<PAGE> 1
As filed with the U.S. Securities and Exchange Commission on July 9, 1999
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Scientific NRG, Incorporated
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Minnesota 41-1457271
- ------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2246 Lindsay Way, Glendora, California 91740
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices, including ZIP Code)
Employment and Consulting Agreements
- --------------------------------------------------------------------------------
(Full title of the plan)
Fred G. Luke, President, 2246 Lindsay Way, Glendora, California 91740
- --------------------------------------------------------------------------------
(Name and address of agent for service)
(909) 305-0322
- --------------------------------------------------------------------------------
(Telephone number, including area code, of agent for service)
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===========================================================================================================
Proposed
Proposed Maximum Amount of
Title of Securities Amount of Shares Maximum Offering Aggregate Registration
to be Registered to be Registered Price Per Share(1) Offering Price(1) Fee
- ------------------- ---------------- ------------------ ----------------- ------------
<S> <C> <C> <C> <C>
no par value
common stock 2,793,082 $0.06 $167,585 $ 46.58
no par value
common stock 1,000,000 $0.06 $60,000 $ 16.68
no par value
common stock 300,000 $0.06 $18,000 $ 5.01
no par value
common stock 1,505,471 $0.07 $105,383 $ 29.30
underlying options
no par value
common stock 1,000,000 $0.30 $300,000 $ 83.40
underlying options
TOTALS 6,598,553 $650,968 $180.97
===========================================================================================================
</TABLE>
Total No. of Pages: 29 Exhibit Index on Page No.: 13
(1) This calculation is made solely for the purposes of determining the
registration fee pursuant to the provisions of Rule 457(h) under the
Securities Act and is calculated on the basis of either (a) the average
of the high and low prices per share of the Common Stock as of a date
within five business days prior to the filing of this Registration
Statement.
2
<PAGE> 3
PROSPECTUS
SCIENTIFIC NRG, INCORPORATED
2246 Lindsay Way, Glendora, California 91740
4,093,082 SHARES OF COMMON STOCK AND
2,505,471 SHARES OF COMMON STOCK UNDERLYING OPTIONS
This Prospectus relates to the offer and sale by Scientific NRG,
Incorporated, a Minnesota corporation (the "Company"), of shares of its no par
value per share common stock (the "Common Stock") to certain employees and
consultants (collectively the "Consultants") pursuant to agreements entered into
between the Company and the Consultants. The Company is registering hereunder
and then issuing, upon receipt of adequate consideration therefor, to the
Consultants 4,093,082 shares of the Common Stock and 2,505,471 shares of Common
Stock underlying stock options in consideration for services rendered and to be
performed under the agreements.
The Common Stock is not subject to any restriction on transferability.
Recipients of shares other than persons who are "affiliates" of the Company
within the meaning of the Securities Act of 1933 (the "Act") may sell all or
part of the shares in any way permitted by law, including sales in the
over-the-counter market at prices prevailing at the time of such sale. Of the
shares registered hereunder 3,793,082 shares of Common Stock are being sold to
Jonathan D. Forgy and Fred G. Luke who are "affiliates" of the Company. An
affiliate is summarily, any director, executive officer or controlling
shareholder of the Company. The "affiliates" of the Company may become subject
to Section 16(b) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), which would limit their discretion in transferring the shares
acquired in the Company. If the Consultant who is not now an "affiliate" becomes
an "affiliate" of the Company in the future, he would then be subject to Section
16(b) of the Exchange Act. (See "General Information - Restrictions on
Resales").
The Common Stock is listed on the OTC bulletin board under the symbol "SCCG".
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is July 14, 1999
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<PAGE> 4
This Prospectus is part of a Registration Statement which was filed and
became effective under the Securities Act of 1933, as amended (the "Securities
Act"), and does not contain all of the information set forth in the Registration
Statement, certain portions of which have been omitted pursuant to the rules and
regulations promulgated by the U.S. Securities and Exchange Commission (the
"Commission") under the Securities Act. The statements in this Prospectus as to
the contents of any contracts or other documents filed as an exhibit to either
the Registration Statement or other filings by the Company with the Commission
are qualified in their entirety by the reference thereto.
A copy of any document or part thereof incorporated by reference in this
Prospectus but not delivered herewith will be furnished without charge upon
written or oral request. Requests should be addressed to: 2246 Lindsay Way,
Glendora, California 91740.
The Company is subject to the reporting requirements of the Exchange Act
and in accordance therewith files reports and other information with the
Commission. These reports, as well as the proxy statements, information
statements and other information filed by the Company under the Exchange Act may
be inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W. Washington D.C. 20549. Copies may be
obtained at the prescribed rates. In addition, the Common Stock is quoted on the
automated quotation system maintained by the National Association of Securities
Dealers, Inc. ("NASD"); thus, copies of these reports, proxy statements,
information statements and other information may also be examined at the offices
of the NASD at 1735 K. Street, N.W. Washington, D.C. 20549.
No person has been authorized to give any information or to make any
representation, other than those contained in this Prospectus, and, if given or
made, such other information or representation must not be relied upon as having
been authorized by the Company. This Prospectus does not constitute an offer or
a solicitation by anyone in any state in which such is not authorized or in
which the person making such is not qualified or to any person to whom it is
unlawful to make an offer or solicitation.
Neither the delivery of this Prospectus nor any sale made hereunder
shall, under any circumstances, create any implication that there has not been a
change in the affairs of the Company since the date hereof.
4
<PAGE> 5
TABLE OF CONTENTS
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS 6
ITEM 1. PLAN INFORMATION 6
DOCUMENTS INCORPORATED BY REFERENCE AND ADDITIONAL INFORMATION 7
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION 7
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT 8
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE 8
ITEM 4. DESCRIPTION OF SECURITIES 8
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL 8
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS 9
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED 9
ITEM 8. EXHIBITS 10
ITEM 9. UNDERTAKINGS 10
SIGNATURES 12
EXHIBIT INDEX 13
5
<PAGE> 6
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information
GENERAL INFORMATION
THE COMPANY
The Company has its principal executive offices at: 2246 Lindsay Way,
Glendora, California 91740.
PURPOSES
The Common Stock will be issued by the Company pursuant to agreements
entered into between the Consultants and the Company and approved by the Board
of Directors of the Company (the "Board of Directors"). The agreements are
intended to provide a method whereby the Company may be stimulated by the
personal involvement of the Consultants in the Company's future prosperity,
thereby advancing the interests of the Company, and all of its shareholders.
Copies of the agreements have been filed as exhibits to this Registration
Statement.
COMMON STOCK
The Board has authorized the issuance of up to 4,093,082 shares of the
Common Stock and 2,505,471 shares underlying stock options granted to the
Consultants upon effectiveness of this Registration Statement. Of the shares
offered hereby 2,793,082 shares are being sold to Fred G. Luke for advisory
services related to the acquisition of certain assets from NuVen Capital L.P.,
1,000,000 shares are being sold to Jonathan D. Forgy as a bonus related to the
sale of the Company's downlight business and acquisition of certain assets from
NuVen Capital L.P. and 300,000 shares to Richard O. Weed for legal services
rendered and to be rendered on behalf of the Company.
THE CONSULTANTS
The Consultants have agreed to provide their expertise and advice to the
Company on a non-exclusive basis for the purpose of promoting the interests of
the Company.
NO RESTRICTIONS ON TRANSFER
The Consultants will become the record and beneficial owners of the
shares of Common Stock upon issuance and delivery and are entitled to all of the
rights of ownership, including the right to vote any shares awarded and to
receive ordinary cash dividends on the Common Stock.
TAX TREATMENT TO THE CONSULTANT
The Common Stock is not qualified under Section 401(a) of the Internal
Revenue Code. The Consultant, therefore, will be deemed for federal income tax
purposes to recognize ordinary income during the taxable year in which the first
of the following events occurs: (a) the shares become freely transferable, or
(b) the shares cease to be subject to a substantial risk of forfeiture.
Accordingly, the Consultant will receive compensation taxable at ordinary rates
equal to the fair market value of the shares on the date of receipt since there
will be no substantial risk of forfeiture or other restrictions on transfer. If,
however, the
6
<PAGE> 7
Consultant receives shares of common stock pursuant to the exercise of an option
or options at an exercise price below the fair market value of the shares on the
date of exercise, the difference between the exercise price and the fair market
value of the stock on the date of exercise will be deemed ordinary income for
federal income tax purposes. The Consultant is urged to consult his tax advisor
on this matter. Further, if any recipient is an "affiliate", Section 16(b) of
the Exchange Act is applicable and will affect the issue of taxation.
TAX TREATMENT TO THE COMPANY
The amount of income recognized by any recipient hereunder in accordance
with the foregoing discussion will be an expense deductible by the Company for
federal income tax purposes in the taxable year of the Company during which the
recipient recognizes income.
RESTRICTIONS ON RESALES
In the event that an affiliate of the Company acquires shares of Common
Stock hereunder, the affiliate will be subject to Section 16(b) of the Exchange
Act. Further, in the event that any affiliate acquiring shares hereunder has
sold or sells any shares of Common Stock in the six months preceding or
following the receipt of shares hereunder, any so called "profit", as computed
under Section 16(b) of the Exchange Act, would be required to be disgorged from
the recipient to the Company. Services rendered have been recognized as valid
consideration for the "purchase" of shares in connection with the "profit"
computation under Section 16(b) of the Exchange Act. The Company has agreed that
for the purpose of any "profit" computation under 16(b) the price paid for the
common stock issued to affiliates is equal to the value of services rendered.
Shares of Common Stock acquired hereunder by persons other than affiliates are
not subject to Section 16(b) of the Exchange Act.
DOCUMENTS INCORPORATED BY REFERENCE AND ADDITIONAL INFORMATION
The Company hereby incorporates by reference (i) its annual report on
Form 10-KSB for the year ended June 30, 1998 filed pursuant to Section 13 of the
Exchange Act, (ii) any and all Forms 10-Q (or 10-QSB) filed under the Securities
or Exchange Act subsequent to any filed Form 10K (or 10-KSB), as well as all
other reports filed under Section 13 of the Exchange Act, and the Company's Form
8-K filings, if any, and (iii) its annual report, if any, to shareholders
delivered pursuant to Rule 14a-3 of the Exchange Act. In addition, all further
documents filed by the Company pursuant to Section 13, 14, or 15(d) of the
Exchange Act prior to the termination of this offering are deemed to be
incorporated by reference into this Prospectus and to be a part hereof from the
date of filing. All documents which when together, constitute this Prospectus,
will be sent or given to participants by the Registrant as specified by Rule
428(b)(1) of the Securities Act.
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION
A copy of any document or part thereof incorporated by reference in this
Registration Statement but not delivered with this Prospectus or any document
required to be delivered pursuant to Rule 428(b) under the Securities Act will
be furnished without charge upon written or oral request. Requests should be
addressed to: 2246 Lindsay Way, Glendora, California 91740.
7
<PAGE> 8
LEGAL OPINION AND EXPERTS
Richard O. Weed has rendered an opinion on the validity of the
securities being registered. Mr. Weed is a former director of the Company and
owns, prior to this offering, 657,740 shares of the Company's common stock.
The financial statements of Scientific NRG, Inc. incorporated by
reference in the Company's Annual Report (Form 10-KSB) for the year ended June
30, 1998 have been audited by Corbin & Wertz independent auditors, as set forth
in their report incorporated herein by reference and are incorporated herein in
reliance upon such report given upon the authority of the firm as experts in
auditing and accounting.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, or persons controlling the Company,
the Company has been informed that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
Registrant hereby states that (i) all documents set forth in (a) through
(c), below, are incorporated by reference in this registration statement, and
(ii) all documents subsequently filed by registrant pursuant to Section 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended, prior to
the filing of a post-effective amendment which indicates that all securities
offered have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference in this registration
statement and to be a part hereof from the date of filing of such documents.
(a) Registrant's latest Annual Report, whether filed pursuant to
Section 13(a) or 15(d) of the Exchange Act;
(b) All other reports filed pursuant to Section 13(a) or 15(d)
of the Exchange Act since the end of the fiscal year covered by annual
report referred to in (a), above; and
(c) The latest prospectus filed pursuant to Rule 424(b) under
the Securities Act.
ITEM 4. DESCRIPTION OF SECURITIES
No description of the class of securities (i.e. the no par value Common
Stock) is required under this item because the Common Stock is registered under
Section 12 of the Exchange Act.
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ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Richard O. Weed, counsel to the Company and a former Director, owns
657,740 shares of the Company's common stock and will receive 300,000 shares
pursuant to this registration statement. Mr. Weed holds an option to acquire up
to 1,000,000 shares of the Company's common stock at $.30 per share.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Minnesota Statutes Annotated Section 302A.251 Subdivision 4 provides for
the elimination or limitation of liability for directors of the Company.
Moreover, Article VI of the Company's Articles of Incorporation provides that "A
director or the corporation shall not be personally liable to the corporation
shareholders for monetary damages for breach of fiduciary duty as a director,
except (i) liability based on a breach or the duty of loyalty to the corporation
or shareholders; (ii) liability for acts or omissions not in good faith or that
in intentional misconduct or a knowing violation of law; (iii) liability based
on the payment of an improper dividend or an improper repurchase of the
corporation's stock Section 559 or the Minnesota Business Corporation Act
(Minnesota Statutes, Chapter 302A) or on violations of federal or state
securities laws; (iv) liability for any transaction from which the director
derived an improper personal benefit, or (v) liability for any omission
occurring prior to the date this Article VI becomes effective. If Chapter 302A
of the Minnesota Business Corporation Act hereafter is amended to authorize the
further elimination or limitation of the liability of directors, then the
liability of a director the corporation, in addition to the limitation on
personal liability provided herein, shall be limited to the fullest extent
permitted by such amended Chapter 302A of the Minnesota Business Corporation
Act. Any repeal or modification or this Article by the shareholders of the
corporation shall be prospective only, shall not adversely affect any limitation
on the personal liability or a director of the corporation existing at the time
of such repeal or modification, and shall be made only upon the affirmative vote
of the same percentage of votes represented by shares of the common stock of the
Corporation present, in person or by proxy, at a meeting of shareholders duly
called for such purpose as were originally obtained to adopt this Article VI.
The effect of these provisions will be to eliminate the rights of the
Company and its stockholders (through shareholders' derivative suits on behalf
of the Company) to recover monetary damages against a director for breach of
fiduciary duty as a director (including breaches resulting from negligent or
grossly negligent behavior) except in the situations described in clauses (i) -
(v) of the proceeding paragraph.
These provisions will not affect the validity of injunctive relief
against directors of the Company (although such relief may not always be
available as a practical matter) nor will it limit directors liability for
violations of federal securities laws.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
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<PAGE> 10
ITEM 8. EXHIBITS
(a) The following exhibits are filed as part of this registration
statement pursuant to Item 601 of Regulation S-K and are
specifically incorporated herein by this reference:
Exhibit No. Title
----------- -----
10. A. Advisory Agreement with Fred G. Luke
B. Fee Agreement with Richard O. Weed
24.1 Consent of Richard O. Weed, special counsel to
registrant, to the use of his opinion with respect to
the legality of the securities being registered hereby
and to the references to him in the Prospectus
filed as a part hereof.
24.2 Consent of Corbin & Wertz
ITEM 9. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of
registrant pursuant to the foregoing provisions, or otherwise, registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by registrant of expenses
incurred or paid by a director, officer or controlling person of registrant in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification is against public policy
as expressed in the Act and will be governed by the final adjudication of such
issue.
Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement to:
(i) include any prospectus required by Section 10 (a) (3) of the
Securities Act;
(ii) reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represents a fundamental change in the
information set forth in the registration statement; and
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<PAGE> 11
(iii) include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
provided, however, paragraphs (i) and (ii) shall not apply if
the information required to be included in a post-effective
amendment by those paragraph is incorporated by reference from
period reports filed by the registrant small business issuer
under the Exchange Act.
(2) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment to the registration
statement shall be deemed to be a new registration statement
relating to the securities offered therein and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) To deliver or cause to be delivered with the prospectus, to each
person to whom the prospectus is sent or given, the latest annual
report to security holders that is incorporated by reference in the
prospectus and furnished pursuant to and meeting the requirements of
Rule 14a-3 or Rule 14e-3 under the Securities Exchange Act of 1934;
and, where interim financial information require to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to
deliver, or cause to be delivered to each person to whom the
prospectus is sent or given, the latest quarterly report that is
specifically incorporated by reference in the prospectus to provide
such interim financial information.
Registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of registrant's annual
report pursuant to Section 13(a) of the Securities Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
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<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned thereunto duly
authorized in the City of Newport Beach, State of California on the 14th day of
July, 1999.
SCIENTIFIC NRG, INCORPORATED.
(Registrant)
By: /s/ Fred G. Luke
------------------------------
Fred G. Luke, President
Pursuant to the requirements of the 1933 Act, this registration
statement or amendment has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <C> <C>
/s/ Fred G. Luke President and Director July 14, 1999
- -----------------------
Fred G. Luke
/s/ Jon L. Lawver Secretary and Director July 14, 1999
- -----------------------
Jon L. Lawver
</TABLE>
12
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FORM S-8 REGISTRATION STATEMENT
EXHIBIT INDEX
The following Exhibits are filed as part of this registration statement
pursuant to Item 601 of Regulation S-K and are specifically incorporated herein
by this reference:
<TABLE>
<CAPTION>
Exhibit
Number in
Registration Numbered
Statement Description Page
- ------------ ----------- --------
<S> <C> <C>
5. Opinion of Counsel 14
10. A. Advisory Agreement with Fred G. Luke 16
B. Fee Agreement with Richard O. Weed 24
24.1 Consent of Richard O. Weed to Use of Opinion 28
24.2 Consent of Corbin & Wertz 29
</TABLE>
13
<PAGE> 1
EXHIBIT 5
OPINION OF COUNSEL
WEED & CO. L.P.
4695 MACARTHUR COURT, SUITE 530, NEWPORT BEACH, CALIFORNIA 92660
TELEPHONE (949) 475-9086 FACSIMILE (949) 475-9087
EMAIL: [email protected]
WRITER'S DIRECT NUMBER
(949) 475-7730
July 14, 1999
Board of Directors
Scientific NRG, Incorporated
2246 Lindsay Way
Glendora, CA 91740
RE: Form S-8 Registration Statement
Dear Members of the Board:
As special project counsel to Scientific NRG, Incorporated, a Minnesota
corporation (the "Company"), in connection with that certain Form S-8
registration statement dated July 14, 1999, I have been asked to provide an
opinion of counsel as to the legality of the securities being registered,
indicating whether they will, when sold, be legally issued, fully paid and
non-assessable.
In rendering this opinion, I have assumed, without independently
verifying such assumptions, and this opinion is based and conditioned upon the
following: (i) the genuineness of the signatures on and the enforceability of
all instruments, documents and agreements examined by me and the authenticity of
all documents furnished for my examination as originals and the conformity to
the original documents of all documents furnished to me as copies; (ii) where an
executed document has been presented to me for my review, that such document has
been duly executed on or as of the date stated and that execution and delivery
was duly authorized on the part of the parties thereto; (iii) each of the
foregoing certificates, instruments and documents being duly authorized,
executed and delivered by or on behalf of all the respective parties thereto,
and such instruments and documents being legal, valid binding obligations of
such parties; (iv) the truth and accuracy of representations and statements made
in the documents received from the State of Minnesota; and (vi) the Company will
be operated in accordance with the terms of its charter documents and the laws
of the State of Minnesota and the terms of the instruments or documents referred
to above.
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<PAGE> 2
Based upon the foregoing, I am of the opinion that:
1. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Minnesota, the
jurisdiction of its incorporation.
2. The terms and provisions of the common stock conform to the
description thereof contained in the registration statement, and the form of the
stock certificates used to evidence the common stock are in good and proper form
and no stockholder is entitled to preemptive rights to subscribe for or purchase
any of the common stock,
3. The issuance and the sale of the shares of common stock has been duly
and validly authorized and the securities will, when sold, be duly legally
issued, fully paid and non-assessable shares of common stock of the Company.
I am admitted to practice in the State of California and the State of
Texas. I am not admitted to practice in any jurisdictions other than California
and Texas, in which the Company may own property or transact business. My
opinions herein are with respect to federal law only and, to the extent my
opinions are derived from the laws of other jurisdictions, are based upon an
examination of all relevant authorities and the documents referenced herein and
are believed to be correct. I have not directly obtained legal opinions as to
such matters from attorneys licensed in such other jurisdictions. No opinion is
expressed upon any conflict of law issues. My opinions are qualified to the
extent that enforcement of rights and remedies are subject to bankruptcy,
insolvency, fraudulent conveyance, moratorium, and other laws of general
application or equitable principles affecting the rights and remedies of
creditors and security holders and to the extent that the availability of the
remedy of specific performance or of injunctive relief is subject to the
discretion of the court before which any proceeding may be brought.
This opinion is limited to matters existing as of this date and no
responsibility is assumed to advise you of changes (factual or legal) which may
hereafter occur, whether deemed material or not.
I furnish this opinion to you as special counsel for the Company and it
is solely for your benefit. This opinion is not to be used, circulated, quoted
or otherwise referred to in whole or in part for any other purpose, except as
set forth in my consent.
Very truly yours,
/s/ Richard O. Weed
---------------------------------
Richard O. Weed
2
<PAGE> 1
EXHIBIT 10A
ADVISORY AGREEMENT WITH FRED G. LUKE
ADVISORY AGREEMENT
THIS ADVISORY AGREEMENT ("Agreement") is made this 12th day of August
1998, by and between NuVen Advisors, Inc., a Nevada corporation ("Advisor") and
Scientific NRG, Incorporated, a Minnesota corporation (the "Company").
WHEREAS, Advisor and Advisor=s Personnel (as defined below) have in
excess of 25 years of experience in evaluating and effecting mergers and
acquisitions, supervising corporate management, and in performing general
administrative duties for publicly-held companies and development stage
investment ventures; and
WHEREAS, the Company desires to retain Advisor to advise and assist the
Company in acquiring or merging with a new line of business or company on the
terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company and Advisor
agree as follows:
1. ENGAGEMENT
The Company hereby retains Advisor, effective the date hereof and
continuing until termination, as provided herein, to assist the Company
in it's formulation of growth and financing strategies (the "Services")
including but not limited to effecting merger of the Company into or the
acquisition of a privately-held company (the ?Initial Merger"). The
Services are to be provided on a "best efforts" basis directly and
through Advisor=s officers or others employed or retained and under the
direction of Advisor (?Advisor=s Personnel"); provided, however, that
the Services shall expressly exclude all legal advice, accounting
services or other services which require licenses or certification which
Advisor may not have.
The Company expressly retains the right to approve, in its sole
discretion, the Initial Merger and each Business Opportunity (as defined
below) introduced by Advisor, and to make all final decisions with
respect to effecting a transaction on the Initial Merger or any Business
Opportunity.
2. TERM
This Agreement shall have an initial term of one (1) year (the "Primary
Term"). At the conclusion of the Primary Term this Agreement will
automatically be extended on an annual basis (the "Extension Period")
unless Advisor or the Company shall serve written notice on the other
party terminating the Agreement. Any notice to terminate given hereunder
shall be in writing and shall be delivered at least thirty (30) days
prior to the end of the Primary Term or any subsequent Extension Period.
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<PAGE> 2
3. TIME AND EFFORT OF ADVISOR
Advisor shall allocate time and Advisors Personnel as it deems necessary
to provide the Services. The particular amount of time may vary from day
to day or week to week. Except as otherwise agreed, Advisor=s monthly
statement identifying, in general, tasks performed for the Company shall
be conclusive evidence that the Services have been performed.
Additionally, in the absence of willful misfeasance, bad faith,
negligence or reckless disregard for the obligations or duties hereunder
by Advisor, neither Advisor nor Advisor=s Personnel shall be liable to
the Company or any of its any shareholders for any act or omission in
the course of or connected with rendering the Services, including but
not limited to losses that may be sustained in any corporate act in the
Initial Merger, or in any subsequent merger, asset purchase or sale of
assets by the Company, or financing transaction where the Company
provides capital for an interest or rights for a particular business
venture, or any investment undertaken by the Company as a result of
advice provided by Advisor or Advisor=s Personnel (collectively a
"Business Opportunity").
4. COMPENSATION
If, as a result of providing the Services or otherwise, Advisor is
successful effecting the Initial Merger, the Company agrees to pay
Advisor a fee equal to ten percent (10%) of the capitalization (the
"Introduction Fee Shares") of the Company at the closing of the Initial
Merger.
Additionally, following the Initial Merger, if Advisor is successful in
introducing a subsequent Business Opportunity introduced by Advisor
which is acquired in whole or in part, by purchase, merger, or
otherwise, the Company agrees to pay Advisor a fee equal to five percent
(5%) of the value of each Business Opportunity. The fee for the
introduction of each Business Opportunity shall be referred to herein,
in each instance, as the ?Transaction Fee", and such fee shall be
payable upon the closing date each such transaction.
As incentive to execute this Agreement, the Company will cause the grant
to Advisor of an option to purchase shares of common stock of the
Company: The option (the "Option") shall grant Advisor the right to
acquire common stock equal to four and nine-tenths percent (4.9%) of the
shares outstanding of the Company immediately following the Initial
Merger (the "Option Shares") exercisable at a price of one hundred ten
percent (110%) of the 10-day moving average closing bid price per share
of such common stock on the date hereof (the "Exercise Price"). The
right of Advisor to exercise such Option will vest to Advisor upon
execution of a definitive agreement with respect to the Initial Merger.
The Transaction Fee, subject to the conditions set forth herein, may be
paid in cash or in shares of common stock of the Company. The Company
and Advisor acknowledge that in the event Advisor, as a result of this
Agreement, receives shares of Company's common stock, it may be
considered an affiliate subject to Section 16(b) of the Securities
Exchange Act of 1934 (the "'34 Act"). In this regard the Company and
Advisor agree, that for purposes of any "profit" computation under
Section 16(b) of the '34 Act, the price paid for such shares is equal to
the Transaction Fee.
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5. OTHER SERVICES
In addition to the Initial Fee Shares, the Introduction Fee Shares, the
Option Shares and Transaction Fee Shares, if any, Advisor agrees to
provide on-going merger and acquisition prospecting on behalf of the
Company following the Initial Merger and, in consideration for such
advisory services, Advisor shall be entitled to a fee ("Advisory Fee")
equal to Ten Thousand Dollars (USD $10,000), payable monthly in cash or
shares of common stock of the Company (the "Advisory Shares").
6. REGISTRATION OF SHARES
No later than ten (10) days following an event giving rise to the
obligation by the Company to pay Advisor the Fee Shares, to deliver the
Option Shares, or to deliver shares as a Transaction Fee or Advisory Fee
(by issuing shares of its common stock for said fee in lieu of cash),
the Company will cause such shares to be registered with the Securities
and Exchange Commission under a Form S-8 or other applicable
registration statement, and it shall cause such registration statement
to be remain effective at all times while Advisor holds such shares. At
Advisor's election, such shares may be issued prior to registration in
reliance on exemptions from registration provided by Section 4(2) of the
Securities Act of 1933 (the "'33 Act"), Regulation D of the '33 Act, and
applicable state securities laws. Such issuance or reservation of shares
shall be in reliance on representations and warranties of Advisor set
forth herein. Failing to register such shares, or maintain the
effectiveness of the applicable registration statement, the Company
shall satisfy any Transaction Fee and/or Advisory Fee in cash within ten
(10) days of receipt of Advisor's statement setting out the amount and
type of fee then due and payable.
7. COSTS AND EXPENSES
Following the Initial Merger, any and all out-of-pocket expenses
incurred during the Primary Term hereof shall be paid by the Company, or
reimbursed to Advisor if paid by Advisor on behalf of the Company,
within thirty (30) days of receipt of written notice by Advisor,
provided that the Company must approve in advance all such expenses in
excess of $500 per month.
8. PLACE OF SERVICES
The Services provided by Advisor or Advisor's Personnel hereunder will
be performed at Advisor's offices except as otherwise mutually agreed by
Advisor and the Company.
9. INDEPENDENT CONTRACTOR
Advisor and Advisor's Personnel will act as an independent contractor in
the performance of its duties under this Agreement. Accordingly, Advisor
will be responsible for payment of all federal, state, and local taxes
on compensation paid under this Agreement, including income and social
security taxes, unemployment insurance, and any other taxes due relative
to Advisor's Personnel, and any and all business license fees as may be
required. This Agreement neither expressly nor impliedly creates a
relationship of principal and agent, or employee and employer, between
Advisor=s Personnel and the Company. Neither Advisor nor Advisor=s
Personnel are authorized to enter into any agreements on behalf of the
Company.
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<PAGE> 4
10. REJECTED BUSINESS COMBINATION
If, during the Primary Term of this Agreement or any Extension Period,
the Company elects not to proceed to acquire, finance or participate in
any Business Opportunity identified and/or selected by Advisor,
notwithstanding the time and expense the Company may have incurred
reviewing such Business Opportunity, Advisor shall be entitled to
acquire such rejected Business Opportunity for its own account or submit
such Business Opportunity elsewhere, and Advisor shall be entitled to
any and all profits or fees resulting from Advisor's purchase, referral
or placement of any Business Opportunity.
11. NO AGENCY EXPRESS OR IMPLIED
This Agreement neither expressly nor impliedly creates a relationship of
principal and agent between the Company and Advisor, or employee and
employer as between Advisor's Personnel and the Company.
12. TERMINATION
The Company and Advisor may terminate this Agreement prior to the
expiration of the Primary Term upon thirty (30) days written notice with
mutual written consent. Failing to have mutual consent, without
prejudice to any other remedy to which the terminating party may be
entitled, if any, either party may terminate this Agreement with thirty
(30) days written notice under the following conditions:
(A) By the Company.
(i) If during the Primary Term of this Agreement or any Extension
Period, Advisor is unable to provide the Services as set forth
herein for thirty (30) consecutive business days because of
illness, accident, or other incapacity of Advisor=s Personnel;
or,
(ii) If Advisor willfully breaches or neglects the duties required
to be performed hereunder; or,
(B) By Advisor.
(i) If the Company breaches this Agreement or fails to make any
payments or provide information required hereunder; or,
(ii) If the Company ceases its present line of business or, other
than as a result in the Initial Merger or purchase of a
subsequent Business Opportunity, it sells a controlling
interest or substantially all of its assets to a third party,
or agrees to a consolidation or merger of itself with or into
another corporation, or enters into such a transaction outside
of the scope of this Agreement, or sells substantially all of
its assets to another corporation, entity or individual
outside of the scope of this Agreement; or,
(iii) If the Company has a receiver appointed for its business or
assets, or otherwise becomes insolvent or unable to timely
satisfy its obligations in the ordinary course of business
including but not limited to the obligation to pay or cause
the payment of any Transaction Fee(s) or Advisory Fees; or,
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<PAGE> 5
(iv) If the Company institutes, makes a general assignment for the
benefit of creditors, has instituted against it any bankruptcy
proceeding for reorganization for rearrangement of its
financial affairs, files a petition in a court of bankruptcy,
or is adjudicated a bankrupt; or,
(v) If any of the disclosures made herein or subsequent hereto by
the Company to Advisor are determined to be materially false
or misleading.
In the event Advisor elects to terminate without cause or this Agreement
is terminated prior to the expiration of the Primary Term or any
Extension Period by mutual written agreement, or by the Company for the
reasons set forth in A(i) and (ii) above, the Company shall only be
responsible to pay Advisor for unreimbursed expenses accrued up to and
including the effective date of termination. If this Agreement is
terminated by the Company for any other reason, or by Advisor for
reasons set forth in B(i) through (v) above, Advisor shall be entitled
to any outstanding unpaid portion of reimbursable expenses, Transaction
Fees, if any, and the balance of the Advisory Fee for the remainder of
the unexpired portion of the applicable term (Primary Term or Extension
Period) of the Agreement.
13. INDEMNIFICATION
Subject to the provisions herein, the Company and Advisor agree to
indemnify, defend and hold each other harmless from and against all
demands, claims, actions, losses, damages, liabilities, costs and
expenses, including without limitation, interest, penalties and
attorneys' fees and expenses asserted against or imposed or incurred by
either party by reason of or resulting from any action or a breach of
any representation, warranty, covenant, condition, or agreement of the
other party to this Agreement.
14. REMEDIES
Advisor and the Company acknowledge that in the event of a breach of
this Agreement by either party, money damages would be inadequate and
the non-breaching party would have no adequate remedy at law.
Accordingly, in the event of any controversy concerning the rights or
obligations under this Agreement, such rights or obligations shall be
enforceable in a court of equity by a decree of specific performance.
Such remedy, however, shall be cumulative and non-exclusive and shall be
in addition to any other remedy to which the parties may be entitled.
15. MISCELLANEOUS
(A) Subsequent Events. Advisor and the Company each agree to notify the
other party if, subsequent to the date of this Agreement, either
party incurs obligations which could compromise its efforts and
obligations under this Agreement.
(B) Amendment. This Agreement may be amended or modified at any time
and in any manner only by an instrument in writing executed by the
parties hereto.
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(C) Further Actions and Assurances. At any time and from time to time,
each party agrees, at its or their expense, to take actions and to
execute and deliver documents a may be reasonably necessary to
effectuate the purposes of this Agreement.
(D) Waiver. Any failure of any party to this Agreement to comply with
any of its obligations, agreements, or conditions hereunder may be
waived in writing by the party to whom such compliance is owed. The
failure of any party to this Agreement to enforce at any time any
of the provisions of this Agreement shall in no way be construed to
be a waiver of any such provision or a waiver of the right of such
party thereafter to enforce each and every such provision. No
waiver of any breach of or non-compliance with this Agreement shall
be held to be a waiver of any other or subsequent breach or
non-compliance.
(E) Assignment. Neither this Agreement nor any right created by it
shall be assignable by either party without the prior written
consent of the other.
(F) Notices. Any notice or other communication required or permitted by
this Agreement must be in writing and shall be deemed to be
properly given when delivered in person to an officer of the other
party, when deposited in the United States mails for transmittal by
certified or registered mail, postage prepaid, or when deposited
with a public telegraph company for transmittal, or when sent by
facsimile transmission charges prepared, provided that the
communication is addressed:
(i) In the case of the Company:
Scientific NRG, Incorporated
2246 Lindsay Way
Glendora, CA 31740
Telephone: 909-305-0322
Facsimile:
(ii) In the case of Advisor:
NuVen Advisors Inc.
4001 South Decatur Blvd., Suite 37-130
Las Vegas, NV 89103-5800
Telephone: (801) 277-8755
Facsimile: (801) 277-8755
(iii) With a copy to:
Archer & Weed
4695 MacArthur Court, Suite #530
Newport Beach, CA 92660
Telephone: (949) 475-9086
Telefax: (949) 475-9087
or to such other person or address designated in writing by the
Company or Advisor to receive notice.
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(G) Headings. The section and subsection headings in this
Agreement are inserted for convenience only and shall not
affect in any way the meaning or interpretation of this
Agreement.
(H) Governing Law. This Agreement was negotiated and is being
contracted for in the United States, State of California, and
shall be governed by the laws of the State of California, and
United States of America, notwithstanding any conflict-of-law
provision to the contrary.
(I) Binding Effect. This Agreement shall be binding upon the
parties hereto and inure to the benefit of the parties, their
respective heirs, administrators, executors, successors, and
assigns.
(J) Entire Agreement. This Agreement contains the entire agreement
between the parties hereto and supersedes any and all prior
agreements, arrangements, or understandings between the
parties relating to the subject matter of this Agreement. No
oral understandings, statements, promises, or inducements
contrary to the terms of this Agreement exist. No
representations, warranties, covenants, or conditions, express
or implied, other than as set forth herein, have been made by
any party.
(K) Severability. If any part of this Agreement is deemed to be
unenforceable the balance of the Agreement shall remain in
full force and effect.
(L) Counterparts. A facsimile, telecopy, or other reproduction of
this Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument, by one or more parties hereto and such executed
copy may be delivered by facsimile of similar instantaneous
electronic transmission device pursuant to which the signature
of or on behalf of such party can be seen. In this event, such
execution and delivery shall be considered valid, binding and
effective for all purposes. At the request of any party
hereto, all parties agree to execute an original of this
Agreement as well as any facsimile, telecopy or other
reproduction hereof.
(M) Time is of the Essence. Time is of the essence of this
Agreement and of each and every provision hereof.
[Signatures on following page]
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date
above written.
"Advisor"
NUVEN ADVISORS, INC.
a Nevada corporation
By: /s/ FRED G. LUKE
-----------------------------
Name: Fred G. Luke
Title: President
The "Company"
SCIENTIFIC NRG, INCORPORATED
a Minnesota corporation
By: /s/ JONATHAN D. FORGY
-----------------------------
Name: Jonathan D. Forgy
Title: President
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EXHIBIT 10B
FEE AGREEMENT WITH RICHARD O. WEED
FEE AGREEMENT FOR PROFESSIONAL SERVICES
This agreement is between Scientific NRG, Incorporated. ("Client" or
"Company") whose address is 2246 Lindsay Way, Glendora, California 91740 and
Richard O. Weed, of the firm Weed & Co. L.P. ("Attorney") whose address is 4695
MacArthur Court, Suite 530, Newport Beach, California 92660.
Attorney has agreed to provide legal services to Client with respect to
any and all legal matters or special projects referred to Attorney by Client
from time to time. This agreement is made in advance as to the conditions and
guidelines that will govern the relationship between the parties.
To protect both of the parties and to comply with professional
obligations, we have already discussed with each other and resolved any
potential conflicts of interest with present or former clients. The services
that Attorney will provide shall be in accordance with the following terms and
conditions:
PROFESSIONAL FEES
Fees will be based upon the reasonable value of Attorney's services as
determined in accordance with the American Bar Association Model Code of
Professional Responsibility and the California & Texas Rules of Professional
Conduct. Fees will be based on the rates charged by Attorney.
Attorney's rate is $200 per hour. It is anticipated that Client and
Attorney will agree on a fixed fee for special projects from time to time. The
fixed fee arrangements for special projects will be agreed to in writing from
time to time.
Client understands Attorney's billing rate may be reasonably adjusted
from time to time, but not more frequently than annually. Notice of any such
adjustments will be given within a reasonable time. Client further understands
that during the course of Attorney's engagement, it may be necessary or
advisable to delegate various portions of this matter to others.
COSTS AND EXPENSES
Client understands that in the course of representation, it may be
necessary for Attorney to incur certain costs or expenses. Client will reimburse
Attorney for certain costs or expenses
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actually incurred and reasonably necessary for completing the assigned matter,
as long as the charges for costs and expenses are competitive with other sources
of the same products or services. More particularly, Client will reimburse
Attorney in accordance with the following guidelines:
1. Computer-Related Expenses - Client will reimburse Attorney for
computerized research and research services. However, any charges over $500 per
month will require approval. Client also encourages Attorney to utilize computer
services that will enable Attorney to more efficiently manage the projects.
2. Travel - Client will reimburse Attorney for expenses in connection
with out of town travel. However, Client will only reimburse for economy class
travels (except for international travel which shall be business class) and,
where necessary, for the reasonable cost of a rental car. All related travel
expenses, i.e., lodging and meals, must be reasonable under the circumstances.
3. Filing Fees & Court Costs - Client will reimburse Attorney for
expenses incurred in connection with filing fees and court costs, if any, but
will not be responsible for sanctions or penalties imposed due to the conduct of
Attorney.
BILLING
All bills will include a summary statement of the kinds of services
rendered during the relevant period. Client expects that Attorney will maintain
back-up documentation for all expenses. Client expects to be billed monthly or
at the conclusion of each project and expects to pay Attorney's invoices as
described below.
PAYMENT
As payment for services and costs, Client has proposed and Attorney has
agreed, that Client place a block of 300,000 shares of free trading Company
stock in Attorney's name with a national securities broker. At least once a
month, Attorney will send Client a statement for fees and costs, with written
notice to the brokerage firm of the dollar amount of such statement. Unless
objection is made to the bill, sufficient Company stock, net of commission,
shall then be liquidated forthwith at the prevailing market rate to satisfy such
statement. Attorney has not been engaged to perform, nor will Attorney agree to
perform any services in connection with a capital raising transaction in
exchange for shares. The rules and regulations of the United States Securities
and Exchange Commission do not allow the use of a Form S-8 registration
statement under such circumstances. Any fees for services that are in connection
with a capital raising transaction shall be paid in cash.
In the course of Attorney's representation of the Company, if all the
stock is liquidated, a new block of stock sufficient to cover projected fees and
costs, in an amount contemporaneously
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agreed to by the parties, will again be placed with the brokerage firm, under
the terms and conditions outlined above. At the conclusion of Attorney's
representation of Client and the payment of all final fees and costs, any unused
stock shall forthwith be returned to Client.
Client has agreed to promptly register such blocks of stock pursuant to
Form S-8 at its own expense and deliver such stock to the Attorney or brokerage
firm upon the filing and effectiveness of the Form S-8 Registration Statement.
STOCK OPTION
As an incentive for Attorney to represent the Client and to increase
Attorney's proprietary interest in the success of the Company, thereby
encouraging him to maintain his relationship with the Company, the Client hereby
grants to Attorney the option to purchase up to 1,000,000 shares of the Client's
common stock at a price of $.30 per share (the "Option"). The Option is
non-transferable and will expire unless exercised on or before December 31,
2004. Client has agreed to promptly register the shares of common stock
underlying the Stock Option on Form S-8 at its own expense.
INVOLVEMENT OF CLIENT
Client expects to be kept closely involved with the progress of
Attorney's services in this matter. Attorney will keep Client apprised of all
material developments in this matter, and, in the case of litigation or
administrative proceedings, will provide sufficient notice to enable a
representative to attend meetings, conferences, hearings and other proceedings.
A copy of all correspondence in the course of Attorney's services will be
forwarded to Client.
There may be times when Attorney will need to obtain information from
Client. All requests for access to documents, employees, or other information
shall be granted without unreasonable delay. At the conclusion of this matter,
all documents obtained shall be returned upon request.
TERMINATION
Client shall have the right to terminate Attorney's engagement by
written notice at any time. Attorney has the same right to terminate this
engagement, subject to an obligation to give Client reasonable notice to permit
it to obtain alternative representation or services and subject to applicable
ethical provisions. Attorney will be expected to provide reasonable assistance
in effecting a transfer of responsibilities to the new firm.
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DISPUTES
The laws of the State of California shall govern the interpretation of
this agreement, including all rules or codes of ethics which apply to the
provision of services. Other than disputes involving fees, that are covered by
the Mandatory Fee Arbitration Statutes, all disputes between us arising out of
this agreement which cannot be settled, shall be resolved through binding
arbitration in Orange County, California in accordance with the rules for
resolution of commercial disputes, then in effect, of the American Arbitration
Association, and judgment upon the award may be entered in any Court having
jurisdiction thereof. It is further agreed that the arbitrators may, in their
sole discretion, award attorneys' fees to the prevailing party.
Dated: July 1, 1999
Client
Scientific NRG, Incorporated
By: /s/ Fred G. Luke
------------------------------
Name: Fred G. Luke
Title: President
Weed & Co. L.P.
By: /s/ Richard O. Weed
------------------------------
Name: Richard O. Weed
Title: General Partner
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EXHIBIT 24.1
CONSENT OF RICHARD O. WEED TO USE OF OPINION
WEED & CO. L.P.
4695 MACARTHUR COURT, SUITE 530, NEWPORT BEACH, CALIFORNIA 92660
TELEPHONE (949) 475-9086 FACSIMILE (949) 475-9087
EMAIL: [email protected]
WRITER'S DIRECT NUMBER
(949) 475-7730
July 14, 1999
Board of Directors
Scientific NRG, Incorporated
2246 Lindsay Way
Glendora, CA 91740
RE: Consent to Use of Opinion in Form S-8 Registration Statement
Dear Members of the Board:
I hereby consent to the use of my opinion as an exhibit to the Form S-8
registration statement being filed by Scientific NRG, Incorporated.
Sincerely yours,
/s/ RICHARD O. WEED
------------------------------
Richard O. Weed
<PAGE> 1
EXHIBIT 24.2
CONSENT OF CORBIN & WERTZ
CONSENT OF INDEPENDENT AUDITORS
Board of Directors
Scientific NRG, Incorporated
We agree to the incorporation by reference in this Registration Statement on
Form S-8, and in the Section 10(a) prospectus referred to therein, of our report
dated August 3, 1998, on our audits of the financial statements of Scientific
NRG, Incorporated (the "Company") as of June 30, 1998, and for each of the years
in the two-year period then ended, which report is included in the Company's
1998 Annual Report on Form 10-KSB.
/s/ CORBIN & WERTZ
----------------------------------
Corbin & Wertz
Irvine, California
July 14, 1999
