PROCARE INDUSTRIES, LTD.
RULE 14f-1
NOTICE TO SHAREHOLDERS
Pursuant to Rule 14f-1 adopted under the Securities Exchange Act of
1934, as amended, ProCare Industries, Ltd. (the "Company") furnishes the
following information to shareholders of record as of September 30, 2000.
The Company has entered into an Agreement and Plan of Merger, as
amended September 29, 2000, with FastPoint Communications, Inc. ("FastPoint").
FastPoint is a Los Angeles-based network access provider of Internet, data and
communications services. Under the agreement, FastPoint will be merged with and
into a new-formed subsidiary corporation of the Company (the "Merger
Transaction"), and Fastpoint will pay to the Company immediately prior to
closing approximately $235,000 (of which $75,000 has been paid) in fees and
reimbursement for expenses. As a result of the Merger Transaction, FastPoint
will become a wholly-owned subsidiary corporation of the Company in exchange for
the issuance, to nonaffiliated persons, of a number of shares of common stock
equal to approximately 92% of the outstanding common stock following the Merger
Transaction. The Merger Transaction is expected to close on or after 10 days
from the date that this Notice is mailed to our shareholders. When the Merger
Transaction is completed, the name of the Company will be changed to "FastPoint
Communications, Inc."
As of the anticipated date of the closing of the Merger Transaction,
the Company will have 1,785,559 shares of our no par value common stock issued
and outstanding, each of which is entitled to one vote. Upon completion of the
Merger Transaction, the Company anticipates that there will be issued and
outstanding 20,103,990 shares of our common stock and options and warrants to
acquire an additional 6,202,778 shares which will be held by various officers,
employees, affiliates of FastPoint and others who have provided services to
FastPoint.
In connection with the Merger Transaction, a change of control will be
effected. Shareholders of FastPoint, who will collectively own approximately 92%
of the Company's issued and outstanding voting common stock, will have control
of the Company following the Merger Transaction. Michael Allocca, the founder of
FastPoint, will own approximately 26.9% of the outstanding common stock of the
Company following the Merger Transaction and may be deemed to be a parent of the
Company. The persons expected to be named as the directors of the Company
following the completion of the Merger Transaction, identified below, will
replace the present directors of the Company and will assume control of the
Company. Prior to completion of the Merger Transaction, Robert Marsik, the
Chairman of the Board of Directors and President of the Company holding
approximately 19% of outstanding common stock and Arlington Capital, LLC,
holding approximately 44.4% of the outstanding common stock, have had effective
control of the Company. At the closing of the Merger Transaction, the persons
identified below whom presently serve as officers and directors of the Company
shall resign and be replaced by the following persons.
Name Age Position
---- --- ---------
Michael Allocca 34 Chairman of the Board
Ira S. Morris 49 President, Chief Executive Officer
and Chief Operating Officer, and
a director
Leonard Makowka, M.D., Ph.D. 44 Director
<PAGE>
Each of the directors will hold office until the next annual meeting of
shareholders of the Company and until his successor is elected and qualified or
until his earlier death, resignation or removal. The following is information
concerning each of the persons who will become directors following the closing
of the Merger Transaction.
Michael Allocca. Mr. Allocca, the Chairman of the Board, founded
FastPoint in September 1998. From March 1995 until August 1998 Mr. Allocca was
employed as a registered representative and Managing Director of The Boston
Group, LP, a registered broker-dealer firm. He has been a registered
representative since September 1991. Mr. Allocca received a BS in Economics from
Northeastern University.
Ira S. Morris. Mr. Morris is President, Chief Executive Officer and
Chief Operating Officer of FastPoint and is a veteran telecommunications and
technology professional. He joined FastPoint in December 1999 and has over 23
years of experience in the telecommunications industry. Prior to joining
FastPoint, Mr. Morris was with TelePacific Communications, a Los Angeles-based
CLEC which he co founded in June 1998. As President and Chief Operating Officer
of TelePacific, he built the company from the ground up, initially offering
voice-based services and later developing a full line of Internet and DSL
products. In 18 months he built TelePacific into a full service
telecommunications company with over 160 employees and $25 million in yearly
revenues.
Prior to forming TelePacific Communications, Mr. Morris headed TCG's
(Teleport Communications Group, which was acquired by AT&T) Pacific Market as
Regional Vice President, overseeing its 170-member staff and a $100 million
capital budget. He also served as Vice President and General Manager of Flex
Communications Services, Inc. (now Citizens Utilities, Inc.), a regional Long
Distance reseller. Prior to that, Mr. Morris held a variety of managerial
positions in operations, sales, marketing, data services and business
development during a 15-year tenure with AT&T Communications. He graduated with
an Associates Degree in Business from the College of Staten Island.
Leonard Makowka, M.D., Ph.D. Dr. Makowka, a cofounder of FastPoint, is
a clinical surgeon, transplantation specialist and medical researcher who
specializes in hepatic science (study relating to the liver). Dr. Makowka joined
the Cedars Sinai Medical Center in Los Angeles in 1989 as Chairman of the
Department of Surgery and Director of Transplantation Services, a position he
held until September 1995. Dr. Makowka held the positions of Professor of
Surgery, Department of Surgery, at the UCLA School of Medicine from January 1989
to September 1995. In 1995, Dr. Makowka founded the Comprehensive Liver Disease
and Treatment Center at St. Vincent Medical Center in Los Angeles. Dr. Makowka
retired from medical practice in December 1997. Dr. Makowka received his M.D.
from the University of Toronto Medical School and Masters of Science and Doctor
of Philosophy degrees from the University of Toronto's Department of Pathology.
Dr. Makowka is actively involved on the boards of various companies. He holds
positions on the Board of Directors for Hollis Eden Pharmaceuticals, a public
company, Bio Pathology Medical Service, Inc. and LaSalle Street Capital Markets,
Inc./Technology Venture Fund, Inc. Hollis Eden Pharmaceuticals is a biotech
company specializing in new therapies for HIV and Hepatitis. Bio Pathology
Medical Service, Inc. has provided general and anatomic services to Southern
California since 1983.
Except as set forth above, there are no family relationships among
directors or executive officers of FastPoint and, no directorships are held by
any director in a company which has a class of securities registered pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended, or subject to the
requirements of Section 15(d) of that Act or any company registered as an
investment company under the Investment Company Act of 1940. Officers serve at
the discretion of the Board of Directors.
2
<PAGE>
Certain Relationships and Related Party transactions. There are no
material relationships between the Company and the current officers and
directors or any of the persons expected to become directors or executive
officers of the Company other than those transactions described below, or
contemplated in the Merger Agreement.
Mr. Marsik had an agreement with the Company under which he agreed to
pay the Company's unpaid liabilities at June 30, 1999, which then totaled
approximately $9,793 and to pay all other liabilities and obligations of the
Company which the Company is unable to satisfy through the earlier of July 1,
2000 or completion of an acquisition transaction such as that contemplated with
FastPoint. Mr. Marsik agreed to remain as the Company's President and as a
director. In return the Company agree to pay to Mr. Marsik a contingent cash fee
of $150,000 upon completion of an acquisition transaction. The agreement was
modified and replaced with a new agreement effective July 1, 2000. Under the
revised agreement, Mr. Marsik agreed to continue to serve as President and as a
director of the Company through the earlier of July 1, 2001 or completion of an
acquisition transaction acceptable to the Board of directors. The Company issued
1,000,000 shares of its common stock which would be returned to the Company and
cancelled if the Company has completed the merger with Fastpoint by October 31,
2000, received all cash payment from Fastpoint required under the Merger
Agreement, and paid to Mr. Marsik $150,000 (less amounts previously advanced)
plus $20,000 for each month after July 1, 2000 that Mr. Marsik continues to
serve as President. The Company also agreed to use its available cash to pay, or
to reimburse Mr. Marsik, for advances, the expenses and liabilities of the
Company through the date of completion of any merger.
In November 1999, Mr. Marsik purchased 125,000 shares of common stock
for $3,937, the price per share paid by an unaffiliated person in a separate
transaction. Mr. Marsik agreed that the Company can repurchase the shares at the
same price if Mr. Marsik fails or refuses to assist the Company during a three
month period following completion of an acquisition transaction.
Office space, telephone services and related miscellaneous supplies
and expenses are provided to the Company by Mr. Marsik.
In November 1998, the Board of Directors approved the issuance of
shares of its common stock, which had no market value, to the three directors of
the Company for approximately $4,000 in out-of-pocket expenses advanced on
behalf of the Company for services provided in connection with reactivating the
Company and reestablishing the Company as a Colorado corporation in good
standing. The shares were issued in January 1999 as follows: 360,000 shares to
Mr. Marsik, 20,000 shares each to Mr. Bergenfield and Mr. Rizzo, then a
directors.
In November 1999, Arlington Capital, LLC purchased 793,844 shares of
Company common stock for $25,000 and Mr. Marsik purchased the shares referred to
above.
The following table shows information concerning the identification and
address of each person which prior to the Merger Transaction was the beneficial
owner of more than 5% of the Company's outstanding common stock, its only class
of voting securities:
3
<PAGE>
<TABLE>
<CAPTION>
Name and Address of Amount and Nature
Beneficial Owner Title of Class of Beneficial Ownership Percent of Class
------------------- -------------- ----------------------- -----------------
<S> <C> <C> <C>
Robert W. Marsik Common 337,985(1) 19.0%
Stock
1960 White Birch Drive
Vista, CA 92083
Arlington Capital, LLC Common 793,844 44.4%
Stock
P. O. Box 11447
Beverly Hills, CA 90213
</TABLE>
-----------------------
(1) The shares are held by Mr. Marsik and Carlotta R. Marsik, who is also a
director of the Company and they may be deemed to share beneficial ownership of
the shares. Does not include shares which would be cancelled upon completion of
the merger.
The following table sets forth the name and address of each person who
will be the beneficial owner of more than 5% of any class of voting securities
of the Company following the Merger Transaction.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature
Beneficial Owner Title of Class of Beneficial Ownership Percent of Class
------------------- -------------- ----------------------- ----------------
<S> <C> <C> <C>
Michael Allocca Common 6,400,000(1) 37.7%
Stock
5777 West Century Blvd., Ste
600
Los Angeles, CA 90045
Arlington Capital, LLC Common 1,473,506(2) 8.3%
Stock
P. O. Box 11447
Beverly Hills, CA 90213
</TABLE>
------------------------
(1) Half of these shares are held by an escrow agent subject to certain vesting
requirements which must occur on or before January 8, 2000.
(2) Includes warrants to purchase up to 679,662 shares which are exercisable
within 60 days of completion of the Merger Transaction.
4
<PAGE>
Executive Compensation
No compensation was paid to the Board of Directors or any executive
officer of the Company in those capacities during the last two fiscal years and
until the present, and no cash compensation is anticipated to be paid at any
time in the immediate future to any director in that capacity. However, as
described above, the Company agreed to pay Mr. Marsik a contingent fee if the
Company completes an acquisition transaction and a portion of that fee was
advanced to him in 1999.
The Board of Directors has no standing audit, nominating or
compensation committees or committees performing similar functions. During the
fiscal year ended December 31, 1999, the Board of Directors of the Company held
three meetings, all of which consisted of meetings held by unanimous written
consent without an actual meeting.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act")
requires the Company's directors, executive officers and persons who own more
than 10% of a registered class of the Company's equity securities, to file with
the SEC initial reports of ownership and reports to changes in ownership of
common stock and other equity securities of the Company. Officers and directors
and greater than 10% shareholders are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and information otherwise available to the
Company, as of June 1, 2000, all Section 16(a) filing requirements applicable to
the Company's officers, directors and greater than 10 beneficial owners were
complied with.
BY ORDER OF THE BOARD OF DIRECTORS
PROCARE INDUSTRIES, INC.
a Colorado corporation
Vista, California
October 20, 2000
Robert M. Marsik, President
