As
filed with the Securities Exchange Commission on August 26, 2010
Registration
No. 333-
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
S-3
REGISTRATION
STATEMENT UNDER
THE
SECURITIES ACT OF 1933
SULPHCO
,
INC.
(Exact
name of registrant as specified in its charter)
Nevada
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88-0224817
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(State
or other jurisdiction of
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(I.R.S. Employer
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incorporation
or organization)
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Identification
No.)
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SulphCo,
Inc.
4333
W. Sam Houston Pkwy. N., Suite 190
Houston,
TX 77043
(713)
896-9100
(Address,
including zip code, and telephone number, including area code,
of
registrant's principal executive offices)
Mr.
Stanley W. Farmer
Vice
President, Chief Financial Officer,
Treasurer
and Corporate Secretary
SulphCo,
Inc.
4333
W. Sam Houston Pkwy. N., Suite 190
Houston,
TX 77043
(713)
896-9100
(Name,
Address, including zip code, and
telephone
number, including area code, of agent for service)
Copy
to:
Robert S.
Matlin, Esq.
Robert D.
Shin, Esq.
K&L
Gates LLP
599
Lexington Avenue
New York,
NY 10022
212-536-3900
Approximate
date of proposed sale to the public: From time to time after the
Registration Statement becomes effective.
If the
only securities being registered on this Form are being offered pursuant to
dividend or reinvestment plans, please check the following box.
¨
If any of
the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, other
than securities offered only in connection with dividend or interest
reinvestment plans, check the following box.
x
If this
Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act of 1933, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering.
¨
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering.
¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer
o
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Accelerated
filer
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þ
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Non-accelerated
filer (Do not check if smaller reporting company)
¨
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Smaller
reporting company
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¨
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CALCULATION
OF REGISTRATION FEE
TITLE
OF EACH CLASS
OF
SECURITIES TO BE
REGISTERED
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AMOUNT
TO BE
REGISTERED(1)(2)
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PROPOSED
MAXIMUM
OFFERING
PRICE
PER
UNIT
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PROPOSED
MAXIMUM
OFFERING
PRICE
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AMOUNT
OF
REGISTRATION
FEE(3)
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Warrants
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100
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%
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Common
Shares, par value $0.001 per share
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100
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%
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Total
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100
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%
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$
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122,180,000
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(3)
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$
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(1)
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This
registration statement (the “New Registration Statement”) includes unsold
securities, consisting of warrants and shares of common stock covered by
registration statement No. 333-145460 (the “Expiring Registration
Statement”) pursuant to Rule
415(a)(6).
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An
indeterminate aggregate initial offering price or number of the securities of
each identified class is being registered as may from time to time be issued by
the registrant at indeterminate prices, with an aggregate initial offering price
not to exceed $122,180,000 or the equivalent thereof in one or more other
currencies, currency units or composite currencies.
(2)
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Includes
such indeterminate amounts of warrants and common shares as may from time
to time be issued upon exercise, conversion or exchange of any securities
that provide for that issuance.
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(3)
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A
filing fee of $4,605 had previously been paid pursuant to the Expiring
Registration Statement in connection with such unsold
securities. The registrant may continue to sell securities
pursuant to the Expiring Registration Statement until the New Registration
Statement becomes effective in accordance with Rule
415(a)(5).
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THE
REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS
MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A
FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION
8(a), MAY DETERMINE.
PROSPECTUS
SUBJECT
TO COMPLETION, DATED AUGUST 26, 2010
$122,180,000
SulphCo, inc.
WARRANTS
COMMON
SHARES
SulphCo,
Inc. from time to time may offer to sell warrants and common
shares. The warrants may be exercisable for common shares of SulphCo,
Inc.
The
common shares of SulphCo, Inc. are listed on the NYSE Amex LLC and trade under
the ticker symbol “SUF.”
The total
amount of warrants and common shares will have an initial aggregate offering
price of up to $122,180,000 or the equivalent amount in other currencies,
currency units or composite currencies, although SulphCo, Inc. may increase this
amount in the future.
The
securities covered by this prospectus may be offered and sold to or through one
or more underwriters, dealers and agents, or directly to purchasers, on a
continuous or delayed basis.
This
prospectus describes some of the general terms that may apply to these
securities and the general manner in which they may be offered. The
specific terms of any securities to be offered, and the specific manner in which
they may be offered, will be described in one or more supplements to this
prospectus.
Investing
in our securities involves risks. See ‘‘Risk Factors’’ beginning on
page 6. The prospectus supplement applicable to each type or
series of securities we offer may contain a discussion of additional risks
applicable to an investment in us and the particular type of securities we are
offering under that prospectus supplement.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or passed upon the adequacy or
accuracy of the prospectus. Any representation to the contrary is a
criminal offense.
_______ __,
2010
TABLE
OF CONTENTS
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Page
No.
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SUMMARY
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3
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RISK
FACTORS
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6
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FORWARD
LOOKING STATEMENTS
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13
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USE
OF PROCEEDS
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13
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PLAN
OF DISTRIBUTION
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13
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DESCRIPTION
OF WARRANTS
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16
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DESCRIPTION
OF SHARE CAPITAL
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16
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CERTAIN
ERISA CONSIDERATIONS
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18
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EXPERTS
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18
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LEGAL
MATTERS
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18
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WHERE
YOU CAN FIND MORE INFORMATION
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19
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INFORMATION
NOT REQUIRED IN PROSPECTUS
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20
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About
this Prospectus
This
prospectus is part of a registration statement that we filed with the SEC
utilizing a “shelf” registration process. Under this shelf process,
we may sell any combination of the securities described in this
prospectus. This prospectus provides you with a general description
of the securities we may offer. When we sell securities, we will
provide a prospectus supplement that will contain specific information about the
terms of that offering. The prospectus supplement may also add,
update or change information contained in this prospectus. You should
read both this prospectus and any prospectus supplement together with additional
information described under the heading “Where You Can Find More
Information.”
SUMMARY
This
summary highlights important information included in or incorporated by
reference in this prospectus. This summary does not contain all of
the information that you should consider before investing in the common
stock. You should read the entire prospectus carefully, including the
documents incorporated by reference in this prospectus.
References
to "we," "us," "our company," “the Company” and "SulphCo" refer to
SulphCo, Inc.
Our
Company
We were
incorporated in the State of Nevada in 1986. Our predecessor, GRD,
Inc., commenced its current line of business in 1999. Our executive
offices are located at 4333 W. Sam Houston Pkwy N., Suite 190,
Houston, TX 77043. Our telephone number is (713)
896-9100. Our corporate website is
www.sulphco.com
. Information
contained in our website is not part of this prospectus.
Our
Business
Overview
SulphCo
is an energy technology company focused on the development and commercialization
of an oxidative desulfurization (“ODS”) process for crude oil products, crude
oils, natural gasoline and condensate streams. SulphCo’s oxidative
desulfurization process consists of (1) the ultrasound assisted conversion of
the sulfur compounds to their oxidized analogs employing its patented and
proprietary Sonocracking™ technology, and (2) the subsequent removal of these
oxidized compounds via adsorption, extraction, water wash or other similar
separation techniques (the “SulphCo Process”).
Ever
increasing environmental regulations are mandating the reduction of sulfur
content in many fuels, including gasoline, diesel fuel, and bunker
fuel. For example, the sulfur specification for finished diesel fuel
in certain jurisdictions is less than 10 parts per million (“ppm”), while
typical starting concentrations are in the thousands of ppm. The currently
practiced method for desulfurization is hydrodesulfurization
(“HDS”). HDS requires a large capital investment and suffers from
high hydrogen and energy consumption as severe operating conditions have to be
employed to treat the most refractory sulfur compounds. In contrast, the SulphCo
Process allows for comparably mild reaction conditions such as
ambient temperatures and mild pressures, resulting in a potentially more cost
effective and energy efficient alternative to HDS for certain applications
within the refining, transportation, and blending market segments.
Research and Development
Activities
The
following is an update of the Company’s more significant research and
development activities conducted in the first six-months of 2010.
Development of Catalyst
Systems and Sulfur Removal Processes
Activities in the first six-months of
2010 continued to center around optimizing additive packages for the sulfur
conversion step as well as establishing key parameters for the adsorption or
extraction process typically needed for sulfur removal. Targeted efforts to
improve cost/benefit ratios have led to the identification of a preferred new,
cost effective catalyst system that distinguishes itself through high reactivity
towards a wide range of sulfur compounds, robustness towards process conditions
and wide range of applicability. In diesel finishing and transmix
applications, less than 10 ppm sulfur content has routinely been achieved
employing this catalyst system. In addition, this catalyst system
also excels for natural gasoline and condensate streams.
We also
continued dedicated work on sulfur removal for diesel and transmix streams,
which included ongoing work in adsorption and a new effort in
extraction. Adsorption is the preferred means of sulfur removal for
product streams with low sulfur content (100 ppm or less), while extraction is
preferred for product streams with higher sulfur content. At least two potential
adsorbent alternatives have been identified and characterized. Also, a suitable
extraction solvent has been identified. Ongoing work will be oriented towards
process implementation for the adsorption and extraction based
processes.
The most
promising work during the first six-months of 2010 has been directed towards
desulfurization of natural gasoline, an important blend stock for on-road
gasoline. The above mentioned catalyst system has proven to be highly
effective in the oxidation of the sulfur compounds contained in the samples of
natural gasoline evaluated during the first six-months of 2010. At
least as important, the resulting oxidized sulfur species are water soluble due
to their small molecular size and can be removed by employing a simple water
wash.
Ultrasound Probe, Reactor
and Control Systems
During the first six-months of 2010,
the collaborative work between SulphCo and Märkisches Werk Halver, GmbH (“MWH”)
continued to center around simplifying and enhancing the user friendliness of
the equipment towards commercial operation as well as long-term endurance
testing. Highlights include development of a prototype forged probe
to allow simplified mass production and a prototype tool that simplifies
ultrasound probe swap-out. Also, high intensity endurance testing of
the current ultrasound probe/transducer assembly continued with positive
results. Testing will continue throughout the remainder of
2010.
Business
Development Activities Update
The
following is an update on the more significant business development activities
in the regions that have been the focal point of the Company’s efforts during
the first six months of 2010.
With
respect to the Company’s ongoing commercial efforts, we continue to see a high
level of interest in the Sonocracking™ process as potential customers see the
value that can be driven by the technology. We are pursuing what we
believe are opportunities presenting the highest likelihood of near-term success
for the technology (i.e., crude oil product streams such as diesel fuel, natural
gasoline, and naphtha as well as low to moderate sulfur-containing crude oils
and condensates) and are working with several potential customers to achieve
this goal.
Europe
SulphCo and OMV Refining and Marketing
GmbH (“OMV”) entered into a technology agreement in the first quarter of 2009
and have been working together since that time to jointly evaluate SulphCo’s
Sonocracking™ technology in several of OMV’s refining
applications. During the first quarter of 2010, SulphCo’s efforts
with OMV have centered on the evaluation of certain additional product streams
from OMV’s facility in Burghausen, Germany. During the second quarter
of 2010, OMV collected and shipped samples of these product streams to SulphCo
for further evaluation. Testing of these samples has shown promising
results. In the near future, the Company expects to discuss these
results with OMV. While the Company is encouraged by the recent
progress in Europe, there can be no assurance that the Company will be
successful in implementing any commercial agreements.
North
America
During
the later part of 2009 and into the first quarter of 2010, SulphCo was pursuing
a specific condensate application with an integrated major oil company with a
facility located in North America. We have performed several lab-scale trials to
demonstrate the effectiveness of our technology in this particular
application. Technical representatives from this company visited our
Houston offices in June 2009 to confirm the lab-scale results and subsequently
recommended the installation of a Sonocracking™ unit at this company’s facility
in North America. In November 2009, this potential customer changed the process
requirements associated with this condensate application. In response to this
change, SulphCo formulated a proposed solution that met the new technical
requirements and provided it to this potential customer. Late in the
first quarter of 2010, the potential customer notified SulphCo that it had
completed its evaluation of investment and process options for this condensate
application and had decided not to use the SulphCo Process for this particular
application. Notwithstanding this application specific decision, discussions
with technical representatives of this company continue with respect to other
applications of the SulphCo Process in its facilities around the
world.
We have
presented in-house laboratory and third-party data with respect to the
performance of the Sonocracking™ technology to an independent refiner located in
the United States. Based on those presentations and discussions, we
are working on samples of various streams from its facility to determine the
best value proposition for the technology in its system. We have sent
a collaboration proposal to this potential customer and are awaiting results of
further laboratory tests to determine steps forward. It is
anticipated that this proposal may lead to collaboration on application specific
technology developments and commercial scale demonstrations.
On
September 15, 2009, SulphCo reported that it had executed a letter of intent
with Laguna Development Corporation ("Laguna") to move toward the installation
of SulphCo's desulfurization technology at Laguna's New Mexico trans-mix
facility. On November 13, 2009, SulphCo reported that it had executed a letter
of intent with Golden Gate Petroleum (“Golden Gate”) to move toward the
installation of SulphCo’s technology at Golden Gate’s Nevada trans-mix
facility. SulphCo continues to work with Laguna, Golden Gate and
other companies in the trans-mix market to meet their technical and commercial
requirements to produce ultra-low sulfur diesel. As of the end of the
second quarter, neither of Laguna or Golden Gate has decided whether they want
to go forward with the proposals that have been presented to them by
SulphCo.
On June
23, 2010, SulphCo announced that it had executed a validation agreement (the
“Validation Agreement”) with Enterprise Products Operating LLC (“Enterprise”), a
wholly owned subsidiary of Enterprise Products Partners L.P. Pursuant
to the terms of the Validation Agreement, SulphCo will install a mobile
Sonocracking™ unit at Enterprise’s natural gas liquids (“NGL”) fractionation
facility located in Mont Belvieu, Texas for the purpose of evaluating the
commercial scale performance of SulphCo’s Sonocracking™ technology on certain
Enterprise natural gasoline streams produced at the facility following
laboratory tests on such streams. SulphCo expects that the
installation will be completed by the end of July with commercial scale
evaluations to follow during the ensuing eight to ten week
period. Concurrent with the execution of the Validation Agreement,
SulphCo and Enterprise commenced negotiations on a definitive commercial
agreement (the “Operating Agreement”). While SulphCo expects that the
Operating Agreement will be executed as soon as practicable after the successful
completion of the commercial evaluation, there can be no guarantees that the
evaluation phase will lead to a definitive commercial agreement.
In
addition to the ongoing discussions described above, we have been contacted by
several new potential customers expressing interest in the Sonocracking™
technology, including product pipeline companies, integrated major oil
companies, independent oil companies, and small refiners. The
applications include sulfur reduction in natural gasoline, natural gas
condensates, naphthas and diesel fuels. Work continues on samples provided by
several of these potential customers which will form the basis for their
evaluation of the Sonocracking™ technology in their respective
systems.
While the
Company is encouraged by the recent progress in North America, there can be no
assurance that the Company will be successful in implementing any commercial
agreements.
South
America
Based on technical data presented by
SulphCo at meetings with an Argentinean based oil company in 2009, the
distribution agreement between SulphCo and J.W. Tecnologia Servicios Petroleros
S.A.C. (“South American Distributor”) was expanded to include that certain
company in Argentina. We have also performed tests on crude oil and
petroleum product streams provided by other South American companies through our
South American Distributor and have achieved results consistent with testing
performed on diesel fuels and oils originating from other areas of the world.
Proposals for collaboration were sent to these potential customers in early 2009
and have lead to additional discussions on possible collaborative efforts to
utilize the Sonocracking ™ technology on specific customer
applications. Additionally, SulphCo representatives, along with our
South American Distributor met with two oil companies in Peru during March 2010
to discuss diesel fuel applications. Samples of diesel from two
different refineries in Peru owned by one of these oil companies have been sent
to SulphCo for testing and evaluation.
Further,
as a result of laboratory tests on samples provided by a large integrated oil
company in Brazil, technology meetings were held in that country during the
first quarter of 2009 and again during the first quarter of 2010. Based on
positive feedback from these meetings, a proposal for collaboration on
application specific technology and commercial scale demonstrations was sent to
this potential customer. In response to this proposal, discussions
are being held with this company to identify the value proposition for site
specific applications and determine the appropriate actions moving forward.
Samples of diesel from the Brazilian oil company have been delivered to
SulphCo’s Houston facility and testing on the samples is set to begin as soon as
possible. It is anticipated these discussions may ultimately lead to
commercial demonstrations.
While the
Company is encouraged by the recent progress in South America, there can be no
assurance that the Company will be successful in implementing any commercial
agreements.
RISK
FACTORS
We
are a development stage company with a limited operating history, which makes it
more difficult to predict whether we will be able to successfully commercialize
our technology and implement our business plan.
We are a
development stage company with a limited operating history, and our principal
technologies and products are not yet commercially
proven. Accordingly, there is a limited operating history upon which
to base an assumption that we will be able to successfully implement our
business plan.
Our
technologies are not fully developed, are commercially untested, and therefore,
the successful development and commercialization of our technologies remain
subject to significant uncertainty.
Our
activities, to date, have involved the research and development of our crude oil
desulfurization and oxidative desulfurization technologies. We have not yet
generated any material revenues since commencing these activities in January
1999. Commercial application of our technologies will require further
investment, development and testing. We may be unable to complete the
commercialization of our technologies on a timely basis, or at all.
Development
and commercialization of a new technology, such as our SulphCo Process, is
inherently subject to significant risks. Accordingly, we cannot
assure that our technology will perform in a commercial scale setting as
indicated in initial laboratory or small scale testing or that we will be able
to successfully commercialize our technology. Introducing and
enhancing a new technology involves numerous technical challenges, substantial
financial and personnel resources, and often takes many years to
complete. We cannot be certain that we will be successful at
commercializing our technology on a timely basis, or in accordance with
milestones, if at all. In addition, we cannot be certain that, once
our technology is made operational in a commercial setting, it will perform as
expected. Our technology is complex and, despite further vigorous
testing and quality control procedures, may contain undetected
errors. Any inability to timely deliver a commercially viable product
or service could have a negative effect on our business, revenues, financial
condition and results of operations.
We
have a history of operating losses and have not generated material revenues to
date, and we are unable to predict when or if we will generate material revenues
on a sustained basis or achieve profitability.
We have
not generated any material revenues, and we have experienced significant
operating losses in each period since we commenced our current line of business
in January 1999. As of June 30, 2010, we had an accumulated deficit
of approximately $161.7 million. These losses are principally
associated with the research and development of our Sonocracking™ units for
desulfurization and upgrading of crude oil and other petroleum products,
research and development of ultrasound technologies, development of
pre-production prototypes and related marketing activity, and we expect to
continue to incur expenses in the future for development, commercialization,
sales and marketing activities related to the commercialization of our
technology. We cannot predict when or to what extent our technology
or resulting products will begin to produce revenues on a sustained basis, or
whether we will ever reach profitability. If we are unable to achieve
significant levels of revenue on a sustained basis, our losses will
continue. If this occurs, we may be compelled to significantly
curtail our business activities or suspend or cease our
operations.
We
may not have sufficient working capital in the future, and we may be unable to
obtain additional capital, which could result in the curtailment, suspension or
cessation of our business activity. If we obtain additional
financing, you may suffer significant dilution.
In the
past we have financed our research and development activities primarily through
debt and equity financings from third parties. We expect our existing
capital resources will be sufficient to fund our cash requirements into the
first quarter of 2011 based upon projected levels of expenditures and
anticipated needs. However, we expect that additional working capital
will be required in the future.
The
extent and timing of our future capital requirements will depend upon several
factors, including:
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continued
progress toward commercialization of our
technologies;
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rate
of progress and timing of product commercialization activities and
arrangements; and
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our
ability to establish and maintain collaborative arrangements with others
for product development, commercialization, marketing, sales and
manufacturing.
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Accordingly,
our capital requirements may vary materially from those currently planned, and
we may require additional financing sooner than anticipated.
Sources
of additional capital, other than from future revenues (for which we presently
have no commitments) include proceeds from the exercise of warrants issued to
the investors in the November 2007, May 2008, and January 2010 placements,
funding through collaborative arrangements, licensing arrangements and debt and
equity financings. We do not know whether additional financing will
be available on commercially acceptable terms when needed. If we
cannot raise funds on acceptable terms, we may not be able to successfully
commercialize our technology, or respond to unanticipated requirements. If we
are unable to secure such additional financing, we may have to curtail, suspend
or cease all or a portion of our business activities. Further, if we
issue equity securities, our shareholders may experience severe dilution of
their ownership percentages, and the new equity securities may have rights,
preferences or privileges senior to those of our common stock.
Commercial
activities by us in foreign countries could subject us to political and economic
risks which could impair future potential sources of revenue or impose
significant costs.
We are
currently engaged in activities outside the U.S., including the Middle East,
Austria, Europe, North America, South America and South Korea, and we expect to
continue to do so in the future, either directly, or through partners, licensees
or other third parties, in connection with the commercialization of our
technologies. The transaction of business by us in a foreign
country, either directly or through partners, licensees or other third parties,
may subject us, either directly or indirectly, to a number of risks, depending
upon the particular country. These risks may include, with respect to
a particular foreign country:
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government
activities that may result in the curtailment of contract
rights;
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government
activities that may restrict payments or limit the movement of funds
outside the country;
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confiscation
or nationalization of assets;
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confiscatory
or other adverse foreign taxation
regulations;
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acts
of terrorism or other armed conflicts and civil
unrest;
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currency
fluctuations, devaluations and conversion restrictions;
and
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trade
restrictions or embargoes imposed by the U.S. or a foreign
country.
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Many of
these risks may be particularly significant in some oil producing regions, such
as the Middle East and South America.
Our
strategy for the development and commercialization of our technologies
contemplates collaborations with third parties, making us dependent on them for
our success.
We do not possess all of the
capabilities to fully commercialize our desulfurization and upgrading
technologies on our own. Our success may depend upon partnerships and
strategic alliances with third parties. Collaborative agreements
involving the development or commercialization of technology such as ours
generally pose such risks as:
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collaborators
may not pursue further development or commercialization of products
resulting from collaborations or may elect not to continue or renew
research and development programs;
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collaborators
may delay development activities, underfund development activities, stop
or abandon development activities, repeat or conduct new testing or
require changes to our technologies for
testing;
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collaborators
could independently develop, or develop with third parties, products that
could compete with our future
products;
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the
terms of our agreements with collaborators may not be favorable to
us;
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a
collaborator may not commit enough resources, thereby delaying
commercialization or limiting potential revenues from the
commercialization of a product; and
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collaborations
may be terminated by the collaborator for any number of reasons, including
failure of the technologies or products to perform in line with the
collaborator’s objectives or expectations, and such termination could
subject us to increased capital requirements if we elected to pursue
further activities.
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We
have very limited manufacturing, marketing and sales experience, which could
result in delays to the implementation of our business plan.
We have very limited manufacturing,
marketing and product sales experience. We cannot ensure that
contract manufacturing services will be available in sufficient capacity to
supply our product needs on a timely basis. If we decide to build or
acquire commercial scale manufacturing capabilities, we will require additional
management and technical personnel and additional capital.
We
rely on third parties to provide certain components for our products. If our
vendors fail to deliver their products in a reliable, timely and cost-efficient
manner, our business will suffer.
We
currently depend on relationships with third parties such as contract
manufacturing companies and suppliers of components critical for the product we
are developing in our business. If these providers do not produce
these products on a timely basis, if the products do not meet our specifications
and quality control standards, or if the products are otherwise flawed, we may
have to delay product delivery, or recall or replace unacceptable
products. In addition, such failures could damage our reputation and
could adversely affect our operating results. As a result, we could
lose potential customers and any revenues that we may have at that time may
decline dramatically.
Our business is subject to the risk of supplier
concentration.
We depend on a limited number of third party suppliers
and vendors for the manufacturing and development of our Sonocracker™
units. As a result of this concentration in our supply chain, our
business and operations would be negatively affected if any of our key suppliers
were to experience significant disruption affecting the price, quality,
availability or timely delivery of their products. The partial or
complete loss of one of these suppliers, or a significant adverse change in our
relationship with any of these suppliers, could have a material adverse effect
on our business, results of operations and financial condition.
We
are highly dependent on our key personnel to manage our business, and because of
competition for qualified personnel, we may not be able to recruit or retain
necessary personnel. The loss of key personnel or the inability
to retain new personnel could delay the implementation of our business
plan.
Our
success depends to a significant degree on the continued services of our senior
management and other key employees, and our ability to attract and retain highly
skilled and experienced scientific, technical, managerial, sales and marketing
personnel. We cannot assure you that we will be successful in
recruiting new personnel or in retaining existing personnel. None of
our senior management or key personnel has long term employment agreements with
us. We do not maintain key person insurance on any members of our
management team or other personnel. The loss of one or more key
employees or our inability to attract additional qualified employees could delay
the implementation of our business plan, which in turn could have a material
adverse effect on our business, results of operations and financial
condition. In addition, we may experience increased compensation
costs in order to attract and retain skilled employees.
Because
the market for products utilizing our technologies is still developing and is
highly competitive, we may not be able to compete successfully in the highly
competitive and evolving desulfurization and upgrading market.
The
market for products utilizing our technologies is still developing and there can
be no assurance that our products will ever achieve market
acceptance. Because we presently have no customers for our business,
we must convince petroleum producers, refiners and distributors to utilize our
products or license our technology. To the extent we do not achieve
market penetration, it will be difficult for us to generate meaningful revenue
or to achieve profitability.
The
success of our business is highly dependent on our patents and other proprietary
intellectual property, and we cannot assure you that we will be able to protect
and enforce our patents and other intellectual property.
Our
commercial success will depend to a large degree on our ability to protect and
maintain our proprietary technology and know-how and to obtain and enforce
patents on our technology. We rely primarily on a combination of
patent, copyright, trademark and trade secrets laws to protect our intellectual
property. Although we have filed multiple patent applications for our
technology, and we have nine issued patents in the U.S., our patent position is
subject to complex factual and legal issues that may give rise to uncertainty as
to the validity, scope and enforceability of a particular
patent. Accordingly, we cannot assure you that any patents will be
issued pursuant to our current or future patent applications or that patents
issued pursuant to such applications will not be invalidated, circumvented or
challenged. Also, we cannot ensure you that the rights granted under
any such patents will provide the competitive advantages we anticipate or be
adequate to safeguard and maintain our proprietary rights. In
addition, effective patent, trademark, copyright and trade secret protection may
be unavailable, limited or not applied for in certain foreign
countries. Moreover, we cannot ensure you that third parties will not
infringe, design around, or improve upon our proprietary
technology.
We also
seek to protect our proprietary intellectual property, including intellectual
property that may not be patented or patentable, in part by utilizing
confidentiality agreements and, if applicable, inventor's rights agreements with
our employees and third parties. We cannot assure you that these
agreements will not be breached, that we will have adequate remedies for any
breach or that such persons will not assert rights to intellectual property
arising out of these relationships.
We
are a new entrant in our business and we face significant
competition.
We are a
new entrant in the market for development and sale of upgrading and sulfur
reduction technology to the oil industry. We face well-established
and well-funded competition from a number of sources. Our competitors
in this area include manufacturers of conventional refinery desulfurization
equipment and major integrated oil companies and oil refineries. Most
of these entities have substantially greater research and development
capabilities and financial, scientific, manufacturing, marketing, sales and
service resources than we do.
Because
of their experience and greater research and development capabilities, our
competitors might succeed in developing and commercializing competing
technologies or products which would render our technologies or products
obsolete or non-competitive.
Regulatory
developments could have adverse consequences for our business.
The
regulatory environment that pertains to our business is complex, uncertain and
changing rapidly. Although we anticipate that existing and proposed
governmental mandates regulating the sulfur content of petroleum products will
continue to provide an impetus for customers to utilize our Sonocracking™
technology for desulfurization, it is possible that the application of existing
environmental legislation or regulations or the introduction of new legislation
or regulations could substantially impact our ability to launch and promote our
proprietary technologies, which could in turn negatively impact our
business.
Rules and
regulations implementing federal, state and local laws relating to the
environment will continue to affect our business, including laws and regulations
which may apply to the use and operation of our Sonocracker™ units, and we
cannot predict what additional environmental legislation or regulations will be
enacted or become effective in the future or how existing or future laws or
regulations will be administered or interpreted with respect to products or
activities to which they have not been applied previously. Compliance
with more stringent laws or regulations, as well as more vigorous enforcement
policies of regulatory agencies, could have a materially adverse effect on our
business.
To date,
environmental regulation has not had a material adverse effect on our business,
which is presently in the development stage. However, future
activities may subject us to increased risk as we seek to commercialize our
units by reason of the installation and operation of these units at customer
sites. We intend to address these risks by imposing contractual
responsibility, whenever practicable, on third party users for maintaining
necessary permits and complying with applicable environmental laws governing or
related to the operation of our units. However, these measures may
not fully protect us against environmental risks. Furthermore,
although we may be entitled to contractual indemnification from third parties
for environmental compliance liabilities, this would not preclude direct
liability by us to governmental agencies or third parties under applicable
federal and state environmental laws. We are presently unable to
predict the nature or amount of additional costs or liabilities which may arise
in the future related to environmental regulation. However, such
future liabilities and costs could be material.
We
may be sued for product liability, which could result in liabilities which
exceed our available assets.
We may be
held liable if any product we develop, or any product which is made with the use
of any of our technologies, causes injury or is found otherwise unsuitable
during product testing, manufacturing, marketing, sale or use. We
currently have no product liability insurance. When we attempt to
obtain product liability insurance, this insurance may be prohibitively
expensive, or may not fully cover our potential
liabilities. Inability to obtain sufficient insurance coverage at an
acceptable cost or otherwise to protect against potential product liability
claims could inhibit the commercialization of products developed by
us. If we are sued for any injury caused by our products, our
liability could exceed our available assets.
We
are the defendant in several lawsuits, in which an adverse judgment against us
could result in liabilities which exceed our available assets.
Details of the current status of
outstanding litigation involving the Company are available in the Form 10-K for
the fiscal year ended December 31, 2009 and the Forms 10-Q for the quarterly
periods ended March 31, 2010 and June 30, 2010. An adverse judgment
in any of these cases could result in material harm to our business or result in
liabilities that exceed our available assets.
Our
stock price is volatile, which increases the risk of an investment in our common
stock.
The
trading price for our common stock has been volatile, ranging from a sales price
of $0.18 in July 2010, to a sales price of over $19.00 per share in January
2006. The price has changed dramatically over short periods with
decreases of more than 50% and increases of more than 100% percent in a single
day. An investment in our stock is subject to such volatility and,
consequently, is subject to significant risk.
Sales
of our common stock, or market expectations of such sales, may have an adverse
impact on the market price of our common stock.
This
prospectus relates to the sale of up to $122,180,000 in shares of common stock
or warrants by the Company. Large sales volumes by the Company or market
expectations of such sales could adversely affect the market price of our common
stock.
The
potential exercise of outstanding options and warrants could adversely affect
the market price of our common stock, dilute the holdings of existing
stockholders and impede our ability to obtain additional equity
financing.
As of
July 31, 2010, we had outstanding options and warrants to purchase approximately
22 million shares of our common stock. If the option and warrant
holders exercise their options and warrants, we will be obligated to issue
additional shares of common stock at the stated exercise price. The
existence of such rights to acquire common stock at fixed prices may prove a
hindrance to our efforts to raise future equity funding, and the exercise of
such rights will dilute the percentage ownership interest of our stockholders
and may dilute the value of their ownership. Future sales of shares issuable on
the exercise of outstanding warrants and options at fixed prices below
prevailing market prices, or expectations of such sales, could adversely affect
the prevailing market price of our common stock, particularly since such
warrants or options may be exercised at a fixed price and resold. Further, the
holders of the outstanding options or warrants may exercise them at a time when
we would otherwise be able to obtain additional equity capital on terms more
favorable to us.
We
do not expect to pay dividends on our common stock in the foreseeable
future.
Although
our stockholders may receive dividends if, as and when declared by our board of
directors, we do not presently intend to pay dividends on our common stock until
we are able to generate revenues and profits on a sustained basis and available
cash exceeds our working capital requirements. Therefore, you should not
purchase our common stock if you need immediate or future income by way of
dividends from your investment.
In certain cases, our board of
directors has the ability to issue additional shares of our common stock without
obtaining the approval of our stockholders, which issuances may result in
further dilution to our stockholders.
Our
corporate charter currently authorizes our board of directors to issue up to
150,000,000 shares of common stock, of which 101,708,741 shares were outstanding
as of July 31, 2010. In certain cases, the power of the board of directors to
issue shares of common stock or warrants to purchase shares of common stock is
not subject to stockholder approval under Nevada state law, the state of our
corporate organization. Any additional issuance of our common stock may have the
effect of further diluting the equity interest of our stockholders.
Our board
of directors has the authority to issue up to 10,000,000 shares of preferred
stock, none of which are issued or outstanding, and to determine the price, and
the rights, preferences, privileges and restrictions, without any further vote
or action by our stockholders. The rights of the holders of common stock may be
adversely affected by the rights of the holders of any preferred stock that may
be issued in the future. Rights, preferences and privileges applicable to future
preferred stock issuances could include dividend, liquidation and voting rights
which are greater than rights afforded our common stockholders. Because the
holders of preferred stock may be entitled to vote on some matters as a class,
issuance of preferred stock could have the effect of delaying, deferring or
preventing a change of control of our company. The issuance of preferred stock,
while providing desirable flexibility, could have the effect of making it more
difficult for a third party to acquire control of our company.
Our
former Chairman and CEO may attempt to control corporate decisions, and his
interests may differ from the interests of other stockholders.
As of the
date of this prospectus Dr. Rudolf W. Gunnerman beneficially owned approximately
10.08% of our issued and outstanding common stock. Accordingly, Dr. Gunnerman
may effectively be able to exercise control over all matters requiring approval
by our stockholders, including the election of directors and the approval of
significant corporate transactions. Dr. Gunnerman’s interests may differ from
the interests of other stockholders and, therefore, result in corporate
decisions that may be disadvantageous to other stockholders. This concentration
of ownership may also have the effect of delaying or preventing a change in
control, which could have a material adverse effect on our stock
price.
We may be delisted from the NYSE
Amex LLC resulting in a more limited market for our common
stock
.
On June
30, 2010, we were notified of our failure to comply with the NYSE Amex LLC’s
(the “Exchange”) continued listing standards under section 1003(a) (iii) of
the Exchange’s Company Guide because our stockholders' equity was less than
$6,000,000 and we have had losses from continuing operations and net losses in
our five most recent fiscal years. The notice was based on a review
by the Exchange of our publicly available information, including the Company's
quarterly report on Form 10-Q for the quarter ended March 31, 2010 at which time
the Company’s stockholders’ equity was approximately $5.3
million. As of June 30, 2010 our stockholders' equity was
approximately $3.3 million resulting in our failure to comply with Section
1003(a)(ii) of the Company Guide because our stockholders’ equity was less than
$4,000,000 and we had losses from continuing operations and net losses in three
of our four most recent fiscal years. During the week ended July 30, 2010, we
submitted to the Exchange a plan outlining our efforts to regain compliance with
the Exchange's continued listing requirements. The Exchange has 45 days in
which to decide whether the plan is acceptable. The plan consisted of several
elements, but primarily focused on the sales of our products and services and
raising additional equity capital. If (i) our plan is not accepted,
(ii) we do not make progress toward regaining compliance consistent with our
plan, or (iii) we are not in compliance at the end of the plan period, then our
shares of common stock may be delisted from the Exchange. If the
Exchange delists our common stock, we anticipate that our common stock would be
quoted on the OTC Bulletin Board or possibly the so-called "pink sheets." Even
if our common stock is quoted on such systems, a delisting by the Exchange could
harm our investors by reducing the liquidity and market price of our common
stock. Additionally, a delisting could negatively affect us by reducing the
number of investors willing to hold or acquire our common stock, which could
negatively affect our ability to access public capital markets. If
the Company is not listed on a national exchange and/or if our public float
remains below $75 million, it will be limited in its ability to file new shelf
registration statements on Form S-3 and/or to fully use one or more registration
statements on Form S-3 that have been filed with the Securities and Exchange
Commission. Any such limitations may have a material adverse effect
on the Company’s ability to raise the capital needed to continue its
operations.
Because
our common stock may be subject to rules governing low priced securities, market
liquidity for our common stock could be adversely impacted.
If our
common stock trades below $5.00 per share and is not listed on the NYSE Amex LLC
or a national or regional securities exchange, our common stock is subject to
the low priced security or so-called "penny stock" rules that impose additional
sales practice requirements on broker-dealers who sell such securities to
persons other than established customers and accredited investors. For any
transaction involving a penny stock, unless exempt, the rules require, among
other things, the delivery, prior to the transaction, of a disclosure schedule
required by the Securities and Exchange Commission relating to the penny stock
market. These rules also require that the broker determine, based upon
information obtained from the investor, that transactions in penny stocks are
suitable for the investor, and require the broker to obtain the written consent
of the investor prior to effecting the penny stock transaction. The
broker-dealer must also disclose the commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and, if the broker-dealer is the sole market-maker, the broker-dealer
must disclose this fact and the broker-dealer's presumed control over the
market. Finally, monthly statements must be sent disclosing recent price
information for the penny stock held in the account and information on the
limited market in penny stocks. So long as our common stock is characterized as
a penny stock, the market liquidity for these shares could be severely affected.
The regulations relating to penny stocks could limit the ability of
broker-dealers to sell these securities and, in turn, the ability of
stockholders to sell their shares in the secondary market.
We
may have difficulty managing our growth.
We expect
to experience significant growth if we are successful in our efforts to roll out
our Sonocracking units on a worldwide basis. This growth exposes us
to increased competition, greater operating, marketing and support costs and
other risks associated with entry into new markets and the development of new
products, and could place a strain on our operational, human and financial
resources. To manage growth effectively, we must:
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attract
and retain qualified personnel;
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upgrade
and expand our infrastructure so that it matches our level of
activity;
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manage
expansion into additional geographic areas;
and
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improve
and refine our operating and financial systems and managerial controls and
procedures.
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If we do
not effectively manage our growth, we will not be successful in executing our
business plan, which could materially adversely affect our business, results of
operations and financial condition.
FORWARD-LOOKING
STATEMENTS
This
prospectus contains forward-looking statements within the meaning of the federal
securities laws that relate to future events or our future financial
performance. In some cases, you can identify forward-looking statements by
terminology, such as "may," "will," "should," "could," "expect," "plan,"
"anticipate," "believe," "estimate," "project," "predict," "intend," "potential"
or "continue" or the negative of such terms or other comparable terminology,
although not all forward-looking statements contain such terms. In addition,
these forward-looking statements include, but are not limited to, statements
regarding:
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implementing
our business strategy;
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development,
commercialization and marketing of our
products;
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our
intellectual property;
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our
estimates of future revenue and
profitability;
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our
estimates or expectations of continued
losses;
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our
expectations regarding future expenses, including research and
development, sales and marketing, manufacturing and general and
administrative expenses;
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difficulty
or inability to raise additional financing, if needed, on terms acceptable
to us;
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our
estimates regarding our capital requirements and our needs for additional
financing;
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attracting
and retaining customers and
employees;
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sources
of revenue and anticipated revenue;
and
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competition
in our market.
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These
statements are only predictions. Although we believe that the expectations
reflected in these forward-looking statements are reasonable, we cannot
guarantee future results, levels of activity, performance or achievements. We
are not required to and do not intend to update any of the forward-looking
statements after the date of this prospectus or to conform these statements to
actual results. In light of these risks, uncertainties and assumptions, the
forward-looking events discussed in this prospectus might not occur. Actual
results, levels of activity, performance, achievements and events may vary
significantly from those implied by the forward-looking statements. A
description of risks that could cause our results to vary appears under “Risk
Factors” and elsewhere in this prospectus.
In this
prospectus, we refer to information regarding our potential markets and other
industry data. We believe that we have obtained this information from reliable
sources that customarily are relied upon by companies in our industry, but we
have not independently verified any of this information.
Unless
otherwise specified in a prospectus supplement accompanying this prospectus, the
net proceeds from the sale of the securities by SulphCo to which this prospectus
relates will be used for general corporate purposes. These purposes
may include repayment of debt, acquisitions, additions to working capital,
capital expenditures and investments in our subsidiaries.
PLAN
OF DISTRIBUTION
The
securities being offered by this prospectus may be sold:
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to
or through one or more underwriters on a firm commitment or best efforts
basis,
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through
put or call option transactions relating to the
securities,
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through
broker-dealers (acting as agent or
principal),
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directly
to purchasers, through a specific bidding or auction process or otherwise,
or
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through
a combination of any such methods of
sale.
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The
prospectus supplement will set forth the terms of the offering of such
securities, including:
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the
name or names of any underwriters, dealers or agents and the amounts of
securities underwritten or purchased by each of them,
and
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the
public offering price of the securities and the proceeds to us and any
discounts, commissions or concessions allowed or reallowed or paid to
dealers.
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Any
public offering price and any discounts or concessions allowed or reallowed or
paid to dealers may be changed from time to time.
The
distribution of securities may be effected from time to time in one or more
transactions, including block transactions and transactions on the NYSE Amex LLC
or any other organized market where the securities may be traded. The
securities may be sold at a fixed price or prices, which may be changed, or at
market prices prevailing at the time of sale, at prices relating to the
prevailing market prices or at negotiated prices. The consideration
may be cash or another form negotiated by the parties. Agents,
underwriters or broker-dealers may be paid compensation for offering and selling
the securities. That compensation may be in the form of discounts,
concessions or commissions to be received from us or from the purchasers of the
securities. Any dealers and agents participating in the distribution
of the securities may be deemed to be underwriters, and compensation received by
them on resale of the securities may be deemed to be underwriting
discounts. If such dealers or agents were deemed to be underwriters,
they may be subject to statutory liabilities under the Securities Act of
1933.
Agents
may from time to time solicit offers to purchase the securities. If
required, we will name in the applicable prospectus supplement any agent
involved in the offer or sale of the securities and set forth any compensation
payable to the agent. Unless otherwise indicated in the prospectus
supplement, any agent will be acting on a best efforts basis for the period of
its appointment. Any agent selling the securities covered by this
prospectus may be deemed to be an underwriter, as that term is defined in the
Securities Act, of the securities.
If
underwriters are used in a sale, securities will be acquired by the underwriters
for their own account and may be resold from time to time in one or more
transactions, including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of sale, or under delayed
delivery contracts or other contractual commitments. Securities may
be offered to the public either through underwriting syndicates represented by
one or more managing underwriters or directly by one or more firms acting as
underwriters. If an underwriter or underwriters are used in the sale
of securities, an underwriting agreement will be executed with the underwriter
or underwriters, as well as any other underwriter or underwriters, with respect
to a particular underwritten offering of securities, and will set forth the
terms of the transactions, including compensation of the underwriters and
dealers and the public offering price, if applicable. The prospectus
and prospectus supplement will be used by the underwriters to resell the
securities.
If a
dealer is used in the sale of the securities, we, or an underwriter will sell
the securities to the dealer, as principal. The dealer may then
resell the securities to the public at varying prices to be determined by the
dealer at the time of resale. To the extent required, we will set
forth in the prospectus supplement the name of the dealer and the terms of the
transactions.
We may
directly solicit offers to purchase the securities and may make sales of
securities directly to institutional investors or others. These
persons may be deemed to be underwriters within the meaning of the Securities
Act with respect to any resale of the securities. To the extent
required, the prospectus supplement will describe the terms of any such sales,
including the terms of any bidding or auction process, if used.
Agents,
underwriters and dealers may be entitled under agreements which may be entered
into with us to indemnification by us against specified liabilities, including
liabilities incurred under the Securities Act, or to contribution by us to
payments they may be required to make in respect of such
liabilities. If required, the prospectus supplement will describe the
terms and conditions of the indemnification or contribution. Some of
the agents, underwriters or dealers, or their affiliates may be customers of,
engage in transactions with or perform services for us or our
subsidiaries.
Under the
securities laws of some states, the securities offered by this prospectus may be
sold in those states only through registered or licensed brokers or
dealers.
Any
person participating in the distribution of common shares registered under the
registration statement that includes this prospectus will be subject to
applicable provisions of the Exchange Act, and the applicable SEC rules and
regulations, including, among others, Regulation M, which may limit the timing
of purchases and sales of any of our common shares by that
person. Furthermore, Regulation M may restrict the ability of any
person engaged in the distribution of our common shares to engage in
market-making activities with respect to our common shares. These
restrictions may affect the marketability of our common shares and the ability
of any person or entity to engage in market-making activities with respect to
our common shares.
Certain
persons participating in an offering may engage in over-allotment, stabilizing
transactions, short-covering transactions and penalty bids that stabilize,
maintain or otherwise affect the price of the offered securities. For
a description of these activities, see the information under the heading
‘‘Underwriting’’ in the applicable prospectus supplement.
Any
common shares that qualify for sale pursuant to Rule 144 of the Securities Act,
or Regulation S under the Securities Act, may be sold under Rule 144 or
Regulation S rather than pursuant to this prospectus.
To the
extent that we make sales to or through one or more underwriters or agents in
at-the-market offerings, we will do so pursuant to the terms of a distribution
agreement between us and the underwriters or agents. If we engage in
at-the-market sales pursuant to a distribution agreement, we will issue and sell
our common shares to or through one or more underwriters or agents, which may
act on an agency basis or on a principal basis. During the term of
any such agreement, we may sell shares on a daily basis in exchange transactions
or otherwise as we agree with the underwriters or agents. The
distribution agreement will provide that any common shares sold will be sold at
prices related to the then prevailing market prices for our common
shares. Therefore, exact figures regarding proceeds that will be
raised or commissions to be paid cannot be determined at this time and will be
described in a prospectus supplement. Pursuant to the terms of the
distribution agreement, we also may agree to sell, and the relevant underwriters
or agents may agree to solicit offers to purchase, blocks of our common shares
or other securities. The terms of each such distribution agreement
will be set forth in more detail in a prospectus supplement to this
prospectus.
In the
event that any underwriter or agent acts as principal, or broker-dealer acts as
underwriter, it may engage in certain transactions that stabilize, maintain or
otherwise affect the price of our securities. We will describe any
such activities in the prospectus supplement relating to the
transaction.
Offers to
purchase the securities offered by this prospectus may be solicited, and sales
of the securities may be made, by us of those securities directly to
institutional investors or others, who may be deemed to be underwriters within
the meaning of the Securities Act with respect to any resales of the
securities. The terms of any offer made in this manner will be
included in the prospectus supplement relating to the offer.
In
connection with offerings made through underwriters or agents, we may enter into
agreements with such underwriters or agents pursuant to which we receive our
outstanding securities in consideration for the securities being offered to the
public for cash. In connection with these arrangements, the
underwriters or agents may also sell securities covered by this prospectus to
hedge their positions in these outstanding securities, including in short sale
transactions. If so, the underwriters or agents may use the
securities received from us under these arrangements to close out any related
open borrowings of securities.
One or
more firms, referred to as ‘‘remarketing firms,’’ may also offer or sell the
securities, if the prospectus supplement so indicates, in connection with a
remarketing arrangement upon their purchase. Remarketing firms will
act as principals for their own accounts or as agents for us. These
remarketing firms will offer or sell the securities in accordance with a
redemption or repayment pursuant to the terms of the securities. The
prospectus supplement will identify any remarketing firm and the terms of its
agreement, if any, with us and will describe the remarketing firm’s
compensation. Remarking firms may be deemed to be underwriters in
connection with the securities they remarket. Remarketing firms may
be entitled under agreements that may be entered into with us to indemnification
by us against certain civil liabilities, including liabilities under the
Securities Act of 1933, as amended, and may be customers of, engage in
transactions with or perform services for us in the ordinary course of
business.
Issuer Forward
Sale.
We may enter into derivative transactions
with third parties or sell securities not covered by this prospectus to third
parties in privately negotiated transactions. If the applicable
prospectus supplement indicates, in connection with those derivatives, such
third parties (or affiliates of such third parties) may sell securities covered
by this prospectus and the applicable prospectus supplement, including in short
sale transactions. If so, such third parties (or affiliates of such
third parties) may use securities pledged by us or borrowed from us or others to
settle those sales or to close out any related open borrowings of shares, and
may use securities received from us in settlement of those derivatives to close
out any related open borrowings of shares. The third parties (or
affiliates of such third parties) in such sale transactions will be underwriters
and, if not identified in this prospectus, will be identified in the applicable
prospectus supplement (or a post-effective amendment).
Share Borrow
Facility.
We or a selling shareholder may loan or
pledge securities to a financial institution or other third party that in turn
may sell the securities using this prospectus. Such financial
institution or third party may transfer its short position to investors in our
securities or in connection with a simultaneous offering of other securities
offered by this prospectus.
DESCRIPTION
OF WARRANTS
We may
issue warrants to purchase our equity securities. Warrants may be
issued independently or together with any other securities and may be attached
to, or separate from, such securities. Each series of warrants will
be issued under a separate warrant agreement to be entered into between us and a
warrant agent. The terms of any warrants to be issued and a
description of the material provisions of the applicable warrant agreement will
be set forth in the applicable prospectus supplement.
The
applicable prospectus supplement will describe the following terms of any
warrants in respect of which this prospectus is being delivered:
|
·
|
the
title of such warrants;
|
|
·
|
the
aggregate number of such warrants;
|
|
·
|
the
price or prices at which such warrants will be
issued;
|
|
·
|
the
date on which the right to exercise such warrants shall commence and the
date on which such right shall
expire;
|
|
·
|
if
applicable, the minimum or maximum amount of such warrants which may be
exercised at any one time; and
|
|
·
|
any
other terms of such warrants, including terms, procedures and limitations
relating to the exchange and exercise of such
warrants.
|
DESCRIPTION
OF SHARE CAPITAL
Our
authorized share capital consists of 150,000,000 common shares, par value $0.001
per share, and 10,000,000 preferred shares, par value $0.001 per
share. As of July 31, 2010, we had outstanding
(i) 101,708,741 common shares, (ii) warrants to purchase an
additional 16,088,480 common shares, (iii) options to purchase an
additional 5,819,885 common shares and (iv) no preferred
shares.
Common
Shares
Generally.
Generally,
each shareholder is entitled to one vote for each common share held on all
matters submitted to a vote of shareholders. Cumulative voting for
the election of directors is not provided for in our Restated Articles of
Incorporation or By-laws, which means that the holders of a majority of the
shares voted can elect all of the directors then standing for
election. The common shares are not entitled to preemptive rights and
are not subject to conversion or redemption. Upon the occurrence of a
liquidation, dissolution or winding-up, the holders of common shares would be
entitled to share ratably in the distribution of all of our assets remaining
available for distribution after satisfaction of all our liabilities, subject to
any resolution of the shareholders providing otherwise and to any liquidation
preference on any other class of shares that rank ahead of the common
shares.
Issuance of
Shares.
Subject to our By-laws and Nevada law, our board of
directors has the power to issue any of our unissued shares as it determines,
including the issuance of any shares or class of shares with preferred, deferred
or other special rights.
Our Board of Directors and Corporate
Action.
Our Restated Articles of Incorporation provide that
our board of directors shall consist of not less than three (3) members, as
the board of directors may determine. Our board currently consists of
six (6) directors. Each director serves a one-year
term. Shareholders may only remove a director for cause at any time
and only by the affirmative vote of sixty-six and two-thirds
percent (66-2/3%).
Generally,
the affirmative votes of a majority of the votes cast at any meeting at which a
quorum is present are required to authorize a resolution put to vote at a
meeting of the board of directors. Corporate action may also be taken
by a unanimous written resolution of the board of directors without a
meeting. The quorum necessary for the transaction of business at a
meeting of the board of directors shall be a majority of the directors then in
office.
Shareholder
Action.
At the commencement of any general meeting, holders of
our common stock present in person and representing, in person or by proxy, more
than 50% of the total issued voting power of our shares shall constitute a
quorum for the transaction of business. In general, any questions
proposed for the consideration of the shareholders at any general meeting shall
be decided by the affirmative votes of a majority of the votes cast in
accordance with our By-laws. Shareholders do not have the ability to
take action by written request.
Amendment.
The
By-laws may only be amended by a resolution adopted by the board of
directors.
Transfer Agent and
Registrar.
Integrity Stock Transfer serves as transfer agent
and registrar for our common shares.
Incorporation
of Certain Information by Reference
The SEC
allows this prospectus to "incorporate by reference" certain other information
that we file with them, which means that we can disclose important information
to you by referring you to those documents. The information
incorporated by reference is an important part of this prospectus, and
information that we file later with the SEC will automatically update this
information. In all cases, you should rely on the later information
over different information included in this prospectus or the prospectus
supplement. We incorporate by reference into this prospectus the
documents listed below and any future filings made by us with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until
all of the securities that we have registered have been sold:
|
(1)
|
Our
Annual Report, on Form 10-K for the fiscal year ended December 31, 2009,
filed with the SEC on February 25,
2010;
|
|
(2)
|
Our
Quarterly Reports on Form 10-Q for the quarter ended March 31, 2010, filed
with the SEC on May 5, 2010 and for the quarter ended June 30, 2010, filed
with the SEC on July 22, 2010;
|
|
(3)
|
Our
Current Reports on Form 8-K filed January 29, 2010*, February 4, 2010*,
June 11, 2010, June 23, 2010* and July 7,
2010*;
|
|
(4)
|
The
description of our common stock contained in our report on Form 8-A filed
on October 3, 2005; and
|
|
(5)
|
In
addition, we also incorporate by reference in to this prospectus
additional information that we may subsequently file with the Securities
and Exchange Commission under Section 13(a), 13(c), 14 and 15(d) of the
Exchange Act prior to the termination of the offering. These
documents include Annual Reports on Form 10-K, Quarterly Reports on Form
10-Q and Current Reports on Form 8-K, as well as proxy
statements.
|
*The
Regulation FD disclosure is not incorporated by reference into this registration
statement.
If you
make a request for such information in writing or by telephone, we will provide
to you, at no cost, a copy of any or all of the information incorporated by
reference in the registration statement of which this prospectus is a
part. Requests should be addressed to us as follows:
SulphCo,
Inc.
4333
W. Sam Houston Pkwy N., Suite 190
Houston,
TX 77043
Attn: Mr.
Stanley W. Farmer
Vice
President, Chief Financial Officer,
Treasurer
and Corporate Secretary
Telephone: (713)
896-9100
You
should rely only on the information incorporated by reference or provided in
this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. We will not
make an offer of the shares of our common stock in any state where the offer is
not permitted. You should not assume that the information in this
prospectus or any prospectus supplement is accurate as of any date other than
the date on the front of those documents.
CERTAIN
ERISA CONSIDERATIONS
We and
our affiliates may each be considered a party in interest within the meaning of
the Employee Retirement Income Security Act of 1974 (ERISA), or a disqualified
person under corresponding provisions of the Internal Revenue Code of 1986 (the
Code), relating to an employee benefit plan. Prohibited transactions
within the meaning of ERISA and the Code may result if any securities offered by
this prospectus are acquired by or with the assets of a pension or other
employee benefit plan relating to which we or any of our affiliates is a service
provider, unless those securities are acquired under an exemption for
transactions effected on behalf of that plan by a ‘‘qualified professional asset
manager’’ or an ‘‘in-house asset manager’’ or under any other available
exemption. Additional special considerations may arise in connection
with the acquisition of capital securities by or with the assets of a pension or
other employee benefit plan. The assets of a pension or other
employee benefit plan may include assets held in the general account of an
insurance company that are deemed to be ‘‘plan assets’’ under
ERISA. Any employee benefit plan or other entity subject to such
provisions of ERISA or the Code proposing to acquire the offered securities
should consult with its legal counsel.
EXPERTS
The
financial statements as of December 31, 2009 and 2008 and for the three
years ended December 31, 2009, incorporated by reference in this prospectus,
have been so included in reliance on the report of Hein & Associates LLP,
independent certified public accountants and a registered public accounting
firm, given on the authority of said firm as experts in accounting and
auditing.
LEGAL
MATTERS
The
validity of the issuance of the shares of common stock offered by this
prospectus has been passed upon for us by McDonald Carano Wilson LLP, Reno,
Nevada.
WHERE
YOU CAN FIND MORE INFORMATION
We file
annual, quarterly and special reports, proxy statements and other information
with the Securities and Exchange Commission. You may also read and
copy any document we file at the SEC’s Public Reference Room located at 100 F
Street, N.E., Washington, D.C. 20549. Please call the SEC
at 1-800-732-0330 for further information on the Public Reference
Room. Our SEC filings are also available to the public over the
internet from the SEC's website at http://www.sec.gov, or at our website at
http://www.sulphco.com.
This
prospectus provides you with a general description of the common stock being
registered. This prospectus is part of a registration statement that
we have filed with the SEC. This prospectus does not contain all the
information contained in the registration statement. Some items
are contained in schedules and exhibits to the registration statement as
permitted by the rules and regulations of the SEC. Statements made in
this prospectus concerning the contents of any documents referred to in the
prospectus are not necessarily complete. With respect to each such
document filed with the SEC as an exhibit to the registration statement, please
refer to the exhibit for a more complete description, and each such statement is
qualified by such reference. To see more detail, you should read the
exhibits and schedules filed with our registration statement.
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
14. Other Expenses of Issuance and Distribution
The
following table sets forth the expenses payable by the Registrant in connection
with the sale and distribution of the securities being registered
hereby. All amounts are estimated except the Securities and Exchange
Commission registration fee.
Securities
and Exchange Commission registration fee
|
|
$
|
0
|
|
Accounting
fees and expenses
|
|
$
|
2,500
|
|
Printing
and engraving
|
|
$
|
500
|
|
Legal
fees and expenses
|
|
$
|
10,000
|
|
Miscellaneous
|
|
$
|
1,000
|
|
Total
|
|
$
|
14,000
|
|
Item
15. Indemnification of Directors and Officers
Section 78.7502
of the Nevada Revised Statutes Annotated ("Nevada RSA") provides that a Nevada
corporation may indemnify its directors and officers against expenses,
judgments, fines, and settlements actually and reasonably incurred by them in
connection with any civil suit or action, except actions by or in the right of
the corporation, or any administrative or investigative proceeding if, in
connection with the matters in issue, they acted in good faith and in a manner
they reasonably believed to be in, or not opposed to, the best interests of the
corporation, and in connection with any criminal suit or proceeding, if in
connection with the matters in issue, they had no reasonable cause to believe
their conduct was unlawful. Section 78.7502 of the Nevada RSA
further provides that, in connection with the defense or settlement of any
action by or in the right of a Nevada corporation, a Nevada corporation may
indemnify its directors and officers against expenses actually and reasonably
incurred by them if, in connection with the matters in issue, they acted in good
faith, in a manner they reasonably believed to be in, or not opposed to, the
best interest of the corporation. Section 78.7502 of the Nevada
RSA further permits a Nevada corporation to grant its directors and officers
additional rights of indemnification through by-law provisions and
otherwise.
Article VI
of our Amended and Restated By-Laws provides that we will indemnify our
directors and officers and advance costs and expenses incurred by such officers
and directors to the fullest extent permitted by Nevada law. Our
Amended and Restated By-Laws also permit us to enter into agreements with any
director or officer or to obtain insurance indemnifying directors and officers
against certain liabilities incurred by them in the performance of their duties,
including liabilities under the Securities Act of 1933. We currently
maintain a policy of insurance indemnifying directors and officers against
certain liabilities incurred by them in the performance of their
duties.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may
be permitted to directors, officers and controlling persons pursuant to the
foregoing provisions, or otherwise, we have been advised that in the opinion of
the SEC such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable.
Item
16. Exhibits and Financial Statement Schedules
|
3.1
1
|
Restated
Articles of Incorporation, as amended and filed with the Nevada Secretary
of State
|
|
3.2
2
|
Amended
and Restated Bylaws
|
|
5.1
|
Opinion
of McDonald Carano Wilson LLP
|
|
23.1
|
Consent
of Hein & Associates LLP
|
|
23.2
|
Consent
of McDonald Carano Wilson LLP (Included in Exhibit
5.1)
|
|
24.1
|
Power
of Attorney (Included in Signature
Page)
|
|
(b)
|
Financial
Statement Schedules
|
None.
Item
17. Undertakings
The
undersigned Registrant hereby undertakes:
(a) To
file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) to
include any prospectus required by Section 10(a)(3) of the Securities Act of
1933;
(ii) to
reflect in the prospectus any facts or events arising after the effective date
of this Registration Statement (or its most recent post-effective amendment)
which, individually or in the aggregate, represent a fundamental change in the
information set forth in this Registration Statement. Notwithstanding
the foregoing, any increase or decrease in the volume of securities offered (if
the total dollar value of securities offered would not exceed that which was
registered), and any deviation from the low or high end of the estimated maximum
offering range, may be reflected in the form of prospectus filed with the
Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement;
(iii) to
include any material information with respect to the plan of distribution not
previously disclosed in this Registration Statement or any material change to
such information in this Registration Statement;
PROVIDED,
HOWEVER,
(a) that
the undertakings set forth in paragraphs (a)(i), (a)(ii) and (a)(iii) above do
not apply if the information required with or furnished to the Securities and
Exchange Commission to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Securities and Exchange Commission by the Registrant pursuant to Section 13 or
Section 15(d) of the Exchange Act that are incorporated by reference in this
Registration Statement.
1
|
Incorporated
by reference from the Company’s Form 10-KSB, filed with the SEC on
March 29, 2004, the amendment disclosed in the Form 8-K, filed with the
SEC on June 25, 2008 and the amendment disclosed in the Definitive Proxy
Statement, filed with the SEC on April 30,
2009.
|
2
|
Incorporated
by reference from the Company’s Form 10-KSB/A, filed with the SEC on
April 22, 2003, as amended on January 17, 2007 (Form 8-K
filed on January 22, 2007), May 29, 2007 (Form 8-K filed on June 1,
2007) and March 27, 2009 (Form 8-K filed on March 30,
2009).
|
(b) that,
for the purpose of determining any liability under the Securities Act of 1933,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
(d) That,
for the purpose of determining liability under the Securities Act of 1933 to any
purchaser:
(A) Each
prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to
be part of the registration statement as of the date the filed prospectus was
deemed part of and included in the registration statement; and
(B) Each
prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as
part of a registration statement in reliance on Rule 430B relating to an
offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose
of providing the information required by section 10(a) of the Securities Act of
1933 shall be deemed to be part of and included in the registration statement as
of the earlier of the date such form of prospectus is first used after
effectiveness or the date of the first contract of sale of securities in the
offering described in the prospectus. As provided in Rule 430B, for
liability purposes of the issuer and any person that is at that date an
underwriter, such date shall be deemed to be a new effective date of the
registration statement relating to the securities in the registration statement
to which that prospectus relates, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering
thereof. Provided, however, that no statement made in a registration
statement or prospectus that is part of the registration statement or made in a
document incorporated or deemed incorporated by reference into the registration
statement or prospectus that is part of the registration statement will, as to a
purchaser with a time of contract of sale prior to such
effective date, supersede or modify any statement that was made
in the registration statement or prospectus that was part of the registration
statement or made in any such document immediately prior to such effective
date.
(e) That,
for the purpose of determining liability of a Registrant under the Securities
Act of 1933 to any purchaser in the initial distribution of the securities, the
undersigned Registrant undertakes that in a primary offering of securities of
the undersigned Registrant pursuant to this registration statement, regardless
of the underwriting method used to sell the securities to the purchaser, if the
securities are offered or sold to such purchaser by means of any of the
following communications, the undersigned Registrant will be a seller to the
purchaser and will be considered to offer or sell such securities to such
purchaser:
(i) Any
preliminary prospectus or prospectus of an undersigned Registrant relating to
the offering required to be filed pursuant to Rule 424;
(ii) Any
free writing prospectus relating to the offering prepared by or on behalf of an
undersigned Registrant or used or referred to by an undersigned
Registrant;
(iii) The
portion of any other free writing prospectus relating to the offering containing
material information about an undersigned Registrant or its securities provided
by or on behalf of an undersigned Registrant; and
(iv) Any
other communication that is an offer in the offering made by an undersigned
Registrant to the purchaser.
(f) That,
for purposes of determining any liability under the Securities Act of 1933, each
filing of the Registrant's annual report pursuant to Section 13(a) or 15(d) of
the Exchange Act that is incorporated by reference in this Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered therein and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(g) Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may
be permitted to directors, officers and controlling persons of the Registrant
pursuant to the provisions referred to in Item 15 of this Registration
Statement, or otherwise, the registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933 and will be governed by the
final adjudication of such issue.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the Registrant certifies that
it has reasonable grounds to believe that it meets all of the requirements for
filing on Form S-3 and has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Houston, State of Texas, on the 26
th
day of
August, 2010.
|
SULPHCO,
INC.
|
|
|
|
|
|
By:
|
/s/ Larry D. Ryan
|
|
|
|
Larry
D. Ryan
|
|
|
|
Chief
Executive Officer
|
|
KNOW BY
ALL MEN THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Larry D. Ryan and Stanley W. Farmer or either of them,
his true and lawful attorney-in-fact and agent, with full power of substitution,
for him and his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement, and to file the same with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent full power and authority to do and perform
each and every act and thing requisite and ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes may lawfully do
or cause to be done by virtue thereof.
Pursuant
to the requirements of the Securities Act of 1933, this Registration Statement
has been signed below by the following persons in the capacities and on the
dates indicated.
/s/ Larry D. Ryan
|
|
Chief
Executive Officer, Director
|
|
August
26, 2010
|
Larry
D. Ryan
|
|
(Principal
Executive Officer)
|
|
|
|
|
|
|
|
/s/ Stanley W. Farmer
|
|
Vice
President, Chief Financial Officer,
|
|
August
26, 2010
|
Stanley
W. Farmer
|
|
Treasurer
and Corporate Secretary
|
|
|
|
|
(Principal
Financial Officer and
|
|
|
|
|
Principal
Accounting Officer)
|
|
|
|
|
|
|
|
/s/ Fred S. Zeidman
|
|
Chairman
of the Board, Director
|
|
August
26, 2010
|
Fred
S. Zeidman
|
|
|
|
|
|
|
|
|
|
/s/ Robert J. Hassler
|
|
Director
|
|
August
26, 2010
|
Robert
J. Hassler
|
|
|
|
|
|
|
|
|
|
/s/ Orri Hauksson
|
|
Director
|
|
August
26, 2010
|
Orri
Hauksson
|
|
|
|
|
|
|
|
|
|
/s/ Robert H.C. van
Maasdijk
|
|
Director
|
|
August
26, 2010
|
Robert
H.C. van Maasdijk
|
|
|
|
|
|
|
|
|
|
/s/ Lawrence G. Schafran
|
|
Director
|
|
August
26, 2010
|
Lawrence
G. Schafran
|
|
|
|
|
EXHIBIT
INDEX
|
3.1
|
Restated
Articles of Incorporation
1
|
|
3.2
|
Amended
and Restated Bylaws
2
|
|
5.1
|
Opinion
of McDonald Carano Wilson LLP
|
|
23.1
|
Consent
of Hein & Associates LLP
|
|
23.2
|
Consent
of McDonald Carano Wilson LLP (Included in Exhibit
5.1)
|
|
24.1
|
Power
of Attorney (Included in Signature
Page)
|
1
|
Incorporated by reference from
the Company’s Form 10-KSB, filed with the SEC on March 29, 2004, the
amendment disclosed in the Form 8-K, filed with the SEC on June 25, 2008
and the amendment disclosed in the Definitive Proxy Statement, filed with
the SEC on April 30, 2009.
|
2
|
Incorporated by reference from
the Company’s Form 10-KSB/A, filed with the SEC on April 22,
2003, as amended on January 17, 2007 (Form 8-K filed
on January 22, 2007), May 29, 2007 (Form 8-K filed on June 1, 2007),
April 9, 2008 (Form 8-K filed on April 11, 2008 and Form 8-K/A filed on
April 15, 2008), June 20, 2008 (Form 8-K filed on June 25, 2008) and March
27, 2009 (Form 8-K filed on March 30,
2009).
|
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