SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the Securities
Exchange Act of 1934 (Amendment No. )
Check the appropriate box:
[ ] Preliminary Information Statement [ ] Confidential, for Use of the
[X] Definitive Information Statement Commission Only (as permitted
by Rule 14c-5(d) (2))
TECHDYNE, INC.
................................................................................
(Name of Registrant as Specified In Its Charter)
................................................................................
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2) Aggregate number of securities to which transaction applies:
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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):
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was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
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<PAGE>
April 14, 2000
To: Our Shareholders
From: Thomas K. Langbein
Subject: Invitation to the Techdyne, Inc. 2000 Annual Meeting of Shareholders
Management is extending its invitation to you to attend our Annual
Meeting on May 24, 2000. The Annual Meeting is being held at our executive
offices, at 2230 West 77th Street, Hialeah, Florida at 11:00 a.m. In addition to
the formal items of business, I will review the major developments of 1999 into
the new millenium and answer your questions.
This booklet includes the Notice of Annual Meeting and the Information
Statement. Proxies are not being solicited since a quorum exists for the meeting
through Medicore's 71% ownership of Techdyne, Inc. The Information Statement
provides details as to quorum and voting requirements. The Information Statement
also describes the business we will conduct at the meeting, basically the
election of seven directors, and provides information about Techdyne, Inc.
I am sure you will notice that this year the Information Statement is
written in "plain English," which we hope makes its reading and understanding
easier for you.
We look forward to seeing you at the Annual Meeting.
Thomas K. Langbein
Chairman of the Board and
Chief Executive Officer
<PAGE>
TECHDYNE, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
----------------------------------------------
Date: Wednesday, May 24, 2000
Time: 11:00 a.m.
Place: Executive Offices of
Techdyne, Inc.
2230 West 77th Street
Hialeah, Florida 33016
----------------------------------------------
Dear Shareholder:
You are cordially invited to attend the 2000 Techdyne, Inc. Annual
Meeting of Shareholders to:
1. Elect seven directors;
2. Ratify the selection of Wiss & Company, LLP as independent
auditors for 2000; and
3. Transact any other business that may properly be presented
at the Annual Meeting.
If you were a shareholder of record at the close of business on April
10, 2000, you are entitled to vote at the Annual Meeting.
Your copy of the Annual Report on Form 10-K of Techdyne, Inc. for 1999
is enclosed.
By order of the Board of Directors
Lawrence E. Jaffe
Counsel and Corporate Secretary
April 14, 2000
<PAGE>
TABLE OF CONTENTS
Page
----
Information About the Annual Meeting and Voting........................ 2
Proposals.............................................................. 4
Information About Directors and Executive Officers..................... 5
Executive Compensation................................................. 7
Board Executive Compensation Report.................................... 13
Performance Graph...................................................... 15
Certain Relationships and Related Transactions......................... 15
Beneficial Ownership of the Company's Securities....................... 19
<PAGE>
INFORMATION STATEMENT FOR
TECHDYNE, INC.
2000 ANNUAL MEETING OF STOCKHOLDERS
INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
Q: WHY DID YOU SEND ME AN INFORMATION STATEMENT?
A: Management of Techdyne, Inc. ("Techdyne" or the "Company") is asking
you to attend and vote at the 2000 Annual Meeting. This Information
Statement summarizes the information you need to know to vote
intelligently.
Q: WHY DID YOU NOT SEND ME A PROXY?
A: This is because a quorum already exists based upon the approximately
71% ownership of Techdyne's voting securities by Medicore, Inc.
("Medicore" or the "Parent").
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US
A PROXY.
Q: WHAT DOES A QUORUM MEAN?
A: A quorum means a majority of the outstanding shares. The Annual Meeting
may only proceed if a quorum is present at the meeting. A majority of
the outstanding shares will be present at the meeting through Medicore.
At April 10, 2000, the Record Date, there were 6,596,990 shares of
Techdyne common stock outstanding. Medicore owns 4,674,990 shares of
Techdyne common stock or approximately 71% of the votes. A shareholder
list will be available at our executive offices in Hialeah, Florida at
the meeting and for 10 days prior to the meeting for your review.
Q: WHO IS ENTITLED TO VOTE?
A: Shareholders who owned Techdyne common stock at the close of business
on April 10, 2000 ("Record Date").
Q: HOW MANY VOTES DO I HAVE?
A: Each share of common stock is entitled to one vote. Techdyne is sending
this Information Statement, the attached Notice of Annual Meeting, and
our 1999 Annual Report, which includes our financial statements, on
April 17, 2000 to all shareholders entitled to vote.
Q: WHAT AM I VOTING ON?
A: Election of seven directors, Messrs. Thomas K. Langbein, Barry Pardon,
Joseph Verga, Peter D. Fischbein, Anthony C. D'Amore, Lytton Crossley
and Edward Diamond for a one year term; and ratification of Wiss &
Company, LLP as Techdyne's independent auditors.
Q: HOW DO I VOTE?
A: By attending the Annual Meeting. At that time you will be given a
ballot and you may vote your shares. If your shares of Techdyne common
stock are held in the name of a broker, bank or other nominee, you must
bring an account statement or letter from the nominee showing you were
the beneficial owner of the shares on April 10, 2000, the Record Date.
Q: IS MY VOTE CONFIDENTIAL?
A: Yes. Only the inspectors of election and other employees of Techdyne
assisting in tallying the vote will have access to your vote and
comments, unless you tell us to disclose such information.
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Q: WHO COUNTS THE VOTES?
A: We appoint two persons to act as inspectors of election, who each take
an oath to accept that responsibility and certify the voting to the
board.
Q: WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE INFORMATION STATEMENT?
A: Your shares of Techdyne common stock are probably registered in more
than one name or account. It would be appreciated if you would contact
our transfer agent, Continental Stock Transfer & Trust Company, 2
Broadway, New York, New York 10004 (Attention: Proxy Department) and
tell them to put all your accounts registered in the same name at the
same address; and if there is more than one Techdyne shareholder at
that address, that you have no objection and would prefer only one
Notice of Annual Meeting and registration statement be sent to that
address for all persons holding Techdyne common stock at that address.
Q: HOW MUCH COMMON STOCK DO OFFICERS AND DIRECTORS OWN?
A: Approximately 600,000 shares or approximately 9% of our common stock as
of the Record Date. This does not include Medicore's 70.8% (4,674,620
shares) of Techdyne common stock ownership.
Q: WHO ARE THE LARGEST PRINCIPAL SHAREHOLDERS?
A: As of the Record Date, other than Medicore's 71% ownership, Messrs.
Thomas K. Langbein (owns 2.7%), Barry Pardon (owns 2.8%) and Joseph
Verga (owns 1.6%), officers and directors of the Company, are the
largest holders of Techdyne common stock. See "Information About
Directors and Executive Officers" and "Beneficial Ownership of the
Company's Securities."
Q: WHO SENDS OUT THE INFORMATION STATEMENTS AND ANNUAL REPORTS AND WHAT
ARE THE COSTS?
A: The Company is sending out the Information Statement and Annual Report
to shareholders.
We will ask banks, brokers and other institutions, nominees and
fiduciaries to forward these materials to their principals and we will
reimburse them for their reasonable expenses in forwarding the
materials. Techdyne pays all expenses of preparing and delivering the
Information Statements and Annual Reports, including printing,
envelopes, mailing and similar out-of-pocket expenses.
Q: WHO IS ELIGIBLE TO SUBMIT A PROPOSAL?
A: To be eligible, you must have continuously held at least $2,000 in
market value, or 1%, of Techdyne's common stock for at least one year
by the date you submit the proposal. You must continue to hold your
Techdyne shares through the date of the meeting. However, please
remember that Medicore's 71% ownership will determine the outcome of
any proposal.
Q: WHEN ARE THE YEAR 2001 SHAREHOLDER PROPOSALS DUE?
A: Shareholder proposals must be submitted in writing by December 17, 2000
to Lawrence E. Jaffe, corporate Secretary, Techdyne, Inc., 777 Terrace
Avenue, Hasbrouck Heights, New Jersey 07604. Any proposal should
provide the reasons for it, the text of any resolution, and must comply
with Rule 14a-8 of Regulation 14A of the proxy rules of the Securities
and Exchange Commission.
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<PAGE>
PROPOSALS
1. ELECTION OF DIRECTORS
Nominees for election for a one year term are:
Current Position Position
Name Age and Areas of Responsibility Held Since
- ---- --- --------------------------- ----------
Thomas K. Langbein 54 Chairman of the Board and 1982
Chief Executive Officer 1990
Barry Pardon 48 President 1991
and Director 1990
Joseph Verga 48 Senior Vice President, 1988
Treasurer 1985
and Director 1984
Peter D. Fischbein* 60 Director 1984
Anthony C. D'Amore* 69 Director 1984
Lytton Crossley 64 Director 1999
Edward Diamond 54 Director 1999
* MEMBER OF THE AUDIT COMMITTEE.
There is no nominating committee. Nominations for directors are
considered by the entire board.
The affirmative vote of a plurality of the shares of common stock
represented at the meeting is required to elect the nominees as directors.
Abstentions and votes withheld for any nominee will have the same effect as a
vote against his re-election.
Medicore owns 4,674,620 shares or approximately 71% of the voting stock
of the Company, and intends to vote all of its shares in favor of the election
of the seven nominees of management for directors, thereby assuring their
election as directors.
The nominees have consented to serve on the board. Each nominee has
served as a director of the Company last year, a majority having served on
the board for 15 years or more. If any nominee is unable to serve for any
reason, the parent's controlling block of our common stock will be voted for
any substitute nominee as designated by the board.
For more information about the directors and executive officers see
"Information About Directors and Executive officers."
2. RATIFICATION OF WISS & COMPANY, LLP AS INDEPENDENT AUDITORS
The board, upon the recommendation of the audit committee, engaged Wiss
& Company, LLP as our new independent accountants to do the 1999 fiscal year
audit for the Company. Wiss & Company replaces our former independent
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<PAGE>
accountants, Ernst & Young LLP. The termination of Ernst & Young was effective
August 6, 1999, and was reported in our Current Report on Form 8-K dated August
27, 1999.
Ernst & Young's report on our financial statements for the two fiscal
years ended December 31, 1998 and 1997 contained no adverse opinion or
disclaimer of opinion, was not qualified or modified as to any uncertainty,
audit scope or accounting principles. During those two fiscal years and
subsequent interim periods to the date of their termination, August 6, 1999,
there were no disagreements with Ernst & Young on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, nor were there any reportable events as defined in Item 304(a)(1)(v)
of the Commission's Regulation S-K. Reportable events include the accountant's
advising us that internal controls necessary for reliable financial statements
do not exist, information has come to the accountant's attention that led it to
no longer be able to rely on management's representations, the need to expand
significantly the scope of the audit, or information has come to the attention
of the auditors that it has concluded materially impacts the fairness or
reliability of the previous audit or the financial statements. Ernst & Young's
agreement with this position as stated in our August, 1999 Current Report was
provided in their letter to the Commission dated August 27, 1999, which is an
exhibit to our August, 1999 Current Report.
No relationship exists between the Company and Wiss & Company other
than the usual relationship between independent public auditor and client.
A representative of Wiss & Company is expected to attend the Annual
Meeting to respond to shareholder questions. No representative of Ernst & Young
will attend the Meeting.
The affirmative vote of the majority of the shares present and entitled
to vote at the Annual Meeting is needed and will be accomplished by virtue of
Medicore's 71% ownership of the Company and its present intention to vote its
71% ownership to ratify Wiss & Company as independent auditors for 2000.
OTHER MATTERS TO BE PRESENTED TO SHAREHOLDERS
Management is not currently aware of any other matter to be presented
for action at the Annual Meeting other than the election of seven directors,
Proposal No. 1, and the ratification the selection of independent auditors,
Proposal No. 2, in the accompanying Notice of Annual Meeting of Shareholders,
and management does not presently intend to bring any other matter before the
meeting.
INFORMATION ABOUT DIRECTORS AND EXECUTIVE OFFICERS THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS
The board of directors oversees the business and affairs of Techdyne
and monitors the performance of management. In accordance with corporate
governance principles, the board does not involve itself in day-to-day
operations. The board is kept knowledgeable and informed through discussions
with the Chairman, other directors, executives and advisors (counsel, outside
auditors, investment bankers and other consultants), by reading reports,
contracts and other materials sent to them and by participating in board and
committee meetings.
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<PAGE>
The board met 13 times during 1999, including quarterly and special
meetings and action taken by unanimous written consent in lieu of a meeting. All
directors participated at all the meetings, either present in person or by
telephone conference call.
DIRECTORS STANDING FOR RE-ELECTION
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 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 68% owned public subsidiary of
Medicore. In 1971, Mr. Langbein organized and currently is the President, sole
director and owner of Todd & Company, Inc., a broker-dealer registered with the
Securities and Exchange Commission and the NASD. Todd has an agreement with
MainStreet IPO.com with which company DCA has a proposed merger pending. Mr.
Langbein was recently appointed as a director of Linux Global Partners, a
private holding company in which Medicore, in January, 2000, invested and to
which company it loaned money. See "Certain Relationships and Related
Transactions." Mr. Langbein, devotes most of his time to the affairs of the
Company, Medicore and DCA.
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
(Europe). He is also a member of the South Florida Manufacturing Center Advisory
Board.
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 1984 was elected a director. In 1985 he was appointed Treasurer
and in 1988 was made Senior Vice President of Operations.
PETER D. FISCHBEIN is an attorney. He is a director of Viragen, Inc.
(since 1981), formerly a public subsidiary of Medicore spun-off in 1986. Mr.
Fischbein is a director of 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.
ANTHONY C. D'AMORE is director of Medicore. Mr. D'Amore is an insurance
consultant and receives nominal commissions with respect to insurance placed
with the Company, Medicore and DCA.
LYTTON CROSSLEY established Lytton Incorporated in 1979 and was
its Chairman and President through July 31, 1997, at which time Lytton was
acquired by the Company. He remained as President of Lytton until August, 1998,
when he became Assistant to the President, and devotes a limited amount of time
to Lytton. See "Certain Relationships and Related Transactions."
EDWARD DIAMOND acquired with his partner and has been the President of
Robert Warren, LLC d/b/a Lance International, a contract manufacturer of
electronic and electro-mechanical products. Lance International does
manufacturing for the Company. See "Certain Relationships and Related
Transactions."
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<PAGE>
OTHER EXECUTIVE OFFICERS
Name Age Position Held Since
---- --- -------- ----------
Daniel R. Ouzts 53 Vice President (Finance)
and Controller 1986
DANIEL R. OUZTS joined Medicore in 1980 as controller of its plasma
division, and in 1983 became its and DCA's controller. He became Vice President
of Finance of the Company and Medicore in 1986. He was appointed as Vice
President and Treasurer of DCA in 1996. Mr. Ouzts is a certified public
accountant. See "Certain Relationships and Related Transactions."
There are no family relationships among any of the officers or
directors of the Company.
BOARD COMMITTEES
The Company has an audit committee consisting of Peter D. Fischbein
and Anthony C. D'Amore. The audit committee usually meets on a monthly basis,
sometimes alone, usually with management, and from time to time with the
independent auditors, and is responsible for recommending to the board of
directors the firm of independent 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 of the
Company.
The Company also has a stock option committee, consisting of Messrs.
Langbein, Pardon and Verga. This committee considers new option plans and the
granting of incentive and non-qualified options, eligible participants, the
extent of the options and their terms, and makes its recommendation to the
board.
COMPENSATION OF DIRECTORS
No standard arrangements for compensating directors for services as
directors or for participating on any committee exists. We reimburse directors
for travel and related out-of-pocket expenses incurred in attending shareholder,
board and committee meetings, which expenses have been minimal. In lieu of any
cash compensation or per meeting fees to directors for acting as such, we have
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 "Beneficial Ownership of the
Company's Securities" below.
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, 1999 for services in all capacities for its Chief Executive Officer,
President and Senior Vice President. No other executive officer of the Company
received a total annual salary, bonus or other compensation which exceeded
$100,000.
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<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation Awards
------------------- -----------------------------
(a) (b) (c) (e) (g)
Securities
Underlying
Options/SARs(#)
--------------------
Name and Principal Position Year Salary($) Compensation($) Company Medicore
- --------------------------- ---- --------- --------------- ------- --------
<S> <C> <C> <C> <C>
Thomas K. Langbein, CEO 1999 93,800(1) 11,400(2)
1998 90,200(1) 11,300(2)
1997 90,000(1) 12,000(2) 100,000
Barry Pardon 1999 149,600(3) 6,700(4)
1998 150,800(3) 7,300(4)
1997 144,100(3) 8,000(4) 100,000
Joseph Verga 1999 100,700(3) 1,600(5)
1998 80,700(3) 1,600(5)
1997 78,800(3) 2,300(5) 50,000
</TABLE>
- ----------
(1) ALL COMPENSATION WAS PAID BY MEDICORE, WHICH WAS $268,000 FOR 1999,
$258,000 FOR 1998 AND $257,000 FOR 1997. AMOUNTS REFLECTED IN THE
SUMMARY COMPENSATION TABLE WERE THE COMPENSATION PAID TO MR. LANGBEIN
BY MEDICORE BUT ALLOCATED TO THE COMPANY IN PROPORTION TO THE TIME MR.
LANGBEIN SPENT ON BEHALF OF THE COMPANY.
(2) AUTOMOBILE ALLOWANCE AND RELATED EXPENSES OF $14,475, $14,437 AND
$16,475 FOR 1999, 1998 AND 1997, RESPECTIVELY, AND LIFE AND
DISABILITY INSURANCE PREMIUMS OF $17,967, $17,880 AND $17,870 FOR
1999, 1998 AND 1997, RESPECTIVELY, PAID BY MEDICORE TOTALLING
APPROXIMATELY $32,400, $32,300 AND $34,300 FOR THE YEARS 1999, 1998
AND 1997, RESPECTIVELY. AS PART OF THE SERVICE AGREEMENT WITH
MEDICORE, THE AMOUNTS IN THE SUMMARY COMPENSATION TABLE REFLECT THAT
PORTION ALLOCATED TO THE COMPANY.
(3) ALL COMPENSATION PAID BY THE COMPANY.
(4) AUTOMOBILE LEASE AND RELATED EXPENSES AND TERM LIFE INSURANCE PREMIUMS
($300) FOR EACH OF 1999, 1998 AND 1997, PAID BY THE COMPANY.
(5) AUTOMOBILE RELATED EXPENSES AND TERM LIFE INSURANCE PREMIUMS ($300)
FOR EACH OF 1999, 1998 AND 1997, PAID BY THE COMPANY.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Mr. Langbein has an employment agreement with Medicore through August
31, 2003 at an annual salary of $261,504 with yearly increases in increments of
no less than $10,000. The agreement provides for Mr. Langbein to serve as the
Chairman, Chief Executive Officer and President.
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The Medicore employment agreement also provides
o $850 per month automobile allowance
o employee benefit plans and other fringe benefits and programs
available to Medicore employees and executives
o reimbursement for business expenses
o payment of universal and term life insurance owned by Mr.
Langbein with an aggregate face value of $1,600,000 -
beneficiaries designated by Mr. Langbein
o indemnification of Mr. Langbein against losses, judgments and
expenses in any claim against him for acting as an officer and/or
director of Medicore and the Company, provided he acted in good
faith and in a manner he reasonably believed was in the best
interests of Medicore and the Company
o non-competition for two years from termination within 20 miles of
Medicore's primary operations, presently Hialeah, Florida;
Medicore has option to request Mr. Langbein's non-competition
within the United States at $4,000 per month for each 12 month
period, increasing 5% each succeeding 12 month period
o full compensation for first 90 days of disability with option of
Medicore to continue employment of Mr. Langbein with full
compensation less disability payments or terminate
The Medicore employment agreement also contains different termination
provisions as follows:
o upon death, wrongful termination (defined below), disability
termination or change in control (defined below), Mr. Langbein
will receive a lump sum payment (as severance allowance (see
below) and liquidated damages) in an amount equal to Mr.
Langbein's salary, including expenses and benefits, for three
years from the date of termination
o Mr. Langbein has the option to take 400,000 shares of Medicore
common stock instead of the lump sum payment; Mr. Langbein has
the right for two years to demand registration of the Medicore
shares and for three years to include the Medicore shares in any
registration statement filed by Medicore; registration of the
Medicore shares to be at the sole cost of Medicore except any of
Mr. Langbein's legal fees and commissions for sale of the
Medicore shares
o full vesting of any warrants, options or similar rights held by
Mr. Langbein with choice of Mr. Langbein to keep those options
and warrants, otherwise Medicore has to repurchase them at a
certain repurchase formula
o for cause by Medicore - no benefits or salary
o for good reason (defined below) by Mr. Langbein - Medicore
continues to pay salary, benefits and expenses under the
agreement, and all options, warrants and other securities shall
be fully vested and exercisable; or provide Mr. Langbein with the
lump sum payment or instead, at Mr. Langbein's option, to acquire
Medicore shares
o upon expiration at August 31, 2003, if Medicore does not renew or
enter into new employment agreement, severance allowance which is
the lump sum payment or Mr. Langbein's option to take the
Medicore shares.
DEFINITIONS
o "cause" for termination includes willful failure to perform
duties under the employment agreement, and illegal conduct or
gross misconduct which damages the business or reputation of
Medicore
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o "good reason" to terminate his employment includes assigning Mr.
Langbein duties inconsistent with his position with Medicore or
any action that results in reducing Mr. Langbein's authority,
duty or responsibilities; reduction of salary, expenses or
benefits; or other substantial breach of the agreement
o "change in control" generally includes (a) the announcement for
and/or acquisition by an individual, entity or group of 25% or
more of the common stock then outstanding, except by persons
affiliated with Mr. Langbein, or (b) a sale of substantially all
of the assets, or a merger or acquisition of Medicore, or (c)
certain changes in the board other than through shareholder
elections of members nominated by the existing board.
Barry Pardon, director and President of the Company, has a five-year
employment agreement through December 31, 2000, retaining him as President. Mr.
Pardon's employment agreement provides for the following:
o base annual salary of $120,000
o over-ride commission of .5% of net sales in excess of $22,000,000
(which is increased by net sales of acquired companies)
increasing $1,000,000 each of the next two years
o automobile, travel and entertainment expenses
o termination may occur by (i) expiration of the term; (ii) death
of Mr. Pardon; (iii) Mr. Pardon's disability; (iv) conviction of
a crime, failure to carry out policies of the Company, dishonest
practice, conduct prejudicing the Company or breach of the
employment agreement; severance, which is nine months' salary,
only paid upon death or termination without cause
o non-competition for one year from termination; restrictions on
Mr. Pardon calling upon customers or suppliers of the Company,
diverting customers, services, or products of the Company, or
disclosing any trade secrets
Certain executive and accounting personnel and administrative
facilities of Medicore and its subsidiaries, including the Company and DCA, were
common for fiscal 1999. The costs of executive and accounting salaries and other
shared corporate overhead are allocated pursuant to a Service Agreement
between the Company and Medicore. 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.
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. We do reimburse directors
for expenses of attending meetings, which is minimal.
NON-STANDARD ARRANGEMENTS
Over the years, the Company and Medicore have provided options to
directors, among other executives, consultants and employees.
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OPTIONS, WARRANTS OR RIGHTS
1994 Techdyne, Inc. Stock Option Plan
o expired May 24, 1999
o 1994 Plan history
-- 250,000 shares reserved for issuance
-- 227,900 granted
-- 216,400 exercised
-- 11,500 cancelled
-- -0- outstanding
1995 Options
o non-qualified
o 152,500 granted to eight directors of the Company and its
subsidiaries and counsel
o 145,000 exercised at $1.75 per share on February 25, 2000, cash
for par value, the balance with three-year recourse promissory
notes at 6.19% interest (at the coupon issue yield of a 52-week
U.S. Treasury bill) secured by the common stock held in escrow
o voting rights held by share owner provided no default exists
under the note
o restriction on transfer of these shares until the exercise price
has been paid in full
o 1995 Option History
-- 145,000 exercised
-- 7,500 expired
-- -0- outstanding
1997 Stock Option Plan
o expires June 5, 2002
o grants available to officers, directors, consultants, key
employees, advisors and similar parties
o options, non-qualified and incentive, up to five years, vesting,
and exercise price established by board or stock option committee
o options, at discretion of board, may be exercised either with
cash, common stock with fair market value equal to cash exercise
price, optionee's personal recourse note, or assignment to the
Company of sufficient proceeds from sale of common stock acquired
upon exercise of the option with an authorization to the broker
to pay that amount to the Company, or any combination of such
payments
o termination of optionee's affiliation with the company by
optionee
-- death, disability or retirement after age 65, exercisable
for nine months but not beyond option expiration date
-- termination for cause, right to exercise terminates
immediately
-- any other termination, 30 day exercise
o options are non-transferable, except by laws of descent and
distribution or change in control
o forced redemption at formulated prices upon change in control of
the Company which includes (i) sale of substantially all the
assets of the Company or its merger or consolidation, (ii)
majority of board changes other than by election of shareholders
pursuant to board solicitations or vacancies filled by board
caused by death or resignation, or (iii) a person or group
acquires or makes a
tender offer for at least 25% of the Company's common stock;
optionee may waive redemption
11
<PAGE>
o 1997 Plan history to April 10, 2000
-- 500,000 reserved for issuance
-- 462,000 granted (including 23 officers, directors and key
employees of the Company and its subsidiaries)
-- none exercised
-- 52,000 cancelled
-- 345,000 exercisable at $3.25 per share through June 22,
2002 (155,000 non-qualified, 190,000 incentive)
-- 65,000 exercisable at $4.00 per share; expiration dates
range from June 29, 2002 to December 14, 2002; all
incentive options
The exercise price of all options is 100% or greater of the fair market
value of the common stock on the date of grant.
Options were granted in May, 1998 to IRG, a former public relations
firm, all of which were cancelled except for 6,250 options exercisable at $4.25
through May 14, 2001.
Incentive options for 87,000 shares of the Company's common stock
were granted from June through December 1999 under our 1997 Plan (22,000 were
cancelled) to key employees, including Messrs. David Watts (10,000 share
option), Chief Financial Officer of the Company, Lytton Crossley and Edward
Diamond (5,000 share options each), directors of the Company, and Larrell
Walters (20,000 share option), President of Lytton. All the incentive
options are exercisable at $4.00 per share through periods ranging from June
29, 2002 through December 14, 2002.
Options for 100,000 shares exercisable at $3.50 per share through
September 15, 2000 were granted to Joseph Dillon & Company, Inc. under a
financial advisory services agreement to terminate on September 15, 2000.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
(a) (b) (c) (d) (e)
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at FY-End (#) at FY-End($)
Shares Acquired Value Realized Exercisable/ Exercisable/
Name on Exercise (#) ($) Unexercisable Unexercisable
- ---- --------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
CEO
Thomas K. Langbein
Company Options -0- -0- 140,000 (exer.)(1) 28,800 (exer.)(2)
Medicore Options -0- -0- 250,000 (exer.) (3) (exer.)
Barry Pardon
Company Options -0- -0- 140,000 (exer.)(1) 28,800 (exer.)(2)
Medicore Options -0- -0- 75,000 (exer.) (3) (exer.)
Joseph Verga
Company Options -0- -0- 75,000 (exer.)(4) 18,000 (exer.)(2)
Medicore Options -0- -0- 30,000 (exer.) (3) (exer.)
</TABLE>
12
<PAGE>
- ----------
(1) 40,000 1995 OPTIONS EXERCISABLE AT $1.75 PER SHARE, AND 100,000 1997
OPTIONS EXERCISABLE AT $3.25 PER SHARE. THE 40,000 OPTIONS WERE
EXERCISED ON FEBRUARY 25, 2000 WITH CASH FOR PAR VALUE ($400) AND THE
BALANCE WITH A RECOURSE THREE-YEAR PROMISSORY NOTE. SEE "1995 OPTIONS"
ABOVE.
(2) "IN-THE-MONEY" STOCK OPTIONS ARE OPTIONS FOR WHICH THE EXERCISE PRICE
IS LESS THAN THE MARKET PRICE OF THE UNDERLYING COMMON STOCK ON A
PARTICULAR DATE. THE VALUE OF THE IN-THE-MONEY OPTIONS, WHICH INCLUDED
ONLY THE 40,000 1995 OPTIONS (THE 1997 OPTIONS ARE OUT-OF-THE-MONEY
SINCE THE EXERCISE PRICE IS HIGHER THAN THE YEAR-END MARKET VALUE), WAS
DETERMINED BY THE DIFFERENCE BETWEEN THE EXERCISE PRICE AND THE CLOSING
PRICE OF THE COMMON STOCK AS REPORTED BY NASDAQ ON FRIDAY, DECEMBER 31,
1999, WHICH WAS $2.47.
(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, 1999 WAS $2.06.
(4) 25,000 1995 OPTIONS EXERCISABLE AT $1.75 PER SHARE, AND 50,000 1997
OPTIONS EXERCISABLE AT $3.25 PER SHARE. THE 25,000 OPTIONS WERE
EXERCISED ON FEBRUARY 25, 2000 WITH CASH FOR PAR VALUE ($250) AND THE
BALANCE WITH A RECOURSE THREE-YEAR PROMISSORY NOTE. SEE "1995 OPTIONS"
ABOVE.
BOARD EXECUTIVE COMPENSATION REPORT
We have no executive compensation committee. Compensation of our
executive officers is considered by the entire board of directors. Only Barry
Pardon, President and director of the Company. Mr. Langbein has an employment
agreement with Medicore. See "Executive Compensation - Employment Contracts
and Termination of Employment and Change In Control Arrangements."
Executive compensation is structured to motivate management to create
and sustain shareholder value. The board attempts to accomplish this goal by:
(i) aligning the interests of management and shareholders through
stock ownership; and
(ii) seeking growth and performance of Techdyne by attracting,
retaining and motivating talented executives and employees
through competitive compensation.
WHAT IS THE STRUCTURE OF EXECUTIVE COMPENSATION?
The elements of executive compensation include:
o base pay
o long-term incentives
o special awards in recognition of extraordinary efforts and
achievements
13
<PAGE>
HOW IS BASE PAY DETERMINED?
Base pay is determined by individual performance and position with and
responsibilities to the Company. We also try to be competitive with salaries of
companies in our industry in an attempt to be able to maintain quality
executives. Base salaries for management are below major competitors, which are
much larger with greater financial resources than the Company.
BASE SALARY FOR CHAIRMAN OF THE BOARD, CHIEF EXECUTIVE OFFICER AND PRESIDENT
Thomas K. Langbein, Chairman of the Board and Chief Executive Officer,
and Barry Pardon, President and director, who have been affiliated with the
Company for 18 years and 20 years, respectively, are most responsible for the
Company's performance.
Mr. Pardon has been one of the motivating forces behind the Company's
sales growth, implementing efficiency programs, expansion of products, services
and customer base, and keeping the Company current with technological changes in
the industry. He, with Mr. Langbein, directs our operations and continuously
seeks new areas of growth in the electronics and electro-mechanical industry.
Mr. Pardon was responsible for the Lytton acquisition, which has strengthened
our financial, sales and manufacturing positions and expanded our operations
into new geographic areas, broadening our product line and enabling us to better
serve our customer base with enhanced product choices.
Thomas K. Langbein, as Chairman and Chief Executive Officer, has been
another motivating force behind our growth, inventory and expense control and
strengthening of profit margins. Mr. Langbein's compensation is paid by Medicore
under his employment agreement with that parent company, with certain amounts
allocated to the Company in proportion to the time Mr. Langbein spends on our
behalf.
The board considers all these factors in evaluating the performance and
setting the compensation of Mr. Langbein as Chief Executive Officer and Mr.
Pardon as President. The board also considered these officers' direction of our
operations and establishing and implementing our business strategy. Mr.
Langbein and Mr. Pardon did not participate in discussions affecting their own
compensation.
WHAT ARE LONG-TERM INCENTIVES?
Long-term incentive awards for executives usually take the form of
granting stock options under our option plans or granting restricted stock
awards, meaning shares which cannot be publicly sold for a certain period of
time, usually from one to two years. We believe the granting of stock options or
restricted shares helps align the interests of the Company's executives with our
shareholders. This is premised on the basic principle that the executives will
receive value only if the market value of our common stock increases over time.
Market price should increase if management strives to improve the Company's
operations and profitability. Our revenues have increased over the years and
we have been profitable, although recently at reduced amounts. Our stock
prices have remained relatively consistent in the range of $2.00 to a high in
the third quarter of $4.63. See Item 5, "Market for the Registrant's Common
Equity and Related Stockholder Matters," Item 6, "Selected Financial Data",
and Item 7, "Management's Discussion and Analysis of Financial Condition and
Results of Operations" of the Company's Annual Report on Form 10-K for the
year ended December 31, 1999 accompanying this Information Statement.
14
<PAGE>
SPECIAL AWARDS
Special awards may be granted from time to time in recognition of
extraordinary efforts and achievements, as well as prospective contributions and
services. Such may arise based upon an executive's extraordinary efforts in
accomplishing expansion, acquisitions, increasing market share and similar
events. These situations and extent of awards are evaluated on a case by case
basis.
SUBMITTED BY THE BOARD OF DIRECTORS
Thomas K. Langbein
Anthony C. D'Amore Barry Pardon
Joseph Verga Peter D. Fischbein
Edward Diamond Lytton Crossley
PERFORMANCE GRAPH
The following graph shows a five-year comparison of cumulative total
shareholder returns for the Company, the Nasdaq Market Index and the Electronics
Industry Index from October 2, 1995, the date the common stock started trading,
through December 31, 1999. The cumulative total shareholder returns on the
Company's common stock was measured by dividing the difference between the
Company's share price at the end and the beginning of the measurement period by
the share price at the beginning of the measurement period. The total
shareholder return assumes $100 invested at the beginning of the period in the
Company's common stock, in the Nasdaq Market Index and the Electronics Industry
Index. We did not pay dividends on our common stock during the measurement
period and the calculations of cumulative total shareholders return on the
common stock did not include dividends.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURNS AMONG TECHDYNE,
NASDAQ MARKET INDEX AND ELECTRONICS INDUSTRY
INDEX
Mesaurement Period Electronic
- ------------------ Techdyne, Inc. Nasdaq Index Industry Index
(Fiscal Year Covered) -------------- ------------ --------------
Measurement Pt-10/2/95 $ 100.00 $ 100.00 $ 100.00
FYE 12/31/95 84.48 99.20 83.21
FYE 12/31/96 77.59 123.27 126.15
FYE 12/31/97 60.34 150.78 134.23
FYE 12/31/98 33.62 212.66 196.48
FYE 12/31/99 34.05 375.08 415.86
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Medicore had been advancing funds at no interest to finance our
business since its acquisition of our Company in 1982. After several repayments
to Medicore over the years we issued to Medicore an unsecured demand promissory
note convertible into our common stock at a rate of $1.75 per share. The annual
interest rate on the note was 5.7%. Medicore converted $350,000 of the Company's
promissory note into 200,000 shares of our common stock in 1996, $875,000 of the
15
<PAGE>
note into 500,000 shares of our common stock in 1997, and on September 30, 1999,
Medicore converted the balance of the note, with interest, which amounted to
$2,531,941, into 1,446,823 shares, resulting in Medicore's ownership interest in
the Company of 4,674,620 shares of common stock (70.8% of the outstanding
shares).
In 1990, we sold to Medicore our real property consisting of land, two
buildings and a parking lot in Hialeah, Florida. Medicore is leasing these two
buildings and parking lot to us under a five year net lease expiring March 31,
2001 at $150,000 per year plus applicable taxes. We believe that the rentals
are on terms as favorable as obtainable from unaffiliated parties.
We had a credit facility and three commercial loans with NationsBank in
Florida. The line of credit was for $1,600,000, secured by all of our assets,
with interest at the bank's prime rate, 8.50% as of December 31, 1999, with a
maturity date of May 1, 2000, and an outstanding balance of $1,600,000 at
December 31, 1999. We also had a five year term loan of $1,500,000 due December
29, 2002 at an annual interest rate of 8.60%, with a variety of affirmative and
negative covenants, and two commercial term loans obtained in 1996, one for
$712,500 expiring on February 7, 2001 at an annual rate of interest equal to
8.28% and a prepayment penalty, secured by a mortgage on properties in Hialeah,
Florida owned by Medicore, two of which properties are leased to us and one
parcel used as a parking lot, and the second commercial term loan for the
principal amount of $200,000 for a period of five years bearing interest at a
per annum rate of 1.25% over NationsBank's prime rate, secured by all of our
tangible personal property, goods and equipment, and all cash or non-cash
proceeds of such collateral. We also had borrowings from a local bank for
$145,000 with interest payable monthly at prime with the note maturing in April,
2000.
All these financings, which had an aggregate remaining principal
balance at the time of refinancing of approximately $3,115,000, were replaced
with two credit facilities with The Provident Bank in Ohio for an aggregate
borrowing of $5,500,000. This includes a three-year revolving credit line at
an interest rate of prime minus .25%, or at a fixed rate equal to the relevant
quoted LIBOR rate plus 2.5%, at our election. Also, part of the financing is
a five-year term loan of $1,000,000 at the same interest rate as the revolving
line of credit. For details of the financing see Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources" of our Annual Report on Form 10-K for the
year ended December 31, 1999 accompanying this Information Statement. This
financing is guaranteed by Lytton, which subsidiary has provided The
Provident Bank with a Security Agreement, including all of Lytton's
property, and a Conditional Assignment of Lease, assigning all of its right,
title and interest as tenant under the lease to the bank as further security
for its guaranty. The Conditional Assignment of Lease takes effect only if
Lytton defaults in any of its obligations under the lease or its guaranty
of our financing. That lease is with Stanley Avenue Properties, Ltd., a
limited liability company whose membership includes Lytton and Patricia
Crossley. Mrs. Crossley is the wife of Lytton Crossley, former President of
Lytton and a director of the Company, who is also Assistant to the President
of Lytton under an Employment Agreement renewable annually requiring 40 hours
per month at an annual salary of $30,000. See "Proposal No. 1: Election of
Directors."
Lytton also entered into amendments to its financing agreements with
The Provident Bank which include a $3,000,000 revolving credit arrangement, a
$1,400,000 term loan and a $500,000 equipment loan, modified to extend the line
of credit term to coincide with our line of credit term and with the interest
rates reduced to interest rates identical to those on our financing with the
bank. We have unconditionally guaranteed Lytton's financing, secured by a
Security Agreement providing the bank with a continuing first priority
security interest on all our property. See Item 7, "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and Note 2
to "Notes to Consolidated Financial Statements" of our Annual Report on
Form 10-K for the year ended December 31, 1999, accompanying this Information
Statement.
We acquired Lytton in 1997 for $2,500,000 cash and 300,000 shares of
our common stock which had a fair value of approximately $1,031,000 based on the
closing price on the date of acquisition for which we guaranteed $2,400,000 to
16
<PAGE>
Patricia Crossley, the seller of Lytton. The guarantee was modified and in July,
1999, we paid her $1,100,000 and forgave an advance of $1,278,000 made in July,
1998.
The Lytton acquisition agreement also provided for incentive
consideration based on specific sales levels of Lytton for each of three
successive specified years. This resulted in additional consideration to
Patricia Crossley of approximately $290,000 and $154,000 for the first two years
of sales levels paid in April, 1999 and April, 1998.
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.
Lytton had a deferred compensation arrangement with Mr. Crossley, which
required monthly payments of $8,339 provided that Lytton's cash flow was
adequate to cover the payments with interest to be calculated on any unpaid
balances as of August 1, 1999. For the year ended December 31, 1999, a total of
$58,000 was paid under this arrangement, which fully paid this arrangement.
In 1996, Lytton sold its offices and operating facility to Stanley
Avenue Properties, Ltd., a limited liability company whose membership includes
Lytton and Pat Crossley. Stanley Avenue Properties, Ltd. acquired the facilities
in exchange for a note to Lytton and the assumption of two mortgage notes. The
note receivable from Stanley Avenue Properties, Ltd. of approximately $139,000
was repaid on July 31, 1997 upon our 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 to a five year
lease through July 31, 2002 with monthly lease payments of approximately $17,900
for the first year, adjusted in subsequent years for the change in the consumer
price index, and contains two renewal options each for five years of the then
fair market rental value. See Item 2, "Properties" of our Annual Report on Form
10-K for the year ended December 31, 1999 accompanying this Information
Statement.
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 Medicore
and DCA, as well as being President of Medicore, and an officer and director
of Medicore's and certain of DCA's subsidiaries. Mr. Langbein is also the
President, sole shareholder and director of Todd, a securities broker-dealer.
Daniel R. Ouzts, Vice President of Finance and Controller of the Company holds
the same positions with and is also Treasurer of Medicore and DCA, and Peter
D. Fischbein and Anthony C. D'Amore are each directors of the Company and
Medicore. See "Proposal No. 1: Election of Directors." Mr. Langbein owns
2.7% of our Company (includes an option for 100,000 shares), 17.2% of our
Parent (includes an option for 250,000 Medicore shares), and 6.5% of DCA
(includes an option for 260,000 DCA shares). Mr. Fischbein owns 1% and
Messrs. Ouzts and D'Amore have a less than 1% interest in our Company and
have interests in Medicore ranging from 1.2% to 4.7%, respectively. See
"Beneficial Ownership of the Company's Securities." Lawrence E. Jaffe is
Secretary and counsel to the Company, Medicore and DCA. Mr. Jaffe has less
than a 1% interest in our Company, a 2.5% interest in our parent and a 4.2%
interest in DCA (which includes a warrant for 2,000 DCA shares and an option
for 160,000 DCA shares). Mr. Jaffe also receives a substantial portion of
his professional fees from our Company, our parent and DCA, which for 1999
were $45,000, $86,000 and $132,000, respectively.
Todd, a small securities brokerage firm of which Thomas K. Langbein
is owner and principal, has an agreement with MainStreet IPO.com Inc.
pursuant to which the principals of MainStreet are to recommend their
prospective clients to Todd to act as underwriter or stock selling group
member. MainStreet has developed a website to provide companies the ability
to engage in direct public offerings through a Dutch Auction. That is a
process that allows potential investors to bid for a specific amount of an
17
<PAGE>
issuer's securities at prices they determine they are willing to pay. Todd
has made its broker-dealer registration available to MainStreet, if
necessary. MainStreet's proposed operations are subject to an issue of
broker-dealer registration now under discussion between MainStreet and the
Commission. Mr. Langbein received 660,000 shares (approximately 8%) of
MainStreet, with an additional 240,000 shares issued to Mr. Langbein's two
adult children and two brothers, both of whom is employed by Medicore in
marketing.
MainStreet has not initiated operations, and has filed a registration
statement with the Commission, which includes a proxy statement of DCA, our
parent's other public subsidiary, of which Mr. Langbein is Chairman of the
Board and CEO. That registration and proxy relate to the proposed sale of
DCA's operations to Medicore and the merger of MainStreet with DCA under a
merger agreement pursuant to which MainStreet would issue its shares to the
DCA shareholders. If the DCA/MainStreet merger is accomplished, for which
there can be no assurance, the DCA options/common stock would become
MainStreet securities. The DCA securities owned by our and Medicore's
affiliates have been included for resale, along with the other Medicore, DCA
and MainStreet shareholders, in MainStreet's registration statement now
pending before the Commission.
MainStreet also has a joint venture with Linux Global Partners, a
private holding company investing in Linux software companies. The joint
venture is Linux IPO.com, a website similar to MainStreet's for direct
public offerings of Linux companies, in which Linux Global Partners invested
and which may wish to effect direct public offerings. Our parent, Medicore,
in January, 2000, acquired for $90 a 6% interest in Linux Global Partners,
and at that time lent that company $1,500,000 at an annual interest rate of
10%, for Linux Global Partners' investing in Linux software companies and in
which Medicore obtained a security interest to secure its loan. Mr. Langbein
was appointed as a director of Linux Global Partners. Medicore had an option
to and on March 27, 2000 acquired an additional 2% interest in and loaned an
additional $500,000 to Linux Global Partners. Medicore borrowed the
$2,000,000 from DCA, its other public subsidiary, at an interest rate of 10%
per annum.
Certain of the executive and accounting personnel and administrative
facilities of Medicore and its subsidiaries, including the Company, are
common. The costs of executive and accounting salaries and other shared
corporate overhead for these companies are charged through a Service Agreement
between the Company and Medicore. See "Executive Compensation - Employment
Contracts and Termination of Employment and Change-In-Control Arrangements."
The amount of expenses due to Medicore, generally included in intercompany
Medicore advances to us, for each of the three years ended December 31, 1999
was approximately $408,000. It is our opinion that these services are on terms
as favorable as obtainable from unaffiliated parties.
We manufactured certain products for Medicore in 1998 which sales
amounted to $172,000 for that year. Medicore's Medical Products Division took
over the lancet production in the first quarter of 1999, with sales to Medicore
amounting to approximately $23,000 in 1999.
Lance International, with which company Edward Diamond, one of our
directors (see "Proposal No. 1: Election of Directors"), is affiliated as
President and one of the owners, does subcontract manufacturing for us. For the
two years ended December 31, 1999 and 1998, Lance International revenues from
manufacturing for the Company amounted to $1,728,000 and $2,245,000,
representing 26% and 30% of its revenues for these years, respectively. The
Lance International manufacturing for us represented approximately 4% and 6%
of our sales for the two years ended December 31, 1999 and 1998, respectively.
Anthony C. D'Amore, one of our directors and a director of Medicore,
acts as an insurance consultant and receives nominal commissions from the
property, casualty, general liability and worker's compensation insurance
coverages for the Company, Medicore and DCA. The Company, Medicore and DCA
obtain group health insurance coverage and personal life insurance policies
for several executives and key employees through
18
<PAGE>
George Langbein, brother of Thomas K. Langbein and an employee of Medicore.
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, Treasurer and director of the Company (each purchased and
paid for by the Company), Daniel R. Ouzts, Vice President of Finance and
Controller of the Company, and Bonnie Kaplan, a key employee of Medicore
(both 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 $761,000 during 1999 of
which $467,000 was for the Company. We are of the opinion that the cost and
coverage of the insurance are as favorable as can be obtained from unaffiliated
parties.
BENEFICIAL OWNERSHIP OF THE COMPANY'S SECURITIES
The following table sets forth as of April 10, 2000 the names and
beneficial ownership of the equity securities of the Company and of Medicore,
our parent, for directors, individually itemized, and for directors and
executive officers as a group, without naming them, and for each of the named
executive officers described in the Summary Compensation Table (see "Executive
Compensation"), and for shareholders known to the Company to beneficially own
more than 5% of our voting securities.
<TABLE>
<CAPTION>
Amount and Nature of Beneficial Ownership(1)
--------------------------------------------------------------
Techdyne Medicore
Common Common
Name Stock %(2)(3) Stock %(2)(4)
---- ----- ------- -------- -------
<S> <C> <C> <C> <C>
Medicore, Inc. 4,674,620 70.8%(5) -- --
2337 W. 76th St.
Hialeah, FL 33016
Barry Pardon+ 186,533(6) 2.8% 136,950(7) 2.4%
Thomas K. Langbein ** 4,854,620(8) 72.3% 1,023,014(9) 17.2%
Joseph Verga + 103,334(10) 1.6% 79,075(11) 1.4%
less than
Peter D. Fischbein ** 55,000(12) 1.0% 176,229(13) 3.0%
less than
Anthony C. D'Amore ** 40,000(14) 1.0% 273,890(15) 4.7%
less than
Lytton Crossley 5,000(16) 1.0% -- --
61 Flamingo Drive
Crossville, TN 38555
less than
Edward Diamond 5,000(16) -- 17,000(17) 1.0%
One Sprucewood Lane
West Port, CT 06880
All directors and
executive officers
as a group (8 persons) 599,867(5)(18) 8.7% 1,777,208(19) 28.5%
</TABLE>
19
<PAGE>
** 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 OUR STOCK TRANSFER BOOKS. 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.
"BENEFICIAL OWNERSHIP" IS A TECHNICAL TERM BROADLY DEFINED BY THE RULES
OF THE COMMISSION TO MEAN MORE THAN JUST DIRECT OWNERSHIP IN YOUR NAME.
BENEFICIAL OWNERSHIP ALSO MEANS YOU MAY HOLD INDIRECTLY, EITHER THROUGH
A RELATIONSHIP, A POSITION OF DIRECTOR OR TRUSTEE, OR THROUGH A
CONTRACT OR OTHER ARRANGEMENT, THE POWER, ALONE OR SHARED, TO VOTE OR
SELL THE SHARES. ALSO YOU ARE DEEMED A BENEFICIAL OWNER IF YOU HAVE THE
RIGHT TO ACQUIRE THE SHARES WITHIN 60 DAYS. SEE NOTE (2) BELOW.
(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 10, 2000 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 6,596,990 SHARES OF COMMON STOCK OUTSTANDING. DOES NOT INCLUDE
(I) OPTIONS UNDER THE COMPANY'S 1997 STOCK OPTION PLAN FOR 410,000
SHARES OF COMMON STOCK; (II) OPTIONS GRANTED IN 1998 TO THE INVESTOR
RELATIONS GROUP, INC. ("IRG"), A FORMER PUBLIC RELATIONS FIRM TO THE
COMPANY AND MEDICORE FOR 6,250 SHARES OF COMMON STOCK EXERCISABLE
THROUGH MAY 14, 2001 AT $4.25 PER SHARE; (III) 200,000 SHARES OF COMMON
STOCK EXERCISABLE UNDER A PURCHASE OPTION ISSUED TO THE UNDERWRITER OF
THE COMPANY'S 1995 PUBLIC OFFERING OF COMMON STOCK AND WARRANTS, WHICH
OPTION IS FOR 100,000 SHARES OF COMMON STOCK AT A PURCHASE PRICE OF
$6.60 PER SHARE AND $.25 PER WARRANT FOR WARRANTS EXERCISABLE INTO
COMMON STOCK AT $8.25 PER SHARE THROUGH SEPTEMBER 12, 2000; OR (IV) AN
OPTION GRANTED IN JULY, 1999, TO JOSEPH DILLON & COMPANY, INC. FOR
100,000 SHARES OF COMMON STOCK EXERCISABLE THROUGH SEPTEMBER 15, 2000
AT $3.50 PER SHARE. SEE NOTE (2).
(4) BASED ON 5,710,540 SHARES OUTSTANDING. DOES NOT INCLUDE (I) 838,000
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)); (II) 400,000 SHARES OF MEDICORE'S COMMON STOCK UNDER AN OPTION
GRANTED IN THE EMPLOYMENT AGREEMENT OF THOMAS K. LANGBEIN (SEE NOTE
(9)); (III) 5,000 SHARES OF MEDICORE'S COMMON STOCK UNDERLYING OPTIONS
GRANTED TO IRG (SEE NOTE (3)) EXERCISABLE THROUGH MAY 14, 2001 AT $2.25
PER SHARE; (IV) 98,000 SHARES AUTHORIZED FOR ISSUANCE UNDER A KEY
EMPLOYEE STOCK PLAN DATED MAY 6, 1996; AND (V) 475,000 SHARES OF
COMMON STOCK UNDERLYING OPTIONS GRANTED IN FEBRUARY, 2000 UNDER
MEDICORE'S 2000 STOCK OPTION PLAN, WHICH IS SUBJECT TO MEDICORE'S
SHAREHOLDER APPROVAL.
(5) OFFICERS AND DIRECTORS OF MEDICORE, INCLUDING THOSE DIRECTORS OF THE
COMPANY AND MEDICORE WHO MAY BE SHAREHOLDERS OF EACH COMPANY, DISCLAIM
ANY INDIRECT BENEFICIAL OWNERSHIP OF THE COMPANY'S COMMON STOCK THROUGH
MEDICORE'S 70.8% OWNERSHIP OF THE COMPANY).
(6) INCLUDES (I) OPTIONS FOR 100,000 SHARES OF OUR COMMON STOCK (SEE NOTE
(2)); AND (II) 5,533 SHARES HELD IN HIS WIFE'S NAME. EXCLUDES
APPROXIMATELY 112,000 (1.7%) SHARES THAT MAY BE DEEMED INDIRECTLY
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BENEFICIALLY OWNED THROUGH MEDICORE'S OWNERSHIP OF THE COMPANY, WHICH
INDIRECT BENEFICIAL OWNERSHIP IS DISCLAIMED. SEE NOTE (5).
(7) 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) 8,400 SHARES OF MEDICORE'S COMMON STOCK OWNED
BY HIS WIFE. SEE NOTE (4).
(8) INCLUDES (I) OPTIONS FOR 100,000 SHARES OF OUR COMMON STOCK (SEE NOTE
(2)); AND (II) MEDICORE'S 4,674,620 SHARE OWNERSHIP (70.8%) OF THE
COMPANY BY VIRTUE OF HIS EXECUTIVE POSITIONS AND DIRECTORSHIPS WITH THE
COMPANY AND MEDICORE AND HIS STOCK OWNERSHIP OF MEDICORE, WHICH 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 804,000
SHARES OF THE COMPANY (12.2%). SEE NOTE (5). WITHOUT INCLUDING
MEDICORE'S OWNERSHIP, MR. LANGBEIN OWNS 180,000 SHARES (2.7%) OF
TECHDYNE (INCLUDES AN OPTION FOR 100,000 SHARES).
(9) 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).
(10) INCLUDES OPTIONS FOR 50,000 SHARES OF OUR COMMON STOCK (SEE NOTE (2).
EXCLUDES APPROXIMATELY 65,000 (1.0%) 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).
(12) INCLUDES OPTIONS FOR 15,000 SHARES OF OUR COMMON STOCK. SEE NOTE (2).
EXCLUDES APPROXIMATELY 140,000 (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 OF MEDICORE COMMON STOCK 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). 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 15,000 SHARES OF OUR COMMON STOCK (SEE NOTE
(2)); AND (II) 15,000 SHARES OF OUR COMMON STOCK HELD IN HIS RETIREMENT
PLAN. EXCLUDES APPROXIMATELY 220,000 (3.3%) SHARES THAT MAY BE DEEMED
INDIRECTLY BENEFICIALLY OWNED THROUGH MEDICORE'S OWNERSHIP OF THE
COMPANY, WHICH INDIRECT BENEFICIAL 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).
(16) INCLUDES OPTIONS FOR 5,000 SHARES OF OUR COMMON STOCK UNDER THE 1997
STOCK OPTION PLAN.
(17) ALL SHARES HELD IN HIS RETIREMENT PLAN.
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(18) DOES NOT INCLUDE MEDICORE'S OWNERSHIP THROUGH MR. LANGBEIN. SEE NOTE
(8)
(19) 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).
DID DIRECTORS, EXECUTIVE OFFICERS AND 10% SHAREHOLDERS COMPLY WITH SECTION 16(a)
OWNERSHIP REPORTING IN 1998?
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors, executive officers and 10% shareholders to file reports with the
Securities and Exchange Commission, the Nasdaq Stock Market and the Company,
indicating their ownership of our common stock and any changes in their
beneficial ownership of their common stock ownership interests. The rules of the
Securities and Exchange Commission require that we disclose failed or late
filings of reports of Company stock ownership by its directors and executive
officers. To the best of the Company's knowledge, all beneficial ownership
reports by these reporting persons were filed on a timely basis, except for
Lytton Crossley, late on a Form 3, his initial beneficial ownership report,
and Peter D. Fischbein, late for one transaction relating to the exercise of
an option in May, 1999.
UPON WRITTEN REQUEST BY ANY SHAREHOLDER TO THE SECRETARY OF THE
COMPANY, LAWRENCE E. JAFFE, 777 TERRACE AVENUE, HASBROUCK HEIGHTS, NEW JERSEY
07604, A COPY OF THE FINANCIAL SCHEDULES OF THE COMPANY'S ANNUAL REPORT ON FORM
10-K FOR THE YEAR ENDED DECEMBER 31, 1999 (COPIES OF WHICH ANNUAL REPORT ARE
INCLUDED WITH THIS NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND INFORMATION
STATEMENT) WILL BE PROVIDED WITHOUT CHARGE.
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