paul Ressler |
4,216,521 |
12.77% |
Leonard DuCharme |
3,916,521 |
11.86% |
Darren Jensen |
2,854,268 |
8.64% |
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Name and Address
|
Number of Shares |
Percent of Class |
Kripaitis & Associates, LLC (1)(2)(3) |
1,750,000 |
5.3% |
Peter Kristensen (2)(3) |
2,666,667 |
8.08% |
F. Briton McConkie, Jr. (2)(3) |
2,666,667 |
8.08% |
Passport Financial, LLC (2)(3) |
2,666,666 |
8.08% |
Legend Merchant Group, Inc. (2) |
1,650,000 |
5.0% |
Christopher Giordano (3)(4) |
1,811,846 |
5.49% |
All officers and directors as a |
10,987,310 |
33.27% |
_____________________________
(1) | Includes 500,000 shares owned by Ann Marie Kripaitis, the mother of Ray Kripaitis, president of Kripaitis & Associates, LLC. |
|
(2) | These shares are subject to registration pursuant to a Registration Rights Agreement entered into among Sunrise and certain shareholders on June 7, 2006. See Part III Item 2. |
|
(3) | Resale of these shares is limited by a Lock-Up/Leak-Out Agreement entered into among Pukka and certain shareholders. See Part III Item 2. | |
(4) | (1) Includes 3,159 shares of Sunrise’s common stock owned by Mr. Giordano’s mother and non-resident minor children and 1,011,843 shares of Sunrise’s common stock owned by Birchwood Capital Advisors Group, Inc., a company wholly-owned by Mr. Giordano. |
Name
|
Age
|
Position |
Leonard DuCharme |
47 |
Director and CEO |
Darren Jensen |
43 |
Director, Secretary and Treasurer |
Paul Ressler |
40 |
Director, President and COO |
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PAUL RESSLER. In February 2006, Mr. Ressler joined our Board of Directors and became our President and Chief Operating Officer. From November 2002 through January 2006, Mr. Ressler was a Manager and co-founder of our predecessor entity, Pukka USA LLC. Since 2001, Mr. Ressler has focused his attention to the light electric vehicle market. He was the co-founder of RDR Global, the manufacturer of the MyGo, and highly instrumental in developing its relationship with Razor USA, who sells the product under the XLR8R brand. Mr. Ressler currently serves on the board of trustees of the Top Flight Fund (TOPFX) an open-end, no-load mutual fund.
Committees
We do not have any standing audit committee. We also do not have standing nominating, or compensation committees of the Board of Directors. The fact that we only have three directors and executive officers, we believe that we are able to effectively manage the issues normally considered by such committees.
Item 6. Executive Compensation
The following table discloses the compensation we paid to our senior executive officers, in the six months ending June 30, 2006 and during the 3 preceding fiscal years.
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SUMMARY COMPENSATION TABLE
Name and Principal Position |
Year |
Annual Compensation |
Long Term Compensation |
All Other Compensation
($) |
||||
Salary |
Bonus
($) |
Other Annual Compensation
($) |
Restricted Stock Awards
($) |
Securities Underlying Options/
SARs (#) |
LTIP Payouts ($)
|
|||
Leonard DuCharme |
2006 |
54,000 |
-
- - - |
-
- - - |
-
- - - |
-
- - - |
-
- - - |
-
- - - |
Darren Jensen |
2006 |
45,000 |
-
- - - |
-
- - - |
-
- - - |
-
- - - |
-
- - - |
-
- - - |
Paul Ressler |
2006 |
54,000 |
-
- - - |
-
- - - |
-
- - - |
-
- - - |
-
- - - |
-
- - - |
None of our employees have employment agreements.
Item 7. Certain Relationships and Related Transactions.
Leonard DuCharme, Paul Ressler, Darren Jensen, and Cary Peterson are the owners of Red Iron Group LLC (“RIG”). RIG is a distributor similar to other distributors of Pukka products. In accordance with the terms of this program RIG maintains a dealer network, purchases product at distributor cost, and resells to dealers.
Wayne DuCharme is brother to our director and Chief Executive Officer, Leonard DuCharme. Wayne DuCharme is a Pukka shareholder and one of our retailers in Tacoma, WA. Mr. DuCharme is a dealer under our standard distributor and dealer agreement and does not have any exclusive or any other special arrangement outside this program. In accordance with the terms of this program he purchases product at dealer cost and resells product to customers.
Peter Kristensen, F. Briton McConkie, Jr. and Passport Financial, LLC were issued 2,666,667, 2,666,667 and 2,666,666 shares of Pukka common stock, respectively, in consideration for consulting services rendered to Pukka through March 2006. The accompanying financial statements for the six months ended June 30, 2006, include stock-based compensation expense of $72,533 apiece.
Birchwood Capital Advisors, Inc. (“Birchwood”) and the Company entered into a consulting services agreement on January 1, 2006 for consulting services rendered and to be rendered through January 1, 2007. In consideration for their services Birchwood
17
Legend Merchant Group, Inc. (“Legend”) and the Company have entered into a consulting services agreement on April 1, 2006 for consulting services rendered and to be rendered through April 1, 2008. In consideration for their services Legend received 1,650,000 shares of common stock. The accompanying financial statements for the six months ended June 30, 2006, include stock-based compensation expense of $44,880.
There were no material transactions, or series of similar transactions, during the period ended June 30, 2006, or our last two calendar years ended December 31, 2005, and 2004, or any currently proposed transactions, or series of similar transactions, to which we or any of our subsidiaries was or is to be a party, in which the amount involved exceeded $60,000 and in which any director, executive officer or any security holder who is known to our Company to own of record or beneficially own more than five percent of any class of our common stock, or any member of the immediate family of any of the foregoing persons, had an interest.
Item 8. Description of Securities
Authorized and Outstanding
Sunrise’s authorized capital stock consists of 99,000,000 shares of common stock, par value $.0001 per share and 1,000,000 shares of preferred stock, par value $.0001 per share. As of date of this Report, there were issued and outstanding 33,023,543 shares of common stock and -0- shares of preferred stock. The following table summarizes the number of the Company’s shares of common stock, which are subject to restrictions and the number that have been granted rights to registration and are subject to leak-out restrictions.
As of the Date |
|
|
|
|
|
Total shares of common stock issued |
33,023,543 |
============== | |
|
|
Shares available for resale without |
367,187 |
|
|
Shares which may be sold only |
32,656,356 |
|
|
Shares which are subject to SEC’s |
2,656,356 |
|
|
Shares subject to registration rights |
20,406,356 |
|
|
Shares subject to the Lock-Up/Leak- |
12,500,000 |
18
In his request, Mr. Worm had referred to several situations in which non-affiliate stockholders of blank check or shell companies had sought to treat their shares as free trading or unrestricted securities. As defined in the Wulff Letter, a blank check or shell company is "a development stage company that has no specific business plan or purpose or has indicated its business plan is to engage in a merger or acquisition with an unidentified company or companies, or other entity or person." Sunrise is a blank check and/or shell company as contemplated by the Wulff Letter.
The Wulff Letter stated that promoters and affiliates of blank check or shell companies, as well as transferees of their securities, are "underwriters" with respect to such securities. Accordingly, transactions in these companies' securities by promoters, affiliates or their transferees do not fall within the scope of the Rule 144 "safe harbor" resales . . . or the Section 4(1) exemption from registration for resales under the Securities Act."
As a result, it is the position of the Securities and Exchange Commission that these securities may be resold by these persons only pursuant to registration under the Securities Act. According to the Wulff Letter, this restriction would continue to apply even after the blank check or shell company completes a merger or acquisition transaction with an operating entity. Messrs Omar Barrientos and Christopher Giordano are “affiliates” of Sunrise, as contemplated by the Wulff Letter, and have agreed that neither they nor their affiliates will publicly resell their securities without registration under the Securities Act.
(2) See Part III Item 2.
(3) Includes shares subject to Wulff letter restrictions.
(4) These shares are subject to the registration rights agreement.
Common Stock
Voting Rights
Holders of Sunrise common stock have the right to cast one vote for each share of stock in their name on the books of our company, whether represented in person or by proxy, on all matters submitted to a vote of holders of common stock, including
19
Preemptive Rights
Holders of Sunrise’s common stock are not entitled to preemptive rights, and no redemption or sinking fund provisions are applicable to our common stock. All outstanding shares of our common stock are fully paid and non-assessable.
Reverse Stock Split
On February 15, 2006, shareholders owning a majority of Sunrise’s issued and outstanding shares approved in writing a reverse split of our issued and outstanding common stock at the rate of one new share for thirty eight existing shares. This reverse stock split was effective on March 23, 2006 upon the filing of an amendment to Sunrise’s Articles of Incorporation with the State of Nevada. The par value of the common stock remained at $0.0001 per share.
2005 Stock Option Plan
On February 15, 2006, Sunrise implemented its 2005 Stock Option Plan (the “Plan”). The Plan reserves 250,000 shares of Sunrise’s unissued common stock for issuance in accordance with the terms of the Plan. Initial grants pursuant to the plan include two (2) grants for the purchase of a total of 212,000 shares effective upon the Effective Date of the Plan. As of the date of this Report, the initial grants were exercised in full, and there remain no options outstanding under the Plan, and 38,000 shares are available for future grant.
20
FORM 10-SB PART II
Item 1. Market Price Of And Dividends On The Registrants Common Equity And Other Shareholder Matters
As of the date of this Report, there is no established trading market for our common stock. As of August 15, 2006, the number of shareholders of record of our issued and outstanding common stock was 33,023,543. We have no shares preferred stock issued and outstanding.
We have not paid any cash dividends on our common stock to date, and we have no intention of paying cash dividends in the foreseeable future. Whether we declare and pay dividends will be determined by our board of directors at their discretion subject to certain limitations imposed under Nevada law. The timing, amount and form of dividends, if any, will depend on, among other things, our results of operations, financial, financial condition, cash requirements and other factors deemed relevant by our Board of Directors.
The transfer agent for our common stock is Signature Stock Transfer Company.
Item 2. Legal Proceedings
During the past five years, no present or former director, executive officer or person nominated to become a director or an executive officer of ours:
(1) was a general partner or executive officer of any business against which any bankruptcy petition was filed, either at the time of the bankruptcy or two years prior to that time;
(2) was convicted in a criminal proceeding or named subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
(3) was subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or
(4) was found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.
Item 3. Changes In and Disagreements With Accountants
None.
21
Name and Relationship |
Date Acquired |
Aggregate |
Aggregate |
|
|||
|
|
|
|
Issued for Services |
|
|
|
Stock Options under the 2005 |
March 24, 2006 |
212,000 |
$ 40,000 |
Peter Kristensen, Brit McConkie |
March 1, 2006 |
8,000,000 |
$ 217,600 |
Legend Merchant Group, Inc., |
April 7, 2006 |
1,650,000 |
$ 44,880 |
Transcontinental Media, Ltd.; |
April 10, 2006 |
3,600,000 |
$ 94,320 |
Birchwood Capital Advisors |
January 1, 2006 |
1,000,000 |
$ 27,200 |
Issued for Cash or Other |
|||
Omar Barrientos and Christopher |
November 15, 2005 |
630,306 |
$ 12,500 |
6 Pukka Shareholders (2) |
March 13, 2006 |
4,500,000 |
$ 100,000 |
Pukka Shareholder (2) |
March 7, 2006 |
100,000 |
$ 25,000 |
Pukka Shareholder (2)(3) |
February 6, 2006 |
15,000 |
$ 408 |
All Pukka Shareholders (1)(4) |
August 15, 2006 |
31,000,000 |
$ - |
(1) Sunrise issued all of these securities to persons who were "accredited investors," and each had prior access to all material information about us. This offering and sale of shares of common stock qualified for exemption under Section 4(2) and/or Section 4(6) of the Securities Act, since the issuance by Sunrise did not involve a public offering. The offering was not a public offering as defined in Section 4(2) and/or Section 4(6) because the offer and sale was made to an insubstantial number of persons and because of the manner of the offering. Sunrise did not undertake an offering in which Sunrise sold shares to a large number of investors. In addition, these investors had the necessary investment intent as required by Section 4(2) and/or Section 4(6) since
22
they agreed to, and received, share certificates bearing a legend stating that such shares are restricted. This restriction ensures that these shares will not be immediately redistributed into the market and therefore not be part of a public offering. This offering was done with no general solicitation or advertising by Sunrise. Based on an analysis of the above factors, Sunrise has met the requirements to qualify for exemption under Section 4(2) and/or Section 4(6) of the Securities Act for this transaction. (2) Pukka issued all of these securities to persons who were "accredited investors," and each had prior access to all material information about us. This offering and sale of shares of common stock qualified for exemption under Section 4(2) and/or Section 4(6) of the Securities Act, since the issuance by Pukka did not involve a public offering. The offering was not a public offering as defined in Section 4(2) and/or Section 4(6) because the offer and sale was made to an insubstantial number of persons and because of the manner of the offering. Pukka did not undertake an offering in which Sunrise sold shares to a large number of investors. In addition, these investors had the necessary investment intent as required by Section 4(2) and/or Section 4(6) since they agreed to, and received, share certificates bearing a legend stating that such shares are restricted. This restriction ensures that these shares will not be immediately redistributed into the market and therefore not be part of a public offering. This offering was done with no general solicitation or advertising by Sunrise. Based on an analysis of the above factors, Pukka has met the requirements to qualify for exemption under Section 4(2) and/or Section 4(6) of the Securities Act for this transaction. (3) Pukka also issued its $15,000 promissory note together with these 15,000 shares of common stock as additional interest. (4) Sunrise acquired Pukka by issuing 31,000,000 shares of its common stock to all shareholders of Pukka pursuant to the Stock Exchange Agreement. We believe these securities were exempt from the registration requirements of the Securities Act, pursuant to Section 4(2) and/or Section 4(6) thereof.
Item 5. Indemnification of Officers and Directors
Our certificate of incorporation eliminates the personal liability of our directors for monetary damages arising from a breach of their fiduciary duty as directors to the fullest extent permitted by Nevada law. This limitation does not affect the availability of equitable remedies, such as injunctive relief or rescission. Our articles of incorporation requires us to indemnify our directors and officers to the fullest extent permitted by Nevada law, including in circumstances in which indemnification is otherwise discretionary under Nevada law.
Under Nevada law, we may indemnify our directors or officers or other persons who were, are or are threatened to be made a named defendant or respondent in a proceeding because the person is or was our director, officer, employee or agent, if we determine that the person:
(1) conducted himself or herself in good faith;
23
(2) reasonably believed, in the case of conduct in his or her official capacity as our director or officer, that his or her conduct was in our best interests, and, in all other cases, that his or her conduct was at least not opposed to our best interests; and (3) in the case of any criminal proceeding, had no reasonable cause to believe that his or her conduct was unlawful.
These persons may be indemnified against expenses, including attorney fees, judgments, fines, including excise taxes, and amounts paid in settlement, actually and reasonably incurred, by the person in connection with the proceeding. If the person is found liable to the corporation, no indemnification shall be made unless the court in which the action was brought determines that the person is fairly and reasonably entitled to indemnity in an amount that the court will establish.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers, and controlling persons 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 and is, therefore, unenforceable.
FORM 10-SB PART F/S
See Item 9.01 Financial Statements and Exhibits, item (a) Financial Statements of Business Acquired and item (b) Pro Forma Consolidated Financial Information
FORM 10-SB PART III
Item 1. Index to Exhibits
See Item 9.01 Financial Statements and Exhibits, item (d) Exhibits.
Section 3 - Securities and Trading Markets
Item 3.02 Unregistered Sales of Equity Securities.
All sales of unregistered securities by the Company have been described above at “Recent Sales of Unregistered Securities,” Form 10-SB, Part II, Item 4.
SECTION 5 CORPORATE GOVERNANCE AND MANAGEMENT
ITEM 5.01 CHANGES IN CONTROL OF REGISTRANT
Sunrise incorporates be reference the information set forth in the Schedule of 14F-1 that it filed with the Commission on June 13, 2006.
24
(b) Resignation of Principal Officers and Directors
On August 15, 2006, Omar Barrientos resigned as President and Treasurer and as a Director of Sunrise, effective immediately.
On August 15, 2006, Gene Fairchild resigned as Secretary and as a Director of Sunrise, effective immediately.
(c) Appointment of Principal Officer
On August 15, 2006, Sunrise’s board of directors appointed Leonard DuCharme to be its Chief Executive Officer, effective immediately, Paul Ressler to be it’s President and Chief Operating Officer, effective immediately, and Darren Jensen to be it’s Secretary and Treasurer, effective immediately.
(d) Appointment of Directors
On August 15, 2006, the following persons were appointed directors of Sunrise: Paul Ressler, Leonard DuCharme, and Darren Jensen.
ITEM 5.06 CHANGE IN SHELL COMPANY STATUS
The information provided in Item 2.01 of this Report is incorporated herein by reference.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired
Audited consolidated financial statements of Pukka USA LLC and Affiliate as of the years ended December 31, 2005 and 2004.
Unaudited consolidated financial statements of Pukka USA Inc. and Affiliate as of the six months ended June 30, 2006.
(b) Pro Forma Consolidated Financial Information
Pro forma unaudited consolidated financial information showing the effects of the acquisition as to the consolidated reporting group of Sunrise U.S.A. Incorporated together with its wholly-owned subsidiary (Pukka USA, Inc.) and their affiliated company (Red Iron Group, LLC) for the six months ended June 30, 2006.
(c) Not Applicable
(d) Exhibits
3.1 |
Articles of Incorporation (1) |
3.2 |
By-Laws (1) |
|
|
10.1 |
Share Exchange Agreement dated June 7, 2006 (2) |
10.1.1* |
Signature Pages to Share Exchange Agreement |
10.2* |
Waiver of Share Exchange Agreement Condition |
10.3* |
Second Waiver of Share Exchange Agreement Condition |
10.4* |
Third Waiver of Share Exchange Agreement Condition |
25
10.5* |
Consent and Acceptance |
|
|
10.6 |
Registration Rights Agreement dated June 7, 2006 (2) |
10.6.1* |
Signature Pages to Registration Rights Agreement |
|
|
10.7* |
Lock-Up/Leak-Out Agreement dated June 7, 2006 |
|
|
10.8* |
Assignment of Patent Rights |
10.9* |
Assignment of Patent Rights |
|
|
10.10* |
Lease Agreement, dated June 15, 2006, between Pukka and Point |
|
|
10.11* |
Corporate Services Agreement, dated January 1, 2006, by and |
|
|
10.12* |
Corporate Services Agreement, dated April 7, 2006, by and |
|
|
10.13* |
Investor Relations Agreement dated April 3, 2006, Warrant |
|
|
10.14* |
Investor Relations Agreement dated April 3, 2006, Warrant |
|
|
10.15* |
Investor Relations Agreement dated April 3, 2006, Warrant |
|
|
10.16* |
Product Purchase Agreement, dated as of September 24, 2002, |
10.17* |
Manufacturing Representative Agreement, dated as of February 1, 2005 |
10.18* |
Sales and Service Representative Agreement, dated as of March 31, 2005 |
10.19* |
Professional Services Agreement, dated as of April 1, 2005 |
|
|
17.1* |
Resignation Letter of Omar Barrientos dated August 15, 2006 |
17.2* |
Resignation Letter of Gene Fairchild dated August 15, 2006 |
|
|
21.1* |
List of Subsidiaries |
|
|
23.1* |
Consent of Independent Registered Public Accounting Firm |
|
|
* |
Filed herewith |
26
(1) |
Incorporated herein by reference to Form 10SB12G/A filed with |
(2) |
Incorporated herein by reference to Form 8-K filed with the |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
SUNRISE U.S.A. INCORPORATED |
Dated: August 21, 2006 |
By: |
/s/ Leonard DuCharme |
Chief Executive Officer |
27
FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
Audited Financial Statements of Business Acquired:
Independent Auditor’s Report on the Financial Statements |
F-1 |
Consolidated Balance Sheet as of December 31, 2005 and 2004 |
F-2 |
Consolidated Statement of Operations and Members’ Equity For |
F-3 |
Consolidated Statement of Cash Flows For The Years Ending |
F-4 |
Notes to the Consolidated Financial Statements |
F-5 |
Unaudited Financial Statements of Business Acquired:
Consolidated Balance Sheet as of June 30, 2006 |
F-11 |
Consolidated Statement of Operations and Members’ Equity For |
F-12 |
Consolidated Statement of Cash Flows For The Six Months |
F-13 |
Notes to the Consolidated Financial Statements |
F-14 |
Unaudited Pro Forma Financial Statements:
Pro Forma Consolidated Condensed Financial Statements For |
F-19 |
28
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Pukka USA, LLC as of December 31, 2005 and 2004 and the results of its operations and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company does not have the necessary working capital to service its debt and for its planned activity, which raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are described in Note 9 to the financial statements. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Madsen & Associates CPA’s, Inc.
Madsen & Associates CPA’s, Inc.
Salt Lake City, Utah
June 20, 2006
F-1
December 31, |
|
December 31, |
||
ASSETS |
2005 |
|
2004 |
|
|
|
|||
Current Assets: |
||||
Cash |
$ |
9,256 |
$ |
27,618 |
Accounts Receivable |
|
10,658 |
|
35,004 |
Less: Allowance for doubtful accounts |
|
(6,717) |
|
(30,579) |
Inventory |
|
- |
|
87,565 |
|
|
|||
Total Current Assets |
|
13,197 |
|
119,608 |
|
|
|
|
|
Equipment |
|
7,078 |
|
7,078 |
Less: Accumulated Depreciation |
|
(1,011) |
|
- |
|
|
|||
Total Equipment |
|
6,067 |
|
7,078 |
|
|
|
|
|
Patents |
|
8,821 |
|
8,521 |
Less: Accumulated Amortization |
|
(535) |
|
(107) |
|
|
|||
Total Patents |
|
8,286 |
|
8,414 |
|
|
|
|
|
Total Assets |
$ |
27,550 |
$ |
135,100 |
=========== | =========== | |||
|
|
|
|
|
LIABILITIES & MEMBERS' EQUITY |
|
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
Accounts Payable |
$ |
58,867 |
$ |
51,465 |
Accrued Expenses |
|
7,743 |
|
8,513 |
|
|
|||
Total Current Liabilities |
|
66,610 |
|
59,978 |
|
|
|
|
|
Long-term Liabilities |
|
|
|
|
Line of credit |
|
3,978 |
|
6,425 |
Notes Payable to Members |
|
35,888 |
|
39,888 |
|
|
|||
Total Long-term Liabilities |
|
39,866 |
|
46,313 |
|
|
|
|
|
Total Liabilities |
|
106,476 |
|
106,291 |
|
|
|
|
|
Members' Equity |
|
(78,926) |
|
28,809 |
|
|
|||
|
|
|
|
|
Total Liabilities and Members' Equity |
$ |
27,550 |
$ |
135,100 |
|
=========== |
|
=========== |
The accompanying notes are an integral part of these consolidated financial statements
F-2
Year Ended |
Year Ended |
|||
|
|
|||
|
||||
Revenues |
$ |
231,151 |
$ |
885,046 |
Cost of Goods Sold |
|
195,251 |
|
714,474 |
|
|
|||
Gross Profit |
|
35,900 |
|
170,572 |
|
|
|
|
|
Expenses: |
|
|
|
|
General and Administrative |
|
70,025 |
|
59,909 |
Marketing |
|
8,598 |
|
28,008 |
Bad Debt Expense |
|
7,201 |
|
34,666 |
Amortization |
|
428 |
|
107 |
Depreciation |
|
1,011 |
|
- |
|
|
|||
Total Operating Expenses |
|
87,263 |
|
122,690 |
|
|
|
|
|
Other Expenses: |
|
|
|
|
Interest Expense |
|
1,106 |
|
386 |
|
|
|||
|
|
|
|
|
Net (Loss) Income |
$ |
(52,469) |
$ |
47,496 |
|
|
|
|
|
Beginning Members' Equity |
$ |
28,809 |
$ |
16,454 |
Contributions |
|
- |
|
69,859 |
Distributions |
|
(55,266) |
|
(105,000) |
|
|
|||
Ending Members' Equity |
$ |
(78,926) |
$ |
28,809 |
|
============ |
|
============ |
The accompanying notes are an integral part of these consolidated financial statements
F-3
For the year |
For the year |
|||
December 31, |
December 31, |
|||
|
|
|||
Cash Flows from Operating Activities: |
||||
|
||||
Net (Loss) Income |
$ |
(52,469) |
$ |
47,496 |
|
|
|
|
|
Adjustments to reconcile net loss to net cash |
|
|
|
|
Provided be operating activities: |
|
|
||
Depreciation & Amortization |
|
1,439 |
|
107 |
Changes in assets and liabilities: |
|
|
|
|
Accounts receivable |
|
24,346 |
|
13,654 |
Allowance for doubtful accounts |
|
(23,862) |
|
30,589 |
Inventory |
|
87,565 |
|
7,027 |
Patents |
|
(300) |
|
(8,521) |
Loans to shareholders |
|
(4,000) |
|
(34,510) |
Line of credit |
|
(2,447) |
|
- |
Current portion of notes payable |
|
- |
|
- |
Accounts payable and accrued expenses |
|
6,632 |
|
7,570 |
|
|
|||
Net cash provided by Operating Activities |
|
36,904 |
|
63,412 |
|
|
|
|
|
Cash Flows from Investing Activities: |
|
|
|
|
Purchases of fixed assets |
|
- |
|
(7,078) |
|
|
|||
Net cash used by Investing Activities |
|
- |
|
(7,078) |
|
|
|
|
|
Cash Flows from Financing Activities: |
|
|
|
|
Line of credit |
|
- |
|
6,425 |
Member distributions |
|
(55,266) |
|
(105,000) |
Member contributions |
|
- |
|
69,859 |
|
|
|||
Net cash used by Financing Activities |
|
(55,266) |
|
(28,716) |
|
|
|
|
|
Net (Decrease) Increase in Cash |
$ |
(18,362) |
$ |
27,618 |
|
|
|
|
|
Cash at Beginning of Period |
$ |
27,618 |
$ |
- |
|
|
|||
|
|
|
|
|
Cash at End of Period |
$ |
9,256 |
$ |
27,618 |
============ | ============ | |||
|
|
|
|
|
Cash paid for: |
|
|
|
|
Interest |
$ |
- |
$ |
- |
Taxes |
$ |
- |
$ |
- |
The accompanying notes are an integral part of these consolidated financial statements
F-4
The accompanying consolidated financial statements include all of the accounts of PUL and its affiliated entity RIG. Affiliate entities in which PUL directly or indirectly owns more than 50% of the outstanding, voting interest are accounted for under the consolidation method of accounting. Under this method, an investee company's results of operations are reflected within PUL’s consolidated statement of operations. All significant intercompany accounts and transactions have been eliminated.
Equity-Based Compensation Arrangements
The Company applies the intrinsic value method of accounting prescribed by Accounting Principles Board Opinion ("APB") No. 25, "Accounting For Stock Issued To Employees," and related interpretations, in accounting for its equity-based grants to employees. Under the intrinsic value method of accounting, compensation expense is recorded on the date of grant only if the current market price of the underlying stock exceeds the exercise price. The Company applies the disclosure provisions specified in Statement of Financial Accounting Standards ("SFAS") No. 148, "Accounting for Stock Based Compensation - Transition and Disclosure - an Amendment of SFAS 123." PUL applies SFAS No. 123, "Accounting for Stock-Based Compensation," in accounting for equity-based grants to non-employees.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand and investments in money market funds. The Company considers all highly-liquid instruments with an original maturity of 90 days or less at the time of purchase to be cash equivalents.
F-5
The Company records bad debts using the allowance method. Accordingly, an allowance has been recorded in the consolidated financial statements for accounts that have been deemed to be doubtful of collection.
Equipment
Equipment is recorded at cost. Depreciation is provided by use of the straight-line method over the estimated useful life of the asset (7 years)
Capitalized Interest
There was no capitalized interest during 2005 or 2004.
Product Research and Development
All costs incurred to establish the technological feasibility of new products or technology to be sold, leased, or otherwise marketed are charged to expense. Technological feasibility is established when a product design and a working model of the product have been completed and confirmed by testing. Costs to produce or purchase technology incurred subsequent to establishing technological feasibility are capitalized. Capitalization of costs ceases when the product is available for general release to customers. Costs to perform consulting or development services are charged to cost of revenues in the period in which the corresponding revenues are recognized. Costs of maintenance and customer support are charged to expense when related revenue is recognized or when these costs are incurred, whichever occurs first.
The Company has not incurred any costs related to the production or purchase of it’s hybrid technology, the feasibility of which will be confirmed through future testing. All costs associated with the development, production and sale of the Pukka GX400C have been expensed in the periods to which they relate.
Patents
The costs of patents include direct costs incurred by the Company in applying for patents covering its internally developed technologies.
Revenue Recognition
The Company recognizes revenue when title to the related goods has been transferred to the buyer. For services rendered, revenue is recognized once the service has been completed.
F-6
Use of Accounting Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
NOTE 3 GOING CONCERN
The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles, which contemplates continuation of the Company as a going concern. The Company incurred a net loss of $52,469 for the year ended December 31, 2005 and has an accumulated deficit of $78,926 as of December 31, 2005. Consequently, the aforementioned items raise substantial doubt about the Company’s ability to continue as a going concern.
The Company has incurred losses since its inception and has limited on-going operations. Further, the Company has current liabilities in excess of current assets. The Company’s ability to continue as a going concern is dependent upon its ability to raise capital through equity and debt financing or other means on desirable terms. If the Company is unable to
F-7
The Company has three (3) provisional patents and one (1) non-provisional patent filed with the U.S. Patent and Trademark Office. The applications were filed for technology the Company believes to be unique in the application of:
(i) a maximum efficiency control device (“MEC”) that will allow an electric motor to run more efficiently by operating at or near it peak operating limit for a higher percentage of total operating time filed on December 1, 2005, (ii) a hydraulic regenerative braking system (“HRB”) for capturing a moving vehicle’s kinetic energy for use in braking or battery recharging filed on November 3, 2005 and an update on December 12, 2005, (iii) an integrated extended range propulsion system (“ERT”) linking three drive motors to the same transmission filed on November 3, 2005, and (iv) a split-rim wheel (“Split-Rim”) that encapsulates a multi-speed planetary gear style transmission for light vehicles having small diameter wheels and small motors filed on October 4, 2004.
The Company will require additional capital in order to complete the development and commercial application of these technologies. The Company has undertaken a plan of recapitalization which the Company anticipates will enable it to obtain the requisite capital. There is no assurance that the Company will be able to raise the requisite capital when needed, or that such capital if received, will be sufficient to complete all of the work necessary to commercially develop the Company’s technologies. There is also no assurance that the Company will be able to sell its debt or securities, or if able to do so, that such debt or equity securities can be issued on acceptable or favorable terms.
NOTE 5 PATENTS
The direct costs associated with the filing of the Company’s patents have been capitalized and will be amortized over the effective period of the related patents once granted (20 and 21 years). The Company follows SFAS 121, which requires a review of the Company’s patents be made whenever events or changes in circumstances indicate that the carrying amount of the patents may not be recoverable. As of the date of these consolidated financial statements, no such events have occurred.
F-8
In 2004 a distributor of the Pukka GX400C was involved in a warranty claim lawsuit related to the distributor’s refurbishment of a used mini-bike. In the first quarter of 2006 the distributor asserted a third-party claim against PUL. The suit was settled shortly thereafter with PUL contributing $7,500 to the settlement, of which $2,500 was paid by PUL’s insurance carrier. The total amount accrued in the financial statements as of December 31, 2004 and 2005, for this lawsuit is $7,500. The Company does not expect to incur any additional expense related to this action.
NOTE 7 NOTES PAYABLE MEMBERS
The Company had outstanding notes payable to Members of $35,888 and $39,888 at December 31, 2005 and 2004, respectively. The notes are for cash advanced and unreimbursed expenses incurred by Paul Ressler, Darren Jensen, and Leonard DuCharme. Each note is payable along with any unpaid interest within 30 days of demand and bears interest at the rate of four percent (4%) per annum.
NOTE 8 MEMBER INTERESTS
Each of PUL’s members’ interest is equal in rights and terms and entitles its owner to a pro-rata interest in each item of PUL income, expense and cash distributions, if any. The members have no obligation to contribute capital to PUL and none of the members have any obligation for the general debts or obligations of PUL.
Each of RIG’s members’ interest is equal in rights and terms and entitles its owner to a pro-rata interest in each item of RIG income, expense and cash distributions, if any. The members have no obligation to contribute capital to RIG and none of the members have any obligation for the general debts or obligations of RIG.
NOTE 9 RECAPITALIZATION
On February 1, 2006 PUL converted its form of business from a Utah limited liability company to a Utah corporation (named Pukka USA, Inc. (“Pukka”)), issuing 12,135,000 shares of its $0.001 par value voting common stock in conversion of 100% of the limited liability company member interests.
NOTE 10 SUBSEQUENT EVENTS
On January 1, 2006 Pukka entered into a consulting services agreement with Birchwood Capital Advisors Group, Inc. (“Birchwood”) As compensation for these services, Birchwood will be issued 1,000,000 shares of Pukka common stock.
F-9
In March, 2006 Pukka issued 8,000,000 shares of common stock to two (2) individuals and one (1) company for consulting services rendered.
On April 7, 2006 Pukka entered into an Investment Banking Agreement with Legend Merchant Group, Inc.(“Legend”). As compensation for these services, Legend will be issued 1,650,000 shares of Pukka common stock.
As of the date of the Birchwood and the Legend agreements Pukka did not have a number of authorized but unissued shares of common stock sufficient to satisfy the requirements for the issuance of shares to Legend or to Birchwood. These shares are being issued to Legend and Birchwood as part of the completion of the Share Exchange Agreement as described below.
On April 10, 2006 Pukka entered into three (3) Investor Relations Agreements with Transcontinental Media, Ltd; MNDD Communications, Ltd and Topaz Analytic, Ltd. In exchange for the issuance of warrants for the purchase of 3,600,000 shares of Pukka common stock an exercise price of $0.001 per share (the “Warrants”). The companies were granted 1,200,000 Warrants each.
On August 15, 2006 Pukka and it’s shareholders closed upon a Share Exchange Agreement with Sunrise U.S.A. Incorporated, a Nevada corporation (“Sunrise”), whereby, Sunrise acquired 100% of the capital stock of Pukka and the shareholders and management of Pukka assumed control of Sunrise (the “Reverse Acquisition”). In consideration of the acquisition, the shareholders and other equity security holders of Pukka received 31,000,000 shares of Sunrise common stock representing 93.87% of the post acquisition outstanding shares of Sunrise common stock.
F-10
PUKKA USA, INC. and Affiliate
Consolidated Balance Sheet
June 30, |
December 31 |
|||
2006 |
2005 |
|||
(Unaudited) |
(Audited) |
|||
|
|
|||
ASSETS |
||||
Current Assets: |
||||
Cash |
$ |
16,085 |
$ |
9,256 |
Accounts Receivable |
8,901 |
10,658 |
||
Less: Allowance for doubtful accounts |
(8,901) |
(6,717) |
||
Employee Advances |
16,000 |
- |
||
|
|
|||
Total Current Assets |
32,085 |
13,197 |
||
|
||||
Equipment |
7,078 |
7,078 |
||
Less: Accumulated Depreciation |
(2,191) |
(1,011) |
||
|
|
|||
Total Equipment |
4,887 |
6,067 |
||
|
||||
Patents |
8,821 |
8,821 |
||
Less: Accumulated Amortization |
(811) |
(535) |
||
|
|
|||
Total Patents |
8,010 |
8,286 |
||
|
||||
Total Assets |
$ |
44,982 |
$ |
27,550 |
============ | ============ | |||
|
||||
LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT) |
||||
Current Liabilities |
||||
Accounts Payable |
$ |
100,600 |
$ |
58,867 |
Accrued Wages Payable |
66,781 |
7,743 |
||
Accrued Expenses |
19,188 |
|||
Note Payable |
15,000 |
|||
|
|
|||
Total Current Liabilities |
201,569 |
66,610 |
||
|
||||
Long-term Liabilities |
||||
Line of credit |
2,741 |
3,978 |
||
Notes Payable to Shareholders |
35,888 |
35,888 |
||
|
|
|||
Total Long-term Liabilities |
38,629 |
39,866 |
||
|
||||
Total Liabilities |
$ |
240,198 |
$ |
106,476 |
|
||||
Stockholders' Equity (Deficit) |
||||
Common Stock - $.001 par value, 25,000,000 shares authorized, |
||||
12,135,000 shares pro forma issued and outstanding on |
$ |
24,750 |
$ |
12,135 |
Common Stock Subscribed 2,650,000 shares |
2,650 |
|||
Additional Paid-In Capital |
402,408 |
(91,061) |
||
Accumulated Deficit |
(625,024) |
- |
||
|
|
|||
Total Stockholders' (Deficit) |
(195,216) |
(78,926) |
||
|
||||
Total Liabilities and Stockholders' Equity (Deficit) |
$ |
44,982 |
$ |
27,550 |
============ | ============ |
The accompanying notes are an integral part of these unaudited consolidated financial statements
F-11
PUKKA USA, INC. and Affiliate
Consolidated Statement of Operations
For The Six Months Ended June 30, 2006 and 2005
(Unaudited)
Six Months |
Six Months |
|||
Ended |
Ended |
|||
June 30 |
June 30 |
|||
2006 |
2005 |
|||
|
|
|||
|
||||
Revenues |
$ |
14,572 |
$ |
216,542 |
Cost of Goods Sold |
|
6,605 |
|
114,648 |
|
|
|||
Gross Profit |
|
7,967 |
|
101,894 |
|
|
|
|
|
Expenses: |
|
|
|
|
General and Administrative |
|
245,617 |
|
30,998 |
Stock based compensation |
|
384,000 |
|
- |
Marketing |
|
- |
|
- |
Bad Debt Expense |
|
2,184 |
|
- |
Amortization |
|
276 |
|
214 |
Depreciation |
|
506 |
|
506 |
|
|
|||
Total Operating Expenses |
|
632,583 |
|
31,718 |
|
|
|
|
|
Other Expenses: |
|
|
|
|
Interest Expense |
|
408 |
|
821 |
|
|
|||
|
|
|
|
|
Net (Loss) Income |
$ |
(625,024) |
$ |
69,355 |
|
============ |
|
============ |
The accompanying notes are an integral part of these unaudited consolidated financial statements
F-12
PUKKA USA, INC. and Affiliate
Consolidated Statements of Cash Flows
For The Six Months Ended June 30, 2006 and 2005
(Unaudited)
Six Months |
Six Months |
|||
Ended |
Ended |
|||
June 30 |
June 30 |
|||
2006 |
2005 |
|||
|
|
|||
Cash Flows from Operating Activities: |
|
|
|
|
Net (Loss) Income |
$ |
(625,024) |
$ |
69,355 |
|
|
|
|
|
Adjustments to reconcile net loss to net cash |
|
|
|
|
Provided by operating activities: |
|
|
|
|
Depreciation & Amortization |
|
782 |
|
782 |
Issuance of stock for services & interest |
|
290,088 |
|
- |
Issuance of warrants for services |
|
94,320 |
|
- |
Changes in assets and liabilities: |
|
|
|
|
Accounts receivable |
|
1,757 |
|
(81,240) |
Allowance for doubtful accounts |
|
2,184 |
|
(30,579) |
Employee advances |
|
(16,000) |
|
- |
Inventory |
|
|
|
87,565 |
Accrued expenses |
|
11,445 |
|
(1,203) |
Accrued wages payable |
|
66,781 |
|
- |
Accounts payable |
|
41,733 |
|
(19,892) |
|
|
|||
|
|
|
|
|
Net cash provided by Operating Activities |
|
(131,934) |
|
24,788 |
|
|
|
|
|
Cash Flows from Investing Activities: |
|
|
|
|
Purchases of assets |
|
- |
|
(300) |
|
|
|||
|
|
|
|
|
Net cash used by Investing Activities |
|
- |
|
(300) |
|
|
|
|
|
Cash Flows from Financing Activities: |
|
|
|
|
Note payable to shareholder |
|
15,000 |
|
(4,000) |
Payments on line of credit |
|
(1,237) |
|
(1,217) |
Issuance of stock for cash |
|
125,000 |
|
- |
Distributions to members |
|
|
|
(32,000) |
|
|
|||
|
|
|
|
|
Net cash used by Financing Activities |
|
138,763 |
|
(37,217) |
|
|
|||
|
|
|
|
|
Net (Decrease) Increase in Cash |
$ |
6,829 |
$ |
(12,729) |
|
|
|
|
|
Cash at Beginning of Period |
|
9,256 |
|
27,618 |
|
|
|||
|
|
|
|
|
Cash at End of Period |
$ |
16,085 |
$ |
14,889 |
=========== | =========== | |||
|
|
|
|
|
Cash paid for: |
|
|
|
|
Interest |
|
- |
|
|
Taxes |
|
- |
|
|
The accompanying notes are an integral part of these unaudited consolidated financial statements
F-13
PUKKA USA, INC. and Affiliate
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Note 1 Basis of Presentation
The unaudited condensed consolidated financial information included for the six month period ended June 30, 2006 and 2005 have been prepared by Pukka USA, Inc. (“Pukka”), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. The financial statements reflect all adjustments that are, in the opinion of management, necessary to fairly present such information. All such adjustments are of a normal recurring nature. Although the Company believes that the disclosures are adequate to make the information presented not misleading, certain information and footnote disclosures, including a description of significant accounting policies normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America, have been condensed or omitted pursuant to such rules and regulations.
These financial statements should be read in conjunction with Pukka’s consolidated financial statements and the notes thereto for the years ending December 31, 2005 and 2004 included in the Report on Form 8-K filed with the Securities and Exchange Commission by Sunrise U.S.A. Incorporated. The results of operations for interim periods are not necessarily indicative of the results for any subsequent quarter or the entire fiscal year ending December 31, 2006.
Note 2 New Accounting Standards
Effective January 1, 2006, Pukka adopted the provisions of Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (SFAS No.123R) requiring that compensation cost relating to share-based payment transactions be recognized under fair value accounting and recorded in the financial statements. The cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the grantee’s requisite service period (generally the vesting period of the equity award). Prior to January 1, 2006, share-based compensation to employees was recorded in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB No. 25), and related interpretations. The Company also followed the disclosure requirements of Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation”, as amended by Statement of Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure”. Pukka adopted SFAS No. 123R using the modified prospective method and, accordingly, financial statement amounts for prior periods presented herein have not been restated to reflect the fair value method of recognizing compensation cost relating to non-qualified stock options. There was no compensation cost related to non-qualified stock options recognized in operating results for the six months ended June 30, 2006 and 2005.
According to the fair value method of valuing option awards the fair value is estimated on the date of grant using the Black-Scholes option-pricing model. The use of this model includes; (i) a calculation of an expected volatility based on historical stock
F-14
(i) a maximum efficiency control device (“MEC”) that will allow an electric motor to run more efficiently by operating at or near it peak operating limit for a higher percentage of total operating time filed on December 1, 2005, (ii) a hydraulic regenerative braking system (“HRB”) for capturing a moving vehicle’s kinetic energy for use in braking or battery recharging filed on November 3, 2005 and December 12, 2005, (iii) an integrated extended range propulsion system (“ERT”) linking three drive motors to the same transmission filed on November 3, 2005, and (iv) a split-rim wheel (“Split-Rim”) that encapsulates a multi-speed planetary gear type transmission for light vehicles having small diameter wheels and small motors filed on October 4, 2004.
The Company will require additional capital in order to complete the development and commercial application of these technologies. The Company has
F-15
F-16
F-17
Sunrise is required to file periodic reports with the Securities & Exchange Commission (“SEC”). Also, Sunrise is defined as a blank check company pursuant to Section 7(b)(3) of the Securities Act of 1933. As such all of the shares of common stock of Sunrise were being held in escrow (collectively the “Sunrise Escrow Shares”) pending the completion of a business combination. The business combination with Pukka satisfies the conditions upon which the Sunrise Escrow would be terminated and all of the Sunrise Escrow Shares were delivered to their respective owners.
The former Sunrise officers, directors and affiliate shareholders own 2,656,356 shares of Sunrise common stock, which shares can only be resold pursuant to an effective registration statement. These shareholders and Sunrise have entered into a Registration Rights Agreement, which agreement also includes 30,000,000 shares of Sunrise common stock issued to certain of the Pukka shareholders. The Registration Rights Agreement covers a total of 32,656,356 shares of Sunrise common stock, grants the holders of these shares a one time demand right for registration and a right for piggy-back registration in respect of the next registration statement that may be filed by Sunrise.
On June 7, 2006 Sunrise and nine (9) shareholders of Pukka entered into a Lock-Up/Leak-Out Agreement that provides for the escrow of all of their shares of Sunrise common stock (12,500,000 shares) (the “Lock-Up Agreement” and the “Escrow Shares”). The Lock-Up Agreement provides for the leak-out of the Escrow Shares over an eighteen-month period beginning 60 days after the first day of a bid/ask market for Sunrise common stock. The Escrow Shares are also subject to registration under the Registration Rights Agreement, with any sale there under remaining subject to the quantity and price limitations as set forth in Lock-Up Agreement.
F-18
PUKKA USA, INC. and Affiliate
Pro Forma Financial Statements
(Unaudited)
Pro forma financial information showing the effects of the Reverse Acquisition assuming the acquisition had occurred on June 30, 2006 would be as follows:
Pro-Forma Consolidated Condensed Balance Sheet
As Of June 30, 2006 (Unaudited)
As Of |
||
|
||
|
||
ASSETS |
||
Current Assets |
$ |
35,884 |
Equipment net of depreciation |
|
4,887 |
Patents net of amortization |
|
8,010 |
|
||
|
|
|
Total Assets |
$ |
48,781 |
============ | ||
|
|
|
LIABILITIES & STOCKHOLDERS’ DEFICIT |
|
|
Current Liabilities |
$ |
137,233 |
Notes & Accounts Payable Shareholders |
|
128,099 |
Long-term Liabilities |
|
2,741 |
|
||
|
|
|
Total Liabilities |
|
265,332 |
|
|
|
Stockholders’ (Deficit) |
|
|
Preferred Stock 1,000,000 shares authorized none outstanding |
|
|
Common Stock $0.0001 par value, 99,000,000 authorized |
|
3,302 |
Additional Paid-In Capital |
|
485,146 |
Accumulated Deficit |
|
(704,999) |
|
||
|
|
|
Total Stockholders’ (Deficit) |
|
(216,551) |
|
||
|
|
|
Total Liabilities and Stockholders' (Deficit) |
$ |
48,781 |
============ |
F-19
Six Months |
||
|
||
|
||
Revenues |
$ |
14,572 |
Cost of Goods Sold |
|
6,605 |
|
||
Gross Profit |
|
7,967 |
|
|
|
Operating & Interest Expenses |
|
631,991 |
Expense associated with the |
|
79,975 |
|
||
Total Expenses |
|
711,558 |
|
|
|
Pro-Forma Net (Loss) |
$ |
(703,999) |
============ |
Preferred Stock |
Common Stock |
Additional |
Accumulated |
Total |
|||
Number |
|
Number of |
|
Paid-in |
Retained |
Stockholders' |
|
of Shares |
Amount |
Shares |
Amount |
Capital |
(Defit) |
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2006 |
- |
$ - |
27,400,000 |
$ 27,400 |
$ 402,408 |
$ (625,024) |
$ (195,216) |
======= | ======= | ======== | ======= | ======== | ========= | ========= | |
|
|||||||
Restatement of par value |
$ (24,660) |
$ 24,660 |
$ - |
||||
Exercise of Warrants |
3,600,000 |
360 |
3,240 |
3,600 |
|||
Reverse Acquisition of Sunrise |
|||||||
Liabilities net of assets assumed |
(24,935) |
(24,935) |
|||||
Sunrise shares issued and outstanding |
2,023,543 |
202 |
54,838 |
(55,040) |
- |
||
|
|
|
|
|
|
|
|
|
|||||||
Pro-Forma Balance, June 30, 2006 |
- |
$ - |
33,023,543 |
$ 3,302 |
$ 485,146 |
$ (704,999) |
$ (216,551) |
======= |
======= |
======== |
======= |
======== |
========= |
========= |
The accompanying notes are an integral part of these unaudited pro forma financial statements
F-20
PUKKA USA, INC. and Affiliate
Notes to the Pro Forma Financial Statements
(Unaudited)
Note 1 Basis of Pro Forma Presentation
Sunrise, the acquirer, acquired Pukka, the acquiree on August 15, 2006. The transaction resulted in the control of Sunrise passing to the management and shareholders of Pukka, and will be accounted for as a reverse acquisition purchase. Accordingly, Pukka will continue will be treated as the accounting parent of the consolidated group in accordance with generally accepted accounting principles for all future consolidated financial statements.
Note 2 Pro Forma Adjustments
The pro forma financial statements reflect the effects of the reverse acquisition purchase to the consolidated financial statements of Pukka and Affiliate for the period ending June 30, 2006 as if the transaction had closed on June 30, 2006. The pro forma adjustments are summarized as follows: (1) the restatement of the group’s common stock par-value from Pukka par value of $0.001 per share to the Sunrise (the statutory parent) par value of $0.0001 per share, (2) to reflect the exercise of 3,600,000 Pukka warrants at $0.001 per share, for which the Warrant Holders agreed to accept Sunrise common shares $0.0001 par value, (3) assumption of Sunrise liabilities of $24,935, (4) the addition of the 2,023,543 shares of Sunrise issued and outstanding common stock as a deemed issuance of shares by the consolidated group at a fair value of $55,040 and (5) recognition as an expense for the period of the liabilities assumed plus the fair value of the Sunrise Shares deemed to have been issued for a total expense of $79,975.
F-21
Share Exchange Agreement Signature Page
IN WITNESS WHEREOF, Sunrise, Pukka and the Shareholders have caused this Agreement to be signed by their respective officers hereunto duly authorized, all as of the date first written above.
SUNRISE U.S.A. INCORPORATED |
PUKKA USA, INC. |
|
|
By: /s/ Omar Barrientos |
By: /s/ Leonard Du Charme |
SHAREHOLDERS |
|
/s/ Leonard DuCharme |
/s/ Paul Ressler |
/s/ Jimmy Chan |
/s/ Brian Christensen |
/s/ Naomi Coones |
/s/ Wayne DuCharme |
/s/ Steve Hatch |
/s/ Darren Jensen |
/s/ Anne Marie Kripaitis |
/s/ Peter Kristensen |
/s/ Gale Leetzow Gale Leetzow |
/s/ Mark Lund |
/s/ F. Briton McConkie, Jr. |
/s/ Nancy Olpin |
/s/ Cary Peterson |
/s/ William Robins |
/s/ Robin Ross |
/s/ Nancy Olpin |
Kripaitis & Associates, LLC By: /s/ Ray Kripaitis Ray Kripaitis |
MBA Investors, Ltd. By: /s/ Thomas Pierson Thomas Pierson |
Passport Financial, LLC By: /s/ Marc Didier Marc Didier |
Power Network, Inc. By: /s/ Joe V. Overcash Joe V. Overcash |
Brighten Up, LLC By: /s/ Steve Wright Steve Wright |
Starr Consulting, Inc. By: /s/ Daniel D. Starczewski Daniel D. Starczewski |
YtK, Inc. By: /s/ Richard Muller Richard Muller |
WAIVER OF
SHARE EXCHANGE AGREEMENT
CONDITION
The Undersigned, being parties to that certain Share Exchange Agreement (the “Agreement”), dated June 7, 2006, by and among PUKKA USA, INC. (“Pukka”), SUNRISE U.S.A. INCORPORATED (“Sunrise”), PAUL RESSLER and LEONARD DUCHARME, the principal shareholders of Pukka (collectively, the “Principal Shareholders”), and the other individual shareholders of Pukka (each a “Shareholder” and together with the Principal Shareholders, the “Shareholders”), hereby agree to waive and extend the Outside Date for Closing of the Agreement, described in Section 2.1 of the Agreement.
WHEREAS, the parties acknowledge and agree that substantially all conditions required for the Closing have been satisfactorily complied with but that additional time beyond that permitted by the Agreement is required to complete certain ministerial tasks before the transactions contemplated therein can be consummated.
NOW, THEREFORE, WITNESSETH that in consideration of good and valuable consideration, the receipt and sufficiency of which is acknowledged by each party hereto, the parties agree as follows:
1. Closing Date. Section 2.1 of the Agreement is hereby amended to provide that the Outside Date set forth therein as June 30, 2006 for the Closing of the Agreement is hereby waived, and that July 15, 2006 is hereby established as the new Outside Date for the Closing of the Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Waiver to be executed on the day and year set forth opposite below their signatures.
SUNRISE U.S.A. INCORPORATED PUKKA USA, INC.
By: /s/ Omar G. Barrientos By: /s/ Paul R. Ressler
Date: 6/30/06 Date: 6/30/06
SHAREHOLDERS
(on behalf of themselves and of all Shareholders of Pukka):
/s/ Leonard DuCharme /s/ Paul R. Ressler
Leonard DuCharme Paul Ressler
Date: 6/30/06 Date: 6/30/06
SECOND WAIVER OF
SHARE EXCHANGE AGREEMENT
CONDITION
The Undersigned, being parties to that certain Share Exchange Agreement (the “Agreement”), dated June 7, 2006, by and among PUKKA USA, INC. (“Pukka”), SUNRISE U.S.A. INCORPORATED (“Sunrise”), PAUL RESSLER and LEONARD DUCHARME, the principal shareholders of Pukka (collectively, the “Principal Shareholders”), and the other individual shareholders of Pukka (each a “Shareholder” and together with the Principal Shareholders, the “Shareholders”), hereby agree to waive and extend the Outside Date for Closing of the Agreement, described in Section 2.1 of the Agreement.
WHEREAS, the parties acknowledge and agree that substantially all conditions required for the Closing have been satisfactorily complied with but that additional time beyond that permitted by the Agreement is required to complete certain ministerial tasks before the transactions contemplated therein can be consummated.
NOW, THEREFORE, WITNESSETH that in consideration of good and valuable consideration, the receipt and sufficiency of which is acknowledged by each party hereto, the parties agree as follows:
1. Closing Date. Section 2.1 of the Agreement is hereby amended to provide that the Outside Date set forth therein as June 30, 2006, and extended until July 15, 2006 by a Waiver of Share Exchange Agreement Condition dated June 30, 2006, for the Closing of the Agreement is hereby waived, and that July 31, 2006 is hereby established as the new Outside Date for the Closing of the Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Waiver to be executed on the day and year set forth opposite below their signatures.
SUNRISE U.S.A. INCORPORATED PUKKA USA, INC.
By: /s/ Omar G. Barrientos By: /s/ Paul R. Ressler
Date: 7/15/06 Date: 7/15/06
SHAREHOLDERS
(on behalf of themselves and of all Shareholders of Pukka):
/s/ Leonard DuCharme /s/ Paul R. Ressler
Leonard DuCharme Paul Ressler
Date: 7/15/06 Date: 7/15/06
THIRD WAIVER OF
SHARE EXCHANGE AGREEMENT
CONDITION
The Undersigned, being parties to that certain Share Exchange Agreement (the “Agreement”), dated June 7, 2006, by and among PUKKA USA, INC. (“Pukka”), SUNRISE U.S.A. INCORPORATED (“Sunrise”), PAUL RESSLER and LEONARD DUCHARME, the principal shareholders of Pukka (collectively, the “Principal Shareholders”), and the other individual shareholders of Pukka (each a “Shareholder” and together with the Principal Shareholders, the “Shareholders”), hereby agree to waive and extend the Outside Date for Closing of the Agreement, described in Section 2.1 of the Agreement.
WHEREAS, the parties acknowledge and agree that substantially all conditions required for the Closing have been satisfactorily complied with but that additional time beyond that permitted by the Agreement is required to complete certain ministerial tasks before the transactions contemplated therein can be consummated.
NOW, THEREFORE, WITNESSETH that in consideration of good and valuable consideration, the receipt and sufficiency of which is acknowledged by each party hereto, the parties agree as follows:
1. Closing Date. Section 2.1 of the Agreement is hereby amended to provide that the Outside Date set forth therein as June 30, 2006, extended until July 15, 2006 by a Waiver of Share Exchange Agreement Condition dated June 30, 2006, and extended again until July 31, 2006 by a Waiver of Share Exchange Agreement Condition dated July 15, 2006, for the Closing of the Agreement is hereby waived, and that August 15, 2006 is hereby established as the new Outside Date for the Closing of the Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Waiver to be executed on the day and year set forth opposite below their signatures.
SUNRISE U.S.A. INCORPORATED PUKKA USA, INC.
By: /s/ Omar G. Barrientos By: /s/ Paul R. Ressler
Date:8/1/06 Date: 8/1/06
SHAREHOLDERS
(on behalf of themselves and of all Shareholders of Pukka):
/s/ Leonard DuCharme /s/ Paul R. Ressler
Leonard DuCharme Paul Ressler
Date: 8/2/06 Date: 8/1/06
CONSENT AND ACCEPTANCE
OF
SHARE EXCHANGE AGREEMENT
The Undersigned, being parties to that certain Share Exchange Agreement (the “Agreement”), dated June 7, 2006, by and among PUKKA USA, INC. (“Pukka”), SUNRISE U.S.A. INCORPORATED (“Sunrise”), PAUL RESSLER and LEONARD DUCHARME, the principal shareholders of Pukka (collectively, the “Principal Shareholders”), and the other individual shareholders of Pukka (each a “Shareholder” and together with the Principal Shareholders, the “Shareholders”), hereby state as follows:
1. The Agreement as finally constituted on August 15, 2006, together with all exhibits as set forth therein, conforms in all respects to the agreement and transactions contemplated therein, and the parties hereto consent to and accept the Agreement and all exhibits, schedules and related documents in the form reviewed by the Company’s auditors as the final agreement of the parties.
2. All conditions and prerequisites to the Closing of the transactions contemplated by the Agreement have been fully performed and/or waived by the parties as of August 15, 2006, and the parties hereto consent and agree that the Stock Exchange between Pukka, Sunrise and the shareholders of Pukka has closed effective on August 15, 2006.
IN WITNESS WHEREOF, the parties hereto have caused this Consent and Acceptance to be executed on the day and year set forth opposite below their signatures.
SUNRISE U.S.A. INCORPORATED PUKKA USA, INC.
By: /s/ Omar G. Barrientos By: /s/ Paul R. Ressler
Date: 8/16/06 Date: 8/15/06
SHAREHOLDERS
(on behalf of themselves and of all Shareholders of Pukka):
/s/ Leonard DuCharme /s/ Paul R. Ressler
Leonard DuCharme Paul Ressler
Date: 8/15/06 Date: 8/15/06
Registration Rights Agreement Signature Page
Post-Exchange Shareholders: |
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/s/ Anne Marie Kripaitis |
/s/ Peter Kristensen |
/s/ F. Briton McConkie, Jr. |
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Kripaitis & Associates, LLC By: /s/ Ray Kripaitis Ray Kripaitis |
MBA Investors, Ltd. By: /s/ Thomas Pierson Thomas Pierson |
Passport Financial, LLC By: /s/ Marc Didier Marc Didier |
Power Network, Inc. By: /s/ Joe V. Overcash Joe V. Overcash |
Brighten Up, LLC By: /s/ Steve Wright Steve Wright |
Starr Consulting, Inc. By: /s/ Daniel D. Starczewski Daniel D. Starczewski |
YtK, Inc. By: /s/ Richard Muller Richard Muller |
Legend Merchant Group, Inc. By: /s/ John Shaw John Shaw |
Birchwood Capital Advisors Group, Inc. By: /s/ Christopher Giordano Christopher Giordano |
Transcontinental Media, Ltd. By: /s/ Steven H. Mcdonald Steven H. Mcdonald |
MNDD Communications, Ltd. By: /s/ Jamie R. Hildago Jamie R. Hildago |
Topaz Analytics, Ltd. By: /s/ Warren B. Hutchinson Warren B. Hutchinson |
LOCK-UP / LEAK-OUT AGREEMENT
THIS LOCK-UP / LEAK-OUT AGREEMENT (the “Agreement”) is made and entered into this 7th day of June, 2006, Sunrise U.S.A. Incorporated, a Nevada corporation with an office at 892 North 340 East, American Fork, Utah 84003, and Kripaitis & Associates, LLC with offices at 39 Wyandotte Ave., Oceanport, NJ 07757, and Ann Marie Kripaitis, with a residence at 513 Joseph Ave., Woodbridge, NJ 07095, and Peter Kristensen, with a residence at 7668 Quicksilver Dr., Salt Lake City, UT 84121, and MBA Investors, Ltd., with offices at 2501 E. Commercial Blvd. Suite 212, Ft. Lauderdale, Fl. 33308, and F. Briton McConkie Jr., with a residence at 4014 Splendor Way, S.L.C. Ut. 84124, and Passport Financial LLC, with offices at 14701 Nestled Cove, Draper Utah 84020, and Power Network Inc. with offices at 1020 Brookstown Avenue, Suite 30 Winston Salem, NC 27101, and Starr Consulting Inc. with offices at 932 Burke Street, Winston Salem, NC 27101, and Yt2K, Inc. with offices at 2501 E. Commercial Blvd. Suite 212, Ft. Lauderdale, Fl. 33308 (collectively the “Shareholders” and individually the “Shareholder”).
RECITALS
WHEREAS, as of April 10, 2006, the Shareholders were the shareholders of record of shares of common stock, par value $.001 per share, of Pukka USA, Inc., a Utah corporation (“Pukka”) as set forth on Annex A hereto;
WHEREAS, Pukka and Sunrise entered into that certain Share Exchange Agreement (the “Exchange Agreement”), dated June 7, 2006, pursuant to which all of the issued and outstanding capital stock of Pukka are to be exchanged for newly-issued shares of Sunrise common stock, par value $0.0001 per share (“Sunrise Common Stock”);
WHEREAS, as of the date of this Agreement, the Shareholders are the shareholders of record of shares of Sunrise Common Stock as set forth on Annex A hereto;
WHEREAS, in order to facilitate the consummation of the transactions contemplated by the Exchange Agreement and an orderly market for the Sunrise Common Stock subsequent to the Exchange contemplated thereby, the undersigned agree to restrict the sale, assignment, transfer, conveyance, hypothecation or alienation of the Subject Shares, all on the terms set forth below.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants contained herein, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Transfer. Notwithstanding anything contained in this Agreement, a Shareholder may transfer its Subject Shares to its affiliates, partners in a partnership, subsidiaries and trusts, spouses or lineal descendants for estate planning purposes provided that the transferee (or the legal representative of the transferee) executes an agreement to be bound by all of the terms of this Agreement.
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[Signature pages follow]
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SUNRISE U.S.A. INCORPORATED |
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By: /s/ Paul Ressler |
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SHAREHOLDERS |
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/s/ Anne Marie Kripaitis |
/s/ Peter Kristensen |
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/s/ F. Briton McConkie, Jr. |
YT2K, Inc. |
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Kripaitis & Associates, LLC |
MBA Investors, Ltd. |
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Passport Financial, LLC |
Power Network, Inc. |
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Brighten Up, LLC |
Starr Consulting, Inc. |
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YT2K, Inc. |
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S-1
Annex A
SHAREHOLDER |
SHARES OF |
SHARES OF SUNRISE COMMON STOCK |
BLOCKS/MONTHLY ALLOTMENT |
Kripaitis & Associates, LLC |
1,25,000 |
1,25,000 |
2,500 shares per day, not to exceed |
500,000 |
500,000 |
2,500 shares per day, not to exceed |
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Peter Kristensen |
2,666,667 |
2,666,667 |
5,000 shares per day, not to exceed |
MBA Investors, Ltd. |
500,000 |
500,000 |
2,500 shares per day, not to exceed |
F. Briton McConkie Jr. |
2,666,667 |
2,666,667 |
5,000 shares per day, not to exceed |
Passport Financial LLC |
2,666,666 |
2,666,666 |
5,000 shares per day, not to exceed |
Power Network Inc. |
875,000 |
875,000 |
2,500 shares per day, not to exceed |
Starr Consulting Inc. |
875,000 |
875,000 |
2,500 shares per day, not to exceed |
Yt2K, Inc. |
500,000 |
500,000 |
2,500 shares per day, not to exceed |
PATENT ASSIGNMENT
THIS PATENT ASSIGNMENT (“Assignment”), effective as of the 15th day of December 2005 (the “Effective Date”), is by and between Leonard DuCharme, with a residence at 892 North 340 East, American Fork, Utah 84003 (the “Assignor”) and Pukka USA, LLC, a limited liability company formed in accordance with the laws of Utah (the “Assignee”), with a place of business in Utah at 892 North 340 East, American Fork, Utah 84003.
WHEREAS, Assignor is the Nominee Holder of those works described below (hereinafter the “Conveyed Materials”); and
WHEREAS, Assignor filed patent applications for the Conveyed Materials in behalf of the Assignee; and
WHEREAS, the Assignee is desirous to be the sole holder of all right, title and interest, including all patents in the United States and throughout the world, in and to the Conveyed Materials.
NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are acknowledged, the parties hereby agree as set forth below.
Conveyed Materials. The following patent is herein the works to be conveyed by Assignor to Assignee:
Patent Name
Small diameter split-rim drive wheel with internal transmission
Patent Number
10/958,152
Filing Date
10/4/2004
Description
This patent describes a method for securing a geared transmission inside a
small split-rim wheel.
Patent Name
Hydraulic regenerative braking system that provides acceleration assistance
And battery rechargingPatent Number
60/732,574 and 60/748934
Filing Date
11/3/2005 and 12/12/2005
Description
This patent describes a method for storing the kinetic energy of normal braking
in a hydraulic system and then using that energy to assist a vehicle in acceleration
and to turn a generator to charge a battery.
Assignment. Assignor, without consideration, relinquishes all right, title, interest in and to the Conveyed Material in the United States and all jurisdictions outside the United States, (including, without limitation, the right to renew any registrations included in the Conveyed Materials, the right to apply for patents within or outside the United States based in whole or in part upon the Conveyed Materials, and any priority right that may arise from the Conveyed Materials), the same to be held and enjoyed by Assignee as fully and entirely as said interest could have been held and enjoyed by Assignor had this sale, assignment, transfer and conveyance not been made.
Representations and Warranties. Assignor represents and warrants to Assignee the following:
Assignor has the right, power and authority to enter into this Agreement; and
Assignor was acting on behalf of the Assignee in filing the patents.
Assignor authorizes the Commissioner of Patents and Trademarks of the United States and other empowered officials of the United States Patent and Trademark Office and officials in any applicable jurisdictions outside the United States to record the transfer of the patents and/or patent applications set forth above to Assignee as assignee of Assignor’s entire right, title and interest therein. Assignor agrees to further execute any documents reasonably necessary at any time now or in the future to effect and/or perfect this assignment or to confirm Assignee’s ownership of the Conveyed Materials.
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Exhibit 10.9
PATENT ASSIGNMENT
THIS PATENT ASSIGNMENT (“Assignment”), effective as of the 15th day of December 2005 (the “Effective Date”), is by and between Leonard DuCharme, with a residence at 892 North 340 East, American Fork, Utah 84003, individually; Paul Ressler, with a residence at 942 North 240 East, American Fork, Utah 84003, individually; Darren Jensen, with a residence at 892 North 340 East, American Fork, Utah 84003, individually, (collectively, the “Assignor”) and Pukka USA, Inc., a corporation formed in accordance with the laws of Utah (the “Assignee”), with a place of business in Utah at 892 North 340 East, American Fork, Utah 84003.
WHEREAS, Assignor is the Nominee Holder of those works described below (hereinafter the “Conveyed Materials”); and
WHEREAS, Assignor filed patent applications for the Conveyed Materials in behalf of the Assignee; and
WHEREAS, the Assignee is desirous to be the sole holder of all right, title and interest, including all patents in the United States and throughout the world, in and to the Conveyed Materials.
NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are acknowledged, the parties hereby agree as set forth below.
Conveyed Materials. The following patents and provisional patents are herein the works to be conveyed by Assignor to Assignee:
Patent Name
Drive train of a hybrid vehicle utilizing a hydraulic motor, an electric motor,
and an internal combustion enginePatent Number
60/732,613
Filing Date
11/3/2005
Description
This patent describes a method for using three power sources in an improved
hybrid architecture.
Patent Name
Integrated electric motor control/transmission control system for use with
infinitely variable transmissions in electric vehiclesPatent Number
60/748935
Filing Date
12/1/2005
Description
This patent describes a method for using a transmission to control movement of a vehicle while
maintaining an electric motor in its peak operating range.
Assignment. Assignor, without consideration, relinquishes all right, title, interest in and to the Conveyed Material in the United States and all jurisdictions outside the United States, (including, without limitation, the right to renew any registrations included in the Conveyed Materials, the right to apply for patents within or outside the United States based in whole or in part upon the Conveyed Materials, and any priority right that may arise from the Conveyed Materials), the same to be held and enjoyed by Assignee as fully and entirely as said interest could have been held and enjoyed by Assignor had this sale, assignment, transfer and conveyance not been made.
Representations and Warranties. Assignor represents and warrants to Assignee the following:
Assignor has the right, power and authority to enter into this Agreement; and
Assignor was acting on behalf of the Assignee in filing the patents.
Assignor authorizes the Commissioner of Patents and Trademarks of the United States and other empowered officials of the United States Patent and Trademark Office and officials in any applicable jurisdictions outside the United States to record the transfer of the patents and/or patent applications set forth above to Assignee
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/s/ Leonard DuCharme |
/s/ Paul Ressler |
/s/ Darren Jensen |
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Commercial Lease
In consideration of the rights, covenants and agreements herein contained, Landlord does hereby lease, demise and let unto Tenant the Premises hereinafter described for the term of this Lease upon the following terms and conditions:
1. Basic Lease Information.
1.1 Lease Date: June 15, 2006
1.2 Lease Term: 5 years commencing on upon receipt of an Occupancy Permit from
Bluffdale City, projected to be September 1, 2006. (the "Commencement
Date") and terminating on 5 years form Commencement (the "Termination
Date").
1.3 Tenant: Hybrid Propulsion Laboratory
Address of Tenant: 14621 So. 800 W., Bluffdale UT 84065
Contact: Paul Ressler Phone #: (801) 367-7175
1.4 Landlord: Point Management LLC
Address of Landlord: 6091 Dry Creek Circle, Highland UT 84003
Contact: Steve Bearnson Phone #: (801) 380-4073
1.5 Premises: 14621 So. 800 W, Bluffdale UT 84065
Property Description: Approx 3000 SF of stacked office & 4500 SF warehouse
1.6 Basic Rent: $0.85 SF office / $0.50 SF warehouse per month.
1st Mths Rent Payable: Upon Lease Execution
1.7 Security Deposit: $5,000
1.8 Exhibits:
Exhibit A: Commission Agreement attached to Landlord’s copy
Exhibit B: Office floor plan to be built by Landlord
Attached Addendum # 1
The above Basic Lease Information and attached Exhibit(s) are hereby incorporated into and made a part of this Lease. Any reference in the Lease to the above terms shall mean and refer to the information and terms set forth in the above Basic Lease Information.
2. PARTIES: This Lease is made by and between the Landlord and Tenant identified in Section 1.
3. PREMISES: Landlord hereby rents to Tenant and Tenant hereby leases from Landlord the Premises identified in Section 1.
4. TERM AND POSSESSION.
a. The term of the Lease shall be for the period that commences on the Commencement Date and ends on the Termination Date identified in Section 1, unless sooner terminated pursuant to any provision hereof or extended pursuant to any Option to Extend granted hereunder.
b. If the Landlord, for any reason whatsoever, cannot deliver possession of the Premises to the Tenant on the Commencement Date, this Lease shall not be void or voidable, nor shall Landlord be liable to Tenant for any loss or damage resulting there from, nor shall the Termination Date be in any way extended, but in that event, all rent shall be abated during the period between the Commencement Date and the actual time when Landlord delivers possession. However, in the event Premises are not completed and ready for occupancy by October 15, 2006 the Tenant herein, at their opinion, may cancel this lease without damage.
c. In the event that Landlord shall permit Tenant to occupy the Premises prior to the Commencement Date, such occupancy shall be subject to all the provisions of this Lease including but not limited to the obligation to pay all Basic Rent unless otherwise noted herein. Any early possession shall not advance the Termination Date.
5. RENT.
a. Tenant agrees to pay to Landlord the Basic Rent set forth in Section 1, payable in monthly installments, in advance, on or before the first day of each calendar month during the term hereof. Rent for any partial month occurring during the term hereof shall be prorated on a per diem based upon a thirty (30) day month. All rent shall be paid to Landlord without deduction or offset at Landlord's Address.
b. Tenant may be charged a 10% late fee per month on all rent or other payments which are received by Landlord more than 10 days after their due date. Such late fee shall continue to be charged monthly for each rent or other payment until paid and shall compensate
PAYMENT FOR MAINTENANCE & UTILITIES: Tenant responsible for (T), Landlord responsible for (L)
[ L ] Roof [ T ] Light Globes and Tubes [ T ] Telephone [ L ] Exterior Walls [ T ] Glass / Window Breakage [ T ] Power [ L ] Structural Repair [ T ] Trash Removal [ T ] Heat [ L ] Exterior Painting [ L* ] Snow Removal [ T* ] Water [ L ] Parking Surface [ L* ] Landscaping [ T* ] Sewer [ T ] Plumbing Equipment [ T ] Janitor [ T ] Electrical Equipment [ T ] Overhead doors [ T ] HVAC * Landlord shall contract these services and be reimbursed by Tenant in the CAM charge
a. Landlord shall, at all times during the term of this Lease, keep in good order, condition and repair those portions of Landlord's Building which affect the use and occupancy of the Premises. Tenant shall keep the sidewalks, if any, free from snow and ice. Notwithstanding the foregoing, however, Landlord shall not be responsible to repair any damage to the Premises or to Landlord's Building resulting from the negligent acts or omissions of Tenant, Tenant's employees or invitees, or resulting from fire, acts of God, or other casualties or resulting from condemnation, except to the extent described in Sections 26 and 27 below.
b. Notwithstanding subparagraph (a) above, Tenant shall repair, at its expense, any damage to Landlord's Building or the Premises caused by, or resulting from, any negligent act of Tenant, its employees, invitees or others acting on its behalf. Tenant shall also, at its cost and expense, maintain in good order, condition and repair (ordinary ware and tear excepted) all wall, window and floor coverings, all trade fixtures and all personal property of Tenant within the Premises. Landlord will pay and assume all cost of major repairs in excess of $500 per repair, and costs of replacement of HVAC & plumbing equipment.
c. Landlord shall not be required to make any repairs hereunder until Tenant has notified Landlord of the need for such repairs. Following receipt of such notice, Landlord shall promptly pursue the completion of any such repairs with due diligence. Except as provided herein, there shall be no abatement of rent and no liability of Landlord by reason of any damages to or interference with Tenant's business arising from the making of any repairs, alterations or improvements in or to any portion of Landlord's Building or the Premises or in or to fixtures, appurtenances and personal property therein.
8. INSURANCE.
a. Landlord shall procure insurance coverage designating Landlord and Tenant as insured parties as their interests may appear, insuring against loss of, or damage to, the Premises by reason of fire and other casualties in the face amount equal to the full replacement cost of the Premises. Such insurance shall include normal extended coverage perils as well as extended coverage on the Premises insuring against loss or damage arising from acts such as vandalism and malicious mischief and insuring against loss or damage to fixtures and equipment located within the Premises. The proceeds of any such insurance in case of loss of, or damage to, the Premises or Landlord's fixtures or equipment shall be paid to Landlord to repair and rebuild Landlord's Building pursuant to paragraph 26 below. Any proceeds not required for such purpose shall be the sole property of Landlord.
b. Tenant shall procure commercial general liability insurance covering Landlord and Tenant as their interests may appear, against death, bodily or personal injury or property damage occurring within the Premises or Landlord's Building. Such insurance as obtained by Tenant shall be in a combined single limit not less than $1,000,000.00 for injury or death.
c. All insurance shall be underwritten by insurance companies acceptable to Landlord and authorized to do business in the State of Utah. Tenant shall furnish Landlord with certificates issued by approved insurance companies certifying that such insurance is in effect. Such certificates shall provide the insurance may not be canceled without at least 10 days advance notice to Landlord.
d. To the extent permitted in the State of Utah and under the insurance policies, and to the extent any loss is actually covered by insurance proceeds, each of the parties hereby waives any rights it may have against the other party on account of any loss or damage to its
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ADDENDUM # 1
To
Commercial and Industrial Lease
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Page 1 of 1
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THIS IS AN ADDENDUM to that Commercial and Industrial Lease (herein referred to as the “CIL”) with an Reference Date of June 15, 2006 including all prior addenda and counteroffers, between Hybrid Propulsion Laboratory as Tenant, and Point Management LLC as Landlord, regarding the Property located at 14621 So. 800 W, Bluffdale UT 84065. The following terms are hereby incorporated as part of the CIL:
To the extent the above terms of this Addendum modify the body of the Lease agreement or are different than the terms in the body of the Lease Agreement then these terms shall control.
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CORPORATE SERVICES AGREEMENT
AGREEMENT, made as of this 1st day of January 2006, between Pukka USA, Inc. a Utah corporation with its offices at 892 North 340 East, American Fork, Utah, 84003 (hereinafter known as the “Company”) and Birchwood Capital Advisors Group, Inc. with its offices at 264 Union Blvd, First Floor, Totowa, NJ, 07512 hereinafter Known as the "Consultant".
WHEREAS, the Consultant is in the business of providing management consulting , corporate advisory and capital advisory services.
WHEREAS, the Company desires to retain the Consultant to perform consulting services in connection with the Company's business affairs on a non-exclusive basis, and the Consultant is willing to undertake to provide such services on that basis and as hereinafter set forth.
NOW, THEREFORE, the parties agree as follows:
1. TERM OF AGREEMENT. The term of the agreement shall be one (1) years from the date signed herein.
2. NATURE OF SERVICES. The Consultant will use his best efforts and render advice and assistance to the Company on business-related matters (all of which services are hereinafter collectively referred to as the “Corporate Services Agreement” and in connection therewith, the Consultant shall at the Board of Director’s request:
a. Attend meetings of the Company's Board of Directors, Executive Committee, and Financial Committee(s) when so requested by the Company.
Attend meetings and at the request of the Company to review, analyze and report on proposed business opportunities. These meetings are to include operations and production meetings when the Company deems necessary.
c. Consult with the Company concerning on-going strategic corporate planning and long-term investment policies, including any revisions of the Company's business plan, any revisions of the Company’s corporate governance guidelines or accounting policies, and any changes to its short term or long term goals.
Consult with and advise the Company with regard to any and all potential mergers, acquisitions and/or reverse merger opportunities that the Consultant and Company mutually agree would advance the prospects of the Company and benefit its shareholders.
e. The Consultant has no authority to bind the Company and his sole duties are to report recommendations to the Company's Board of Directors.
Anything to the contrary herein notwithstanding, it is recognized and agreed that the Consultant's services will not include any service that constitutes the rendering of legal opinions, performance of work that is in the ordinary purview of a certified public accountant, or any work that is in the ordinary purview of a registered securities broker/dealer.
3. COMPENSATION. As full payment for its services set forth above the Company shall issue to the Consultant 1,000,000 shares of its only class of common stock in lieu of any and all cash compensation as it relates to Section 2 above.
It is further understood and agreed that Consultant may rely upon information furnished to him by the Company reasonably believed to be accurate and reliable and that, except as herein provided, the Consultant shall not be accountable for any loss suffered by the Company by reason of the Company's action or non-action on the basis of any advice, recommendation or approval of the Consultant, his employees or agents.
The parties further acknowledge that the Consultant undertakes no responsibility for the accuracy of any statement made by management contained in press releases or other communications, including, but not limited to, filings with the Securities and Exchange Commission and the National Association of Securities Dealers, Inc.
7. STATUS OF CONSULTANT. The Consultant is an independent contractor and has no authority to bind the Company without the approval from the Board of Directors. The Consultant shall not have, nor be deemed to have, any fiduciary obligation or duties to the Company.
8. OTHER ACTIVITIES OF CONSULTANT. The Company recognizes that the Consultant now renders, and may continue to render, consulting and advisory services to other companies which may or may not have policies and conduct activities similar to those of the Company. The Consultant shall be free to pursue, conduct and carry on for the Consultant's own account (or for the account of others) such activities, employment, ventures, businesses and other pursuits as the Consultant in his sole, absolute and unfettered discretion, may elect, provided the Consultant and any such activities by him or on his behalf do not violate Paragraph 10 of this Agreement, or any other provision hereof.
9. DISCLAIMER BY CONSULTANT. The Consultant will prepare certain materials for the Company. Consultant makes no representation that his services will result in any enhancement of the Company.
10. CONFIDENTIALITY. Until such time as it may be publicly disclosed, the Consultant agrees that any information, materials or documents provided by the Company will not be revealed or disclosed to the public or any third person, except in the performance of this Agreement and with the Company's consent. Upon completion of the term of this Agreement and at the written request of the Company, the Consultant will return any original documentation provided by the Company to the Consultant. The Consultant will require similar confidentiality agreements from his employees and/or agents where he reasonably believes they will come in contact with confidential material.
11. MISCELLANEOUS.
a. The Company shall make all final decisions with respect to consultation, advice and services rendered by the Consultant.
b. This Agreement contains the entire agreement of the parties hereto and there are no agreements, representations or warranties other than those contained herein. Neither party may modify this Agreement unless in writing and signed by both parties.
c. This Agreement shall be governed by and construed in accordance with the laws of the State of Utah.
d. Any controversy or claim under, arising out of, or related to this Agreement shall be settled by arbitration in accordance with the rules and under the auspices of the American Arbitration Association to be conducted in Utah.
e. This Agreement shall supersede and replace all previous agreements between the parties, both written and oral.
/s/ Leonard DuCharme |
/s/ Chris Giordano |
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Mr. Leonard DuCharme |
Mr. Chris Giordano |
CORPORATE SERVICES AGREEMENT
AGREEMENT, made as of this 7th day of April 2006, between Pukka USA, Inc. a Utah corporation with its offices at 892 North 340 East, American Fork, Utah, 84003 (hereinafter known as the “Company”) and Legend Merchant Group, Inc. with its offices at 30 Broad Street, 38th Floor, NYC, NY, 10004 hereinafter Known as the "Consultant".
WHEREAS, the Consultant is in the business of providing management consulting , corporate advisory and capital advisory services.
WHEREAS, the Consultant has already rendered valuable services over the course of the last one hundred twenty (120) days and will continue for a period of two (2) years from this date herein.
WHEREAS, the Company desires to retain the Consultant to perform consulting services in connection with the Company's business affairs on a non-exclusive basis, and the Consultant is willing to undertake to provide such services on that basis and as hereinafter set forth.
NOW, THEREFORE, the parties agree as follows:
1. TERM OF AGREEMENT. The term of the agreement shall be two (2) years from the date signed herein.
2. NATURE OF SERVICES. The Consultant will use his best efforts and render advice and assistance to the Company on business-related matters (all of which services are hereinafter collectively referred to as the “Corporate Services Agreement” and in connection therewith, the Consultant shall at the Board of Director’s request:
a. Attend meetings of the Company's Board of Directors, Executive Committee, and Financial Committee(s) when so requested by the Company.
b. Attend meetings and at the request of the Company to review, analyze and report on proposed business opportunities. These meetings are to include operations and production meetings when the Company deems necessary.
c. Consult with the Company concerning on-going strategic corporate planning and long-term investment policies, including any revisions of the Company's business plan, any revisions of the Company’s corporate governance guidelines or accounting policies, and any changes to its short term or long term goals.
The parties further acknowledge that the Consultant undertakes no responsibility for the accuracy of any statement made by management contained in press releases or other communications, including, but not limited to, filings with the Securities and Exchange Commission and the National Association of Securities Dealers, Inc.
7. STATUS OF CONSULTANT. The Consultant is an independent contractor and has no authority to bind the Company without the approval from the Board of Directors. The Consultant shall not have, nor be deemed to have, any fiduciary obligation or duties to the Company.
8. OTHER ACTIVITIES OF CONSULTANT. The Company recognizes that the Consultant now renders, and may continue to render, consulting and advisory services to other companies which may or may not have policies and conduct activities similar to those of the Company. The Consultant shall be free to pursue, conduct and carry on for the Consultant's own account (or for the account of others) such activities, employment, ventures, businesses and other pursuits as the Consultant in his sole, absolute and unfettered discretion, may elect, provided the Consultant and any such activities by him or on his behalf do not violate Paragraph 10 of this Agreement, or any other provision hereof.
9. DISCLAIMER BY CONSULTANT. The Consultant will prepare certain materials for the Company. Consultant makes no representation that his services will result in any enhancement of the Company.
10. CONFIDENTIALITY. Until such time as it may be publicly disclosed, the Consultant agrees that any information, materials or documents provided by the Company will not be revealed or disclosed to the public or any third person, except in the performance of this Agreement and with the Company's consent. Upon completion of the term of this Agreement and at the written request of the Company, the Consultant will return any original documentation provided by the Company to the Consultant. The Consultant will require similar confidentiality agreements from his employees and/or agents where he reasonably believes they will come in contact with confidential material.
IN WITNESS WHEREOF, the undersigned have executed this Agreement effective as of the day and year first above written.
/s/ Leonard A. DuCharme /s/ John Shaw
Mr. Leonard DuCharme Mr. John Shaw
CEO/ Pukka USA, Inc CEO/Legend Merchant Group, Inc
INVESTOR RELATIONS PROGRAM AGREEMENT
April 3, 2006
Mr. Paul Ressler, President
Pukka USA, Inc.
892 North 340 East
American Fork, Utah 84003
Dear Mr. Ressler,
This letter agreement is between Pukka USA, Inc. (the “Company") and Transcontinental Media, Ltd ("Transcontinental") and, in that regard, the parties agree as follows:
1. Term. This letter agreement will commence on April 3, 2006, and expire on March 31, 2007.
2. IR Fees. The Company will pay Transcontinental warrants to purchase 1,200,000 shares of its common stock, exercisable at $.001 per share for implementation of its Investor Relations ("IR") Program. The Company agrees to include the foregoing shares in the next registration statement filed by the Company with the Securities and Exchange Commission.
3. IR Services. Transcontinental, in consideration of the above fee, will perform the following services for the Company; however, such services will be subject to the Company's written or oral approval:
A. Arrange an initial visit between the Transcontinental's team and Management to discuss the Company, Transcontinental's IR Program, investor relation goals and objectives, and themes to be stressed in the implementation of the program.
B. Prepare a Corporate Fact Sheet, a document that encapsulates the Company's information and its most recent financial results. The Corporate Fact Sheet will be sent to targeted investment professionals and will be followed up with phone calls as an initial screening tool to determine the recipients' interest in meeting with the Company. All responses will be entered into Transcontinental's database in order that Company information can be furnished to them in the future.
C. Compile an "IR Kit", including the Corporate Fact Sheet, case studies, media backgrounders, press releases, press clippings, existing annual report and/or brochure, recent SEC documents and other materials regarding the Company.
5. Compliance with Applicable Laws. In performing the activities described in this letter agreement, Transcontinental's and the Company's actions will comply with all SEC and applicable State laws, rules and regulations.
6. Indemnification. The Company will indemnify and defend Transcontinental against all claims, proceedings, suits or other matters that might be asserted against Transcontinental's activities by reason of this letter agreement and the Company will pay Transcontinental' reasonable attorneys' fees and expenses in connection with such matters; however, the Company's indemnification of Transcontinental is conditioned upon the following:
A. Transcontinental must act within the scope of this letter agreement;
B. Transcontinental must act in accordance with the Company instructions;
C. Transcontinental is not negligent;
D. Transcontinental must submit information and materials to the Company for approval prior to dissemination.
7. Confidential Information. Transcontinental acknowledges that it will gain knowledge of information of substantial value to the Company regarding the Company's business which is not generally known and which gives the Company an advantage over competitors who do not know, or use, such information, including, but not limited to, know-how, trade secrets, techniques, designs, sales and customer information, and business and financial information relating to the business, products, services, practices or techniques of the Company's plans for future products or developments ("Confidential Information"). Transcontinental agrees to, at all times, regard and preserve as confidential such Confidential Information, and to refrain from publishing or disclosing any part of it by using, copying or duplicating it in any way or by any means, whatsoever. Transcontinental further agrees that such Confidential Information will not be disclosed by it to any person or entity without the prior written consent of the Company. Finally, Transcontinental agrees to refrain at all times from any other act or omission that would reduce the value of the Confidential Information to the Company.
8. Notices. All notices, requests, demands or other communications required or authorized or contemplated to be given by this Agreement shall be in writing and shall
10. Governing Law. This letter agreement will be governed by the laws of the State of Utah applicable to contracts made and to be performed in that State.
11. Entire agreement; no amendment except in writing. The provisions of this letter agreement set forth the entire binding agreement between the parties and supersede all prior written and oral communications, discussions, and negotiations between the parties concerning the proposed transaction. The terms of this letter agreement may be amended only in writing and when signed by both parties.
If the foregoing correctly states our understanding, please execute the enclosed copies of this letter in the spaces provided below and return a duplicate to the undersigned. We look forward to working with Pukka USA, Inc. and to a long and mutually successful relationship.
Very truly yours,
TRANSCONTINENTAL MEDIA, LTD
By: /s/ Steven H. Mcdonald
Title: President
Date: April 3, 2006
Agreed to and approved:
PUKKA USA, INC.
By: /s/ Paul Ressler
Title: President
Date: April 3, 2006
PUKKA USA, INC
WARRANT AGREEMENT
Issue Date: April 10, 2006
1. Basic Terms. This Warrant Agreement (the “Warrant”) certifies that, for value received, the registered holder specified below or its registered assigns (“Holder”), is the owner of a warrant of Pukka USA, Inc., a Utah corporation having its principal place of business at 892 North 340 East, American Fork, Utah 84003 ( the "Corporation"), subject to adjustments as provided herein, to purchase one million two hundred thousand (1,200,000) shares of the Common Stock, $.001 par value (the “Common Stock”), of the Corporation from the Corporation at the price per share shown below (the “Exercise Price”).
Holder:
Transcontinental Media, Ltd.
Exercise Price per share:
$0.001
Except as specifically provided otherwise, all references in this Warrant to the Exercise Price and the number of shares of Common Stock purchasable hereunder shall be to the Exercise Price and number of shares after any adjustments are made thereto pursuant to this Warrant.
2. Corporation’s Representations/Covenants. The Corporation represents and covenants that the shares of Common Stock issuable upon the exercise of this Warrant shall at delivery be fully paid and non-assessable and free from taxes, liens, encumbrances and charges with respect to their purchase. The Corporation shall take any necessary actions to assure that the par value per share of the Common Stock is at all times equal to or less than the then current Exercise Price per share of Common Stock issuable pursuant to this Warrant. The Corporation shall at all times reserve and hold available sufficient shares of Common Stock to satisfy all conversion and purchase rights of outstanding convertible securities, options and warrants of the Corporation, including this Warrant.
(i) takes a record of the holders of its outstanding shares of Common Stock for the purposes of entitling them to receive a dividend payable in, or other distribution of, Common Stock; or (ii) subdivides its outstanding shares of Common Stock into a larger number of shares of Common Stock; or (iii) combines its outstanding shares of Common Stock into a smaller number of shares of Common Stock;
then, and in each such case, the Exercise Price shall be adjusted to that price determined by multiplying the Exercise Price in effect immediately prior to such event by a fraction (A) the numerator of which is the total number of outstanding shares of Common Stock immediately prior to such event and (B) the denominator of which is the total number of outstanding shares of Common Stock immediately after such event.
Upon each adjustment in the Exercise Price under this Warrant such number of shares of Common Stock purchasable under this Warrant shall be adjusted by multiplying the number of shares of Common Stock by a fraction, the numerator of which is the Exercise Price immediately prior to such adjustment and the denominator of which is the Exercise Price in effect upon such adjustment.
5. Adjustment for Reorganization, Consolidation, Merger, Etc.
PUKKA USA, INC. |
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By: /s/ Paul Ressler |
Paul Ressler, President 892 North 340 East American Fork, Utah 84003 |
PUKKA USA, INC.
Form of Transfer
(To be executed by the Holder to transfer the Warrant)
For value received the undersigned registered holder of the attached Warrant hereby sells, assigns, and transfers the Warrant to the Assignee(s) named below :
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PUKKA USA, INC.
Exercise Form
(To be executed by the Holder to purchase
Common Stock pursuant to the Warrant)
The undersigned holder of the attached Warrant hereby irrevocably elects to exercise purchase rights represented by such Warrant for, and to purchase, 1,200,000 shares of Common Stock of Pukka USA, Inc.
The undersigned herewith tenders payment for those shares and encloses a certified check, official bank check or has wired payment of $1,2000 .
The undersigned requests that (1) a certificate for the shares be issued in the name of the undersigned and (2) if such number of shares is not all of the shares purchasable under this Warrant, that a new Warrant of like tenor for the balance of the remaining shares purchasable under this Warrant be issued.
Date: July 20, 2006 /s/ Steven H. Mcdonald
Signature
INVESTOR RELATIONS PROGRAM AGREEMENT
April 3, 2006
Mr. Paul Ressler, President
Pukka USA, Inc.
892 North 340 East
American Fork, Utah 84003
Dear Mr. Ressler,
This letter agreement is between Pukka USA, Inc. (the “Company") and MNDD Communications, Ltd ("MNDD") and, in that regard, the parties agree as follows:
1. Term. This letter agreement will commence on April 3, 2006, and expire on March 31, 2007.
2. IR Fees. The Company will pay MNDD warrants to purchase 1,200,000 shares of its common stock, exercisable at $.001 per share for implementation of its Investor Relations ("IR") Program. The Company agrees to include the foregoing shares in the next registration statement filed by the Company with the Securities and Exchange Commission.
3. IR Services. MNDD, in consideration of the above fee, will perform the following services for the Company; however, such services will be subject to the Company's written or oral approval:
A. Arrange an initial visit between the MNDD's team and Management to discuss the Company, MNDD's IR Program, investor relation goals and objectives, and themes to be stressed in the implementation of the program.
B. Prepare a Corporate Fact Sheet, a document that encapsulates the Company's information and its most recent financial results. The Corporate Fact Sheet will be sent to targeted investment professionals and will be followed up with phone calls as an initial screening tool to determine the recipients' interest in meeting with the Company. All responses will be entered into MNDD's database in order that Company information can be furnished to them in the future.
C. Compile an "IR Kit", including the Corporate Fact Sheet, case studies, media backgrounders, press releases, press clippings, existing annual report and/or brochure, recent SEC documents and other materials regarding the Company.
5. Compliance with Applicable Laws. In performing the activities described in this letter agreement, MNDD's and the Company's actions will comply with all SEC and applicable State laws, rules and regulations.
6. Indemnification. The Company will indemnify and defend MNDD against all claims, proceedings, suits or other matters that might be asserted against MNDD's activities by reason of this letter agreement and the Company will pay MNDD' reasonable attorneys' fees and expenses in connection with such matters; however, the Company's indemnification of MNDD is conditioned upon the following:
A. MNDD must act within the scope of this letter agreement;
B. MNDD must act in accordance with the Company instructions;
C. MNDD is not negligent;
D. MNDD must submit information and materials to the Company for approval prior to dissemination.
7. Confidential Information. MNDD acknowledges that it will gain knowledge of information of substantial value to the Company regarding the Company's business which is not generally known and which gives the Company an advantage over competitors who do not know, or use, such information, including, but not limited to, know-how, trade secrets, techniques, designs, sales and customer information, and business and financial information relating to the business, products, services, practices or techniques of the Company's plans for future products or developments ("Confidential Information"). MNDD agrees to, at all times, regard and preserve as confidential such Confidential Information, and to refrain from publishing or disclosing any part of it by using, copying or duplicating it in any way or by any means, whatsoever. MNDD further agrees that such Confidential Information will not be disclosed by it to any person or entity without the prior written consent of the Company. Finally, MNDD agrees to refrain at all times from any other act or omission that would reduce the value of the Confidential Information to the Company.
8. Notices. All notices, requests, demands or other communications required or authorized or contemplated to be given by this Agreement shall be in writing and shall be deemed to have been duly given if hand delivered, sent by commercial overnight courier or sent by certified or registered mail. A facsimile transmission, when received, shall be considered delivery of written notice.
10. Governing Law. This letter agreement will be governed by the laws of the State of Utah applicable to contracts made and to be performed in that State.
11. Entire agreement; no amendment except in writing. The provisions of this letter agreement set forth the entire binding agreement between the parties and supersede all prior written and oral communications, discussions, and negotiations between the parties concerning the proposed transaction. The terms of this letter agreement may be amended only in writing and when signed by both parties.
If the foregoing correctly states our understanding, please execute the enclosed copies of this letter in the spaces provided below and return a duplicate to the undersigned. We look forward to working with Pukka USA, Inc. and to a long and mutually successful relationship.
Very truly yours,
MNDD COMMUNICATIONS, LTD
By: /s/ Jamie R. Hildago
Title: President
Date: April 3, 2006
Agreed to and approved:
PUKKA USA, INC.
By: /s/ Paul Ressler
Title: President
Date: April 3, 2006
PUKKA USA, INC
WARRANT AGREEMENT
Issue Date: April 10, 2006
1. Basic Terms. This Warrant Agreement (the “Warrant”) certifies that, for value received, the registered holder specified below or its registered assigns (“Holder”), is the owner of a warrant of Pukka USA, Inc., a Utah corporation having its principal place of business at 892 North 340 East, American Fork, Utah 84003 ( the "Corporation"), subject to adjustments as provided herein, to purchase one million two hundred thousand (1,200,000) shares of the Common Stock, $.001 par value (the “Common Stock”), of the Corporation from the Corporation at the price per share shown below (the “Exercise Price”).
Holder:
MNDD Communications, Ltd.
Exercise Price per share:
$0.001
Except as specifically provided otherwise, all references in this Warrant to the Exercise Price and the number of shares of Common Stock purchasable hereunder shall be to the Exercise Price and number of shares after any adjustments are made thereto pursuant to this Warrant.
2. Corporation’s Representations/Covenants. The Corporation represents and covenants that the shares of Common Stock issuable upon the exercise of this Warrant shall at delivery be fully paid and non-assessable and free from taxes, liens, encumbrances and charges with respect to their purchase. The Corporation shall take any necessary actions to assure that the par value per share of the Common Stock is at all times equal to or less than the then current Exercise Price per share of Common Stock issuable pursuant to this Warrant. The Corporation shall at all times reserve and hold available sufficient shares of Common Stock to satisfy all conversion and purchase rights of outstanding convertible securities, options and warrants of the Corporation, including this Warrant.
(i) takes a record of the holders of its outstanding shares of Common Stock for the purposes of entitling them to receive a dividend payable in, or other distribution of, Common Stock; or (ii) subdivides its outstanding shares of Common Stock into a larger number of shares of Common Stock; or (iii) combines its outstanding shares of Common Stock into a smaller number of shares of Common Stock;
then, and in each such case, the Exercise Price shall be adjusted to that price determined by multiplying the Exercise Price in effect immediately prior to such event by a fraction (A) the numerator of which is the total number of outstanding shares of Common Stock immediately prior to such event and (B) the denominator of which is the total number of outstanding shares of Common Stock immediately after such event.
Upon each adjustment in the Exercise Price under this Warrant such number of shares of Common Stock purchasable under this Warrant shall be adjusted by multiplying the number of shares of Common Stock by a fraction, the numerator of which is the Exercise Price immediately prior to such adjustment and the denominator of which is the Exercise Price in effect upon such adjustment.
6. Notice of Adjustment. On the happening of an event requiring an adjustment of the Exercise Price or the shares purchasable under this Warrant, the Corporation shall immediately give written notice to the Holder stating the adjusted Exercise Price and the adjusted number and kind of securities or other property purchasable under this Warrant resulting from the event and setting forth in reasonable detail the method of calculation and the facts upon which the calculation is based.
7. Dissolution, Liquidation. In case of the voluntary or involuntary dissolution, liquidation or winding up of the Corporation (other than in connection with a reorganization, consolidation, merger, or other transaction covered by paragraph 5 above) is at any time proposed, the Corporation shall give at least thirty days prior written notice to the Holder. Such notice shall contain: (a) the date on which the transaction is to take place; (b) the record date (which shall be at least thirty (30) days after the giving of the notice) as of which holders of Common Stock will be entitled to receive distributions as a result of the transaction; (c) a brief description of the transaction, (d) a brief description of the distributions to be made to holders of Common Stock as a result of the transaction; and (d) an estimate of the fair value of the distributions. On the date of the transaction, if it actually occurs, this Warrant and all rights under this Warrant shall terminate.
8. Rights of Holder. The Corporation shall deliver to the Holder all notices and other information provided to its holders of shares of Common Stock or other securities which may be issuable hereunder concurrently with the delivery of such information to the holders. This Warrant does not entitle the Holder to any voting rights or, except for the foregoing notice provisions, any other rights as a shareholder of the Corporation. No dividends are payable or will accrue on this Warrant or the shares of Common Stock purchasable under this Warrant until,
9. Exchange for Other Denominations. This Warrant is exchangeable, on its surrender by the Holder to the Corporation, for a new Warrant of like tenor and date representing in the aggregate the right to purchase the balance of the number of shares purchasable under this Warrant in denominations and subject to restrictions on transfer contained herein, in the names designated by the Holder at the time of surrender.
10. Substitution. Upon receipt by the Corporation of evidence satisfactory (in the exercise of reasonable discretion) to it of the ownership of and the loss, theft or destruction or mutilation of the Warrant, and (in the case or loss, theft or destruction) of indemnity satisfactory (in the exercise of reasonable discretion) to it, and (in the case of mutilation) upon the surrender and cancellation thereof, the Corporation will issue and deliver, in lieu thereof, a new Warrant of like tenor.
11. Restrictions on Transfer. Neither this Warrant nor the shares of Common Stock issuable on exercise of this Warrant have been registered under the Securities Act or any other securities laws (the “Acts”). Neither this Warrant nor the shares of Common Stock purchasable hereunder may be sold, transferred, pledged or hypothecated in the absence of (a) an effective registration statement for this Warrant or Common Stock purchasable hereunder, as applicable, under the Acts, or (b) an opinion of counsel reasonably satisfactory to the Corporation that registration is not required under such Acts. If the Holder seeks an opinion as to transfer without registration from Holder’s counsel, the Corporation shall provide such factual information to Holder’s counsel as Holder’s counsel reasonably requests for the purpose of rendering such opinion. Each certificate evidencing shares of Common Stock purchased hereunder will bear a legend describing the restrictions on transfer contained in this paragraph unless, in the opinion of counsel reasonably acceptable to the Corporation, the shares need no longer to be subject to the transfer restrictions. If the Corporation files a registration statement with the Securities and Exchange Commission, the Holder will have piggyback registration rights as to the shares of Common Stock underlying this Warrant.
12. Transfer. Except as otherwise provided in this Warrant, this Warrant is transferable only on the books of the Corporation by the Holder in person or by attorney, on surrender of this Warrant, properly endorsed.
13. Recognition of Holder. Prior to due presentment for registration of transfer of this Warrant, the Corporation shall treat the Holder as the person exclusively entitled to receive notices and otherwise to exercise rights under this Warrant. All notices required or permitted to be given to the Holder shall be in writing and shall be given by first class mail, postage prepaid, addressed to the Holder at the address of the Holder appearing in the records of the Corporation.
PUKKA USA, INC. |
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By: /s/ Paul Ressler |
Paul Ressler, President 892 North 340 East American Fork, Utah 84003 |
PUKKA USA, INC.
Form of Transfer
(To be executed by the Holder to transfer the Warrant)
For value received the undersigned registered holder of the attached Warrant hereby sells, assigns, and transfers the Warrant to the Assignee(s) named below :
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PUKKA USA, INC.
Exercise Form
(To be executed by the Holder to purchase
Common Stock pursuant to the Warrant)
The undersigned holder of the attached Warrant hereby irrevocably elects to exercise purchase rights represented by such Warrant for, and to purchase, 1,200,000 shares of Common Stock of Pukka USA, Inc.
The undersigned herewith tenders payment for those shares and encloses a certified check, official bank check or has wired payment of $1,200 .
The undersigned requests that (1) a certificate for the shares be issued in the name of the undersigned and (2) if such number of shares is not all of the shares purchasable under this Warrant, that a new Warrant of like tenor for the balance of the remaining shares purchasable under this Warrant be issued.
Date: July 19, 2006 /s/ Jamie R. Hildago
Signature
INVESTOR RELATIONS PROGRAM AGREEMENT
April 3, 2006
Mr. Paul Ressler, President
Pukka USA, Inc.
892 North 340 East
American Fork, Utah 84003
Dear Mr. Ressler,
This letter agreement is between Pukka USA, Inc. (the “Company") and Topaz Analytics, Ltd ("Topaz") and, in that regard, the parties agree as follows:
1. Term. This letter agreement will commence on April 3, 2006, and expire on March 31, 2007.
2. IR Fees. The Company will pay Topaz warrants to purchase 1,200,000 shares of its common stock, exercisable at $.001 per share for implementation of its Investor Relations ("IR") Program. The Company agrees to include the foregoing shares in the next registration statement filed by the Company with the Securities and Exchange Commission.
3. IR Services. Topaz, in consideration of the above fee, will perform the following services for the Company; however, such services will be subject to the Company's written or oral approval:
A. Arrange an initial visit between the Topaz's team and Management to discuss the Company, Topaz's IR Program, investor relation goals and objectives, and themes to be stressed in the implementation of the program.
B. Prepare a Corporate Fact Sheet, a document that encapsulates the Company's information and its most recent financial results. The Corporate Fact Sheet will be sent to targeted investment professionals and will be followed up with phone calls as an initial screening tool to determine the recipients' interest in meeting with the Company. All responses will be entered into Topaz's database in order that Company information can be furnished to them in the future.
C. Compile an "IR Kit", including the Corporate Fact Sheet, case studies, media backgrounders, press releases, press clippings, existing annual report and/or brochure, recent SEC documents and other materials regarding the Company.
6. Indemnification. The Company will indemnify and defend Topaz against all claims, proceedings, suits or other matters that might be asserted against Topaz's activities by reason of this letter agreement and the Company will pay Topaz' reasonable attorneys' fees and expenses in connection with such matters; however, the Company's indemnification of Topaz is conditioned upon the following:
A. Topaz must act within the scope of this letter agreement;
B. Topaz must act in accordance with the Company instructions;
C. Topaz is not negligent;
D. Topaz must submit information and materials to the Company for approval prior to dissemination.
7. Confidential Information. Topaz acknowledges that it will gain knowledge of information of substantial value to the Company regarding the Company's business which is not generally known and which gives the Company an advantage over competitors who do not know, or use, such information, including, but not limited to, know-how, trade secrets, techniques, designs, sales and customer information, and business and financial information relating to the business, products, services, practices or techniques of the Company's plans for future products or developments ("Confidential Information"). Topaz agrees to, at all times, regard and preserve as confidential such Confidential Information, and to refrain from publishing or disclosing any part of it by using, copying or duplicating it in any way or by any means, whatsoever. Topaz further agrees that such Confidential Information will not be disclosed by it to any person or entity without the prior written consent of the Company. Finally, Topaz agrees to refrain at all times from any other act or omission that would reduce the value of the Confidential Information to the Company.
8. Notices. All notices, requests, demands or other communications required or authorized or contemplated to be given by this Agreement shall be in writing and shall be deemed to have been duly given if hand delivered, sent by commercial overnight courier or sent by certified or registered mail. A facsimile transmission, when received, shall be considered delivery of written notice.
PUKKA USA, INC
WARRANT AGREEMENT
Issue Date: April 10, 2006
1. Basic Terms. This Warrant Agreement (the “Warrant”) certifies that, for value received, the registered holder specified below or its registered assigns (“Holder”), is the owner of a warrant of Pukka USA, Inc., a Utah corporation having its principal place of business at 892 North 340 East, American Fork, Utah 84003 ( the "Corporation"), subject to adjustments as provided herein, to purchase one million two hundred thousand (1,200,000) shares of the Common Stock, $.001 par value (the “Common Stock”), of the Corporation from the Corporation at the price per share shown below (the “Exercise Price”).
Holder:
Topaz Analytics Ltd.
Exercise Price per share:
$0.001
Except as specifically provided otherwise, all references in this Warrant to the Exercise Price and the number of shares of Common Stock purchasable hereunder shall be to the Exercise Price and number of shares after any adjustments are made thereto pursuant to this Warrant.
2. Corporation’s Representations/Covenants. The Corporation represents and covenants that the shares of Common Stock issuable upon the exercise of this Warrant shall at delivery be fully paid and non-assessable and free from taxes, liens, encumbrances and charges with respect to their purchase. The Corporation shall take any necessary actions to assure that the par value per share of the Common Stock is at all times equal to or less than the then current Exercise Price per share of Common Stock issuable pursuant to this Warrant. The Corporation shall at all times reserve and hold available sufficient shares of Common Stock to satisfy all conversion and purchase rights of outstanding convertible securities, options and warrants of the Corporation, including this Warrant.
4. Protection Against Dilution. The number of shares of Common Stock purchasable under this Warrant, and the Exercise Price, shall be adjusted as set forth as follows. If at any time or from time to time after the date of this Warrant, the Corporation:
(i) takes a record of the holders of its outstanding shares of Common Stock for the purposes of entitling them to receive a dividend payable in, or other distribution of, Common Stock; or (ii) subdivides its outstanding shares of Common Stock into a larger number of shares of Common Stock; or (iii) combines its outstanding shares of Common Stock into a smaller number of shares of Common Stock;
then, and in each such case, the Exercise Price shall be adjusted to that price determined by multiplying the Exercise Price in effect immediately prior to such event by a fraction (A) the numerator of which is the total number of outstanding shares of Common Stock immediately prior to such event and (B) the denominator of which is the total number of outstanding shares of Common Stock immediately after such event.
Upon each adjustment in the Exercise Price under this Warrant such number of shares of Common Stock purchasable under this Warrant shall be adjusted by multiplying the number of shares of Common Stock by a fraction, the numerator of which is the Exercise Price immediately prior to such adjustment and the denominator of which is the Exercise Price in effect upon such adjustment.
7. Dissolution, Liquidation. In case of the voluntary or involuntary dissolution, liquidation or winding up of the Corporation (other than in connection with a reorganization, consolidation, merger, or other transaction covered by paragraph 5 above) is at any time proposed, the Corporation shall give at least thirty days prior written notice to the Holder. Such notice shall contain: (a) the date on which the transaction is to take place; (b) the record date (which shall be at least thirty (30) days after the giving of the notice) as of which holders of Common Stock will be entitled to receive distributions as a result of the transaction; (c) a brief description of the transaction, (d) a brief description of the distributions to be made to holders of Common Stock as a result of the transaction; and (d) an estimate of the fair value of the distributions. On the date of the transaction, if it actually occurs, this Warrant and all rights under this Warrant shall terminate.
8. Rights of Holder. The Corporation shall deliver to the Holder all notices and other information provided to its holders of shares of Common Stock or other securities which may be issuable hereunder concurrently with the delivery of such information to the holders. This Warrant does not entitle the Holder to any voting rights or, except for the foregoing notice provisions, any other rights as a shareholder of the Corporation. No dividends are payable or will accrue on this Warrant or the shares of Common Stock purchasable under this Warrant until,
10. Substitution. Upon receipt by the Corporation of evidence satisfactory (in the exercise of reasonable discretion) to it of the ownership of and the loss, theft or destruction or mutilation of the Warrant, and (in the case or loss, theft or destruction) of indemnity satisfactory (in the exercise of reasonable discretion) to it, and (in the case of mutilation) upon the surrender and cancellation thereof, the Corporation will issue and deliver, in lieu thereof, a new Warrant of like tenor.
11. Restrictions on Transfer. Neither this Warrant nor the shares of Common Stock issuable on exercise of this Warrant have been registered under the Securities Act or any other securities laws (the “Acts”). Neither this Warrant nor the shares of Common Stock purchasable hereunder may be sold, transferred, pledged or hypothecated in the absence of (a) an effective registration statement for this Warrant or Common Stock purchasable hereunder, as applicable, under the Acts, or (b) an opinion of counsel reasonably satisfactory to the Corporation that registration is not required under such Acts. If the Holder seeks an opinion as to transfer without registration from Holder’s counsel, the Corporation shall provide such factual information to Holder’s counsel as Holder’s counsel reasonably requests for the purpose of rendering such opinion. Each certificate evidencing shares of Common Stock purchased hereunder will bear a legend describing the restrictions on transfer contained in this paragraph unless, in the opinion of counsel reasonably acceptable to the Corporation, the shares need no longer to be subject to the transfer restrictions. If the Corporation files a registration statement with the Securities and Exchange Commission, the Holder will have piggyback registration rights as to the shares of Common Stock underlying this Warrant.
12. Transfer. Except as otherwise provided in this Warrant, this Warrant is transferable only on the books of the Corporation by the Holder in person or by attorney, on surrender of this Warrant, properly endorsed.
13. Recognition of Holder. Prior to due presentment for registration of transfer of this Warrant, the Corporation shall treat the Holder as the person exclusively entitled to receive notices and otherwise to exercise rights under this Warrant. All notices required or permitted to be given to the Holder shall be in writing and shall be given by first class mail, postage prepaid, addressed to the Holder at the address of the Holder appearing in the records of the Corporation.
PUKKA USA, INC. |
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By: /s/ Paul Ressler |
Paul Ressler, President 892 North 340 East American Fork, Utah 84003 |
PUKKA USA, INC.
Form of Transfer
(To be executed by the Holder to transfer the Warrant)
For value received the undersigned registered holder of the attached Warrant hereby sells, assigns, and transfers the Warrant to the Assignee(s) named below :
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PUKKA USA, INC.
Exercise Form
(To be executed by the Holder to purchase
Common Stock pursuant to the Warrant)
The undersigned holder of the attached Warrant hereby irrevocably elects to exercise purchase rights represented by such Warrant for, and to purchase, 1,200,000 shares of Common Stock of Pukka USA, Inc.
The undersigned herewith tenders payment for those shares and encloses a certified check, official bank check or has wired payment of $1,200 .
The undersigned requests that (1) a certificate for the shares be issued in the name of the undersigned and (2) if such number of shares is not all of the shares purchasable under this Warrant, that a new Warrant of like tenor for the balance of the remaining shares purchasable under this Warrant be issued.
Date: July 19, 2006 /s/ Warren B. Hutchinson
Signature
Exhibit 10.16
PRODUCT PURCHASE AGREEMENT
This PRODUCT PURCHASE AGREEMENT (this “Agreement”), dated and effective as of the Effective Date defined below, is entered into by and between SUMOWORKS, LIMITED (“Sumo”) with an address of Unit 1806, 18/F., Lippo House, Causeway Bay Plaza 2, 463-483 Lockhart Road, Causeway Bay, Hong Kong, and LUND INSTRUMENT ENGINEERING, INC. doing business as PowerStream Technology (“PowerStream”) with an address of 140 S. Mountain Way Drive, Orem, Utah 84058.
RECITALS
A. Sumo is engaged in the business of designing, developing, marketing and selling electric motor powered minibikes and other products and desires to use the Licensed Product in its electric minibike products.
B. PowerStream has developed and has proprietary rights associated with the Licensed Product (defined below).
C. Sumo desires to purchase and PowerStream desires to sell the Licensed Product.
AGREEMENT
NOW, THEREFORE, Sumo and PowerStream, in consideration of the mutual covenants contained herein, the sufficiency of which is hereby acknowledged, agree as follows:
1. DEFINITIONS
1.1. “Affiliate” means, as to a Party, any corporation or other entity which, directly or indirectly, through one or more intermediaries, controls (i.e., possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of an entity, whether through ownership of voting securities, by contract, or otherwise), is controlled by, or is under common control with such Party.
1.2. “Agreement” means this Product Purchase Agreement.
1.3. “Confidential Information” means information, materials, or work products that are considered to be proprietary and confidential, including without limitation, “know-how,” trade secrets, customer lists, details of client or consultant contracts, pricing policies, operational methods, marketing plans or strategies, product development techniques or plans, business acquisition plans, new personnel acquisition plans, methods of production and distribution, technical processes, designs and design projects, and inventions and research projects of a Party. All information disclosed or otherwise made available to a Party by the other Party, as well as all information, work product, materials, memoranda, notes, lists, records and other documents or papers (and all copies thereof), including such items stored in computer memories, created by a Party for the other Party, shall be deemed to be Confidential Information.
1.4. “Effective Date” means September 24, 2002.
1.5. “Intellectual Property Rights” means rights or interests in and to any and all trademarks, trade names, service marks, patents, copyrights (including any registrations, applications, licenses or rights relating to any of the foregoing), technology, trade secrets, inventions, know-how, names, logos, artwork, designs, discoveries, computer programs, software products and related source code and documentation, processes, and all other intangible assets, properties and rights.
SUMOWORKS, LIMITED
Attention: President
Unit 1806, 18/F, Lippo House, Causeway Bay Plaza 2
463-483 Lockhart Road
Causeway Bay, Hong Kong
If to PowerStream:
POWERSTREAM
Attention: President
140 S. Mountain Way Drive
Orem, Utah 84058
Unless otherwise proven, each such notice given by either Party hereto shall be deemed to have been received by the other Party on the sixth (6th) day following the mailing date or on the second (2nd) day following the facsimile date.
SUMOWORKS, LIMITED
By: /s/ Paul R. Ressler
Name: Paul R. Ressler
Its: ________________________________
LUND INSTRUMENT ENGINEERING, INC.
By: /s/ Mark W. Lund
Name: Mark W. Lund
Its: CEO
Schedule A
PWM Controller Design Specifications
1. Functional Criteria
a. Full range (0-100%) duty cycle control
b. Soft-start acceleration
c. Power gate on brake sensing
d. Latched power gate on fault detect
e. Latched power gate on low battery voltage
f. Accessory output
g. Parental speed control switch (50% duty cycle)
h. FET twist grip throttle control
2. Project Criteria
a. Minimized cost (PowerStream will disclose all costs associated with the
development and manufacture of the controller)
b. Compact size
c. Minimum complexity while providing above functionality
MANUFACTURING REPRESENTATIVE AGREEMENT
THIS AGREEMENT, whose effective date is the 1st day of February, 2005, by and between PUKKA USA, LLC, (hereinafter referred to as “PUKKA”), a corporation organized and existing under the laws of the State of Utah, having an office at 395 South 640 West, Pleasant Grove, Utah 84062, and Don Green Sales, (hereinafter referred to as “REPRESENTATIVE”), a corporation, organized and existing under the laws of the State of (State agency is located in), having offices at:
Don Green Sales, 1617 St. Marks Plaza, Suite B, Stockton, CA 95207
In consideration of the mutual covenants and agreements he4reinafter set forth, the parties agree as follows:
ARTICLE I. APPOINTMENT OF REPRESENTATIVE.
Subject to the terms and conditions of this Agreement, PUKKA hereby grants to REPRESENTATIVE, and REPRESENTATIVE hereby accepts, the right to solicit from the customers specified in Exhibit A attached herein (called the “Customers”), orders for the sale by PUKKA of its products specified in Exhibit B attached hereto (herein called the “Products”).
ARTICLE II. COMMISSIONS.
Section A. Subject to Section B below and the provisions of Articles X and XII hereof, PUKKA shall pay REPRESENTATIVE a four percent (4%) commission on the net sales price of Products supplied by PUKKA for all such Products ordered from PUKKA under this Agreement and shipped after the effective date of this Agreement shipped to the customers, territory or vertical market listed in Exhibit A titled CUSTOMERS.
Section B. Notwithstanding Section “A” of this Article II, if any Products sold by PUKKA under orders solicited by REPRESENTATIVE hereunder are shipped by PUKKA to Customers not included on Exhibit A, if any person (including an employee of PUKKA) other than REPRESENTATIVE is instrumental in soliciting, and/or obtaining an order for Products may divide, allocate and/or reduce the total commission payable in respect thereof to REPRESENTATIVE in such a manner as PUKKA in its sole and exclusive discretion deems fair and equitable, and PUKKA’s decision in such a case shall be binding on all parties interested therein. If PUKKA shall adopt any policy for the division, allocation, and/or reduction of commission in such cases, PUKKA shall advise REPRESENTATIVE thereof. PUKKA’s rights hereunder are in addition to the rights granted under Article XII hereof.
Section C. The commission payable hereunder shall constitute full and complete compensation for REPRESENTATIVE’s services hereunder and for all expenses incurred by REPRESENTATIVE in rendering such services, including office expenses, telephone, telegrams, postage, traveling expenses, salesmen’s salaries, and all other similar or different costs, all of which expenses shall be borne by REPRESENTATIVE.
Section D. As used herein, the term “net sales price” of any Products shall mean the gross invoice price for such Product, less all discounts (including cash discounts), allowances and adjustments (including credit memos), charges for transportation and packaging, sales and any other applicable taxes with respect to the sale of such Products.
ARTICLE III. NON-COMMISSIONS.
Section A. No commission shall be payable to REPRESENTATIVE hereunder on any sales to any person, firm or corporation in whose business REPRESENTATIVE shall have either a direct or indirect interest.
Section B. REPRESENTATIVE shall not pay any part of any commissions payable to REPRESENTATIVE hereunder to any purchaser of Products or to any agent, representative or other intermediary acting for, in behalf of or subject to the direct or indirect control of any purchaser of Products.
Section C. REPRESENTATIVE hereby represents that no purchaser of Products has or shall have any interest, financial or otherwise, in REPRESENTATIVE’s business and that if any purchaser of Products secures such an interest, REPRESENTATIVE shall promptly so notify PUKKA in writing.
Section B. Neither REPRESENTATIVE nor any subsidiary or affiliate of REPRESENTATIVE shall incorporate under or otherwise make use of the name of PUKKA or any of its divisions or subsidiaries, or any trademarks or trade names of PUKKA or of any name, trademark or trade name which in the judgment of PUKKA is confusingly similar thereto, without the prior written consent of PUKKA. REPRESENTATIVE’s covenant in this respect shall survive termination of this Agreement.
ARTICLE IX. BILLING TO CUSTOMERS.
All Products sold by PUKKA on orders solicited by REPRESENTATIVE shall be billed by PUKKA directly to the purchaser.
ARTICLE X. COMMISSIONS AFTER TERMINATION.
Upon the termination of the Agreement for any reason whatsoever, no commissions or other amounts shall be payable to REPRESENTATIVE with regard to Products shipped after the effective date of such termination, except that PUKKA shall continue to pay REPRESENTATIVE, subject to the provisions of Articles II, III and IV hereof, the commissions herein provided with regard to Products shipped within sixty (60) days after the effective date of such termination under orders solicited by REPRESENTATIVE and accepted by PUKKA prior to the effective date of such termination. No commissions shall be payable hereunder with respect to any Products shipped during the aforesaid 60-day post termination pursuant to any increase in quantity accepted by PUKKA after the effective date of such termination with respect to any such order.
ARTICLE XI. TERMS OF AGREEMENT.
Unless sooner terminated as herein provided, this Agreement shall continue in full force and effect until terminated by either party upon not less than thirty (30) days prior written notice to the other party specifying the effective date of termination.
ARTICLE XII. HOUSE ACCOUNTS, A REVISION OF CUSTOMERS, PRODUCTS AND COMMISSIONS.
Section A. PUKKA shall have the sole and exclusive right, from time to time upon not less than thirty (30) days written notice to REPRESENTATIVE, to change any or all of the following:
Section B. PUKKA may deem any Customer on the REPRESENTATIVE’s Customer list (see Exhibit A) to become a House Account at its option. No commission will be paid on House Accounts.
ARTICLE XIII. FORCE MAJEURE.
If the Performance by PUKKA of any of its obligations under orders for Products accepted by PUKKA is interrupted or prevented by riot, war, hostilities between nations, government orders or regulations, embargoes, acts of God, fire, accidents, strikes, differences with workmen, delays of carriers, lack of transportation facilities, inability to obtain raw materials, curtailment of failure of obtaining power, or any other similar or different contingencies beyond the reasonable control of PUKKA, PUKKA CORPORATION shall be excused from the performance of such obligations while and to the extent that its performance is interrupted or prevented by one or more of each of the aforementioned contingencies. IN the event PUKKA is unable, for any reason whatsoever, to supply the full quantities of Products that it is as such times required under contracts to supply to its customers, after first satisfying the requirements of PUKKA’s own departments and division, PUKKA shall have the right to prorate among any and all purchaser such quantity of Products as PUKKA may have available for shipment to them.
ARTICLE XIV. ASSIGNABILITY.
PUKKA may cancel and terminate this Agreement at any time with a thirty (30) day written notice to REPRESENTATIVE at the address set forth on the face page of this Agreement. PUKKA will pay commissions on any shipments to the REPRESENTATIVE’s Customers made within sixty (60) days of the effective date of termination according to the provisions of this Agreement. After the effective date of termination, PUKKA shall make normal shipments to the REPRESENTATIVE’s Customers; but in the event of any dispute, PUKKA shall be the sole judge defining normal shipments. In the event that the REPRESENTATIVE breaches the contract in any way, PUKKA has the right to cancel the contract with no commission payable past the date of notice of breach of contract.
ARTICLE XVI. PREVIOUS AGREEMENTS.
Upon the effective date of this Agreement, this Agreement shall supersede and cancel all prior Manufacturing Representative Agreements between the parties covering the sale of Products by the REPRESENTATIVE covered by this Agreement. There are no REPRESENTATIVE agreements, oral or otherwise, not contained in this Agreement, its Exhibits, or renewals of this Agreement from time to time.
ARTICLE XVII. DISPUTE AND VENUE.
The provisions of this Agreement shall be construed and the performance thereof shall be enforced in accordance with the laws of the State of Utah. In the event of any legal action arising directly or indirectly form this contract, the parties hereto agree that venue shall be in the District or County Courts of Salt Lake City, Utah.
ARTICLE XVIII. NOTICES AND PAYMENTS.
It shall be as sufficient giving of any notice or other communication hereunder if the party giving the same shall deposit a copy thereof in the U.S. Post Office in a registered or certified envelope, postage prepaid, addressed to the other party at the address herein above set forth on the face page of this Agreement, or at such other address as the other party shall have theretofore in writing designated. Payments to be made hereunder shall be transmitted to the address to which notices at the time shall be addressed as provided, and may be so requested, report or any other communication, and the date of making any such payment provided such payment is received, shall be the date on which such envelope was deposited in the United States Mail. The U.S. Post Office receipt showing the date of such deposit shall be the prima facie evidence of these facts.
IN WITNESS THEREOF, the parties have caused this Agreement to be duly executed as of the day and year first above written.
Exhibit A: Customers
Vertical Markets and Geography
Auto Parts Resellers and Distributors
Truck Parts Resellers and Distributors
(Not including Rhino Liners)
Motor Home and Motor Home Accessories Resellers and Distributors
with purchasing offices located in the states of California, Nevada and Arizona
Exhibits B: Products
GX-400C
Sales and Service Representative Agreement
This agreement is effective 3/31/05. Pukka USA, LLC whose principal place of business is located at 395 South 640 West, Pleasant Grove, Utah 84062 (hereinafter referred to as (Pukka USA) and Watt/Spohn-Universal, Ltd. whose principal business office is located at 13717 Welch Road, Dallas, Texas 75244 (hereinafter referred to as Watt/Spohn).
Whereas, Pukka USA has products, information, inventive and general know how relating to the marketing and distribution of products for the retail trade merchants and...WHEREAS, Watt/Spohn is experienced in selling and marketing of such products to military retail merchants, and is desirous in representing Pukka USA.
Therefore it is agreed as follows:
Article 1
Pukka USA appoints Watt/Spohn as Pukka USA exclusive sales and service representative for the military services worldwide limited to channels of distribution or accounts specified in Article 2.
Article 2
The specific channels of distribution of accounts are all military exchange systems worldwide. Army and Air Force Exchange Service (AAFES), Navy Exchanges (NEXCOM), Marine Corps., Coast Guard, Veterans Administration, and General Services Administration.
Article 3
Watt/Spohn shall provide an aggressive and adequately staffed sales and service organization and provide an adequate place of business, in order to make the best effort to market Pukka USA products. Watt/Spohn will make regular sales calls on the customers in the territory, provide pre-sale and post-sale customer service and support and monitor the territory for competitive information and provide this to Pukka USA.
Article 4
Watt/Spohn shall be entitled to receive a commission on net customer shipments equal to 7.5% of the net sales amount. Commission will be paid to Watt/Spohn within 30 days following the end of the month that shipments are made by close of business.
Article 5
Watt/Spohn will be responsible for all ordinary and necessary expenses incurred in connection with these activities.
Article 6
Watt/Spohn is an independent contractor and has no authority to execute an agreement on behalf of Pukka USA.
Article 7
Any samples or promotional materials used by Watt/Spohn will be provided by Pukka USA at no charge to Watt/Spohn.
Article 8
This agreement will continue in effect until termination by either party upon not less than 60 days prior written notice to the other. In the event of termination, all commissions earned by Watt/Spohn during the final 30 days of this agreement will be held for a period of 30 days after the termination of this agreement during which time a final reconciliation of all outstanding invoices and credits will be completed by Pukka USA. The net result of this reconciliation will be paid to Watt/Spohn in the next 30 days.
Article 9
This agreement may not be assigned or otherwise transferred by either party and may be amended or modified only in writing. No other agreement or understanding purporting to modifier supply to this agreement exists.
Article 10
Watt/Spohn will hold harmless, and indemnify Pukka USA for any damages, claims, demands, liabilities or losses of whatever nature (including reasonable attorney's fees), made against or sustained by Pukka USA by reason of or arising out of a breach of this agreement or incurred as a result of any action performed with respect to the execution of this agreement by Watt/Spohn or it's agents, employees, officers, directors or representatives.
Article 11
Any disputes arising hereunder will be resolved by binding arbitration under the rules of the American Arbitration Association.
In witness whereof, the parties have executed this agreement on the 31st March, of 2005.
Pukka USA, LLC
By: /s/ Paul R. Ressler
Name: Paul R. Ressler
Title: Managing Member
WATT/SPOHN-UNIVERSAL, LTD.
By: WSUME, Inc., General Partner
By: /s/ Gene Jordan
Name: Gene Jordan
Title: Senior VP
Exhibit 10.19
PROFESSIONAL SERVICES AGREEMENT
This Agreement is effective as of the 1st day of April, 2005 (the “Effective Date”), by and between The McLain Group, L.L.C., a Nevada limited liability company, including it’s subsidiaries, affiliates, successors and assigns (collectively “TMG”), with its principal place of business at 18000 Leatha Lane, Little Rock, Arkansas 72223, and Red Iron Group, L.L.C. also known as Pukka USA, L.L.C., both Utah limited liability corporations, including their subsidiaries, affiliates, successors and assigns (collectively, “PUKKA”), with their principal place of business at 942 N 240 E., American Fork, UT 84003. The term of this Agreement shall be for a period of five (5) years commencing upon the Effective Date.
W I T N E S S E T H:
WHEREAS, TMG has provided marketing and referral services (the “Services”) for certain business opportunities as identified in Exhibit A (the “Business Opportunities”); and
WHEREAS, PUKKA will provide certain services/products for the Business Opportunities as identified in Exhibit A
WHEREAS, PUKKA utilized the Services of TMG pursuant to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the terms and conditions set forth below, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Scope of Services. TMG has provided the Services to PUKKA for those certain Business Opportunities as identified in Exhibit A and has referred those certain Clients (as defined in paragraph 3 herein below) to PUKKA. A summary of the terms of each Business Opportunity and the services/product to be provided by PUKKA and TMG in connection with each such Business Opportunity is set forth in Exhibit A as may be amended by the parties in writing from time to time to reflect any changes to the agreed upon services and terms.
2. Business Opportunities. PUKKA acknowledges and agrees that the fees and other consideration due to TMG pursuant to this Agreement shall be paid to TMG in connection with those certain Business Opportunities listed on Exhibit A. For purposes of this Agreement, a Business Opportunity shall also include Affiliated Business Opportunities (as defined herein).
Affiliated Business Opportunities. An Affiliated Business Opportunity shall mean a Business Opportunity or other business venture that is carried out at any time during the term of this Agreement by the same Client(s) as identified on Exhibit A. For example purposes, in the event that PUKKA performs services or provides a product for a Client(s) in the Middle East and that same Client(s) wishes to have that same service/product on a Business Opportunity in the United States through the services of TMG, then TMG would receive fees per this agreement as an Affiliated Business Opportunity. Exhibit A shall be updated from time to time to reflect New Business Opportunities and/or Affiliated Business Opportunities.
Continuance. Upon expiration of this Agreement the Parties agree to negotiate in good faith to determine which, if any, of the Business Opportunities listed on Exhibit A as of the expiration date remain viable business opportunities and shall continue to be governed by this Agreement. The Parties also agree to meet annually thereafter for this same purpose until all such Business Opportunities listed on Exhibit A as of the expiration date of this Agreement have been removed.
3. Clients. PUKKA acknowledges and agrees that those entities listed on Exhibit A attached hereto and made part hereof by this reference (individually, a “Client” and collectively, the “Clients”), have been referred to PUKKA by TMG and all fees and other consideration due to TMG pursuant to this Agreement
6. Access to Books and Records. PUKKA shall provide TMG with a copy of all invoices submitted to a Client or in connection with a Business Opportunity so that TMG can verify the fees owed to it. TMG shall invoice PUKKA for services in accordance with this Agreement upon receipt of the Client invoice from PUKKA.
7. Independent Contractor. Nothing contained in this Agreement shall be construed to constitute TMG as a partner, employee or agent of PUKKA, nor shall either party have any authority to bind the other party in any respect, it being intended that each shall remain an independent contractor responsible for its own actions. Furthermore, TMG shall be responsible for all employment and income taxes, and full compliance with all tax laws applicable to the operation of an independent contractor business, including, but not limited to, the reporting of all gross receipts therefrom as income from the operation of a business and the payment of all self-employment taxes.
8. Binding Effect. All of the terms of this Agreement shall be binding upon the respective successors of the parties hereto and shall inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns in interest, including, but not limited to successors in interest to PUKKA by reason of merger, consolidation or liquidation or the sale of business or all or substantially all of the assets of PUKKA.
9. Assignment. This Agreement may not be assigned by either party without the prior written consent of the other party hereto.
10. Governing Law. This Agreement shall be governed by the laws of the State of Arkansas, without regard to conflicts of law principles and the parties agree to submit to the jurisdiction of the courts of the State of Arkansas.
11. No Waiver. A waiver by a party of any breach of this Agreement by any other party shall not be construed as a waiver of any such subsequent breach by such party of the same or any other provisions of this Agreement.
12. Partial Invalidity. If any portion of this Agreement shall be held invalid or void, such portion shall be deemed modified to the extent necessary to render such provision enforceable under the law, and this Agreement shall remain valid and enforceable as so modified. In the event that the provision may not be modified in such a way as to make it enforceable, that Agreement shall be construed as if the portion so invalidated was not part of this Agreement.
16. Notices. Notice required or permitted to be given pursuant to the terms of this agreement shall be deemed received (5) days after deposit into the United States mail, postage prepaid, certified returned receipt requested and addressed as provided below, or upon receipt if delivered by any other method. Notices shall be given to the person and information provided in the signatory portion of this document.
17. Attorneys Fees. In the event of any breach of this Agreement, or should legal action ever be necessary to enforce or interpret the terms of this Agreement, each Party shall pay their own attorneys’ fees, costs and incidental expenses which are incurred in connection with such breach, including any costs or fees in preparation for trial, on appeal or otherwise.
18. Negotiated Document. The parties acknowledge and agree that this Agreement has been negotiated by each with the assistance of counsel, or an opportunity for counsel to assist and review the same, and no party hereto shall be considered the drafter of this Agreement so as to construe this Agreement against any such party in the event an ambiguity exists herein.
19. Non-Circumvention. Each party to this Agreement (including each party’s representatives, employees, agents or owners) hereby specifically agrees not to circumvent the other party to this Agreement in relation to any and all transactions relating to the Business Opportunities identified on Exhibit A. Additionally, no party to this Agreement will make contact with, deal with or otherwise be involved in any transaction with any person or entity individually or collectively, or their associates, who were introduced to them by the other party hereto, without the authority of the introducing party. In the event of circumvention by any party involved in this transaction either directly or indirectly, it is agreed and guaranteed that a monetary penalty, equal to the maximum service fee the circumvented party should realize from such transaction(s) will be paid by the party, person or persons engaged in that circumvention.
IN WITNESS WHEREOF the parties sign this Agreement to be effective on the Effective Date.
Red Iron Group, L.L.C. and Pukka USA, L.L.C.
/s/ Leonard DuCharme
By: Leonard DuCharme
Its: Managing Member
Address: 942 N 240 E., American Fork, UT 84003
Phone: (801) 420-6650
EXHIBIT A1
BUSINESS OPPORTUNITY TERMS
DATE: April 5, 2005
The following are the terms of that certain Business Opportunity known as: Club Marketing Services.
I. CLIENT INFORMATION
a. Client Name Club Marketing Services
b. Primary Principals Dan Pickering
c. Address 411 E. Hwy 67, Duncanville, TX 75137
d. Phone Number (972) 296-6630 x121
e. Fax Number (972) 780-8443
f. Mobile Number (214) 215-0690
g. E-mail Address dan.pickering@clubmarketing.com
II. BUSINESS OPPORTUNITY INFORMATION
a. Name Sam’s Wholesale & Wal-Mart
b. Location Worldwide Potential
c. Description Sale of Pukka 400 or Private Label
d. Contact Unknown at this time
e. Expected Start Date Unknown at this time
f. Expected Completion Date Unknown at this time
g. Business Opportunity Value Unknown at this time
h. Business Opportunity Profit Unknown at this time
III. COMPENSATION
The TMG shall receive a fee of 20% of the gross sales to either Sam’s Wholesale or Wal-Mart for the first year of sales (defined by the date on the purchase orders), and 10% of the gross sales for each subsequent year thereafter. Each new product offered for this Business Opportunity shall start with the 20% compensation and revert to 10% one year later and continue thereafter. All payments shall be in United States currency and paid in the United States. Any fees due to Club Marketing Services shall be paid by PUKKA and are in addition to the TMG fees.
IV. SERVICES/PRODUCT PROVIDED BY PUKKA:
Pukka 400 or other private label brand of the same product.
Acknowledged and Agreed:
/s/ Scott McLain
THE MCLAIN GROUP, LLC Date April 6, 2005
By: Scott McLain
Its: President & Managing Member
Red Iron Group, L.L.C. and Pukka USA, L.L.C.
/s/ Leonard DuCharme Date April 6, 2005
By: Leonard DuCharme
Its: Managing Member
EXHIBIT A2
BUSINESS OPPORTUNITY TERMS
DATE: April 5, 2005
The following are the terms of that certain Business Opportunity known as: International Trade Partners.
V. CLIENT INFORMATION
a. Client Name International Trade Partners, L.P. and/or
International Trade Consultants, L.L.C.
b. Primary Principals Mike Farhat
c. Address 3500 Grapevine Mills Parkway, Grapevine, TX 76051
d. Contact Name Mike Farhat
e. Phone Number (972) 724-2911
f. Fax Number (972) 724-3308
g. Mobile Number (817) 291-8841
h. E-mail Address mfarhat55@aol.com
VI. BUSINESS OPPORTUNITY INFORMATION
a. Name Unknown at this time
b. Location Middle East (including countries of the Arabian
Peninsula), Afghanistan and Africa
c. Description Sale of Pukka 400 or Private Label
d. Contact Unknown at this time
e. Expected Start Date Unknown at this time
f. Expected Completion Date Unknown at this time
g. Business Opportunity Value Unknown at this time
h. Business Opportunity Profit Unknown at this time
VII. COMPENSATION
The TMG shall receive all proceeds from the sales transaction in excess of $131.50 per unit FOB Yantian China. All payments shall be in United States currency and paid in the United States. Any fees due to International Trade Partners, L.P. or International Trade Consultants, L.L.C. shall be paid by TMG and are included in the TMG fees.
VIII. SERVICES/PRODUCT PROVIDED BY PUKKA:
Pukka 400 or other private label brand of the same product.
Acknowledged and Agreed:
/s/ Scott McLain
THE MCLAIN GROUP, LLC Date April 6, 2005
By: Scott McLain
Its: President & Managing Member
Red Iron Group, L.L.C. and Pukka USA, L.L.C.
/s/ Leonard DuCharme Date April 6, 2005
By: Leonard DuCharme
Its: Managing Member
EXHIBIT A3
BUSINESS OPPORTUNITY TERMS
DATE: April 5, 2005
The following are the terms of that certain Business Opportunity known as: Australia.
IX. CLIENT INFORMATION
a. Client Name Unknown at this time
b. Primary Principals Unknown at this time
c. Address Unknown at this time
d. Contact Name Unknown at this time
e. Phone Number Unknown at this time
f. Fax Number Unknown at this time
g. Mobile Number Unknown at this time
h. E-mail Address Unknown at this time
X. BUSINESS OPPORTUNITY INFORMATION
a. Name Unknown at this time
b. Location Australia
c. Description Sale of Pukka 400 or Private Label
d. Contact Unknown at this time
e. Expected Start Date Unknown at this time
f. Expected Completion Date Unknown at this time
g. Business Opportunity Value Unknown at this time
h. Business Opportunity Profit Unknown at this time
XI. COMPENSATION
The TMG shall receive all proceeds from the sales transaction in excess of $131.50 per unit FOB Yantian China. All payments shall be in United States currency and paid in the United States. Any fees due to brokers or in-country representatives shall be paid by TMG and are included in the TMG fees.
XII. SERVICES/PRODUCT PROVIDED BY PUKKA:
Pukka 400 or other private label brand of the same product.
Acknowledged and Agreed:
/s/ Scott McLain
THE MCLAIN GROUP, LLC Date April 6, 2005
By: Scott McLain
Its: President & Managing Member
Red Iron Group, L.L.C. and Pukka USA, L.L.C.
/s/ Leonard DuCharme Date April 6, 2005
By: Leonard DuCharme
Its: Managing Member
EXHIBIT A4
BUSINESS OPPORTUNITY TERMS
DATE: April 5, 2005
The following are the terms of that certain Business Opportunity known as: New Zealand.
XIII. CLIENT INFORMATION
a. Client Name Unknown at this time
b. Primary Principals Unknown at this time
c. Address Unknown at this time
d. Contact Name Unknown at this time
e. Phone Number Unknown at this time
f. Fax Number Unknown at this time
g. Mobile Number Unknown at this time
h. E-mail Address Unknown at this time
XIV. BUSINESS OPPORTUNITY INFORMATION
a. Name Unknown at this time
b. Location New Zealand
c. Description Sale of Pukka 400 or Private Label
d. Contact Unknown at this time
e. Expected Start Date Unknown at this time
f. Expected Completion Date Unknown at this time
g. Business Opportunity Value Unknown at this time
h. Business Opportunity Profit Unknown at this time
XV. COMPENSATION
The TMG shall receive all proceeds from the sales transaction in excess of $131.50 per unit FOB Yantian China. All payments shall be in United States currency and paid in the United States. Any fees due to brokers or in-country representatives shall be paid by TMG and are included in the TMG fees.
XVI. SERVICES/PRODUCT PROVIDED BY PUKKA:
Pukka 400 or other private label brand of the same product.
Acknowledged and Agreed:
/s/ Scott McLain
THE MCLAIN GROUP, LLC Date April 6, 2005
By: Scott McLain
Its: President & Managing Member
Red Iron Group, L.L.C. and Pukka USA, L.L.C.
/s/ Leonard DuCharme Date April 6, 2005
By: Leonard DuCharme
Its: Managing Member
EXHIBIT A5
BUSINESS OPPORTUNITY TERMS
DATE: April 5, 2005
The following are the terms of that certain Business Opportunity known as: Brazil.
XVII. CLIENT INFORMATION
a. Client Name Unknown at this time
b. Primary Principals Unknown at this time
c. Address Unknown at this time
d. Contact Name Unknown at this time
e. Phone Number Unknown at this time
f. Fax Number Unknown at this time
g. Mobile Number Unknown at this time
h. E-mail Address Unknown at this time
XVIII. BUSINESS OPPORTUNITY INFORMATION
a. Name Unknown at this time
b. Location Brazil
c. Description Sale of Pukka 400 or Private Label
d. Contact Unknown at this time
e. Expected Start Date Unknown at this time
f. Expected Completion Date Unknown at this time
g. Business Opportunity Value Unknown at this time
h. Business Opportunity Profit Unknown at this time
XIX. COMPENSATION
The TMG shall receive all proceeds from the sales transaction in excess of $131.50 per unit FOB Yantian China. All payments shall be in United States currency and paid in the United States. Any fees due to brokers or in-country representatives shall be paid by TMG and are included in the TMG fees.
XX. SERVICES/PRODUCT PROVIDED BY PUKKA:
Pukka 400 or other private label brand of the same product.
Acknowledged and Agreed:
/s/ Scott McLain
THE MCLAIN GROUP, LLC Date April 6, 2005
By: Scott McLain
Its: President & Managing Member
Red Iron Group, L.L.C. and Pukka USA, L.L.C.
/s/ Leonard DuCharme Date April 6, 2005
By: Leonard DuCharme
Its: Managing Member
EXHIBIT A6
BUSINESS OPPORTUNITY TERMS
DATE: April 5, 2005
The following are the terms of that certain Business Opportunity known as: India.
XXI. CLIENT INFORMATION
a. Client Name Unknown at this time
b. Primary Principals Unknown at this time
c. Address Unknown at this time
d. Contact Name Unknown at this time
e. Phone Number Unknown at this time
f. Fax Number Unknown at this time
g. Mobile Number Unknown at this time
h. E-mail Address Unknown at this time
XXII. BUSINESS OPPORTUNITY INFORMATION
a. Name Unknown at this time
b. Location India
c. Description Sale of Pukka 400 or Private Label
d. Contact Unknown at this time
e. Expected Start Date Unknown at this time
f. Expected Completion Date Unknown at this time
g. Business Opportunity Value Unknown at this time
h. Business Opportunity Profit Unknown at this time
XXIII. COMPENSATION
The TMG shall receive all proceeds from the sales transaction in excess of $131.50 per unit FOB Yantian China. All payments shall be in United States currency and paid in the United States. Any fees due to brokers or in-country representatives shall be paid by TMG and are included in the TMG fees.
XXIV. SERVICES/PRODUCT PROVIDED BY PUKKA:
Pukka 400 or other private label brand of the same product.
Acknowledged and Agreed:
/s/ Scott McLain
THE MCLAIN GROUP, LLC Date April 6, 2005
By: Scott McLain
Its: President & Managing Member
Red Iron Group, L.L.C. and Pukka USA, L.L.C.
/s/ Leonard DuCharme Date April 6, 2005
By: Leonard DuCharme
Its: Managing Member
Letter of Resignation Omar G. Barrientos
August 15, 2006
Sunrise U.S.A. Incorporated
3203 E. Ovid Avenue
Des Moines, IA 50317
Gentlemen:
Please accept this letter as my resignation, effective immediately, from my position as a member of the Board of Directors and from all executive officer positions that I hold with Sunrise U.S.A Incorporated.
Very truly yours,
/s/ Omar G. Barrientos
Omar G. Barrientos
Letter of Resignation Gene Fairchild
August 15, 2006
Sunrise U.S.A. Incorporated
3203 E. Ovid Avenue
Des Moines, IA 50317
Gentlemen:
Please accept this letter as my resignation, effective immediately, from my position as a member of the Board of Directors and from all executive officer positions that I hold with Sunrise U.S.A Incorporated.
Very truly yours,
/s/ Gene Fairchild
Gene Fairchild
List of Subsidiaries
Pukka USA, Inc.
Red Iron Group LLC
Madsen & Associates CPA’s, Inc.
684 East Vine Street
Building #3
Murray, UT 84107
CONSENT OF AUDITOR
Madsen & Associates, CPA’s, Inc. consents to the use in the Form 8-K for Sunrise USA, Inc., our report dated June 20, 2006, relating to the December 31, 2005 and 2004 consolidated financial statements of Pukka USA, LLC and Affiliate.
/s/ Madsen & Associates CPA’s, Inc.
Madsen & Associates CPA’s, Inc.
August 18, 2006