1-4 5-8 9-12 13-16 17-20 21-24 25-28 29-32 33-36 37-40 41-44 45-48 49-52 53-56 57-60 61-64 65-68 69-72 73-76 77-80 81-84 85-86 
1-4 5-8 9-12 13-16 17-20 21-24 25-28 29-32 33-36 37-40 41-44 45-48 49-52 53-56 57-60 61-64 65-68 69-72 73-76 77-80 81-84 85-86
The Company’s long-term plan for providing liquidity to its shareholders is to develop a public
market for its Common Stock by soliciting securities brokers to become market makers of the
shares. However, to date the Company has not solicited any such securities brokers nor does the
Company have any immediate plans to do so. There can be no assurance that the Company will be
successful in soliciting a market maker if it attempts to do so.
Following the Offering, the Company will still be considered a “non-reporting” issuer whose
securities are not listed or subject to regulation under the Securities Exchange Act of 1934 (the
“1934 Act”). The vast majority of all broker-dealers generally do not engage in the sale or trading
of securities of a “non-reporting” issuer. Further limitations upon the development of a trading
market are likely by virtue of regulations under Rule 15c2-11 of the 1934 Act which require that
before broker-dealers can make a market in the Company’s securities and thereafter as they
continue making the market the Company must provide these broker-dealers with current
information about the Company. The Company presently has formulated no specific plans to
distribute current information to broker-dealers and probably will only do so if there appears
otherwise to be adequate interest in making a market in the Company’s securities. Furthermore, in
view of the absence of an underwriter, the relatively small size of the Offering and the nature of the
Company as a “non-reporting” issuer, there is virtually no likelihood that a regular trading market
will develop in the near term, if at all, or that if developed it will be sustained. The Shares might
not be able to be resold at the offering price or any other price. Accordingly, an investment in the
Company’s Common Stock should be considered highly illiquid.
The Company has never paid dividends and does not
foreseeable future. See “Dividend Policy.”
The Commission recently adopted rules that regulate broker-dealer practices in connection with
transactions in “penny stocks.” Penny stocks generally are equity securities with a price of less
than $5.00 (other than securities registered on certain national securities exchanges or quoted on
the NASDAQ system, provided that current price and volume information with respect to
transactions in such securities is provided by the exchange or system). The penny stock rules
require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules,
to deliver a standardized risk disclosure document prepared by the Commission that provides
information about penny stocks and the nature and level of risks in the penny stock market.
stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly
account statements showing the market value of each penny stock held in the customer’s account.
In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise
exempt from such rules the broker-dealer must make a special written determination that the penny
stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the
transaction. These disclosure requirements may have the effect of reducing the level of trading
activity in the secondary market for a stock that becomes subject to the penny stock rules. If the
Company’s Common Stock becomes subject to the penny stock rules, investors in this Offering
may find it more difficult to sell their shares. In such event, any broker-dealer who desires to sell
the Company’s Common Stock will have to do so in compliance with the penny stock rules.
Of the 9,985,947 shares of Common Stock currently outstanding (as of June 30, 1999), all but
3,505 shares were offered and sold by the Company in private transactions in reliance upon an
exemption from registration under the Securities Act. Accordingly, all of such shares are
“restricted securities” as defined by Securities and Exchange Commission Rule 144 (“Rule 144”).
Under the Securities Act, Rule 144 shares cannot be resold without registration except in
reliance on Rule 144 or another applicable exemption from registration.
In general, under Rule 144, a person (or persons whose shares are required to be aggregated),
including any affiliate of the Company, who beneficially owns restricted shares for a period of at
least ONE YEAR (reduced recently from two years) is entitled to sell within any three month
period shares equal in number to the greater of (i) 1 percent of the then outstanding shares of the
Common Stock (109,459 shares if all of the shares offered hereby are sold) or (ii) the average
weekly trading volume of the same class of shares during the four calendar weeks preceding the
filing of the required notice of sale with the Commission. The seller must also comply with the
notice and manner of sale requirements of Rule 144, and there must be current public information
available about the Company. In addition, any person (or persons whose shares are required to be
aggregated) who is not, at the time of sale, nor during the preceding three months, an affiliate of
the Company, and who has beneficially owned restricted shares for at least three years, can sell
such shares without regard to notice, manner of sale, public information or the volume limitations
described above. Shares of Common Stock first became eligible for resale under Rule 144 in
November of 1989 (assuming the other requirements of Rule 144 are met).
Of the current 9,985,947 shares outstanding, 9,438,232 shares (94.5%) are aged past one year
from their date of issue and qualify under Rule 144 for conditional sales. Of the current 9,985,947
shares outstanding, 8,886,695 shares (89%) are aged past three years and qualify for immediate
resale under Rule 144 without registration except as may be required for certain “control stock.”
Sales of stock under Rule 144 may have a depressive effect on the price of the Common Stock in
any trading markets that may develop for the Company’s stock.
No prediction can be made as to the effect, if any, that future sales of the above described
outstanding Common Stock, or the availability of such Common Stock for sale, will have on the
market price prevailing from time to time. Sales of substantial amounts of such Common Stock in
the public market, or the perception that such sales may occur, could adversely affect the then
prevailing market price. See “SHARES ELIGIBLE FOR FUTURE SALE.”
There are currently outstanding 500,000 shares of stock options expiring December 31, 2000
through December 31, 2003. The Company also has an incentive stock option plan with
1,000,000 shares of Common Stock set aside for employees. The plan expires in the year 2001
and no shares have been issued under the plan. No prediction can be made as to the effect, if any,
that future sales or potential sales of these stock options or incentive stock options may have on the
market price of the Common stock prevailing from time to time.
If a market does develop, there can be no assurance that it will be maintained or that the market
price of the Company's securities will not decline below the initial public offering price. The
trading price of the securities is likely to be subject to significant fluctuations.
If any of the above described 500,000 stock options are exercised, it will result in an additional
and substantial further dilution in the net tangible book value of any investment. There are
1,000,000 shares of Common Stock set aside in the Company’s employee incentive stock option
plan. No options have been issued to any employee from this plan to date. However, any options
granted and subsequently exercised could have a significant additional dilutive effect. In addition,
the Company may issue stock again in future public offerings, which would also have significant
additional dilutive effects. See “DILUTION” and “NOTES TO FINANCIAL STATEMENTS.”
There is no cumulative voting for the election of directors of the Company. The owners of less
than a majority of the Common Stock outstanding may not be able to elect any directors.
After this Offering, EJ Partners Limited Partnership will own and Edward G. Palmer the
Company’s President will have the ability to direct the vote of — 27.7% of the Company's
outstanding Common Stock. As such, EJ Partners Limited Partnership may have the ability to
elect the entire Board of Directors and, very likely, the ability to control all matters requiring
shareholder approval. The General Partner of EJ Partners Limited Partnership is the “EJ Palmer
Trust” which is also known as “The Edward G. Palmer Family Trust” of which Edward G.
Palmer, the Company’s President is the Trustee. See "PRINCIPAL SHAREHOLDERS."
The Company is dependent upon the management services of Edward G. Palmer, the
Company’s President. To the extent that Mr. Palmer’s services would become unavailable to the
Company, the Company would greatly suffer. There is no assurance that the Company would be
able to employ qualified persons to replace Mr. Palmer. The Company does not currently have
"key man" insurance or any employment contract with Mr. Palmer. See "MANAGEMENT."
While the Company manufactures proprietary solar and ventilation products and to its
knowledge has no direct competitors selling the same equipment, the Company faces stiff
competition from well-entrenched and well-established competitive products within the markets
that the Company’s products will serve. Some competitors certainly have substantially more
business and marketing resources than the Company. Therefore, there can be no assurance that the
Company will operate profitably within this competitive environment.
If the Minimum Offering is not reached, the Company will have to refund all amounts paid for
the shares offered hereby. This could result in a lengthy period of up to twelve months whereby
investment funds are tied up without any interest accruing. Stock certificates will not be issued
until after the minimum is reached. If refunds are due from a failure to reach the minimum, the
refund payments will not contain any interest payments or deductions.
The Company carries general liability, theft and fire insurance. However, it is self-insured for
product liability risks without any stop loss insurance. To the extent that the Company would
suffer a catastrophic product liability loss, for any reason, it would have a severe negative impact
on the Company and could cause the Company to fail and result in a complete loss of all equity
investment made in the Company. There can be no assurance that the Company will be able to
obtain sufficient insurance coverage for all potential liabilities that the Company is either now or in
the future may become exposed to. There can also be no assurance that the Company will be able
to obtain any product liability insurance or even that the Company would be able to afford such
product liability insurance if it is available to the Company.
RISKS NOT FORESEEN OR FULLY APPRECIATED BY MANAGEMENT. IN REVIEWING
THIS PROSPECTUS, POTENTIAL INVESTORS SHOULD KEEP IN MIND OTHER
POSSIBLE RISKS THAT COULD BE IMPORTANT.
The Company is offering to sell 150,000 to 4,800,000 newly issued Shares at a price of $1.00 per
share. There is a required minimum number of 150,000 Shares to be sold pursuant to the Offering.
The Offering will begin on the date of this Prospectus and continue for up to twelve months or
until all of the Shares offered are sold, whichever is less, or such earlier date as the Company may
close or terminate the Offering. The minimum investment for the Offering is 500 shares ($500).
The maximum investment is the remaining available shares to be sold at any given time.
The Company plans to offer and sell the Shares directly to investors and has not retained any
underwriters, brokers or placement agents in connection with the Offering. The Company will
escrow all proceeds from the sale of the first 150,000 shares. In the event the minimum escrow is
not reached during the allowable period of time, all subscriber funds will be returned without
interest and without deduction.
The Company has a database with over 1297 investors that previously contacted the Company
with an interest in investing from the states of Minnesota and New York. The Company intends to
first contact these prospective investors with a direct mail announcement and stock offer. The
Company then plans to conduct local media advertising in the Minneapolis-St. Paul area and will
present the Company to Minnesota fairgoers at the 1999 Minnesota State Fair. The Company will
back up these marketing efforts with an extensive web site containing all available Offering
information including Registration documents that are not a part of this Prospectus. Databases of
financial brokers and money managers in the State of New York may also be used to market the
Company’s Offering. The Company will make it easy to invest by allowing for the use of credit
cards to purchase its stock. To reach the maximum possible pool of investors, the Company has
chosen to only have a minimum purchase requirement of 500 shares. Edward G. Palmer, the
Company’s president and CEO shall conduct the Offering on behalf of the Company.
To Subscribe for Shares, each prospective investor must complete, date, execute and deliver to
the Company a subscription agreement and have paid the purchase price of the Shares subscribed
for by check or money order payable to SolarAttic, Inc. Credit card purchases of common stock
will be accepted. A copy of the subscription agreement is attached at the end of this Prospectus
at page X-1. Subscriptions become irrevocable after 72 hours. The form on page X-3 can be used
to rescind the purchase of the Shares during this period.
The Company reserves the right to accept or reject any subscription in part or in its entirety or to
allocate Shares among prospective investors. If any subscription is rejected, funds received by the
Company for such subscription will be returned to the subscriber without interest or deduction.
Within five days of its receipt of a subscription agreement accompanied by payment of the
purchase price, the Company will send by first class mail a written confirmation to notify the
subscriber of the extent, if any, to which such subscription has been accepted by the Company.
Not more than thirty days following the completion of escrow or the mailing of its written
confirmation if escrow has been completed, a subscriber’s Common Stock certificate will be
mailed by first class mail. The company shall not use the proceeds paid by any investor until the
Common Stock certificate evidencing such investment has been mailed.
Although the Company’s long-term plan for providing liquidity to its shareholders is to develop
a public market for its Common Stock by soliciting securities brokers to become market-makers of
the shares, to date the Company has not solicited any such securities brokers nor does the
Company have immediate plans to do so. See "RISK FACTORS."
ABLE TO COMPLETE A FURTHER PUBLIC OFFERING OR THE COMPANY IS ABLE TO
BE SOLD FOR CASH OR MERGED WITH A PUBLIC COMPANY THAT THEIR
INVESTMENT IN THE COMPANY MAY BE ILLIQUID INDEFINITELY.