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 officers and directors of the Company, their ages, residential addresses and present
positions within the Company are as follows:
15548 95th Circle NE
Elk River, MN 55330
President, COO, Treasurer, Secretary,
& Chief Financial Officer (CFO)
19096 Carson Street NW
Elk River, MN 55330
7601 5th Avenue South
Richfield, MN 55423
8021 Oakmere Road
Bloomington, MN 55438
13801 Ton Bridge Court
Bonita Springs, FL 34135
EDWARD G. PALMER, Chairman of the Board (Director) and President of the Company, is
the sole founder of the Company. From June 1985 to the present, he has been the President of the
Company. From January through May of 1985, he was the Director of Quality for the Winchester
Division of Applied Magnetics Corporation in Santa Barbara, California. From April of 1979 to
December of 1984, he served in the positions of Senior Quality Engineer, Quality Control Manager
and Quality Assurance Manager at Magnetic Peripherals Inc., Bloomington, Minnesota. Mr.
Palmer’s principal responsibilities are those of President, CEO, CFO and the Chairman of the
Board of Directors.
JAMES F. STANLEY, is the Vice President of Marketing & Sales for the Company. He has
been with SolarAttic from February 1997 to present. From 1994 to 1997, Jim was employed by
Systems West, Inc of Litchfield, MN where he served in the sales and project management of
commercial and agricultural building projects. From 1991 to 1994, Jim served in sales and project
management for Metropolitan Steel Fabricators, Incorporated of White Bear Lake, MN. From
1981 through 1990, he was employed by Central Industrial Engineering Company of Los Angeles,
CA, which had annual revenues of $25 Million. Jim's responsibilities included the management of
the sales department and all its related functions. He graduated in 1981 from the North Dakota
State College of Science with an Associates Degree in Architectural Drafting and Estimating.
LAWRENCE J. MATTHEWS has been a director of the Company since 1988. From 1993
until its sale in 1998, Mr. Matthews was involved in building a manufacturing company called
Vendtronics Corporation based in Brooklyn Center, Minnesota. Mr. Matthews was its principal
owner. From 1984 until his retirement in 1993, he was the Vice President of Engineering for
Zytec. He also served as a director. Mr. Matthews was a co-founder of Zytec based in Eden
Prairie, MN, which recently merged with Computer Products to form Artesyn Technologies.
Artesyn is publicly traded on the NASDAQ/NMS as ATSN. Mr. Matthews continues to serve as
one of its directors. Before January 1984, he was employed by Control Data Corporation in
engineering design, engineering management and operations management. Mr. Matthews has a
degree in mechanical engineering and extensive management experience at the executive level.
LAWRENCE GARDE has been a director of the Company since 1989. From November 1989
to the present, he has been self-employed as a consultant and trainer to Minnesota companies and
individuals in the area of patent protection. He has a degree in electronic engineering and eight
patents in his name. Until November 1989, when he retired, he was a design engineering manager
for Control Data Corporation’s Imprimis (Magnetic Peripherals, Inc.).
LEE M. BERLIN has been a director of the Company since April 1999. Mr. Berlin has served
as a director of LecTec Corporation since 1981 and was its Chairman from 1983 until shortly after
he left LecTec in 1993. He was Chief Executive Officer of LecTec from 1983 to 1989. LecTec
Corporation is a publicly traded company based in Minnesota and is listed on the NASDAQ/NMS
as LECT. Prior to LecTec, Mr. Berlin served in a variety of foreign and domestic marketing,
product development and general management positions with 3M in Minnesota. Mr. Berlin was
the founder of Medical Alley in Minnesota; served as Chairman of Minnesota District Export
Council; Director of the Minnesota World Trade Center; Chairman of the Governor's Commission
on Medical Technology; and, Chairman of the National Small Business Exporter's Association.
He has been a life-long resident of Minnesota and long-time booster of Minnesota business and
technology. Mr. Berlin brings extensive entrepreneurial, executive management and international
business experience to the Company. Mr. Berlin holds a Chemical Engineering Degree from the
University of Minnesota and a Law Degree from the William Mitchell College of Law. Mr. Berlin
currently lives in Bonita Springs, Florida where he continues to be involved with new businesses,
new technology and international trade.
The Company has four directors. All directors hold office until the next annual meeting of
shareholders or until their successors have been duly elected and qualified. The officers of the
Company are elected annually and serve at the discretion of the Board of Directors. None of the
Company's officers are employed pursuant to a written employment contract.
The Company’s Restated Articles of Incorporation, as amended, limit the liability of directors in
their capacity of directors to the Company or its shareholders to the full extent permitted by
Minnesota law. They provide that a director shall not be liable to the Company or its shareholders
for monetary damages for breach of fiduciary duty as a director, except (i) for any breach of the
director’s duty of loyalty to the Company or its shareholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law, (iii) for dividends,
stock repurchases and other distributions made in violation of Minnesota law or for violations of
the Minnesota securities laws, (iv) for any transaction from which the director derived an improper
personal benefit or (v) for any act or omission occurring prior to the effective date of the provision
in the Company’s Restated Articles of Incorporation, as amended limiting such liability. These
provisions do not affect the availability of equitable remedies, such as an action to enjoin or rescind
a transaction involving a breach of fiduciary duty, although, as a practical matter, equitable relief
may not be available. The above provisions also do not limit liability of the directors for violations
of, or relieve them from the necessity of complying with, the federal securities law.
Insofar as indemnification for liabilities arising out of the Securities Act of 1933 may be
permitted to directors, officers or persons controlling the Registrant pursuant to the foregoing
provisions, the Registrant has been informed that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy, as expressed in the Act, and is,
therefore, unenforceable.
OFFICERS, DIRECTORS, AND OTHER KEY PERSONNEL, POTENTIAL INVESTORS
SHOULD CONSIDER WHETHER OR NOT THESE INDIVIDUALS HAVE ADEQUATE
BACKGROUND AND EXPERIENCE TO DEVELOP AND OPERATE THIS COMPANY AND
TO MAKE IT SUCCESSFUL. IN THIS REGARD, THE EXPERIENCE AND ABILITY OF
MANAGEMENT ARE OFTEN CONSIDERED THE MOST SIGNIFICANT FACTORS IN THE
SUCCESS OF A BUSINESS.
The following table sets forth the cash and non-cash compensation for 1998 awarded to or
earned by SolarAttic’s Chief Executive Officer, Vice President of Marketing & Sales and the
Company’s Directors.
Compensation
Salary (1)
Compensation
Number of
Stock Options
Granted
Compensation
(2)
President and CEO
Vice President, Marketing & Sales
Director
Director
Director
reimburses Mr. Palmer and Mr. Stanley for medical insurance expenses. The Company has also
agreed to reimburse Mr. Palmer for any other medical expenses up to $10,000 annually. To date,
Mr. Palmer has had limited medical expenses except for insurance costs.
Company plans to start paying Mr. Palmer an annual salary of $60,000. The Company currently
pays a monthly salary of $2,408 to Mr. Stanley. If 25% of this Offering is sold, Mr. Stanley’s
monthly salary will increase to $4,000. Officer salaries may be paid, in part or whole, from the
following Use of Proceeds’ categories: Working Capital (Mr. Palmer); and, Marketing/Sales (Mr.
Stanley). See “USE OF PROCEEDS.”
The Company has not historically and does not currently compensate directors for director
services.
WHETHER OR NOT THE COMPENSATION TO MANAGEMENT AND OTHER KEY
PERSONNEL DIRECTLY OR INDIRECTLY, IS REASONABLE IN VIEW OF THE PRESENT
STAGE OF THE COMPANY'S DEVELOPMENT.
On March 17, 1999, the Company issued 4,964 shares of common stock valued at $5.00 per
share to parties involved with the Elk River Business Center in exchange for $24,820 in prepaid
rent over the company’s one year lease. The common stock payment constituted 80% of the rent
value over the one-year period of the lease, which expires April 15, 2000. The balance of the rent
due under the Company’s lease is paid in monthly cash rent payments. See “Facilities.”
This stock was issued to the following accredited investors involved with the Elk River
Business Center: The City of Elk River Economic Development Authority (1,418 shares); Genesis
Portfolio Partners, LLC (1,418 shares); and, Larry Hickman (2,128 shares).
During the first three months of 1999, public investors purchased 1,305 shares of common
stock valued at $5.00 per share for $6,525 in cash.
During 1998, public investors purchased 2,200 shares of common stock valued at $5.00 per
share for $11,000 in cash.
During 1998, 2,400 shares of common stock valued at $5.00 per share were issued to Gill
Engineering in exchange for engineering design services associated with the Company's SAVC02
electronic control. See "PRODUCTS."
During 1998, a group of early investors exercised warrants and options that were scheduled to
expire on December 31. 589,326 option or warrant shares were issued in exchange for $133,365
cash at a weighted average issuance price of $.23 per share.
The "unsecured note payable to officer" identified in the financial statements is a business
operating loan in the form of a standard variable-rate first mortgage using Mr. Palmer's residence
as collateral. All proceeds of this loan were used exclusively by the Company for its business
operations and cash flow needs. This included consolidating Company debt and paying normal
business operating expenses such as payroll, phones, long distance, etc. SolarAttic is obligated to
repay the loan (mortgage) in accordance with its terms directly to Ameriquest Mortgage Company.
The "due from officer" identified in the financial statements is an accrued loan to Mr. Palmer
who is currently unpaid. Mr. Palmer now donates his management services free to the Company.
On occasion, funds are loaned to Mr. Palmer for personal use and economic support. "Due from
officer" is scheduled for immediate monthly repayment at the rate of 1/20th of Mr. Palmer’s salary
when the Company starts to pay him a salary. See "Note 2: Related Party Transactions" on F-10.
The Company has agreed with certain state regulatory authorities that so long as the Company's
securities are registered in such states, or one year from the date of this Prospectus, whichever is
longer, the Company will not make loans to its officers, directors, employees, or principle
shareholders, except for loans made in the ordinary course of business, such as travel advances,
expense account advances, relocation advances, or reasonable salary advances.
THE COMPANY’S MANAGEMENT BELIEVES THAT THE TERMS OF ALL PREVIOUS
AFFILIATED OR RELATED TRANSACTIONS ARE NO LESS FAVORABLE TO THE
COMPANY THAN WOULD HAVE BEEN OBTAINED FROM ANY NON-AFFILIATED OR
NON-RELATED THIRD PARTY FOR SIMILAR GOODS OR SERVICES. ALL FUTURE
TRANSACTIONS WITH AFFILIATED OR RELATED PARTIES WILL BE APPROVED BY A
MAJORITY OF MEMBERS OF THE BOARD OF DIRECTORS WHO ARE NOT OTHERWISE
A PARTY TO THE TRANSACTION.