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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
INFORMATION STATEMENT
PURSUANT TO SECTION 14(f)
OF THE
SECURITIES EXCHANGE ACT OF 1934
AND RULE 14f-1 THEREUNDER
DK INDUSTRIES, INC.
(Exact Name of Registrant as specified in its Charter)
Colorado 84-0891674
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1580 Lincoln Street, Suite 900, Denver, Colorado 80203
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(Address of principal executive offices)
(303) 863-1869
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(Issuer's telephone number, including area code)
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INFORMATION STATEMENT PURSUANT TO SECTION 14(F)
OF THE SECURITIES EXCHANGE ACT OF 1934 AND RULE 14f-1 THEREUNDER
This Information Statement is being mailed on or about June 13, 1996 to
holders of shares of the common stock of DK Industries, Inc., a Colorado
corporation, (the "Company") (the only class of stock of the Company currently
outstanding), pursuant to Section 14(f) of the Securities Exchange Act of 1934,
as amended, (the "Act") and Rule 14f-1 promulgated thereunder. The Information
Statement is being furnished in connection with the merger (the "Merger") of the
Company's wholly-owned subsidiary, DK Acquisition Corp., with and into GDC
Holdings Corporation ("GDCH"), a Louisiana corporation, and the provision of the
Agreement to Merge (the "Agreement") among the Company, DK Acquisition Corp.,
GDCH, and GDC Enviro Solutions, Inc. ("GDC Solutions," the wholly-owned
subsidiary of GDCH) providing that GDCH shall have the power to designate four
members of the Company's board of directors, and thus assume control of the
board of directors. The Merger became effective on May 31, 1996.
NO ACTION IS REQUIRED BY THE SHAREHOLDERS OF THE COMPANY IN CONNECTION WITH
THE DESIGNATION AND ELECTION OF THE DIRECTORS TO THE BOARD. However, Section
14(f) of the Act requires the mailing to the Company's shareholders of the
information set forth in this Information Statement prior to the change in a
majority of the Company's directors, pursuant to an agreement between the
company and the persons entitled to designate such change in control under the
agreement.
AGREEMENT TO MERGE
The Agreement provides, in part, that GDCH shall designate four members to
the board of directors of the Company and upon the assumption of office by those
four directors, the current three directors of the Company shall resign. The
directors designated by GDCH will assume their office ten days after the later
of (i) the filing of this Information Statement with the Securities and Exchange
Commission or (ii) the date that this Information Statement is mailed to all of
the Company's shareholders of record disclosing such appointment. Upon their
assumption of office GDCH will effectively control the board of directors of the
Company. The current directors of the Company have offered their resignations,
effective upon the assumption of office by the GDCH designated directors. The
Agreement also provides, in part, that the board approve and effect a 1-for-20
reverse stock split prior to the Merger becoming effective, which stock split
was effected on May 24, 1996. All statements herein with regard to shares
outstanding and shares held are stated in terms of post-reverse split shares.
The effect of the Merger is that the shareholders of GDCH have acquired, as of
the effective date of the Merger, voting control of the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
GENERAL
The outstanding voting securities of the Company as of May 31, 1996
consisted of 2,374,104 shares of common stock. An additional 100,000 shares of
common stock are reserved for issuance pursuant to outstanding warrants. Each
share of common stock is entitled to one vote in the election of directors and
in all other matters requiring a shareholder vote.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth the information as to beneficial
ownership of shares of common stock by each person known to the Company,
as of May 31, 1996, to own more than 5% of the shares.
NAME & ADDRESS OF AMOUNT & NATURE PERCENT OF
BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP CLASS(1)
Kathleen Elnaggar 981,045(1) 41.3%
822 Neosho Avenue of record
Baton Rouge, Louisiana 70802
Elnaggar Family Trust 485,298(2) 20.4
822 Neosho Avenue of record
Baton Rouge, Louisiana 70802
Tarek Elnaggar 175,990(3) 7.4
822 Neosho Avenue of record
Baton Rouge, Louisiana 70802
Harry C. Conger 131,387 5.5
822 Neosho Avenue of record
Baton Rouge, Louisiana 70802
(1) Excludes an indeterminate number of shares to be issued to Mrs. Elnaggar in
connection with the anticipated acquisition by the Registrant of 3E Corporation
of Louisiana ("3E"), a corporation owned by Mrs. Elnaggar. The Registrant has
agreed to purchase 100% of the issued and outstanding shares of common stock of
3E from Mrs. Elnaggar in exchange for the issuance by the Registrant of that
number of shares of the Registrant's common stock that will have an aggregate
value of $600,000 on the date that the acquisition is closed. Also excludes
485,298 shares owned of record by the Elnaggar Family Trust, of which Mrs.
Elnaggar is the sole trustee. See note (2), below.
(2) The Elnaggar Family Trust (the "Trust") is the record owner of these shares
and was created under a Judgment of Possession dated October 4, 1994, pursuant
to the will of Hamid Elnaggar. The sole trustee and usufructory (life tenant) of
the Trust is Kathleen Elnaggar. Mrs. Elnaggar possesses all voting and
dispositive power with respect to the shares owned by the Trust and, therefore,
may be deemed to be the beneficial owner of those shares. The beneficiaries of
the Trust are Tarek Elnaggar, Sharif Joseph Elnaggar, and Jeanne Marie Elnaggar.
The beneficiaries may be deemed to be the beneficial owners of the shares owned
by the Trust.
(3) Excludes 485,298 shares owned of record by the Elnaggar Family Trust, of
which Mr. Elnaggar is one of the beneficiaries. See note (2), above. Mr.
Elnaggar is the stepson of Kathleen Elnaggar.
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SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the information as to beneficial ownership
of shares by each (i) each person designated to become a director of the
Company, (ii) each named executive, and (iii) all executive officers and persons
designated to become directors of the Company as a group, as of May 31, 1996.
NAME & ADDRESS OF AMOUNT & NATURE PERCENT OF
BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP CLASS(1)
Kathleen Elnaggar 981,045(1) 41.3%
822 Neosho Avenue of record
Baton Rouge, Louisiana 70802
Elnaggar Family Trust(2) 485,298(2) 20.4
822 Neosho Avenue of record
Baton Rouge, Louisiana 70802
Harry C. Conger 131,387 5.5
822 Neosho Avenue of record
Baton Rouge, Louisiana 70802
James W. Muzzy 75,000 3.1
1580 Lincoln Street of record
Suite 900
Denver, Colorado 80203
B. James Porter 66,667(3) 2.7
822 Neosho Avenue
Baton Rouge, Louisiana 70802
Directors and Officers 1,739,397(3)(4) 71.3
as a Group
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(1) Excludes an indeterminate number of shares to be issued to Mrs. Elnaggar in
connection with the anticipated acquisition by the Registrant of 3E Corporation
of Louisiana ("3E"), a corporation owned by Mrs. Elnaggar. The Registrant has
agreed to purchase 100% of the issued and outstanding shares of common stock of
3E from Mrs. Elnaggar in exchange for the issuance by the Registrant of that
number of shares of the Registrant's common stock that will have an aggregate
value of $600,000 on the date that the acquisition is closed. Also excludes
485,298 shares owned of record by the Elnaggar Family Trust, of which Mrs.
Elnaggar is the sole trustee. See note (2), below.
(2) The Elnaggar Family Trust (the "Trust") is the record owner of these shares
and was created under a Judgment of Possession dated October 4, 1994, pursuant
to the will of Hamid Elnaggar. The sole trustee and usufructory (life tenant) of
the Trust is Kathleen Elnaggar. Mrs. Elnaggar possesses all voting and
dispositive power with respect to the shares owned by the Trust and, therefore,
may be deemed to be the beneficial owner of those shares. The beneficiaries of
the Trust are Tarek Elnaggar, Sharif Joseph Elnaggar, and Jeanne Marie Elnaggar.
The beneficiaries may be deemed to be the beneficial owners of the shares owned
by the Trust.
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(3) Includes 66,667 shares that, as of May 31, 1996, may be acquired within 60
days pursuant to the exercise of options (which shares are treated as
outstanding for the purpose of determining the number shares and the percentage
of outstanding common stock owned by Mr. Porter but not deemed to be outstanding
for the purpose of for the determining the number shares and the percentage of
outstanding common stock owned by any other person).
(4) Includes 485,298 shares owned of record by the Elnaggar Family Trust. See
note (2), above.
CHANGE IN CONTROL
As a result of the Merger, the persons identified in the sections captioned
"SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS" and "SECURITY OWNERSHIP OF
MANAGEMENT," above, acquired the number of shares of common stock of the Company
indicated in that section in exchange for their shares of common stock of GDCH.
In addition, in connection with the Merger, all of the then-current members
of the board of directors of the Company will resign, and the following persons
have been designated to become members of the board of directors of the Company:
Mrs. Kathleen Elnaggar
Mr. Harry C. Conger
Mr. James W. Muzzy
Mr. B. Jim Porter
The appointments of the new directors and the resignations of the outgoing
directors are effective ten days after the later of (i) the filing of this
Information Statement with the Securities and Exchange Commission by the
Registrant or (ii) the date that this Information Statement is mailed to all of
the Company's shareholders of record disclosing such appointment.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding the current
executive officers and the persons who have been designated to become the
directors of the Company effective ten days after the later of (i) the filing of
this Information Statement with the Securities and Exchange Commission by the
Registrant or (ii) the date that this Information Statement is mailed to all of
the Company's shareholders of record disclosing such appointment..
Name Age Position
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Harry C. Conger 65 President and Director
James W. Muzzy 51 Vice President, Secretary and Director
Donald L. Murphy, Jr. 36 Treasurer
Kathleen Elnaggar 51 Director
B. Jim Porter 53 Director
Mr. Conger, age 65, was elected to be the President of the Company on May
28, 1996. Mr. Conger has and continues to serve also as Chief Executive Officer
and director of GDC Solutions, the wholly-owned subsidiary of GDCH, since
January 1995. Since consummation of the Merger he has also served as President
and a director of the Company. Prior to joining GDC Solutions, he served as
President of Strategic Success Group, a consulting firm, from 1992-1995, and as
President of Waste Tech Services Inc., an environmental remediation firm, from
1985 to 1992. He has over 36 years experience in executive management, corporate
development, and ownership of full service companies in the hazardous waste
market. He has extensive knowledge in the establishment of international
business relations, the improvement of sales and profits and the expansion of
business offerings. Mr. Conger has been CEO of a number of substantial
environmental and industrial companies, and held senior executive positions with
Calgon, Merck, and Olin. He received an AMP from the Harvard University Graduate
School of Business Administration.
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Mr. Muzzy, age 51, was elected to serve as the Vice President and Secretary
of the Company on May 28, 1996. Mr. Muzzy has served as Vice President,
Secretary and a director of GDCH since October 1995. Since January 1995 he has
also served as a consultant to GDC Solutions. From 1970 to 1983 Mr. Muzzy held
executive positions with major international banks. Since 1983 Mr. Muzzy has
provided domestic and international corporate and client advisory services for
public and private companies, including companies engaged in the environmental
sector and recycling. Mr. Muzzy received and MBA degree from the University of
Chicago.
Mr. Murphy, age 36, was elected to serve as the Treasurer of the Company on
May 28, 1996. Mr. Murphy has served as Chief Financial Officer of GDC Solutions
since May, 1994. He has over 15 years of experience in all levels of accounting
management and its functions, over 10 of which have been in the environmental
arena. He has participated extensively in strategic planning, loan negotiation,
debt restructuring and analytical review of operations. From March 1985 to April
1994 Mr. Murphy served as Vice President and Controller of Chemfix Technologies,
Inc., an environmental company. He received his Bachelor of Science in
Accounting from Louisiana State University and is a Certified Public Accountant.
Mrs. Elnaggar, age 51, co-founded GDC Solutions with her husband in
December 1980 and served as an administrative officer until 1992. Since her
husband's death in 1992, Mrs. Elnaggar has served as Chairman of the Board of
Directors and through December 31, 1994 served as Chief Executive Officer of GDC
Solutions. Mrs. Elnaggar is the mother of Tarek Elnaggar.
Mr. Porter, age 53, has served as President of the Louisiana
Mid-Continental Oil and Gas Association since February 1989. From 1988-1989 he
served as Executive Vice President of GDC Solutions. Mr. Porter has served in a
variety of state government posts, principally in agencies concerned with
natural resources and the environment. He also has served on numerous committees
and commissions of public and private agencies and groups associated with oil,
gas, energy, and other related matters.
The directors of the Company are elected to hold office until the next
annual meeting of shareholders and until their respective successors have been
elected and qualified. Officers of the Company are elected by the Board of
Directors and hold office until their successors are duly elected and qualified.
Tarek Elnaggar is the stepson of Kathleen Elnaggar. There are no other
family relationships between director, executive officer, or person designated
to become a director of the Company.
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CERTAIN TRANSACTIONS
In August 1995, GDC Solutions issued 131,387 shares of GDCH Stock to Harry
Conger pursuant to the terms of his employment agreement.
GDCH has entered into an agreement to acquire 3E, a corporation owned by
Kathleen Elnaggar, a director and principal shareholder of the Company, which
owns centrifuges and related equipment used in environmental waste remediation.
The purchase price for all of the issued and outstanding common stock of 3E is
that number of shares of the Company's common stock having an aggregate value of
$600,000 on the date that the acquisition is completed.
GDC Solutions has entered into an agreement with Kathleen Elnaggar, a
director and principal shareholder of the Company, to purchase the principal
facilities of GDC Solutions from her and the Trust within six months following
the consummation of the Merger for a purchase price of $956,000, its appraised
value at the time of the agreement. The purchase price will include (i) the
assumption by GDC Solutions of the existing note and mortgage on the building,
which has a principal balance of approximately $425,000, and (i) a promissory
note for the balance of the purchase price. the note will bear interest at 10%
per annum and will be amortized over 24 months from the closing. It will be
secured by a mortgage, which will be subordinate to the lien of the mortgagee on
the original mortgage.
GDC Solutions was the maker of certain promissory notes in the aggregate
principal amount of $915,737, with accrued interest of approximately $225,000,
which were held directly or indirectly by Mrs. Elnaggar and affiliated parties.
The notes bore interest at the prevailing prime rate. In March 1996, GDCH and
Mrs. Elnaggar consummated a transaction pursuant to which Mrs. Elnaggar
contributed the notes to the capital of GDCH in exchange for the issuance by
GDCH to Mrs. Elnaggar and the affiliated parties of 502,333 shares of GDCH
Stock.
In January 1995, GDC Solutions entered into a consulting agreement with
James Muzzy and David Burlingame. Mr. Muzzy became an officer and a director of
GDCH in October 1995. Under the agreement, Messrs. Muzzy and Burlingame have
assisted GDC Solutions in restructuring certain of its debt with its principal
financial lending institution, structuring and negotiating the Merger, and
providing consulting services related to numerous corporate and financial
matters. Mr. Burlingame acts as counsel to the Company and renders billings to
the Company on a regular basis. Mr. Muzzy is currently paid consulting fees of
approximately $6,000 per month by GDC Solutions. The agreement also requires GDC
Solutions to issue to Messrs. Muzzy and Burlingame options or warrants (with a
nominal exercise price) to purchase shares of GDC Solutions stock aggregating 6%
of the issued and outstanding stock of GDC Solutions. In connection with its
negotiation of the Merger, GDCH, Messrs. Muzzy and Burlingame, and the Company
agreed that the obligation to issue the warrants could be satisfied through the
acquisition of the Company's common stock prior to the Merger. Messrs. Muzzy and
Burlingame acquired 150,000 shares of the Company's common stock from certain
principal shareholders of DK prior to consummation of the Merger.
COMPLIANCE WITH SECTION 16 OF THE ACT
Section 16(a) of the Act requires the Company's directors and executive
officers, and persons who own more than 10% of a registered class of equity
securities, to file with the Commission initial reports of ownership and reports
of changes in ownership of common stock and other equity securities of the
Company. Directors, executive officers and greater than 10% shareholders are
required by Commission regulations to furnish to the Company copies of all
Section 16(a) forms which they file.
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The Company did not receive any Section 16(a) reports of ownership and
reports of changes in ownership of common stock and other equity securities of
the Company during the last fiscal year.
The Board of Directors of the Company presently has no committees.
During the fiscal year ended June 30, 1995, the board of directors did not
hold any meetings.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The Company did not pay any compensation to any of its officers or
directors during the fiscal year ended June 30, 1995 and continued not to have
any paid officers or directors up to the closing date of the Merger.
GDC Solutions is paying Harry Conger, who became Chief Executive Officer in
January 1995, the rate of $130,000 per annum, and Kathleen Elnaggar, who
currently served as Chairman of the Board of GDC Solutions, at the rate of
$150,000 per year. Mr. Conger also was reimbursed for moving expenses and real
estate commissions in connection with his relocation to GDC Solutions' offices
in Louisiana. In addition, during the current fiscal year, Tarek Elnaggar,
President of GDC Solutions, is being paid at the rate of $100,580 per annum.
Employment Agreements
Mr. Conger serves as Chief Executive Officer of GDC Solutions pursuant to
an employment agreement. The agreement has a two-year term ending December 31,
1996. Under the agreement, Mr. Conger receives an annual salary of $130,000 and
he may be paid bonuses at the discretion of the Board of Directors based upon
performance and profitability of GDC Solutions. In August 1995, the employment
agreement was amended to provide that GDC Solutions issue 131,387 shares of GDC
Solutions common stock (as adjusted to give effect to a recapitalization of the
stock of GDCH and GDC Solutions). Under the agreement, Mr. Conger also had the
right to obtain additional shares if certain conditions were satisfied. The
shares were exchanged for an equal number of shares of common stock of GDC
Holdings and, in turn, were converted into an equal number of shares of the
Company's common stock as a result of the Merger.
Mrs. Elnaggar is employed by GDC Solutions pursuant to an employment
agreement having a three year term ending August 31, 1998. Under the agreement,
Mrs. Elnaggar is paid an annual salary of $150,000.
Mr. Elnaggar and Mr. Murphy are both employed by GDC Solutions pursuant to
employment agreements having two year terms ending September 13, 1997. Under the
agreements, Mr. Elnaggar and Mr. Murphy are paid annual salaries of $100,580 and
$85,580, respectively, and they may be paid bonuses at the discretion of the
Board of Directors based upon the net profits of GDC Solutions. The agreements
further provide that in the event of a change in control of GDC Solutions after
September 30, 1996, as defined in the agreements, Mr. Elnaggar and Mr. Murphy
each have the right to terminate their agreement and receive a cash termination
payment equal to two years' annual salary.
Director Compensation
The directors of the Company do not currently receive cash compensation.
One of the persons designated to become a director of the Company and one
non-employee director of GDC Solutions (in connection with their service as
directors of GDC Solutions) have been issued warrants to acquire an aggregate of
100,000 shares of common stock of the Company. The Warrants give the holders
thereof certain demand and "piggy-back" registration rights which give them the
right to have the warrants or underlying shares registered under a registration
statement filed with the Securities and Exchange Commission. Following the
Merger, management anticipates paying to each non-employee director of the
company annual compensation of approximately $15,000 plus reimbursement of
expenses incurred in attending meetings of the board of directors. In addition,
directors will be able to participate in stock option plans of the Company.
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