<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1995 Commission File Number 0-9519
REGENT TECHNOLOGIES, INC.
(Exact name of Registrant as specified in its charter)
Colorado 84-0807913
(State of Incorporation) (I. R. S. Employer Identification No.)
8080 N. Central, Suite 400, Dallas, Texas 75206
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: 214-369-9055
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Name of Each Exchange
Title of Each Class On Which Registered
------------------- -------------------
Common Stock, $,01 Par Value None
Indicate by a check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months and (2) has been subject to such
filing requirements for the past 90 days. [X]
Indicate by a check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein and will not be
contained, to the best of the Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-KSB or an amendment to this Form 10-KSB. [ ]
The aggregate market value of the Registrant's Common Stock held by non-
affiliates of the Registrant on April 15, 1996 was approximately $80,000.
Number of shares outstanding of the Registrant's Common Stock at April 12,
1996: 9,000,000 shares, par value $.01 per share.
==============================================================================
<PAGE>
REGENT TECHNOLOGIES, INC.
ANNUAL REPORT ON FORM 10-KSB
Securities and Exchange Commission
Item Number and Description Page
- - ---------------------------- ----
PART I
Item 1. Business.......................................................... 1
Item 2. Description of Properties......................................... 2
Item 3. Legal Proceedings................................................. 2
Item 4. Submission of Matters to a Vote of Security Holders............... 2
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters............................................... 3
Item 6. Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................. 3
Item 7. Financial Statements and Supplemental Data........................ 5
Item 8. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosures......................................... 6
PART III
Item 9. Directors and Executive Officers of the Registrant................ 6
Item 10. Executive Compensation............................................ 7
Item 11. Security Ownership of Certain Beneficial Owners and Management.... 7
Item 12. Certain Relationships and Related Transactions.................... 8
PART IV
Item 13. Exhibits, Financial Statements Schedules and Reports on Form 8-K.. 9
SIGNATURES................................................................. 10
ACCOUNTANTS' REPORTS...................................................... F-1
i
<PAGE>
PART I
Item 1. Description of Business.
The terms "Company" and "Regent" when used herein mean Regent Technologies,
Inc. and its subsidiaries through which Regent conducts its business, unless
the context indicates or implies otherwise. Regent was incorporated under the
laws of the State of Colorado on January 18, 1980 as Regent Petroleum Corpora-
tion and adopted its present name in December, 1994.
Regent is in the business of acquiring, developing and marketing new and
emerging technologies. In 1993, management decided to invest the Company's
resources in the development and marketing of new technologies, primarily
related to environmental services and resource recovery.
Reclamation Services
Effective October 1, 1994, the Company acquired SSB Environmental, Inc.
("SSBE") for the consideration of (1) the delivery and exchange of 441,579
shares of newly issued common stock of the Company to the stockholders of SSBE
and (2) the implementation of an incentive stock option plan (the "Plan").
The shares of stock to be issued under the Plan are based on a formula of net
income contributed by SSBE to the Company's consolidated net income as
measured over a three year period. The general nature of the business of SSBE
is to provide a range of environmental services, with an emphasis on landfill
reclamation. Landfill reclamation is the innovative application of surface
mining techniques to manage, reduce or eliminate old landfills, or to recover
air space at operating facilities. Management of SSBE has led the establish-
ment of these techniques in New York State and throughout the country by suc-
cessfully completing several projects, including management of the State-
sponsored demonstration project at Edinburg, New York. This project received
national acclaim and during the time of the Edinburg project, the management
of SSBE worked closely with the state officials to develop testing protocols
for reclaimed materials as well as operational and regulatory guidelines for
the conduct of future reclamation projects. It was determined that reclama-
tion for the Edinburg site cost less than the expense of capping and monitor-
ing the site for the next 30 years as required under Subtitle D regulations.
SSBE's business focus for the foreseeable future is contracting with landfill
owners to manage the reclamation of the landfill for the reuse of the landfill
space as an operating landfill or for a new use of the land such as recreation
or real estate development.
On September 23, 1994, SSBE was awarded management of a $1.3 million contract
for the complete removal of a 7-acre landfill in the Town of Hague near Lake
George, New York. As of December 31, 1995, SSBE had a backlog balance of
$177,800 primarily related to the Hague contract. This backlog represents
the amount of revenue SSBE expects to realize from work to be performed on
uncompleted contracts.
Principal Customers
The principal customers of Regent and SSBE include all current owners of
active and/or inactive landfills, both municipal and private. The Town of
Hague contract is the only ongoing reclamation project with which SSBE is
currently involved.
Competition
SSBE was one of the first three companies nationally to enter the landfill
reclamation field. Other entities conducting reclamation include municipal
governments or local waste authorities. A small number of medium-sized
regional engineering firms and contractors/developers are beginning to compete
for reclamation opportunities. The principal bases of competition for landfill
reclamation are local knowledge and experience. The Company may be at a compe-
titive disadvantage in acquiring landfill prospects since it must compete with
companies which have greater financial resources and larger technical staffs.
1
<PAGE>
Regulation
The Company's operations are affected in various degrees by political develop-
ments, federal and state laws and regulations. The Company's activities are
subject to existing local and state laws and regulations governing environmen-
tal quality and pollution control. The existence of such regulations has had
no material effect on the Company's individual operations and the cost of such
compliance has not been material to date. There are no federal regulations
which specifically address landfill reclamation.
Employees
At December 31, 1995, the Company conducted all of its business through
consulting agreements. Satisfactory relations have generally prevailed
between the Company and its consultants.
Item 2. Description of Property.
Offices
The Company utilizes executive office space at 8080 North Central Expressway,
Dallas, Texas 75206. SSBE's executive and administrative offices are located
at 15 Elk Street, Albany, New York. Both locations are under a month-to-month
lease. In addition, the Company leases administrative space from the Presi-
dent for $750.00 per month.
Oil and Gas Properties
The Company owns overriding royalty oil and gas interests in certain oil and
gas proved undeveloped properties located in Rusk County, Texas. The Board
of Directors approved the sale of the Company's developed oil and gas proper-
ties primarily because of the inconsistent revenues from said properties and
to develop the Company's environmental business opportunities.
Item 3. Legal Proceedings.
The Company is not a party to any pending litigation and no litigation or
legal proceeding has been threatened against the Company.
Item 4. Submission of Matters To Vote of Security Holders.
The Company did not submit any proposals to a vote for security holders in
1995.
2
<PAGE>
PART II
Item 5. Market For Registrant's Common Stock and Related Security Holder
Matters.
The Company's Common Stock is traded in the over-the-counter market and
currently listed on the electronic bulletin board under the symbol "REGT."
The following table sets forth the range of high and low bid quotations as
reported by security dealers listed in the "Pink Sheets." The market quota-
tions may not necessarily represent actual transactions.
Bid Price
High Low
1993 ----------
1st Quarter .02 .02
2nd Quarter .02 .02
3rd Quarter .02 .02
4th Quarter .05 .02
1994
1st Quarter .02 .02
2nd Quarter .02 .02
3rd Quarter .02 .01
4th Quarter .07 .01
1995
1st Quarter .18 .10
2nd Quarter .10 .05
3rd Quarter .05 .02
4th Quarter .02 .02
Regent has not declared any cash dividends on the Regent Common Stock since
formation and does not anticipate declaring any such dividend in the foresee-
able future. The approximate number of record holders of Regent Common Stock
at April 12, 1996, was 3,500.
Item 6. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Corporate Development
During fiscal 1993, the Company initiated several ventures to participate in
the development of new technologies. On February 9, 1993, Regent entered
into a joint venture to manufacture and market water distillation systems
through the utilization of a patented variable vacuum distillation technology.
The technology had successfully been used to separate hazardous waste from
liquids. A unit was manufactured and leased to a laboratory in Houston, Texas.
In April, 1993, the Company invested $50,000 in the construction of a super-
critical water oxidation unit to be used for the destruction of liquid hazar-
dous waste. The Company sold its investment for $50,000 following a six month
test period. While no acquisitions occurred in 1995, the SSBE acquisition in
1994 has contributed to Regent's growth and is expected to continue to contri-
bute in 1996. Management believes that acquisitions will continue to be the
primary avenue for growth and the Company is seeking a business combination in
1996 as a major contribution for long-term growth. SSBE is engaged in the
single industry of landfill reclamation. The work is performed under cost-
plus fee contracts, fixed-price contracts and fixed-price contracts modified
by incentive and penalty provisions. The length of the contracts will vary
but will typically be less than two years. The profitability of this industry
is strongly influenced by economic cycles and technological advances. Besides
the Town of Hague contract, SSBE has a number of proposals for feasibility
studies outstanding. The balance of the Hague project will be undertaken in
1996 after weather and conditions allow.
3
<PAGE>
Liquidity and Capital Resources
At year-end 1995, the Company had a working capital surplus of $19,424, a
reduction of $71,761 due primarily to the sale of the oil and gas properties
and the use of liquid assets for operations and corporate general and admini-
strative expenses. The Company receives $400 per month through May, 1996 from
the financing note receivable for the water distillation technology unit manu-
factured under a 1993 joint venture. The Company received cash in the amount
of $12,351 from collections on notes receivable and $37,035 from the sale of
certain oil and gas properties. The Company received $4,000 cash flow from the
sale of a vehicle. The affiliate and stockholder notes of approximately
$44,000 and $10,000 are corporate liabilities of SSBE solely. The $44,000
note is interest only until December 31, 1997 and bears interest at 6%. The
Company raised $5,000 by selling new restricted previously unissued common
stock for $.05 per share. All required payments on indebtedness and accounts
payable were made on a timely basis. Over the years, the Company has funded
its operations through cash provided by operations, the sale of certain non-
strategic assets and cash from capital infusions and bank and shareholder
borrowings. During the first quarter of 1996, the Company raised an addi-
tional $5,000 by selling new restricted previously unissued common stock for
$.05 per share.
General Financial Analysis
1995 versus 1994
For the twelve months ending December 31, 1995, the Company had a 353% increase
in sales from $98,312 to $446,310. This increase in sales was due primarily to
the acquisition of SSBE and the Town of Hague contract. For fiscal 1995, the
Company had a net loss of $74,174 compared to a net loss of $58,202 for fiscal
1994. The 1995 loss was due primarily to increased general and administrative
expenses related to the SSBE acquisition and higher than expected costs for
the Hague contract. The Hague contract expenses included the cost of rental
equipment which the Company plans to reduce for future contracts by acquiring
acquiring the required equipment. The decrease of oil and gas sales for the
same period was due to the sale of certain oil and gas properties in May 1995.
Depreciation, depletion and amortization increased in 1995 and included a
$9,400 write down of oil and gas properties due to the full cost ceiling value
being in excess of the capitalized costs. The interest income of $362 was from
the payments for the water distillation unit which the Company leased to a
Houston laboratory. The lease agreement provides for ownership by the labora-
at the end of 36 monthly lease payments of $400 without any additional payment.
The Company has no plans for the manufacturing of the distillation unit in the
future. The gain of $4,273 was from the sale of a Company vehicle. The mis-
cellaneous income of approximately $14,000 was from certain feasibility studies
performed by SSBE.
1994 versus 1993
For the twelve months ending December 31, 1994, the Company had an increase
in sales of $27,255 for the same period in 1993 due primarily to the acquisi-
tion SSBE. The decrease in oil and gas sales and related expenses for the
period is attributable to the sale of certain oil and gas properties in 1993.
The miscellaneous income was $946 in 1994 and $14,536 in 1993 for a refund of
Utah State income taxes and $2,775 in 1993 from the manufacturing of a water
distillation unit which the Company leased to a Houston laboratory. The lease
agreement provides for ownership by the laboratory at the end of 36 monthly
lease payments of $400 without any additional payment. The Company has no
plans for the manufacturing of the distillation unit in the future. For the
period, general and administrative expenses decreased as compared to 1993 due
primarily to the capitalization of expenses related to the acquisition of
SSBE. The payment of $2,000 per month to the President as salary was initiated
in October 1993 and continued through 1994. Interest expense decreased for
1994 due to less debt outstanding.
1993 versus 1992
The Company reported a net loss of $50,899 for fiscal 1993 compared to net
income of $21,650 for fiscal 1992. The Company's total revenue was $71,057
and $132,751 for the years ending December 31, 1993 and 1992, respectfully.
This decrease in revenue and oil and gas expenses was primarily due to the
lower oil and gas sales of $80,265 following the sale of certain oil and gas
properties in 1993. The miscellaneous income was $14,546 for a refund of Utah
State income taxes and $2,775 from the distillation technology joint venture.
The Company's total expenses increased $10,855 for the period ending December
31, 1993 as compared to the same period in 1992 due primarily to higher person-
nel, travel and office expenses related to the investigation and negotiation of
various business opportunities. A financial analyst was employed in June 1993,
and used as a consultant beginning in October 1993 to assist in the analysis
of various business opportunities which resulted in expense of $33,480. The
President received a salary of $2,000 per month beginning in October 1993.
4
<PAGE>
Item 7. Financial Statements and Supplemental Data
1. Consolidated Financial Statements (included herein at Pages F-1
through F-15):
Reports of Independent Public Certified Accountants F-1
Balance Sheets - December 31, 1995 and 1994 F-3
Statements of Operations for the years ended December 31,
1995, 1994 and 1993 F-4
Statements of Stockholders' Equity for the years ended
December 31, 1995, 1994 and 1993 F-5
Statements of Cash Flows for the years ended
December 31, 1995, 1994 and 1993 F-6
Notes to Financial Statements F-7
5
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
of Regent Technologies, Inc.
We have audited the accompanying consolidated balance sheet of Regent
Technologies, Inc. (a Colorado corporation) and subsidiaries as of
December 31, 1995, and the related consolidated statements of operations,
stockholders' equity and cash flows for the year then ended. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial state-
ments are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the consolida-
ted financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Regent
Technologies, Inc. and subsidiaries as of December 31, 1995, and the results
of their operations and their cash flows for the year then ended in
conformity with generally accepted accounting principles.
SALMON, BEACH & COMPANY
Dallas, Texas
April 12, 1996
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
Regent Technologies, Inc.
We have audited the accompanying consolidated balance sheet of Regent Techno-
logies, Inc. (a Colorado corporation) and subisidiaries as of December 31,
1994, and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the two years in the period ended
December 31, 1994. These consolidated financial statements are the responsi-
bility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also included assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Regent Technologies, Inc. and subsidiaries as of December 31, 1994, and
the results of their operations and their cash flows for each of the two years
in the period ended December 31, 1994, in conformity with generally accepted
accounting principles.
FARMER, FUQUA, HUNT & MUNSELLE, P.C.
Dallas, Texas
April 12, 1996
F-2
<PAGE>
REGENT TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31,
<TABLE>
<CAPTION>
ASSETS
1995 1994
---- ----
<S> <C> <C>
CURRENT ASSETS
Cash $ 8,780 $ 25,385
Costs and estimated earnings in excess of billings 15,521 ---
Accounts receivable - oil and gas sales --- 2,895
Retainage accounts receivable - reclamation sales 40,229 67,903
Oil and gas assets held for resale --- 66,806
State tax refunds receivable --- 2,130
Notes receivable - current portion 2,471 14,821
Deposit 25,000 ---
Other 9,688 6,630
------ ------
Total current assets 101,689 186,570
PROPERTY AND EQUIPMENT - AT COST
Net oil and gas properties, using the full cost
method of accounting 28,950 10,660
Vehicles --- 28,955
Furniture and fixtures 4,064 4,064
------ ------
33,014 43,679
Less accumulated depreciation, depletion
and amortization 2,464 11,541
------ ------
30,551 32,138
OTHER ASSETS 99,677 110,237
------- -------
$ 231,916 $ 328,945
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt $ --- $ 5,124
Billings in excess of costs and estimated earnings --- 846
Accounts payable and accrued liabilities 72,265 77,819
Notes payable to affiliates 10,000 11,596
Total current liabilities 82,265 95,385
LONG-TERM DEBT, less current portion --- 15,585
NOTES PAYABLE TO AFFILIATE, less current portion 44,111 44,111
COMMITMENTS --- ---
STOCKHOLDERS' EQUITY
Common stock, $.01 par value; authorized 100,000,000
shares, issued and outstanding 8,974,201 and 8,859,203
shares for 1995 and 1994, respectively 89,742 88,592
Additional paid-in capital 2,228,322 2,223,622
Accumulated deficit (2,212,524) (2,138,350)
--------- ---------
105,540 173,864
$ 231,916 $ 328,945
The accompanying notes are an integral part of these statements.
</TABLE>
F-3
<PAGE>
REGENT TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
REVENUE
Environmental sales and services $ 421,793 $ 79,684 $ ---
Oil and gas sales 5,460 14,872 51,346
Gain on sale 4,273 --- ---
Miscellaneous income 14,422 946 17,311
Interest income 362 2,810 2,400
------- ------ ------
446,310 98,312 71,057
EXPENSES
Costs of environmental sales and services 338,154 69,051 ---
Lease operating expenses --- --- 11,133
Production taxes 360 1,016 5,667
General and administrative 148,326 71,276 88,335
Depreciation, depletion, amortization
and impairment 28,437 11,446 12,500
Interest expense 5,207 3,725 4,321
520,484 156,514 121,956
NET EARNINGS (LOSS) $ (74,174) $ (58,202) $ (50,899)
======== ======== =======
EARNINGS (LOSS) PER COMMON SHARE $ (.008) $ (.007) $ (.006)
====== ====== ======
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 8,878,369 8,507,301 8,390,000
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE>
REGENT TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
Additional Total
Common Stock Paid-In Accumulated Stockholders'
Shares Amount Capital Deficit Equity
------ ------ ------- ------- ------
BALANCES,
JANUARY 1, 1993 8,390,000 $83,900 $2,204,855 $(2,029,249) $259,506
Net loss --- --- --- (50,899) (50,899)
--------- ------- --------- ----------- --------
BALANCES,
DECEMBER 31, 1993 8,390,000 83,900 2,204,855 (2,080,148) 208,607
Issuance of
common stock 469,203 4,692 18,767 --- 23,459
Net loss --- --- --- (58,202) (58,202)
--------- ------- ---------- ----------- --------
BALANCES,
DECEMBER 31, 1994 8,859,203 88,592 2,223,622 (2,138,350) 173,864
Issuance of
common stock 114,998 1,150 4,700 --- 5,850
Net loss --- --- --- (74,174) (74,174)
--------- ------- --------- ---------- --------
BALANCES,
DECEMBER 31, 1995 8,974,201 $89,742 $2,228,322 $(2,212,524) $105,540
In November, 1995, the Company offered 500,000 shares of its common stock as
restricted stock for $.05 per share through a private placement offering
memorandum.
At December 31, 1995, the Company had sold 100,000 shares under this offering.
The proceeds from this offering were used for landfill reclamation research
and development expenses and general and administrative costs.
The accompanying notes are an integral part of these statements.
F-5
<PAGE>
REGENT TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss) $(74,174) $(58,202) $(50,899)
Adjustments to reconcile net earnings (loss)
to net cash provided (used) by operating activities:
Depreciation, depletion, amortization
and impairment 28,437 11,446 12,500
Gain on sale of assets (4,273) --- --- (Increase) decrease in
Accounts receivable 30,569 (67,279) 14,380
State tax refunds receivable 2,130 12,406 (14,536)
Other current assets (3,058) (6,630)
Costs and estimated earnings in excess
of billings (15,521) --- ---
Increase (decrease) in
Accounts payable and accrued liabilities (5,554) 76,467 (2,200)
Billings in excess of costs and estimated
earnings (846) 846 ---
-------- -------- --------
Net cash provided (used) by operating
activities (42,290) (30,946) (40,755)
======== ======== ========
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of oil and gas properties 37,035 --- 210,845
Net collections (funding) on notes receivable 14,437 31,060 (51,581)
Costs of investment in subsidiary --- (49,638) ---
(Increase) decrease of property and equipment 16,518 (1,153) (9,559)
(Increase) decrease in other assets (25,000) 7,131 (250)
-------- -------- --------
Net cash provided (used) by investing
activities 42,990 (12,600) 149,455
======== ======== ========
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from (repayment of) borrowings (20,709) (3,538) (1,655)
Issuance of common stock 5,000 10,000 ---
Net proceeds from (repayment of) note
to stockholder (1,596) (9,757) (34,937)
Cash used by financing activities (17,305) (3,295) (36,592)
-------- -------- --------
INCREASE (DECREASE) IN CASH (16,605) (46,841) 72,108
CASH, beginning of period 25,385 72,226 118
-------- -------- --------
CASH, end of period $ 8,780 $ 25,385 $ 72,226
======== ======= ========
SUPPLEMENTAL DISCLOSURES
Cash paid during the year for interest $ 1,947 $ 3,530 $ 4,566
======== ======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
F-6
<PAGE>
REGENT TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
(1) ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Regent Technologies, Inc. (the "Company"), formerly Regent Petroleum Corpora-
tion, was incorporated on January 18, 1980, for the purpose of exploration and
development of oil and gas properties in the United States. Activities of the
Company up to 1995, include organization, issuance of equity capital and acqui-
sition of developed and undeveloped oil and gas properties. In 1994, the Com-
pany redirected its core activities and acquired SSBE Environmental, Inc.
("SSBE"), which was organized for the purpose of obtaining waste and landfill
reclamation contracts. SSBE's work is to be performed under cost-plus-fee and
fixed price contracts. The length of contracts is expected to vary between
one and three years, and a sole contract accounted for all environmental sales
in 1994 and 1995.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries, Regent Industries, Inc., incorporated in Texas
in April 1991, and SSBE, incorporated in Virginia in June 1994. All signifi-
cant intercompany accounts and transactions have been eliminated.
Use of Estimates
Management uses estimates and assumptions in preparing financial statements.
Those estimates and assumptions affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities, and reported
revenues and expenses. Significant estimates used in preparing these financial
statements include those assumed in computing profit percentages under the
percentage-of-completion revenue recognition method and those used in deter-
mining oil and gas reserves for the purpose of amortizing the associated costs
of acquisition. It is at least reasonably possible that the significan esti-
mates used will change within the next year.
Oil and Gas Properties
The Company follows the full cost method of accounting, whereby all costs of
acquisition of oil and gas reserves, including both productive and nonproduc-
tive costs, are capitalized as incurred. Such costs are amortized in the
aggregate on a unit-of-production method based upon physical units of oil and
gas. Physical units are determined on the basis of relative energy content
which is estimated by the Company to be six MCF of gas to each barrel of oil.
Gains or losses on the sale or disposition of oil and gas properties are re-
cognized only in the case of extraordinary transactions. Otherwise they are
added to or deducted from capitalized costs. Maintenance and repairs are
charged against income when incurred. Renewals and betterments which extend
the useful lives of properties are capitalized.
Under the full cost method of accounting, capitalized costs less accumulated
depreciation and depletion, are limited to the sum of: (a) the future net re-
venues attributable to proved oil and gas reserves, based on current economic
and operating conditions, discounted at 10%, (b) the costs of major properties
not being amortized due to the stage of evaluation or development and (c) the
lower of cost or market value of any unproved properties being amortized.
Revenue and Cost Recognition on Reclamation Contracts
The Company recognizes revenues from fixed-price contracts on the percentage-
of-completion method, measured by the percentage of cost incurred to date to
estimated total cost for each contract. That method is used because management
considers total cost to be the best available measure of progress on the con-
tracts.
F-7
<PAGE>
REGENT TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
DECEMBER 31, 1995, 1994 AND 1993
(1) ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
Contract costs include all direct material and labor costs and those indirect
costs related to contract performance, such as indirect labor, supplies, tools,
repairs and depreciation. Selling, general, and administration costs are
charged to expense as incurred. Provisions for estimated losses on uncom-
pleted contracts are made in the period in which such losses are determined.
Changes in job performance, job conditions, and estimated profitability may
result in revisions to costs and income, which are recognized in the period
in which the revisions are determined. Changes in estimated job profitability
resulting from job performance, job conditions, contract penalty provisions,
claims, change orders, and settlements, are accounted for as changes in esti-
mates in the current period.
The asset, "Costs and estimated earnings in excess of billings", represents
revenues recognized in excess of amounts billed. The liability, "Billing in
excess of costs and estimated earnings", represents billings in excess of
revenues recognized.
Depreciation
Depreciation of furniture and fixtures is provided in amounts sufficient to
relate the cost of depreciable assets to operations over their estimated
service lives (5 years). The straight-line method of depreciation is used
for financial reporting purposes, while accelerated methods are used for tax
purposes.
Stock Options and Awards
In 1994, as part of the acquisition of SSBE, the Company adopted a nonqualified
stock option plan ("Plan"). Under the Plan, options may be granted to key ma-
nagement employees to purchase Company common stock at $0.075 per share. The
shares to be issued under the Plan are based on a formula of each participant's
contribution to the profitability of the Company; specifically, to SSBE's con-
tribution to the consolidated net income measured over a three year period.
The number of shares covered by the stock options granted under the Plan shall
not exceed 33,118,521 shares. These stock options must be exercised on or
before December 1, 2001.
In 1995, the Directors approved a resolution granting each Director stock
options of 100,000 shares with an exercise price of $.075 for a term of ten
years or ninety days after termination or resignation as a Director, whichever
comes first.
Income Taxes
The Company utilizes the method of accounting for income taxes set forth in
Statement of Financial Accounting Standards No. 109 "Accounting for Income
Taxes" (SFAS 109). SFAS 109 requires the recognition of deferred tax
liabilities and assets for the expected future tax consequences of events that
have been recognized in the Company's financial statements or tax returns.
Under this method, deferred tax liabilities and assets are determined based
on the difference between the financial statement carrying amounts and tax bases
of assets and liabilities, usin enacted tax rates in effect in the years in
which the differences are expected to reverse. These temporary differences
primarily relate to depreciation, depletion and amortization. The Company
has not recognized the benefit of any net operating loss carryforwards as the
result of adopting SFAS 109, and no deferred tax assets have been recorded in
the books of the Company due to uncertainty as to the Company's ability to
utilize the loss carryforwards.
Consolidated Statements of Cash Flows
The Company does not consider any of its assets to meet the definition of a
cash equivalent.
F-8
<PAGE>
REGENT TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
DECEMBER 31, 1995, 1994 AND 1993
(2) BUSINESS COMBINATION
Effective October 1, 1994, the Company acquired 100% of the stock of SSBE in a
transaction which has been accounted for under the purchase method of
accounting. Under terms of the agreement, the Company issued 441,579 shares
of newly issued common stock to the stockholders of SSBE and implemented an
incentive stock option plan for key members of management of both companies.
These newly issued shares of common stock were valued at approximately $22,000.
In addition, the Company incurred various costs directly attributable to the
acquisition, which increrased goodwill by approximately $60,000. The purchase
price exceeded the fair value of the net assets by approximately $76,000 and
accordingly, has been recorded as goodwill which is being amortized on a
straight line basis over 40 years.
(3) UNCOMPLETED CONTRACTS
Costs, estimated earnings, and billings on uncompleted contracts are summarized
as follows:
1995 1994
---- ----
Costs incurred on uncompleted contracts $ 423,999 $ 89,510
Estimated earnings 100,339 16,167
------- -------
524,338 105,677
Billings to date 508,816 106,523
------- -------
$ 15,521 $ (846)
Included in the accompanying balance
sheets under following captions:
Costs and estimated earnings in excess
of billings $ 15,521 ---
Billings in excess of costs and
estimated earnings --- (846)
------- -------
$ 15,521 $ (846)
======= =======
(4) NOTES RECEIVABLE
1995 1994
Financing note receivable, bearing interest at 7%, ---- ----
payable in monthly installments of $400, including
interest, through May 1996, collateralized by a
water distillation unit with an original cost of $10,180. $ 2,471 $ 6,908
Note receivable from an individual, generated in
connection with the Company's option to acquire a
biodegradable lubricant manufacturing business,
bearing interest at 8%, on demand. (The option
was allowed to lapse by the Company.) $ --- 10,000
------- ------
2,471 16,908
Less long-term portion, included in other assets
as of December 31, --- 2,087
------- ------
Notes receivable - current portion $ 2,471 $ 14,821
====== ======
F-9
<PAGE>
REGENT TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
DECEMBER 31, 1995, 1994 AND 1993
(5) OTHER ASSETS
1995 1994
---- ----
Long-term portion of financing note receivable $ --- $ 2,087
Goodwill, less accumulated amortization of $ 2,391 74,107 76,020
and $454 in 1995 and 1994, respectively.
Intangibles, less accumulated amortization of $10,927
and $4,367 in 1995 and 1994, respectively. 25,570 32,130
------ ------
$ 99,677 $ 110,237
======= =======
(6) LONG-TERM DEBT
1995 1994
---- ----
Note payable to a bank, bearing interest at 8.95%, payable
in monthly installments of $565, including interest, through
June 1998, collateralized by a vehicle with an original cost
of approximately $28,000. The vehicle was sold in December,
1995, and the note was paid in full.
$ --- $ 20,709
Less current portion --- 5,124
------ ------
$ --- $ 15,585
====== ======
(7) TRANSACTIONS WITH RELATED PARTIES
During 1993, the Company purchased a vehicle for $7,600 from Mr. David Nelson
(Mr. Nelson), the Company's president since October 1992.
During 1993, Mr. Nelson, performed services for the Company without
compensation. Mr. Nelson began receiving a salary of $2,000 per month in
October 1993.
In April 1991, the Company borrowed $100,000 with a note payable to Mr. Jesse
Edwards (Mr. Edwards), a stockholder who was the Company's president until
October 1992. Under the terms of the agreement in effect at December 31,
1994, the note bears interest at 10%, and is to be repaid in monthly
installments of $1,352, including principal and interest, through May 1995.
The note was fully paid in May, 1995.
In June 1994, SSBE issued a note payable to Schillinger, Salerni and Boyd,
Inc., owned by certain stockholders of the Company, in the amount of $44,111
for certain intangibles paid on behalf of the SSBE. The terms of the
promissory note require annual interest payments equal to a rate of 6% per
annum and principal due and payable on December 31, 1996.
In September 1994, SSBE borrowed $15,000 from Schillinger, Salerni and Boyd,
Inc. SSBE repaid $10,000 in October 1994. In 1995, SSBE repaid the balance of
the $15,000 note and borrowed an additional $10,000. Under the terms of the
agreement, interest is to accrue at 10% per annum and principal and unpaid
interest is payable upon demand.
In November 1995, Elaine Nelson, the wife of the Company's President, purchased
100,000 restricted shares of the Company's common stock for $.05 per share
under the Company's 500,000 share private placement offering.
In 1995, the Company paid $109,039 to Schillinger, Salerni and Boyd, Inc. for
services rendered.
F-10
<PAGE>
REGENT TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
DECEMBER 31, 1995, 1994 AND 1993
(8) SALES THROUGH MAJOR OPERATORS
The following operators individually accounted for 10% or more of the total oil
and gas revenue of the Company:
Year ended December 31,
Operator 1995 1994 1993
J.C. Thompson -% - % 64%
Forney Oil Corporation 47 45 17
Arnold Energy 1985-11 39 40 16
-- -- --
86% 85% 97%
== == ==
(9) BACKLOG
The following schedule summarizes changes in backlog on the contract during
1995. Backlog represents the amount of revenue SSBE expects to realize from
work to be performed on the uncompleted contract in progress at year end from
contractual agreements on which work has not yet begun.
Beginning backlog $ 614,788
New contract during the year ---
-------
614,788
Less contract revenue earned during the period 421,793
-------
Backlog balance at December 31, 1995 $ 192,995
=======
SSBE has not entered into any additional contracts, as of April 12, 1996.
(10) COMMITMENTS
The Company has administrative offices in the home of Mr. Nelson, the
President, under a month-to-month lease which provides for rental payments
of $750 per month. In 1993, additional office space was obtained on a
month-to-month basis. Rent expense was approximately $9,600, $12,000 and
$15,000 in 1995, 1994 and 1993, respectively.
In February 1993, the Company entered into a joint venture to manufacture
and market water distillation systems for laboratories and other small
quantity users of purified water. The venture negotiated the manufacture and
financing of a twenty-five (25) gallons per day distillation unit for a
Houston laboratory. The Company recognized $2,775 of profit in 1993 from
this arrangement. After an evaluation of the performance of the unit and
the potential market opportunity, the Company terminated the joint venture
and will receive $400 per month from the financing note receivable related to
the unit through May 1996.
In April 1993, the Company invested $50,000 in the construction of a super-
critical water oxidation unit. The unit was designed to utilize a relatively
new patented technology for the commercial treatment of hazardous waste.
Following a six month test period, the Company disposed of its investment
interest for $50,000.
In August 1993, the Company loaned $13,000 to an unrelated party in connection
with the Company's option to purchase a biodegradable lubricant manufacturing
business. After a due diligence period, the Company elected not to pursue the
purchase of this business, and the option was allowed to lapse. The promissory
note had an outstanding balance of $10,000 at December 31, 1994 and was sold
for the consideration of a cash payment of $10,000 to the Company and the
grant of 10,000 shares of newly issued and restricted common stock.
F-11
<PAGE>
REGENT TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
DECEMBER 31, 1995, 1994 AND 1993
(11) INCOME TAXES
There is no provision for federal income taxes for 1995, 1994 or 1993, due to
the utilization of net operating loss carryforwards.
The Company has net operating loss carryforwards for tax purposes totaling
approximately $2,257,000, which expire at various dates, as follows:
Year ended
December 31, Amount
------------ ----------
1996 $ 209,000
1997 283,000
1998 303,000
1999 365,000
2000 125,000
2001 751,000
2003 24,000
2004 18,000
2008 45,000
2009 60,000
2010 74,000
---------
$ 2,257,000
=========
Additionally, the Company has investment tax credit carryforwards totaling
approximately $8,000, which expire at various dates, as follows:
Year ended
December 31, Amount
------------ --------
1996 $ 6,200
1997 1,700
1998 ---
1999 100
--------
$ 8,000
========
(12) STATEMENTS OF CASH FLOWS
Excluded from the consolidated statements of cash flows were the effects of
certain non-cash investing and financing activities, as follows:
Year ended
December 31,
-------------------------------
1995 1994 1993
------ ------ ------
Issuance of common stock for directors' fees $ 750 $ --- $ ---
Issuance of common stock with sale of note 100 --- ---
Issuance of common stock upon acquisition
of SSBE on December 19, 1994 --- 22,079 ---
F-12
<PAGE>
REGENT TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
DECEMBER 31, 1995, 1994 AND 1993
(12) STATEMENTS OF CASH FLOWS - Continued
Year ended
December 31,
---------------------------------
1995 1994 1993
------ ------ ------
Issuance of 27,599 shares common stock
upon settlement of consulting agreement
with investment banker on October 31, 1994 --- 1,380 ---
Issuance of note for costs of intangibles --- 44,111 ---
Acquisition of vehicle for a note payable --- --- 25,902
(13) CONCENTRATION OF CREDIT RISK
The Company received revenues from oil and gas production in Texas and Utah
during 1995, 1994 and 1993. The Utah properties were sold in 1993. The Texas
producing properties were sold in 1995. Accounts receivable at December 31,
1994 and 1993 are from a variety of oil and gas operators. In addition, the
reclamation contract receivable is from one town in New York.
(14) EARNINGS PER COMMON SHARE
Earnings per common share are based on the weighted average number of shares
outstanding during each year.
(15) COST OF OIL AND GAS PROPERTIES
Depreciation and depletion per equivalent unit of production for the years
ended December 31, 1995, 1994 and 1993, were approximately $1.13, $1.11 and
$1.44, respectively.
The following table sets forth the capitalized costs of oil and gas properties
as of December 31, 1995 and 1994:
1995 1994
------- -------
Capitalized costs:
Proved properties $ 140,505 $ 177,540
Less accumulated depreciation, depletion,
amortization and impairment 111,555 100,074
------- -------
$ 28,950 $ 77,466
In April 1993, the Company sold, for cash totaling approximately $211,000,
its working interest in its oil and gas properties located in Utah. In May
1995, the Company sold, for cash totaling approximately $37,000, its remaining
producing oil and gas properties. The sales were treated as adjustments of
capitalized costs related to oil and gas properties. The adjustments had no
significant effect on the relationship between capitalized costs and proved
reserves and, accordingly, no gain or loss was recognized in connection with
the sale.
F-13
<PAGE>
REGENT TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
DECEMBER 31, 1995, 1994 AND 1993
(15) COST OF OIL AND GAS PROPERTIES - Continued
In 1995, the Company held oil and gas properties with a cost of $140,505 and
accumulated depletion of $111,555. Under the full cost method of accounting,
the Company added $9,704 to accumulated depletion to account for the net capi-
talized costs in excess of the full cost ceiling value. Also, the Company took
$508 of depletion in 1995. The remaining properties are not producing and
accordingly are not subject to depletion of reserves.
(16) OIL AND GAS RESERVE INFORMATION (UNAUDITED)
The Company's proved oil and gas reserves are located entirely in the United
States. The reserve estimates at December 31, 1995, 1994 and 1993, are based
on a rollforward of the January 1, 1989 reserve estimates, adjusted for 1989,
1990, 1991, 1992, 1993, 1994 and 1995 production, property sales and year-end
prices. The January 1, 1989, reserve estimates were prepared by an independent
petroleum engineer and were acquired by the Company in connection with its
acquisition of oil and gas properties in June 1989. In accordance with
guidelines established by the Securities and Exchange Commission and the
Financial Accounting Standards Board, the Company's adjusted reserve estimates
were prepared under economic and operating conditions existing at the end of
each year, with no provision for price and cost escalations except by
contractual arrangements.
The Company's management emphasizes that reserve estimates are inherently
imprecise and that estimates of new discoveries are more imprecise than those
of producing oil and gas properties. Accordingly, the estimates are expected
to change as future information becomes available.
The following unaudited table sets forth the Company's proved oil and gas
reserve quantities:
Oil Gas
(Bbls) (MCF)
-------- --------
PROVED RESERVES:
January 1, 1993 1,103 1,050,574
Purchase of reserves in place --- ---
Revision of previous estimates --- ---
Sale of reserves in place (152) (606,774)
Production (155) (32,254)
------- ---------
December 31, 1993 796 411,546
Purchase of reserves in place --- ---
Revision of previous estimates --- ---
Sale of reserves in place --- ---
Production (31) (11,134)
------- ---------
December 31, 1994 765 400,412
Purchase of reserves in place --- ---
Revision of previous estimates --- ---
Sale of reserves in place (280) (272,957)
Production (34) (2,497)
------- ----------
December 31, 1995 451 124,958
======= ==========
F-14
<PAGE>
REGENT TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
DECEMBER 31, 1995, 1994 AND 1993
(16) OIL AND GAS RESERVE INFORMATION (UNAUDITED) - Continued
Oil Gas
(Bbls) (MCF)
-------- -------
PROVED DEVELOPED RESERVES:
December 31, 1993 345 286,588
===== =======
December 31, 1994 314 275,454
===== =======
December 31, 1995 --- ---
===== =======
Standardized measure of discounted future net cash flows relating to proved
oil and gas properties:
December 31,
--------------------------------
1995 1994 1993
------ ------ ------
Future cash flows $ 229,185 $ 602,694 $ 585,805
Future costs-
Production (21,026) (212,189) (204,037)
Development --- --- ---
--------- --------- ---------
Future net cash flows 208,159 390,505 381,768
10% discount factor (179,209) (251,627) (211,937)
--------- --------- ---------
Present value of future net cash flows
before income taxes 28,950 138,878 169,831
Present value of future income tax expense --- --- (1,023)
--------- --------- ---------
Standardized measure of discounted future
net cash flows $ 28,950 $ 138,878 $ 168,808
======== ======== ========
Changes in standardized measure of discounted future net cash flows from
proved reserves:
December 31,
-------------------------------
1995 1994 1993
------ ------ ------
Standardized measure, beginning of year $ 138,878 $ 168,808 $ 374,976
Purchase of reserves in-place --- --- ---
Oil and gas sales, net of production costs (4,938) (13,856) (34,546)
New discoveries and extensions --- --- ---
Revisions of previous quantity estimates --- --- ---
Net change in income taxes --- (1,031) (1,841)
Sale of reserves in place (37,035) --- (210,845)
Changes in production rates (timing) and other (67,955) (15,043) 41,064
--------- ------- -------
Standardized measure, end of year $ 28,950 $ 138,878 $ 168,808
F-15
<PAGE>
REGENT TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
DECEMBER 31, 1995, 1994 AND 1993
(17) SCHEDULE OF CONTRACTS IN PROGRESS
Contract - At December
Operations Portion From Inception to December 31, 1995 31, 1995
----------------- ----------------------------------------- ---------
Estimated
Estimated Earnings
Estimated Gross Gross and Costs
Contract Profit Revenues Cost of Profit Billed Cost to in Excess of
Revenues (Loss) Earned Revenues (Loss) To Date Complete Billings
-------- ------ ------- -------- ------- ------- -------- --------
Hague,
NY $714,200 $138,734 $521,205 $420,866 $100,339 $508,816 $159,600 $15,522
======= ======= ======= ======= ======= ======= ======= ======
For the Period Ended December 31, 1995
--------------------------------------
Revenues Cost of Gross Profit Percent
Earned Revenues (Loss) Complete
Hague,
NY $421,794 $337,621 $84,172 72.5%
======= ======= ====== =======
F-16
<PAGE>
Item 8. Changes In and Disagreements with Accountants on Accounting and
Financial Disclosures
(a) The client-auditor relationship between the registrant and its principal
accountant for the periods ending 1993 and 1994, Farmer, Fuqua, Hunt & Mun-
selle, P.C., ceased effective December 31, 1995. The decision to change ac-
countants was recommended by the audit committee due to the change of employ-
ment of the primary auditor performing the audit of the registrant's financial
statements.
The former accountant`s reports on the financial statements of the registrant
for either of the past two years did not contain an adverse opinion or a
disclaimer of opinion or was qualified in any way. There were no disagreements
with the former accountant at any time.
(b) A new independent principal accountant has been engaged by the registrant.
The name of the registrant's new principal accountant is Salmon, Beach &
Company, P. C., 12720 Hillcrest Road, Suite 900, Dallas, Texas 75230. Mr.
William H. Sims, a CPA with the registrant's new principal accountant, was the
registrant's primary auditor with the firm of Farmer, Fuqua, Hunt & Munselle,
and will act as the registrant's primary auditor with the registrant's new
principal accountant.
PART III
Item 9. Directors and Executive Officers of the Registrant
The directors and executive officers of the Company, together with certain
information about them, are as follows:
Name Age Director Since Position
David A. Nelson 48 October, 1992 Director, President
Gordon M. Boyd 49 December, 1994 Director, Vice President
William D. BinghaM 41 December, 1994 Director
L. R. Schillinger 39 Secretary
Eugene L. Salerni 43 Vice President, SSBE
Mr. Nelson has served as President of the Company since October, 1992. From
November, 1988 to September, 1992, Mr. Nelson was President, Chief Executive
Officer and Chairman of Intramerican Corporation, formerly Intramerican Oil
and Minerals, Inc., a public oil and gas corporation. Mr. Nelson managed the
rebuilding of Intramerican through the addition of business segments related
to gas gathering and property management and moved the company from a nega-
tive earnings position in 1988 to consecutive profitable years in 1989, 1990
and 1991. Mr. Nelson graduated from Baylor University with a B.A. degree and
J.D. degree and from Texas A&M with a Masters in Computing Sciences. He is a
licensed attorney in the State of Texas. He was employed from 1971 to 1983 at
Republic National Bank and last served as a Vice President in the commercial
lending department.
Mr. Boyd is President of SSB Environmental, Inc. and was the founder of
Schillinger, Salerni and Boyd, Inc. which specialized in environmental consul-
ting services to the solid waste management and recycling industries from 1986
to 1994. Mr. Boyd is a graduate of Hamilton College with a B.A. degree. From
1979 to 1983, Mr. Boyd served as an environmental policy aide to the State As-
sembly of New York. In 1983, he was appointed executive director of the New
York State Legislative Commission on Solid Waste Management Board.
Mr. Bingham is President of Forecast Futures Group, Inc., a network computer
technology company serving the financial markets. From 1986 to 1994, Mr.
Bingham was a Vice President of Browning Ferris Industries where he helped
launch BFI's medical waste business. As a Vice President, Mr. Bingham
initiated BFI's entry into the organic waste business and as a Divisional
6
<PAGE>
Vice President, he had responsibility for all operations in New York and
Connecticut. His education background includes studies at Stanford University
and UCLA.
Mr. Schillinger has served as the corporate secretary since May, 1995 and has
managed the permitting and compliance requirements for SSBE's landfill recla-
mation projects. He was instrumental in the development of the guidelines for
reclamation projects which now form the basis of 6NYCRR Part 360..18, New York
State's regulations governing landfill reclamation. Mr. Schillinger received
his J.D. degree from North Carolina University and is a licensed attorney in
New York State.
Dr. Salerni has led all of SSBE's landfill reclamation projects and in that
role has pioneered this new business. His experience in the field includes
directing the firm's research and development, proposal writing and negotia-
tions, project site management and reporting, regulatory affairs, marketing and
disposal of recovered materials. Dr. Salerni is a Ph.D. graduate of Rensselaer
Polytechnic Institute. Salerni is a member of the Technology Systems and Prac-
tices Committee of the Landfill Reclamation Committee of the Solid Waste Asso-
ciation of North America.
Item 10. Executive Compensation
Compensation which the Company paid for services in all capacities for the year
ended December 31, 1995, to the executive officers of the Company is set forth
as follows:
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name Other
and Annual Restricted
Principal Compen- Stock Options/ LTIP Other
Position Year Salary Bonus sation(1) Awards SARs(#) Payouts Comp(3)
David A. Nelson,
President (2) 1995 $12,450 - $1,600
1994 $24,000 - $1,600
1993 $6,000 - $6,400
(1) Other Annual Compensation is the use of a company vehicle.
(2) The Company rents administrative office space from the President for
$750.00 per month.
(3) The Company paid the following consulting fees in 1995:
David A. Nelson, $12,000;
Salerni, Schillinger & Boyd, Inc., $109,038;
Law firm of Lawrence R. Schillinger, $360.
Other Benefits.
---------------
The Company has a qualified incentive stock option plan. No options will
be granted under the Plan until November 1, 1997. The Directors of the Compa-
ny receive $250 each for meetings attended and each director agreed to convert
the Director's fee to newly issued restricted common stock at a price of $.15
per share to conserve cash. Also, the Directors voted to grant each Director
stock options of 100,000 shares with an exercise price of $.075 for a term of
ten years or ninety days after termination or resignation, whichever comes
first. The Company is not a party to any employment contract.
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth the ownership of the Company's Common Stock
$.01 par value per share as of December 31, 1995, by (i) each person who is
known by the Company to own beneficially more than 5% of the outstanding shares
of its Common Stock and (ii) information as to the shares beneficially owned by
all directors and officers of the Company as a group.
7
<PAGE>
Principal Shareholders
----------------------
The following table sets forth certain information respecting the holdings of
each shareholder who was known to the Company to be the beneficial owner, as
defined in Rule 13d-3 of the Securities Exchange Act of 1934, as amended, of
more than 5% of the Common Stock of the Company as of December 31, 1995. Each
of the persons or entities named below as beneficially owning the shares set
forth opposite his name has sole voting power and sole investment power with
respect to such shares, unless otherwise indicated. The amounts include
spousal ownership.
Name and address of Amount and Nature of Beneficial
Beneficial Owner Beneficial Ownership Ownership
- - ------------------ -------------------- ----------
David A. Nelson 2,465,760 Shares 27.4%
3424 Princeton Avenue
Dallas, Texas 75205
Jesse G. Edwards 1,712,073 Shares 19.0%
1890 Valley View Lane
Tyler, Texas 75703
Security Ownership of Management
--------------------------------
The following table sets forth certain information with respect to the Common
Stock of the Company beneficially owned by the directors and the directors and
officers as a group. The person named below as beneficially owning the shares
set forth opposite his name has sole voting power and sole investment power
with respect to such shares, unless otherwise indicated.
Name of Amount and Nature of Beneficial
Beneficial Owner Beneficial Ownership Ownership
David A. Nelson, President 2,465,760 Shares 27.4%
Gordon M. Boyd, Vice President 111,229 Shares 1.24%
L. R. Schillinger, Secretary 97,147 Shares 1.08%
Officers and Directors as a Group 2,674,136 Shares 29.8%
Item 12. Certain Relationships and Related Transactions
- - --------------------------------------------------------
During 1993, the Company purchased a vehicle for $7,600 from Mr. David Nelson
(Mr. Nelson), the Company's president since October 1992.
During 1993 and 1992, Mr. Nelson, performed services for the Company without
compensation. Mr. Nelson began receiving a salary of $2,000 per month in
October 1993.
In June 1994, SSBE issued a note payable to Schillinger, Salerni and Boyd,
Inc., owned by certain stockholders of the Company, in the amount of $44,111
for certain intangibles paid on behalf of the SSBE. The terms of the promis-
sory note require annual interest payments equal to a rate of 6% per annum and
principal due and payable on December 31, 1996.
8
<PAGE>
In September 1994, SSBE borrowed $15,000 from Schillinger, Salerni and Boyd,
Inc. SSBE repaid $10,000 in October 1994. In 1995, SSBE repaid the balance
of the $15,000 note and borrowed an additional $10,000. Under the terms of
the agreement, interest is to accrue at 10% per annum and principal and unpaid
interest is payable upon demand.
In November 1995, Elaine Nelson, the wife of the Company's President, purchased
100,000 restricted shares of the Company's common stock for $.05 per share un-
der the Company's 500,000 share private placement offering.
In 1995, the Company paid $109,039 to Schillinger, Salerni and Boyd, Inc. for
services rendered.
PART IV
Item 13. Exhibits, Financial Schedules and Reports on Form 8-K.
- - ----------------------------------------------------------------
(a) Listing of Documents
(1) Financial Statements. The Company's Consolidated Financial
Statements included in Item 7 hereof, as required at December 31,
1995 and 1994, and for the years ended December 31, 1995, 1994,
1993, consist of the following:
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Cash Flows
Consolidated Statements of Stockholders' Equity
Notes to Consolidated Financial Statements
(2) Exhibits.
2.1 Agreement and Plan of Reorganization relating to the Acquisi-
tion of SSB Environmental, Inc. as as subsidiary of Regent
Petroleum Corporation. (1)
3.1 Restated Articles of Incorporation of Regent Technologies,
Inc. (2)
3.2 Bylaws of Regent Technologies, Inc. as amended. (2)
10.1 1994 Formula Stock Option Plan. (1)
22. List of Subsidiaries
- - ------------------
(1) Incorporated by reference to Regent Petroleum Corporation Proxy Statement
for Special Meeting of Shareholders held December 19, 1994, dated November
28, 1994.
(2) Incorporated by reference to Regent Petroleum Corporation Proxy Statement
for Special Meeting of Shareholders held January 26, 1988, dated December
30, 1987.
(b) Reports on Form 8-K.
There were no reports filed on Form 8-K during the last quarter of
the period covered by this report.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
REGENT TECHNOLOGIES, INC.
By: /s/ David A. Nelson
-----------------------
David A. Nelson
President
Dated: April 12, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
Name Title Date
----------------- ----------------------- --------------
/s/David A. Nelson Director and President, April 12, 1996
------------------ the Principal Executive
David A. Nelson Officer and Principal
Accounting Officer
/s/Gordon M. Boyd Director and Vice President April 12, 1996
------------------
Gordon M. Boyd
10
<PAGE>
Exhibit 22
-------------------------
Regent Technologies, Inc.
List of Subsidiaries
1. Regent Industries, Inc.
8080 N. Central, Suite 400
Dallas, Texas 75206
2. SSB Envionmental, Inc.
15 Elk Street
Albany, New York 12207
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