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SCHEDULE 13E-3
(RULE 13e-100)
Transaction Statement Pursuant to Section 13(e) of the Securities
Exchange Act of 1934 and Rule 13e-3 Thereunder
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
Rule 13e-3 Transaction Statement
(Pursuant to Section 13(e) of the Securities Act of 1934)
U.S. DRUG TESTING, INC.
(Name of Issuer)
U.S. DRUG TESTING, INC.
(Name of Person(s) Filing Statement)
COMMON STOCK, $.001 PAR VALUE
(Title of Class of Securities)
3821 0610
(CUSIP Number of Class of Securities)
ROBERT STUTMAN
U.S. DRUG TESTING, INC.
10410 Trademark Street
Rancho Cucamonga, California 91730
(909) 466-8378
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of Person(s) Filing Statement)
This statement is filed in connection with (check the appropriate
box):
a. [ ] The filing of solicitation materials or an
information statement subject to Regulation 14A, Regulation 14C or Rule
13e-3(c) under the Securities Exchange Act of 1934.
b. [X] The filing of a registration statement under the
Securities Act of 1933.
c. [ ] A tender offer.
d. [ ] None of the above.
Check the following box if the soliciting materials or information
statement referred to in checking box (a) are preliminary copies: [ ]
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Calculation of Filing Fee
<TABLE>
<CAPTION>
Transaction
Valuation* Amount of Filing Fee
<S> <C>
$11,266,101 $3,884.00
</TABLE>
* The fee was calculated on the basis of an assumed value of
$2.00 (the closing sales price on August 7, 1996) assigned to
a share of the Common Stock of U.S. Drug Testing, Inc. to be
issued in the proposed transaction and it was assumed that an
aggregate of 4,519,988 shares would be issued to the Issuer's
minority stockholders for their 1,721,900 shares and that
393,750 shares would be issued upon the exercise of warrants
at an exercise price of $2.86 per share.
[X] Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting
fee was previously paid. Identify the previous filing by
registration statement number, or the form or schedule and the
date of its filing.
Amount Previously Paid: $3,884.00
Form or Registration No.: Registration Statement on Form S-4
File No. 333-3923
Filing Party: U.S. Alcohol Testing of America, Inc.
Date Filed: May 6, 1996
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CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Schedule 13E-3 Registration Statement
Item Number and Caption Caption
----------------------- ----------------------
<S> <C> <C>
1. Issuer and Class of Security Market Data-U.S. Drug Market
Subject to the Transaction Information
2. Identity and Background Summary-Background of
Companies; Business of the
Company-General; USAT
Management-Business History
3. Past Contacts, Transactions Material Contacts of USAT With
or Negotiations U.S. Drug
4. Terms of the Transaction Terms of the Transaction;
The Merger and Related Matters
5. Plans or Proposals of the Terms of the Transaction; The
Issuer or Affiliate Merger and Related Matters
6. Source and Amounts of Funds The Merger and Related
or Other Consideration Matters-Fees and Expenses
7. Purposes, Alternatives, Reasons for the Merger and
Reasons and Effects Approval by the USAT Board
of Directors and Certain Tax
Consequences under the caption
"The Merger and Related Matters";
Terms of the Transaction-
Special Payment
8. Fairness of the Transaction Reasons for the Merger and Approval
and Fairness Opinion under the caption
"The Merger and Related Matters"; Terms
of the Transaction-The Consent Procedure-
Statutory Basis
9. Reports, Opinions, Appraisals The Merger and Related
and Certain Negotiations Matters-Fairness Opinion
10. Interest in the Common Stock U.S. Drug Principal
of the Issuer Stockholders
11. Contracts, Arrangements or The Merger and Related
Understandings with Respect Matters-Terms of the Merger
to the Common Stock Agreement
12. Present Intention and Terms of the Transaction-
Recommendation of Certain Consent Procedure-
Persons With Regard to the Miscellaneous
Transaction
</TABLE>
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CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Schedule 13E-3 Registration Statement
Item Number and Caption Caption
----------------------- ----------------------
<S> <C> <C>
13. Other Provisions of the Terms of the Transaction-
Transaction The Consent Procedure; The
Consent Procedure-Rights of
Dissenting U.S. Drug Stockholders
14. Financial Information U.S. Drug's Financial Statements;
Summary Historical and Proforma
Combined Financial Data; U.S. Drug's
Selected Financial Data
15. Persons and Assets Employed, The Merger and Related
Retained or Utilized Matters-Fees and Expenses;
Terms of the Transaction-Miscellaneous
16. Additional Information Not Applicable
17. Material to be Filed as Appendix A to Consent
Exhibits Solicitation Statement/
Prospectus
</TABLE>
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ITEM 1. ISSUER AND CLASS OF SECURITY SUBJECT TO THE TRANSACTION.
(a) This Rule 13e-3 transaction (the "Merger") relates to the common
stock, $.001 par value (the "U.S. Drug Common Stock"), of U.S. Drug Testing,
Inc. ("U.S. Drug"), which has its principal office at 10410 Trademark Street,
Rancho Cucamonga, California 91730.
(b) As of July 31, 1996, there were 5,221,900 shares of the U.S. Drug
Common Stock outstanding, of which 1,721,900 shares were held by stockholders
(the "U.S. Drug Minority Stockholders") other than U.S. Alcohol Testing of
America, Inc. ("USAT") and, as of July 22, 1996, there were 77 holders of
record of the U.S. Drug Common Stock (including USAT).
(c) USAT has filed a Registration Statement on Form S-4, Registration
No. 333-3923 (the "Registration Statement"), under the Securities Act of 1933,
as amended (the "Securities Act"), relating to this Rule 13e-3 transaction.
Information as to the market and the market prices for the U.S. Drug Common
Stock may be found in the section "Market Data" under the caption "U.S. Drug
Market Information" in the Consent Solicitation Statement/Prospectus (the
"Prospectus") constituting Part I of the Registration Statement, which
information is incorporated herein by this reference.
(d) U.S. Drug has not declared any dividends on the U.S. Drug Common
Stock to date and, in view of the continuing losses, the Board of Directors of
U.S. Drug has stated that the company has no current intention to pay any such
dividends. U.S. Drug is not aware of any restrictions in any agreement or
security which restricts U.S. Drug's present or future ability to pay
dividends.
(e) Pursuant to a registration statement under the Securities Act
which became effective on October 5, 1993, U.S. Drug sold 1,721,900 shares of
the U.S. Drug Common Stock to the public at $5.00 per share and netted
approximately $7,099,000 in proceeds.
(f) Not Applicable.
ITEM 2. IDENTITY AND BACKGROUND.
U.S. DRUG
U.S. Drug, the reporting person with respect to this Schedule 13E-3,
is the issuer of the U.S. Drug Common Stock, the class of equity securities
which is the subject of this Rule 13e-3 transaction.
(a)-(d) and (g) Reference is made to the section "Background of the
Company" under the caption "Summary" in the Prospectus for the following
information relating to U.S. Drug, the reporting
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person: its state of organization, its principal business and the address of
its principal executive offices, which information is incorporated herein by
this reference.
(e) and (f) During the last five years, U.S. Drug has not been
convicted in a criminal proceeding and was not a party to a civil proceeding of
a judicial or administrative body of competent jurisdiction which resulted in a
judgment, decree or final order enjoining further violations of, or prohibiting
activities subject to, federal or state securities laws or finding any
violation of such laws.
For each of the directors and executive officers of U.S. Drug, there
is furnished the following information: (a) the reporting person's name; (b)
his or her residence or business address; (c) his or her present principal
occupation or employment and the name, principal business and address of any
corporation or other organization in which such employment or occupation is
conducted; (d) information as to material occupations, positions, offices or
employments during the last five years is incorporated herein by this reference
to the section "Business History" under either the caption "U.S. Drug
Management" or "USAT Management" in the Prospectus; (e) whether or not, during
the last five years, such person has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors); (f) whether or not,
during the last five years, such director and/or executive officer was a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction, as a result of such proceeding, was or is subject to a judgment,
decree or final order enjoining further violations of, or prohibiting
activities subject to, Federal or State securities laws or finding any
violation of such laws; and, if so, identifying and describing such proceeding
and summarizing the terms of such judgment, decree or final order; and (g)
citizenship.
(a) Robert Stutman
(b) c/o Robert Stutman & Associates, Inc.
450 Washington Street
Deadham, MA 02026
(c) Chairman of the Board and Chief Executive Officer of U.S.
Alcohol Testing of America, Inc. 10410 Trademark Street
Rancho Cucamonga, CA 91730
(d) Reference is made to the section "Business History" under the
caption "USAT Management" in the Prospectus, which is
incorporated herein by this reference.
(e) No
(f) No
(g) United States
(a) Linda H. Masterson
(b) 10410 Trademark Street
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Rancho Cucamonga, CA 91730
(c) President and Chief Operating Officer of U.S. Alcohol Testing
of America, Inc. 10410 Trademark Street Rancho Cucamonga, CA
91730
(d) Reference is made to the section "Business History" under the
caption "USAT Management" in the Prospectus, which is
incorporated herein by this reference.
(e) No
(f) No
(g) United States
(a) Michael S. McCord
(b) 2001 Kirby Drive
Suite 701
Houston, TX 77019
(c) Self Employed
Capital Market Investments
2001 Kirby Drive
Suite 701
Houston, TX 77019
(d) Reference is made to the section "Business History" under the
caption "USAT Management" in the Prospectus, which is
incorporated herein by this reference.
(e) No
(f) No
(g) United States
(a) Joseph Bradley
(b) 10410 Trademark Street
Rancho Cucamonga, CA 91730
(c) Treasurer, Acting Chief Financial Officer and Acting Chief
Accounting Officer of U.S. Alcohol Testing of America, Inc.
10410 Trademark Street Rancho Cucamonga, CA 91730
(d) Reference is made to the section "USAT Management-Business
History" in the Prospectus, which is incorporated herein by
this reference.
(e) No
(f) No
(g) United States
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS.
(a) and (b) Reference is made to the caption "Material Contacts of
USAT with U.S. Drug" and the section "Reasons for the Merger and Approval"
under the caption "The Merger and Related Matters" in the Prospectus for
information as to any contacts, negotiations or transactions between U.S. Drug
and USAT, which information is incorporated herein by this reference. The
transaction which is the subject of this Schedule and the
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Registration Statement is the only transaction relating to a merger,
consolidation or acquisition or a tender offer.
ITEM 4. TERMS OF THE TRANSACTION.
(a) and (b) Reference is made to the captions "Terms of the
Transaction" and "The Merger and Related Matters" for a full description of the
material terms of the Merger, which information is incorporated herein by this
reference.
ITEM 5. PLANS OR PROPOSALS OF THE ISSUER OR AFFILIATE.
(a) through (g) Reference is made to the captions "Terms of the
Transaction" and "The Merger and Related Matters" in the Prospectus for
information in response to Item 5 of Schedule 13E-3, which information is
incorporated herein by this reference.
ITEM 6. SOURCE AND AMOUNTS OF FUNDS OR OTHER CONSIDERATION.
(a) and (b) Reference is made to the section "Fees and Expenses" under
the caption "The Merger and Related Matters" in the Prospectus for information
as to the estimated fees and costs of the Merger and whether such fees and
costs will be paid by USAT or U.S. Drug, which information is incorporated
herein by this reference. USAT does not intend to borrow any funds to
consummate the transaction. U.S. Drug may borrow funds from USAT to pay its
costs and expenses.
(c) and (d) Not Applicable.
ITEM 7. PURPOSES, ALTERNATIVES, REASONS AND EFFECTS.
(a) through (d) Reference is made to the sections "Reasons for the
Merger and Approval" and "Certain Tax Consequences" under the caption "The
Merger and Related Matters" in the Prospectus for information as to the
benefits of the Merger, the purpose of the Merger, the alternative means
considered, the reasons for the structure of the transaction as the Merger and
for undertaking the transaction at this time and the federal tax consequences
of the Merger, which information is incorporated herein by this reference.
Reference is made to the other sections under the caption "The Merger
and Related Matters" and the caption "Terms of the Transaction" in the
Prospectus for additional information as to the effect of the Merger on U.S.
Drug, USAT and the unaffiliated securityholders, which information is
incorporated herein by this reference. The detriment to U.S. Drug, USAT and
the U.S. Drug Minority Stockholders if the Merger is not consummated is, in the
opinion of USAT, that some or all of the benefits described in the section
"Reasons for the Merger and Approval" under the
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caption "Merger and Related Matters" in the Prospectus may not be realized.
ITEM 8. FAIRNESS OF THE TRANSACTION.
(a) Reference is made to the section "Reasons for the Merger and
Approval" under the caption "The Merger and Related Matters" in the Prospectus
for information relating to the reasons why U.S. Drug believes the Merger is
fair to the U.S. Drug Minority Stockholders, which information is incorporated
by this reference. Karen B. Laustsen, who was until April 18, 1996 a director
and an executive officer of USAT, abstained from the initial votes of the USAT
Board on November 16, 1995 and February 6, 1996 relating to the Merger because
of her concern about the conflict in also being a director of U.S. Drug;
however, she approved the Merger when submitted to a vote of the U.S. Drug
Board on April 23, 1996 and indicated that she also approved the Merger as a
director of USAT.
(b) See the response to section (a) of this Item 8 to the Schedule
for information as to the material factors which the U.S. Drug Board took into
consideration in evaluating the fairness of the Merger, including its
evaluation of current market prices, historical market prices, net book value,
going concern value, liquidation value and the fairness opinion of Whale
Securities Co., Inc. ("Whale Securities"). Reference is also made to the
section "Fairness Opinion" under the caption "The Merger and Related Matters"
in the Prospectus, which is incorporated herein by this reference.
There have been no firm offers to date by an unaffiliated person,
other than by USAT, during the preceding 18 months for: (i) the merger or
consolidation of U.S. Drug into or with another entity; (ii) the sale or other
transfer of all or any substantial part of the assets of U.S. Drug; or (iii)
securities of U.S. Drug which would enable the holder thereof to exercise
control of the issuer. See the section "Reasons for the Merger and Approval"
under the caption "The Merger and Related Matters" in the Prospectus, which is
incorporated herein by this reference.
(c) Adoption of the Merger Agreement by the requisite consents of the
holders of at least 50% of the shares of the U.S. Drug Common Stock held by the
U.S. Drug Minority Stockholders is required before the Merger can be
consummated. See the subsection "Statutory Basis" in the section "The Consent
Procedure" under the caption "Terms of the Transaction" in the Prospectus,
which is incorporated herein by this reference.
(d) As indicated in the section "Reasons for the Merger and Approval"
under the caption "The Merger and Related Matters" in the Prospectus, which
information is incorporated herein by this reference, there was no independent
U.S. Drug Board to act on the Merger and, accordingly, the U.S. Drug Board
retained Whale
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Securities to render an opinion for the benefit of the U.S Drug Minority
Stockholders as to the fairness of the Merger exchange ratio to the U.S. Drug
Minority Stockholders from a financial point of view (see Item 9 to this
Schedule). The U.S. Drug Board also authorized, as a condition precedent to
the Merger, that the U.S. Drug Minority Stockholders holding at least 50% of
the non-USAT held shares of the U.S. Drug Common Stock must consent to the
Merger. In addition, the U.S. Drug Board employed independent counsel to
represent U.S. Drug and the U.S. Drug Minority Stockholders.
(e) All directors of U.S. Drug approved the Merger on April 23, 1996,
all three of whom were not employees of U.S. Drug, although all three were
employees of USAT on the date of approval. Of the three current directors of
U.S. Drug, two are current employees of USAT and the third is a consultant to
the USAT Board of Directors. All of the current directors are in favor of the
Merger.
(f) Not applicable.
ITEM 9. REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS.
(a) U.S. Drug has received an opinion from Whale Securities as to the
fairness of the Merger to the U.S. Drug Minority Stockholders, which will be
delivered to them as Appendix B to the Prospectus.
(b) Reference is made to the section "Fairness Opinion" under the
caption "The Merger and Related Matters" in the Prospectus, which information
is incorporated herein by this reference.
(c) The full text of the opinion by Whale Securities, filed as
Appendix B in Amendment No. 1 to the Registration Statement, is available for
inspection and copying at the principal executive offices of U.S. Drug located
at 10410 Trademark Street, Rancho Cucamonga, California 91730 during its
regular business hours by any interested stockholder or his, her or its
representative who has been so designated in writing. A copy of such opinion
is Appendix B to the Consent Solicitation Statement/Prospectus to be mailed to
the U.S. Drug Minority Stockholders.
ITEM 10. INTEREST IN THE COMMON STOCK OF THE ISSUER.
(a) Reference is made to the caption "U.S. Drug Principal
Stockholders" in the Prospectus for information as to stock ownership in U.S.
Drug by USAT and others, which information is incorporated herein by this
reference.
(b) No transaction was effected relating to the U.S. Drug Common
Stock during the past 60 days by U.S. Drug or by USAT or
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by any person named in the table incorporated by this reference in the response
to section (a) of this Item 10.
ITEM 11. CONTRACTS, ARRANGEMENTS OR UNDERSTANDINGS WITH RESPECT TO THE
COMMON STOCK.
Reference is made to the section "Terms of the Merger Agreement" under
the caption "The Merger and Related Matters" in the Prospectus, which
information is incorporated herein by this reference.
ITEM 12. PRESENT INTENTION AND RECOMMENDATION OF CERTAIN PERSONS WITH
REGARD TO THE TRANSACTION.
(a) and (b) Reference is made to the subsection "Miscellaneous" in the
section "The Consent Procedure" under the caption "Terms of the Transaction" in
the Prospectus, which is incorporated herein by this reference.
ITEM 13. OTHER PROVISIONS OF THE TRANSACTION.
(a) Reference is made to the subsection "Right of the Dissenting U.S.
Drug Stockholders" in the section "The Consent Procedure" under the caption
"Terms of the Transaction" in the Prospectus for information as to why the U.S.
Drug Minority Stockholders do not have appraisal rights if the Merger is
consummated, which information is incorporated herein by this reference.
(b) No provision has been made by U.S. Drug or USAT in connection
with the Merger to allow unaffiliated U.S. Drug security holders to obtain
access to the corporate files of the issuer, other than as set forth in
exhibits to the Registration Statement or to obtain counsel or appraisal
services at the expense of either U.S. Drug or USAT.
(c) The Merger does not involve the exchange of debt securities.
ITEM 14. FINANCIAL INFORMATION.
(a) & (b) Reference is made to the captions "Summary Historical and
Proforma Combined Financial Data" in the Prospectus relating to the proforma
effect on USAT and its subsidiaries, including U.S. Drug, which information is
incorporated herein by this reference.
ITEM 15. PERSONS AND ASSETS EMPLOYED, RETAINED OR UTILIZED.
(a) and (b) Other than the payment of certain fees and expenses by
USAT and U. S. Drug as described in the section "Fees and Expenses" under the
caption "The Merger and Related Matters" in the Prospectus, which information
is incorporated herein by
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this reference, there are no officers, class of employees or corporate asset of
U.S. Drug or USAT which shall be employed, availed of or utilized in connection
with this Rule 13e-3 transaction. However, the directors, executive officers
and employees of USAT, who will receive no additional compensation, will
participate in the solicitations as indicated in the section "Miscellaneous"
under the caption "Terms of the Transaction" in the Prospectus.
ITEM 16. ADDITIONAL INFORMATION.
Not Applicable.
ITEM 17. MATERIAL TO BE FILED AS EXHIBITS
(a) Not Applicable.
(b) The opinion referred to in Items 8(d) and 9 of this Schedule
will be Appendix B to the Prospectus is filed in Amendment No. 1 to the
Registration Statement.
(c) The Merger Agreement is Appendix A to the Prospectus and is
incorporated herein by this reference.
(d) The only disclosure document to be furnished to the U.S. Drug
Minority Stockholders will be the Prospectus, which is incorporated herein by
this reference.
(e) The disclosure as to the unavailability of appraisal rights is
described in the Prospectus, which is incorporated herein by this reference.
(f) Not Applicable.
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SIGNATURES
After due inquiry and to the best of the undersigned's knowledge and
belief, the undersigned hereby certify that the information set forth in this
statement is true, complete and correct.
August 6, 1996
(Date)
U.S. DRUG TESTING, INC.
By: /s/ Robert S. Stutman
------------------------------
Robert S. Stutman, Chairman
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