SCHEDULE 14C INFORMATION
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[ ] Preliminary Information Statement [ ] Confidential, for Use of the
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TECHDYNE, INC.
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(Name of Registrant as Specified In Its Charter)
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<PAGE>
TECHDYNE, INC.
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
June 10, 1998
----------
To Shareholders:
The Annual Meeting of Shareholders of TECHDYNE, INC. (the "Company")
will be held at the Don Shula Hotel, 15255 Bull Run Road, Miami Lakes,
Florida on Wednesday, June 10, 1998 at 11:00 a.m., for the following
purposes:
1. To elect five members to the board of directors to serve until the
next Annual Meeting of Shareholders; and
2. To transact such other business as may properly come before
the meeting or any adjournment thereof.
The board of directors has fixed the close of business on April 17,
1998, as the record date for the determination of the shareholders
entitled to notice of and to vote at the meeting and any adjournment
thereof.
Your copy of the Annual Report of the Company for 1997 is enclosed.
You are cordially invited to attend the Annual Meeting of Shareholders.
By Order of the Board of Directors
LAWRENCE E. JAFFE
Secretary
Hialeah, Florida
May 1, 1998
<PAGE> 1
TECHDYNE, INC.
2230 West 77th Street
Hialeah, Florida 33016
-----------
Information Statement for Annual Meeting of Shareholders
June 10, 1998
-----------
Matters to be Considered at the Meeting
This Information Statement and the Company's Annual Report to Share-
holders for the year ended December 31, 1997, anticipated to be mailed on
or about May 4, 1998, is solicited by and on behalf of the board of
directors of Techdyne, Inc., a Florida corporation (the "Company"), for
the Annual Meeting of Shareholders of the Company to be held on Wednesday,
June 10, 1998, at the Don Shula Hotel, 15255 Bull Run Road, Miami Lakes,
Florida at 11:00 a.m., including any adjournment thereof, for the purposes
set forth in the Notice of Annual Meeting.
The Company will request brokers, nominees, fiduciaries and custodians
to forward this Information Statement and the Company's Annual Report to
their principals and beneficial owners, and will reimburse such persons
for reasonable expenses incurred by them in forwarding such materials.
Record Date
The board of directors has fixed the close of business on April 17,
1998, as the record date for the determination of shareholders entitled to
receive notice of and to vote at the Annual Meeting and any adjournment
thereof. Only shareholders of record on that date are entitled to vote at
the meeting.
Voting Securities
As of April 17, 1998 there were outstanding and entitled to be voted
at the Annual Meeting, 5,135,167 shares of common stock, $.01 par value
("Common Stock"). Each share of Common Stock is entitled to one vote. A
majority of the outstanding shares is needed for a quorum and a plurality
of the votes cast is necessary to effectuate election of the directors.
A majority of shares represented at the meeting is sufficient to effectuate
any other matter that may properly come before the meeting, except as
otherwise required by applicable law. The Company's parent, Medicore,
Inc. ("Medicore" or the "Parent"), intends to vote its 3,227,797 shares of
the Company's Common Stock, or approximately 63% voting equity of the
Company, in favor of election of each of the five (5) nominees for
directors (see "Election of Directors"), thereby assuring the election
of the five nominees. See "Security Ownership of Certain Beneficial
Owners and Management."
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY
<PAGE> 2
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of April 17, 1998, the names and
beneficial ownership of the equity securities of the Company and its
subsidiaries and of Medicore, for directors, individually itemized, and
for directors and officers as a group, without naming them, and for each
of the named executive officers disclosed in the Summary Compensation
Table (see "Executive Compensation") and for shareholders known to the
Company to beneficially own more than 5% of its voting securities.
Amount and Nature of Beneficial Ownership(1)
Techdyne Medicore
Common Common
Name Stock %(2)(3) Stock %(2)(4)
- ---- ----- ------- ------ -------
Medicore, Inc. 4,537,727 70.4%(5) --- ---
2337 W. 76th St.
Hialeah, FL 33016
Thomas K. Langbein** 4,717,727(6) 71.2% 1,043,014(7) 17.1%
Barry Pardon+ 184,333(8) 3.5% 135,750(9) 2.3%
Joseph Verga+ 103,834(10) 2.0% 79,075(11) 1.3%
Peter D. Fischbein** 55,000(12) 1.1% 176,229(13) 3.0%
less than
Anthony C. D'Amore** 44,000(14) 1.0% 273,890(15) 4.6%
All directors and
executive officers
as a group (6 persons) 5,129,894(5)(6) 73.2% 1,779,408(16) 27.8%
** c/o Medicore, Inc., 777 Terrace Avenue, Hasbrouck Heights, New
Jersey 07604
+ c/o the Company, 2230 W. 77th Street, Hialeah, Florida 33016
- ----------
(1) Based upon information furnished to the Company by either the
directors and officers or obtained from the stock transfer books
of the Company. The Company is informed that these persons hold
sole voting and dispositive power with respect to the shares of
Common Stock except as noted herein.
<PAGE> 3
(2) For purposes of computing the percentage of outstanding shares
held by each person or group of persons named in this table, any
security which such person or group of persons has the right to
acquire within 60 days of April 17, 1998 is deemed to be outstanding
for purposes of computing the percentage ownership of such person or
persons, but is not deemed to be outstanding for the purpose of
computing the percentage ownership of any other person.
(3) Based on 5,135,167 shares of Common Stock outstanding. Does not
include (i) shares obtainable under Medicore's convertible note,
except as to Thomas K. Langbein (see Note (5)); (ii) options under
the Company's 1994 Stock Option Plan for 171,600 shares of Common
Stock; (iii) options granted in 1995 to directors and counsel for
152,500 shares of Common Stock; or (iv) options under the Company's
1997 Stock Option Plan for 375,000 shares of Common Stock. See Note
(2) and "Executive Compensation - Options, Warrants or Rights."
(4) Based on 5,856,940 shares outstanding. Does not include 841,000
shares of Medicore's common stock underlying options granted under
Medicore's 1989 Stock Option Plan, which options are not transferable
and are exercisable through April 17, 2000 at $2.38 per share. See
Note (2) and "Executive Compensation - Options, Warrants or Rights."
(5) Includes 1,309,930 shares which Medicore may acquire upon conversion
of its demand promissory note from the Company in the amount of
approximately $2,292,400 at December 31, 1997 convertible at $1.75
per share. Officers and directors of Medicore, including those
directors of the Company and Medicore who may be shareholders of
each company, except Thomas K. Langbein (see Note (6)), disclaim
any indirect beneficial ownership of the Company's Common Stock
through Medicore's 70.4% ownership of the Company.
(6) Includes (i) Medicore's 3,227,797 share ownership, plus 1,309,930
shares which Medicore may obtain upon conversion of its demand
promissory note from the Company (see Note (5) above), by virtue
of his position with the Company and Medicore and his stock owner-
ship of Medicore, which position may deem Mr. Langbein to have
beneficial ownership of such shares through shared voting and
investment power with respect to Medicore's ownership of the
Company; Mr. Langbein disclaims such entire beneficial ownership,
but for his proportionate interest, approximately 776,000 shares of
the Company (12.0%); and (ii) Company options for 180,000 shares.
See Note (2) and "Executive Compensation - Options, Warrants or
Rights."
(7) Includes 250,000 shares underlying options granted in April, 1995,
exercisable at $2.38 per share through April 17, 2000. Does not
include (i) 15,700 shares each held in the names of Mr. Langbein's
two children who are of majority age; and (ii) an option to acquire
up to 400,000 shares of common stock in lieu of a lump sum payment,
which option is not presently exercisable except in the event of a
change in control of Medicore. See Note (4) and "Employment
Contracts and Termination of Employment and Change-In-Control
Arrangements" and "Options, Warrants or Rights" under the caption
"Executive Compensation."
(8) Includes (i) options for 180,000 shares of the Company's Common
Stock (see Note (2) and "Executive Compensation - Options, Warrants
or Rights"); (ii) Company warrants for 1,000 shares of Common Stock
exercisable at $5.00 per share through September 12, 1998; and (iii)
2,333 shares held in his wife's name. Excludes approximately 104,000
(1.6%) shares that may be deemed indirectly beneficially owned
through Medicore's ownership of the Company, which indirect
beneficial ownership is disclaimed. See Note (5).
<PAGE> 4
(9) Includes (i) 75,000 shares of Medicore's common stock underlying an
option granted in April, 1995 exercisable at $2.38 per share through
April 17, 2000; and (ii) 7,200 shares of Medicore's common stock
owned by his wife. See Note (4) and "Executive Compensation -
Options, Warrants or Rights."
(10) Includes (i) options for 100,000 shares of the Company's Common
Stock (see Note (2) and "Executive Compensation - Options, Warrants
or Rights"); and (ii) Company warrants for 500 shares of Common
Stock exercisable at $5.00 per share through September 12, 1998.
Excludes approximately 59,000 (1%) shares that may be deemed
indirectly beneficially owned through Medicore's ownership of the
Company, which indirect beneficial ownership is disclaimed. See
Note (5).
(11) Includes 30,000 shares of Medicore's common stock underlying an
option granted in April, 1995 exercisable at $2.38 per share through
April 17, 2000. See Note (4) and "Executive Compensation - Options,
Warrants or Rights."
(12) Includes options for 55,000 shares of the Company's Common Stock.
See Note (2) and "Executive Compensation - Options, Warrants or
Rights." Excludes approximately 136,000 (2.1%) shares that may be
deemed indirectly beneficially owned through Medicore's ownership
of the Company, which indirect beneficial ownership is disclaimed.
See Note (5).
(13) Includes (i) 100,000 shares held in trust for his infant son; Mr.
Fischbein's wife is trustee; Mr. Fischbein disclaims beneficial
interest in these 100,000 shares; and (ii) 75,000 shares of
Medicore common stock underlying an option granted in April, 1995
exercisable at $2.38 per share through April 17, 2000. See Note (4)
and "Executive Compensation - Options, Warrants or Rights." Does
not include 196,382 shares of common stock owned by his wife in
which shares, based on her financial independence, Mr. Fischbein
disclaims beneficial interest.
(14) Includes (i) options for 25,000 shares of the Company's Common
Stock (see Note (2) and "Executive Compensation - Options, Warrants
or Rights"); (ii) Company warrants for 4,000 shares of Common Stock
exercisable at $5.00 per share through September 12, 1998 held in
his retirement plan; and (iii) 15,000 shares of the Company's Common
Stock held in his retirement plan. Excludes approximately 209,000
(3.2%) shares that may be deemed indirectly beneficially owned
through Medicore's ownership of the Company, which indirect bene-
ficial ownership is disclaimed. See Note (5).
(15) Includes 75,000 shares of Medicore common stock underlying an
option granted in April, 1995 exercisable at $2.38 per share through
April 17, 2000. See Note (4) and "Executive Compensation - Options,
Warrants or Rights."
(16) Includes 535,000 shares of Medicore's common stock underlying the
options granted under Medicore's 1989 Stock Option Plan. See Notes
(2) and (4) and "Executive Compensation - Options, Warrants or
Rights."
ELECTION OF DIRECTORS
At the Annual Meeting, shareholders will elect five directors to serve
for a one year term and until each of their successors is elected and
qualified. The By-Laws of the Company provide that the board of directors
shall not be less than two nor more than six persons, and since less than
the maximum number of
<PAGE> 5
directors are to be elected, which is permissible pursuant to the Company's
By-Laws, shareholders cannot vote for a greater number of persons than the
number of nominees named. The Certificate of Incorporation and By-Laws,
as presently constituted, provide that the majority of directors have the
right to appoint candidates to fill any vacancies on the board, whether
through death, retirement or other termination of a director, or through
an increase in the board. At such time that qualified candidates are
available to serve, the majority of the board, although less than a quorum,
or by a sole remaining director, may appoint such person(s) to fill the
vacancy now existing. When appointed, such director shall then serve for
the remainder of the term.
The affirmative vote of a plurality of the shares of Common Stock
represented at the meeting is required to elect the five directors.
Cumulative voting is not permitted in the election of directors. Conse-
quently, each shareholder is entitled to one vote for each share of
Common Stock held in his name. Medicore owns 63% of the voting stock of
the Company and intends to vote all of its Common Stock in favor of the
election of the persons named below as nominees for directors, thereby
assuring the election of the five nominees. The nominees have consented
to be named herein and to serve on the board of directors. If any nominee
is unable to serve as a director (which presently is not anticipated),
the Common Stock will be voted for such substituted nominee as may be
designated by the present board of directors. The five nominees for
directors are now directors and were elected by the shareholders at the
last annual meeting, and have been directors of the Company for at least
the last eight years. There is no nominating committee with nominations
for director considered by the entire board of directors.
For additional information concerning the nominees for the board of
directors, including compensation and share ownership, see "Security
Ownership of Certain Beneficial Owners and Management," "Executive
Compensation" and "Certain Relationships and Related Transactions."
Current Position Position
Name Age and Areas of Responsibility Held Since
- ---- --- --------------------------- ----------
Thomas K. Langbein 52 Chairman of the Board and 1982
Chief Executive Officer 1990
Barry Pardon 46 President 1991
and Director 1990
Joseph Verga 46 Senior Vice President, 1988
Treasurer 1985
and Director 1983
Peter D. Fischbein(1) 58 Director 1984
Anthony C. D'Amore(1) 67 Director 1984
- ----------
(1) Member of the Audit Committee.
Thomas K. Langbein was financial consultant to Medicore until 1980 when
he became Chairman of the Board of Directors, Chief Executive Officer and
President of Medicore. Mr. Langbein is also an officer and director of
most of Medicore's subsidiaries. Mr. Langbein was Chairman of the Board
of Directors of the Company in 1985, formerly having been Vice President
and Treasurer. He has been a
<PAGE> 6
director of the Company since it was acquired by Medicore in 1982. In
1990, Mr. Langbein was appointed as President and Chief Executive Officer
and Mr. Langbein relinquished the Presidency to Barry Pardon in November,
1991. Mr. Langbein is also a director of Lytton and Techdyne (Scotland).
Mr. Langbein is Chairman of the Board and Chief Executive Officer of
Dialysis Corporation of America ("DCA"), a 66% owned public subsidiary of
Medicore. In 1971, Mr. Langbein organized and currently is the President,
sole director and owner of Todd & Company, Inc. ("Todd"), a broker-dealer
registered with the Securities and Exchange Commission and the NASD. Mr.
Langbein, devotes most of his time to the affairs of the Company, Medicore
and DCA. See "Certain Relationships and Related Transactions."
Barry Pardon joined the Company in November, 1980 as national sales
manager and initiated the independent manufacturer representatives sales
force. Mr. Pardon became Vice President of Marketing in 1981, was
appointed Executive Vice President (Marketing) in 1988, and was appointed
President in November, 1991. Mr. Pardon is Chairman of the Board of
Lytton and a director of Techdyne (Scotland).
Joseph Verga joined the Company in 1979 as purchasing agent. In 1980
he became production control manager and Vice President, in 1981 the
operations manager, and in 1983 was elected a director and appointed
Secretary of the Company. In 1985 he was appointed Treasurer and in 1988
was made Senior Vice President of Operations.
Peter D. Fischbein is an attorney whose has from time to time repre-
sented the Company, Medicore, Viragen, Inc. ("Viragen"), formerly a public
subsidiary of Medicore spun-off in 1986, and Todd. Mr. Fischbein is a
director of Viragen (since 1981) and Medicore (since 1984). He was
Chairman of the Board of the Company from April, 1990 to November, 1991.
Mr. Fischbein is a general partner of several limited partnerships engaged
in real estate development. See "Certain Relationships and Related Trans-
actions."
Anthony C. D'Amore is director of Medicore and is registered as a
part-time account executive with Todd, but has not been active in the
brokerage business for many years. Mr. D'Amore was the owner of an
insurance agency, the A.C. D'Amore Agency, Inc., which he sold in 1992,
and from whom the Company, Medicore and their subsidiaries purchase much
of their insurance at rates competitive with unaffiliated parties. Mr.
D'Amore continues to receive commissions with respect to insurance placed
with the Company and Medicore. See "Certain Relationships and Related
Transactions."
There is no family relationship between any officer or director of
the Company.
Since the last Annual Meeting in June, 1997, there were five meetings
of the Board of Directors, including actions by unanimous written consent.
All directors participated at all the meetings.
The Company has an audit committee, recently formed, consisting of
Peter D. Fischbein and Anthony C. D'Amore. Mr. Fischbein is also on the
audit committee of Medicore. The audit committee meets quarterly, and is
responsible for recommending to the board of directors the firm of inde-
pendent accountants to serve the Company, reviewing fees, services and
results of the audit by such independent accountants, reviewing the
accounting books and records of the Company and reviewing the scope,
results and adequacy of the internal audit control procedures. No member
of the audit committee receives a fee for his services. The Company also
has a stock option committee consisting of Messrs. Langbein, Fischbein
and Verga. See "Executive Compensation - Options, Warrants or Rights."
The By-Laws provide for and the Company has made payment of reasonable
expenses for directors' attendance at meetings.
In lieu of any cash compensation or per meeting fees to directors
for acting as such (except for a minimal fee paid to directors of Techdyne
(Scotland), see "Executive Compensation"), the Company has
<PAGE> 7
provided directors, among others, with options to purchase Common Stock of
the Company at fair market value as of the date of grant. See "Executive
Compensation - Options, Warrants or Rights" and "Security Ownership of
Certain Beneficial Owners and Management."
EXECUTIVE COMPENSATION
The Summary Compensation Table below sets forth compensation paid by
the Company and its subsidiaries for the last three fiscal years ended
December 31, 1997 for services in all capacities for its Chief Executive
Officer and each of its principal executive officers whose total annual
salary and bonus exceeded $100,000. The Chief Executive Officer's compen-
sation is primarily derived from Medicore which company owns 63% of the
Company. The only executive officer whose compensation exceeds $100,000
and is paid directly by the Company is its President, Barry Pardon.
Annual Compensation Long Term Compensation Awards
(a)(b)(c)(e)(g)
Securities
Underlying
Annual Options/SARs(#)
Name and Compen- ------------------
Principal Position Year Salary($) sation($) Company Medicore
- ------------------ ---- --------- --------- ------- --------
Thomas K. Langbein, CEO 1997 90,000(1) 12,000(2) 100,000
1996 91,700(1) 8,900(2) 250,000(3)
1995 80,500(1) 10,400(2) 40,000 250,000(3)
Barry Pardon(4) 1997 144,100 8,000(5) 100,000
1996 160,600 8,800 75,000(3)
1995 113,000 8,200 40,000 75,000(3)
- ----------
(1) All compensation paid by Medicore, which was $257,000 for 1997,
$262,000 (including a $25,000 bonus) for 1996, and $230,100 for 1995.
Does not include (i) $1,000 paid in 1995 by Techdyne (Scotland) to
each director of that subsidiary which includes Mr. Langbein; or (ii)
the June, 1996 Medicore forgiveness of a promissory note in the
amount of $94,200 (including interest) for an option exercise of
Medicore common stock by Mr. Langbein in 1994. See "Options, Warrants
or Rights" below. Amounts reflected in the Summary Compensation Table
were the compensation allocated to the Company in proportion to the
time spent on behalf of the Company.
(2) Automobile allowance and related expenses ($16,475), and life and
disability insurance premiums ($17,870) paid by Medicore amounted to
$34,345, $24,800, and $26,100 for the years 1997, 1996 and 1995,
respectively, in addition to which, Mr. Langbein received $1,000 as
compensation as a director of Techdyne (Scotland) in 1995. As part of
the Service Agreement with Medicore (October 1, 1996) and previously
as part of the general corporate overhead allocation, the amounts in
the Summary Compensation Table reflect that portion allocated to the
Company.
<PAGE> 8
(3) In December, 1996, the $3.00 exercise price of the options for
250,000 shares of Medicore common stock granted in April, 1995 was
reduced to $2.38, the then fair market value of the Medicore common
stock, which repricing is deemed a new grant of options. See
"Aggregated Option/SAR Exercises In Last Fiscal Year and FY-End
Option/SAR Values" under the caption "Options, Warrants or Rights."
(4) All compensation paid by the Company. Does not include (i) $1,000
paid in 1995 by Techdyne (Scotland) to each director of that subsidiary
which included Mr. Pardon; or (ii) the June, 1996 Medicore forgiveness
of a promissory note in the amount of $21,200 (including interest) for
an option exercise of Medicore common stock by Mr. Pardon in 1994.
See "Options, Warrants or Rights" below. In February, 1993, due to
an administrative cost reduction program, Mr. Pardon's base compensa-
tion was reduced to $84,000 and increased to $96,000 in April, 1994,
and to $108,000 in March, 1995.
(5) Automobile lease and related expenses ($7,700) and term life
insurance premiums ($300) paid by the Company amounted to $8,000,
$8,800 and $8,200, respectively, for the years 1997, 1996 and 1995,
respectively.
Employment Contracts and Termination of Employment and Change-In-Control
Arrangements
Mr. Langbein has an employment agreement with Medicore through May 31,
1999 at an annual salary of $220,000 with yearly increases in increments
of no less than $10,000 which increases Mr. Langbein had waived in prior
years. In June, 1995 the $10,000 yearly increment went into effect.
Medicore also provides Mr. Langbein with an automobile allowance of $850
per month.
The Medicore employment agreement provides upon his death three years
full salary to his children or other designee of Mr. Langbein and provides
for reimbursement of reasonable business expenses and full salary for the
remainder of the term of the employment agreement in the event of disa-
bility. Medicore maintains an income disability insurance policy for Mr.
Langbein. The agreement also provides for life insurance, of which a
$500,000 policy owned by Medicore was assigned to Mr. Langbein in the
first quarter of 1997. Medicore also maintains a $750,000 whole life
insurance policy and a $350,000 term policy insuring the life of Mr.
Langbein with Mr. Langbein as the owner of the policies. His former wife
is beneficiary of $550,000 of the insurance policies, with his two
children beneficiaries to the balance. Most life insurance is obtained
through George Langbein, his brother, who is an independent sales repre-
sentative for the Company. See "Certain Relationships and Related
Transactions."
Based upon any wrongful termination of his employment agreement, which
includes changes in control of Medicore through an acquiring person (any
person who has acquired or announces a tender offer or exchange for 25% of
Medicore), a sale of substantially all of the assets, merger, acquisition
of Medicore or its consolidation with another, or certain types of board
changes, Medicore shall pay Mr. Langbein a lump sum payment, based upon
his then compensation, including benefits and perquisites, for the next
three years from such termination. At Mr. Langbein's option, he may elect,
in lieu of any such lump sum payment, to take common stock of Medicore
equivalent to such lump sum payment based upon the lowest closing price
of the stock as reported by the principal stock exchange upon which the
shares are then trading, or if the trading is then in the over-the-counter
market, presently trading on the Nasdaq National Market, then as reported
by Nasdaq or other inter-dealer quotation medium, within 30 days of such
wrongful termination or change in control. Medicore has reserved up to
400,000 shares of its common
<PAGE> 9
stock for such option, and has granted Mr. Langbein one time demand and
five year "piggy-back" registration rights with respect to the shares Mr.
Langbein may obtain upon any wrongful termination with or change in
control of Medicore in lieu of any lump sum payment as provided in the
employment agreement. Such registration of the stock of Medicore would
be at the sole cost and expense of Medicore except with respect to Mr.
Langbein's legal fees and commissions or discounts upon sale of such stock.
The employment agreement also contains a two (2) year non-competition
provision within a 20 mile radius of Medicore's primary operation in
Florida. Medicore has the right, upon Mr. Langbein's termination, to
request further non-competition by Mr. Langbein in the United States for
consideration of $4,000 per month, increasing 5% in any twelve-month period.
Barry Pardon, director and President of the Company, has a five-year
employment agreement through December 31, 2000, retaining him as President
which provides him with a base annual salary of $120,000, plus an over-ride
commission of .5% of net sales of the Company in excess of $20,000,000 the
first year of the agreement, increasing $1,000,000 each successive year of
the term. With respect to any acquired companies, such as Lytton, the net
sales of that acquired company for the immediately preceding fiscal year
are added to the base $20,000,000 (plus $1,000,000 yearly increases)
before the .5% over-ride applies. In January, 1993, as part of the
Company's administrative cost reduction program, Mr. Pardon voluntarily
reduced his base salary to $84,000, which was increased to $96,000 in
April, 1994, to $108,000 in March, 1995 and now is at his contracted-for
base salary. Under the employment agreement, Mr. Pardon is entitled to
severance pay of nine months salary if he is terminated without cause
during the term, or his estate receives it if he dies. Mr. Pardon is
furnished with an automobile, travel and entertainment expenses incurred
relating to the Company's business, which sums did not exceed 10% of his
reported cash compensation. The agreement provides for non-competition
for one year following termination including restrictions on Mr. Pardon
calling upon any customers or suppliers of the Company, diverting any
customers, services, items or products of the Company or disclosing any
trade secrets.
Certain executive and accounting personnel and administrative facili-
ties of Medicore and its subsidiaries, including the Company and DCA, were
common for fiscal 1997. The costs of executive and accounting salaries
and other shared corporation overhead for these companies were charged on
the basis of direct usage when identifiable with the remainder allocated
on the basis of time spent. The Company's allocation is now accomplished
pursuant to a two-year Service Agreement which commenced on October 1,
1996. Mr. Langbein, as an officer and director of the Company, Medicore
and DCA, and Mr. Daniel Ouzts, as an officer of the Company, Medicore and
DCA, divide their time and efforts among each company and the proportionate
allocation of their compensation has been provided for through the overhead
allocations and Service Agreement. See "Certain Relationships and Related
Transactions."
Compensation of Directors
Standard Arrangements
There are no standard arrangements for compensating directors for
services as directors or for acting on any committee. The Company does
reimburse directors for expenses from attending meetings.
Non-Standard Arrangements
During the year ended December 31, 1997, the Company obtained its
property, casualty and general liability insurance, as did Medicore and
its other subsidiaries, through an arrangement made by one
<PAGE> 10
of its directors, Anthony C. D'Amore, who acts as an insurance consultant.
Mr. D'Amore receives only minimal commissions ($4,000) on this insurance.
See "Certain Relationships and Related Transactions."
Over the years, the Company and Medicore provided options to directors,
among other executives, consultants and employees. In 1997, the Company
granted 375,000 non-qualified stock options to its officers, directors,
counsel and an advisor affiliated with the Parent as an officer and
director. See the tables "Company Options/SAR Grants in the Last Fiscal
Year" and "Aggregated Option/SAR Exercises In Last Fiscal Year and FY-End
Option/SAR Values" under the caption, "Options, Warrants or Rights."
Options, Warrants or Rights
In May, 1994, the board of directors and shareholders adopted the
1994 Techdyne, Inc. Stock Option Plan (the "1994 Plan") pursuant to which
250,000 shares of Common Stock are reserved for issuance at fair market
value on the date of grant of the options. The 1994 Plan is for a period
of five years, expiring on May 24, 1999. Options may be granted to
officers, directors, consultants, key employees, advisors and similar
parties who provide their skills and expertise to the Company. Options
granted under the 1994 Plan may be exercisable for up to five years, may
require vesting, and shall be at an exercise price as determined by the
board or stock option committee. Options are non-transferable except by
the laws of descent and distribution or a change in control of the Company
as defined in the 1994 Plan and are exercisable only by the participant
during his lifetime. Change in control includes (i) the sale of substan-
tially all the assets of the Company or its merger or consolidation with
another, or (ii) a majority of the board changes other than by election
of shareholders pursuant to board solicitation or by vacancies filled by
the board caused by death or resignation, or (iii) a person or group
acquires 25% or makes a tender offer for 25% of the Company's outstanding
shares.
If a participant ceases affiliation with the Company by reason of
death, permanent disability or retirement at or after age 65, the option
remains exercisable for nine months from such occurrence but not beyond
the option's expiration date. Other termination gives the participant 30
days to exercise except for termination for cause which results in the
option becoming immediately null and void.
Options granted under the 1994 Plan, at the discretion of the board,
may be exercised either with cash, Common Stock having a fair market value
equal to the cash exercise price, the participant's personal recourse note,
or with an assignment to the Company of sufficient proceeds from the sale
of the Common Stock acquired upon exercise of the option with an authoriza-
tion to the broker or selling agent to pay that amount to the Company, or
any combination of the above.
There are presently outstanding under the 1994 Plan options to 34
officers, directors, employees, and advisors of the Company and its
subsidiary for 171,600 shares of Common Stock exercisable at $1.00 per
share through May 24, 1999. Thirty-nine employees have exercised their
Options for 51,400 shares, and 13 options for 4,900 shares of Common
Stock have been cancelled due to termination of the employee.
On February 27, 1995, the Company granted non-qualified stock options,
not part of the 1994 Plan, to directors of the Company and its subsidiary
for an aggregate of 142,500 shares of Common Stock exercisable at $1.75
per share for five years. In April, 1995 an option for 10,000 shares of
Common Stock was granted to counsel as part of his compensation for
assisting in the preparation of the Company's registration statement for
its public offering of Common Stock and warrants.
<PAGE> 11
In June, 1997, the board of directors and shareholders approved a 1997
Stock Option Plan ("1997 Plan") pursuant to which 500,000 shares of Common
Stock were reserved and options, both incentive and non-qualified, were
granted for 375,000 shares of Common Stock to officers, directors, counsel
and one advisor, affiliated as an officer and director of Medicore and to
the Company. The 1997 Plan is substantially similar to the 1994 Plan.
The options granted under the 1997 Plan are fully vested, are for a period
of five years expiring June 22, 2002, and are exercisable at $3.25 per
share.
The exercise price of all options is 100% of the fair market value of
the Common Stock on the date of grant.
Company Options/SAR Grants in the Last Fiscal Year
(a) (b) (c) (d) (e)
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise or
Options/SARs Employees Base Price Expiration
Name Granted(#) in 1997 ($/Sh) Date
- ---- ---------- ------- ---------- ----------
CEO
Thomas K. Langbein 100,000 26.7 3.25 6/22/2002
Barry Pardon 100,000 26.7 3.25 6/22/2002
Aggregated Option/SAR Exercises In Last Fiscal Year and FY-End
Option/SAR Values
(a) (b) (c) (d) (e)
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
Shares Value at FY-End(#) at FY-End($)
on Realized Exercisable/ Exercisable/
Name Exercise(#) ($) Unexercisable Unexercisable
- ---- ----------- -------- ------------- -------------
CEO
Thomas K.
Langbein
Company Options -0- -0- 180,000(exer.)(1) 353,400(exer.)(2)
Medicore Options -0- -0- 250,000(exer.) (3) (exer.)
Barry Pardon
Company Options -0- -0- 180,000(exer.)(1) 353,400(exer.)(2)
Medicore Options -0- -0- 75,000(exer.) (3) (exer.)
(Notes on next page)
<PAGE> 12
- ----------
(1) 40,000 Options exercisable at $1.00 ("1994 Options"), 40,000 Options
exercisable at $1.75 ("1995 Options"), and 100,000 Options exercisable
at $3.25 ("1997 Options").
(2) The value of the in-the-money options was determined by the difference
between the exercise price and the average of the bid and asked prices
of the Common Stock as reported by Nasdaq on December 31, 1997, which
was $4.38.
(3) The Medicore options are out-of-the money, the exercise price being
$2.38 per share and the closing price of the common stock as reported
by Nasdaq on December 31, 1997 was $2.13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Since Medicore's acquisition of the Company in November, 1982, Medicore
had been advancing funds at no interest to finance the Company's business.
After repayment to Medicore of $900,000 from proceeds of the Company's 1985
public offering, and in October, 1995, another repayment of $1,500,000,
there remained a balance due to Medicore at December 31, 1995 of approxi-
mately $2,686,000 evidenced by an unsecured demand promissory note
convertible into Common Stock of the Company at a rate of $1.75 per share.
The annual interest rate on the note is 5.7%. Medicore converted $350,000
of the Company's promissory note into 200,000 shares of the Company's
Common Stock in June, 1996, and $875,000 of the Company's promissory note
into 500,000 shares of the Company's Common Stock in November, 1997,
resulting in Medicore's ownership interest in the Company of 3,227,797
shares of Common Stock (63% of the outstanding shares, or approximately
70% including the beneficial ownership of the convertible note). At
December 31, 1997, the Company owed its Parent approximately $2,292,000.
Pursuant to the Company's refinanced credit facility with a Florida bank,
Medicore has not only guaranteed the loans, and secured them with certain
of its properties which it leases to the Company, but has also agreed to
subordinate this indebtedness, provided the Company may make payments to
Medicore on the subordinated debt from additional equity that is injected
into the Company or from retained earnings arising subsequent to March 31,
1995, provided that at the time of any such repayment to Medicore, the
Company is in compliance with the financial covenants of the loan agree-
ments. The Company is advised that Medicore does not intend to require
repayment of its advances prior to January 1, 1999.
In 1990, the Company sold to Medicore its real property in Hialeah,
Florida consisting of land, two buildings and a parking lot. Medicore is
leasing the buildings and the parking lot to the Company under a five year
net lease expiring March 31, 2000 initially at $130,000 per year plus
applicable taxes. The rental was reduced to $94,000 per year plus appli-
cable taxes effective April 1, 1996. Management is of the opinion that
the rentals are on terms as favorable as obtainable from unaffiliated
parties.
The Company had a credit facility with Consolidated Bank, N.A., now
NationsBank of Florida, which had been amended over the years. The
$230,000 mortgage and the NationsBank credit facility were replaced in
February, 1996 by the Company entering into three loan arrangements with
Barnett Bank of South Florida, NA ("Barnett Bank"). One credit facility
was a $2,000,000 line of credit, due on demand, secured by the Company's
accounts receivable, inventory, furniture, fixtures, and intangible assets
with interest at Barnett Bank's prime rate plus 1.25%. This line of credit
was extended to $2,500,000 in July,
<PAGE> 13
1997 by a First Amendment to Loan and Security Agreement, Loan Agree-
ment, and Security Agreement, and fully used to pay the cash portion of
the consideration for the Lytton acquisition completed on July 31, 1997.
See below. Effective December 29, 1997, the Company refinanced its
revolving line of credit which is no longer a demand loan but rather has
a maturity date of May 1, 2000, is for an amount of up to $1,600,000 and
bears interest at Barnett Bank's prime rate, currently 8.5%.
The Company also obtained a five year term loan of $1,500,000 due
December 29, 2002 at an annual interest rate of 8.60%. The interest was
fixed based upon a variable rate note (LIBOR plus 2.25% floating rate) and
an interest rate swap agreement entered into with Barnett Bank. The swap
agreement in effect reduces the interest rate risk by allowing the Company
to lock-in a fixed rate by converting the foregoing variable rate obliga-
tion. The term loan is payable in equal principal payments of $25,000
plus interest. Early termination of the swap agreement, either through
prepayment or default on the term loan, may result in a cost or a benefit
to the Company. The market risk from such early termination that arises
from the movement in interest rates may cause a liability to the Company
if interest rates are down, and a benefit to the Company if interest rates
are up, with the Company recognizing a loss or gain resulting from the
difference between its fixed interest rate and the market value of interest
rates at the time of early termination. Under the term loan, the Company
is obligated to adhere to a variety of affirmative and negative covenants,
including but not limited to a debt service ratio of 1:25 to 1:00, a
current ratio of 1:5 to 1:00, a capital funds ratio of total debt to
capital funds of no more than 1:7 to 1:00, maintenance of capital funds
equal to or in excess of $3,500,000, and the Company may not sell any of
its assets or properties, except inventory in the ordinary course of
business, within any calendar year for which the aggregate book value
exceeds $500,000. The term loan also provides for restrictions on
transactions with related persons, precludes changes in ownership in the
Company which would reduce the ownership by Medicore, to less than 51%,
and restricts the Company from engaging in any new unrelated business
which might adversely affect the repayment of the term loan.
Barnett Bank had also extended two commercial term loans to the
Company in 1996, one for $712,500 for five years expiring on February 7,
2001 at an annual rate of interest equal to 8.28% with monthly payments
of principal and interest of $6,925 based on a 15-year amortization
schedule with the unpaid principal and accrued interest due on the expira-
tion date. This term loan has a prepayment penalty and is secured by a
mortgage on properties in Hialeah, Florida owned by Medicore, two of which
properties are leased to the Company and one parcel used as a parking lot.
Under this term loan the Company is obligated to adhere to a variety of
affirmative and negative covenants similar to those of the $1,500,000 five
year term loan.
The mortgage issued by Medicore to secure the $712,500 term loan pro-
vides Barnett Bank with reappraisal rights so that should the principal
amount outstanding under the Note exceed 75% of the reappraised value of
the mortgaged property, such excess has to be repaid by the Company and/or
Medicore. Medicore, as lessor to the Company of these mortgaged
properties, has assigned the leases, rents and profits to Barnett Bank
as further security for the $712,500 term loan, provided Medicore may
continue to collect the rents until an event of default, if any, occurs.
Medicore, as lessor of the properties mortgaged, has subordinated its
interests in the leases to the mortgage held by Barnett Bank to secure
this term loan.
The second commercial term loan is for the principal amount of $200,000
for a period of five years bearing interest at a per annum rate of 1.25%
over Barnett Bank's prime rate and requiring monthly principal payments
with accrued interest of $3,333 through expiration on February 7, 2001.
This $200,000 term loan carries no prepayment penalty and is secured by
all of the Company's tangible personal property, goods and equipment, and
all cash or non-cash proceeds of such collateral.
<PAGE> 14
The revolving and term financing facilities are secured by a first
security interest on corporate assets. Medicore has also subordinated
$2,291,665 in principal indebtedness due to it from the Company to these
financing facilities, provided the Company may make payments to Medicore
on the subordinated debt from additional equity that is injected into the
Company or from the use, on a quarterly basis, of retained earnings
arising subsequent to March 31, 1995, so long as the Company is in
compliance with all financial covenants of the loan agreements.
There are cross defaults between the revolving and term loans
exclusive of the $200,000 term loan.
Medicore has unconditionally guaranteed the payment and performance
by the Company of the revolving line of credit and the three commercial
term loans.
The Company has outstanding borrowings from a local bank for $145,000
with interest payable monthly at prime with the note maturing in April,
2000. This note is secured by two certificates of deposit of a related
company and one certificate of deposit of the Company.
The Company has advanced funds to Techdyne (Scotland) for that sub-
sidiary's working capital requirements which advances aggregated approxi-
mately $600,000 at an interest rate of prime plus 1.5% per annum and was
repaid in 1997. The Company has guaranteed a line of credit for Techdyne
(Scotland) from The Royal Bank of Scotland Plc which credit line has a U.S.
equivalency of approximately $330,000 at December 31, 1997. This line of
credit operates as an overdraft facility. No amounts were outstanding
under this line of credit as of December 31, 1997.
On July 31, 1997, the Company acquired Lytton Incorporated, which is
engaged in the manufacture and assembly of printed circuit boards and
other electronic products for commercial customers. See Item 1, "Business -
Business Strategy" of the Company's Annual Report on Form 10-K for the year
ended December 31, 1997. This acquisition required $2,500,000 cash at
closing, funded by the modified revolving line of credit with Barnett
Bank, as well as 300,000 shares of the Company's Common Stock which had
a fair value of approximately $1,031,000 based on the closing price on
the date of acquisition for which the Company has guaranteed $2,000,000
minimum proceeds ($2,400,000 if certain earnings objectives are met over
a twelve month period) to Patricia Crossley, the seller of Lytton.
Patricia Crossley is the wife of Lytton's President, Lytton Crossley.
The Stock Purchase Agreement also provided for incentive consideration
based on specific sales levels of Lytton for each of three successive
specified years, which includes payment to Patricia Crossley of 4% of
Lytton's sales of $14,000,000 up to $20,000,000, and 5% of Lytton's sales
over $20,000,000. The Lytton acquisition has expanded the Company's
customer base, broadened its product line, enhanced its manufacturing
capabilities and provided a new geographic area to better serve the
continued existing customer base with opportunities to attract new
customers. Lytton Crossley has a one year employment agreement with
Lytton through July 30, 1998 at an annual salary of $135,000, plus
participation in medical, hospitalization, group health, disability and
life insurance programs and profit and other employee benefit plans, and
reasonable business costs and expenses. In the event of Mr. Crossley's
disability he would receive benefits from Lytton's existing standard
disability plan.
Mr. Crossley had borrowed an aggregate of approximately $155,000 from
Lytton, which was repaid at the closing date of the Lytton acquisition on
July 31, 1997. The repayment was made through use of a portion of the
cash consideration paid to Patricia Crossley for the sale of Lytton to
the Company.
<PAGE> 15
Lytton has a defined compensation arrangement with its President, Mr.
Crossley, dated August 1, 1997 in the amount of $200,140. The agreement
calls for monthly payments of $8,339 provided that Lytton's cash flow is
adequate to cover the payments with interest to be calculated on any
unpaid balances as of August 1, 1999. For the period ended December 31,
1997, a total of $33,357 was paid under this arrangement.
On September 16, 1996, Lytton sold its offices and operating facility
to Stanley Avenue Properties, Ltd., a limited liability company whose
membership includes Lytton's President, Mr. Crossley, and his wife.
Stanley Avenue Properties, Ltd. acquired the facilities in exchange for
a note to Lytton for $147,000 and the assumption of two mortgage notes
payable for a total sales price of $1,200,152. Lytton recognized a gain
on the sale of the property and equipment in the amount of approximately
$14,400, which was reflected in the revenues section of Lytton's financial
results. The note receivable from Stanley Avenue Properties, Ltd. of
approximately $139,000 was also repaid on July 31, 1997 upon the Company's
acquisition of Lytton.
Stanley Avenue Properties, Ltd. leased the property to Lytton. In
connection with the acquisition of Lytton by the Company, the lease was
renegotiated. The lease is now a five year lease with monthly lease
payments of approximately $17,900 for the first year, adjusted in subse-
quent years for the change in the consumer price index, and contains two
renewal options each for five years of the then fair market resale value.
See Item 2, "Properties" of the Company's Annual Report on Form 10-K for
the year ended December 31, 1997.
During 1995, pursuant to a redemption agreement, Lytton purchased 249
shares of treasury stock from its former parent, Electrolert, Inc.
("Electrolert"), as well as from certain other minority stockholders.
Consideration included cash, assignment of an account receivable and
provisions for contingent payment upon sale of Lytton to a third party.
This contingent payment resulted in Electrolert receiving $1,150,000 from
the proceeds of the Company's acquisition of Lytton, releasing Lytton from
any further liability to its former parent under the redemption agreement.
In 1995, Lytton entered into loan agreements with The Provident Bank
in Ohio for revolving ($1,500,000), term ($1,000,000), equipment (up to
$900,000) and mortgage loans ($900,000), secured by a mortgage on the real
property leased to Lytton and owned by Stanley Avenue Properties, Ltd.,
and by other collateral, and guaranteed by Lytton Crossley. The mortgage
loan was assigned to and assumed by Stanley Avenue Properties, Ltd. and
the mortgage was amended to delete the other loans from indebtednesses
secured by the mortgage. The revolving line was extended to August 1,
1998 and has monthly interest payments at prime plus .5%. The average
amount outstanding on this line since the Company acquired Lytton on
July 31, 1997 was $438,000, the maximum outstanding was $695,000 with
an outstanding balance of $549,000 as of December 31, 1997. The weighted
average interest rate on this line during this period was 9.13%. The
$1,000,000 installment loan matures June, 2002 at an annual rate of 9%
for two years, with monthly payments of $16,667 plus interest. After two
years, Lytton will have an option of a variable or fixed interest rate.
The balance outstanding on this loan was $933,000 as of December 31, 1997.
The $500,000 equipment loan is payable over four years through July 1,
2001 with the same interest rate as the installment loan. There was no
outstanding balance on this loan as of December 31, 1997. All of these
bank loans are secured by the business assets of Lytton.
Certain of the officers and directors of the Company are officers
and/or directors of Medicore and its publicly held subsidiary, DCA,
including Thomas K. Langbein, Chairman of the Board of Directors and
Chief Executive Officer of the Company holding the same positions with
DCA and Medicore, as well as being President of Medicore, and an
officer and director of Medicore's subsidiaries. Mr. Langbein is also
<PAGE> 16
the President, sole shareholder and director of Todd, a broker-dealer.
Daniel R. Ouzts, Vice President of Finance and Controller of the Company
holds the same positions with DCA and Medicore, as well as being their
Treasurer; and Peter D. Fischbein and Anthony C. D'Amore are each a
director of the Company and Medicore. See "Election of Directors."
Lawrence E. Jaffe, counsel to the Company, is Secretary and counsel to
Medicore and DCA and receives a substantial portion of his fees from the
Company, Medicore and DCA. Options to purchase 50,000 shares of Common
Stock of the Company, ranging in exercise prices from $1.00 per share to
$3.25 per share, from May, 1999 to June, 2002, are held in trust for his
wife, as well as approximately 1% of the outstanding shares of Medicore
common stock and less than 1% of the securities of DCA. Mr. Jaffe
disclaims beneficial ownership of the securities held in the trust.
In addition, certain of the accounting personnel and administrative
facilities of Medicore and its subsidiaries, including the Company, are
common. The costs of executive accounting salaries and other shared
corporate overhead for these companies are charged first on the basis of
direct usage when identifiable, with the remainder allocated on the basis
of time spent, either through corporate overhead allocation or through a
Service Agreement between the Company and Medicore. See "Executive Com-
pensation - Employment Contracts and Termination of Employment and
Change-In-Control Arrangements." Since the shared expenses are allocated
on a cost basis, there is no intercompany profit involved. The amount of
expenses due to Medicore, generally included in intercompany Medicore
advances to the Company, for each of the three years ended December 31,
1997 was approximately $408,000. Utilization of personnel and administra-
tive facilities in this manner enables Medicore to share the cost of
qualified individuals with its subsidiaries rather than duplicating the
cost for various entities. It is in the opinion of management that these
services are on terms as favorable as obtainable from unaffiliated parties.
The Company manufactures certain products for Medicore which amounted
to $214,000 and $279,000, for the two year period ended December 31, 1997,
respectively.
Property, casualty, and general liability insurance coverage for the
Company and similar insurance for Medicore, DCA and their subsidiaries
were obtained through the A.C. D'Amore Agency, Inc., an insurance agency
owned by Anthony C. D'Amore, a director of the Company and Medicore and
registered as a part-time account executive with Todd, although he has
not been active in the securities business. In 1992, Mr. D'Amore sold
his insurance business and acts as an insurance consultant. Mr. D'Amore
continues to receive nominal commissions for the accounts of the Company
and Medicore. The aggregate annual premiums for such insurance were
approximately $159,000 in 1997 of which $127,000 was for the Company. Mr.
D'Amore's commissions were approximately $4,000. In addition, the Company,
Medicore and DCA obtained group health insurance coverage and several
executive and key employee life insurance policies through George
Langbein, brother of Thomas K. Langbein. George Langbein is affiliated
as an independent sales representative with the Company. This insurance
includes $100,000 term life insurance each covering and owned by Barry
Pardon, President and director of the Company, Joseph Verga, Senior Vice
President, Secretary, Treasurer and director of the Company (each
purchased and paid for by the Company), and Bonnie Kaplan, a key employee
of Medicore (purchased and paid for by Medicore). Medicore also pays for
$1,600,000 of life insurance owned by Thomas K. Langbein. See "Executive
Compensation." Premiums on these coverages totaled approximately $374,000
during 1997 of which $127,000 was for the Company. Management is of the
opinion that the cost and coverage of the insurance are as favorable as
can be obtained from unaffiliated parties.
Peter D. Fischbein, director of the Company, Medicore and Viragen, is
an attorney who, from time to time, represents the Company, Medicore and
Todd. See "Election of Directors."
<PAGE> 17
AUDITORS
The audit committee is reviewing the services and fees of Ernst &
Young LLP, the Company's independent accountants since 1983 and which
firm audited the financial statements of the Company for fiscal 1997. Upon
the completion of its review, the audit committee will make its recommen-
dation to the board as to the independent accountants to audit the
Company's financial statements for the current fiscal year and share-
holders will be so notified. The Company also files consolidated
financial statements with Medicore.
A representative of Ernst & Young LLP is expected to be present at
the Annual Meeting and will have the opportunity to make a statement if
desired to do so. The representative will also be available to respond
to appropriate questions from shareholders attending the meeting.
SHAREHOLDER PROPOSALS
Any shareholder proposal to be considered by the Company for inclusion
in the 1999 Information Statement must be received by the Company not later
than February 10, 1999. Any such proposal should be sent to Joseph Verga,
the Secretary of the Company, 2230 West 77th Street, Hialeah, Florida 33016.
Any such proposal should provide the proposer's intention to present the
proposal for action at the meeting, and must comply with Item 4 of Schedule
14C of the rules of the Securities and Exchange Commission.
ADDITIONAL INFORMATION
Management is not aware of any other matter to be presented for
action at the Annual Meeting other than the election of directors, Item
1 in the accompanying Notice of Annual Meeting of Shareholders, and
management does not intend to bring any other matter before the meeting.
UPON WRITTEN REQUEST BY ANY SHAREHOLDER TO THE SECRETARY OF THE
COMPANY, JOSEPH VERGA, 2230 WEST 77TH STREET, HIALEAH, FLORIDA 33016, A
COPY OF THE FINANCIAL SCHEDULES OF THE COMPANY'S ANNUAL REPORT ON FORM
10-K FOR THE YEAR ENDED DECEMBER 31, 1997 (COPIES OF WHICH ANNUAL REPORT
ARE INCLUDED WITH THIS NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND
INFORMATION STATEMENT) WILL BE PROVIDED WITHOUT CHARGE.
By Order of the Board of Directors
LAWRENCE E. JAFFE
Secretary
May 1, 1998
