FORM 10-K-SB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 1-14791
SOLAR ENERGY LIMITED
(formerly Salvage World, Inc. )
(originally Taurus Enterprises, Inc.)
Delaware 76-0418364
(Jurisdiction of Incorporation) (I.R.S. Employer Identification No.)
112 C LONGVIEW DRIVE, LOS ALAMOS, NEW MEXICO 87544
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (604) 257-3602
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: 12/31/98 11,903,911
Securities registered pursuant to Section 12(g) of the Act: 12/31/99 13,053,911
Yes[x] No[] (Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.)
[] (Indicate by check mark if disclosure of delinquent filers ('229.405) is not
and will not to the best of Registrant's knowledge be contained herein, in
definitive proxy or information statements incorporated herein by reference or
any amendment hereto.)
As of 12/31/98:
the aggregate number of shares held by non-affiliates was approximately
9,893,511.
the number of shares outstanding of the Registrant's Common Stock was
11,903,911.
Exhibit Index is found on page 19.
1
<PAGE>
PART I
INTRODUCTION
This Annual Report on Form 10K-SB is filed voluntarily. Our Form 10-SB
Registration Statement became effective after the close of 1998. That 1934
Securities Exchange Act registration of our common stock has become effective
during 1999, but has not yet cleared final comments by the Staff of the
Securities and Exchange Commission. This Annual Report on Form 10K-SB is filed
after the end of 1999, primarily for the purpose of disclosing our year-end 1998
Audit, and other matters. Accordingly, this Report contains information
concerning material subsequent events.
ITEM 1. DESCRIPTION OF BUSINESS.
(A) ORGANIZATION AND HISTORY. Solar Energy Limited (the "Registrant",
"Company","We", "Us" and "Our") was
first incorporated in Delaware as Taurus Enterprises, Inc. on January 5, 1994,
and re-incorporated in Nevada on August 20, 1996 as Salvage World, Inc. On
August 20, 1996. Taurus made its original issuance of 25,000,000 shares to
founders in 1994, pursuant to '4(2) of the Securities Act of 1933. During 1996,
Salvage placed an additional 451,250 shares, pursuant to Regulation D, Rule 504,
resulting in the a total of 25,451,250 shares then issued and outstanding. On
December 17, 1997, the Shareholders approved a proposal to Reverse Split the
Common Stock of the Corporation 20 to 1; with the provision that no Shareholder
owning 100 shares or more shall be reversed or reduced below 100 Shares. The
25,451,250 shares were reduced to 1,272,562, and the adjustment for small
shareholders was 5,949 shares, for a total post-reverse of 1,278,511. Also on
December 17, 1997, shareholders approved, and Management effected a Plan of
Reorganization and Merger of Salvage World, Inc. into Solar Energy Limited, a
private Delaware Corporation, the effect of which merger changed the name of
this Corporation, moved its place of incorporation from Nevada to Delaware and
involved the acquisition of Hydro-Air Technologies, Inc. ("HAT") to become a
wholly-owned subsidiary of this Issuer, Solar Energy Limited.
Also on December 17, 1997, shareholders approved the placement of up to
10,000,000 additional shares of common stock, at $0.10, pursuant to Regulation
D, Rule 504 and/or 505, but limited to offers and sales to non-U.S. Residents. A
total of 9,800,000 shares were placed pursuant to Rule 504. A further total of
125,000 shares were placed pursuant to Rule 505. The Offering closed on or about
November 10, 1998. The Shareholders also approved a formula for the acquisition
of Hydro-Air Technologies, Inc. ("HAT"), for stock equal to 40% of the total
issued and outstanding of the company, on a fully diluted basis (following the
20 to 1 Reverse Split, and the proposed issuance of such of the additional
10,000,000 Regulation D shares as might have been placed). The issuance to HAT
is to proceed in phases. The first phase issuance of 170,400 was made about
April 15, 1998. The second phase issuance of 530,000 shares was made on October
23, 1998. The amount of shares issued and possibly to be issued for HAT is
summarized as follows:
A. Issuance and Release of Solar stock. Solar and the HAT Shareholders
--------------------------------------
desired to create an orderly process for the issuance and progressive release of
common stock to or for the benefit of the HAT Shareholders.
1. HAT Shareholders. The HAT Shareholders were to receive, subject to
----------------
this Reorganization Agreement, shares of Solar equal to 40% of the resulting
total issued and outstanding stock of Solar, on a fully-diluted basis, computed
following certain designated capital formation stages. However, the total number
of Solar shares which was to be issued to the HAT Shareholders to meet this
obligation was undeterminable at the time of the agreement.
2
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2. Initial Issuance. Upon consummation of the Merger, Solar was to
-----------------
issue and did issue to the HAT Shareholders 20% of 40% of the outstanding Solar
shares, as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
HAT Shareholder April 1998 October 1998 Total
- ---------------------------------------------------------------
Melvin L. Prueitt 16,359 50,880 67,239
- ---------------------------------------------------------------
David Jones 8,179 25,440 33,619
- ---------------------------------------------------------------
Stanley D. Prueitt 8,179 25,440 33,619
- ---------------------------------------------------------------
Leslie Speir 8,179 25,440 33,619
- ---------------------------------------------------------------
Dana Hansen and Linda Hansen 3,408 10,600 14,008
- ---------------------------------------------------------------
Ara Lee Stevens 1,363 4,240 5,603
- ---------------------------------------------------------------
Baycove Investments, Inc. 34,080 106,000 140,080
- ---------------------------------------------------------------
Hydro-Air Founders, LLC 90,653 281,960 372,613
- ---------------------------------------------------------------
Total HAT 170,400 530,000 700,400
===============================================================
</TABLE>
3. Phased Release of Shares. The remaining 80% of 40% is to be issued
------------------------
to the HAT Shareholders in phases based on the following formula: one share of
Solar stock for each $2.00 of earnings generated by HAT, as determined by
Generally Accepted Accounting Principles (GAAP). There have not been revenues to
date, so that no further issuances have been made to or for HAT.
There are certain internal agreements between the HAT Founders and
Shareholders (and not involving us) which are disclosed in Item 7 of this Part
I, Relationships and Transactions. These are arrangements by which the HAT group
agreed to manage the distribution, voting and private trading restrictions, as
between them.
Hydro-Air Technologies, Inc. (the Issuer's first wholly-owned subsidiary)
is a development stage company, founded by Dr. Melvin L. Prueitt, David Jones,
Stanley Prueitt and Leslie Speir, which company has developed certain
intellectual property rights with which they intend to generate commercially
viable electrical power using the energy of vaporization. The intellectual
property rights are called Hydro-Air Renewable Power System (AHARPS@) and
include two U.S. Patents, one granted on September 3, 1996 (number 5,551,238)
and a second granted on July 28, 1998 (number 5784886). We regarded and regard
this acquisition of HAT as an investment in the future growth and demand for
HARPS. HAT has proposed other projects which are disclosed and discussed under
section (b) of this Item 1.
(B) SUBSEQUENT EVENTS. Renewable Energy Corporation ("RECO") (the Issuer's
second wholly-owned subsidiary) is also a development stage company. It was
founded by Dr. Reed Jensen. Dr. Jensen has developed certain intellectual
property rights for a process called Direct Solar Reduction of CO2 to Fuel and
Feedstock, which rights and process the Company intends to develop into a
commercially viable system. This process utilizes solar energy to directly
reduce CO2 that would have been released to the atmosphere while producing
chemical feedstock, fuel and "green" or environmentally friendly electricity.
Management of the parent issuer regards the acquisition of RECO as a long-term
investment in the growing market for renewable energy sources.
RECO was acquired 100% from its owner developer Dr. Reed Jensen, an
individual unrelated to us, for 350,000 escrowed shares of the common stock of
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this Issuer, plus $20,000 cash. In addition to those share for direct
acquisition, 150,000 shares have been issued and escrowed for future employee
options. No options for the acquisition of these option shares has been adopted.
On or about November 22, 1999, we placed an additional 800,000 shares to a
single accredited investor, at $0.20 per share.
The resulting total issued and outstanding 13,053,911 is further
illustrated in the following table.
Please Note: The total reported includes events subsequent to our 1998 Audited
Financial Statements.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Series # Taurus Salvage Solar Energy
Issuances (20 to 1)
- -------------------------------------------------------
1 ss4(2) 25,000,000 1,250,000
2 ss504 451,260 22,562
Subtotal 25,451,260 1,272,562
Adjustment (1) 5,949
Subtotal 5,949
Interim Total 1,278,511 1,278,511
3 ss504 9,800,000
4 ss505 125,000
5 ss4(2)/Rule 145 700,400
Close 1998 11,903,911
6 ss4(2)/Rule 145 350,000
7 Rule 505 800,000
Close 1999 1,150,000
Total Issued 13,053,911
=======================================================
</TABLE>
(C) THE BUSINESS OF REGISTRANT AND ITS SUBSIDIARIES. The information provided
in this sub-section (c) includes the most recent available information and
includes events subsequent to December 31, 1998.
Solar Energy Limited is a public U.S. company listed on the OTC Electronic
Bulletin Board ("OTCBB") whose ticker symbol is "XSEL". Our thrust is to explore
and/or develop alternative energy systems that are environmentally friendly in
addition to being economically viable and competitive. It is estimated that the
world needs 50% more electrical power in the next 25 years. It is calculated
that, at the current use, there are 44 years of oil, 57 years of gas, 91 years
of uranium and 564 years of coal left. What is an alternative? Solar power in
several forms. The sun discharges on the earth enough energy each day to fill
our global total energy requirements for many years. We only need to tap a small
portion of the sunlight. At the same time the globe's second major problem, lack
of water, could also be solved (it is mainly a lack of inexpensive power to fuel
desalination plants).
4
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PROJECTS HAT:
1. HARPS. As our first project, we purchased 100% of a private company
located in Los Alamos, New Mexico. This operating company, Hydro-Air
Technologies, Inc. ("HAT") has as its main assets certain technology, patents,
and intellectual property rights to the concept of producing electricity using
the energy of evaporation. One quart of water has about one-twentieth the energy
of a quart of gasoline. The process derived from this technology, called Hydro
Air Renewable Power Systems ("HARPS"), is an efficient and environmentally
friendly energy source. It uses only dry air and water (either fresh, ocean, or
waste water) to produce electricity while at the same time cleaning the air.
Initial internal computer driven studies conducted by us indicate that
electricity could be produced at one-third the current cost of electricity
generated by nuclear or fossil fuel plants. A working prototype is being built
in Los Alamos. Research and Development continues. No date for marketability has
been set. The HARPS units can be small enough for a house or large enough to
service a state. In theory, on a few hundred acres of land on the Baja,
California coast, enough electricity could be produced to service the needs of
Canada, the U.S. and Mexico. HAT was founded by and is headed by Dr. Melvin
Prueitt, a research scientist, author of three books and more than thirty
publications. One of his many achievements is that he was the first to determine
the temperature of a lightning bolt. He holds twelve patents and is listed in
Who's Who in America Index, Men of Achievement and Who's Who in the West. Most
of the team Dr. Prueitt assembled to assist in the project come from the Los
Alamos National Laboratory facilities, the research center managed by the
University of California for the Department of Energy of the U.S. government.
2. ACES - HAT has recently acquired the rights of a second project called
Air Conditioner Energy System ("ACES"). This project is similar in theory to
HARPS. The difference is that the ACES units are primarily for single family
residences. They are small, self-contained roof mounted units that produce
electricity with a unique bi-product - cold air. That is, they provide
electricity 24 hours a day whilst air conditioning a house. The theory also
relies on the heat of vaporization of water but is simpler than the HARPS.
Excess power can be sold to the utility company. Again, a model/prototype is to
be built with the same team from HAT. Research and Development continues. No
date for marketability has been set.
3. PHOTOVOLTAICS (THE CONVERSION OF LIGHT TO ELECTRICITY). Much work, time
and research dollars are being spent globally on this concept which is the
direct production of electricity by light passing through a photovoltaic medium.
We have already spent some time and funds on this concept but the field is
currently flooded with hundreds of companies exploring this potential. For now
we are focusing on investigating various new photovoltaic materials that are
both economical and have higher efficiencies than those now readily available.
4. DESALINATION PLANTS: SPAESS AND SUNSPRING: The main problem of
desalination plants is that the energy required per ton of water produced is
high. We have developed an energy collection system (patent pending) called
SPAESS, which stands for Solar Power and Energy Storage System. The concept of
SPAESS is that it employs a large flexible earth coupled solar thermal collector
system. SPAESS collects energy during the daytime and stores it, for daytime and
nighttime use. SPAESS transfers heat to low boiling liquids to drive turbine
generators. The projected cost of energy per kilowatt, using SPAESS system is
projected by Dr. Prueitt to be less than any existing system currently in use.
These are projections only. As a result of the work done on SPAESS, we have
developed a unique (patent pending) system to produce low cost fresh water from
sea water. The name given for this system is SunSpring. It is an innovative
method of converting low temperature solar heated water to directly pump sea
water (rather than having to produce electricity to power a motor to drive a
high-pressure pump). SunSpring uses no electric motor. We have already tested
various components of SunSpring, and all tests have exceeded expectations, thus
5
<PAGE>
far. This does not guaranty that the final assembled unit will be trouble free.
A full working prototype is expected to be in operation by the fall of 2000.
5. MECH. As a result of the research work on ACES and HARPS, we have
developed an engine that is one-third the size of a conventional internal
combustion engine for the same power, while being about 25% more efficient. MECH
is the name given for Motor, Expander, Compressor, Hydraulics. We have already
made a small working prototype and all tests currently exceed expectations. We
are currently exploring our options with MECH, while continuing to test and
refine the prototype. The main source of the increased efficiency is because
there is primarily rolling friction generated (instead of sliding friction in
conventional engines) as the MECH pistons rotate back and forth on rollers.
PROJECTS RECO:
DIRECT SOLAR REDUCTION OF CO2 (SOLAREC). We acquired 100% of the shares of
Renewable Energy Corp (RECO as of January 1, 1999 from Dr. Reed Jensen, who
joined our Board of Directors. "Solarec" is the concept name for the patented
process whereby, using only solar energy and CO2 obtained from the atmosphere,
to produce a fuel (gasoline, diesel, etc.) with electricity and free oxygen
produced as by-products. Various components of the system have been successfully
tested to date and a full scale prototype is scheduled to be completed by June
2000. Dr. Jensen is the President of this subsidiary, RECO, as well as one of
our principal directors.
DEVELOPMENT TEAMS AND PROGRESS: Two separate teams have been organized and are
now in place. The HAT team is directed by Dr. Mel Prueitt. The RECO team is
directed by Dr. Reed Jensen. Four prototypes are in process of development:
SPAESS, SunSpring, MECH and RECO's solar reduction of CO2 (Solarec). It is
likely that each of these projects, if and when prototypes are operational and
successful, will be functional but not immediately commercial, cost effective or
aesthetically packaged or contained. It is therefore expected that related
spin-off projects will emerge from these technologies, until one or more
products be commercialized profitably. HARPS and ACES are progressing albeit
slowly. We are focusing on SPAESS, SunSpring, MECH and RECO's Solarec. We feel
that one of these latter four will be in commercial production earlier with less
capital requirement. However, much of the research and development work already
performed in HARPS and ACES has given rise to, and been used in these latter
four projects.
The success of the SPAESS and Solarec projects will be dependent on the
final cost to produce the renewable electricity by the Issuer's developmental
system, as compared to other existing or competitive methods of producing
electricity. If the result is not cost-effective, the system will not be
commercially viable. Should SPAESS and Solarec prove able to produce electricity
at better than $0.05 per kilowatt, the concept would be deemed proven and
successful. Completion of both the SPAESS and Solarec prototypes, and testing of
them, is expected to occur by fall of 2000.
WORKING PROTOTYPES refer to assembled model systems which not only work, but
work at an acceptable level of performance. Preliminary prototypes or working
models may prove the scientific validity of a process before the system is
refined or redesigned to bring performance to an acceptable and possibly
commercial level. HARPS and ACES are presently deferred in favor of the other
projects, but not abandoned. The reason is that the development of these
projects has given rise to technologies and science suggestive of products
capable of more rapid development. We expect that working prototypes will be
demonstrated for MECH in May 2000. Solarec is scheduled tentatively for June
2000. SunSpring and SPAESS is scheduled for fall of 2000. RECO is scheduled for
June 2000.
6
<PAGE>
We feel that it is too early and speculative to make projections about
marketing and sales at this point in time. The earliest possible pre-sales
revenues, sales of licenses and such, are not expected before the year 2001.
FUTURE MARKETING. In all of our projects, the business plan is to produce a
working model/prototype that can be tested as to efficiency, cost of product,
etc. The decision whether to produce the units directly or whether to license
other companies the right to manufacture and distribute the unit is yet to be
decided. More likely, it will be a combination of some company owned plants
combined with territorial licenses to other qualified manufacturers. The market
for each of our projects (if successfully tested) is unlimited. The amount of
units to be sold will be dependant on our ability to raise sufficient working
capital for our own manufacturing plants and our ability of the Company to
franchise or license other facilities globally. It follows that the ability of
the Company to raise funds will be dependent on the performance of the
prototypes currently in development and production. No efforts have been made to
date to identify other companies to manufacture our products, or to identify
probable or targeted licensees. The Issuer has determined to await commercially
viable prototype readiness before addressing manufacturing and marketing issues.
We are not ready to address those issues.
FINANCING PLANS. For more information, please see Item 6 of Part II,
Management's Discussion and Analysis.
GOVERNMENT REGULATION. There are no issues of government regulation unique to
this Registrant or its business.
COMPETITION. We are developing new products utilizing new technologies. We are
aware of no direct competition or competitors in precisely the areas of our
focused attention. However, it must be accepted that other firms are likely
engaged in research and development of proprietary products of which we are not
aware, and there can be no assurance that competing products will not emerge
with features comparable to the products which may result from our current
projects.
PLANNED ACQUISITIONS. There are no planned acquisitions.
EMPLOYEES. Our parent corporation, Solar Energy Limited has seven directors and
three officers, none of which are classified as employees, as such. HAT has one
full time employee, Dr. Prueitt, and one or two part time assistants, the number
varying from time to time. RECO has one employee, Dr. Jensen.
ITEM 2. DESCRIPTION OF PROPERTY.
The Company's principal offices are located at 112 C Longview Drive, Los
Alamos, New Mexico, 87544. The facilities consist of a leased plant and
building of about 3,400 square feet, including offices and laboratory facilities
in which prototype development is on-going. The lease provides for rent of
$55,200 payable $2,300 per month. We pay for fire, flood and damage insurance of
the premises and for premises liability to third persons, in addition to normal
utilities. Our facilities are located minutes away from the prestigious Los
Alamos National Laboratory. Please Note: the total reports events subsequent to
our 1998 Audited Financial Statements.
7
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ITEM 3. LEGAL PROCEEDINGS.
There are no legal proceedings pending against the Company, as of the
preparation of this Report.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no Shareholder Meetings or matters submitted to shareholders
during 1998 or 1999.
The Remainder of this Page is Intentionally left Blank
8
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PART II
ITEM 5. MARKET FOR COMMON EQUITY AND STOCKHOLDER MATTERS.
(A) MARKET INFORMATION. The Company, has one class of securities, Common Voting
Equity Shares ("Common Stock"). The Company's Securities may be quoted in the
over-the-counter market, but there is a young, sporadic and potentially volatile
trading market for them. Quotations for, and transactions in the Securities, are
capable of rapid fluctuations, resulting from the influence of supply and demand
on relatively thin volume. There may be buyers at a time when there are no
sellers, and sellers when there are no buyers, resulting in significant
variations of bid and ask quotations by market-making dealers, attempting to
adjust changes in demand and supply. A young market is also particularly
vulnerable to short selling, sell orders by persons owning no shares of stock,
but intending to drive down the market price so as to purchase the shares to be
delivered at a price below the price at which the shares were sold short.
(B) HOLDERS. Management calculates that the approximate number of holders of
the Company's Common Stock, as of December 31, 1998, was 255. As a subsequent
matter, as of December 31, 1999, the number of shareholder was approximately
270.
(C) DIVIDENDS. We have not paid any cash dividends on our Common Stock, and do
not anticipate paying cash dividends on its Common Stock in the next year. We
anticipate that any income generated in the foreseeable future will be retained
for the development and expansion of our business. Future dividend policy is
subject to the discretion of the Board of Directors and will depend upon a
number of factors, including future earnings, debt service, capital
requirements, business conditions, the financial condition of the Company and
other factors that the Board of Directors may deem relevant.
(D) SALES OF UNREGISTERED COMMON STOCK 1998 AND 1999.
The following table first presents the chronology of our share issuance,
all in post reverse numbers, from inception through December 31, 1998. Please
compare this presentation to the Statement of Shareholders Equity in our
December 31, 1998 financial statements.
<TABLE>
<CAPTION>
<S> <C> <C>
Dates Shares Description
- -------------------------------------------------------------------------------------------
12/31/94 1,250,000 Inception:Cash and Services
1,250,000 Total Issued during 1994-1995
8/14/96 13,000 For Cash at $0.10 for a total of $26,000.00
8/14/96 8,312 For Cash at $0.00458 for a total of $761.00
10/29/96 1,250 For Cash at $0.01 for a total of $1,250.00
12/31/96 5,959 (carried at par $0.0001) for rounding adjustment in favor of
existing shareholders, owning 100 shares or less
- -------------------------------------------------------------------------------------------
28,511 Total Issued during 1996 (Rule 504)
- -------------------------------------------------------------------------------------------
Jan-98 170,400 Issued Phase One for Hydro-Air Technologies acquisition
(ss4[2])(Rule 145)
Jan-98 3,250,000 For Cash at $0.10 for a total of $325,000.00 (Rule 504)
Jan-98 125,000 For Cash at $1.00 to investors pursuant to Rule 505, for a total
of $125,000.00 (Rule 504)
7/98-9/98 1,650,000 For Cash at $0.10 to investors pursuant to Rule 504, for a total
of $165,000.00 (rule 145)
Oct-98 530,000 Issued Phase Two for Hydro-Air Technologies acquisition
(ss4[2])(Rule 145)
Oct-98 2,900,000 For Cash at $0.10 for a total of $290,000.00 to investors (Rule 504)
Dec-98 2,000,000 For Cash at $0.01 for a total of $20,000.00 (Rule 504)
- -------------------------------------------------------------------------------------------
10,625,400 Total Issued during 1998
- -------------------------------------------------------------------------------------------
11,903,911 Total Issued and outstanding through December 31, 1998
- -------------------------------------------------------------------------------------------
</TABLE>
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Now with respect to 1998, and subsequent events in 1999, we provide the
following additional disclosure. We believe that shares issued for the
acquisition of HAT and RECO have been discussed adequately in Item 1 of Part I,
but please do refer to Item 12 of Part III, especially for a discussion of the
internal arrangement among and between the Founders of HAT, with respect to
shares issued for that acquisition.
================================================================================
Date Title Exemption Price Amount Cash
Jan/Feb 1998 Common Stock Rule 504 0.10 3,250,000 325,000.00
- --------------------------------------------------------------------------------
Sold to sophisticated individual Investors, with pre-existing relationships with
management, for cash
================================================================================
Date Title Exemption Price Amount Cash
March 1998 Common Stock sec 4(2) 1.00 125,000 125,000.00
- --------------------------------------------------------------------------------
Sold to sophisticated individual Investors, with pre-existing relationships with
management, for cash
================================================================================
Date Title Exemption Price Amount Cash
7/98-9/98 Common Stock Rule 504 0.10 1,650,000 165,000
- --------------------------------------------------------------------------------
Sold to sophisticated individual Investors, with pre-existing relationships with
================================================================================
management, for cash
================================================================================
Date Title Exemption Price Amount Cash
10/98 Common Stock Rule 504 0.10 2,900,000 290,000
- --------------------------------------------------------------------------------
Sold to sophisticated individual Investors, with pre-existing relationships with
management, for cash
================================================================================
10
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Date Title Exemption Price Amount Cash
12/98 Common Stock Rule 504 0.01 2,000,000 200,000
- --------------------------------------------------------------------------------
Sold to sophisticated individual Investors, with pre-existing relationships with
management, for cash
================================================================================
(E) MARKET INFORMATION.
Our Common Stock is quoted Over-the-Counter on the Bulletin Board
("OTCBB"). The Company's trading symbol is XSEL. Based upon standard reporting
sources, the following information is provided:
<TABLE>
<CAPTION>
<S> <C> <C>
period high bid low bid
- ---------------------------
4th 1997 15.50 13.50
1st 1998 15.50 5.00
2nd 1998 13.50 5.00
3rd 1998 11.00 4.00
4th 1998 5.00 2.50
===========================
</TABLE>
The foregoing price information is based upon inter-dealer prices without
retail mark-up, mark-down or commissions and may not reflect actual
transactions.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
(A) PLAN OF OPERATION FOR THE NEXT TWELVE MONTHS. In general terms, our plan
of operation had been consistent throughout 1998 and 1999, to develop working
prototypes of our proprietary technologies, with the aim of arriving at a
commercially viable product. In general some working prototypes may be expected
in year 2000, and others in 2001. Although this report is filed for year 1998,
the information reported is substantially current to date of filing this Report.
Our priority is to commercialize at least one of the four most promising
projects (SPAESS, SunSpring, MECH and Solarec). As all four prototypes are being
worked on simultaneously, it is not yet clear which one will have a successful
working prototype first, if any. We feel the global potential of any one of
these four, if successful, is sufficiently large, to make further capital
formation attractive if, and when, we are in a position to disclose such
success.
(B) CASH REQUIREMENTS AND OF NEED FOR ADDITIONAL FUNDS. We have had no
revenues since inception. We have been funded by sophisticated investors.
Virtually all of the funding/working capital raised to date has been allocated
for research and development of our several prototype projects. We have
minimally sufficient funds to continue through year 2000. Each of our projects
is sufficiently partially or fully funded, sufficiently through year 2000. Our
minimally sufficient funds are not deemed adequate for the optimal requirements
of our Corporation. Due to the large number of potentially viable projects, we
are exploring methods of maximizing our potential by additional capital
formation. We are looking at converting one or more of our projects into its own
subsidiary, and preparing one or more initial public offerings. In any such
program, we would either retain majority control of the resulting pubic company
or companies; or we would distribute the shares of the new company to our
shareholders, pro-rata, in connection with a registered public offering of
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shares. We estimate that we need a million dollars optimally. We are also
exploring raising funds in an additional limited offering and/or private
placement to highly sophisticated accredited investors. We have not yet
determined what capital program is in the best interests of our shareholders.
(1) EXPECTED PURCHASE OR SALE OF PLANT AND SIGNIFICANT EQUIPMENT. None at
this time.
(2) EXPECTED SIGNIFICANT CHANGE IN THE NUMBER OF EMPLOYEES. None at this
time.
(C) DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
(1) OPERATIONS AND RESULTS FOR THE PAST TWO FISCAL YEARS AND. We were an
inactive corporation during 1997. For that reason comparison of 1998 operations
with 1997 inactivity would not provide any material insight. The discussion
which follows includes subsequent 1999 events and is substantial current.
(2) FUTURE PROSPECTS. The discussion which follows includes subsequent
1999 events and is substantially current.
HAT
Our business consists entirely of the activities of HAT and RECO. It
consists of scientific research and development of working prototypes of the
projects identified in Item 1 of this Part, Description of Business. HAT's
development team has made substantial progress in proving the viability of the
scientific and chemical processes which underlie HARPS and ACES. Full working
prototypes are not yet achieved. They are taking more time than originally
expected, for the reason that no existing turbines will work with the chemical
processes at low temperatures. It is therefore necessary for our HAT team to
develop a turbine generator of our own. As a result of HAT's work on HARPS and
ACES, the HAT team became aware of MECH, SPAESS and SunSpring, and has
re-allocated attention to these promising areas. Accordingly, management's
decision to focus on one or more of the projects is based on its evaluation of
which can become commercially viable earliest. We are focusing on MECH,
SunSpring, Solarec and SPAESS.
RECO
The RECO team reports that RECO is well underway developing the Solarec
prototype. This last project is on schedule and under budget.
ITEM 7. FINANCIAL STATEMENTS.
Please see the Exhibit Index found on page number 19 of this Report. The
financial statements listed therein, attached hereto and filed herewith are
incorporated herein by this reference as though fully set forth herein.
ITEM 8.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
The Remainder of this Page is Intentionally left Blank
12
<PAGE>
PART III
ITEM 9.
DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
The following information is provided concerning the Management of Issuer,
including all current directors and officers, and positions with the Company.
All directors were elected at the last meeting of shareholders on December 7,
1997, and will hold office until the next annual meeting of shareholders and
until their successors have been elected and qualified. The officers are elected
by the Board of Directors at the first meeting after each annual meeting of
shareholders and hold office until their successors are elected. The date of the
next annual meeting of the Company has not yet been set. The management of the
Company is presently provided on a day-to-day basis by personnel of the Company.
The overall management of the Company is presently under the direction and
control of its officers and directors.
The Board of Directors of this Company, Solar Energy Limited, consists of,
Dr. Melvin L. Prueitt, Joel S. Dumaresq, Norman Wareham, David Jones and Dr.
Reed Jensen.
The Board of Directors of the subsidiary, Hydro-Air Technologies, Inc.,
consists of Dr. Prueitt and David Jones, Leslie Speir, and Stanley Prueitt.
The Board of Directors of the subsidiary, Renewable Energy Corporation,
consists of Dr. Reed Jensen.
Dr. Melvin L. Prueitt, is the Chairman of the Board of Directors of Solar
Energy Limited, and President of our wholly-owned subsidiary, Hydro-Air
Technologies, Inc. Dr. Prueitt received his B.S. from the Brigham Young
University, his M.S. from the University of Arizona and his Ph.D. from the
University of New Mexico, all in physics. Following his graduation from the
University of Arizona, Dr. Prueitt joined the Los Alamos National Laboratory
where he remained until 1993. He has developed a method which combines dry air
and water under controlled conditions to release the energy of vaporization of
water. This method called HARPS (Hydro-Air Renewable Power System), uses the
energy developed thereby to drive a turbine and generator for the production of
electric power. HARPS produces no atmospheric pollutants, and, since it produces
large quantities of air, it can be used to clean particulates and some noxious
gases from polluted air by adding a wet scrubber to the exhaust air. Unlike
nuclear plants, it produces no radioactive materials that must be disposed of,
unlike coal-fired plants it requires no land-scarring strip mining, and unlike
oil-fired plants it does not contribute to the imbalance of foreign trade. Dr.
Prueitt, who holds 12 U.S. patents, was the first to determine the temperature
of lighting strikes. A prolific research scientist and writer, he has authored
three books and has been published in over 30 publications. He is listed in
Who=s Who in the West, Who=s Who in America Index, Men of Achievement,
Dictionary of International Biography and Contemporary Authors.
Joel S. Dumaresq, is the President of Solar Energy Limited. He is also CFO
of Nifco Synergy, Inc. developing financial controls and systems for Expert
Software Developer with operations in Canada, the United States and Mexico, and
was instrumental in securing $27 million Class 12 Software financing for the
company. Mr. Dumaresq was President of Westair Aviation, Inc., responsible for
re-organizing and re-financing this air ambulance company. His experience with
corporate finance, institutional equity sales and investment brokerage spans the
past decade.
13
<PAGE>
Norman Wareham is the our Secretary-Treasurer and Chief Financial Officer.
He has a comprehensive background in implementing information systems for public
and private companies, with particular expertise in financial management and tax
planning. He was president of Global Financial Corporation in the British West
Indies, and has been a public accountant for 25 years, owning two accounting
firms. Mr. Wareham is currently on the board of directors and is chief financial
officer for several public companies, including the ZMAX Corporation, and
Cybernet Internet Services International, Inc. He is also president of Wareham
Management Ltd., a private company engaged in management consulting for public
and private companies.
David Jones is one of our Directors who brings to the Company 17 years of
business experience resulting from starting and developing Jomar Systems, Inc.,
which specialized in the design and manufacture of nuclear assay equipment, and
32 years of systems development experience involving electronic circuit design,
mechanical apparatus design, application software and firmware design,
manufacturing and integration. In addition to publishing several articles on
nuclear instrumentation and methods, Mr. Jones holds a patent for "Method &
Apparatus for Controlling Multiple Motors". In 1992, David F. Jones was awarded
the "Excellence in Enterprise" award by the Los Alamos Economic Development
Corporation, the Los Alamos National Bank and the Los Alamos National
Laboratory.
Leslie Speir is a Directory of our Subsidiary, Hydro-Air Technologies. He
brings to that Company the solid technical experience in systems design, and in
heading up mechanical design teams. He is presently Senior Designer for the
Process Equipment Section, Merrick and Company, having participated in the Cold
Vacuum Drying Facility for the DOE Richland Operations Office, and he designed
equipment for the Pit-9 Waste Reclamation Characterization Facility. He enriches
the Company with specialized knowledge and experience in construction, operation
and maintenance of electro-mechanical and hydraulic systems, refrigeration
equipment, gas chromatographs, ultra high vacuum systems, and mass pectrometer
leak detectors, as well as engineering stress and dynamic drive train and basic
nuclear physics calculations and radiation exposure computations, heat flow
calculations and operation and maintenance of nuclear reactors including
pressurized water sodium cooled and gas cooled variation. He is also trained and
experienced in health physics surveying techniques and radiological hazards
control.
Stanley Prueitt is a Director of our Subsidiary, Hydro-Air Technologies. He
brings to that Company a range of business, management and personnel skills
along with solid experience in project controls and coordination. His executive
experience includes marketing, franchising, news director, and business
start-up, and the organization of public companies. He speaks, reads and writes
Scandinavian languages and is an experienced motivational speaker and conductor
of public seminars, as well as a very active member of the New Mexico Mounted
Patrol.
Dr. Reed Jensen. is a one of our Directors, and the sole Director of our
second subsidiary, Renewable Energy Corporation.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT. Based solely upon a review of
Forms 3, 4 and 5 furnished to the Company, the Company is not aware of any
person who at any time during the fiscal year ended December 31, 1998 was a
director, officer, or beneficial owner of more than ten percent of the Common
Stock of the Company, and who failed to file, on a timely basis, reports
required by Section 16(a) of the Securities Exchange Act of 1934 during such
fiscal year.
14
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION.
The Officers and Directors of Solar Energy Limited serve without
compensation at this time. No plan of compensation has been adopted or is under
consideration at this time. None of the Directors currently receives, or has
ever received, any salary from the Company in their capacities as such, and none
are expected to be compensated in their capacities as such. No officers are
expected to receive any compensation for their services. No officers or
directors are under an employment contract with the Company. Each Officer
presently devotes an insubstantial amount of time to the affairs of the Company.
The Company has no retirement, pension, profit sharing, or insurance or medical
reimbursement plans.
The Officers and Directors of the HAT Operating subsidiary are compensated
for their time on an hourly wage basis. The only full-time person is Dr.
Prueitt, whose compensation is set at $35.00 per hour. Compensation is not
specifically for duties as Officers and Directors as such, but generally for
participation in all their activities of the Operating Subsidiary.
Dr. Reed Jensen is the only officer/employee of RECO. He is its founder. He
receives no compensation at this time. 150,000 shares have been reserved for
employees of RECO, to be issued, if at all, pursuant to a plan not yet
developed. No plan will be developed until commercially viable products are
developed, and until this subsidiary achieves profitability.
We issued a total of 700,400 shares to or for HAT. We are required to issue
to or for HAT one additional share for each $2.00 of earnings generated by HAT,
as determined by Generally Accepted Accounting Principles (GAAP) to a maximum of
3,502,000 additional investment shares. There have not been revenues to date, so
that no further issuances have been made to or for HAT. There is no indication
when or if these shares or any of them will be earned.
This discussion is complicated by those internal arrangements among the HAT
shareholders, and their Hydro-Air Founders LLC. The HAT Founders LLC is a kind
of trust arrangement for the shares issued to it and the shares which may become
issuable to it, when and if HAT produces earnings. Their Founders Agreement sets
up a formula for distribution in proportion to their continuing participation.
Please see Item 7, next following, for more information and for citation to the
appropriate exhibits provided with this filing. In order to determine how the
HAT founders would distribute their Founders Agreement shares, the computation
would include factors such as hours and other participation not yet
ascertainable.
Since it is impossible to determine whether or whom shares may be issued in
the future, no tabular presentation of these multiple contingencies is
practicable, except to show the amount issued, that maximum amount which could
be issued, and the distribution by percentages of those shares, assuming the
maximum issuance, as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
HAT Shareholder Issued % If Issued
- ------------------------------------------------------
Melvin L. Prueitt 67,239 10 350,200
David Jones 33,619 5 175,100
Stanley D. Prueitt 33,619 5 175,100
Leslie Speir 33,619 5 175,100
Dana Hansen and Linda Hansen 14,008 2 70,040
Ara Lee Stevens 5,603 1 35,020
Baycove Investments, Inc. 140,080 20 700,400
Hydro-Air Founders, LLC 372,613 53 1,856,060
Total HAT 700,400 100 3,502,000
======================================================
</TABLE>
15
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
To the best of Issuer's knowledge and belief the following disclosure
presents, as of the date of this Report, December 31, 1998 and 1999, the total
beneficial security ownership of all Directors and Nominees, naming them, and by
all Officers and Directors as a group, without naming them, of Issuer, known to
or discoverable by Issuer, and the total security ownership of all persons,
entities and groups, known to or discoverable by Issuer, to be the beneficial
owner or owners of more than five percent of any voting class of Issuer's stock.
More than one person, entity or group could be beneficially interested in the
same securities, so that the total of all percentages may accordingly exceed one
hundred percent. Issuer has only one class of stock, issued and outstanding,
namely Common Voting Equity Shares. Please see Notes following Tables A and B.
TABLE A
CERTAIN BENEFICIAL OWNERS AND OWNERS OF 5% OR MORE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Name and Address of Beneficial Owner Share Share
Ownership % Attribution %
- ---------------------------------------------------------------------------------
Hydro-Air Founders (1) 90,653 0.69 700,400 5.37
1177 West Hastings #1818
Vancouver BC V6E 2K3
- ---------------------------------------------------------------------------------
Givigest Fiduciaria SA 800,000 6.13 0.00
Corso Elvezia 4
6900 Lugano Switzerland
- ---------------------------------------------------------------------------------
Diane Poole (2) 100,000 0.77 940,000 7.20
1177 West Hastings #1818
Vancouver BC V6E 2K3
- ---------------------------------------------------------------------------------
Baycove Investments, Ltd. (2) 490,000 3.75 940,000 7.20
1177 West Hastings #1818
Vancouver BC V6E 2K3
- ---------------------------------------------------------------------------------
Baycove Capital Corp. (2) 350,000 2.68 940,000 7.20
1177 West Hastings #1818
Vancouver BC V6E 2K3
Total Shares Issued and Outstanding 13,053,911 100.00 13,053,911 100.00
=================================================================================
</TABLE>
The Remainder of this Page is Intentionally left Blank
16
<PAGE>
TABLE B
OFFICERS AND DIRECTORS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Name and Address of Beneficial Owner Share Share
Ownership % Attribution %
- --------------------------------------------------------------------------------------------
Dr. Melvin L. Prueitt (1) 67,239 0.52 700,400 5.37
146A Estagate Drive
Los Alamos, New Mexico, 87544 Chairman/Director
- --------------------------------------------------------------------------------------------
Joel S. Dumaresq 20,000 0.15 20,000 0.00
#5 - 4360 Agar Drive
Richmond BC V7B 1A3 President/Director
- --------------------------------------------------------------------------------------------
Norman Wareham Secretary-Treasurer/Director -0- 0.00 -0- 0.00
1177 West Hastings #1818
Vancouver BC V6E 2K3
- --------------------------------------------------------------------------------------------
David M. Jones (1) 33,619 0.26 700,400 5.37
146A Estagate Drive
Los Alamos, New Mexico, 87544 Director
- --------------------------------------------------------------------------------------------
Dr. Reed Jensen 350,000 2.68
146A Estagate Drive
Los Alamos, New Mexico, 87544 Director
- --------------------------------------------------------------------------------------------
Leslie Speir (1) 33,619 0.26 700,400 5.37
1177 West Hastings #1818
Vancouver BC V6E 2K3 Director Subsidiary HAT
- --------------------------------------------------------------------------------------------
Stanley Prueitt (1) 33,619 0.26 700,400 5.37
1177 West Hastings #1818
Vancouver BC V6E 2K3 Director Subsidiary Hat
- --------------------------------------------------------------------------------------------
Officers and Directors as a Group 538,096 4.12 0.00
- --------------------------------------------------------------------------------------------
Total Shares Issued and Outstanding 13,053,911 100.00 13,053,911 100.00
============================================================================================
</TABLE>
(1) The Founders of HAT are the interested persons in the Hydro-Air Founders. In
addition to displaying the actual shares of each, the total of all is shown as
attributed to each. Please see Item 7, Relationships and Transactions, for more
information and disclosure.
(2) Rene Poole is the managing Director of the two Baycove entities. Diane Poole
is Rene Poole's daughter. These shareholders report that they are a single group
of related shareholders.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The founders of HAT are interested persons in the Hydro-Air Founders, LLC,
an entity created by the founders of HAT to determine the ultimate and phased
distribution of shares issued and to be issued to HAT for its acquisition by
this Issuer. Exhibit 6.3, the Founders Agreement, sets forth the terms and basis
for the calculations, and identifies the individuals included in the class of
Hydro-Air Founders.
Founders Agreement. Pursuant to that certain Founders Agreement, David F.
-------------------
Jones, Melvin L. Prueitt, Stanley Prueitt, and Leslie Speir (individually
referred to by name or as a "HAT Shareholder," and collectively referred to as
"HAT Shareholders") and Hydro-Air Technologies, Inc., ("HAT") a New Mexico
corporation (Corporation") agreed to a plan of organization, management and
17
<PAGE>
funding for the HAT and for ownership of their interest in the Solar Energy
Limited. The sum and substance of this agreement is that the "Founders Shares",
that is the shares issued to Hydro-Air Founders, LLC, would be distributed to
the Founders according to a formula keyed to their future participation,
measured by hours, and by specific kinds of tasks. This Founders agreement is
internal to the Founders of HAT and does not further concern Solar Energy
Limited, this registering corporation.
We issued a total of 700,400 shares to or for Hat. We are required to issue
to or for HAT one additional share for each $2.00 of earnings generated by HAT,
as determined by Generally Accepted Accounting Principles (GAAP) to a maximum of
3,502,000 additional investment shares. There have not been revenues to date, so
that no further issuances have been made to or for HAT. There is no indication
when or if these shares or any of them will be earned.
Voting Trust Agreement. The HAT shareholders also created a Voting Trust,
-------------------------
to hold and manage the shares covered by their Founders Agreement. This
agreement is also internal to the Founders and Shareholders of HAT, and does not
further concern Solar Energy Limited.
Stock Restriction Agreement. The HAT shareholders also created a private
------------------------------
stock restriction agreement, to limit the ability, as between the Founders and
Shareholders, to resell the shares of stock issued to them, in connection with
the acquisition of HAT by Solar Energy Limited.
The Founders Agreement, the Voting Agreement, and the Stock Restriction
Agreement effectively precede the acquisition by us of HAT. We are not a party
to these internal agreements of the HAT Founders and Shareholders.
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(A) FINANCIAL STATEMENTS. Please see Exhibit Index following.
(B) FORM 8-K REPORTS. None.
(C) EXHIBITS. Please see Exhibit Index following.
18
<PAGE>
EXHIBIT INDEX
FINANCIAL STATEMENTS AND DOCUMENTS
FURNISHED AS A PART OF THIS REGISTRATION STATEMENT
Each Exhibit is filed under an Exhibit Cover-page, and indexed by the
Exhibit Number, Description, and sequential page number of this Report.
- --------------------------------------------------------------------------------
Page
Exhibit Table Category / Description of Exhibit Number
- --------------------------------------------------------------------------------
[2] PLAN OF ACQUISITION, REORGANIZATION, ARRANGEMENT, LIQUIDATION OR
- --------------------------------------------------------------------------------
SUCCESSION
- --------------------------------------------------------------------------------
2.1 Articles of Merger and Plan of Reorganization 16
- --------------------------------------------------------------------------------
[3] ARTICLES OF INCORPORATION AND BY-LAWS
- --------------------------------------------------------------------------------
3.1 ARTICLES OF INCORPORATION 37
3.2 BY-LAWS 39
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
F-1 Audited Financial Statements for the years ended December 31, 1998 and
1997 48
================================================================================
19
<PAGE>
SUPPLEMENTARY INFORMATION TO BE FURNISHED WITH
REPORTS FILED PURSUANT TO SECTION 15(D) OF THE ACT BY
REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES
PURSUANT TO SECTION 12 OF THE ACT.
No annual report or proxy material has been sent to security holders.
20
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the individual capacities and on the
date indicated.
SOLAR ENERGY LIMITED
(formerly Salvage World, Inc. )
(originally Taurus Enterprises, Inc.)
Dated: March 15, 2000
_________/S/_________ ________/S/______
Dr. Melvin L. Prueitt Joel S. Dumaresq
Chairman/Director President/Director
_______/S/______ _______/S/_______
Norman Wareham David M. Jones
Secretary/Treasurer/Director Director
_________/S/_______
Dr. Reed Jensen
Director
21
<PAGE>
- --------------------------------------------------------------------------------
EXHIBIT 2.1
ARTICLES OF MERGER AND PLAN OF REORGANIZATION 3.1
- --------------------------------------------------------------------------------
22
<PAGE>
PLAN OF REORGANIZATION AND ACQUISITION
23
<PAGE>
PLAN OF REORGANIZATION AND ACQUISITION
SOLAR/HAT
FEBRUARY 1, 1998 PAGE 86
BY WHICH
SOLAR ENERGY LIMITED
(A DELAWARE CORPORATION)
SHALL ACQUIRE
HYDRO-AIR TECHNOLOGIES, INC.
(A NEW MEXICO CORPORATION)
BY MERGER WITH A WHOLLY-OWNED SUBSIDIARY
THIS PLAN OF REORGANIZATION AND ACQUISITION is made and dated this day of
February 1, 1998, by and between the above referenced corporations, and shall
become effective on "the Effective Date" as defined herein.
I. THE INTERESTED PARTIES
A. THE PARTIES TO THIS PLAN
1. SOLAR ENERGY LIMITED ("Solar"), 1177 W. Hastings, Vancouver BC V6E 2K3,
a Delaware Corporation, was duly incorporated in Delaware on July 24, 1997.
2. HYDRO-AIR TECHNOLOGIES, INC. ("HAT"), 161 Cascabel, Los Alamos NM
87544, was duly incorporated in New Mexico, on June 18, 1997.
3. NEWCO ("NewCo"), 146 A Eastgate, Los Alamos, New Mexico 87544, is or is
to be a wholly-owned subsidiary of Solar, organized or being organized under the
laws of New Mexico.
II. RECITALS
A. THE CAPITAL OF THE PARTIES:
1. THE CAPITAL OF SOLAR consists of 50,000,000 shares of common voting
stock of $.0001 par value authorized, of which 1,278,000 shares are issued and
outstanding and no shares are held in treasury. All outstanding shares of Solar
Common Stock have been duly issued and are validly outstanding, fully paid and
nonassessable. There are no Rights authorized, issued or outstanding with
respect to the capital stock of Solar. None of the shares of Solar's capital
stock has been issued in violation of the preemptive rights of any person.
2. THE CAPITAL OF HAT consists of 250,000 shares of common voting stock of
$.01 par value authorized, of which 125,000 shares are issued and outstanding
among a limited number of shareholders. All outstanding shares of capital stock
have been duly issued and are validly outstanding, fully paid and nonassessable.
The shares of Common Stock to be issued in connection with the Reorganization
contemplated herein shall have been duly authorized and, when issued in
accordance with the terms of this Reorganization Agreement and will be validly
issued, fully paid and nonassessable.
24
<PAGE>
3. THE CAPITAL OF NEWCO consists or shall consist of 100,000 shares of
common stock, no par value, of which 100,000 shares are or shall be issued and
outstanding and no shares are held in treasury. All outstanding shares of NewCo
Common Stock have or shall have been duly issued and validly outstanding, fully
paid and nonassessable as of the effective date hereof. There are and shall be
no Rights authorized, issued or outstanding with respect to the capital stock of
NewCo, all shares being owned by Solar. None of the shares of NewCo's capital
stock has or shall have been issued in violation of the preemptive rights of any
person.
B. THE BACKGROUND FOR THE ACQUISITION: Solar desires to acquire HAT and
the shareholders of HAT wish to be acquired by a public company in order to
attract necessary capital for development of its HARPS technology. The HAT
Shareholders want Solar, a public company, to acquire HAT in order to attract
the capital necessary for the development of HAT's HARPS technology. The boards
of directors of Solar and HAT have approved the acquisition of HAT by Solar
through the creation of NewCo by Solar and the merger of NewCo into HAT
("Merger"). For federal income tax purposes, it is intended that the Merger
qualify as a reorganization within the meaning of Section 368 of the Code.
C. THE BOARDS OF DIRECTORS of both Corporations respectively have
determined that it is advisable and in the best interests of each of them and
both of them to proceed with the acquisition by the Delaware Corporation, in
accordance with IRS ' 368 and pursuant to this Plan of Reorganization and
Acquisition.
D. THE SHAREHOLDERS OF SOLAR, the Delaware corporation, having met on
December 17, at a meeting of shareholders, duly called upon notice, approved the
acquisition, by affirmative vote 24,339,750, abstaining 1250 votes, and against
13,750, there being a total issued and outstanding of 24,451,250, and 24,354,750
shares present and voting, this agreement was approved and adopted by the Board
of Directors of Solar in a manner consistent with the laws of Delaware and the
constituent documents of the Solar.
E. APPROVAL BY HAT. HAT has all requisite corporate power and authority
to enter into and perform all of its obligations under this Reorganization
Agreement. Except as Previously Disclosed, the execution and delivery of this
Reorganization Agreement and the consummation of the transactions contemplated
hereby and thereby have been duly and validly authorized by all necessary
corporate action in respect thereof on the part of HAT, in accordance with the
laws of New Mexico and the constituent documents of HAT.
25
<PAGE>
III. PLAN OF ACQUISITION
A. Reorganization and Acquisition: The Delaware corporation and the New
Mexico corporation shall be reorganized, and Solar shall acquire HAT, in the
following manner and sequence:
1. MERGER OF NEWCO INTO HAT. As of the effective date hereof, NewCo shall
be merged with and into HAT, such that HAT shall survive the Merger without
interruption and NewCo shall cease to exist as an entity separate and apart from
HAT as its successor for all purposes.
2. ACQUISITION OF HAT BY SOLAR. Immediately following the Merger of NewCo
into HAT, Solar shall acquire, or shall be deemed to have acquired,all capital
stock of HAT, and HAT (the New Mexico Corporation surviving the Merger with
NewCo) shall be, become and remain, a wholly-owned subsidiary of Solar, the
public Delaware corporation.
B. EFFECTIVE DATE AND CLOSING: This Plan of Reorganization and Acquisition
shall become effective immediately upon approval and adoption by the parties
hereto, in the manner provided by the law of the places of incorporation and
constituent corporate documents, and the time of such effectiveness shall be
called the effective date hereof. Closing shall occur on the effective date.
Following Closing, Solar shall cause Articles of Merger and/or Share Exchange,
or the appropriate equivalent thereof in Delaware and in New Mexico, as provided
by the corporate laws of each State. The following provisions more specifically
define the conditions precedent to Closing.
A. Conditions Precedent of Solar, HAT and New Corporation. The
respective obligations of the parties to effect the Merger shall be subject to
satisfaction or waiver of the following conditions at or prior to the Closing
Date:
1. All corporate action necessary to authorize the execution,
delivery and performance of this Reorganization Agreement and consummation of
the transactions contemplated hereby and thereby shall have been duly and
validly taken.
2. The parties hereto shall have received all regulatory approvals
required or mutually deemed necessary in connection with the transactions
contemplated by this Reorganization Agreement, all notice periods and waiting
periods required after the granting of any such approvals shall have passed and
all conditions contained in any such approval required to have been satisfied
prior to consummation of such transactions shall have been satisfied.
26
<PAGE>
B. Conditions Precedent of Solar and New Corporation. The obligations
of Solar and New Corporation to effect the Merger shall be subject to
satisfaction of the following additional conditions:
1. The representations and warranties of HAT shall be true and
correct in all material respects as of the date of this Reorganization Agreement
and as of the Closing Date as though made on and as of the Closing Date (or on
the date when made in the case of any representation and warranty which
specifically relates to an earlier date), except as otherwise contemplated by
this Reorganization Agreement or consented to in writing by New Corporation.
2. HAT shall have in all material respects performed all
obligations and complied with all covenants required by this Reorganization
Agreement.
C. Conditions Precedent of HAT. The obligations of HAT to effect the
Merger shall be subject to satisfaction of the following additional conditions:
1. The representations and warranties of Solar and New Corporation
shall be true and correct in all material respects as of the date of this
Reorganization Agreement and as of the Closing Date as though made on and as of
the Closing Date (or on the date when made in the case of any representation and
warranty which specifically relates to an earlier date), except as otherwise
contemplated by this Reorganization Agreement or consented to in writing by HAT.
2. Solar, New Corporation and their subsidiaries shall have in all
material respects performed all obligations and complied with all covenants
required by this Reorganization Agreement and the Agreement of Merger.
C. SURVIVING CORPORATION: Both the Solar and HAT corporations shall
survive the Reorganization herein contemplated and shall continue to be
governed by the laws of their respective State of Incorporation; but NewCo,
having merged into HAT immediately preceding the effective acquisition of HAT by
Solar, NewCo shall not survive this Reorganization.
Rights of Dissenting Shareholders: HAT shall be responsible for the for the
rights of dissenting shareholders, as between NewCo and HAT, pursuant to the
laws of New Mexico, if any there be, and Solar shall be responsible for the
rights of dissenting shareholders in any and all respects pursuant to the laws
of Delaware.
a. Service of Process in Delaware: the Resulting Corporation may be served
with process in Delaware in any proceeding for the enforcement of the rights of
a dissenting shareholder, if any, pursuant to any extent required by the laws
thereof. The President of the Nevada corporation hereby irrevocably appoints the
Secretary of State of Delaware as agent to accept service of process for the
Nevada corporation with respect to any such proceeding to the extent required by
the laws thereof.
27
<PAGE>
b. Agent for Mailing Process to the New Mexico corporation: Both
Corporations hereby further comply with the laws of Delaware by designating a
person to whom process served upon the Secretary of that State may be forwarded
and mailed: William Stocker, Special Counsel for Service of Process, P.O. Box
4980, Laguna Beach CA 92652.
D. SURVIVING ARTICLES OF INCORPORATION: The Articles of Incorporation of
Solar and HAT shall remain in full force and effect, unchanged.
E. SURVIVING BY-LAWS: The By-Laws of HAT and Solar shall remain in full
force and effect, unchanged
F. CONVERSION OF OUTSTANDING STOCK: Solar and HAT Shareholders desire to
create an orderly process for the issuance and progressive release of common
stock to or for the benefit of the HAT Shareholders. The HAT Shareholders will
receive subject to this Reorganization Agreement, in the aggregate, shares of
Solar equal to 40% of the resulting total issued and outstanding stock of Solar,
on a fully-diluted basis, following certain designated capital formation stages.
However, the total number of Solar shares which will be issued to the HAT
Shareholders to meet this obligation is undeterminable at this time.
Accordingly, each and every share of HAT shall be converted into new investment
shares of Solar in accordance with a formula and arrangement as follows.
1. FORTHWITH upon the effective consummation of the Acquisition of HAT by
Solar, Solar shall issue to the HAT Shareholders 20% of 40% of the shares of
Solar outstanding at that time, being 8% of 1,278,000 shares, or 102,240 shares
of the common stock of Solar.
2. THE REMAINING 80% of 40% will be issued as provided in this paragraph.
Solar will issue and distribute to HAT Shareholders additional new investment
shares of Solar in phases based on the following formula: one share of Solar
stock for each $1.50 US (One U.S. Dollar and Fifty Cents) of earnings generated
by HAT, as determined by Generally Accepted Accounting Principles (GAAP) as
provided in the offer.
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3. THE CERTAIN DESIGNATED CAPITAL FORMATION STAGES are identified as
placements to investors, if and when placed, as follows:
(a) A further 10,000,000 shares at $0.10 shares to be offered and issued
pursuant to Rule 504;
(b) A further 2,000,000 at $0.50 shares to be offered and pursuant to Rule
505 or 506 of Regulation D; and, finally
(c) Solar will employ its best efforts to place an additional 1,000,000
shares at not less than $2.00 per share.
(d) As to matters between Solar and HAT, as Parent and Subsidiary,
following and not affecting closing of this transaction, the parties have made
certain other internal commitments, by separate written agreement of even date
herewith. That certain Agreement is entitled Plan Of Internal Structure and
Funding.
G. FURTHER ASSURANCE, GOOD FAITH AND FAIR DEALING: the Directors of each
Company shall and will execute and deliver any and all necessary documents,
acknowledgments and assurances and to do all things proper to confirm or
acknowledge any and all rights, titles and interests created or confirmed
herein; and both companies covenant expressly hereby to deal fairly and in good
faith with each other and each others shareholders.
IV. REPRESENTATIONS AND WARRANTIES OF SOLAR.
Solar hereby represents and warrants to NewCo, HAT and HAT Shareholders as
follows:
A. Capital Structure of Solar. The authorized capital stock of Solar
consists of 50,000,000 shares of common voting stock, $.0001 par value ("Solar
Common Stock"), of which 1,278,000 shares are issued and outstanding and no
shares are held in treasury. All outstanding shares of Solar Common Stock have
been duly issued and are validly outstanding, fully paid and nonassessable.
There are no Rights authorized, issued or outstanding with respect to the
capital stock of Solar. None of the shares of Solar's capital stock has been
issued in violation of the preemptive rights of any person.
B. Organization, Standing and Authority of Solar. Solar is a duly
organized corporation, validly existing and in good standing under the laws of
the State of Delaware with full corporate power and authority to carry on its
business as now conducted and is duly qualified to do business in the states of
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the United States and foreign jurisdictions where its ownership or leasing of
property or the conduct of its business requires such qualification and where
failure to so qualify would have a material adverse effect on the financial
condition, results of operations, business or prospects of Solar on a
consolidated basis.
C. Authorized and Effective Agreement.
1. Solar has all requisite corporate power and authority to enter
into and perform all of its obligations under this Reorganization Agreement.
The execution and delivery of this Reorganization Agreement, and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized by all necessary corporate action in respect thereof on
the part of Solar.
2. This Reorganization Agreement constitutes a legal, valid and
binding obligation of Solar, enforceable against it in accordance with its
terms, subject as to enforceability, to bankruptcy, insolvency and other laws of
general applicability relating to or affecting creditors' rights and to general
equity principles. Solar is not required to file Quarterly, Annual or Current
reports, pursuant to any provision of the Securities Exchange Act of 1934, and
is not in default of any filing requirement required by the Securities Laws.
Solar Energy's public disclosure documents are reasonably current with respect
to Rule 15c2-11 adopted by the Securities and Exchange Commission, provided that
this transaction has not yet been reported, and shall be reported following the
consummation hereof.
3. Neither the execution and delivery of this Reorganization
Agreement in the case of Solar, nor consummation of the transactions
contemplated hereby or thereby, nor compliance by Solar with any of the
provisions hereof or thereof shall (i) conflict with or result in a breach of
any provision of the articles, charter, code of regulations or by-laws of Solar
or any Solar Subsidiary, (ii) constitute or result in a breach of any term,
condition or provision of, or constitute a default under, or give rise to any
right of termination, cancellation or acceleration with respect to, or result in
the creation of any lien, charge or encumbrance upon any property or asset of
Solar or any Solar Subsidiary pursuant to, any note, bond, mortgage, indenture,
license, agreement or other instrument or obligation, or (iii) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to Solar
or any Solar Subsidiary.
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V. REPRESENTATIONS AND WARRANTIES OF NEWCO.
NewCo hereby represents and warrants to HAT and Solar as follows:
A. Capital Structure of NewCo. The authorized capital stock of NewCo
consists of 100,000 shares of common stock, no par value ("NewCo Common Stock"),
of which 100,000 shares are issued and outstanding and no shares are held in
treasury. All outstanding shares of NewCo Common Stock have been duly issued
and are validly outstanding, fully paid and nonassessable. There are no Rights
authorized, issued or outstanding with respect to the capital stock of NewCo
except as Previously Disclosed. None of the shares of NewCo's capital stock has
been issued in violation of the preemptive rights of any person.
B. Organization, Standing and Authority of NewCo. NewCo is a duly
organized corporation, validly existing and in good standing under the laws of
the State of New Mexico with full corporate power and authority to carry on its
business.
C. No NewCo Subsidiaries. NewCo does not own, directly or indirectly,
any outstanding capital stock or other voting securities of any corporation or
other organization except for Solar.
D. Authorized and Effective Agreement.
1. NewCo has all requisite corporate power and authority to enter
into and perform all of its obligations under this Reorganization Agreement.
The execution and delivery of this Reorganization Agreement and the consummation
of the transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action in respect thereof on the part of
NewCo.
2. This Reorganization Agreement constitutes a legal, valid and
binding obligations of NewCo, enforceable against it in accordance with its
terms, subject as to enforceability, to bankruptcy, insolvency and other laws of
general applicability relating to or affecting creditors' rights and to general
equity principles.
3. Neither the execution and delivery of this Reorganization
Agreement, in the case of NewCo, nor consummation of the transactions
contemplated hereby or thereby, nor compliance by NewCo with any of the
provisions hereof or thereof shall (i) conflict with or result in a breach of
any provision of the articles, charter, code of regulations or by-laws of NewCo,
(ii) constitute or result in a breach of any term, condition or provision of, or
constitute a default under, or give rise to any right of termination,
cancellation or acceleration with respect to, or result in the creation of any
lien, charge or encumbrance upon any property or asset of NewCo pursuant to, any
note, bond, mortgage, indenture, license, agreement or other instrument or
obligation, or (iii) violate any order, writ, injunction, decree, statute, rule
or regulation applicable to NewCo or any NewCo Subsidiary.
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VI. REPRESENTATIONS AND WARRANTIES OF HAT.
HAT hereby represents and warrants to NewCo and Solar as follows:
A. Capital Structure of HAT. The capital of HAT consists of 250,000
authorized shares of no par value common voting stock, of which 100,000 shares
are issued and outstanding. All outstanding shares of capital stock have been
duly issued and are validly outstanding, fully paid and nonassessable. The
shares of Common Stock to be issued in connection with the Merger have been duly
authorized and, when issued in accordance with the terms of this Reorganization
Agreement and will be validly issued, fully paid and nonassessable.
B. Organization, Standing and Authority of HAT. HAT is a duly
organized corporation, validly existing and in good standing under the laws of
the State of New Mexico, with full corporate power and authority to carry on its
business.
C. Authorized and Effective Agreement.
1. HAT has all requisite corporate power and authority to enter
into and perform all of its obligations under this Reorganization Agreement.
Except as Previously Disclosed, the execution and delivery of this
Reorganization Agreement and the consummation of the transactions contemplated
hereby and thereby have been duly and validly authorized by all necessary
corporate action in respect thereof on the part of HAT.
2. Except as Previously Disclosed, this Reorganization Agreement
constitutes a legal, valid and binding obligations of HAT, enforceable in
accordance with its respective terms subject, as to enforceability, to
bankruptcy, insolvency and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
3. Neither the execution and delivery of this Reorganization
Agreement nor consummation of the transactions contemplated hereby or thereby,
nor compliance by HAT with any of the provisions hereof or thereof shall (i)
conflict with or result in a breach of any provision of the articles or by-laws
of HAT, (ii) constitute or result in a breach of any term, condition or
provision of, or constitute a default under, or give rise to any right of
termination, cancellation or acceleration with respect to, or result in the
creation of any lien, charge or encumbrance upon any property or asset of HAT
pursuant to, any note, bond, mortgage, indenture, license, agreement or other
instrument or obligation, or (iii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to HAT.
VII. TERMINATION, WAIVER AND AMENDMENT.
A. Termination. This Reorganization Agreement and the Agreement of
Merger may be terminated:
1. At any time on or prior to the Effective Date, by the mutual consent in
writing of the parties hereto.
2. At any time on or prior to the Closing Date, by HAT in writing, if Solar, New
Corporation or any Solar or New Corporation Subsidiary has, or by Solar or New
Corporation in writing, if HAT has, in any material respect, breached (i) any
covenant or agreement contained herein or in the Agreement of Merger or (ii) any
representation or warranty contained herein, and in either case if such breach
has not been cured by the earlier of 30 days after the date on which written
notice of such breach is given to the party committing such breach or the
Closing Date.
3. On the Closing Date, by any party hereto in writing, if any of the conditions
precedent set forth above with respect to such party have not been satisfied or
fulfilled.
B. Effect of Termination. In the event this Reorganization Agreement and the
Agreement of Merger are terminated, this Agreement and the Agreement of Merger
shall become void and have no effect, except that (i) the provisions relating to
confidentiality and expenses shall survive any such termination and (ii) a
termination shall not relieve the breaching party from liability for an uncured
willful breach of such covenant or agreement giving rise to such termination.
C. Survival of Representations, Warranties and Covenants. All representations,
warranties and covenants in this Reorganization Agreement and the Agreement of
Merger or in any instrument delivered pursuant hereto or thereto shall expire
on, and be terminated and extinguished at, the Effective Date other than
covenants that by their terms are to survive or be performed after the Effective
Date, provided that no such representations, warranties or covenants shall be
deemed to be terminated or extinguished so as to deprive HAT, Solar or New
Corporation (or any director, officer or controlling person thereof) of any
defense in law or equity which otherwise would be available against the claims
of any person, including, without limitation, any shareholder or former
shareholder of either HAT, Solar or New Corporation, the aforesaid
representations, warranties and covenants being material inducements to the
consummation by HAT and New Corporation of the transactions contemplated herein.
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D. Amendment or Supplement. This Reorganization Agreement may be amended or
supplemented at any time by mutual agreement of the parties hereto.
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A. MISCELLANEOUS PROVISIONS
A. Expenses. Each party hereto shall bear and pay all costs and
expenses incurred by it in connection with the transactions contemplated in this
Reorganization Agreement, including fees and expenses of its own financial
consultants, accountants and counsel.
B. Entire Agreement. This Reorganization Agreement and Agreement of
Merger contain the entire agreement between the parties with respect to the
transactions contemplated hereunder and thereunder and supersede all prior
arrangements or understandings with respect thereto, written or oral, other than
documents referred to herein or therein, as to all matters affecting closing. As
to matters between Solar and HAT, as Parent and Subsidiary, following and not
affecting closing of this transaction, the parties have made certain other
internal commitments, by separate written agreement of even date herewith. That
certain Agreement is entitled Plan Of Internal Structure and Funding. The terms
and conditions of this Reorganization Agreement and the Agreement of Merger
shall inure to the benefit of and be binding upon the parties hereto and thereto
and their respective successors. Nothing in this Reorganization Agreement or the
Agreement of Merger, expressed or implied, is intended to confer upon any party,
other than the parties hereto and thereto, and their respective successors, any
rights, remedies, obligations or liabilities.
C. No Assignment. No party hereto may assign any of its rights or
obligations under this Reorganization Agreement to any other person.
D. Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered personally
or sent by facsimile transmission or overnight express or by registered or
certified mail, postage prepaid, addressed as follows:
If to New Corporation:
New Corporation
146 A Eastgate
Los Alamos, New Mexico 87544
If to Solar:
Solar Energy Limited
1177 W. Hastings
Vancouver, British Columbia V6E2K3
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If to HAT:
Hydro Air Technologies, Inc.
146 A Eastgate
Los Alamos, New Mexico 87544
E. Captions. The captions contained in this Reorganization Agreement
are for reference purposes only and are not part of this Reorganization
Agreement.
F. Counterparts. This Reorganization Agreement may be executed in any
number of counterparts, and each such counterpart shall be deemed to be an
original instrument, but all such counterparts together shall constitute but one
agreement.
G. Governing Law. The parties acknowledge that both they and their
counsel have reviewed and revised this agreement and that the normal rule of
construction shall not be applied to cause the resolution of any ambiguities
against any party presumptively. This Reorganization Agreement shall be governed
by and construed in accordance with the laws of the State of New Mexico
applicable to agreements made and entirely to be performed within such
jurisdiction, except to the extent federal law may be applicable, and except to
the extent that the laws of Delaware may take precedence as a matter of Delaware
Corporate Law.
H. Arbitration. The Parties to this agreement have no wish to engage
in costly or lengthy litigation with each other. Accordingly, any and all
disputes which the parties cannot resolve by agreement or mediation, shall be
submitted to binding arbitration under the rules and auspices of the American
Arbitration Association, as a further incentive to avoid disputes, each party
shall bear its own costs, with respect thereto, and with respect to any
proceedings in any court brought to enforce or overturn any arbitration award.
This provision is expressly intended to discourage litigation and to encourage
orderly, timely and economical resolution of any disputes which may occur.
I. Severability. If any provision of this Letter Agreement or the
application thereof to any person or situation shall be held invalid or
unenforceable, the remainder of the Agreement and the application of such
provision to other persons or situations shall not be effected thereby but shall
continue valid and enforceable to the fullest extent permitted by law.
J. Waiver. No waiver by any party of any occurrence or provision
hereof shall be deemed a waiver of any other occurrence or provision.
The remainder of this page intentionally left blank.
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EXECUTION
This Plan of Reorganization and Merger is executed on behalf of each
Company by its duly authorized representatives, and attested to, pursuant to the
laws of its respective place of incorporation and in accordance with its
constituent documents.
HYDRO-AIR TECHNOLOGIES, INC. SOLAR ENERGY LIMITED
(A NEW MEXICO CORPORATION) (A DELAWARE CORPORATION)
by by
_____/s/__________ ________/s/_______
Melvin L. Prueitt Joel M. Dumaresq
President President
_________/s/________ _____/s/________
Stanley D. Prueitt Norman Wareham
Secretary Secretary
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ADDITIONAL EXECUTION
_________/s/_____________ _________/s/________
Melvin L. Prueitt David Jones
_____/s/_______ _______/s/_______
Leslie Speir Stanley Prueitt
______/s/_____ ______/s/______
Dana Hanson Linda Hanson
Hydro-Air Founders, LLC
By_______/s/__________ ______/s/______
Melvin L. Prueitt Ora Stevens
Manager
Baycove Investments, Inc.
/s/
By_______________________
Nelson Skalbania
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- --------------------------------------------------------------------------------
EXHIBIT 3.1
ARTICLES OF INCORPORATION
- --------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------
CERTIFICATE OF INCORPORATION
OF
Solar Energy Limited
- --------------------------------------------------------------------------------
FIRST, The name of this corporation is Solar Energy Limited.
SECOND: Its registered office in the State of Delaware is to be located at
1313 N. Market Street, Wilmington DE 19801-1151, County of New Castle. The
registered agent in charge thereof is The Company Corporation, address "same as
above."
THIRD: The nature of the business and, the objects and purposes proposed to
be transacted, promoted and carried on, are to do any or all the things herein
mentioned as fully and to the same extent as natural persons might or could do,
and in any part of the world, vis:
The purpose of the corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.
FOURTH: The amount of the total authorized capital stock of this
corporation is divided into 50,000,000 shares of stock at .0001 par value.
FIFTH: The name and mailing address of the incorporator is as follows:
Regina Cephas, 131 N. Market St., Wilmington DE 19801-1151.
SIXTH: The Directors shall have power to make and to alter or amend the
By-Laws; to fix the amount to be reserved as working capital, and to authorize
and cause to be executed, mortgages and liens without limit as to the amount,
upon the property and franchise of the Corporation.
With the consent in writing, and pursuant to a vote of the holders of a
majority of the capital stock issued and outstanding, the Directors shall have
the authority to dispose, in any manner, of the whole property of this
corporation.
The By-Laws shall determine whether and to what extent the accounts and
books of this corporation, or any of them shall be open to the inspection of the
stockholder; and no stockholder shall have any right of inspecting any account,
or book or document of this Corporation, except as conferred by the law of the
By-Laws, or by resolution of the stockholders.
The stockholders and directors shall have power to hold their meetings and
keep the books, documents and papers of the Corporation outside of the State of
Delaware, at such places as may be from time to time designated by the By-Laws
or by resolution of the stockholders or directors, except as otherwise required
by the laws of Delaware.
SEVENTH: Directors of the corporation shall not be liable to either the
corporation or its stockholders for monetary damages for a breach involves: (1)
a director's duty of loyalty to the corporation of its stockholders; (2) acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law; (3) liability for unlawful payments of dividends or unlawful
stock purchase or redemption by the corporation; or (4) a transaction from which
the director derived an improper personal benefit.
I, THE UNDERSIGNED, for the purpose of forming a corporation under the laws
of the State of Delaware, make, file and record this Certificate and do certify
that the facts herein are true; and I have accordingly hereunto set my hand.
DATED: July 24, 1997 /s/
------------------
Regina Cephas
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- --------------------------------------------------------------------------------
EXHIBIT 3.2
BY-LAWS
- --------------------------------------------------------------------------------
BY-LAWS
OF
SOLAR ENERGY, LIMITED
ARTICLE I - OFFICES
-------------------
1. REGISTERED OFFICE AND AGENT
The registered office of the corporation shall be maintained at
112C Longview Drive
Los Alamos, NM 87544
The registered office or the registered agent, or both, may be changed by
resolution of the board of directors, upon filing the statement required by law.
2. PRINCIPAL OFFICE
The principal office of the corporation shall be at
112C Longview Drive
Los Alamos, NM 87544
provided that the board of directors shall have power to change the location of
the principal office in its discretion.
3. OTHER OFFICES
The corporation may also maintain other offices at such places within or
without the State of Delaware as the board of directors may from time to time
appoint or as the business of the corporation may require.
ARTICLE II - SHAREHOLDERS
-------------------------
1. PLACE OF MEETING
All meetings of shareholders, both regular and special, shall be held
either at the principal office of the corporation in Delaware or at such other
places, either within or without the state, as shall be designated in the notice
of the meeting.
2. ANNUAL MEETING
The annual meeting of shareholders for the election of directors and for
the transaction of all other business which may come before the meeting shall be
held on the 15th day of April in each year (if not a legal holiday and, if a
legal holiday, then on the next business day following) at the hour specified in
the notice of meeting.
If the election of directors shall not be held on the day above designated
for the annual meeting, the board of directors shall cause the election to be
held as soon thereafter as conveniently may be at a special meeting of the
shareholders called for the purpose of holding such election.
The annual meeting of shareholders may beheld for any other purpose in
addition to the election of directors which may be specified in a notice of such
meeting. The meeting may be called by resolution of the board of directors or by
a writing filed with the secretary signed either by a majority of the directors
or by shareholders owning a majority in amount of the entire capital stock of
the corporation issued and outstanding and entitled to vote at any such meeting.
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3. NOTICE OF SHAREHOLDERS' MEETING
A written or printed notice stating the place, day and hour of the meeting,
and in case of a special meeting, the purpose or purposes for which the meeting
is called, shall be delivered not less than ten (10) more than fifty (50) days
before the date of the meeting, either personally or by mail, by or at the
direction of the president, secretary or the officer or person calling the
meeting, to each shareholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail addressed to the shareholder at his address as it appears on the
share transfer books of the corporation, with postage thereon prepaid.
4. VOTING OF SHARES
Each outstanding share with voting privileges, regardless of class, shall
be entitled to one vote on each matter submitted to a vote at a meeting of
shareholders, except to the extent that the voting rights of the shares of any
class or classes are limited or denied by the Articles of Incorporation or by
law.
Treasury shares, shares of its own stock owned by another corporation the
majority of the voting stock of which is owned or controlled by this
corporation, and shares of its own stock held by this corporation in a fiduciary
capacity shall not be voted, directly or indirectly, at any meeting, and shall
not be counted in determining the total number of outstanding shares at any
given time.
A shareholder may vote either in person or by proxy executed in writing by
the shareholder or by his duly authorized attorney-in-fact. No proxy shall be
valid after eleven (11) months from the date of its execution unless otherwise
provided in the proxy. Each proxy shall be revocable unless expressly provided
therein to be irrevocable, and in no event shall it remain irrevocable for a
period of more than eleven (11) months.
At each election for directors every shareholder entitled to vote at such
election shall have the right to vote, in person or by proxy, the number of
shares owned by him for as many persons as there are directors to be elected and
for whose election he has a right to vote, or unless prohibited by the articles
of incorporation, to cumulate his votes by giving one candidate as many votes as
the number of such directors multiplied by the number of his shares shall equal,
or by distributing such votes on the same principal among any number of such
candidates. Any shareholder who intends to cumulate his votes as herein
authorized shall give written notice of such intention to the secretary of the
corporation on or before the day preceding the election at which such
shareholder intends to cumulate his votes.
5. CLOSING TRANSFER BOOKS AND FIXING RECORD DATE
For the purpose of determining shareholders entitled to notice of or to
vote at any meeting of shareholders or any adjournment thereof, or entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the board of directors may provide
that the share transfer books shall be closed for a stated period not exceeding
fifty (50) days. If the stock transfer books shall be closed for the purpose of
determining shareholders entitled to notice of or to vote at a meeting of
shareholders, such books shall be closed for at least ten (10) days immediately
preceding such meeting. In lieu of closing the stock transfer books, the by-laws
or in the absence of an applicable by-law the board of directors, may fix in
advance a date as the record date for any such determination of shareholders,
not later than fifty (50) days and, in case of a meeting of shareholders, not
earlier than ten (10) days prior to the date on which the particular action,
requiring such determination of shareholders is to be taken. If the share
transfer books are not closed and no record date is fixed for the determination
of shareholders entitled to notice of or to vote at a meeting of shareholders,
or shareholders entitled to receive payment of a dividend, the date on which
notice of the meeting is mailed or the date on which the resolution of the board
of directors declaring such dividend is adopted, as the case may be, shall be
the record date for such determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof, except where the determination has been made through the closing of
share transfer books and the stated period of closing has expired.
6. QUORUM OF SHAREHOLDERS
Unless otherwise provided in the articles of incorporation, the holders of
a majority of the shares entitled to vote, represented in person or by proxy,
shall constitute a quorum at a meeting of shareholders, but in no event shall a
quorum consist of the holders of less than one-third (1/3) of the shares
entitled to vote and thus represented at such meeting. The vote of the holders
of a majority of the shares entitled to vote and thus represented at a meeting
at which a quorum is present shall be the act of the shareholders' meeting,
unless the vote of a greater number is required by law, the articles of
incorporation of the by-laws.
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7. VOTING LISTS
The officer or agent having charge of the share transfer books for the
shares of the corporation shall make, at least ten (10) days before each meeting
of shareholders, a complete list of the shareholders entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical order, with the
address of and the number of shares held by each, which list, for a period of
ten (10) days prior to such meeting, shall be kept on file at the registered
office of the corporation and shall be subject to inspection by any shareholder
at any time during usual business hours. Such list shall also be produced and
kept open at the time and place of the meeting and shall be subject to the
inspection of any shareholder during the whole time of the meeting. The original
share transfer books shall be prima-facie evidence as to who are the
shareholders entitled to examine such list or transfer books or to vote any
meeting of shareholders.
8. ACTION BY CONSENT OF SHAREHOLDERS
In lieu of a formal meeting, action may be taken by unanimous consent of
the shareholders.
ARTICLE III - DIRECTORS
-----------------------
1. BOARD OF DIRECTORS
The business and affairs of the corporation shall be managed by a board of
directors. Directors need not be residents of the State of Delaware nor be
shareholders in the corporation.
2. NUMBER AND ELECTION OF DIRECTORS
The number of directors shall be 3 provided that the number may be
increased or decreased from time to time by an amendment to these by-laws, but
no decrease shall have the effect of shortening the term of any incumbent
director. At each annual election the shareholders shall elect directors to hold
office until the next succeeding annual meeting.
3. VACANCIES
Any vacancy occurring in the board of directors may be filled by the
affirmative vote of the remaining directors, though less than a quorum of the
board. A director elected to fill a vacancy shall be elected for the unexpired
term of his predecessor in office. Any directorship to be filled by reason of an
increase in the number of directors shall be filled by election at an annual
meeting or at a special meeting of shareholders called for that purpose.
4. QUORUM OF DIRECTORS
A majority of the board of directors shall constitute a quorum for the
transaction of business. The act of the majority of the directors present at a
meeting at which a quorum is present shall be the act of the board of directors.
5. ANNUAL MEETING OF DIRECTORS
Within thirty days after each annual meeting of shareholders the board of
directors elected at such meeting shall hold an annual meeting at which they
shall elect officers and transact such other business as shall come before the
meeting.
6. REGULAR MEETING OF DIRECTORS
A regular meeting of the board of directors may be held at such time as
shall be determined from time to time by resolution of the board of directors.
7. SPECIAL MEETINGS OF DIRECTORS
The secretary shall call a special meeting of the board of directors
whenever requested to do so by the president or by two directors. Such special
meeting shall be held at the time specified in the notice of meeting.
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<PAGE>
8. PLACE OF DIRECTORS' MEETINGS
All meetings of the board of directors (annual, regular or special) shall
be held either at the principal office of the corporation or at such other
place, either within or without the State of Delaware, as shall be specified in
the notice of meeting.
9. NOTICE OF DIRECTORS' MEETINGS
All meetings of the board of directors (annual, regular or special) shall
be held upon five (5) days' written notice stating the date, place and hour of
meeting delivered to each director either personally or by mail or at the
direction of the president or the secretary or the officer or person calling the
meeting.
In any case where all of the directors execute a waiver of notice of the
time and place of meeting, no notice thereof shall be required, and any such
meeting (whether annual, regular or special) shall be held at the time and at
the place (either within or without the State of Delaware) specified in the
waiver of notice. Neither the business to be transacted at, nor the purpose of,
any annual, regular or special meeting of the board of directors need be
specified in the notice or waiver of notice of such meeting.
10. COMPENSATION
Directors, as such, shall not receive any stated salary for their services,
but by resolution of the board of directors a fixed sum and expenses of
attendance, if any, may be allowed for attendance at each annual, regular or
special meeting of the board, provided, that nothing herein contained shall be
construed to preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
11. ACTION BY CONSENT OF DIRECTORS
In lieu of a formal meeting, action may be taken by unanimous written
consent of the directors.
ARTICLE IV - OFFICERS
---------------------
1. OFFICERS ELECTION
The officers of the corporation shall consist of a president, one or more
vice-presidents, a secretary, and a treasurer. All such officers shall be
elected at the annual meeting of the board of directors provided for in Article
III, Section 5. If any office is not filled at such annual meeting, it may be
filled at any subsequent regular or special meeting of the board. The board of
directors at such annual meeting, or at any subsequent regular or special
meeting may also elect or appoint such other officers and assistant officers and
agents as may be deemed necessary. Any two or more offices may be held by the
same person, except the offices of president and secretary.
All officers and assistant officers shall be elected to serve until the
next meeting of directors (following the next annual meeting of shareholders) or
until their successors are elected; provided, that any officer or assistant
officer elected or appointed by the board of directors may be removed with or
without cause at any regular or special meeting of the board whenever in the
judgment of the board of directors the best interests of the corporation will be
served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Any agent appointed shall serve for
such term, not longer than the next annual meeting of the board of directors, as
shall be specified, subject to like right of removal by the board of directors.
2. VACANCIES
If any office becomes vacant for any reason, the vacancy may be filled by
the board of directors.
3. POWER OF OFFICERS
Each officer shall have, subject to these by-laws, in addition to the
duties and powers specifically set forth herein, such powers and duties as are
commonly incident to this office and such duties and powers as the board of
directors shall from time to time designate. All officers shall perform their
duties subject to the directions and under the supervision of the board of
directors. The president may secure the fidelity of any and all officers by bond
or otherwise.
43
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4. PRESIDENT
The president shall be the chief executive officer of the corporation. He
shall preside at all meetings of the directors and shareholders. He shall see
that all orders and resolutions of the board are carried out, subject however,
to the right of the directors to delegate specific powers, except such as may be
by statute exclusively conferred on the president, to any other officers of the
corporation.
He or any vice-president shall execute bonds, mortgages and other
instruments requiring a seal, in the name of the corporation, and, when
authorized by the board, he or any vice-president may affix the seal to any
instrument requiring the same, and the seal when so affixed shall be attested by
the signature of either the secretary or an assistant secretary. He or any
vice-president shall sign certificates of stock.
The President shall be ex-officio a member of all standing committees.
He shall submit a report of the operations of the corporation for the year
to the directors at their meeting next preceding the annual meeting of the
shareholders and to the shareholders at their annual meeting.
5. VICE-PRESIDENTS
The vice-president shall, in the absence or disability of the president,
perform the duties and exercise the powers of the president, and they shall
perform such other duties as the board of directors shall prescribe.
6. THE SECRETARY AND ASSISTANT SECRETARIES
The secretary shall attend all meetings of the board and all meetings of
the shareholders and shall record all votes and the minutes of all proceedings
and shall perform like duties for the standing committees when required. He
shall give or cause to be given notice of all meetings of the shareholders and
all meetings of the board of directors and shall perform such other duties as
may be prescribed by the board. He shall keep in safe custody the seal of the
corporation, and when authorized by the board, affix the same to any instrument
requiring it, and when so affixed, it shall be attested by his signature or by
the signature of an assistant secretary.
The assistant secretary shall, in the absence or disability of the
secretary, perform the duties and exercise the powers of the secretary, and they
shall perform such other duties as the board of directors shall prescribe.
In the absence of the secretary or an assistant secretary, the minutes of
all meetings of the board and shareholders shall be recorded by such person as
shall be designated by the president or by the board of directors.
7. THE TREASURER AND ASSISTANT TREASURERS
The treasurer shall have the custody of the corporate funds and securities
and shall keep full and accurate accounts of receipts and disbursements in books
belonging to the corporation and shall deposit all moneys and other valuable
effects in the name and to the credit of the corporation in such depositories as
may be designated by the board of directors.
The treasurer shall disburse the funds of the corporation as may be ordered
by the board of directors, taking proper vouchers for such disbursements. He
shall keep and maintain the corporation's books of account and shall render to
the president and directors an account of all of his transactions as treasurer
and of the financial condition of the corporation and exhibit his books, records
and accounts to the president or directors at any time. He shall disburse funds
for capital expenditures as authorized by the board of directors and in
accordance with the orders of the president, and present to the president for
his attention any requests for disbursing funds if in the judgment of the
treasurer any such request is not property authorized. He shall perform such
other duties as may be directed by the board of directors or by the president.
If required by the board of directors, he shall give the corporation a bond
in such sum and with such surety or sureties as shall be satisfactory to the
board for the faithful performance of the duties of his office and for the
44
<PAGE>
restoration to the corporation, in case of his death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control belonging to the
corporation.
The assistant treasurers in the order of their seniority shall, in the
absence or disability of the treasurer, perform the duties and exercise the
powers of the treasurer, and they shall perform such other duties as the board
of directors shall prescribe.
ARTICLE V - CERTIFICATES OF STOCK: TRANSFER. ETC.
--------------------------------------------------------
1. CERTIFICATES OF STOCK
The certificates for shares of stock of the corporation shall be numbered
and shall be entered in the corporation as they are issued. They shall exhibit
the holder's name and number of shares and shall be signed by the president or a
vice-president and the secretary or an assistant secretary and shall be sealed
with the seal of the corporation or a facsimile thereof. If the corporation has
a transfer agent or a registrar, other than the corporation itself or an
employee of the corporation, the signatures of any such officer may be
facsimile. In case any officer or officers who shall have signed or whose
facsimile signature or signatures shall have been used on any such certificate
or certificates shall cease to be such officer or officers of the corporation,
whether because of death, resignation or otherwise, before said certificate may
nevertheless be issued by the corporation with the same effect as though the
person or persons who signed such certificates or whose facsimile signature or
signatures shall have been used thereon had been such officer or officers at the
date of its issuance. Certificates shall be in such form as shall in conformity
to law be prescribed from time to time by the board of directors.
The corporation may appoint from time to time transfer agents and
registrars, who shall perform their duties under the supervision of the
secretary.
2. TRANSFERS OF SHARES
Upon surrender to the corporation or the transfer agent of the corporation
of a certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate, and record the transaction upon its books.
3. REGISTERED SHAREHOLDERS
The corporation shall be entitled to treat the holder of record of any
share or shares of stock as the holder in fact thereof and, accordingly shall
not be bound to recognize any equitable or other claim to or interest in such
share on the part of any other person, whether or not is shall have express or
other notice thereof, except as otherwise provided by law.
4. ISSUANCE OF ADDITIONAL SHARES
The corporation shall be enabled to issue additional common shares or to
create additional classes of stock.
5. LOST CERTIFICATE
The board of directors may direct a new certificate or certificates to be
issued in place of any certificate or certificates theretofore issued by the
corporation alleged to have been lost or destroyed, upon the making of an
affidavit of that fact by the person claiming the certificate to be lost. when
authorizing such issue of a new certificate or certificates, the board of
directors in its discretion and as a condition precedent to the issuance
thereof, may require the owner of such lost or destroyed certificate or
certificates or his legal representatives to advertise the same in such manner
as it shall require or to give the corporation a bond with surety and in form
satisfactory to the corporation (which bond shall also name the corporation's
transfer agents and registrars, if any, as obligees) in such sum as it may
direct as indemnity against any claim that may be made against the corporation
or other obligees with respect to the certificate alleged to have been lost or
destroyed, or to advertise and also give such bond.
45
<PAGE>
ARTICLE VI - DIVIDEND
---------------------
1. DECLARATION
The board of directors may declare at any annual, regular or special
meeting of the board and the corporation may pay, dividends on the outstanding
shares in cash, property or in the shares of the corporation to the extent
permitted by, and subject to the provisions of, the laws of the State of
Delaware.
2. RESERVES
Before payment of any dividend there may be set aside out of any funds of
the corporation available for dividends such sum or sums as the directors from
time to time in their absolute discretion think proper as a reserve fund to meet
contingencies or for equalizing dividends or for repairing or maintaining any
property of the corporation or for such other purpose as the directors shall
think conducive to the interest of the corporation, and the directors may
abolish any such reserve in the manner in which it was created.
ARTICLE VII - MISCELLANEOUS
- ------------------------------
1. INFORMAL ACTION
Any action required to be taken or which may be taken at a meeting of the
shareholders, directors or members of the executive committee, may be taken
without a meeting if a consent in writing setting forth the action so taken
shall be signed by all of the shareholders, directors, or members of the
executive committee, as the case may be, entitled to vote with respect to the
subject matter thereof, and such consent shall have the same force and effect as
a unanimous vote of the shareholders, directors, or members of the executive
committee, as the case may be, at a meeting of said body.
2. SEAL
The corporate seal shall be circular in form and shall contain the name of
the corporation, the year of its incorporation and the name "DELAWARE". The seal
may be used by causing it or a facsimile to be impressed or affixed or in any
other manner reproduced. The corporate seal may be altered by order of the board
of directors at any time.
3. CHECKS
All checks or demands for money and notes of the corporation shall be
signed by such officer or officers or such other person or persons as the board
of directors may from time to time designate.
4. FISCAL YEAR
The fiscal year of the corporation shall be determined by resolution of the
Board of Directors.
5. DIRECTORS' ANNUAL STATEMENT
The board of directors shall present at each annual meeting of shareholders
a full and clear statement of the business and condition of the corporation.
6. CLOSE CORPORATIONS: MANAGEMENT BY SHAREHOLDERS
If the articles of incorporation of the corporation and each certificate
representing its issued and outstanding shares states that the business and
affairs of the corporation shall be managed by the shareholders of the
corporation rather than by a board of directors, then, whenever the context so
requires by the shareholders of the corporation shall be deemed the directors of
the corporation for purposes of applying any provision of these bylaws.
7. AMENDMENTS
These by-laws may be altered, amended or repealed in whole or in part by
the affirmative vote of the holders of a majority of the shares outstanding and
entitled to vote, but such power may be delegated by the shareholders to the
board of directors.
46
<PAGE>
The above By-Laws approved and adopted by the Board of Directors on
December 15, 1998.
________________/S/_______________
Joel S. Dumaresq, President
47
<PAGE>
- --------------------------------------------------------------------------------
EXHIBIT F-1
AUDITED FINANCIAL STATEMENTS
FOR YEARS ENDING DECEMBER 31, 1998, 1997
- --------------------------------------------------------------------------------
SOLAR ENERGY LIMITED
(formerly Salvage World, Inc.)
(a Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998 and 1997
INDEPENDENT AUDITORS REPORT
To the Board of Directors and Stockholders of
Solar Energy Limited
We have audited the accompanying consolidated balance sheets of Solar Energy
Limited (a Development Stage Company) as of December 31, 1998 and 1997 and the
related consolidated statements of operations, stockholders equity and cash
flows for the years then ended. These financial statements are the
responsibility of the Companys management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Solar Energy Limited
(a Development Stage Company) as of December 31, 1998 and 1997 and the results
of its operations and cash flows for the years then ended in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered recurring operating losses and is
dependent upon financing to continue operations. These factors raise
substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in the Note 2.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
_________/s/___________
Crouch, Bierwolf & Chisholm
Salt Lake City, Utah
March 7, 2000
48
<PAGE>
Solar Energy Limited
(formerly Salvage World, Inc.)
(a Development Stage Company)
Conolidated Balance Sheets
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS December 31, December 31,
1998 1997
- -------------------------------------------------------------------------
Current Assets
Cash $ 286,627 $ 0
Employee Advance 213 0
Notes Receivable (Note 9) 50,000 0
Total Current Assets 336,840 0
Property & Equiptment (Note 5) 16,653 0
Other Assets
Organizations Costs (Note 1) 2,181 500
Patent Costs (Note 6) 9,808 0
Goodwill (Note 7) 66,677 0
Deposits 3,537 0
Total Other Assets 82,203 500
Total Assets $ 435,696 $ 500
LIABLILITES AND STOCKHOLDERS EQUITY
Current Liabilites
Accounts Payable 154,488 0
Accrued Liabilites 15,154 0
Notes Payable - related party (Note 8) 100,000 0
Total Current Liabilites 269,642 0
Stockholders Equity
Common Stock, authorized
50,000,000 shares of $.0001 par value,
issued and outstanding 11,903,911 and
1,278,511 shares respectively 1,190 128
Additional Paid in Capital 953,323 29,385
Deficit Accumulated During the
Development Stage (788,459) (29,013)
Total Stockholders Equity 166,054 500
Total Liabilites and Stockholders Equity $ 435,696 $ 500
</TABLE>
The accompanying notes are an integral part of these financial statements
49
<PAGE>
Solar Energy Limited
(formerly Salvage World, Inc.)
(a Development Stage Company)
Consolidated Statements of Operations
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Cummulative
For the Years Total
Ended December 31, Since
1998 1997 Inception
- --------------------------------------------------------------------------------------
Revenues: $ 0 $ 0 $ 0
Expenses:
Amortization 19,866 500 21,866
Bank Charges 983 0 983
Bad Debt 225,000 0 225,000
Consulting 16,675 0 18,893
Filing Fees 0 0 235
Financial Services 0 3,500 12,040
Interest Expense 15,923 0 15,923
Legal and Accounting 90,089 0 102,589
Office 3,072 0 3,072
Promotion 15,666 0 15,666
Notary 0 0 20
Research & Development 288,088 0 288,088
Travel 89,328 0 89,328
Total Expenses 764,690 4,000 793,703
Other Income (Expenses)
Interest Income 5,244 0 5,244
Net (Loss) ($759,466) ($4,000) ($788,459)
Net Loss Per Share ($0.147) ($0.003) ($0.384)
Weighted average shares outstanding 5,164,228 1,250,000 2,049,953
</TABLE>
The accompanying notes are an integral part of these financial statements
50
<PAGE>
Solar Energy Limited
(formerly Salvage World, Inc.)
(a Development Stage Company)
Consolidated Statement of Stockholders' Equity
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Deficit
Accumulated
Additional During the
Common Stock Common Stock Paid-In Development
Shares Amount Capital Stage
- -------------------------------------------------------------------------------------------------------
Balance at beginning of development
stage-January 5, 1994 0 $ 0 $ 0 $ 0
Stock issued for organization cost 1,250,000 125 2,375 0
Net Loss December 31, 1994 0 0 0 (500)
Balance, December 31, 1994 1,250,000 125 2,375 (500)
Net Loss December 31, 1995 0 0 0 (500)
Balance, December 31, 1995 1,250,000 125 2,375 (1000)
Shares issued for cash at $.10 13,000 1 25,999 0
Shares issued for cash at $.00458 8,312 1 761 0
Shares issued for cash at $.10 1,250 0 251 0
Stock split rounding adjustment 5,949 1 (1) 0
Net loss December 31, 1996 0 0 (0) (24,013)
Balance, December 31, 1996 1,278,511 128 29,385 (25,013)
Net Loss December 31, 1997 0 0 0 (4,000)
Balance, December 31, 1997 1,278,511 128 29,385 (29,013)
Shares issued for acquisition of
Hydro-Air Technologies, Inc. 700,400 70 (70) 0
Shares issued for cash at $.10 per share 7,800,000 780 779,220 0
Shares issued for cash at $1.00 per share 125,000 12 124,988 0
Shares issued for cash at $.01 per share 2,000,000 200 19,800 0
Net loss for the year ended December 31, 1998 0 0 0 (759,466)
Balance, December 31, 1998 11,903,911 $ 1,190 $ 953,323 ($788,459)
</TABLE>
The accompanying notes are an integral part of these financial statements
51
<PAGE>
Solar Energy Limited
(formerly Salvage World, Inc.)
(a Development Stage Company)
Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
<S> <C> <C> <C>
January 5,
1994 (inception
of the
development
For the years For the years stage) to
ended December 31, ended December 31, December 31,
1998 1997 1998
- -------------------------------------------------------------------------------------------------------
Cash Flows From Operating
Activities
Net Loss ($759,446) ($4,000) ($788,459)
Adjustments to reconcile
net loss to net cash
provided by operations
(net of acquisition):
Amortization/Depreciation 21,968 500 23,968
Increase/Decrease in:
Employee advance (176) 0 (176)
Accounts Payable 145,022 0 145,022
Accrued Expenses 15,154 0 15,154
Net Cash Flows Used In
Operating Activities (577,478) (3,500) (604,491)
Cash Flows From Investment
Activities:
Cash acquired from subsidiary 204,956 0 204,956
Cash paid for patent costs (3,917) 0 (3,917)
Cash paid for property & equipment (8,397) 0 (8,397)
Cash paid for deposits (3,537) 0 (3,537)
Cash paid on notes receivable (50,000) 0 (50,000)
Net Cash Provided by Investing
Activities 139,105 0 139,105
Cash Flows from Financing
Activities:
Issued common stock for cash 925,000 0 952,013
cash received on advance by shareholders 300,000 0 300,000
Cash paid on debt financing (500,000) 0 (500,000)
Net Cash Provided by Financing
Activities 725,000 0 752,013
Net increase (decrease) in cash 286,627 (3,500) 286,627
Cash, beginning of year 0 3,500 0
Cash, end of year $ 286,627.00 $ 0.00 $ 286,627.00
Supplemental Cash Flow Information
Cash Paid for:
Interest $ 15,923.00 $ 0.00 $ 15,923.00
Taxes $ 0 $ 0 $ 0
</TABLE>
The accompanying notes are an integral part of these financial statements
52
<PAGE>
SOLAR ENERGY LIMITED
(a Development Stage Company)
Notes to The Consolidated Financial Statements
December 31, 1998 and 1997
NOTE 1 - Summary of Significant Accounting Policies
a. Organization
Solar Energy Limited ("the Company") was incorporated as Taurus
Enterprises, Inc. under the laws the State of Delaware on January 5, 1994. The
Company was organized primarily for the purpose of operating a used automobile
brokerage firm. The Company did not become operational and abandoned its
attempts to establish the brokerage operation.
In August of 1996 its shareholders decided to reactivate the Company,
merge the Company with Salvage World, Inc., a private company, change the name
to Salvage World, Inc. and reincorporate in the state of Nevada.
On December 17, 1997 the Company merged with Solar Energy Limited
(Solar) a Delaware corporation organized on July 24, 1997 and changed the name
to Solar Energy Limited. The surviving corporation is the Delaware corporation
and the authorized shares were changed to 50,000,000 par value $.0001. Solar's
headquarters are located in Los Alamos, New Mexico.
On January 1, 1998 the Company issued the initial 170,400 shares of
stock and on October 21, 1998 an additional 530,000 share were issued for the
acquisition of 100% of Hydro-Air Technologies, Inc. (Hydro) a New Mexico
corporation organized June 18, 1997. Hydro owns various rights to patented
intellectual property called Hydro-Air Renewable Power System (AHARPS@), and has
developed a prototype system to generate electricity from the evaporation of
water. Hydro=s headquarters are located in Los Alamos, New Mexico.
The Company is in the development stage according to Financial
Accounting Standards Board Statement No. 7 and is currently focusing its
attention on raising capital in order to pursue its goals.
b. Accounting Method
The Company recognizes income and expenses on the accrual basis of
accounting.
c. Earnings (Loss) Per Share
The computation of earnings per share of common stock is based on the
weighted average number of shares outstanding at the date of the financial
statements.
d. Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of
three months or less to be cash equivalents.
53
<PAGE>
The accompanying notes are an integral part of these financial statements
SOLAR ENERGY LIMITED
(a Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1998 and 1997
NOTE 1 - Summary of Significant Accounting Policies (Continued)
e. Provision for Income Taxes
No provision for income taxes has been recorded due to net operating
loss carryforwards totaling approximately $788,459 that will be offset against
future taxable income. These NOL carryforwards begin to expire in the year
2009. No tax benefit has been reported in the financial statements because the
Company believes there is a 50% or greater chance the carryforward will expire
unused.
Deferred tax assets and the valuation account is as follows at
December 31, 1998 and 1997.
December 31,
1998 1997
Deferred tax asset:
NOL carrryforward $ 268,076 $ 8,504
Valuation allowance (268,076) (8,504)
Total $ - $ -
f. Organization Costs
The Company incurred $2,500 of organization costs in 1994. These
costs, which were paid by shareholders of the Company, were exchanged for
1,250,000 shares of common stock. Organization costs are being amortized on a
straight line method over a 60 month period. These costs will be recovered only
if, the Company is able to generate a positive cash flow from operations. Hydro
incurred costs of $3,116 for their organization.
g. Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect reported amounts of assets and liabilities, disclosure
of contingent assets and liabilities at the date of the financial statements and
revenues and expenses during the reporting period. In these financial
statements, assets involve extensive reliance on management=s estimates. Actual
results could differ from those estimates.
h. Principles of Consolidation
The Consolidated Financial Statements include the accounts of Solar
Energy Limited and its wholly owned subsidiary Hydro-Air Technologies, Inc. All
intercompany accounts and transactions have been eliminated in the
consolidation.
NOTE 2 - Going Concern
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. The Company has had recurring
operating losses for the past several years and is dependent upon financing to
continue operations. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty. It is managements plan
to raise sufficient funds to develop the next phase of the HARPS Technology and
then begin to manufacture and market the HARPS Power system.
SOLAR ENERGY LIMITED
(formerly Salvage World, Inc.)
(a Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1998 and 1997
NOTE 3 - Development Stage Company
The Company is a development stage company as defined in Financial
Accounting Standards Board Statement No. 7. It is concentrating substantially
all of its efforts in raising capital and developing its business operations in
order to generate significant revenues.
NOTE 4 - Stockholders Equity Transactions
Pursuant to the plan or reorganization and merger agreement dated
August 20, 1996, the Company merged Taurus Enterprises, Inc. (a public company)
with Salvage World, Inc. (a private company). The shareholders of Taurus
returned their stock and received stock in the new combined entity named Salvage
World, Inc. The Company changed the par value of its common stock from $.0001
to $.001.
Pursuant to the merger agreement dated December 17, 1997, the Company
merged with Solar Energy Limited and the shareholders of Salvage received shares
in the new combined Solar entity. The Company then changed the par back to
$.0001 and the new authorized capital became 50,000,000. The Board then
authorized a 1 for 20 reverse stock split. These financial statements have been
retroactively restated to reflect the split.
The Company has issued 700,400 shares of stock to acquire 100% of the
stock of Hydro-Air Technologies. The acquisition agreement between the Company
and Hydro-Air Technologies provides an initial issuance of stock at the
beginning of phase one, and additional issuances throughout the development
process to arrive at no less than 4,000,000 shares or 40% of the outstanding
stock. Because Hydro had a negative equity position goodwill was recorded and
no value was assigned to the stock issued.
The Company issued 7,800,000 shares of common stock at $.10 and
2,000,000 shares of common stock at $.01 in an exempt 504 offering which raised
$800,000 during 1998.
The Company also issued 125,000 shares of common stock for $125,000 in
a 505 exempt offering.
NOTE 5 - Property & Equipment
Property and equipment consists of the following at December 31, 1998
and 1997:
December 31,
1998 1997
- ------------------------------------------------------------------------------
Office Equipment & Furniture $ 11,020 $ 0
Tools 1,539 0
Auto 6,522 0
19,081 0
Accumulated Depreciation (2,428) 0
Net Property & Equipment $ 16,653 $ 0
Depreciation expense for the years ended December 31, 1998 and 1997 is
$2,102 and $0, respectively.
54
<PAGE>
Solar Energy Limited
(a Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1998 and 1997
NOTE 6 - Patent Costs
The Company has incurred legal costs in connection with the Patent
process which the Company has rights to, and has therefore capitalized those
costs and is amortizing them over a five year period.
NOTE 7 - Goodwill
The Company recorded Goodwill in connection with the acquisition of
Hydro, due to the negative equity position of Hydro. A total of $83,346 was
recorded upon acquisition and is being amortized over a 5 year period. The
realization of this asset is contingent upon Hydros ability to generate revenues
from the HARPS process.
NOTE 8 - Notes Payable - Related Party
FCIC a shareholder of the Company advanced $300,000 to Hydro Air
during 1997 and $200,000 to the Company during 1998 for phase one expense
requirements. $500,000 has been paid back, leaving a $0 balance due at December
31, 1998.
A shareholder loaned the Company $100,000 during 1998 as a short term
working capital loan. The advance was repaid in February 1999.
NOTE 9 - Notes Receivable
Pursuant to a purchase agreement between the Company and Renewable
Energy Corporation (RECO) the Company has advanced $50,000 as an unsecured loan.
The Company will purchase intellectual property rights from RECO. Upon the
closing at January 31, 1999, $40,000 of the loan will convert to equity of RECO
and the Company will become 100% owners of the common stock. The remaining
$10,000 of the unsecured loan was advanced for startup costs and will not be
paid back. Upon closing, the advance will be considered as a cost of the
investment in RECO. According to the agreement, the Company will issue 500,000
shares into an escrow account to be distributed to employees and principals of
RECO according to various terms.
In addition, the agreement specifies a commitment by the Company to provide
working capital loans of $5,700,000 throughout various phases of development.
NOTE 10 - Commitments
The founder of the HARPS technology has granted Hydro an exclusive
license to develop, manufacture and market the same. For the license Hydro is
committed to a 1% royalty on gross sales of the units and 1/2% royalty on the
sale of the electrical power generated by any power plants owned by Hydro.
The Company is committed to a one year operating lease for office
space in Los Almos, New Mexico. Future minimum lease payments are as follows at
December 31, 1998.
1999 $ 27,600
2000 $ 27,600
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Total $ 55,200
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