<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
Regent Technologies, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
REGENT TECHNOLOGIES, INC.
2929 ELM STREET
DALLAS, TEXAS 75226
NOTICE OF ANNUAL MEETING OF THE SHAREHOLDERS
TO BE HELD ON MARCH 4, 1998
The Annual Meeting of Shareholders of Regent Technologies, Inc. (the
"Company") will be held on Wednesday, March 4, 1998, at 10:00 a.m., at 2929
Elm St., Dallas, Texas, for the following purposes:
1. To approve the reverse stock split of the Company's Common Stock on a one
share for six shares basis, thereby reducing the number of shares owned by
each shareholder by 83.33%.
2. To elect four directors to serve for a term of one year and until their
respective successors are duly elected and qualified.
3. To transact such other business as may properly come before the meeting or
any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on February 18, 1998 as
the record date for the meeting. Only shareholders of record on that date are
entitled to notice of and to vote at the meeting and any adjournment or
postponement thereof. As of the date of the mailing of the Proxy, management and
certain shareholders had indicated the intention to vote over 51.5% of the
outstanding shares of the Company in favor of all proposals.
The enclosed proxy is solicited by the Board of Directors of the Company.
Reference is made to the attached proxy statement for further information with
respect to the business to be transacted at the meeting. The Board of Directors
urges you to date, sign and return the enclosed proxy promptly. You are
cordially invited to attend the meeting in person. The return of the enclosed
proxy will not affect your right to vote in person if you do attend the meeting.
David A. Nelson
Corporate President and Secretary
<PAGE> 3
REGENT TECHNOLOGIES, INC
2929 ELM STREET
DALLAS, TEXAS 75226
PROXY STATEMENT
The proxy statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Regent Technologies, Inc. ("Regent" or
the "Company") for use at the Company's Annual Meeting of Shareholders which
will be held on the date, at the time and place and for the purposes set forth
in the foregoing notice. This proxy statement, the foregoing notice and the
enclosed proxy are being sent to shareholders on or about February 20, 1998.
VOTING REQUIREMENTS
At the close of business on February 18, 1998, the record date fixed
for the determination of shareholders entitled to notice of and to vote at the
meeting, there were outstanding 16,048,856 shares of the Company's Common Stock
(the "Common Stock"), the only class of voting securities outstanding. The
presence at the meeting, in person or by proxy, of the holders of a majority of
such outstanding shares will constitute a quorum. Each share of Common Stock
is entitled to one vote on each matter to be submitted to a stockholder vote.
Shareholders do not have cumulative voting rights in the election of directors.
The affirmative vote of the holders of a majority of the outstanding shares of
Common Stock is required for the approval of each proposal except the election
of Directors which requires a plurality vote.
The Board of Directors does not intend to bring any matter before the
meeting except as specifically indicated in the notice and does not know of
anyone else who intends to do so. If any other matters properly come before
the meeting, however, the persons named in the enclosed proxy, or their duly
constituted substitutes acting at the meeting, will be authorized to vote or
otherwise act thereon in accordance with their judgment in such matters. If
the enclosed proxy is properly executed and returned prior to voting at the
meeting, the shares represented thereby will be voted in accordance with the
instructions marked thereon. In the absence of instructions, the shares will
be voted "FOR" the nominees of the Board of Directors in the election of the
four directors. Broker "Non-Votes" and shares marked "Abstain" on the return
proxy will count as a "No" vote but will be counted for purposes of
establishing a quorum. Colorado law does not prohibit members of the Board of
Directors from voting their shares in all matters notwithstanding the potential
of a personal interest therein.
Any proxy may be revoked at any time prior to its exercise by
notifying the Secretary of the Company in writing, by delivering a duly
executed proxy bearing a later date or by attending the meeting and voting in
person. As of the date of the mailing of the Proxy, management and certain
shareholders had indicated the intention to vote over 51.5% of the outstanding
shares of the Company in favor of all proposals.
THE BOARD OF DIRECTORS OF REGENT UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS OF REGENT VOTE THEIR SHARES OF REGENT COMMON STOCK IN FAVOR OF THE
APPROVAL OF BOTH PROPOSALS, NAMELY THE REVERSE STOCK SPLIT AND THE ELECTION OF
DAVID A. NELSON, GORDON M. BOYD, WILLIAM D. BINGHAM AND ROY W. MERS AS
DIRECTORS.
PROPOSAL FOR REVERSE STOCK SPLIT
The Board of Directors has proposed that all of the shares of Common
Stock of Regent, both registered and unregistered, be subject to a reverse
split on a one share for six shares basis, ie. 36,000 shares of Regent Common
Stock would be reduced to 6,000 shares. The Company is currently in need of
capital for the expansion of its business and the Board has determined that
offering shares through private placement memorandums is the best method for
funding the Company's efforts rather than acquiring debt. The Board has also
determined that the success of such offerings will be enhanced and the shares
will be more attractive to investors if a reverse stock split is effected at
this time.
1
<PAGE> 4
INFORMATION REGARDING REGENT
Business
- --------
General. Regent Technologies, Inc., formerly Regent Petroleum
Corporation, was incorporated under the laws of the State of Colorado on
January 18, 1980, for the purpose of exploration and development of oil and gas
properties in the United States. In 1994, the Company redirected its core
activities and acquired SSBE Environmental, Inc. ("SSBE"), which was organized
for the purpose of obtaining waste and landfill reclamation contracts. On
August 16, 1996, the Board of Directors of the Company voted to sell 81% of its
investment in SSBE to management of SSBE and to enter into a license agreement
for the technologies necessary to offer dialup access to the Internet (the
"Technology License" or "License"). On September 15, 1996, the Company
announced it had initiated highspeed Internet access for home and business
using the National Knowledge Networks, Inc. ("NKN") digital network under a
Technology License which licenses the hardware and the software necessary for
the Company to offer access to the Internet. The License was obtained from NKN
Technologies, Inc. ("NKN") which was under license to National Knowledge
Networks, Inc. The consideration was the grant of 2,500,000 shares of common
stock of the Company, 600,000 registered shares and 1,900,000 restricted
shares. To satisfy the grant of registered stock, the Board of Directors
approved the exchange of three (3) shares of restricted stock for one (1) share
of registered stock. The Company issued 3,141,688 shares of newly issued
restricted common stock plus the shares received from SSBE to satisfy the
consideration for the license, all valued at $.10 per share, which resulted in
the Technology License being booked at $364,168. On December 7, 1996, the
License was assigned to the Company's wholly owned subsidiary, Regent Tel1
Communications, Inc. ("TEL1"). The License Agreement has a primary term of ten
(10) years.
Recent Business Developments. Effective September 1, 1997, Regent
acquired ConnecTen, L. L. C. ("ConnecTen") for 100,000 shares of Regent
restricted common stock. The focus of ConnecTen is to provide a wide range of
Internet services for corporate customers including high-speed access, web
hosting, server co-location and web page development. As part of the scope of
the services provided to a corporate account, ConnecTen optimizes a customer's
Internet needs at the least cost available. At the date of the acquisition,
ConnecTen provided Internet services for eight commercial customers with
annualized revenues of $ 60,000. The Company began a direct marketing program
through TEL1 using a network marketing system of independent representatives
("IRs") in October for its Internet access products and other telecommunications
services. TEL1 has specialized in Internet access services and is now
introducing the sale of prepaid long distance telephone cards, residential long
distance, commercial long distance, 800 service, international service and
wireless telephone and paging services. The direct marketing system was chosen
because it is a cost effective strategy that maintains direct contact with the
customers. TEL1's offering of wireless products was the result of Regent's
acquisition of Channel Services, L.C. which allowed TEL1 to succeed to
Channel's status as a preferred customer of AT&T Wireless Services Corp.
Channel Services was acquired through the issuance of 1,281,667 shares of
Regent restricted common stock and warrants which can be exercised for an
additional 80,000 shares of Regent restricted common stock. For a further
description of the Company's planned operations, see "Management's Discussion
and Analysis of Financial Condition and Results of Operations" below.
Employees. At December 31, 1997, the Company had five employees and
50 independent representatives providing marketing for TEL1.
Properties
- ----------
Offices. On September 1, 1997, the Company opened a new corporate
office located at 2929 Elm St., Dallas, Texas 75226 under a five year lease
which provides for rental payments of $3,500 per month.
Legal Proceedings; Submission of Matters To Vote of Security Holders
- ---------------------------------------------------------------------
The Company is not a party to any pending litigation and no
significant litigation or legal proceeding has been threatened against the
Company. No matter was submitted to a vote for security holders during the year
ended December 31, 1997 and in 1998 through the date of this proxy.
2
<PAGE> 5
Market for Regent's Common Stock
The Company's Common Stock is traded in the over-the-counter market and
currently listed on the Electronic Bulletin Board and trades under the symbol
"REGT". The following table sets forth the range of high and low bid quotations
as reported by security dealers.
<TABLE>
<CAPTION> Bid Price
------------
High Low
---- ---
<S> <C> <C> <C>
1995 1st Quarter ............................... .18 .10
2nd Quarter ............................... .10 .05
3rd Quarter ............................... .05 .02
4th Quarter ............................... .02 .01
1996 1st Quarter ............................... .01 .01
2nd Quarter ............................... .01 .01
3rd Quarter ............................... .08 .01
4th Quarter ............................... .08 .05
1997 1st Quarter ............................... .06 .05
2nd Quarter ............................... .06 .05
3rd Quarter ............................... .12 .10
4th Quarter ............................... .14 .10
</TABLE>
The approximate number of record holders of Regent Common Stock at December 31,
1997 was 3,500.
Selected Financial Information
The following table summarizes certain selected historical financial
data for the five years ended December 31, 1996 and the nine months ending
September 30, 1997 and is qualified in its entirety by the more detailed
financial statements included in this report and should be read in conjunction
with such financial statements, the notes thereto and with Management's
Discussion and Analysis of Financial Condition and Results of Operations
included in the Form 10-KSB filed for each year.
<TABLE>
<CAPTION>
Nine Months
Ended September 30, Year Ended December 31,
------------------- -----------------------------------------
1997 1996 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Revenue(1) $34 $4 $4 $446 $98 $71 $132
Net Income (Loss) Before
Extraordinary Item (178) (39) (90) (74) (58) (50) 21
Net Income (Loss) (178) (39) (90) (74) (58) (50) 21
Net Income (Loss) Before
Extraordinary Item
Per Common Share(2) (.013) (.004) (.009) (.008) (.007) (.006) .003
Net Income (Loss) Per Common Share (.013) (.004) (.009) (.008) (.007) (.006) .003
Cash Flow Provided (Used) by
Operations (84) (4) (27) (42) (30) (40) 37
Cash Dividends - Common -0- -0- -0- -0- -0- -0- -0-
Weighted Average Number of Common
Shares Outstanding 13,888 9,215 8,877 8,878 8,507 8,390 8,390
Balance Sheet
Working Capital (Deficit) (95) (16) (30) 19 91 115 (7,198)
Total Assets 451 413 372 231 328 255 319
Total Liabilities 174 22 32 126 155 46 59
Long-Term Debt -0- -0- -0- 44 59 26 34
Total Shareholders' Equity 277 391 340 105 173 208 259
</TABLE>
(1) All amounts in thousands except per share data
(2) Based on the Weighted Average Number of Common Shares Outstanding
3
<PAGE> 6
Management's Discussion and Analysis of Financial Conditions and Results of
Operations
General. Certain statements set forth in this report are forward
looking statements that involve a number of risks and uncertainties. Among
many factors that could cause results to differ materially are the following:
the Company's ability to manage rapid growth; the Company's ability to attract,
maintain, and motivate a large base of IRs; competition in the long distance
telecommunications and Internet industries; the Company's ongoing relationship
with its long distance carriers; dependence upon key personnel; subscriber
attrition; the adoption of new, or changes in, accounting policies, practices,
and estimates and the application of such policies, practices, and estimates;
federal and state governmental regulation of the long distance
telecommunications industry; the Company's ability to develop its own long
distance network; the Company's ability to maintain, operate, and upgrade its
information systems; and the Company's success in the offering of other
additional communications products and services.
The Company's products and services are primarily marketed through a
network of IRs. Currently, the Company resells 1-plus long distance through
Coastal Telephone Company in Houston, Texas; wireless telephone service through
AT&T; dialup Internet service through NKN and the VERIO network, dedicated
Internet service through the Company's Dallas fiber hub which utilizes the
SAVIS backbone nationwide network and prepaid phone card services through
Enhanced Communications in Dallas, Texas. The Company intends to expand its IR
related products and services to include a wide range Internet products
including Internet telephony. At present, the Company has approximately 60
active service contracts which generate recurring annual gross revenues of
$30,000 and expects to increase this volume by 50% per month during 1998.
The Company encourages IRs to enroll subscribers with whom the IRs
have an ongoing relationship. The Company does not require the IRs to use its
services but does encourage its usage through discounts and promotions. The
sales efforts of the IRs are supported through various means, including Company
sponsored training held periodically. The Company presently has 50 IRs and
expects to increase this number by 50 a month during 1998.
Financial Condition
Liquidity and Capital Resources. At September 30, 1997, excluding
amounts owed to officers and affiliates, the Company had net working capital of
$46,000. The Company has no amortization requirements under any term loan
agreements. The Company is current on all trade payables excluding amounts owed
to officers and affiliates. The Company continues to raise monies as needed
through proceeds from the sale of the Company's common stock. Through the end
of 1997, the Company raised $170,000 by selling new restricted previously
unissued common stock, which amount includes a note receivable of $59,000 from
the Chariman payable in monthly installments of $4,916.
Results of Operations
Comparison of the Nine Months Ended September 30, 1997 to the Nine
Months Ended September 30, 1996
The Company's net loss for the third quarter of 1997 was $178,000, or
$.013 cents per common share, compared with a net loss of $39,000 for the same
period in 1996. The difference was due to the increase of general and
administrative costs for the same periods which consists primarily of deferred
management compensation. The Company's expansion of its marketing through
direct marketing channels has resulted in adding over 30 independent sales
representatives who have sold approximately 50 new service contracts for
Internet access or long distance services. The Technology License was modified
to eliminate POP charges by NKN for the first 12 months of the License or until
the number of TEL1 subscribers exceeds 300, whichever comes first. The Company
will begin being charged $500 per month by NKN in October, 1997 for its dial-up
customers, regardless of the quantity. In addition, the Company will pay $5.00
per customer per month for technical support. The Company had consulting income
through its investments in SSBE in the first quarter of 1996. For the nine
months ended September 30, 1997, general and administrative expenses increased
$123,000 from 1996 due primarily to the increase of $140,000 in salaries to
officers of the Company. All salaries have been accrued liabilities until the
Company is capitalized. For the nine months ended September
4
<PAGE> 7
30, 1997, amortization expense for goodwill and intangibles increased from
$27,000 compared to the same period in 1996 due to the amortization of the
Technology License.
1996 versus 1995
For the twelve months ending December 31, 1996, the Company
experienced a significant decrease in sales, current assets and liabilities,
all due to the sale of SSBE. Property and equipment decreased due to the
write-off of the Company's remaining oil and gas assets which represented
undrilled overriding royalty interests. The Company's increase in Other Assets
of $270,000 was due to the acquisition of the Technology License which was
booked at $364,000 at September 30, 1996. The License is being amortized over
ten (10) years and experienced amortized cost of $9,104 for the three months
ending December 31, 1996. The Company experienced a gain of $2,465 on the sale
of 81% of the ownership of SSBE. The remaining 19% has a book value of $13,496
and is included in Other Assets. During the fourth quarter, the Company
initiated test-marketing dial-up services in the Dallas-Ft. Worth area. The
Company realized approximately $1,000 in sales for the three months ending
December 31, 1996. In addition, for the same period, the Company earned nominal
receipts for commissions for reselling long distance services.
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 $50,202
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. 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 provided for ownership by the
laboratory at the end of 36 monthly lease payments of $400 without any
additional payment. The final payment was made in June, 1996. The Company has
no plans for manufacturing of distillation unit in the future. The gain of
$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
acquisition 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 provided for ownership by the laboratory at the end of 36
monthly lease payments of $400. 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 a salary was initiated in October, 1993 and continued through
1994. Interest expense decreased for 1994 due to less debt outstanding.
1996 Regent Financials
The following financial statements are the audited balance sheet for
Regent for the years ended December 31, 1996 and 1995 and related consolidated
statement of operations, stockholders' equity and cash flows for the years
ended December 31, 1996, 1995 and 1994. The statements should be read in
conjunction with the related notes thereto and Management's Discussion and
Analysis of Financial Condition and Results above.
5
<PAGE> 8
[SALMON, BEACH & COMPANY LOGO]
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Regent Technologies, Inc.
We have audited the accompanying consolidated balance sheets of Regent
Technologies, Inc. (a Colorado corporation) and subsidiaries as of December 31,
1996 and 1995, and the related consolidated statements of operations,
stockholders' equity, and cash flows for each of the two years 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 audit 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 statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated 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, 1996 and 1995, and the results of their
operations and their cash flows for each of the two years in the period ended
December 31, 1996 in conformity with generally accepted accounting principles.
/s/ SALMON, BEACH & COMPANY, P.C.
Dallas, Texas
April 10, 1997
<PAGE> 9
[FARMER, FUQUA, HUNT, & MUNSELLE, P.C. LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
Regent Technologies, Inc.
We have audited the accompanying consolidated statements of operations,
stockholders' equity and cash flows of Regent Technologies, Inc. (a Colorado
corporation) and subsidiaries for the year ended December 31, 1994. 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 audit 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 statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated 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 consolidated results of operations and
cash flows of Regent Technologies, Inc. and subsidiaries for the year ended
December 31, 1994, in conformity with generally accepted accounting principles.
/s/ FARMER, FUQUA, HUNT & MUNSELLE, P.C.
Farmer, Fuqua, Hunt & Munselle, P.C.
Dallas, Texas
April 5, 1995
<PAGE> 10
REGENT TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31,
(Amounts in thousands, except per share data)
<TABLE>
<CAPTION>
1996 1995
ASSETS ---- ----
<S> <C> <C>
CURRENT ASSETS
Cash $ 1 $ 9
Costs and estimated earnings in excess of billings -- 16
Accounts receivable 1 40
Deposit -- 25
Other -- 12
------ ------
Total current assets 2 102
PROPERTY AND EQUIPMENT - AT COST
Net investment properties, using the full cost method of accounting -- 29
Furniture and fixtures 4 4
------ ------
4 33
Lease accumulated depreciation, depletion and amortization 3 2
------ ------
1 31
OTHER ASSETS 369 99
------ ------
$ 372 $ 232
------ ------
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 16 $ 72
Accrued compensation 14 --
Notes payable to affiliates 2 10
------ ------
Total current liabilities 32 82
NOTES PAYABLE TO AFFILIATE, less current portion -- 44
COMMITMENTS -- --
STOCKHOLDERS' EQUITY
Common stock, $.01 par value; authorized 100,000,000 shares,
issued and outstanding 12,467,189 and 8,974,201 shares for
1996 and 1995, respectively 125 90
Additional paid-in capital 2,517 2,228
Accumulated deficit (2,302) (2,212)
------ ------
Total Stockholders' Equity 340 106
------ ------
$ 372 $ 232
------ ------
</TABLE>
The accompanying notes are an integral part of these statements.
F-3
<PAGE> 11
REGENT TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31,
(Amounts in thousands, except per share data)
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
REVENUES
Internet sales and service $ 1 $ -- $ --
Investment income -- 427 95
Gain on sale of assets 3 4 --
Interest income and other -- 15 3
--------- --------- ---------
4 446 98
COSTS AND OTHER DEDUCTIONS
Costs of Internet sales and services -- -- --
Costs of investment income -- 338 70
General and administrative 55 149 71
Depreciation, amortization and impairment 39 28 11
Interest expense -- 5 4
94 520 156
--------- --------- ---------
NET LOSS ($90) ($74) ($ 58)
--------- --------- ---------
LOSS PER COMMON SHARE ($0.009) ($0.008) ($0.007)
--------- --------- ---------
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 9,596,689 8,878,369 8,507,301
--------- ---------- ---------
</TABLE>
The accompanying notes are an integral part of these statements
F-4
<PAGE> 12
REGENT TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
FOR THE YEARS ENDED DECEMBER 31,1996,1995 AND 1994
(Amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Common Stock Additional Treasury Stock Total
-------------------- Paid-in Accumulated ----------------------- Stockholders
Shares Amount Capital Deficit Shares Amount Equity
------ ------ ------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
BALANCES, JANUARY 1, 1994 8,390,000 $84 $2,205 ($2,080) - - $209
Issuance of common stock 469,203 5 19 - - - 24
Net loss - - - (58) - - (58)
----------- ---------- ---------- ---------- ---------- ---------- ----------
BALANCES, DECEMBER 31, 1994 8,859,203 89 2,224 (2,138) - - 175
Issuance of common stock 114,998 1 4 - - - 5
Net loss - - - (74) - - (74)
----------- ---------- ---------- ---------- ---------- ---------- ----------
BALANCES, DECEMBER 31, 1995 8,974,201 90 $2,228 (2,212) - - 106
Acquisition of stock in
connection with SSBE
transaction - - - - 500,000 50,000 -
Exchange of registered
stock for restricted
stock - - - - 570,844 - -
Issuance of stock 3,492,988 35 289 - (1,070,844) (50,000) 324
Net loss - - - (90) - (90)
----------- ---------- ---------- ---------- ---------- ---------- ----------
BALANCES, DECEMBER 31, 1996
12,467,189 $125 $2,517 ($2,302) 0 $0 $340
</TABLE>
In November, 1995, the Company offered 500,000 shares of its common stock
as restricted stock for $.05 per share through a private placement
memorandum or other private transactions. In March, 1996, the Company
offered 500,000 shares of its common stock as restricted stock for $.02 per
share to raise working capital.
At December 31, 1996, the Company had sold 451,300 shares of its common
stock as restricted stock for an average price of $.033 per share to raise
working capital in 1995 and 1996 under the aforementioned resolutions.
At September 30, 1996, the Company issued 3,141,688 previously unissued
shares of its common stock as restricted stock as partial consideration for
the Technology License.
The accompanying notes are an integral part of these statements.
F-5
<PAGE> 13
REGENT TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,
(Amounts in thousands,
except per share data)
<TABLE>
<CAPTION>
1996 1995 1994
----- ----- -----
CASH FLOW FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net loss ($90) ($74) ($58)
Adjustments To Reconcile Net Loss
to Net Cash Provided (Used) by Operating Activities:
Gain on sale of assets (3) (4) -
Depreciation, depletion, amortization and impairment 39 28 11
(Increase) Decrease in
Accounts receivable (1) 30 (67)
State tax refunds receivable - 2 12
Other current assets 2 (3) (6)
Costs and estimated earnings in excess of billings - (15) -
Increase (Decrease) in
Accounts payable and accrued liabilities 12 (6) 76
Accrued compensation and other 14 - 1
----- ----- -----
Net Cash Used In Operating Activities (27) (42) (31)
----- ----- -----
CASH FLOW FROM INVESTING ACTIVITIES:
Proceeds from sale of oil and gas properties - 37 -
Net collections on notes receivable 2 14 31
Proceeds (Costs) of investment in subsidiary 6 - (50)
(Increase) Decrease of property and equipment - 17 (1)
(Increase) Decrease in other assets - (25) 7
----- ----- -----
Net Cash Provided (Used) From Investing Activities 8 43 (13)
----- ----- -----
CASH FLOW FROM FINANCING ACTIVITIES:
Net repayment of borrowings - (20) (3)
Issuance of common stock 9 5 10
Net proceeds from (repayment of) note to stockholder 2 (2) (10)
----- ----- -----
Net Cash Provided (Used) From Financing Activities 11 (17) (3)
----- ----- -----
Decrease In Cash (8) (16) (47)
----- ----- -----
Cash at Beginning of Period 9 25 72
----- ----- -----
Cash at End of Period $1 $9 $25
----- ----- -----
SUPPLEMENTAL DISCLOSURES
Cash paid during the period for interest - 2 4
----- ----- -----
</TABLE>
The accompanying notes are an integral part of these statements
F-6
<PAGE> 14
REGENT TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31,1996,1995 AND 1994
(1) ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Regent Technologies, Inc. (the "Company"), formerly Regent Petroleum
Corporation, 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 1992 were primarily organization, issuance
of equity capital and acquisition of developed and undeveloped oil and gas
properties which included the formation of Earth Minerals, Inc. in 1991,
which was later renamed Regent Industries, Inc. In 1992, the Company
redirected its core business to environmental technologies and Regent
Industries joint-ventured water filtration systems. In 1994, the Company
acquired SSB Environmental, Inc. ("SSBE"), which was organized for the
purpose of providing environmental services and was accounted for under the
purchase method of accounting. Effective January 1, 1996, the Company sold
100% of Regent Industries and 81% of its interest in SSBE, and the
remaining 19% is accounted for on the cost method of accounting. In
September, 1996, the Company licensed proprietary technology for the
purpose of offering Internet access and related products and services.
During the fourth quarter of 1996, the Company organized TEL1
Communications, Inc. as a wholly owned subsidiary to market its Internet
and telecommunications products and services.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. Regent Industries and SSBE were
consolidated in the financial statements of the Company in the fiscal years
ended 1994 and 1995 and TEL1 Communications, Inc., incorporated in Nevada
in December, 1996., and registered in Texas as Turbonet, Inc., was
consolidated for the fiscal year ended 1996.
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. Actual results could
differ from these estimates.
Revenue and Cost Recognition on 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. 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
uncompleted 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 estimates 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.
F-7
<PAGE> 15
REGENT TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995 AND 1994
(1) ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-CONTINUED
Depreciation, Amortization and Impariment
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. Amortization of the Technology License is provided in amounts
which reflect the anticipated minimum number of years of the License
Agreement (10 years). Amortization of Goodwill and Intangibles is provided
in amounts to reflect the life of the asset purchased (40 years and 15
years respectively).
Stock Options and Awards
In 1994, as part of the acquisition of SSBE, the Company adopted a
nonqualified stock option plan which was terminated with the sale of 81%
of the SSBE stock. The Plan terminated without the grant of any stock
thereunder.
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, 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, using 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.
(2) SALE OF ASSETS
Effective January 1, 1996, the Company sold 81% of its ownership in SSBE to
management of SSBE for the consideration of cash of $10,000 and 500,000
shares of common stock of the Company, of which 29,156 shares were
registered shares of common stock of the Company. The sale resulted in a
gain of $2,765. The remaining 19% investment ownership has a book value of
$13,496, which can by purchased by the buyers under a two year option for
the consideration of the greater of the Company's book value or the market
value at the date of the exercise of the option.
F-8
<PAGE> 16
REGENT TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31,1996,1995 AND 1994
The following summarized information presents the results of operations of
SSBE for the years ended December 31, 1995 and December 31, 1994. The
contract with the Town of Hague, New York, accounted for $421,794 of the
$435,577 total revenues in 1995 and $79,684 in 1994. This contract was
suspended indefinitely in 1996.
<TABLE>
<CAPTION>
1995 1994
---------- ---------
<S> <C> <C>
Revenues $435,577 $79,684
Net loss ($3,946) ($7,682)
Net loss per common share ($0.0004) ($0.0009)
Weighted average common shares 8,878,369 8,507,301
</TABLE>
(3) PURCHASE OF TECHNOLOGY LICENSE
Effective August 16, 1996, the Board of Directors of the Company approved
the acquisition of the license (the "Technology License") of the hardware
and the software necessary for the Company to offer dialup access to the
Internet. The license was obtained from NKN Technologies, Inc. ("NKN") for
the consideration of the grant of 2,500,000 shares of common stock of the
Company, consisting of 600,000 registered shares and 1,900,000 restricted
shares. To have a sufficient number of registered shares, the Board of
Directors approved the exchange of three (3) shares of restricted stock for
one (1) share of registered stock resulting in the exchange of 1,712,532
shares of restricted stock for 570,844 registered shares. The Company
issued 3,141,688 shares of newly issued restricted common stock plus the
500,000 shares received from SSBE to satisfy the consideration for the
license, all valued at $.10 per share.
(4) NOTES RECEIVABLE
<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
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
---------- ----------
(5) OTHER ASSETS
1996 1995
------ ------
Goodwill, less accumulated amortization of $2,391 - 74,107
in 1995.
Investment, minority ownership SSBE 13,496 -
Intangibles, less accumulated amortization of $10,927 - 25,570
in 1995.
Technology License, less accumulated amortization
of $9,104 in 1996 355,064 -
---------- ----------
$ 368,560 $ 99,677
---------- ----------
</TABLE>
F-9
<PAGE> 17
REGENT TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995 AND 1994
(6) TRANSACTIONS WITH RELATED PARTIES
From October 1992, through March 1997, the Company rented administrative
office space from the President for $750.00 per month.
In 1994, SSBE issued two notes payable to Schillinger, Salemi and Boyd,
Inc., owned by certain stockholders of the Company. In 1995, the Company
paid $109,039 to Schillinger, Salemi and Boyd, Inc. for services rendered.
In November 1995, the wife of the Company's President, purchased 100,000
restricted shares of the Company's common stock for $.05 per share.
Effective January 1, 1996, management of SSBE purchased 81% of the
ownership of SSBE from the Company for 500,000 shares of the common stock
of the Company and cash of $10,000. Management also received an option for
two years to purchase the remaining 19%.
In May 1996, the Board of Directors of the Company approved the sale of
500,000 shares of restricted common stock for $.02 per share to raise
working capital. In the second and third quarters, the wife of the
Company's President, purchased 225,000 shares of common stock of the
Company in two transactions for a total of $4,500 to provide working
capital.
In June 1996, the wife of the Company's President, purchased the stock of
Regent Industries, Inc. with an effective date of January 1, 1996. The
stock had a book value of less than $100 and was sold for $300 for the
purpose of raising working capital for the Company.
In September 1996, certain officers and directors of the Company exchanged
520,844 registered shares of common stock of the Company for 1,562,532
shares of restricted stock of the Company to complete the grant of
registered stock to NKN.
On December 31, 1996, and January 27, 1997, the President issued notes to
the Company in the amounts of $2,000 and $1,500 to assist in the payment of
certain trade payables. The notes are due upon demand and bear interest at
eight percent (8%) per annum.
On February 27, 1997 and March 19,1997, the wife of the Company's President
purchased on each date 100,000 of restricted common stock of the Company
for $.05 per share.
On April 1, 1997, Mr. Roy Mers, a director since March, 1997, purchased
200,000 shares of restricted common stock of the Company for $.05 per
share.
(7) COMMITMENTS
In April, 1997, the Company moved its corporate offices to 350 N. St. Paul,
Suite 2410, Dallas, Texas, under a month-to-month lease which provides for
rental payments of $750 per month. Rent expense was approximately $9,600 in
1996 and 1995 and $12,000 in 1994.
F-10
<PAGE> 18
Management
Directors and Executive Officers - See "Election of Directors" below.
Compensation which the Company paid for services in all capacities for
the year ended December 31, 1997, to the executive officers of the Company is
set forth as follows:
<TABLE>
<CAPTION>
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)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Roy W. Mers, CEO 1997 $90,000 $6,000
David A. Nelson, President 1997 $87,000 $6,000
1996 $24,000 $6,000
1995 $24,000 $1,600
Steve Hughes, CFO 1997 $30,000
Elaine Boze, General Counsel 1997 $12,000
</TABLE>
(1) Other Annual Compensation is an Automobile allowannce.
(2) The CEO and President are compensated under Employment Contracts
initiated effective on April 1, 1997 and have deferred all salary
until the Company is capitalized. The CFO has deferred half of his
salary until the Company is capitalized.
(3) The Company paid, or otherwise incurred, a consulting fee of $24,000
to the President in 1996 and 1995.
(4) The Company also paid the following consulting fees in 1995: Salerni,
Schillinger & Boyd, Inc. $109,038 and & $360 to the Law firm of
Lawrence R. Schillinger.
Other Benefits. The Directors of the Company receive $250 each for meetings
attended and each director has 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 as a Director, whichever cones first.
Security Ownership of Certain Beneficial Owners and Management
Principal Shareholders
The following table sets forth certain information respecting the
holdings of each shareholders 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 of more than 5% of the Common Stock of the Company. 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 indicated. The amounts include spousal ownership and
the grant of options.
<TABLE>
<CAPTION>
Name and address of Amount and Nature of Beneficial
Beneficial Owner Beneficial Ownership Ownership
---------------- -------------------- ---------
<S> <C> <C>
Roy W. Mers (1) 3,245,833 Shares 17.61%
1074 Bells Chapel
Waxahachie, Texas 75165
David A. Nelson 3,869,760 Shares 21.00%
3212 Beverly Drive
Dallas, Texas 75205
NKN Technologies, Inc. (1) 1,666,667 Shares 9.04%
400 N. St. Paul, Suite 500
Dallas, Texas 75201
Jesse G. Edwards 1,712,073 Shares 9.29%
1890 Valley View Lane
Tyler, Texas 75703
</TABLE>
6
<PAGE> 19
(1) Includes 833,333 shares of indirect ownership through Mr. Mers' one
third ownership of NKN Technologies, Inc.
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 and include director options. The person
named below as beneficially owning the shares set forth opposite his name,
including options, has sole voting power and sole investment power with respect
to such shares, unless otherwise indicated.
<TABLE>
<S> <C> <C>
Name and address of Amount and Nature of Beneficial
Beneficial Owner Beneficial Ownership Ownership
- ---------------- -------------------- ---------
Roy W. Mers, Chairman 3,245,833 Shares 17.61%
David A. Nelson, President 3,869,760 Shares 21.00%
Gordon M. Boyd, Director 366,532 Shares 1.99%
William D. Bingham, Director 100,000 Shares .54%
Steve Hughes, CFO 500,000 Shares 2.71%
Bruce Goldstein, President, ConnecTen 500,000 Shares 2.71%
Elaine Boze, General Counsel 500,000 Shares 2.71%
Officers and Directors as a Group 5,288,625 Shares 49.27%
</TABLE>
Certain Relationships and Related Transactions
In April, 1997, the Directors approved the grant stock options to the Chairman
in the amount of 2,000,000 shares and to the President in the amount of 500,000
shares all with an exercise price of $.05 with an expiration of December 31,
1998.
The Directors also approved a resolution granting 50,000 shares each to the
Chief Financial Officer and to the General Counsel to vest upon completion of
their employment contracts.
During the third quarter, 1997, the Directors approved the grant of stock
options to the General Counsel and the Chief Financial Officer in the amount of
450,000 shares and to the Director of the Integration Services Division of the
Company in the amount of 400,000 shares each with an exercise price of $.05
with an expiration of December 31, 1998.
In October, 1997, the Board of directors passed a resolution giving all
employees the option of taking restricted shares of the Company stock, at a
value of $.05 per share, in lieu of salaries owed through 1997.
Regent Interim Financials
The following financial statements are the unaudited financial
statements of Regent for the nine months ended September 30, 1997. The
statements should be read in conjunction with the related notes thereto and the
previous Management's Discussion and Analysis of Financial Condition and
Results. The financial results as of and for the nine months ended September
30, 1997 and 1996, in the opinion of management contain all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of this information.
7
<PAGE> 20
Regent Technologies, Inc. and Subsidiaries
Consolidated Balance Sheets
(unaudited)
(Amounts in thousands)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
---- ----
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash $ 10 1
Notes receivable 59 -
Accounts receivable 10 1
------- ------
Total current assets $ 79 2
PROPERTY AND EQUIPMENT - AT COST
Furniture and fixtures 5 4
Computer and electronic equipment 20 -
------- ------
25 4
Less accumulated depreciation and amortization 4 3
------- ------
$ 21 1
OTHER ASSETS 351 369
------- ------
$ 451 372
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 29 16
Accrued compensation 140 14
Notes payable to affiliates 5 2
------- ------
Total current liabilities 174 32
LONG TERM DEBT -- --
STOCKHOLDERS' EQUITY
Common stock, $.01 par value, authorized 100,000,000 shares,
issued and outstanding 14,767,189 and 12,467,189 shares for
1997 and 1996, respectively 148 125
Capital in excess of par value 2,609 2,517
Accumulated deficit (2,480) (2,302)
------- ------
Total Stockholders Equity $ 277 340
------- ------
Total Liabilities and Stockholders' Equity $ 451 372
------- ------
</TABLE>
The accompanying notes are an integral part of these statements.
8
<PAGE> 21
Regent Technologies, Inc. and Subsidiaries
Statement of Operation
(Unaudited)
(Amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES
Internet and telecommunication product sales $ 19 1 34 1
Miscellaneous income - - - 3
------- ------ ------ ------
19 1 34 4
COSTS AND OTHER DEDUCTIONS
Cost of sales 11 1 20 1
General and administrative 86 12 164 41
Depreciation, depletion and amortization 10 1 28 1
------- ------ ------ ------
107 14 212 43
NET EARNINGS (LOSS) $ (88) (13) (178) (39)
NET EARNINGS (LOSS) APPLICABLE TO COMMON STOCK (88) (13) (178) (39)
------- ------ ------ ------
NET EARNINGS (LOSS) PER COMMON SHARE $(0.006) (0.001) (0.013) (0.004)
------- ------ ------ ------
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 14,767 9,215 13,888 9,215
------- ------ ------ ------
</TABLE>
The accompanying notes are an integral part of these statements.
9
<PAGE> 22
Regent Technologies, Inc. and Subsidiaries
Statement of Cash Flows
(Unaudited)
(Amounts in thousands)
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30,
1997 1996
----- ----
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net earnings (loss) $(178) (39)
Adjustments To Reconcile Net Earnings (loss)
to Net Cash Provided (Used) by Operating Activities:
Gain on sale of assets - 2
Depreciation and amortization 1 1
(Increase) Decrease in
Accounts and notes receivable (67) 39
Prepaid expenses -- 25
Other assets 18 28
Increase (Decrease) in
Accounts payable and accured liabilities 16 (70)
Accrued compensation and other 126 10
----- ----
Net Cash Used In Operating Activities $ (84) (4)
----- ----
CASH FLOW FROM INVESTING ACTIVITIES:
(Increase) Decrease in investments $ - (289)
Capital expenditures (22) -
Proceeds from sale of assets - 10
----- ----
Net Cash Used In Investing Activities: $ (22) (279)
----- ----
CASH FLOW FROM FINANCING ACTIVITIES:
Payment on long-term debt $ - (44)
Issuance of common stock 115 323
----- ----
Net Cash Provided (Used) From Financing Activities $ 115 279
----- ----
Increase (Decrease) In Cash 9 (4)
----- ----
Cash at Beginning of Period $ 1 9
----- ----
Cash at End of Period $ 10 5
----- ----
SUPPLEMENTAL DISCLOSURES
Cash paid during the period for interest $ - -
----- ----
</TABLE>
The accompanying note are an integral part of these statements.
10
<PAGE> 23
NOTES TO FINANCIAL STATEMENTS
September 30, 1997 (unaudited) and December 31, 1996
The amounts presented in the balance sheet as of December 31, 1996 were derived
from Regent Technologies' audited financial statements included in its Form
10-K filed for the year ended December 31, 1996, the notes of which are hereby
incorporated by reference with the accompanying financial statements. The
amounts presented in the balance sheet as of September 30, 1997 were derived
from Regent Technologies' unaudited financial statements included in its Form
10-Q filed for the period ended September 30, 1997, the notes of which are
hereby incorporated by reference with the accompanying financial statements.
(1) MANAGEMENT'S REPRESENTATION. In the opinion of management, the
accompanying financial statements contain all adjustments necessary to present
fairly the financial position of Regent Technologies (the "Company") as of
September 30, 1997 and December 31, 1996 and 1995. The adjustments made for
the periods presented are of a normal and recurring nature.
================================================================================
ELECTION OF DIRECTORS
Identification of the Directors to be Elected
At the meeting, the shareholders will elect four directors to hold
office until the next annual meeting of shareholders and until their successors
are duly elected and qualified. Unless contrary instructions are given, the
shares represented by the enclosed proxy will be voted "FOR" the election of
the Board of Directors' nominees listed below.
The Board of Directors has received notice that the nominees are
willing to serve as directors. If a nominee at the time of his election is
unable or unwilling to serve or is otherwise unavailable for election, and as a
result another nominee is designated, the persons named in the enclosed proxy
or their substitutes will have discretion and authority to vote or to refrain
from voting for the nominee in accordance with their judgment. The nominees
for election as directors, together with certain information about them, are as
follows:
<TABLE>
<CAPTION>
Has Been A Positions With
Name Age Director Since Company
<S> <C> <C> <C>
Roy W. Mers 51 March, 1996 Director, CEO
David A. Nelson 50 October, 1992 Director, President
Gordon M. Boyd 51 December, 1994 Director
William D. Bingham 43 December, 1994 Director
</TABLE>
Principal Occupations of Nominees For Director
Mr. Mers has served as a director and Chief Executive Officer since
March, 1997 and Chairman of the Company since April, 1997. From May, 1996 to
March, 1997, Mr. Mers was the Chief Financial Officer and a Board member of
National Knowledge Networks, Inc., the leading wholesale Internet provider in
the Dallas/Ft. Worth metroplex. As the recent past President of Electronic
Transmission Corporation, Mr. Mers directed the initial growth of the company
which successfully developed network integration of managed care financial
data. Mr. Mers was the founding stockholder of Huntington Systems which was
instrumental in the integration of the Canon Color Laser technology as a
computer output device. Mr. Mers served as a consultant to JC Penny Company
and Sony Corporation to develop a viable digital photography. Mr. Mers holds a
B.S. degree from Southern Methodist University and has completed graduate
studies in economics and finance.
Mr. Nelson has served as President and a Director of the Company
since October, 1992. From November, 1988 to September, 1992, Mr. Nelson was
President, Chief Executive Officer of Intramerican Corporation, formerly
Intramerican Oil and Minerals, Inc., a public oil and gas corporation. Mr.
Nelson
11
<PAGE> 24
managed the rebuilding of Intramerican through the addition of business
segments related to gas gathering and property management and by increasing
proven oil and gas reserves each year. The company moved from a negative
earnings position in 1988 to consecutive profitable years in 1989, 1990 and
1991. Mr. Nelson is an attorney and has over ten years of banking experience.
He holds a B.A. and J.D. from Baylor University and from Texas A & M a Masters
in Computing Sciences. 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 has served as Director of the Company since December, 1994.
From 1988 to 1994, Mr. Boyd served as President of Schillinger, Salerni and
Boyd, Inc. Mr. Boyd was an environmental policy aide to the State Assembly of
New York from 1979 to 1983, when he was appointed executive director of the New
York State Legislative Commission on Solid Waste Management. In 1989, he was
appointed by the Governor to the State Solid Waste Management Board. He has a
B.A. from Hamilton College.
Mr. Bingham is CEO of Net Explorer, Inc., an internet consulting
company serving the Fortune 500 companies. From 1986 to 1994, Mr. Bingham was
a Vice President of Browning Ferris Industries where he helped launch BFI's
medical waste business. He currently consults in the computer operations
business with an emphasis on establishing intranet services. His educational
background includes studies at Stanford University and UCLA.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Financial Statement of the Company for the years ended December
31, 1996 and 1995 were audited by Salmon, Beach and Company and for the year
ended December 31, 1994 by Farmer, Fuqua, Hunt, Munselle & Robert, L.L.C.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the Annual
Meeting of Shareholders in 1999 must be received by the Company by December 31,
1998 in order to be considered for inclusion in the Company's proxy statement.
COST OF SOLICITATION OF PROXIES
The Company will bear the cost of the solicitation of the Board of
Directors' proxies for the meeting, including the cost of preparing, assembling
and mailing proxy materials, the handling and tabulation of proxies received
and charges of brokerage houses and other institutions, nominees and
fiduciaries in forwarding such materials to beneficial owners. In addition to
the mailing of the proxy material, such solicitation may be made in person or
by telephone or telegraph by directors, officers and regular employees of the
Company.
ANNUAL REPORT ON FORM 10-K
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON SOLICITED BY THIS PROXY
STATEMENT, ON THE WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-K (INCLUDING THE FINANCIAL STATEMENTS AND THE
SCHEDULES THERETO) AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR ITS
MOST RECENT FISCAL YEAR. SUCH WRITTEN REQUEST SHOULD BE DIRECTED TO DAVID A.
NELSON, SECRETARY, AT THE ADDRESS OF THE COMPANY APPEARING ON THE FIRST PAGE OF
THIS PROXY STATEMENT.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
REGISTRAR AND TRANSFER AGENT COMMON STOCK INFORMATION
<S> <C>
Signature Stock Transfer, Inc. Regent Technologies, Inc.'s Stock is
14675 Midway Road, Suite 221 traded Over-the-Counter on the
Dallas, Texas 75244 electronic bulletin board under the
(972)788-4193 Symbol "REGT "
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REGENT TECHNOLOGIES, INC.
ANNUAL MEETING OF SHAREHOLDERS
This Proxy is solicited by the Board of Directors for the March 4, 1998
meeting of shareholders.
The undersigned, a shareholder of Regent Technologies, Inc., a Colorado
corporation, hereby constitutes and appoints David A. Nelson and Roy W. Mers,
each of them acting individually as the attorney and proxy of the undersigned,
with full power of substitution, for and in the name and stead of the
undersigned to attend the Annual Meeting of the Shareholders of the Company, to
be held at 2929 Elm St., Dallas, Texas 75226 on Wednesday, March 4, 1998 at
10:00 a.m., local time, and any postponement or adjournment thereof, and thereat
to vote all shares of stock of Regent Technologies, Inc. which the undersigned
would be entitled to cast if then personally present:
1. To approve the reverse stock split of the Company's Common Stock on a one
share for six shares basis, thereby reducing the number of shares owned by
each shareholder by 83.33%.
FOR AGAINST ABSTAIN
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2. Election of Directors
Board of Directors Nominees: David A. Nelson, Gordon M. Boyd, William D.
Bingham and Roy W. Mers
FOR all nominees WITHHOLD AUTHORITY for all nominees
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Instruction: To withhold authority to vote for election of one or more persons
nominated by the Board of Directors, mark FOR above and cross out name(s) of
persons with respect to whom authority is withheld.
3. To transact such other business as may properly come before the meeting or
any adjournment or postponement thereof.
This proxy delegates discretionary authority to vote in respect to all other
matters set forth in Rule 14a-4 of the Securities Exchange Act of 1934,
including matters which the Board of Directors do not know a reasonable time
before the mailings of this proxy are to be presented at the meeting, upon
which the undersigned is entitled to vote and which may properly come before
said meeting or any postponement or adjournment thereof.
The undersigned hereby revokes all previous proxies for the meeting and
acknowledges receipt of the Notice of Meeting and Proxy Statement furnished
herewith, hereby confirms that this proxy shall be valid and may be voted
whether or not the shareholder's name is signed as set forth below or a seal is
affixed or the description, authority or capacity of the person signing is
given or other defect of signature exists, and hereby ratifies all that the
said attorneys and proxies may do by virtue hereof.
When signing as attorney-in-fact, executor, administrator, trustee or guardian,
please add your title as such, and if signer is a corporation, please sign with
full corporate name by duly authorized officers and affix the corporate seal.
Where stock is issued in the name of two or more persons, all such persons
should sign.
PLEASE DATE, SIGN AND RETURN PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
Dated: 1998
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Signature of Shareholder
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Signature of Shareholder
