SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the Securities Exchange
Act of 1934
Check the appropriate box:
[X] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
[ ] Definitive Information Statement
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Biogan International, Inc.
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Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
1)Title of each class of securities to which transaction applies: Not Applicable
2)Aggregate number of securities to which transaction applies: Not Applicable
3)Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined): Not Applicable
4)Proposed maximum aggregate value of transaction: Not Applicable
5)Total fee paid: Not Applicable
[ ] Fee paid previously with preliminary materials. Not Applicable
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1)Amount Previously Paid: Not Applicable
2)Form, Schedule or Registration Statement No.: Not Applicable
3)Filing Party: Not Applicable
4)Date Filed: Not Applicable
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INFORMATION STATEMENT
Concerning the Distribution of 4,266,797 shares of R-Tec Holding, Inc., common
stock to shareholders who owned Biogan International, Inc. common stock on
September 15,1999
By Biogan International, Inc.
This Information Statement is being furnished by Biogan International, Inc. (the
"Company") in connection with the distribution of a special stock dividend of
one share of R-Tec Holding, Inc. common stock for each twenty shares of Biogan
common stock (with fractional shares being "rounded-up), held as of the close of
regular trading on September 15, 1999 (the "Record Date"). The special stock
dividend was distributed to and is being held in escrow by American Securities
Transfer and Trust, Inc, the transfer agent until such time as the Form 10SB
registration of R-Tec Holding, Inc. common stock with the Securities and
Exchange Commission is effective, or until June 30, 2000, whichever is earlier.
Management of R-Tec filed Form 10SB with the SEC on April 25, 2000, and the
effective date is normally 60 days after filing. The receipt of the stock
dividend should not result in any taxable gain or loss to stockholders for
federal income tax purposes.
We Are Not Asking You for a Proxy and You are Requested Not To Send Us a Proxy.
No Vote is to be Made on any Matter.
There is not going to be a shareholders meeting and no matter is to be voted
upon. This Information Statement is to report to you actions taken by the board
of directors and to inform you of current developments.
R-Tec Holding, Inc. (the "Company")
On August 18, 1999, the Board of Directors of Biogan International, Inc.
organized R-Tec Holding, Inc., an Idaho corporation, (the "Company") as a wholly
owned subsidiary, and transferred Biogan's 50% stock ownership of IntorCorp,
Inc. in exchange for 4,266,797 shares of Common Stock of the Company.
On September 27, 1999, Biogan distributed as a stock dividend its 4,266,797
shares of the Company stock (all of its shares), proportionately to Biogan's
shareholders of record one share of Company for each 20 shares of Biogan stock
outstanding. As a result of the special stock dividend the Company became
independent of Biogan, the shareholders retained the same proportionate interest
in the IntorCorp Motor, and enabled IntorCorp to develop the IntorCorp Motor
independently of Biogan.
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On November 3, 1999, the Company issued 4,266,797 shares of Common Stock (50%
ownership) in a private placement transaction, to Gary A. Clayton and Douglas G.
Hastings the two shareholder-owners of R-Tec Corporation, an engineering company
located in Meridian, Idaho, in exchange for 80% of the outstanding stock of
R-Tec Corporation. In addition, the Company contributed its stock of IntorCorp,
Inc. to R-Tec Corporation. On November 4, 1999, R-Tec Corporation redeemed the
remaining 20% of R-Tec Corporation stock from the two shareholder-owners for the
price of $100,000 paid with an interest bearing promissory note payable from
available earnings commencing in January of 2001. The net effect of the
transactions is that:
a Shareholders of the Company descended from Biogan own 50% of the
Company and the two shareholder-owners of R-Tec Corporation own 50%.
b. The Board of directors of the Company has five members, and for a
period of 5 years, the two shareholder-owners from R-Tec Corporation
will have the right (by virtue of a shareholder agreement with certain
shareholders of the Company) to elect 3 members of the board.
c. With the R-Tec Corporation redemption of the 20% outstanding stock
from the shareholder-owners the Company owns 100% of R-Tec
Corporation.
d. R-Tec Corporation owns 50% of the stock of IntorCorp, Inc. (owner of
the intellectual technology for the IntorCorp Motor), which will
enable the development of the Motor under the direction and management
of R-Tec Corporation.
The financial statements for the Company have been prepared according to
"reverse purchase" accounting by which R-Tec Corporation, the dominant business
entity, is considered the purchaser of R-Tec Holding, Inc. For a more complete
discussion of the accounting refer to the last paragraph on page 6 of the
Consolidated Financial Statements of R-Tec Holding, Inc. and R- Tec Corporation
December 1998 and 1999 included in Part F/S of this Form 10SB.
R-Tec Corporation management is familiar with the IntorCorp Motor by virtue of
engineering work performed on the Motor in 1997 when Biogan International had a
consulting engineering agreement with R-Tec Corporation to perform engineering
and development work on the Motor. R-Tec was paid at that time with cash and
Biogan International common stock for the consulting services. The consulting
services were discontinued approximately mid 1998 for lack of funds to continue
the project.
The Company is the holding company of and will be consolidated with R-Tec
Corporation for tax and reporting purposes. The Company at the present time has
no other business interests.
R-Tec Corporation, a subsidiary of the Company.
R-Tec Corporation was initially organized in 1995 as a small individually
operated company in a modified garage for the purpose of developing and
fabricating High-Tech custom manufacturing equipment, primarily for a single
customer. Most of the contracts during the first 18 months were for the
duplication of High-Tech manufacturing tools going overseas for Hewlett Packard.
Presently R-Tec Corporation, under contracts with various customers, develops,
engineers and
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fabricates High-Tech custom manufacturing equipment and parts to be incorporated
into customer owned and operated manufacturing equipment and manufactured
products. R-Tec Corporation expertise includes engineering, development of
controls, machine design and tooling, consulting services, prototype
development, tooling and manufacturing. Typical production includes: mechanical
fixtures; "mech-op stations" (devices for testing mechanical operations and
performance of equipment); "servo-writers" and "transfer stations"(devices that
write code instructions for reading disc drives in manufacturing stations);
"sub-assemblies" (an assembly of electrical components as a unit to be
integrated with other units to complete a device or product); "automatic robot
work stations" (a machine that automatically constructs part of a manufactured
product); and electronic testing devices. Essentially all of the products and
services incorporate one or more complete disciplines of mechanical, electrical,
software, machine visions (a vision camera that digitizes information for
testing purposes) and controls.
Developed technology currently includes CAD-based software (computer aided
design software), electro-mechanical devices, tool design, PC Board Layout
(printed circuit board layout technology from concept to manufactured product),
International CE-Marked products (a quality designation in China similar to "UL"
marked products in the US) Machine Vision, Specialty Tooling, Engineering
Design, Motion Control, Robotics, Software Development, PLC Programming
(programmable logic controller which is a low level computer for controlling
functions).
All of the revenues in 1999 were from custom engineering contracts with
customers. However, Management is currently exploring the manufacture of
standard products for generic application and has revenues of $1,982 as of
August 31, 2000.
Significant clients of R-Tec Corporation include Iomega Corporation, Hewlett
Packard, Pro- Precision Machining, Steelhead Metals, SCP Global Technologies,
System Integration (Division of Micron), Intel, TECHNIT Interconnection
Products, 3Com Corporation, Preco, Inc., Motorola, Micron Communications, Inc.,
Ford Microelectronics, Inc. and Anadigics.
Beginning approximately two and one-half years ago distribution of products and
services has primarily been made through Browand, LaMeire & Associates (B.L.&
A.) A Manufacturer's Representative firm who has sales representative agents in
the US, Europe and Asia. Currently B.L.&A. Has four representative firms in the
U.S. with twelve sales persons. Management is currently entering into the
European and Asian markets through B.L.&A. who has three European agents for
Germany, France and England, and five Asian agents for Singapore, Malaysia,
Taiwan and Japan.
R-Tec Corporation presently employs 10 full time employees and 5 part time
employees.
Certain functions of some projects are, when needed, contracted to R-Tec Machine
Tools, Inc., an Idaho corporation, in which Doug Hastings and Gary Clayton own a
combined 50% interest. R-Tec Machine Tools, Inc conducts business as a machine
shop in the same building as R-Tec Corporation (See "Certain Relationships and
Related Transactions "). However, some machine work is also contracted with
other machine shops depending on time of delivery constraints. R- Tec Machine
Tools, Inc. exclusively machines raw metal into custom parts on contract with
its customers, one of which is R-Tec Corporation. In comparison, R-Tec
Corporation makes
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manufacturing equipment, which sometimes needs machined metal parts which R-Tec
Machine Tools (or some other machine shop) will make. The two companies do not
compete for the same type of work, nor do they combine or share resources. There
is no common personnel, equipment, nor management. Building expenses are
allocated to the two occupants based on square footage occupied.
The custom-parts manufacturing industry is vast with many major competitors who
are larger and financially stronger than R-Tec Corporation, such as Wright
Industries, Technistar, and Acufab. Major companies such as Motorola and Micron
frequently have their own internal tooling development groups to develop their
own equipment requirements and who on occasion will "out source" their over-load
demands to companies like R-Tec Corporation. Management is not aware of any
information to estimate a market share of the industry, but is confident that
R-Tec Corporation has a very small share of the overall market. Management of
R-Tec Corporation primarily relies on it manufacturer's representative to sell
it products and services.
Materials for products, such as aluminum, bar stock, plate stock, wire and
plastics are provided by several subcontractors who bid to provide supplies
according contract specifications. To the best knowledge of Management the
required materials are of a generic nature with ample availability from several
sources, and therefore there is no dependence on a source of raw materials.
During 1999 R-Tec Corporation had contracts (in different stages of performance)
with approximately 43 customers (some had multiple contracts), four of which
customers provided in excess of 10% of annual revenues, i.e. 3COM Corporation,
Micron System Integration, Palm Computing, Inc., and Performance Design, Inc.,
for a combined total of 52.2% from the four. Management presently estimates that
2 customers with contracts in process will exceed 10% of estimated revenues in
2000, i.e. Manufacturers Services, SLC Operation, and Exatron. The nature of the
"custom parts" engineering business is such that customers producing material
revenues generally change from year to year and no dependence on any specific
customers develops. Management has a goal that approximately 10% of revenues in
2000 will be from sales of standard products to customers. As the business
expands and standard products sales increase, R-Tec corporation's dependence on
custom parts contract customers is expected to decrease.
Prior to 1999 R-Tec Corporation did not have any patents or other proprietary
property interests. In 1999 it had in application stage two patents, one of
which was issued for a "Test Probe Positioning Device, and one of which has been
re-applied. The patent issued is #6,064,195 dated May 16, 2000, and will expire
on May 15, 2017. The patent is for a self-aligning device for positioning a test
probe in a socket of a printed circuit board to be tested.
Neither the products nor services provided by R-Tec Corporation presently
require any governmental approval. Management is not currently aware of any
existing or probable governmental regulation on any part of the business.
During 1999 R-Tec Corporation did not expend material funds on research and
development. Any activity that may be considered as research and development has
been only in connection with the performance under a contract with a customer
for services and/or products the cost of which has been paid by the customer as
part of the contract terms.
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Item 2. Management's Discussion and Analysis or Plan of Operation
The consolidated financial statement of R-Tec Holding reflects revenues of
$1,026,847 in 1998 resulting in a net income of $40,345, and revenues of
$1,296,850 in 1999 with a net loss of $317,094. The net loss in 1999 was largely
the result of including in operations acquired in- process research and
development costs of $190,000 related to the IntorCorp acquisition, R-Tec
Corporation recorded signing bonuses of $50,000 for the executive officers,
$50,356 in new facility overhead (compared to $18,006 for 1998), and three
additional skilled employees. The new facilities, and additional employees, are
part of an investment effort by Management put on new product development to
generate revenues from sales of standard products in inventory.
With continued custom contract production and increased emphasis on standard
products, as well as additional marketing effort by the Manufacturer
Representative, Management is projecting revenues estimated at $2,000,000 for
calendar year 2000 and a projected net income in excess of $150,000. The
projection is based on the assumption that custom contract work will continue to
expand at approximately the same rate as for the past three years, and the
addition of standard product sales. The results of operations for the first
quarter of 2000 reflects revenues of $359,337 and an operating loss of $103,802
compared to revenues of $549,428 and an operating income of $42,161 for the
first quarter of 1999. The first quarter revenues and profits of 1999 were
disproportionate as demonstrated by the year end revenues and financial
statements. The first quarter of 2000 does not yet reflect the anticipated
revenues from contracts in process, and in addition reflects an extraordinary
loss in the buy back of a machine product for $50,000. Management anticipates
that the second quarter statement will continue with a less than proportionate
projected revenue statement, with revenues and profits at the projected level
for 2000 becoming evident in the 3rd and 4th quarters of the year.
To realize its goals for 2000, Management has organized the business into three
areas of focus:
a. The first area is custom automation, with a target of several
industries. R-Tec Corporation has excelled in this area of custom
solutions for its customers. Using 3Com as an example, R-Tec
Corporation designed and built approximately 24 automated functional
testers that tests the Palm V hand held organizer. These automated
testers test all of the functions without operator interaction. Other
custom automation include, pick-n-place stations, full robotic work
cells, Electrical/Maniacal test stations, table top testers, and full
automatic assembly lines. This business is based on contracts and has
somewhat of a cyclic model.
b. The second area of focus includes products R-Tec Corporation makes for
OEM and Resale. These products are sold to and are used by more than
one customer. Some examples of this type of product are the RS232
converter boxes that are used to translate communication levels.
Hewlett Packard and Jabil Circuit, Inc. as well as companies overseas
use them. Management is in the process of creating a web site to help
in the marketing of these products which, in Management's opinion,
will create more opportunities for product development.
3. The third area of focus is high-tech interconnect devices. R-Tec
Corporation presently has one of the very few sources for two
technologies, each of which
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gives an edge in the industry for high frequency component testing.
Management anticipates significant growth and a steady stream of
revenues as this area of the business is developed.
The liquidity of R-Tec Corporation has been presently satisfied with the
subscription of Series "A" Convertible Preferred stock in the amount of
$500,000, of which as of June 26, 2000, $393,650 has been received by the
Company, and available institutional loans in the amount of $100,000.
The $100,000 note payable to Clayton and Hastings for the redemption of the 20%
common stock is payable when funds are available from earnings.
Description of Property of R-Tec Corporation (Subsidiary)
R-Tec Corporation is a tenant in a single purpose industrial building located at
1471 E. Commercial Avenue, in Meridian, Idaho. The building is owned by H2C2 &
Associates, LLC, an Idaho limited liability company (owned by Mr. and Mrs.
Hastings and Mr. and Mrs. Clayton, shareholders of R-Tec Corporation) and leased
75% to R-Tec Corporation under a 5 year lease expiring November 30, 2004. The
other 25% of the building is leased to R-Tec Machine Tools, Inc., a machine shop
(owned 25% by Hastings and 25% by Claytons) see "Certain Relationships and
Related Transactions" at page 12. The building was constructed in 1998 according
to the applicable commercial building code requirements, on approximately 1.36
acres of land, and includes a parking area of 20 spaces.
R-Tec Corporation office space consists of approximately 1200 square feet, and
includes a reception area, conference room, and 6 individual offices. The
assembly area consists of approximately 1800 square feet and approximately 1500
square feet of warehouse area. The rent is at the rate of $2,950 per month,
subject to Cost of Living Index increases on an annual basis.
R-Tec Corporation owns the furniture and fixtures, office equipment, phone
system and all shop equipment free of any liens or obligations, except that it
serves as collateral for the line-of-credit when funds are drawn.
R-Tec Holding, Inc. does not have any separate corporate offices, but uses, when
required, the offices of R-Tec Corporation for its purposes, without the payment
of any rent or other obligation, until such time as independent offices may be
required.
Except for the described leasehold interest in the occupied premises by R-Tec
Corporation, neither R-Tec Holding, Inc., R-Tec Corporation nor IntorCorp, Inc.
has any investments in real estate, nor interests in real estate, real estate
mortgages, nor securities of or interests in persons primarily engaged in real
estate, activities.
IntorCorp, Inc. is an Idaho corporation owned 50% by R-Tec Corporation and 50%
by C.T. Corporation an electrical engineering company. The outstanding common
stock of IntorCorp was issued originally to C.T. Corporation and to Biogan
International in exchange for their respective interest in the intellectual
technology for the IntorCorp Motor. By virtue of the transactions described in
Item 1 hereof, the interest of Biogan International has descended to R- Tec
Corporation. The board of directors of IntorCorp is comprised of four members,
two from
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each of C.T. Corporation and two (Gary A. Clayton and Douglas G. Hastings) from
R-Tec Corporation, with Mr. Douglas G. Hastings as President. Negotiations are
presently in process for a consulting agreement between IntorCorp and C.T.
Corporation. IntorCorp has never had assets other than the intellectual
technology for the IntorCorp Motor, nor has it conducted any business. It is
currently in the development stage. Presently Management of IntorCorp is
developing the business plan to raise development funds, interviewing candidates
for managing the project of the development and marketing of the IntorCorp
Motor.
Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth information regarding the shares of Common Stock
of Company and Preferred Stock that is convertible into common stock, that is
presently held beneficially by (i) each director of the Company, (ii) all
officers and directors as a group, and (iii) each person known by the Company to
beneficially own 5% or more of the outstanding shares of the Company's common
stock. Share ownership and subscriptions are reflected as of June 26, 2000.
<TABLE>
<CAPTION>
Amount & Nature
Name and Address of Benef. Owner Percent
of Beneficial Owner Common -- Preferred Common Preferred
------------------- ------------------- -----------------
<S> <C> <C> <C> <C>
Gary A. Clayton (1)(3)(4)(5) 2,133,399 -0- 25% -0-
1471 E. Commercial Ave
Meridian, Idaho 83642
Douglas G. Hastings (1)(3)(4)(5) 2,133,398 -0- 25% -0-
1471 E. Commercial Ave
Meridian, Idaho 83642
Rulon L. Tolman (1)(3)(4) 490,417 531,638 5.75% 24.92%
7213 Potomac Drive
Boise, Idaho 83704
Robert C. Montgomery (1)(3) 116,900 106,669 1.37% 5.00%.
2160 S. Twin Rapid Way
Boise, Idaho 83709
George W. Wadsworth (1)(3)(7) 138,334 153,177 1.62% 7.18%
214 S. Cole Road
Boise, Idaho 83709
John R. Hansen, Jr. (1)(3) 125,000 135,469 1.46% 6.35%
1595 S. Lakemoor Way
Eagle, Idaho 83616
L. William Glazier (3)(7) 525,000 -0- 6.15% -0-%
805 W. Cross Street
Woodland Hills, CA 95695
Ronald J. Tolman (2) 561,164 (2) 599,479 6.58% 28.10%
2326 Bruins Avenue
Boise, Idaho 83704
All Officers and Directors
as a Group (6 persons) 5,137,448 926,953 60.20% 43.45%
Total Shares Issued and Outstanding 8,533,594 2,133,379 (6)(7)
</TABLE>
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(1) These individuals are the directors and officers of the Company who
are shareholders.
(2) Mr. Ronald J. Tolman owns 377,920 shares of Common Stock and 409,613
shares of Preferred Stock in his own name, and 183,244 shares of
Common Stock and 189,659 shares of Preferred Stock are owned of record
in the name of his wife, Jacque L. Tolman.
(3) These shareholders, along with Keith Cline (56,500 shares of Common
Stock (00.662%), with a combined share ownership and voting percentage
of 73.595% have entered into a voting agreement under which Mssrs.
Clayton and Hastings will have the right to nominate 3 of the 5
directors, and the other participants will have the right to nominate
2 of the 5 directors, and the combined ownership would then be voted
as a block for the nominated directors.
(4) These individuals are the present directors of R-Tec Corporation, Inc.
with Hastings as president and Clayton as vice-president and
secretary.
(5) These individuals are two of the four directors of IntorCorp, Inc.
with Hastings as president.
(6) If converted to Common Stock at the present conversion ratio, the
Preferred Stock would represent 20% of the after-conversion issued and
outstanding common stock.
(7) L. William Glazier subscribed to 452,493 shares of Preferred Stock
that has not yet been paid.
Preferred Stock
The Company has amended its Articles of Incorporation to create 2,133,399 shares
of Series "A" Convertible Preferred stock, at a no par value $0.23437 per share,
all of which was subscribed by eight individuals seven of whom are accounted in
the above "Security Ownership of Certain Beneficial Owners and Management". The
Description of the rights of the Preferred Stock is set forth in Item 8,
Description of Securities.
As of June 26, 2000, the Preferred Stock has been issued as follows:
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<TABLE>
<CAPTION>
Date # Shares Cash Subscriber
---- -------- ---- ----------
<S> <C> <C> <C>
1/24/00 135,469 $ 31,750 John R. Hansen, Jr.
1/27/00 67,842 $ 15,900 George W. Wadsworth*
1/27/00 189,871 $ 44,500 Jacque L. Tolman
2/3/00 67,841 $ 15,900 John Smith*
2/25/00 409,609 $ 96,000 Ronald J. Tolman
2/25/00 531,638 $ 124,600 Rulon L. Tolman
4/4/00 106,669 $ 25,000 Robert C. Montgomery
6/26/00 85,335 $ 20,000 George W. Wadsworth*
6/26/00 85,335 $ 20,000 John Smith*
--------- ---------
Totals 1,508,939 $ 353,650
</TABLE>
* Partners in Wadsworth and Smith, Chartered, CPA firm.
Directors, Executive Officers, Promoters and Control Persons of the Company.
<TABLE>
<CAPTION>
Name Age Position Date Appointed
----- --- -------- --------------
<S> <C> <C> <C>
Douglas G. Hastings 41 Director, President Nov. 3, 99
Gary A. Clayton 41 Director, V-P Engineering Nov. 3, 99
Rulon L. Tolman 49 Director, VP Finance Original
John R. Hansen, Jr. 70 Director Original
David R. Stewart 46 Director Nov. 3, 99
Robert C. Montgomery 47 Secretary Nov. 3, 99
George W. Wadsworth 54 Treasurer Nov. 3, 99
</TABLE>
The directors of the Company are elected to serve until the next annual
shareholder's meeting or until their respective successors are elected and
qualified. Officers hold office until the meeting of the Board of Directors
after the next annual shareholders's meeting or until removal by the Board of
Directors. There are no arrangements or understandings among the Officers and
Directors pursuant to which any of them were elected as Officers and Directors.
Family Relationships: Douglas G. Hastings is married to Rena Clayton Hastings, a
sister of Gary A. Clayton. Rulon L. Tolman and Ronald J. Tolman are cousins.
Business Experience of Officers and Directors:
Douglas G. Hastings, 1471 E. Commercial Ave, Meridian, Idaho 83642. Mr.
Hastings received a Micro M.B.A. in May of 1999. Mr. Hastings received special
training in Robotics, Machine Vision and software controls. Prior to starting
R-Tec Corporation in 1995, Mr. Hastings was employed by Hewlett Packard from
1981 to 1995 specializing in electrical and mechanical tool design and controls.
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Gary A. Clayton, 1471 E. Commercial Ave, Meridian, Idaho 83642. Mr. Clayton
received a BS degree in Mechanical Engineering from BYU in 1983. He received
training in Robotics and Industrial Controls in 1987 (with honors), and a
Masters Degree in Mechanical Engineering in 1993 from the University of Utah.
Prior to 1995 (when joined R-Tec Corporation), Mr. Clayton was the Engineering
Manager for Lynn Industries of Boise, Idaho for a year, and prior thereto was
Project Engineer at Thiokol Corporation in Brigham City, Utah, for design,
implementation and project management of HVAC system, process equipment, CNC
type machine tools, and plant automation.
Rulon L. Tolman, was appointed Director August , and is currently a Vice
President of the Company. Mr. Tolman has been with Mutual of New York since 1978
and has been Account Executive, Field Underwriter and Sales Manager. Previously
Mr. Tolman was a Production Supervisor with Boise Cascade Container Division
managing 80 employees.
John R. Hansen, Jr., 12035 Ginger Creek Dr., Boise, Id. 83713. Mr. Hansen
received his J.D. degree from UCLA in 1956, and has practiced law from 1957 to
1968 in California and from 1968 to the present in Idaho, primarily in
securities and business practice. Mr. Hansen is presently outside counsel to the
Company.
David R. Stewart, 9486 Fairview Ave, Boise, Idaho. Mr. Stewart is a
Certified Public Accountant with Stewart, Harding & Co with 20 years experience,
and as President of the company for the past 6 years. He obtained his BS degree
in Accounting in 1979 from the University of Utah.
Robert C. Montgomery, is presently Secretary of the Company. He received
his JD Degree from the University of Idaho in 1974, and is a member of the bar
in Idaho, Oregon and Washington. He was a former adjunct professor of Business
Law and Ethics at Boise State University, and has practiced law in Idaho since
1974.
George W. Wadsworth has been a partner in the accounting firm of Wadsworth
and Smith, Chartered, for the past 23 years. He is the treasurer and consulting
accountant for the Company.
Executive Compensation.
R-Tec Corporation paid executive compensation for the years ended December 31,
1998 and 1999 to the following, plus an employment agreement signing bonus of
$25,000 to each in the calendar year 1999:
Douglas G. Hastings, President. $53,175 and 78,912 respectively.
Gary A. Clayton, Vice President. $56,100 and 78,912 respectively.
On December 1, 1999, R-Tec entered into five year employment agreements with
Douglas G. Hastings to be the CEO and President of R-Tec, and with Gary A.
Clayton to be Vice President of Engineering, each with an annual salary of
$81,120 with a bonus of $25,000 to be paid during the first year, provided
certain goals are attained. In addition, each of the employees will receive the
standard benefits package for employees, including medical, sick leave and
vacation time. The above employees each have a company automobile.
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There is no agreement for the payment of any salary or compensation at this time
for the directors of R-Tec Corporation, or for the executive officers or
directors of the Company. However, the Company anticipates that any out of
pocket expenses of directors will be paid, and that directors who are not
employed by either the Company or R-Tec Corporation will receive compensation
for attendance and other duties performed as directors.
Certain Relationships and Related Transactions.
R-Tec Corporation currently leases 75% of the building it presently occupies at
1471 E. Commercial Ave, Meridian, Idaho 83642 from H2C2 & Associates, LLC, an
Idaho limited liability company owned by Mr. and Mrs. Hastings and Mr. and Mrs.
Clayton under a five year lease ending November 30, 2004, with an option to
extend the lease for an additional five years. The rental rate is $2,950 per
month subject to annual Cost of Living Index increases.
The other 25% of the building is presently leased by R-Tec Machine Tools, an
Idaho "S" corporation, which is owned 25% by each of Mr. Hastings and 25% by Mr.
Clayton. R-Tec frequently contracts machine work to R-Tec Machine Tools at
competitive prices, as well as contract work to other machine shops, the
selection of which is based on competitive pricing as well as speed of work
completion. R-Tec Machine Tools, also contracts work with other manufacturers.
Purchases from Machine Tool for 1999 and 1998 were $188,643 and $77,680,
respectively. During 1998, R-Tec Corporation purchased equipment which was
financed for 100% of the purchase price. The equipment was leased to Machine
Tool and the lease payments received in 1999 and 1998 were $20,580 and $33,535,
respectively. In 1999, Machine Tool acquired the equipment from R-Tec
Corporation by assuming the underlying debt of $138,675 at the time of transfer.
Description of Securities.
The Company presently has two classes of capital stock authorized consisting of
30,000,000 shares of voting Common stock, without par value, and 5,000,000
shares of Preferred Stock, of which 2,133,399 shares have been designated Series
"A" Convertible Preferred shares, as hereinafter described, and with authority
vested in the board of directors to prescribe the classes, series, and the
number of each class or series of the remaining Preferred Stock, and the voting
powers, designations, preferences, limitations, restrictions and relative rights
of each class or series of Preferred Stock as authorized in ss.30-1-602, Idaho
Code.
As of the date of this registration there are issued and outstanding 8,533,594
shares of Common Stock, and, either issued or subscribed, 2,133,399 shares of
Series "A" Convertible Preferred stock.
A. Common stock:
The holders of the Company's Common Stock are entitled to one vote per share on
each matter submitted to vote at any meeting of shareholders. The shares of
Common Stock do not have cumulative voting rights in the election of Directors.
Shareholders of the Company have no pre-emptive rights to acquire additional
shares of Common Stock or other securities. The Common Stock is not subject to
redemption rights and has no subscription or conversions rights. In the event of
liquidation of the Company, the share
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of Common Stock are entitled to share equally in corporate assets after
satisfaction of all liabilities and after distributions to the preferred stock.
All shares of the Common Stock now outstanding are fully paid for and
non-assessable.
Dividends:
Holders of Common Stock are entitled to receive such dividends as the Board of
Directors may from time to time declare out of funds legally available for the
payment of dividends. The Company has never paid a dividend, and the present
focus of Management is for growth and expansion of its business through the
reinvestment of profits, if any, and does not anticipate that it will pay
dividends in the foreseeable future.
Holders of Common Stock:
The number of holders of record of the Company's Common Stock is approximately
776 as reported by the Company's transfer agent. The Common Stock of all
holders, except for two (Hastings and Clayton), is currently held in escrow by
the transfer agent until either the registration of the Common Stock is
effective, or until June 30, 2000, whichever is earlier.
B. Series "A" Convertible Preferred stock:
Voting: Series "A" Convertible Preferred shareholders vote at shareholder
meetings as if they had converted their stock, provided, if the
Company defaulted in its obligation to redeem the stock for two
redemption dates, then the Series "A" Convertible Preferred
shareholders, as a class, have the right to elect the majority of
the directors of the Company.
Dividends: The Series "A" Convertible Preferred Stock is entitled to an
annual income dividend of $0.0222 per share (9%), cumulative if
not paid, but does not bear interest. No dividends can be paid on
Common Stock unless all dividends are paid on Preferred Stock. If
the Corporation pays more than the equivalent rate on the Common
Stock in any year, then Series "A" Convertible Preferred
shareholders participate with the Common Stock proportionately
for any additional dividends.
Liquidation: Series "A" Convertible Preferred Stock get first preference to
receive their par value back on liquidation. Then assets are
distributed to Common Stock until they get an equivalent amount
per share. If any assets are left, the Preferred and Common
shares participate proportionately.
Conversion: Series "A" Convertible Preferred shares convert at their no par
value, share for share, for Common Stock, provided, that the
conversion price is subject to adjustment on a full ratchet basis
for any dilutionary distributions or recapitalization. Preferred
shares may be converted up to 5 days before any "redemption
date", before any public offering, and any time after three
years. They will automatically convert to Common Stock (i) on a
vote of 2/3 of the Preferred Stock; (ii) on the closing of a firm
commitment of public offering netting to the Corporation $1M or
more at a price of $5.00 or more per share.
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Redemption: At the option of the Series "A" Convertible Preferred Stock
holder, starting in January of 2006, the Preferred Stock is to be
redeemed 1/3 each year for three years.
There are currently nine shareholders who have either subscribed or have paid
for the Preferred Stock. Reference is made to the attached exhibit "Preferred
Stock Amendment to the Articles of Incorporation for a more detailed description
of the Preferred Stock.
Certain Relationships and Related Transactions
R-Tec Corporation currently leases 75% of the building it presently
occupies at 1471 E. Commercial Ave, Meridian, Idaho 83642 from H2C2 &
Associates, LLC, an Idaho limited liability company owned by Mr. and Mrs.
Hastings and Mr. and Mrs. Clayton under a five year lease ending November 30,
2004, with an option to extend the lease for an additional five years. The
rental rate is $2,950 per month subject to annual Cost of Living Index
increases.
In addition, the other 25% of the building is presently leased by R-Tec
Machine Tools, an Idaho "S" corporation, which is owned 25% by each of Mr.
Hastings and 25% by Mr. Clayton. R-Tec frequently contracts machine work to
R-Tec Machine Tools at competitive prices, as well as contract work to other
machine shops, the selection of which is based on competitive pricing as well as
speed of work completion.. R-Tec Machine Tools, also contracts work with other
manufacturers.
The Company has machine tooling performed by R-Tec Machine Tool, Inc. which
is owned 25% each by Douglas Hastings and Gary Clayton. Purchases from Machine
Tool for 1999 and 1998 were $188,643 and $77,680, respectively. During 1998,
R-Tec Corporation purchased equipment which was financed for 100% of the
purchase price. The equipment was leased to Machine Tool and the lease payments
received in 1999 and 1998 were $20,580 and $33,535, respectively. In 1999,
Machine Tool acquired the equipment from the Company by assuming the underlying
debt of $138,675 at the time of transfer.
Fiscal Year End:
The Company's fiscal year is December 31.
Transfer Agent:
The Company's transfer agent is American Securities Transfer & Trust, Inc.,
12039 West Alameda Parkway, Lakewood, CO 80228, phone (303) 986-5400 and Fax:
(303) 986-2444. Reports to Shareholders:
The Company intends to furnish its shareholders with annual reports
containing audited financial statements as soon as practicable at the end of
each fiscal year. In addition, the Company may, in its discretion, distribute
quarterly reports containing unaudited financial statements for each of the
first three quarters of each fiscal year.
Market Price of and Dividends on the Registrant's Common Equity and Other
Shareholder Matters.
There presently is no market for either the Common Stock or Preferred Stock.
Management does
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not anticipate that there will be any dividends payable on the common stock for
the forseeable future because all profits, if any, will be used for expansion.
Legal Proceedings.
There are no legal proceedings presently existing or threatened against either
the Company or any subsidiary.
Changes in and Disagreements with Accountants.
The principal accountant for the Company is Wadsworth and Smith, Chartered,
Certified Public Accountants. The auditor for the Company is Balukoff Lindstrom
& Co., PA. There have been no changes nor disagreements with accountants.
Financial Information
Included herewith is the audited consolidated statement of R-Tec Holding, Inc.
and Subsidiaries as of December 31, 1999 and 1998, and the reviewed consolidated
statements for March 31, 2000 and 1999.
Costs
The cost of mailing this Information Statement has been or will be borne by
the Company. In addition to solicitation by mail, arrangements may be made with
brokerage houses and other custodians, nominees and fiduciaries to send this
Information Statement to their principals, and the Company may reimburse them
for the costs thereof.
Biogan International, Inc.
By _______/s/_________________
Robert C. Montgomery, Secretary
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