transfer agent and registrar for the Company's outstanding shares of Common Stock and warrants. Neither Millennia, Inc. nor Digital Communications Technology Corporation is an affiliate of the Company.
Mr. John D. Kuhns was appointed a director and chairman of the Company on March 31, 2005. Since its founding in 1987 he has been a controlling shareholder, president, CEO, a director and chairman of Kuhns Brothers, Inc., an investment banking firm specializing in providing financing for power technology ventures, and, more recently, manufacturing operations within the People's Republic of China. Kuhns Brothers, Inc. owns 100% of Kuhns Brothers Securities Corporations, a broker dealer, registered with the Securities and Exchange Commission, in which Mr. Kuhns is the Chairman. Since 2002 Mr. Kuhns has been a director and chairman of Distributed Power, Inc., a public company that owns electric generating projects. The neither the foregoing Kuhns companies nor Distributed Power, Inc. are affiliated with the Company. Mr. Kuhns holds a bachelors degree in sociology and fine arts from Georgetown University, a masters degree in fine arts from the University of Chicago and an MBA degree from the Harvard Business School.
Mr Deli Du was appointed president and CEO of the Company on March 31, 2005. Mr. Du was the founder of Bazhou Deli Solar Energy Heating Co. Ltd. (PRC) in 1997 and during the past five (5) years been its controlling equity holder, Chairman and Chief Executive Officer. Since June, 2004 he has been a director and manager of Deli Solar Holding Ltd. (BVI). Deli Solar Holding Ltd. (BVI) is now a wholly-owned subsidiary of the Company, and, in turn, owns all the equity of Bazhou Deli Solar Energy Heating Co., Ltd. (PRC). He is a standing member of the China Solar Energy Utilization Association, the China Efficiency Boiler Association and the Beijing New Energy and Renewable Energy Union.
Mr. Jiamin Li was appointed Treasurer and CFO of the Company on March 31, 2005. Prior thereto, commencing October, 2001, he had been Senior Finance Manager for Tianjin Exist Food Co. Ltd., one of the largest distributors of fast food consumer goods in the Province of Tianjin, PRC. Mr. Li holds a bachelor's degree in economics from the Business College of Beijing Forestry University (1991) and has completed the MBA program at Katholicke University Leuven Vlerick Management School in Belgium (2001).
Ms. Jing Wang was appointed Secretary of the Registrant in May, 2005. She also acts as an assistant to the President, Mr. Deli Du. She is the corporate officer in charge of the Company's compliance with U.S. securities' laws and regulations. Ms. Wang holds a bachelor of architecture from the Beijing Jiao Tong University, a masters degree in real estate finance from the University of New South Wales (Australia), a post graduate degree in commerce from the Chinese Academy of Social Sciences, with English studies at ACCL in Sydney, Australia. From March 2002 to February, 2005 she was with Northcroft (Australia) Pty., Ltd., a company engaged in project, cost and risk management analysis, in which she held the position business development manager. Northcroft is not an affiliate of the Company.
Mr. Kelly Chow holds a bachelor of arts degree from the University of Toronto. From 1996 until May, 2005 he was associated with the investment banking firm of Merrill Lynch, and most currently held the office of vice president. While at Merrill Lynch he was engaged primarily in investment and asset management. Merrill Lynch is not an affiliate of the Company. Presently Mr. Chow is an independent investor and consultant specializing in U.S.-Chinese business and corporate financial affairs.
Mr. Yunjun Luo holds a bachelor's degree in pyrology from the Southeast University (People's Republic of China) with further studies and research within the PRC at The Academy of Social Sciences (structural mechanics), the Commission of Science, Techno and Industry for National
Defense (space satellites) and the Beijing Solar Energy Research Institute (solar heaters). For over five (5) years he has been associated with the Beijing New Energy and Renewable Energy Association, holding the positions of director and vice professor. He is presently a director and chief consultant to Company's subsidiary, Beijing Ailiyang Solar Energy Technology Co., Ltd.
Mr. Ravinder Soin holds chemical engineering degrees from the following institutions in India: B.Sc. from Punjab University, M.E. from Biria Institute of Technology & Science (affiliated with Massachusetts Institute of Technology), Ph. D. from MS University. From 1992 to 2003 he was employed by BP Solar Pty Ltd., an Australian corporation engaged in development and exploitation of solar photovoltaic equipment, where he held the position of director of business development. From 2003 to the present he has been associated as a director of Aus Renewable Energy Ltd., an Australian corporation engaged in the renewable energy business. Neither of these companies is an of the Company. Mr. Soin is currently a member of the Institution of Engineers (Australia), the Australian and New Zealand Solar Energy Society and the Australian China Business Council.
None of Messrs Du, Soin, Luo or Chow are members of any boards of directors of companies with securities registered with the SEC. These nominated directors and Mr. Kuhns will be paid a fee at the annual rate of $20,000 to act in their capacities as directors.
Except as set forth above, all directors hold, and nominated directors will hold, office until the next annual meeting of the shareholders of the Company, and until their successors have been elected, or appointed, and qualified. Officers serve at the discretion of the Board of Directors.
Section 16(a) Beneficial Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company's directors and executive officers, and persons who own more than 10% of a registered class of the Company's equity securities, to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. These insiders are required by Securities and Exchange Commission regulations to furnish the Company with copies of all Section 16(a) forms they file, including Forms 3, 4 and 5. To the Company's knowledge, based solely on review of the copies of such reports furnished to the Company and written representations that no other reports were required, during the calendar year ended December 31, 2004, and to date, all Section 16(a) filing requirements applicable to its insiders were complied with.
LEGAL PROCEEDINGS
The Company is not a party to any pending legal proceedings, nor is its property the subject of any pending legal proceedings, except as to routine litigation, if any, that is incidental to the business of the Company.
CORPORATE GOVERNANCE
The Company does not maintain an Audit Committee, Nominating Committee or Compensation Committee. The Company's Board of Directors intends to nominate at the next shareholders' meeting one or more directors, including independent directors, to perform these functions. Until the new Board of Directors has been constituted (See "CHANGE OF CONTROL", above.) shareholders may communicate with the Board of Directors through Mr. John D. Kuhns, one of the directors, at the email address jdkuhns@kuhnsbrothers.com. Thereafter the Board of Directors intends to have established a web site through which shareholders may access phone numbers and email addresses for the Company in order to send messages to and communicate with members of the Board.
Upon the appointment of the nominated directors and the resignation of Mr. Kevin Halter, Jr. as a director, the Company intends to create a nominating committee consisting of its Chairman Mr. Kuhns, its CEO and director Mr. Deli Du, and an independent director to be selected by the board.
During the last full fiscal year the Company held no scheduled or special meetings of its board of directors.
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EXECUTIVE COMPENSATION
For a period of over five (5) years prior to March 31, 2005, the Company paid no compensation to its officers or directors; and no stock options or other stock-based remuneration have been issued in connection with executive compensation.
Mr. Jiamin Li, the CFO of the company, presently receives a salary from the Company paid at the annual rate of $20,000; and Ms. Jing Wang, corporate Secretary of the Company, presently receives a salary paid at the annual rate of $30,000. The compensation paid to these executives is net of income tax, which will be paid by the Company.
As CEO of the Company Mr. Deli Du is presently paid a salary at the annual rate of $80,000. During each of the past three (3) full calendar years Mr. Du received no compensation from the Company or any of its present subsidiaries, including the Deli companies, other than RMB 12,000 (app. $1,451) from Deli Solar Energy Heating Company Co., Ltd. and its affiliates as chief executive officer
None of the above-named executives receives, nor during the Company's past full three (3) full fiscal years, has received any long term compensation from the Company or any of its affiliates.
The Company has no policy at this time for paying bonuses to its executives; however, the Company's Board of Directors is considering the adoption of a stock option plan to benefit its executive and other key employees.
PAYMENTS FOR SERVICES TO AFFILIATES OF DIRECTOR
AND NOMINEE DIRECTOR
Under a advisory agreement the following two corporations, controlled by the director, John D. Kuhns, rendered investment banking and financing services to Deli (PRC), now a wholly owned subsidiary of the Company, during the six (6) month period ending March 31, 2005. These services included (i) investment advisory services rendered by Kuhns Brothers, Inc., for which it was paid was paid $100,000 and a financing fee of $287,401 plus 728,037 shares of the Company's Common Stock and warrants (Exp. 3/30/15) to purchase 164,229 shares of the Company's Common Stock at $3.85 per share. In addition the Company has entered into an agreement, dated April 1, 2005, with Kuhns Brother, Inc. to render financial advisory and consulting services to the Company and its subsidiaries for the period ending December 31, 2005, for which Kuhns Brothers, Inc. is to be paid $10,000. per month commencing April 1, 2005.
PAYMENTS FOR SERVICES TO AFFILIATES OF DIRECTOR
AND NOMINEE DIRECTOR
Under an advisory agreement the following two corporations, controlled by the Company's director and chairman John D. Kuhns, rendered investment banking and financing services to Deli (PRC), now a wholly owned subsidiary of the Company, during the six (6) month period ending March 31, 2005. These services included (i) investment advisory services rendered by Kuhns Brothers, Inc., for which it was paid was paid $100,000 and a financing fee of $287,401 plus 728,037 shares of the Company's Common Stock and warrants (Exp. 3/30/15) to purchase 935,088 shares of the Company's Common Stock at $3.85/6 per share. In addition the Company has entered into an agreement, dated April 1, 2005, with Kuhns Brother, Inc. to render financial advisory and consulting services to the Company and its subsidiaries for the period ending December 31, 2005, for which Kuhns Brothers, Inc. is to be paid $10,000. per month commencing April 1, 2005.
By agreement dated June 1, 2005, Deli (PRC) entered into agreement with Aus Renewable Energy Ltd., an Australian corporation with an office in Hong Kong (the "Consultant"), whereby Consultant agreed to assist in developing international markets for the products and technologies of Deli (PRC). The Consultant is owned entirely by Ravinder Soin, one of the nominee directors of the Company. The agreement has a term of 12 months, and provides for a payment of US $60,000 to Consultant payable at the bimonthly rate of $10,000 plus (i) reimbursement of travel expenses and (ii) commissions based upon percentages to be agreed of sales and "technology transfers" once sales exceed US $1 million.
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PAYMENTS TO CERTAIN SHAREHOLDERS OF THE COMPANY
Under two separate advisory agreements with Deli (PRC), dated February 3, 2004 and March 31, 2004, respectively, Greenstone Investments & Consultants Ltd., a corporation organized under the laws of the People's Republic of China based in Beijing ("Greenstone"), agreed to render financial and management consulting services during a one year period ended March 31, 2005. Greenstone is controlled by Messrs. Yousu LIN, Qian WANG and Yunchun WANG. (See "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS".) These services included strategic planning, organizational restructuring, assistance in the preparation of business plan, new business development, improvements on governance, preparation for financial audits and recruitment of suitable independent members to be nominated to the board of directors of the Company. For such services Greenstone was paid $50,000 and Messrs. Yousu LIN, Qian WANG and Yunchun WANG received shares in Deli (PRC) which they then exchanged for shares of the newly-formed holding company, Deli (BVI), which in turn they then exchanged for shares of the Common Stock of the Company in the amounts set forth above in "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS".
Greenstone entered into an additional agreement with Deli (PRC) on May 18, 2005, to render financial and management consulting services to Deli (PRC). These services include provision of executive human resourcing, management consultation, consultation as to project development and mergers and acquisitions, and financial advisory services. Greenstone is entitled to be paid US$100,000 for these services of which US$50,000 has been paid and the balance is due by the agreement's termination date on May 18, 2006.
 | By Order of the
Board of Directors |
| /s/ John D. Kuhns
John D. Kuhns, Chairman |
July 7, 2005
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