UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14f-1
Under the Securities Exchange Act of 1934
ADVANCE DISPLAY TECHNOLOGIES, INC.
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(Exact name of registrant as
specified in its corporate charter)
0-15224
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Commission File No.
Colorado 84-0969445
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(State of Incorporation) (IRS Employer
Identification No.)
1251 S. Huron, Unit C
Denver, Colorado 80223
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(Address of principal executive offices)
(303) 733-5339
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(Registrant's telephone number, including area code)
August 26, 1997
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INFORMATION STATEMENT
INTRODUCTION
This Information Statement is being furnished pursuant to Section 14(f) of
the Securities Exchange Act of 1934 and Rule 14f-1 thereunder, in connection
with a proposed change in the membership of the Board of Directors of Advance
Display Technologies, Inc. (the "Company" or "ADTI") as the result of the
Company's exchange agreement (the "Exchange Agreement") with Display Optics,
Ltd., a Colorado limited partnership (the "Partnership" or "Display Optics"),
Display Group, LLC, a Colorado limited liability company ("Display Group"), and
certain individual investors and entities (collectively the "Investors"). The
Investors received shares of Common Stock of the Company and shares of a new
series of Preferred Stock in exchange for previously issued Preferred Stock in
the Company and certain other assets. The Company issued 17,509,868 shares of
Common Stock and 1,843,900 shares of Series C Preferred Stock in exchange for
all issued and outstanding shares of Series B Preferred Stock of the Company and
certain other assets consisting primarily of debt and equity securities of
Display Optics and Display Group.
Following the Effective Date of the Exchange, May 21, 1997, four directors
shall be added to the existing Board of Directors of the Company. The change in
directors is intended to be effective no earlier than ten (10) days after the
date on which this Information Statement is filed with the Securities and
Exchange Commission (the "Commission") and mailed to all holders of record of
the Company's Common Stock.
VOTING SECURITIES OUTSTANDING
Immediately following the Effective Date, there were 21,343,923 shares of
the Company's Common Stock outstanding, each of which entitle the holder thereof
to one vote on each matter which may come before a meeting of the shareholders.
There were also 1,843,900 shares of Series C Preferred Stock of the Company
outstanding, which except as otherwise provided by law, are entitled to no
voting rights. The Company has no other voting securities outstanding.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of August 15, 1997, certain information
regarding the voting securities of ADTI beneficially owned of record by each
officer, current and proposed director, each person known by ADTI to own 5% or
more of the voting securities of ADTI, and all current officers and directors as
a group. At August 15, 1997, ADTI had outstanding 21,343,923 shares of Common
Stock.
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Title of Name and address of Amount and nature Percent
Class Beneficial owners of Beneficial Ownership of Class
----- ----------------- ----------------------- --------
Common American Consolidated 1,249,750 5.9%
$.001 Par Growth Corporation (1) Direct
8100 E. Arapahoe Rd.,
Suite 309
Englewood, CO 80112
Common Darrell D. Avey (2) 296,950 1.4%
$.001 Par 4851 E. Harvard Lane Direct
Denver, CO 80222
Common William W. Becker 1,873,369 8.8%
$.001 Par Box 143 Direct
Grand Cayman Island
British West Indies
Common Vincent D. Bradshaw (2) 0 0%
$.001 Par 8280 W. Laurel Place,
Unit B
Littleton, CO 80123
Common Display Group, LLC (3)(6) 1,715,030 8.0%
$.001 Par 5251 DTC Parkway, Direct
Suite 1210
Englewood, CO 80111
Common William J. Elsner 1,126,812 5.3%
$.001 Par 83 Glenmoor Place Direct
Englewood, CO 80110
Common Bruce H. Etkin (4) 3,247,456 15.2%
$.001 Par 1512 Larimer St., No. 325 Direct
Denver, CO 80202
Common John D. Kilgore (2) 42,013 0.2%
$.001 Par 5620 E. Mexico Ave. Direct
Denver, CO 80224
Common Keith A. Hancock (4) 76,045 0.4%
$.001 Par 5251 DTC Parkway, Direct
Suite 1210
Englewood, CO 80111
Common Jan E. Helen 1,126,797 5.3%
$.001 Par 5251 DTC Parkway, Direct
Suite 1010
Englewood, CO 80111
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Title of Name and address of Amount and nature Percent
Class Beneficial owners of Beneficial Ownership of Class
----- ----------------- ----------------------- --------
Common G. Schneider Holdings Co. 4,941,959 23.2%
$.001 Par 4643 S. Ulster, Suite 1300 Direct
Denver, CO 80237
Common Gene W. Schneider (4)(5) 4,941,959 23.2%
$.001 Par 4643 S. Ulster, Suite 1300 Indirect
Denver, CO 80237
Common Mark L. Schneider (4) 2,509,173 11.8%
$.001 Par 4643 S. Ulster St., Direct
Suite 1300
Denver, CO 80237
Common All current officers and 338,963 1.5%
$.001 Par directors as a group Direct
Common All current and proposed
officers and directors 10,664,046 50.0%
$.001 Par as a group (5) Direct and
Indirect
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(1) See Legal Proceedings.
(2) Current officer or director.
(3) Includes 1,365,030 shares of Common Stock which the reporting person
has the right to vote pursuant to a court order pending resolution of
a civil proceeding regarding ownership of those shares. Also includes
350,000 shares to be returned to the Company as a part of the Exchange
Agreement and which will be retired by the Company.
(4) Proposed director.
(5) Includes 4,941,959 shares of Common Stock owned by G. Schneider
Holdings Co. of which Gene W. Schneider is the general partner. Mr.
Schneider holds no Common Stock directly.
(6) The Company is owner of 100% of Display Group, LLC as a result of the
Exchange Agreement.
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CHANGES IN CONTROL
In connection with the Exchange Agreement, the Company issued to the
Investors 17,509,868 shares of Common Stock. Consequently, the Investors own a
total of 17,673,868 shares of Common Stock of the total issued and outstanding
shares of Common Stock of the Company, which constitutes 82.80% of the issued
and outstanding shares of Common Stock of the Company. At the Effective Date,
and following delivery of this Schedule 14f and filing with the Commission, the
four proposed directors will become members of the board, and the Company's
board of directors will be composed of seven members. As a result of these
transactions, the Company has experienced an effective change in control. The
Company knows of no other arrangement or events, the happening of which will
result in a change in control.
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LEGAL PROCEEDINGS
No material legal proceedings, to which the Company is a party or to which
the property of the Company is subject, are currently pending. Also, the Company
is not aware of any legal proceedings in which any director, officer, any owner
of record or beneficially of five percent of any class of voting securities of
the Company, is a party adverse to the Company or any of its subsidiaries or has
a material interest adverse to the Company or any of its subsidiaries, except
the following:
DISPLAY GROUP, LLC vs AMERICAN CONSOLIDATED GROWTH CORPORATION
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This civil action involves ownership of a substantial portion of the issued
and outstanding Common Stock of ADTI. Plaintiff Display Group, LLC (a subsidiary
of the Company) filed a civil action dated July 19, 1996 against American
Consolidated Growth Corporation ("ACGC"; beneficial owner of 5.9% of the
Company's securities) and AGT Sports, Inc. in the Arapahoe County District
Court, Civil Action No. 96-CV1560, seeking ownership of approximately 1,400,000
shares of Common Stock of ADTI pursuant to a security interest owned by the
Plaintiff. That security interest, in turn, was acquired from the Resolution
Trust Corporation ("RTC") pursuant to a public sale.
Pursuant to an order of the District Court dated October 9, 1996, the
Common Stock of the Company which is the subject of this dispute was released to
Plaintiff Display Group, LLC. Pursuant to the Court's order, the Plaintiff is
entitled to possess, use and exercise voting rights of the Common Stock pending
final judgement on its claim for possession. However, Display Group may not
transfer, sell or otherwise assign the stock pending the outcome of the case.
Trial has been set in September, 1997.
In the event this civil action is successfully concluded in favor of
Display Group, the Company intends to cause the 1,400,000 shares of Common Stock
to be canceled and returned to the Company's treasury. However, there is no
assurance that Display Group will prevail at trial.
DISPLAY GROUP, LLC vs. CORPORATION PARTNERS, INC. AND JEFFREY S. ROBINSON
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Display Group is also plaintiff in a civil action commenced in the District
Court for the 140th Judicial District in Lubbock County, Texas, Case No.
96-557024, against Corporate Partners, Inc. and Jeffrey S. Robinson. This civil
action seeks judgment against Defendant Corporate Partners under a promissory
note dated September 19, 1990 (the "Note") and against Jeffrey Robinson under a
Guarantee and Confirmation of Guarantee of that Note. Display Group contends
that the Note was acquired from the RTC at the same time as the security
interest underlying its claims against ACGC.
In defense of this civil action, defendants have raised as an affirmative
defense and counterclaim an alleged agreement dated October 21, 1992 between
ACGC and the Company. According to the defendants, the Company was obligated to
relieve ACGC from liability on a debenture in the amount of $2,175,000 and
implicitly contend that this would have discharged defendants' liability to
Display Group on the Note and Guarantee. The counterclaim does not address how,
if at all, Display Group is obligated on the Agreement.
Display Group has filed a Motion for Summary Judgment in this action
seeking to expedite a decision in its favor prior to trial. This Motion is
currently pending before the Court. However, there is no assurance that Display
Group will prevail in this action, either on the Motion or at trial.
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DIRECTORS AND EXECUTIVE OFFICERS
As described above, in connection with the Exchange Agreement, the
following four individuals will become Incoming Directors, and Darrell D. Avey,
Vincent D. Bradshaw and John D. Kilgore will remain as Directors. The following
information relates to the Incoming Directors who will become Directors upon
filing and delivery of this Schedule 14f:
Incoming Directors: Age: Position:
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Bruce H. Etkin 46 Director
Keith A. Hancock 41 Director
Gene W. Schneider (1) 70 Director
Mark L. Schneider (1) 42 Director
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(1) Mark L. Schneider is the son of Gene W. Schneider.
Each of the Incoming and existing Directors will serve a term of office
which shall continue until the next annual meeting of shareholders and until his
successor has been duly elected and qualified.
The following individuals have been directors and officers of the Company
and will continue in their current positions. Mr. Avey has been a director and
officer since 1991. Mr. Kilgore and Mr. Bradshaw have been directors since May,
1997.
Continuing Directors
and Officers Age Position
-------------------- --- --------
Darrell D. Avey 41 Chairman of the Board,
President and Director
John D. Kilgore 44 Vice President and Director
Vincent D. Bradshaw 56 Director
FAMILY RELATIONSHIPS
Gene W. Schneider is the father of Mark L. Schneider. No other family
relationships exist between any of the officers and directors of the Company.
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BUSINESS EXPERIENCE
Darrell D. Avey
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Darrell D. Avey has been continuously affiliated with the Company since
joining it in September 1985, and has held numerous positions throughout his
tenure. In January, 1990, Mr. Avey was named Chairman of the Board of Directors
and currently holds that position in addition to President, where he is in
charge of creating new opportunities for the Company to exploit its fiber optics
technologies and overseeing production and assembly. Prior to his appointment as
Chairman, Mr. Avey was the production manager, supervising the Company's
assembly, quality control and machine shop facilities. Mr. Avey's other
positions with the Company have been as project scheduler and purchasing agent.
Vincent D. Bradshaw
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Vincent D. Bradshaw has been vice president of Online System Services,
Inc., a publicly traded company that provides Internet services, since June,
1996. In this capacity, Mr. Bradshaw develops and directs sales programs.
Previously, Mr. Bradshaw had been director of marketing for Source One
Management, Inc., from 1993 to 1996, where he developed and implemented
marketing programs for technical and professional services. From 1987 to 1993,
Mr. Bradshaw was a management consultant. Mr. Bradshaw has also been employed by
US West, from 1981 to 1986, as a vice president for sales and director of
government services, as well as division marketing manager for AT&T.
Bruce H. Etkin
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Bruce H. Etkin has been president and director of Etkin Equities, Inc., a
privately held real estate development corporation, since 1982. In this
capacity, Mr. Etkin has participated in the development and acquisition of over
three million square feet of commercial, industrial, and retail real estate
space in the Denver, Colorado metropolitan area.
Keith A. Hancock
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Keith A. Hancock has been president and chief executive officer of Reserve
Battery Cell, L.P., a privately held Colorado limited partnership, since 1993.
He also served as a consultant to the Company for marketing, corporate finance
and strategic planning from 1995 to July, 1997. Reserve Battery Cell developed,
manufactured and distributed reserve battery projects. Mr. Hancock is also
manager of Display Group, LLC, the managing general partner of Display Optics,
Ltd., and in this capacity oversaw financing for the Partnership. Prior to 1993,
Mr. Hancock was a managing director for HSA Associates, a high tech marketing
consulting and services firm.
John D. Kilgore
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Since May, 1996, John D. Kilgore has been vice president of sales of
Display Optics, Ltd., a privately held limited partnership presently wholly
owned by the Company. In this capacity, Mr. Kilgore has been responsible for
sales and marketing of the Company's video display products. Previously, Mr.
Kilgore was employed by Toshiba America Consumer Products, Inc. from 1994 to
1996, as manager of sales responsible for market development and sale of large
screen display products. From 1992 to 1994, Mr. Kilgore was employed by Philips
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Consumer Electronics Company as a regional sales specialist. Mr. Kilgore was
employed by the Company from 1984 to 1990 as vice president of marketing and was
responsible for marketing and investor relations during the Company's initial
public offering.
Gene W. Schneider
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Since 1989, Gene W. Schneider has served as chairman and/or chief executive
officer of United International Holdings, Inc. ("UIH"), a NASDAQ publicly traded
company that provides multichannel television services in Europe, Asia/Pacific,
and South America. Prior to that, Mr. Schneider was a director and officer of
United Cable Television Corporation, a NYSE publicly traded company, and its
predecessors since its inception in 1952. United Cable merged with several
entities including United Artists Communications to form United Artists
Entertainment Company, a publicly traded company, where Mr. Schneider was
chairman until 1991, when that company merged with Tele-Communications, Inc. Mr.
Schneider is currently on the board of five private corporations in addition to
being on the board of UIH.
Mark L. Schneider
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Mark L. Schneider is currently executive vice president for UIH where he is
responsible for international investments, a position he has occupied since
December, 1996. He has also been a director of UIH since its inception. From
1989 to December, 1996, Mr. Schneider served as president or a consultant to
UIH. Mr. Schneider is also currently president and chief executive officer of
United Philips Communications, a European private corporation which provides
enhanced video, data communication and voice telephoning services. Prior to
1989, Mr. Schneider was a vice president of corporate development of United
Cable Television Corporation in international and domestic acquisitions. Mr.
Schneider also has held numerous positions as legislative counsel in Washington
D.C.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the fiscal years ended June 30, 1996 and 1995, the Investors
advanced money to Display Optics, Ltd., a Colorado limited partnership in which
the Company acted as the General Partner and which is currently wholly owned by
the Company. Display Group, LLC, a Colorado limited liability company, became
the Managing General Partner of Display Optics, Ltd., and together with certain
of its members, have advanced an aggregate of $963,425 and $299,918 to Display
Optics, Ltd. as of the years ended June 30, 1996 and 1995 respectively. During
the current fiscal year and through the date of the Exchange, the Investors have
advanced or guaranteed an additional $929,142, bringing the total advances
through the date of the Exchange to $1,892,567. Proceeds from those loans were
utilized by Display Optics to continue research, development, manufacture of the
fiber screen products.
In addition to the advances made by the Investors to Display Group and
Display Optics, certain of these Investors also made equity investments in each
of those entities, together with an investment directly in the Company. These
Investors purchased six Class A Units of Display Optics for a purchase price of
$50,000 during the fiscal year ended June 30, 1995. Concurrently, certain
Investors purchased 2,991,474 shares of Series B Preferred Stock of the Company
for a purchase price of $350,000. Finally, the Investors made an equity
investment in Display Group of $10,000. All of the advances previously made to
Display Group, the equity investment in Display Optics and Display Group and the
Series B Preferred Stock were exchanged for Common Stock and Series C Preferred
Stock of the Company in the Exchange.
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One officer of the Company, Darrell Avey and one former officer, Michael
Nixon, were paid salary by Display Optics for services rendered in connection
with administrative, research and development activities during the years ended
1996 and 1995. During those years the two individuals were paid total
compensation of $160,000, or $80,000 each and $130,000 or $65,000 each,
respectively.
In connection with a dispute regarding rights to certain technology, the
Company commenced a civil action against Nixon, a former officer and director of
the Company and certain other entities. In connection with the settlement of
that litigation, Display Group has made certain payments to or on behalf of Mr.
Nixon and certain other defendants in the amount of $41,000 in exchange for
patent assignments, return of Mr. Nixon's Company Shares and other
consideration.
During the fiscal years ended June 30, 1996 and 1995, Display Optics paid
or accrued certain administrative fees to individuals or entities listed as
principal shareholders of the Company. During the year ended June 30, 1996,
Display Optics paid $17,500 to Keith Hancock for management services rendered to
that entity. During the fiscal years ended June 30, 1996 and 1995, the Company
incurred $42,500 and $33,000, respectively, in management fees to Reserve
Battery Cell, L.P., a Colorado limited partnership. Mr. Hancock is a proposed
director and beneficial shareholder of the Company and is the President and
Chief Executive Officer of Reserve Battery. Gene W. Schneider is a proposed
director and beneficial shareholder of the Company and he and G. Schneider
Holdings, Co. are limited partners of Reserve Battery.
During the years ended June 30, 1996 and 1995, Display Optics also incurred
rent and other administrative expenses to two entities in which certain
beneficial shareholders of the Company are members or principal shareholders.
During the year ended June 30, 1996, Display Optics paid approximately $19,900
and $7,600 to Schneider Investments, LLC, with which Gene and Mark Schneider are
affiliated, and Wild West Development, LLC, with which Gene W. Schneider and G.
Schneider Holdings, Co. are affiliated.
Management of the Company is of the opinion that the terms and conditions
of the foregoing transactions are no less favorable than could be obtained from
unaffiliated third parties.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The following sets forth each director, officer or beneficial owner of more
than ten percent of any class of equity securities of the Company registered
pursuant to Section 12 of the Exchange Act that failed to file on a timely
basis, Forms 3, 4 or 5 as required by Section 16(a) during the most recent
fiscal year or prior years.
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The numbers of late Form 3, Form 4 and Form 5 reports, and the late Form 4
transactions reported are as follows:
Name of
Reporting Person Late Form 3 Late Form 4 Late Form 5 Transactions
- ----------------- ----------- ----------- ----------- ------------
Gene Schneider/
GS Holdings 1 7 1 12
Mark Schneider 1 7 1 9
Keith Hancock 1 1 1
Bruce Etkin 1 6 1 8
BOARD COMMITTEES AND OTHER BOARD INFORMATION
The Company does not currently have an audit, nominating or compensation
committee. Instead, the Board itself performs such functions.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Compensation
- ------------
The following table sets forth the compensation paid, or to be paid, by the
Company for the services rendered during the fiscal year ended June 30, 1996 to
the Chief Executive Officer of the Company, the only "named executive officer."
SUMMARY COMPENSATION
Name Year Salary Bonus Compensation Annual Total
- ---- ---- ------ ----- ------------ ------------
Darrell D. Avey 1996 (1) $ 0 $ 0 $ 0 $ 0
Chairman, and 1995 (2) 0 0 0 0
President 1994 0 0 (3) 24,234 24,234
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(1) Mr. Avey was paid $80,000 in salary by Display Optics, Ltd.
(2) Mr. Avey was paid $65,000 in salary by Display Optics, Ltd.
(3) Mr. Avey was issued 201,950 shares as compensation in lieu of cash
which was valued at the time at approximately $0.12 per share.
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There were no stock options granted, exercised or held by any executive officer
during the past fiscal year.
Compensation of Directors
- -------------------------
No fees are currently paid to directors for attendance at meetings of the
Board of Directors. However, members are reimbursed for expenses to attend the
meetings.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ADVANCE DISPLAY TECHNOLOGIES, INC.
By: /s/ Darrell D. Avey
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Darrell D. Avey
Chairman of the Board and Secretary
Dated: September 5, 1997
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