SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 and 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): June 25, 2004 (June 25, 2004)
ONLINE POWER SUPPLY, INC.
- --------------------------------------------------------------------------------
Exact Name of Registrant as Specified in its Charter)
Nevada 00-29669 84-1176494
- ---------------------------- --------------------- --------------------
(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation) Identification No.)
8100 South Akron Street, Suite 308
Englewood, Colorado 80112 80112
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (303) 741-5641
Not Applicable
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(Former Name, Former Address or Former Fiscal Year,
if Changed From Last Report)
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
See Attached News Release with Motion and Form of Order.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ONLINE POWER SUPPLY, INC.
Dated: June 25, 2004 By: /s/ Gary Y Young
-------------------------------
GARY YOUNG,
Chief Executive Officer
[GRAPHICS OMITTED - COMPANY LOGO]
FOR IMMEDIATE RELEASE: NEWS
June 25, 2004 OTC-OPWR
OPS AGREES TO AUCTION ASSETS
CENTENNIAL, COLO. - OnLine Power Supply, Inc.-OPS (OTC-OPWR), which filed for
protection under Chapter 11 of the Bankruptcy Code on May 14, 2004, announced
today that it has filed a motion with the Bankruptcy Court to sell substantially
all of its assets, including patents, equipment, inventory and other assets used
in connection with its business as a going concern at auction to Saturn
Engineering and Electronics, Inc. ("Saturn") for $400,000.00, subject to higher
and better offers. Saturn will be allowed to credit the outstanding balance due
on certain debtor in possession financing provided by Saturn. OPS will retain
its interest in its cash, accounts receivable, litigation and avoidance actions.
The auction of the assets is scheduled for 10:00 a.m. on Friday, August 20, 2004
at the offices of Sender & Wasserman, P.C., 1999 Broadway, Suite 2305, Denver,
CO 80202. The Bankruptcy Court has also scheduled a hearing on the approval of
the Motion to Sell and the selection of the Successful Bidder for August 20,
2004 at 1:30 p.m. in Courtroom C of the United States Bankruptcy Court, 721 19th
Street, Denver, CO 80202. Under the terms of the proposed sale, following Court
approval, OPS will cease to operate, the case will be converted to a Chapter 7
and thereafter OPS's remaining assets will be liquidated and distributed to
OPS's creditors. At the present time, OPS does not believe there will be any
equity remaining after the payment of debts for distribution to the shareholders
Any party who is interested in participating in the auction of the assets of OPS
should contact the company or its counsel for a copy of the Order establishing
the sale and auction procedures and other relevant information.
On June 3, 2004, the Bankruptcy Court entered its Order authorizing OPS to
borrow up to $125,000.00 from Saturn, in order to allow OPS to continue to
operate pending the consummation of the sale of OPS's assets. The borrowing is
secured by substantially all of OPS's assets.
Copies of all pleadings can be obtained through the U.S. Bankruptcy Court for
the District of Colorado.
OPS holds a U.S patent for the process of producing AC to DC power supplies that
provide efficiencies of up to 97 percent, extended operating temperature ranges
and above average power densities, all with no magnetic thermal deration. This
innovation is called Distributed Power Magnetics (DPM) and is the first
significant breakthrough in power supply technology in over 23 years. The
sophisticated DPM products also boast impressive MTBF statistics, all in the
lightest and smallest footprint available for their particular configurations.
Benefited industries include telecommunications, data communications, networking
and industrial. For additional information, visit www.powersupply.com, or call
1-800-445-4824.
CONTACT: CONTACT:
John Wasserman, Esq. Christie Maxwell
Sender & Wasserman, P.C. Vice President of Operations
jwass@sendwass.com OnLine Power Supply, Inc.
Tel: 303-296-1999 cmaxwell@powersupply.com
Tel: 303-705-5259
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF COLORADO
In re: )
)
ONLINE POWER SUPPLY, INC. )
a Nevada corporation )
) Bankruptcy Case No. 04-20467-ABC
TIN: 84-1176494 ) Chapter 11
)
Debtor. )
________________________________________________________________________________
________________________________________________________________________________
MOTION TO APPROVE SALE OF SUBSTANTIALLY ALL OF THE ASSETS OF THE
ESTATE, FREE AND CLEAR OF LIENS, CLAIMS AND INTERESTS,
PURSUANT TO 11 U.S.C. SS.363(B) AND (F)
________________________________________________________________________________
OnLine Power Supply, Inc., Debtor in Possession herein, by and through its
counsel Sender & Wasserman, P.C. and for its Motion for Approval of Sale of
Substantially All of the Assets of the Estate, Free and Clear of Liens, Claims
and Interests, pursuant to 11 U.S.C.ss.363(b) and (f), hereby states as follows:
1. The Debtor filed its petition for relief under Chapter 11 of the
Bankruptcy Code on May 14, 2004, and since that date has been operating as a
Debtor in Possession.
2. The Debtor is engaged in the design, manufacture, marketing, sale and
distribution of power supply technology and products that convert AC power from
primary sources to precisely controlled DC power for sensitive electronic
products (the "business").
3. On May 14, 2004, the Debtor filed its Motion to Approve Debtor in
Possession Financing as well as an Motion for Interim Order Approving Debtor in
Possession Financing and a request for an emergency hearing thereon. Saturn
Electronics & Engineering, Inc. ("Saturn"), has agreed to provide the Debtor
with Debtor in Possession Financing up to $125,000 under the provisions of 11
U.S.C. ss.364(c)(1) and (c)(3), to enable the Debtor to maintain its operations
pending a sale pursuant to 11 U.S.C. ss.363. A Final Order approving the Debtor
in Possession Financing entered on June 3, 2004.
4. An Asset Purchase Agreement has been negotiated between the Debtor and
Saturn, whereby Saturn directly or through one or more of its affiliates or
acquisition entities to be created intend to purchase, subject to the approval
of this Court, substantially all of the equipment, inventory and other assets
used by the Debtor in connection with the Business as a going concern and
substantially all goodwill, intellectual property, contracts, purchase orders
and intangibles associated therewith (collectively the "Assets"). The Assets
will be purchased free and clear of all liens and claims. Saturn has offered to
purchase the Assets in exchange for cash in the amount of $400,000.00 (which
amount shall include a credit for the outstanding balance
due to Saturn for the Debtor in Possession Financing plus Saturn's reasonable
non-default legal fees up to a maximum of $25,000.00 associated with the Debtor
in Possession Financing). The Debtor will retain its interest in its cash,
accounts receivable, litigation (other than claims against Saturn) and avoidance
actions.
5. Subject to application and further order of the Court, Saturn, if it
is not the Successful Bidder, shall be entitled to receive from the proceeds of
the sale, reimbursement of its reasonable fees and expenses incurred in the
negotiation and preparation of the Asset Purchase Agreement, due diligence and
participation in the auction (including its reasonable professional fees) up to
a maximum of $25,000.00 (the "Due Diligence Expenses"); provided, that any
non-default fees and expenses reimbursed to Saturn under the Debtor in
Possession Financing shall be credited against the $25,000.00 maximum.
6. The following is a summary of the pre-petition relationship between
the Debtor and Saturn:
1. Saturn owns 1,000,000 shares of the Debtor's common stock which
represents 4.7% of the outstanding stock.
2. During the period March 2000 to August 2002, Saturn served as the
exclusive manufacturer of the Debtor's power conversion units. As of
the petition date, the Debtor owed Saturn $1,400,000 which stemmed
from that relationship.
3. During the course of the contract manufacturing relationship, the
Debtor delivered test equipment to Saturn at its facility in de
Monterrey, Mexico, which equipment is still being held by Saturn and
is included in the proposed asset sale. The equipment was purchased
between 1999 and 2000 for a price of approximately $300,000. The test
equipment has an estimated current market value between $20,000 to
$40,000.
4. The Debtor and Saturn are also parties to a lawsuit pending in the
U.S. District Court for Colorado in which the Debtor claimed breach of
contract, unjust enrichment, tortious interference and breach of
fiduciary duty. Saturn filed a counterclaim principally for (i)
injunctive relief, requesting that an order be entered by the court
enjoining the Debtor from transferring its manufacturing business to
OEM; and (ii) breach of contract for nonpayment of at least $1.4
million for the manufacture of product. In furtherance of its
counterclaim for injunctive relief, Saturn filed a motion for
preliminary injunction, requesting the court to order the Debtor to
send all its manufacturing business to Saturn and not take any action
to continue the Debtor's relationship with OEM. Since April 2003, no
significant action has taken place in the case while the parties tried
to reach a settlement. The District Court recently entered a Show
Cause Order to show why the case should not be dismissed. The Debtor
chose not to prosecute its action, however, Saturn is pursuing a
default judgment against the Debtor which was scheduled to be heard or
ruled upon on May 15, 2004, which action has been stayed by the filing
of the petition. Debtor has acknowledged in
connection with the Debtor in Possession Financing that Saturn is
owed, prepetition, an unsecured claim of at least $1,400,000.
7. The only secured creditor of the estate is OEM Worldwide, LLC ("OEM")
which holds a secured claim arising from an agreement between the Debtor and OEM
under which OEM buys raw materials and manufactures finished products for the
Debtor. The finished products are sold to third parties. OEM holds a perfected
security interest in the account receivable generated from the sale of the
finished products. As of the petition date, OEM's secured claim was scheduled in
the amount of $33,138.16. On May 14, 2004, the Debtor filed its Motion to
Approve Stipulation with OEM Worldwide, LLC re Authorizing Use of Cash
Collateral, for Post-Petition Financing, Providing Adequate Protection and
Modifying Automatic Stay. No objections were received after notice and a final
order approving the Stipulation entered on June 3, 2004. Under the Stipulation,
OEM is granted a replacement lien in the Debtor's post-petition receivables, to
the extent of the use of cash collateral and is further granted a security
interest in the Debtor's post-petition accounts receivable generated from the
sale of OEM manufactured products up to the post-petition payable due to OEM.
8. In addition, there may be tax liens arising from prepetition sales and
personal property taxes owing to Arapahoe County and the Colorado Department of
Revenue. The Debtor has scheduled property tax obligations owing to Arapahoe
County in the amount of $35,163.84.
9. The sale to Saturn shall be subject to an auction procedure and other
higher and better offers. The Bankruptcy Court has approved procedures for the
auction and sale of the Assets, a summary of which is attached hereto as EXHIBIT
B. The auction is scheduled for 10:00 a.m. on Friday, August 20, 2004 at the
offices of Sender & Wasserman, P.C., 1999 Broadway, Suite 2305, Denver, CO
80202. The Bankruptcy Court has also scheduled a hearing on the approval of the
Motion to Sell and the selection of the Successful Bidder for August 20, 2004 at
1:30 p.m. in Courtroom C of the United States Bankruptcy Court, 721 19th Street,
Denver, CO 80202. Under the terms of the proposed sale, following Court
approval, the Debtor will cease to operate, the case will be converted to a
Chapter 7 and thereafter the Debtor's remaining Assets will be liquidated and
distributed to the Debtor's creditors.
10. The Debtor requests that the Court approve the sale of the Assets,
free and clear of all claims, liens and interests, under the provisions of 11
U.S.C. ss.363(f). The sale free and clear of liens, claims and interests is
proper under 11 U.S.C. ss.363(f)(3) as the proceeds will be sufficient to pay
the secured claims in full. The secured claims will be paid from the proceeds of
the sale and the liens will attach to such proceeds pending payment. It is in
the best interest of the Debtor, its estate and creditors to accept the offer of
Saturn for the purchase of substantially all of Debtor's assets, as heretofore
described, subject to higher or otherwise better competitive bids
WHEREFORE, the Debtor respectfully requests that this Court enter an Order
in the form attached, approving the sale of the Assets to Saturn, under the
terms and conditions of the Asset Purchase Agreement, attached hereto as EXHIBIT
A, subject to higher or otherwise better competitive bids and for such other and
further relief as the Court deems just.
Respectfully submitted this 18th day of June, 2004.
SENDER & WASSERMAN, P.C.
By:_________________________________________
John B. Wasserman, #10011
Bonnie Bell Bond, #14923
1999 Broadway, Suite 2305
Denver, Colorado 80202
(303) 296-1999; (303) 296-7600 (fax)
bbond@sendwass.com
ATTORNEYS FOR ONLINE POWER
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF COLORADO
IN RE: )
)
ONLINE POWER SUPPLY, INC., ) Case No. 04-20467 ABC
a Nevada Corporation, ) Chapter 11
)
TIN: 84-1176494 )
)
Debtor. )
________________________________________________________________________________
ORDER APPROVING MOTION FOR APPROVAL OF: (1) PROCEDURES
FOR SALE OF ASSETS, (2) BREAK UP FEE AND
(3) NOTICE OF SALE TO EQUITY SECURITY HOLDERS
________________________________________________________________________________
THIS MATTER, having come before the court on Debtor's Motion for Approval
of (1) Procedures for Sale of Assets, (2) Break Up Fee and (3) Notice of Sale to
Equity Security Holders, the Debtor having provided proper notice of the Motion
pursuant to Local Rule 202, and being duly advised herein, hereby
FINDS notice of the Motion and notice of the hearing on the Motion
were appropriate in accordance with the Bankruptcy Code, the Federal Rules of
Bankruptcy Procedure and the Local Rules of Bankruptcy Procedure,
FURTHER FINDS the bid and auction procedures contained in paragraph 7
of the Motion, as modified at the Court's hearing on June 3, 2004, are fair and
reasonable,
FURTHER FINDS that in resolution of the Objection filed by the Office
of the United States Trustee to the Break Up Fee that the Debtor and Saturn have
withdrawn the request for approval of a Break Up Fee preserving the request for
payment of Due Diligence Expenses as set forth in this Order, and
ORDERS the Motion be and hereby is GRANTED, and the Court approves the
following bid and auction procedures:
1. The auction shall be conducted at 10:00 a.m. on Friday, August 20,
2004 at the offices of Sender & Wasserman, P.C., 1999 Broadway, Suite
2305, Denver, CO 80202. Parties wishing to submit overbids must appear
either in person or by telephone. Any party appearing by telephone
shall advise Debtor=s counsel of the number they can be reached at the
time of the auction.
2. Only bidders who have pre-qualified ("Qualified Bidders") shall be
entitled to bid at the auction. Saturn shall be deemed a Qualified
Bidder and shall be entitled to credit bid the outstanding balance of
the Debtor in Possession Financing (including its reasonable
attorney's fees associated with the Debtor in Possession Financing) as
provided in the Motion. All other bidders must qualify by delivering
to Debtor's counsel by 5:00 p.m. on Thursday, August 19, 2004, a
$50,000 deposit ("Earnest Money") in the form of a cashier's check and
provide proof to the Debtor and its counsel demonstrating financial
ability to close. The Earnest Money will be deposited in an escrow
account maintained by Debtor's counsel or held by Debtor's counsel if
the Earnest Money is in the form of a cashier's check. The Debtor's
counsel will keep the information supplied concerning each bidder's
level of financial ability confidential throughout the bidding
process. Earnest Money of all Qualified Bidders other than the
Successful Bidder shall be returned within ten (10) days after the
conclusion of the Court's Hearing on the approval of the Successful
Bidder.
3. The Debtor, subject to execution of an appropriate confidentiality
agreement, shall provide prospective bidders with reasonable access to
the Debtor's personnel and business records for the purpose of
carrying out due diligence related to the submission of bids.
4. The Debtor's counsel shall announce the opening of the auction. The
Saturn Agreement shall be deemed the opening bid at the auction.
Subsequent bids for the assets shall be considered in order by date
and time of qualification as a Qualified Bidder. The first bid after
the opening must be in the aggregate amount of $50,000 more than the
Saturn Agreement and successive bids must be in the aggregate amount
of $20,000 more than the prior bid. All bids shall be in writing on
Bid Forms supplied by the Debtor.
5. Each bid shall be a "firm offer" to purchase the Assets on the terms
of the Saturn Agreement with no other contingencies of any nature or
kind whatsoever. Overbids should not be conditioned upon due diligence
to be performed subsequent to the hearing on approval of the sale.
Overbidders shall be responsible for the payment of all costs and
expenses incurred in connection with their due diligence
investigation.
6. Upon receipt of each bid, the Debtor's counsel will announce the name
of the bidder, the aggregate amount of the bid, the allocation, if any
in the bid, and will describe any additional terms contained in the
bid. The Debtor's counsel will determine if each successive bid
conforms to these rules and if such bid is higher and better than the
previous bid. If Debtor's counsel determines a bid is higher and
better, he will declare it to be the then current lead bid and all
Qualified Bidders will be allowed to submit new bids. If the bid does
not conform to the rules or is not higher and better, the Debtor will
reject the bid and the then current lead bid will continue as a
current lead bid.
7. If a creditor's committee is formed, a representative of the committee
may be present at the auction and shall be allowed to participate in
all decisions regarding the qualification of prospective bidders, the
conduct of the auction and the selection of the winning bid.
8. A reasonable amount of time between rounds of bidding shall be
allowed. Bidding shall continue among Qualified Bidders until, in the
Debtor's opinion, the bidding is exhausted, at which time the Debtor's
counsel shall announce that the auction has concluded. The current
lead bid at the conclusion of the auction shall be determined to be
the Successful Bidder. The bidding shall be final at the conclusion of
the auction with no further right to bid. In the event the sale to the
Successful Bidder does not close, the Debtor shall be authorized to
sell to the next highest bidder.
9. If no bid is received equaling or exceeding the minimum bid amount for
the assets, the Debtor will sell the property pursuant to the pending
Asset Purchase Agreement with Saturn.
10. At the hearing on the Sale Motion, the Debtor's counsel shall identify
the Qualified Bidder who is determined to be the Successful Bidder at
the auction and the next highest bidder, and shall explain the reasons
for selecting the Successful Bidder and the next highest bidder, and
request the Court to enter an order authorizing sale to the Successful
Bidder on the terms of the Saturn Agreement as modified by the terms
of the Successful Bidder's final bid. If the Successful Bidder fails
to close for any reason other than a material breach by the Debtor,
the Successful Bidder will forfeit its Earnest Money to the estate,
and the Trustee shall be authorized to sell to the next highest
bidder.
11. The Debtor shall file a Motion to Approve the Sale of the Assets and
serve notice of the Motion in compliance with Fed. R. Bankr. P. 2002
by June 25, 2004. The deadline for responses to the Motion to Approve
the Sale of Assets shall be July 19, 2004. The Debtor shall file a
certificate of service evidencing compliance with the notice provision
by July 2, 2004.
12. The Court has scheduled a hearing on the approval of the Sale Motion
and the Successful Bidder for August 20, 2004 at 1:30 p.m. in
Courtroom C, United States Bankruptcy Court, 721 19th Street, Denver,
CO 80202.
13. The closing for the sale of the assets shall occur within ten (10)
days following the Court's order approving the sale, but the sale must
close no later than September 15, 2004.
FURTHER ORDERS, subject to application and further order of the Court,
Saturn, if it is not the Successful Bidder, shall be entitled to receive from
the proceeds of the sale, reimbursement of its reasonable fees and expenses
incurred in the negotiation and preparation of the Asset Purchase Agreement, due
diligence and participation in the auction (including its reasonable
professional fees) up to a maximum of $25,000.00 (the "Due Diligence Expenses");
provided, that any non-default fees and expenses reimbursed to Saturn under the
Debtor in Possession Financing shall be credited against the $25,000.00 maximum,
FURTHER ORDERS, that Saturn shall only be entitled to its Due Diligence
Expenses if it is not eventually the Successful Bidder, whether as the high
bidder or the next highest bidder, if the initial Successful Bidder fails to
close,
FURTHER ORDERS that the Notice to Equity Security Holders which the Debtor
shall serve by June 25, 2004 shall contain the following information: (a) notice
of the filing of the Chapter 11; (b) approval of the Debtor in Possession
Financing; c) a summary of the sale procedures and break up fee and entry of the
Order approving the same; (d) the date by which objections must be filed to the
Sale Motion; (e) the date, time and place of the auction; and (f) that as a
party in interest, equity holders have the right to examine the Debtor pursuant
to Rule 2004 of the Bankruptcy Rules.
FURTHER ORDERS, that the Debtor shall by June 25, 2004 file a Form 8-K in
accordance with the Securities Exchange Act of 1934 setting forth the matters
addressed in the Notice to Equity Holders and shall disseminate a press release
to the same effect and post the press release and Form 8-K on the Debtor's
website.
FURTHER ORDERS that the Debtor shall file a certificate of compliance
evidencing service of the Notice to Equity Security Holders and the filing of
the Form 8-K by July 2, 2004.
DATED this _________ day of ____________________, 2004.
BY THE COURT:
_________________________________________
Honorable A. Bruce Campbell
United States Bankruptcy Judge