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Secretary Dated: March 6, 1997
SolarAttic, Inc.
The annual meeting of stockholders of SolarAttic, Inc was held at the
Riverwood
Conference Center, 10990 95th Street NE, Monticello, MN 55362 at 7:00 PM
on
February 13, 1997 in the "GAZEBO" conference room.
From 6:00 p.m. to 7:00 p.m. was set aside as a social time and pre-meeting
demonstration of the Internet and SolarAttic's web presence. James
Kantorowicz
provided the demonstration of the Internet on-line using a portable
Macintosh
computer connected to a Mediashow color overhead projector.
The business meeting was presided over by Ed Palmer, President, who chaired
the
meeting, and Ed Palmer (also Secretary) kept the record of the meeting.
Attendance
The following 12 stockholders were represented in person:
Ed Palmer for EJ Partners, Ltd.
Geoffrey Burton of Burton & Associates LLC
Clement C. Johnson
Larry Garde
Jim Kantorowicz
Jeff Kelsey
Cliff Lundberg
Larry Matthews
Svetlana Shubinsky
Jim Stanley for The Stanley Group
Jim Stanley
Richard & Jean Wiese
The following guests were present:
Bernhard Kinsky (guest of Svetlana Shubinsky)
The following 26 stockholders were represented by proxy:
Alliance Academy
Eugene & Marcelyn Benjamin
Michael Brezman
James R. Cargill II Trust
Dorothy A. Christensen
David Conway
Jean M. Crimmins
Lorraine N. Edberg
Bill Fredell
Matvey Gezunterman
Maurizio Mario Gramigni
Barbara Lepse
Brian Mechler
LeAnn Mechler
Dmitry Mogilyansky
Olmsted Trust
Jacqueline L. Palmer Trust
Raymond Schuster
David C. Smith
Roland & Pearl Starry
Frank Stepanek
Dorothy Stoeckel & Kris Anderson
Mark Stipakov
Tetzloff Family Trust
Joel R. Wiberg
Mark & Jean Williams
Twenty-three shareholders representing 19.7% of the total shares outstanding
were
not represented at this stockholder's meeting. The shares represented in
person
were 56.9% of the total shares outstanding. The shares represented by proxy
were
24.0% of the total shares outstanding. In total, 80.9% of shares outstanding
were
represented at the stockholder's meeting in person or by proxy.
Call To Order
The Chairman called the business meeting to order at 7:10 p.m. and announced
that
the people present in person and by proxy constituted a quorum in accordance
with
the Corporation's Article's & By-Law's and were authorized to vote all
of their
shares. (34% minimum of the total shares outstanding are required for a quorum)
The Chairman announced that the purpose of the meeting was to: a) elect
three
directors to serve for the following year, b) provide an annual management
report
to shareholders, and c) provide an opportunity for investors to get their
questions
answered. After the stockholder's meeting, the directors-elect will elect
officers.
The following corporate records and documents were made available for
review:
Corporate Articles; By-Laws; Stock Ledger; 1996 Financial Records;
Financial
Summary Records from Prior Years; Stockholder Minutes & Records from
2/19/91;
and, Director's Minutes & Records. Copies of the company's new pool heater
post
card mailer, updated space heating brochures and minutes from last year's
meeting
were also available for stockholders to take with them if desired.
The following literature products were made available for review: Guide to
Swimming Pool Heating; Pool Heater Manual; Space Heater Manual; How To
Calculate Pool Heating Costs (Marketing Report); How To Create An Energy
Efficient Pool (Marketing Report); and, How To Understand Pool Heat Pumps
(Marketing Report). A portfolio of other literature that is used in the
company's
Business and Consumer Kits was also available.
In addition, and for reference purposes, Minnesota Statute 302A, the
Minnesota
Business Corporation Act was available along with Robert's Rules Of Order
and
other documents. A copy of Minnesota's proposed SCOR legislation in draft
form
was also available along with some other materials. See attached slides.
There was no old business.
Approval Of Agenda
The meeting agenda was presented and the Chairman stated that no
additional
business had been brought up before the meeting. There being none, the
Chairman
asked if there was a motion to accept the agenda as it stands without any
modification. Jim Kantorowicz made the motion: "There being no requests for
additions to the agenda prior to this annual meeting, the agenda shall hereby
be
approved as presented without any changes." Clem Johnson seconded the
motion.
There was no discussion and the motion was unanimously approved.
Approval Of Minutes
The waiver of reading of last year's minutes was the next order of business.
The
Chairman noted that last year's minutes had been mailed to all stockholders
shortly
after last year's meeting and then offered to entertain a motion to accept
last year's
minutes as written without reading them aloud. Larry Garde and Clem Johnson
made the motion: "That the minutes of the last stockholder's meeting which
was
the Annual Stockholder's Meeting held on 2/15/96 be approved as written and
without being read aloud (waiver of reading them aloud)." Dick Wiese
seconded
the motion. There was no discussion and the motion was unanimously approved.
Approval Of Company Business
The chairman then offered to entertain a motion to approve last year's
activities of
the company. Clem Johnson made the motion: "That all purchases, contracts,
contributions, compensations, acts, decisions, proceedings, elections, and
appointments by the Officers or Board of Directors during 1996, and all
matters
referred to in the Stockholder letters for the Fiscal Year ending 12/31/96
be and the
same hereby are approved and ratified." Jim Kantorowicz seconded the
motion.
There was no further discussion and the motion was unanimously approved by
the
stockholders.
Opening Of Nominations
At this point, the chairman noted that management recommended that
Larry
Matthews, Larry Garde and Ed Palmer be reelected as directors for the coming
year
and offered to entertain a motion to open up nominations for the board of
directors.
Motion was made by Jim Stanley "to open nominations for the board of directors
for
the election of three directors to serve for the year of 1997-1998." The
motion was
seconded by Cliff Lundberg. There was no discussion and the motion was
unanimously passed. The Chairman announced that nominations were open.
Nominations
Upon motion made by Jim Kantorowicz and seconded by Clem Johnson,
Larry
Matthews was nominated to serve another term.
Upon motion made by Jim Stanley and seconded by Clem Johnson, Larry Garde
was
nominated to serve another term.
Upon motion made by Larry Garde and seconded by Dick Wiese, Ed Palmer was
nominated to serve another term.
Close Of Nominations
There being no other nominations, the Chairman asked for a motion to
close the
nominations. "Motion to close nominations for the board of directors" was
made by
Dick Wiese and seconded by Clem Johnson. There was no discussion and the
motion was unanimously approved.
Adoption Of Candidate Slate
The chairman then offered to entertain a motion to "adopt the slate
of board of
director candidates as presented." Cliff Lundberg made the motion. Jim
Kantorowicz and Clem Johnson seconded it. There was no discussion and the
motion was unanimously approved. Larry Matthews, Larry Garde and Ed Palmer
were reelected to serve as directors. The Chairman declared that the above
named
persons were duly elected directors to hold office for the ensuing year of
1997-1998.
Management Presentation Starts
There being no further new business, the chairman proceeded into the
company's
management presentation which began at approximately 7:38 p.m. and lasted
until
approximately 10:10 p.m. Ed Palmer, the company's chairman and also the
company's president and CEO made the management presentation. A copy of all
the slides presented are attached hereto.
Management Presentation
The management presentation highlighted six key areas: 1) 1996 In Review;
2) 1997
Plans & Goals; 3) Internet Strategy; 4) Sales Strategy; 5) DPO Strategy;
and, 6) Q & A.
The chairman started the presentation by reflecting on the "18-24 Month
Strategic
Plan" as presented during last year's meeting. Two 1996 accomplishment
slides
were presented next and the chairman noted that significant progress has
been made
in several areas. At the state fair, the company presented a pre-production
version
of the combined space heating & ventilation product. Once again, people
wanted to
buy the product out of the booth. The chairman pointed out that about 95%
of the
engineering is completed and three units were on hand in various stages.
It is a
1997 goal to complete the engineering and get the unit into production. It
was noted
that the space heater, itself, appeared better to consumers in the broader
context of a
complete line of space heating and ventilation systems (or a combination
thereof).
A slide was then presented that showed 1996 word of mouth sales. This was
26 pool
heaters and one space heater. A historical sales graph for PCS1 pool heaters
was
shown next. It was noted that 131 pool heaters were now out in 29 states
and that
additional testimonials were obtained during 1996. A list of inquiries processed
and
the top four sources were analyzed and compared to 1995 Dulley Inquiries.
The
chairman noted a consistently high response rate on the limited inquiries
involved.
A financial review of the company included an Operations Summary, an analysis
of
Cash Resources, Balance Sheet analysis, Equity Growth and Commentary. The
chairman noted that a significant amount of non-cash transactions were
made.
Some of these were specifically made to get the company's books inline with
GAAP
accounting practices. GAAP stands for Generally Accepted Accounting
Principles
and are required to be used for purposes of reporting the financials of
public
companies. In short, several transactions were made to get ready for the
company's
DPO or direct public stock offering. The chairman noted that while the
ratio
analysis looked great, it was the end result of the financial year-end moves
and did
not necessarily apply to most companies in the developmental stage. The fact
that
the ratios look good will help the company in its DPO endeavor. An equity
growth
bar chart was then presented readjusted for GAAP comparison purposes.
The chairman noted the theme for 1997 is "Breakaway Year" as the corporation
fully
expects major gains in sales and financing during the year. "This is the
year
SolarAttic moves from being a developmental entity into being a full
operating
entity. This is SolarAttic's breakaway year!"
It was noted that development of the technology was still continuing with
two key
milestones expected during 1997. First, the company fully expects that the
fourth
patent will issue. Second, it will be necessary to file internationally by
the new
deadline of 11/22/97. The chairman also noted that a fifth technology patent
was
possible if the fourth patent issues. However, the chairman noted that this
fifth
patent application would be tabled until the company was a full operating
entity.
The chairman noted that the fifth patent was in the duct and ventilation
technology
area, but would not disclose any specifics at this time. Noting further that
this
particular information is very proprietary to SolarAttic at this time.
A Strategic Plan was then laid out next for 1997 that covered five key areas:
1) Ramp
up sales via direct marketing; 2) Expand product offerings; 3) Expand Web
site; 4)
Test-the-waters DPO; and, 5) Expand capital resources. This was followed
by some
specific objectives for 1997. 1) Full-time sales effort using a postcard
direct mail piece
and database in the pool market. An explanation of the new pool market
direct
mail postcard was presented. A copy of the new mailer is attached to these
minutes.
(A full discussion of the company's current sales strategy was made.)
2) Continue to prosecute the company's fourth patent application. 3) Start
up
production of the combination space heating-ventilation product. 4) Create
and
install a ventilation only product into Energy City's model home by fall.
An
explanation of the Energy City (Elk River) project was presented. 5) Raise
additional
private capital. An extension of the company's stock price was made until
March 14,
1997 for current investors due to some delays caused by the Commerce
Department.
6) Update the financial model to $100 Million in 10 years. Update the
company's
stock valuation analysis for the Internet web site DPO documents. Such an
updated
valuation analysis would flow out of the updating the company's financial
model.
7) Get public ASAP via an Internet DPO strategy (using SCOR Form U7). The
chairman noted that the new SCOR Form U7 is already accepted in 45 states.
Sales & marketing strategy was discussed next. The chairman noted that
all
elements are in place for full time sales efforts with the exception of an
advertising
agency and the "media relations" pr firm. Both of these remaining elements
required additional capital and would be put into play as soon as funds allowed.
At 8:15 p.m., the chairman proceeded to go Online to the Internet to
demonstrate
how the company plans to proceed with its DPO (direct public stock
offering).
Various search engines were examined and it was shown how easily anyone in
the
world could now locate SolarAttic. The company's comprehensive web site at
http://www.solarattic.com was examined and a significant amount of time was
spent examining a pseudo site of the company's information which was located
on
www.excite.com (one of the more popular search engines).
The chairman went into SolarAttic's site control panels and showed the
various
analysis capabilities available to the company. A pareto analysis of which
pages
were being examined by Internet surfers was demonstrated. This showed the
rank
of hits being made in descending order. Highest hit pages to lowest hit pages.
The
review showed that virtually all of SolarAttic's web site is being examined.
At the
time of the meeting, SolarAttic's site consists of 120 pages.
A summary page of overall statistics from the site is attached hereto.
February
ended up with 8045 total hits at the site. The company is rapidly approaching
20,000
hits and is getting inquiries from many areas along with interest levels
being
received from prospective investors. The chairman noted that the site is
fully
functional and it is now possible to even order the company's products Online
from
forms contained at the web site. A demonstration of reading the company's
mail on
America Online showed how form data from the web site would be received.
After the Internet, web site and America Online electronic mail demonstration,
the
chairman reviewed the company's DPO strategy at length. This included
revisiting
the prior IPO to discuss the problems encountered and how they would be
overcome in the DPO. A discussion of Minnesota's proposed SCOR legislation
was
conducted. The chairman noted that, in its current form, the proposed
Minnesota
SCOR legislation would not be useful to SolarAttic. If it were law, SolarAttic
would
simply bypass Minnesota with its DPO.
The offensive Minnesota SCOR clauses were covered in a couple of slides and
the
senate and house authors of the new legislation were also identified.
Stockholders
were encouraged to provide their input to their legislators. The last slide
was an
empty stock valuation form that would have to be completed in the near
future.
Prior to completing the company's Form U7. The exact timing of the DPO is
still
uncertain, but SolarAttic is already beginning to "test-the-waters" to see
if sufficient
investor interest is present. Preliminary expressions of interest indicate
that the
DPO could occur sometime mid year. The chairman then spent about ten
minutes
answering specific stockholder questions. The management presentation ended
approximately 10:10 p.m.
Adjournment
There being no further business or discussion, the chairman offered
to entertain a
motion to adjourn. Larry Matthews made the motion to adjourn the annual
stockholder's meeting and Larry Garde seconded it. The motion was
unanimously
approved and the meeting was formally closed at approximately 10:12 p.m.
Election of Officers
During their annual board meeting which followed immediately after the
annual
stockholder's meeting, the board of directors elected James F. Stanley as
the Vice
President of Marketing & Sales. Edward G. Palmer was then elected to
serve in the
capacity of all other officer positions.
Secretary Dated: March 6, 1997
SolarAttic, Inc.
View slides (html file)