PROSPECTUS
----------
1,404,346 Shares
AquaCell Technologies, Inc.
[Company Logo]
Common Stock
The selling stockholders identified in this prospectus may offer from
time to time an aggregate of up to 1,404,346 shares of AquaCell
Technologies, Inc.'s common stock, including 752,173 shares underlying
common stock purchase warrants. We will not receive any of the proceeds
from the sale of shares. We may receive funds of up to $1,429,129 upon
the exercise of up to 752,173 common stock purchase warrants exercisable
at $1.90.
The selling stockholders may offer their shares through public or private
transactions, on or off the American Stock Exchange, at prevailing market
prices or at privately negotiated prices.
Our common stock trades on the American Stock Exchange under the symbol
"AQA". On April 26, 2004, the last reported sale price of our common
stock on the American Stock Exchange was $1.15 per share.
Investing in our common stock involves risks which are described in the
"Risk Factors" section beginning on page 5 of this prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if
this prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.
The date of this prospectus is May 11, 2004.
TABLE OF CONTENTS
Page
Where You Can Find More Information ...............................3
Incorporation of Information We File with the SEC .................3
The Company .......................................................4
Risk Factors ......................................................5
Special Note Regarding Forward-looking Statements .................7
Use of Proceeds ...................................................7
Dividend Policy ...................................................8
Selling Stockholders ..............................................8
Plan of Distribution ..............................................9
Description of Capital Stock ......................................9
Legal Matters ....................................................11
Experts ..........................................................11
___________________
"Purific" and "Never Change Another Bottle" are our trademarks.
All other trademarks or service marks appearing in this prospectus are
trademarks and service marks of the respective companies that use
them.
You should rely only on the information contained or incorporated
by reference in this prospectus. We have not, and the selling
stockholders have not, authorized any other person to provide you with
different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not, and
the selling stockholders are not, making an offer to sell our common
stock in any jurisdiction except where the offer or sale is permitted.
You should not assume that the information contained or incorporated
by reference in this prospectus is accurate as of any date other than
the date on the front cover of this prospectus or the date of such
other documents.
2
WHERE YOU CAN FIND MORE INFORMATION
We are a public company and file annual, quarterly and special
reports, proxy statements and other information with the Securities
and Exchange Commission. You may read and copy any document we file
at the SEC's public reference room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. You can request copies of these documents by
writing to the SEC and paying a fee for the copying cost. Please call
the SEC at 1-800-SEC-0330 for more information about the operation of
the public reference room. Our SEC filings are also available to the
public at the SEC's web site at http://www.sec.gov. In addition, you
can read and copy our SEC filings at the office of the National
Association of Securities Dealers, Inc. at 1735 K Street, Washington,
D.C. 20006.
We have filed a registration statement on Form S-3 with the SEC
covering the common stock offered by this prospectus. We refer you to
this registration statement and its exhibits for additional
information about us and our common stock. Copies of the registration
statement may be obtained at the above referenced SEC offices or on
the SEC's web site at www.sec.gov. Our internet address is
www.aquacell.com.
INCORPORATION OF INFORMATION WE FILE WITH THE SEC
The SEC allows us to incorporate by reference the information we
file with them, which means:
. Incorporated documents are considered part of the
prospectus,
. We can disclose important information to you by
referring you to those documents, and
. Information that we file with the SEC will
automatically update and supersede this prospectus.
We incorporate by reference the documents listed below which were
filed with the SEC under the Securities Exchange Act of 1934 (the
"Exchange Act"):
. Annual Report on Form 10-KSB for the fiscal year
ended June 30, 2003 filed on September 26, 2003.
. Annual Report on Form 10-KSB/A for the fiscal year
ended June 30, 2003 filed on November 6, 2003.
. Quarterly Report on Form 10-QSB for the quarter
ended September 30, 2003 filed on November 14,
2003.
. Quarterly Report on Form 10-QSB for the quarter
ended December 31, 2003 filed on February 13, 2004.
We also incorporate by reference each of the following documents
that we will file with the SEC after the date of this prospectus but
before all the common stock offered by this prospectus has been sold:
. Reports filed under Sections 13(a) and (c) of the
Exchange Act,
. Definitive proxy or information statements filed
under Section 14 of the Exchange Act in connection
with any subsequent stockholders' meeting, and
. Any reports filed under the Section 15(d) of the
Exchange Act.
You may request a copy of any filings referred to above
(excluding exhibits), at no cost, by contacting us at the following
address:
AquaCell Technologies, Inc.
Attention: Karen B. Laustsen
10410 Trademark Street
Rancho Cucamonga, CA 91730
(909) 987-0456
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THE COMPANY
AquaCell Technologies, Inc. (the "Company") is engaged in the
manufacture and sale of products for water filtration and purification
through our operating subsidiaries, Global Water-Aquacell, Inc. and
Water Science Technologies, Inc. (WST). Our products address various
water treatment applications for industrial, commercial, institutional
and residential purposes. These applications range from providing
purified drinking water- through our point-of-use patented self-
filling Purific(R) Water Cooler and production of water bottling plant
equipment- to equipment for processing water for ultra-pure purposes,
such as micro-chip and pharmaceutical manufacturing. The Company was
incorporated in Delaware on March 19, 1997.
Our flagship product is our patented five-gallon self-refilling
bottle Purific water cooler, manufactured by our Global Water-Aquacell
subsidiary. We manufacture five different models of Purific water
coolers with varying complexity of filtration systems, designed to
meet the needs of the customers to which they are sold. The various
filtration systems available on our cooler contain different
combinations of systems, which utilize sediment filters, reverse
osmosis, carbon block, multi-media filters and ultra-violet light. We
replace traditional five-gallon bottle water coolers with a
permanently installed convenient alternative where the bottle never
needs changing and water bottles no longer need to be delivered,
stored or replaced. In addition, we replace water fountains where
users tend to have greater concerns as to sanitation and water
quality.
We recently announced a successful product test that was funded
by a Fortune 100 company on our Purific water cooler. The results of
this test confirmed the competitive advantages of the Purific system,
particularly for the residential market, the fastest growing segment
of the bottled water industry.
We sell our Purific coolers directly to corporations with an
emphasis on Fortune 500 headquarter locations and to the US Government
under a General Services Administration contract, and indirectly
through marketing partners. Additionally, we have an arrangement with
Roto-Rooter Plumbers for the installation and sales of our Purific
coolers. We intend to maintain a small in-house sales force and rely
on our marketing partners for most of our sales.
Corporate Information
---------------------
Our principal executive offices are located at 10410 Trademark
Street, Rancho Cucamonga, CA 91730 and our telephone number is (909)
987-0456. Our website can be accessed at www.aquacell.com. The
reference to our website address does not constitute incorporation by
reference of the information contained at the website.
4
RISK FACTORS
Before you invest in our common stock, you should be aware that
there are risks, including those described below which may affect our
business, financial condition or results of operations. You should
consider carefully these risk factors together with all of the other
information included in this prospectus before you decide to purchase
shares of our common stock.
Risks Relating to Our Business
------------------------------
We have incurred substantial operating losses and an accumulated
deficit. We expect to continue to have operating losses and a growing
accumulated deficit in the future.
Our business operations have generated operating losses since
inception of the business in 1997. For the year ended June 30, 2003,
our business operations generated operating losses of $2,586,000. We
had an accumulated deficit of $13,049,000 at June 30, 2003. For the
six months ended December 31, 2003, we sustained an additional
operating loss of $2,357,000. Our accumulated deficit as of December
31, 2003 was $15,405,000. We expect to continue to generate net
operating losses while we continue to expand our marketing efforts.
We may not obtain a customer base sufficient to support the costs
of our operations.
We may not become profitable, our cash flow may not become
positive at any time in the foreseeable future, or at all, and we may
not generate sufficient cash flow from product sales to liquidate
liabilities as they become due. In the event that we are unable to
liquidate our liabilities, we may delay or eliminate some expenditures
and we may scale back our planned operations. Accordingly, we
expect to need additional funds to meet our planned obligations, and
we will seek to raise such amounts through a variety of options,
including future cash from operations, borrowings and proceeds from
equity financings. Additional funding may not be available when
needed or on terms acceptable to us. In addition, if we raise
additional funds through the issuance of equity, equity-linked or debt
securities, those securities may have rights, preferences or
privileges senior to those of the rights of our common stock and
our stockholders may experience additional dilution.
Our Purific Water Cooler is new and may not be accepted by our target
market.
Our primary product is based upon a permanently attached plastic
bottle with a filtration system. Municipal water passes through the
filter to keep the bottle filled. This is a different approach from
the conventional replaceable five gallon bottle. Our target customers
may not be willing to use our approach which would significantly
hinder our growth potential and would negatively affect our business.
We are dependent on our marketing partners to distribute our products.
We maintain a small in-house sales force and rely primarily on
our marketing partners to distribute our products, none of whom are
required to meet specific performance goals or commit specific
resources to the marketing of our products. The failure of these
marketing partners to act effectively on our behalf will reduce our
sales and distribution of our products, and therefore, our revenue.
The market for bottled water is highly competitive and we compete with
large, well established companies. If we are unable to compete
effectively, the demand for, or prices of, our products may be
reduced.
The bottled water market is intensely competitive. We may not be
able to compete successfully against current or potential competitors
and our failure to do so could seriously harm our business, operating
results and financial condition.
We compete directly with large, well-established companies such
as Nestle (Perrier), Danone (Evian) and Culligan. These and many of
our current and potential competitors have significantly greater
financial, selling and marketing, technical, manufacturing and other
resources than we have. As a result, these competitors may be able to
devote greater resources toward the development, promotion, sale and
support of their products than we can. These companies may introduce
additional products that compete with ours or enter into strategic
relationships to offer complete solutions which we do not currently
offer. In addition, we recently introduced our Purific Water Cooler to
the market and we have not had enough experience selling the product
to fully assess its competitiveness.
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We depend on key personnel and our business prospects may be
diminished if we do not retain those personnel.
Our operations will depend on the efforts of our executive
officers, in particular James C. Witham, our Chairman and Chief
Executive Officer, and Karen B. Laustsen, our President, Chief
Operating Officer and Secretary. We have entered into five year
employment agreements with Mr. Witham and Ms. Laustsen that expire in
February, 2006. Our business prospects could be diminished if any of
these senior management personnel do not continue in their management
roles and if we are unable to attract and retain qualified
replacements and additional members of management.
We may not be able to effectively manage growth.
If we successfully implement our business strategy, the resulting
growth will place significant demands on our management and internal
controls. Management may not be able to effectively direct us through
a period of significant growth. In particular, the pursuit of our
business strategy will place a significant strain on our managerial,
operational and financial resources. We will need to improve our
financial and management controls, reporting systems and procedures.
We will also need to expand, train and manage our work force
and manage multiple relationships with various suppliers, strategic
partners and other third parties. We will need to continually expand
and upgrade our systems and ensure continued high levels of service,
speedy operation and reliability. If we do not effectively manage such
growth, our business, results of operations and financial condition
may be affected.
Our quarterly results may fluctuate and could fall below the
expectations of securities analysts and investors.
We may experience quarterly fluctuations in operating results.
Accordingly, results for any one quarter will not necessarily be
indicative of the results to be expected for any other quarter or for
any year, and comparable sales for any particular future period may
decrease. In the future, results of operations may fall below the
expectations of public market analysts and investors. In that event,
the price of our common stock would likely decrease. Quarterly sales
and operating results will depend in part on the volume and timing of
orders received and performed within the quarter, which are difficult
to forecast. Any significant delay or cancellation of an order could
effect our operations in any particular period and as a result, our
operating results could prove to be volatile.
Risks Relating to the Offering
------------------------------
Exercise of our outstanding warrants and options and the conversion of
our preferred shares may affect the price of our common stock.
As of April 21 , 2004, there were outstanding options to
purchase 1,071,500 shares of common stock, outstanding warrants to
purchase 6,322,478 shares of common stock and 675,000 outstanding
convertible preferred shares. The exercise of the outstanding stock
options and warrants and the conversion of preferred shares will
dilute the percentage ownership of our stockholders. Any sales in
the public market of shares of our common stock underlying the stock
options, warrants and preferred shares may adversely affect prevailing
market prices for our common stock.
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We do not intend to pay cash dividends on our common stock in the
future.
We have never paid cash dividends on our common stock and do not
anticipate that any cash dividends will be declared or paid on our
common stock in the foreseeable future. We presently intend to retain
future earnings, if any, to finance the expansion and growth of our
business. Payment of future dividends on our common stock, if any,
will be at the discretion of our board of directors after taking into
account various factors, including our financial condition, operating
results, current and anticipated cash needs and plans for expansion.
We may issue additional shares of stock without your approval,
including shares of other series of preferred stock with superior
liquidation and other rights that may adversely affect your rights.
Our certificate of incorporation authorizes our board of
directors, without any action by our stockholders, to issue up to
10,000,000 shares of "blank check" preferred stock in one or more
series on terms that our board of directors may determine at the time
of issuance including 1,870,000 Series "A" preferred shares already
designated. In certain instances, a series of preferred stock could
include voting rights, preferences as to dividends and liquidation,
conversion and redemption rights senior to the Series A preferred
stock, and in all instances, senior to our common stock. The future
issuance of preferred stock could effectively diminish or supersede
the dividends and liquidation preferences of the Series A preferred
stock and reduce the value of our common stock.
We may not satisfy the Amex listing standard and if we fai l to do so,
our common stock is subject to delisting.
The Company may not satisfy the Amex' maintenance requirements in
the future and as a result may have its common stock de-listed from
the Amex. If the Company fails to maintain its Amex listing, the
ability of stockholders to trade their stock in an efficient market
would be decreased.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
When used in this prospectus and in future filings by the Company
with the Commission, statements identified by the words "believe",
"positioned", "estimate", "project", "target", "continue", "will",
"intend", "expect", "future", "anticipates", and similar expressions
express management's present belief, expectations or intentions
regarding the Company's future performance within the meaning of the
Private Securities Litigation Reform Act of 1995. Readers are
cautioned not to place undue reliance on any such forward-looking
statements, each of which speaks only as of the date made. Such
statements are subject to certain risks and uncertainties that could
cause actual results to differ materially from historical earnings and
those presently anticipated or projected. The Company has no
obligations to publicly release the result of any revisions which may
be made to any forward-looking statements to reflect anticipated or
unanticipated events or circumstances occurring after the date of such
statements.
USE OF PROCEEDS
All of the net proceeds from the sale of the common stock of
AquaCell covered by this prospectus will go to the stockholders who
offer and sell their shares. Accordingly, we will not receive any of
the proceeds from the sales of the common stock. AquaCell receives
funds only upon sales from warrant conversions and not from the sale
of the shares offered by the selling stockholders. The warrants held
by the selling stockholders are exercisable at $1.90. If all warrants
are exercised, AquaCell will receive proceeds of $1,429,129 which
would be used for general corporate purposes.
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DIVIDEND POLICY
We have never declared or paid any cash dividends on our common
stock and we currently expect to retain future earnings, if any, to
support operations and to finance the growth and development of our
business. Consequently, we do not anticipate paying cash dividends on
our common stock in the foreseeable future. Payment of future
dividends, if any, will be at the discretion of our board of directors
after taking into account various factors, including our financial
condition, operating results, current and anticipated cash needs and
plans for expansion.
The outstanding Series A preferred stock pays an 8% annual
dividend, payable in cash in quarterly installments until such time as
the preferred shares are converted into common shares.
SELLING STOCKHOLDERS
Pursuant to subscription agreements in a private placement
completed on or about April 21, 2004, we agreed to register both
the common shares issued therein and the common shares to be issued
upon exercise of warrants held by these stockholders. We have
agreed to keep the registration statement effective for two years,
or until all of the registered shares are sold, whichever comes
first. Our registration of the common stock held by the selling
stockholders and the shares issuable upon exercise of warrants held
by the selling stockholders does not necessarily mean that the
selling stockholders will sell all or any of their shares.
The prospectus covers the offer and sale by each selling
stockholder of common stock owned by the selling stockholder. Set
forth below are (i) the names of each selling stockholder, (ii) the
nature of any position, office or other material relationship that the
selling stockholder has had within the past three years with us, (iii)
the number of shares of common stock and (if one percent or more) the
percentage of common stock beneficially owned as of April 21, 2004
by each selling stockholder to the Company's best knowledge, (iv) the
number of shares that may be offered and sold by or on behalf of each
selling stockholder hereunder, and (v) the amount and (if one percent
or more) the percentage of common stock to be owned by each selling
stockholder upon the completion of the offering if all shares offered
by such selling stockholder are sold. As of the date of this
prospectus 6,322,478 warrants are outstanding and the shares
underlying 752,173 of those warrants are being registered in this
offering. Any or all of the shares listed below under the heading
"Shares to be Sold" may be offered for sale by or on behalf of the
selling stockholder.
Shares Shares
Beneficially Beneficially
Owned Prior to Owned After
the Offering the Offering
------------------ ----------------
Shares to
Selling Stockholders Number Percent be Sold Number Percent
---------------------------- ---------- ------- --------- -------- -------
AS Capital Partners LLC (1) 136,956 * 86,956 50,000 *
Iroquois Capital LP (2) 547,826 2.8% 347,826 200,000 1.0%
Vertical Ventures LLC (2) 1,169,564 5.9% 869,564 300,000 1.5%
Brighton Capital Ltd (3) 527,274 2.7% 100,000 427,274 2.2%
---------- --------- --------
2,381,620 1,404,346 977,274
(1) Michael Coughlin has sole voting and investment control over the shares held
by AS Capital Partners LLC. Mr. Coughlin disclaims beneficial ownership of
the securities held by AS Capital Partners LLC.
(2) Joshua Silverman has sole voting and investment control over the shares held
by Iroquois Capital LP and Vertical Ventures LLC. Mr. Silverman disclaims
beneficial ownership of the securities held by both of those entities.
(3) Jeffrey Wolin has sole voting and investment control over the shares held by
Brighton Capital Ltd. Mr. Wolin disclaims beneficial ownership of the
securities held by Brighton Capital Ltd.
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PLAN OF DISTRIBUTION
We are registering shares of our common stock on behalf of the
selling stockholders. As used in this prospectus, "selling
stockholders" includes donees and pledgees selling shares received
from a named selling stockholder after the date of this prospectus.
We will pay for all costs, expenses and fees in connection with the
registration of the shares. The selling stockholders will pay for all
selling discounts and commissions, if any. The selling stockholders
may offer and sell their shares from time to time in one or more of
the following types of transactions (including block transactions):
. on the American Stock Exchange,
. in privately negotiated transactions,
. through put or call options transactions relating
to the shares,
. through short sales of shares, or
. a combination of such methods of sale.
The selling stockholders may sell their shares at prevailing
market prices, or at privately negotiated prices. Such transactions
may or may not involve brokers or dealers. The selling stockholders
have not entered into any agreements, understanding or arrangements
with any underwriters or broker-dealers regarding the sale of their
shares, nor is there an underwriter or coordinating broker acting
in connection with the proposed sale of shares by the selling
stockholders. The selling stockholders may be deemed underwriters.
The selling stockholders may offer and sell their shares directly
to purchasers or to or through broker-dealers, which may act as agents
or principals. Such broker-dealers may receive compensation in the
form of discounts, concessions, or commissions from the selling
stockholders and/or the purchasers of shares.
We have agreed to indemnify certain selling stockholders against
certain liabilities, including liabilities arising under the
Securities Act.
Selling stockholders also may resell all or a portion of the
shares in open market transactions in reliance upon Rule 144 under the
Securities Act of 1933, provided they meet the criteria and conform to
the requirements of such rule.
DESCRIPTION OF CAPITAL STOCK
General
-------
Our authorized capital stock consists of 50 million shares of
capital stock, par value $0.001 per share. Currently 40 million of
such shares of capital stock are classified as Common Stock and
10 million are classified as Preferred Stock. On April 21, 2004,
13,426,428 shares of our common stock were outstanding and held by 125
stockholders of record and the Company believes approximately 700
holders in the float. Our Restated Certificate of Incorporation
authorizes the Board to classify any of the unissued shares of
authorized Preferred Stock into one or more different classes or
series of Preferred Stock which may be issued from time to time with
such distinctive designations, rights and preferences as may be
determined by the Board. We may issue Preferred Stock for possible
future financings of acquisitions or for general corporate purposes
without any legal requirement that further stockholder authorization
for such issuance be obtained. The issuance of Preferred Stock could
have the effect of making an attempt to gain control of us more
difficult by means of a merger, tender offer, proxy contest or
otherwise. Preferred Stock, if issued, could have a preference on
dividend payments which could affect our ability to make dividend
distributions to the holders of our Common Stock.
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Common Stock
------------
Dividends. Holders of our Common Stock will be entitled to
dividends declared and payable at such times and in such amounts as
the Board will from time to time determine out of funds legally
available therefore. The rights of holders of our Common Stock to
receive dividends will be subject and subordinate to the rights of any
future holders of Preferred Stock as may be authorized by us.
Liquidation. Upon our liquidation, dissolution or winding up
(either voluntary or involuntary), after payment of liabilities, any
future holders of classes of our Preferred Stock or other senior
stock, as may be authorized by us, will be entitled to receive the
payment of all liquidation and other preference amounts; the holders
of our Common Stock will be entitled to receive our remaining assets
available for distribution to our stockholders pro rata according to
the number of shares held. The following shall not constitute a
liquidation, dissolution or winding up for the foregoing purposes:
. our consolidation or merger with or into another
corporation;
. a merger of any other corporation with or into us
or
. the sale of all or substantially all of our
property or business (other than in connection with
a winding up of our business).
Voting. Each holder of our Common Stock is entitled to one vote
for each share held of record on each matter submitted to vote of
holders of our Common Stock.
Other Rights. There are no preemptive or other subscription
conversion, redemption or sinking fund rights or provisions with
respect to shares of our Common Stock. We hold annual stockholder
meetings, and special meetings may be called by the President or
Secretary or holders of at least 20% of the total voting power of all
outstanding share of our capital stock then entitled to vote or a
majority of the Board. Our Restated Certificate of Incorporation may
be amended in accordance with the Delaware General Corporation Law,
subject to certain limitations set forth therein.
Outstanding Options and Warrants
--------------------------------
As of April 21, 2004, up to 7,393,978 shares of Common Stock
are issuable pursuant to outstanding options and warrants as follows:
. 1,071,500 shares of Common Stock are issuable, in
connection with outstanding options, at a weighted
average exercise price of $1.11; and
. 6,322,478 shares of Common Stock are issuable, in
connection with outstanding warrants, at a
weighted average exercise price of $2.81.
Series A Preferred Stock
------------------------
Our Board has designated 1,870,000 shares of our preferred stock
as Series A Preferred Stock, 1,185,000 shares of which were issued to
private placement investors in April and May, 2003, of which 510,000
shares have been converted to common stock as of April 21, 2004.
Dividends. The series A preferred stock will pay a cash
dividend, payable quarterly, at the rate of 8% per annum. Dividends
will cumulate if not paid.
Liquidation Preference. The series A preferred stock will have
priority over common stock in the event of liquidation equal to its
stated value, plus accrued and unpaid dividends.
Voluntary Conversion. Each share of the series A preferred stock
will be convertible, at the option of the holder, into one share of
common stock (subject to standard adjustments for stock splits and
dividends).
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Mandatory Conversion. Each share of the series A preferred stock
automatically converts into common stock if (i) the closing price of
the common stock is at least $1.89 per share (subject to standard
adjustments for stocks, splits and dividends) for 20 consecutive
trading days and (ii) either (a) at least one year has passed since
the issuance of the preferred stock or (b) a registration statement
registering the resale of the common stock issuable upon conversion
has been declared effective by the SEC and the related prospectus
remains current.
Voting. Holders of the series A preferred stock will not have
voting rights until their shares are converted into common stock,
except as required by Delaware Law.
Seniority. We may establish other series of preferred stock
senior to or parri passu with the series A preferred stock.
Delaware Law and Certain Charter and By-Law Provisions and
----------------------------------------------------------------------
Antitakeover Effects
--------------------
Delaware Law. We are subject to Section 203 of the Delaware
General Corporation Law, which prevents an "interested stockholder"
(defined in Section 203, generally, as a person owning 15% or more of
a corporation's outstanding voting stock) from engaging in a "business
combination" with a publicly held Delaware corporation for three years
following the date such person became an interested stockholder,
unless: (i) before such person became an interested stockholder, the
board of directors of the corporation approved the transaction in
which the interested stockholder became an interested stockholder or
approved the business combination; (ii) upon consummation of the
transaction that resulted in the interested stockholder becoming an
interested stockholder, the interested stockholder owns at least 85%
of the voting stock of the corporation outstanding at the time the
transaction commenced (subject to certain exceptions); or (iii)
following the transaction in which that person became an interested
stockholder, the business combination is approved by the board of
directors of the corporation and authorized at a meeting of
stockholders by affirmative vote of the holders of 66% of the
outstanding voting stock of the corporation not owned by the
interested stockholder. A "business combination" includes mergers,
stock or asset sales and other transactions resulting in a financial
benefit to the interested stockholder. The provisions of Section 203
could have the effect of delaying, deferring or preventing a change of
control.
Certificate of Incorporation and Bylaws. Our restated
certificate of incorporation provides for the division of the board of
directors into three classes with staggered three-year terms. These
provisions result in an increase in the time required for stockholders
to change the composition of the board, and consequently may impede a
change of control.
Transfer Agent, Warrant Agent and Registrar
-------------------------------------------
The transfer agent and registrar for our common stock is
Continental Stock Transfer and Trust Company, New York, New York.
LEGAL MATTERS
The validity of the common stock offered with this prospectus has
been passed upon for AquaCell Technologies, Inc. by Harold W. Paul,
LLC, Westport, Connecticut.
EXPERTS
Our consolidated financial statements as of June 30, 2003 and for
each of the two fiscal years in the period ended June 30, 2003, which
are incorporated by reference herein from our Annual Report on Form
10-KSB/A for the year ended June 30, 2003 have been audited by
Wolinetz, Lafazan & Company, PC, independent auditors, as stated in
their report, which is also incorporated by reference herein, and have
been so included in reliance upon the report of such firm given upon
their authority as experts in accounting and auditing.
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AquaCell Technologies, Inc.
[Company Logo]
Common Stock
------------
P R O S P E C T U S
May 11, 2004
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