SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
November 7, 1997
Date of Report
(Date of earliest event reported)
POWERCOLD CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 319584 23-2582701
(State of Incorporation) (Commission File No.) (IRS Employer Ident. No.)
103 GUADALUPE DRIVE
CIBOLO, TEXAS 78108
(Address of principal executive offices)
210 659-8450
(Registrant's telephone number)
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ITEM 1 - CHANGES IN CONTROL OF REGISTRANT
None
ITEM 2 - ACQUISITION OR DISPOSITION OF ASSETS
None
ITEM 3 - BANKRUPTCY OR RECEIVERSHIP
None
ITEM 4 - CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
None
ITEM 5 - OTHER EVENTS
Mr. Thomas F. Reece has been elected a Director and appointed President of
Nauticon, Inc., effective October 30, 1997. Mr. Reece was recently appointed
Vice president of Marketing for Nauticon. After a few short months as
Nauticon's Sales Manager, Mr. Reece's sales and marketing skills attributed to
significant orders and revenue for Nauticon.
Mr. Reece came to Nauticon with a very credible background in sales, marketing
and administration of industrial related products. Prior to accepting the
position of Sales Manager for Nauticon, Mr. Reece held successful positions
over the last ten years as a Product Manager, Director of Sales and most
recently Vice President of Sales, Marketing and Administration for Conservatrol
Sales, Greensboro, NC. Mr. Reece's background and experience
will support and enhance Nauticon's position in the industry.
ITEM 6 - RESIGNATIONS OF REGISTRANT'S DIRECTORS
The Board of Directors of the Registrant accepted the resignation of Robert D.
Klages as Secretary and Director of the Company effective October 23, 1997.
On October 29, 1997, the Board of Directors of the Registrant, by majority
vote, removed Robert E. Jenkins from the Board of Directors of the Company.
The Board of Directors of the Registrant accepted the resignation of Robert E.
Jenkins as an officer and/or director of the Company and its subsidiary,
Nauticon, Inc. effective October 30, 1997.
(a). Disagreement with Robert E. Jenkins:
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Management disagrees with the contents of Mr. Jenkins resignation letter. Mr.
Jenkins disagrees with the contents of the PowerCold Corporation Corporate
Resolution, dated September 20, 1997, because it makes reference to the
Company's Reorganization and New Corporate Operations that directly effects Mr.
Jenkins and Nauticon, Inc. It is obvious that this was the first time that Mr.
Jenkins has not agreed with the Company's Board of Directors' Meetings and
Corporate Resolutions. As a Director of PowerCold Corporation, since September
1, 1995, Mr. Jenkins has accepted and signed every other Corporate Resolution
that resulted from nine (9) such Board of Director's Meetings.
Mr. Jenkins states that he could not support the Company's New Corporate Policy
because he was not provided with the necessary information. Mr. Jenkins was
previously informed of the contents of the PowerCold Corporation Corporate
Resolution, dated September 20, 1997, at a September 12, 1997 meeting in
Cibolo, Texas he attended, which included two other Company directors and two
additional Company representatives. At that meeting Mr. Jenkins was informed on
every issue that was related, resolved and approved by the September 20, 1997
Corporate Resolutions. Specifically one of the Corporate Resolutions related
directly to a Memo, dated September 14, 1997, which was sent to all Directors
and Subsidiary Company Presidents including Mr. Jenkins. The Memo referenced
the detailed reorganization outline of the New Corporate Operations discussed
at length at the September 12, 1997 Management Meeting. Mr. Jenkins has
purposely disregarded the September 12th Meeting, the September 14th Memo and
the September 20th Corporate Resolutions. Mr. Jenkins disregarded additional
Memo's of October 1, 1997 and October 2, 1997, which outlined the new operating
procedures for Nauticon's operations. Mr. Jenkins disregarded Company policy
because he will not accept the New Corporate Reorganization intended to reduce
overhead expenses and improve accounting controls. Mr. Jenkins ignores
corporate policy directed by a majority vote of the Company Directors by
refusing to cooperate with management and its new operating procedures because
of his self-serving interests.
Mr. Jenkins' allegations that PowerCold is responsible for Nauticon's failure
to pay outstanding accounts payables and payroll taxes and that PowerCold has
not provided Nauticon with necessary capital are untrue. The Directors of
PowerCold Corporation, which included Mr. Jenkins, sets policy for its
subsidiaries, which sometimes included arranging funding for its subsidiaries
to have a working line of credit only on an "as needed" basis. As President of
Nauticon it was Mr. Jenkins fiduciary responsibility to not only manage its
operations but also manage its operating capital. PowerCold has provided
Nauticon with approximately $700,000 of working capital. And todate Mr.
Jenkins' decisions have left Nauticon with some $250,000 in payables. The
Directors are also concerned with the amount of time Mr. Jenkins dedicated to
running Nauticon. There are reasons to believe that Mr. Jenkins did not devote
his full time to the daily operations of Nauticon, but rather other and
conflicting interests. No Company or Subsidiary Executive receives a salary
except Mr. Jenkins who is paid $96,000 annually. Mr. Jenkins mismanagement and
deficiency of Nauticon operations is one of the main reasons the Board of
Directors decided to reorganize Company operations. Mr. Jenkins letter offers
allegations which are excuses for not successfully managing Nauticon. Mr.
Jenkins failure to carry out responsibilities as Nauticon's President resulted
in the mismanagement of operations and operational losses estimated over
$600,000.
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On October 28, 1997, Mr. Jenkins made subjective comments and innuendoes about
the Company and its President, Francis L. Simola, as well as threats of legal
action. Mr. Jenkins also related that he owned the patents for the Nauticon
condenser, and threatened to sell or license the patents to other companies.
This was the first time, at that meeting, that Company Directors and management
became aware that Mr. Jenkins never assigned the patents to Nauticon in August
1995. Management believes that Mr. Jenkins, as a director of the Company and as
a director and officer of Nauticon has been deceptive in misrepresenting
Nauticon's ownership of patents to the Company and its shareholders. When the
Company acquired Nauticon, Inc. in August 1995, Mr. Jenkins represented that
Nauticon assets included patents and technology.
Mr. Jenkins has also failed and refused to deliver all the books and records of
Nauticon after he resigned from his positions as an officer and/or director of
PowerCold Corporation and Nauticon, Inc.
The Company has engaged legal counsel to effect the return of all Company
property. It is of the opinion of the Directors and legal counsel that
rightfully and legally the books and records and the patents all belong to
Nauticon, Inc.
ITEM 7 - FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
Exhibits:
1. Letter of resignation from Robert E. Jenkins.
ITEM 8 - CHANGE IN FISCAL YEAR
None
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: November 7, 1997
POWERCOLD CORPORATION
/s/Francis L. Simola
-------------------
Francis L. Simola
President/CEO
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ROBERT E. JENKINS
October 29, 1997
Mr. Frank Simola
PowerCold Corporation
9408 Meadowbrook
Philadelphia, Pa. 19118
Dear Frank:
I recently received a document from you, or from someone in the Company,
entitled "POWERCOLD CORPORATION CORPORATE RESOLUTION." The document recites
that "a Meeting of the Board of Directors held on the 20th day of September
1997" adopted the resolutions set forth in the document. I did not attend any
such meeting and did not receive any notice of such meeting. Obviously, I
cannot indicate my support for the matters contained in the document just
referred to, for the reason that I have not been provided with the necessary
information by which I could make an informed decision whether of not to vote
in favor of those matters.
As you can see from my September 24 letter, I am very concerned about the
direction PowerCold appears to be headed and the lack of any communication with
me as a director of the Company. It is now clear to me that the Company's
board of directors is not functioning in a customary manner. To my knowledge,
since I became a member of the Board of Directors I have received notice of
only one Board meeting, which was the meeting held in December 1996 and which I
did attend. As I have indicated to you before, this is too infrequent for a
Board to meet. Since I have not been kept informed of the developments of the
Company, I have never been in a position to know when meetings should have been
called.
As you are aware, the Company has failed to pay, or cause to be paid, the
federal payroll taxes with respect to the employees of Nauticon, which were due
for the past two quarters, resulting in a delinquency of approximately $20,000
for the second quarter, and approximately $19,000 for the third quarter of this
year, according to my best information. I believe Nauticon is near the point
of bringing in some significant orders: however, the Company has not provided
Nauticon with the capital necessary to continue operations. The lack of timely
capital has been a continuing problem with Nauticon, despite our numerous
requests to the Company and despite the assurances that were made to me when
Nauticon was acquired by the Company.<PAGE>
Simola/Jenkins
October 29, 1997
Page 2
I am in disagreement with the practices of the Company in (i) allowing payroll
taxes to become and remain delinquent, (ii) the untimely payment of its
employees and vendors, (iii) the failure to keep the directors (at least the
undersigned while I was a director) fully informed concerning the material
developments and activities of the Company, (iv) the failure to have
significantly more frequent meetings of the Company, and (v) not capitalizing
the operations of its subsidiary, Nauticon, in a timely manner. All the above
has been exacerbated by the recent revelation of the resignation of Robert D.
Kledges as PowerCold's Secretary and General Council, the resignation of
Cooper's and Lybrand as PowerCold's Corporate Accountant, and your answers or
lack therof to my letter of September 24.
For the above reasons, I have decided to resign, and I do hereby resign, from
all positions I have as an officer and/or director of PowerCold Corporation and
any of its subsidiaries.
I request that this letter be disclosed in a timely filed Form 8-K report of
the Company, as required by Item 6 thereof.
Sincerely,
/s/Robert E. Jenkins
Robert E. Jenkins
This letter was hand delivered on __Oct. 30,___ 1997 to Francis l. Simola,
President and CEO of PowerCold Corporation, who acknowledges its receipt by his
signature hereon.
/s/F Simola
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Francis L. Simola<PAGE>
