Skylonda Mutual (not a) Water Company (anymore)

Notice of Annual Shareholder Meeting On Zoom

Thursday, November 30, 2023, 7:30 p.m.

Surprise, we’re still here, and you are still a shareholder.

We are working to wind this up. But our bylaws still require us to hold an annual meeting and elect directors for terms that have expired. So…

The annual shareholders meeting will be conducted on a zoom teleconference.

Join Zoom Meeting

https://us02web.zoom.us/j/88596288345?pwd=Y0R6c3U4QW1vY0F6Zmk5bVNsTkpCZz09

(You can also find this link at www.skylondawater.com)

Meeting ID: 885 9628 8345

Passcode: smwc-mtgpw

One tap mobile

+16699006833,,88596288345#,,,,,,0#,,4747332334# US (San Jose)

+14086380968,,88596288345#,,,,,,0#,,4747332334# US (San Jose)

Ballot enclosed for election of 4 board directors with terms expiring in 2027. Ballot must be returned by November 30, 5pm.

Meeting Agenda and Information Update

Physical assets sold to Cal Water

On August 3rd, 2023, Skylonda Mutual sold our physical assets, consisting of the water system and related items to the California Water Service Company. You should have received your last bill from SMWC in mid-August, for service from June until the sale date. The bill from SMWC should be paid to SMWC. You should have received your first water bill from Cal Water in mid-September. The Cal Water bill should be paid to Cal Water.

There were a few hiccups in the billing transition…

- There were a few meter mis-reads. I think that’s all resolved.

- A few folks have sent payments to the wrong place.

- A small number of final SMWC bills are still unpaid.

- A small number of Cal Water bills haven’t been paid yet.

- If you still need help figuring out your bills, please reach out to a SMWC board member, or call or email us at (650) 260-4725 or skylondawater.com

The good news is that now that we have all received our second bill from Cal Water, it is pretty clear that most of us will see substantially lower bills. As an added bonus, we can now pay our bills online or set up an automatic payment, and request water conservation rebates.

What’s next for SMnaWCa?

We don’t have a water system anymore, but we are still a mutual benefit corporation, and property owners that used to receive water service from SMWC are still shareholders. Until we formally shutdown the corporation, we have to do all the things that corporations are required to do; file and pay taxes, file annual reporting forms with the CA Secretary of State’s Office, hold annual meetings, elect directors, and generally follow our bylaws.

Step #1 — Collect unpaid water bills and pay our final bills.

Collect payment from about 10 accounts with outstanding balances totaling about $3000.

Step #2 — Hold our annual shareholders meeting and elect directors.

Hold our required annual shareholders meeting and elect directors to fill expired terms. We need one-third of our shareholders to return their ballots for the election to be valid. Please do your part and vote.

Shareholders running for election for the four open board seats that expire in 2026 are:

Sandra Bachman*, Aurelie de la Broise*, Dan Karlsten*, Jim Smith*

* - current directors with terms expiring in 2023 running for re-election.

Step #3 — Stabilize the finances.

CA Employment Development Dept. — In the process of closing our CA EDD (unemployment insurance/tax) account we were notified of 7 quarters of unfiled DE-9 and DE-9C forms. We’re still in the process of filing those forms. Current payments are all up to date.  We just recently (11/9/23) received a refund of $28k as a refund for a forced delinquent (over) withdrawal that should have been $1,000 for a missed payment and penalties from June 2022.

Payroll Taxes — We are still in the process of doing an internal audit of our federal payroll withholding tax filings and payments. The initial look found a few missing filings, which have been submitted, and the potential for missed payments. This issue has the potential to consume all of our remaining assets.

Issue W2 and 1099s for our ex-employee and contractor

File and pay income taxes for 2022-2023 fiscal year

Step #4 — Prepare to “hibernate” until August 2027.

Why hibernation? As part of the last-minute negotiations with Cal Water, a four-year indemnification of Cal Water against claims related to events prior to closing was added. Our attorneys have advised that the best way to protect our volunteer corporate officers, directors, and our shareholders from future liability is to maintain the corporation. We know of no pending claims or events that are likely to lead to a claim.

We are still working with our attorneys to figure out what this looks like. We anticipate…

• a smaller board of directors with terms ending in 2027.

• simpler annual meeting requirements

• shareholder pre-approval vote for dissolution

To implement this we anticipate a future shareholder vote to modify bylaws, elect longer term directors, and pre-approve corporate dissolution.

It is still the intent of the board of directors to return any remaining funds to our shareholders. Several years back, we reduced the fixed monthly fees, and in so doing reduced our cash reserves by several hundred thousand dollars. We are prohibited by law, as a mutual benefit corporation, from directly distributing our assets to our shareholders until we dissolve the corporation. Thus, the final distribution will have to wait until at least August 2027.

Step #5 — Hibernate until August 2027.

The goals during hibernation will be to expend as little effort and money as possible to keep the corporation intact.

Step #6 — Dissolve the corporation and distribute any remaining funds to our shareholders.

Thank you for your continued interest in your ex water company. We hope to see you on the shareholder’s meeting zoom call.

SMnaWCa Volunteer Board of Directors