SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934 (Amendment No. )
Check the appropriate box:
[_] Preliminary Information Statement
[_] Confidential, for Use of the Commission Only
(as permitted by Rule 14c-5(d)(2))
[X] Definitive Information Statement
REVCARE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant As Specified In Charter)
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:
--------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------------
(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):
--------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------------
(5) Total fee paid:
--------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] 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:
--------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
--------------------------------------------------------------------------
(3) Filing Party:
--------------------------------------------------------------------------
(4) Date Filed:
--------------------------------------------------------------------------
REVCARE, INC.
5400 Orange Avenue, Suite 200
Cypress, California 90630
To Our Stockholders:
On January 26, 2001 the holders of a majority of our outstanding voting
securities executed written consents approving the following action:
Election of four (4) directors to serve until the next annual meeting
of stockholders and until their respective successors are duly elected
and qualified.
Our board of directors had previously approved the above action and fixed
the close of business on January 26, 2001 as the record date for the
determination of stockholders entitled to vote with respect to the above action.
The consenting stockholders, whose shares represent approximately 79% of our
outstanding voting securities, have consented to the above action. Therefore, no
annual meeting of stockholders will be held. Management is not soliciting
proxies in connection with this Information Statement and stockholders are
requested not to send proxies to us. This Information Statement is being mailed
on or about February 2, 2001 to all stockholders of record as of the record
date, and is accompanied by a copy of our Annual Report on Form 10-KSB for the
fiscal year ended September 30, 2000, which includes our audited financial
statements.
Your attention is directed to the enclosed Information Statement.
By Order of the Board of Directors
/s/ George L. McCabe, Jr.
----------------------------
George L. McCabe, Jr.
Chairman of the Board
Cypress, California
January 26, 2001
REVCARE, INC.
5400 Orange Avenue, Suite 200
Cypress, California 90630
--------------------------------------------------------
INFORMATION STATEMENT
--------------------------------------------------------
INTRODUCTION
This Information Statement is furnished by our board of directors in
connection with our election of directors. This Information Statement and
the enclosed materials are first being sent on or before the close of business
on February 2, 2001 to stockholders of record as of September 30, 2000. On
January 26, 2001, the holders of a majority of our outstanding voting securities
on the record date executed written consents approving the above action. We will
cause the election of directors to become effective 20 days after this
Information Statement is first sent to the stockholders.
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY.
The information included in this Information Statement should be reviewed
in conjunction with the financial statements, notes to financial statements,
auditor's report and other information included in our Annual Report on Form 10-
KSB for the fiscal year ended September 30, 2000 that is being mailed with this
Information Statement to all stockholders of record as of the record date.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Effective May 30, 2000, we completed the sale of 15,000,000 shares of our
common stock at $0.50 per share to FBR Financial Fund II, L.P., or FBR, which
has become our principal stockholder, owning 69.7% of our outstanding common
stock and 68.6% of our outstanding voting securities. The price of the
transaction, which was negotiated on an arms-length basis, was based on our
market valuation of $4,240,830 calculated on the basis of 6,460,911 shares of
outstanding common stock at a price of $0.6564 per share. However, our board of
directors determined that $0.50 was a fair price per share because it reflected
an appropriate illiquidity discount in a thinly-traded public market, as well as
the existence of outstanding derivative securities, including options, warrants
and convertible preferred stock, that have the potential of diluting the per
share value. In addition, the board had received a lower valuation for us from
another potential institutional investor. The board believed that the FBR
transaction provided us with the most viable opportunity of pursuing a long-term
growth strategy and that FBR would be a valuable strategic partner with respect
to the conduct of our business. None of the directors approving the transaction
had a relationship with FBR prior to the transaction.
In connection with FBR's investment in us, FBR received certain rights
to cause us to register their common stock. In addition, the board was
reconstituted at five members and four of the five former members of the board
resigned. The reconstituted board consisted of Diane Dales, who was an incumbent
director, and George L. McCabe, Jr. and Edward M. Wheeler, managing directors of
FBR, with the remaining two vacancies to be filled in the future.
The reconstituted board appointed Manuel Occiano as our chief executive
officer on May 30, 2000 and approved the terms of his employment agreement,
which is described on page 9, as well as the granting of options to him as
described below. On January 26, 2001, the board appointed Mr. Occiano as a
director, filling one of the two vacancies on the board. Mr. Occiano had
previously served as our president and chief executive officer, as well as a
director, until he resigned from these positions in December 1999.
In connection with FBR's investment in us, the principal holders of our
common stock, FBR (holding 68.6% of our voting securities) and Pacific Life
(holding 10.5% of our voting securities), have entered into a voting agreement
under which they agreed to appoint one director nominated by Pacific Life to the
board and one director nominated by FBR to the board. FBR has the ability to
elect the remaining directors to the board by virtue of its voting control of
us. Diane Dales is the designee of Pacific Life. George L. McCabe, Jr. is the
designee of FBR. Edward M. Wheeler was nominated by FBR and approved by Pacific
Life.
We received proceeds of $7,500,000 from the sale of our common stock to
FBR. On August 14, 2000, we used approximately $6,300,000 of the proceeds plus
$4.2 million in two-year convertible notes bearing interest at the rate of 8% to
acquire all of the outstanding stock of Orange County Professional Services,
Inc., or CPS, and its affiliated companies, and substantially all of the assets
of InSource Medical Solutions, Inc., RBA Rem-Care, Inc. and Hospital Employee
Labor Pool, which are accounts receivable management services or staffing
outsourcing businesses. The value of the businesses acquired was determined
using a formula based upon a multiple of earnings of those companies. There was
no affiliation between FBR and the entities acquired and FBR did not receive any
fee in connection with these acquisitions. We used the remainder of the
proceeds from the FBR transaction, after transaction expenses, for working
capital purposes. In connection with the CPS acquisition, our board of
directors appointed CPS's co-owners, Russell Mohrmann and Robert Perez, as
executive officers, as more fully described below.
OUTSTANDING SECURITIES AND VOTING RIGHTS
As of the record date, there were issued and outstanding 21,526,909 shares
of our common stock and 345,000 shares of our preferred stock, which shares are
collectively referred to in this Information Statement as voting securities for
the purpose of determining stockholders entitled to receive this Information
Statement. The consenting stockholders held approximately 17,230,000 shares of
our common stock and no shares of preferred stock, or approximately 79% of our
issued and outstanding voting securities.
Each holder of voting securities is entitled to one vote in person or by
proxy for each share of voting securities in his or her name on our books, as of
the record date, on any matter submitted to a vote of the stockholders.
However, under Nevada law, any action which may be
taken at any stockholders' meeting may be taken by written consent of the
requisite number of stockholders required to take such action. The election of
directors requires the affirmative vote or written consent of a majority of our
outstanding voting securities. On January 26, 2001, the consenting stockholders,
who hold approximately 79% of our outstanding voting securities, consented to
the election of directors as set forth herein. Therefore, we are not submitting
the election of directors to a vote of the stockholders, we are not soliciting
proxies and we will not hold a meeting on this matter.
ELECTION OF DIRECTORS
Information Concerning Nominees
Our bylaws fix the number of directors of our board of directors at five.
On January 26, 2001, our board of directors nominated the four persons listed
below for election to the board, with the remaining vacancy to be filled in the
future. All four nominees were incumbent directors. Each director will be
elected to hold office until the next annual meeting of stockholders and until
his or her successor has been duly elected and qualified.
Each of the nominees has consented to be named in this Information
Statement and has consented to serve as a director. However, should any nominee
named in this Information Statement for the office of director become unable or
unwilling to accept nomination or election, the board of directors may recommend
and nominate another person in the place and stead of such person. Our board of
directors has no reason to believe that any substitute nominee will be required.
Diane W. Dales, 44, was elected to serve as a director in 1998. She has
served as an assistant vice president at Pacific Life Insurance Company since
January 1988 and is currently director, private placements, at Pacific Life. She
is responsible for the origination and monitoring of private placement
securities and credit analysis of investment grade public securities.
George L. McCabe, Jr., 41, was elected to serve as our chairman of the
board of directors on May 30, 2000. Mr. McCabe has served as a managing director
of FBR Financial Fund II, L.P., or FBR, the holder of 69% of our voting
securities, since 1986. He is responsible for the management of a private equity
fund focused on the financial services industry.
Edward M. Wheeler, 33, was elected to serve as a director on May 30, 2000.
Mr. Wheeler has served as a managing director of FBR since 1989. He is
responsible for the management of a private equity fund focused on the financial
services industry.
Manuel Occiano, 49, was elected to serve as a director on January 26, 2001.
On May 30, 2000, our board of directors appointed Manuel Occiano as our chief
executive officer. Mr. Occiano assumed management responsibility for the daily
operations and reports directly to the board. Mr. Occiano succeeds John Hindman,
who had been serving as the interim chief executive officer since December 22,
1999. Mr. Occiano previously served as our president and chief executive
officer, as well as a director, from September 16, 1998 until he resigned from
both positions in December 1999. Mr. Occiano served as executive vice president
and chief operating officer of West Capital Financial Services, Corp., a
division of SunAmerica Life from
July 1996 to September 1998. He spent 13 years with Arthur Andersen LLP as
senior manager directing financial services and business consulting practices
for the San Diego office.
Additional Executive Officers and Key Employees
Gary Burdick, 47, became our chief operating officer in September 2000.
He had served as the Regional Vice President of Medaphis Corp. where he was
instrumental in managing the integration of the operations, sales and service of
the companies acquired in the western region.
Russell Mohrmann, 62, was appointed as an executive vice president, as well
as president of our recently acquired subsidiary, CPS, on August 14, 2000. He
has been a co-owner and the president of CPS, which primarily provides
collection services to healthcare clients, since 1974.
Robert Perez, 38, was appointed as our senior vice president of sales and
marketing on August 14, 2000. Prior to joining us, he was a co-owner and the
Secretary/Treasurer of CPS, and was responsible for new business development.
Prior to joining CPS, Mr. Perez owned and operated a firm which provided
financial and reimbursement consulting services to the healthcare industry.
On January 2, 2001, our board of directors appointed Frederick C. McGee,
54, as our chief financial officer and secretary. Mr. McGee succeeds
Kenneth Leighton, who had been serving as the secretary and interim chief
financial officer since July 25, 2000. Prior to joining us, Mr. McGee served as
chief financial officer of TeraGlobal Communications Corp. (one year), DAOU
Systems, Inc., an IT Services company specializing in Healthcare (three years)
and Infrasonics, Inc, a medical device manufacturing company (eight years), all
NASDAQ traded corporations.
Board of Directors and Committees
Our board of directors meets during our fiscal year to review significant
developments affecting us and to act on matters requiring board approval. The
board of directors met seven (7) times and acted by unanimous written consent
three (3) times during the 2000 fiscal year. During that period, all members of
the board participated in at least 75% of all board and applicable committee
meetings.
Our board of directors has established audit, executive, stock option and
nominating and compensation committees to devote attention to specific subjects
and to assist in the discharge of its responsibilities. The functions of those
committees, their members and the number of meetings held during the 2000 fiscal
year are described below.
Audit Committee. The Audit Committee was established to recommend to our
board of directors the appointment of the firm selected to be our independent
public accountants and to monitor the performance of such firm; to review and
approve the scope of the annual audit and quarterly reviews and evaluate with
the independent public accountants our annual audit and annual financial
statements; to review with management the status of internal accounting
controls; to evaluate any problem areas having a potential financial impact on
us which may be brought to our attention by management, the independent public
accountants or the board of directors; and to evaluate all of our public
financial reporting documents. The board of directors has not adopted a written
charter for the Audit Committee. Mr. McCabe and Ms. Dales are presently the
members of the Audit Committee, and both are independent. Mr. Graham Gill was a
member until he resigned from his position as a director on May 30, 2000. The
Audit Committee, which held one meeting during the fiscal year, has:
. reviewed and discussed the audited financial statements for the fiscal
year ended September 30, 2000 with management;
. discussed with Arthur Andersen LLP, our independent accountants, the
matters required to be discussed by SAS 61;
. received the written disclosures and the letter from the independent
accountants required by Independence Standards Board No. 1, and has
discussed with the independent accountants the independent accountants'
independence and;
. based on these reviews and discussions, recommended to our board of
directors that the audited financial statements be included in our
Annual Report in Form 10-KSB for the fiscal year ended September 30,
2000 for filing with the Securities and Exchange Commission.
Audit fees billed to us by Arthur Andersen LLP for review of our annual
financial statements and the financial statements included in our quarterly
reports on Form 10-QSB, for the fiscal year ended September 30, 2000, totaled
$52,700. We did not engage Arthur Andersen LLP to provide advice regarding
financial information systems design and implementation during 2000. Fees billed
to us by Arthur Andersen LLP with respect to the fiscal year 2000 for all other
non-audit services rendered to us, including tax related services, totaled
$241,460. The Audit Committee has concluded that the provision of the other
services including tax-related services by Arthur Andersen LLP is compatible
with maintaining their independence.
Executive Committee. The Executive Committee is empowered to act in lieu
of the board of directors on any matter except that for which the board of
directors has specifically reserved authority to itself and except for those
matters specifically reserved to the full board of directors by law. Mr. McCabe
and Ms. Dales are presently the members of the Executive Committee. Mr. Farrest
Hayden and Mr. John Hindman were members of the Executive Committee until they
resigned from their positions as directors on April 14, 2000 and May 30, 2000,
respectively. The Executive Committee did not meet during the fiscal year, as
all matters acted on during the fiscal year were acted upon by our board of
directors.
Stock Option Committee. The Stock Option Committee develops and
administers incentive plans, including our 1995 Stock Option Plan. Mr. McCabe
and Ms. Dales are presently the members of the Stock Option Committee. Mr.
Hindman was a member of the Stock Option Committee until he resigned from his
position as a director on May 30, 2000. The Stock Option Committee held one
meeting during the fiscal year.
Nominating and Compensation Committee. The Nominating and Compensation
Committee was established to recommend and nominate qualified persons to serve
as our independent directors and to determine the compensation of our executive
officers and key employees. Mr. McCabe and Ms. Dales are presently the members
of the Nominating and Compensation Committee. Mr. Gill was a member of this
committee until he resigned from his position as a board member on May 30, 2000.
The Nominating and Compensation Committee met one time during the fiscal year.
The Nominating and Compensation Committee has not adopted procedures for the
consideration of nominees recommended by security holders.
We compensate independent directors at the rate of $4,000 per year for
service on the board of directors, plus $500 per board meeting.
The Consenting Stockholders
Our stockholders, including three of our directors, representing voting
rights equal to approximately 79% of the shares entitled to vote on the election
of directors, have delivered written consents to the election of the above
nominees as our directors to serve until the next
annual meeting of stockholders and until their successors are duly elected and
qualified as set forth in this Information Statement.
The names of these consenting stockholders and the number of shares of our
voting securities such persons are entitled to vote on the election of directors
are as follows:
Number of Shares of Voting Percentage of
Securities Entitled to Vote as of Voting Securities as of
Name Record Date Record Date
- --------------------------------------- ------------------------------------- -----------------------------------
Pacific Life Insurance Company (1) 2,300,000 68.6%
FBR Financial Fund II, L.P. (2) 15,000,000 10.5%
-------------------------------------- -----------------------------
Total: 17,300,000 79.1%
_________________________
(1) Ms. Diane W. Dales, our director, is a director, private placements,
at Pacific Life Insurance Company. Pacific Life is the holder of our
common stock .
(2) Messrs. George L. McCabe and Edward M. Wheeler, our directors, are
managing directors of FBR Financial Fund II, L.P. FBR is the holder of
our common stock.
These shares represent approximately 79% of our outstanding voting
securities. Therefore, the proposals have been approved by written consent of
the consenting stockholders and will take effect 20 days after this Information
Statement is sent to our stockholders.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the annual and long-term cash and non-cash
compensation paid by us for services rendered in all capacities during the
fiscal years ended September 30, 2000, 1999 and 1998 to those persons who were,
as of September 30, 2000, our chief executive officer and our other most highly
compensated executive officers whose total annual salary and bonus exceeded
$100,000 during the fiscal year ended September 30, 2000:
DRAFT - FOR INTERNAL REVIEW ONLY
Long-Term Compensation
Annual Compensation Awards Payout
Name and Principal Fiscal Salary ($) Bonus ($) Other ($) Restricted Options/ LTIP All Other
Position Year Stock SARs (#) Payout ($) Compen-
Award(s)($) sation
($)(1)
- ------------------------------------------------------------------------------------------------------------------------------------
Manuel Occiano, (2) 2000 135,799 -0- -0- -0- 692,308 -0- -0-
chief executive 1999 180,000 -0- -0- -0- -0- -0- -0-
officer and president 1998 7,500 -0- -0- -0- 300,000 -0- -0-
- ------------------------------------------------------------------------------------------------------------------------------------
John C. Hindman, (3) 2000 64,904 89,783 -0- -0- 100,000 -0- -0-
former chief financial 1999 125,000 -0- -0- -0- -0- -0- -0-
officer and interim 1998 8,996 -0- -0- -0- 100,000 -0- -0-
chief executive officer
- ------------------------------------------------------------------------------------------------------------------------------------
Daniel R. Eder, 2000 117,138 -0- -0- -0- 50,000 -0- -0-
former chief operating 1999 115,000 -0- -0- -0- -0- -0- -0-
officer 1998 127,023 -0- -0- -0- 50,000 -0- -0-
- ------------------------------------------------------------------------------------------------------------------------------------
Kenneth Leighton, 2000 108,782 -0- -0- -0- 50,000 -0- -0-
chief information 1999 -0- -0- -0- -0- -0- -0- -0-
officer 1998 -0- -0- -0- -0- -0- -0- -0-
- ------------------------------------------------------------------------------------------------------------------------------------
(1) The remuneration described in the table does not include the cost to us
of benefits furnished to the named executive officers, including
premiums for health insurance and other personal benefits provided to
such individuals in connection with their employment. The value of such
benefits cannot be precisely determined; however, the named executive
officers did not receive other compensation in excess of the lesser of
$50,000 or 10% of such officers' cash compensation.
(2) Mr. Occiano began his employment with us on September 16, 1998 under a
three-year contract. He resigned his positions as director, president
and chief executive officer on December 22, 1999. Our board of directors
reappointed him as our chief executive officer on May 30, 2000. See
"Employment Agreements" below.
(3) Mr. Hindman began his employment with us on September 1, 1998 under a
three-year contract. On December 22, 1999, he was appointed as interim
chief executive officer and elected as a director. He resigned these
positions on May 30, 2000. See "Employment Agreements" below.
Stock Options Granted in Fiscal 2000
The following table provides the specified information concerning grants of
options to purchase our common stock made during the fiscal year ended September
30, 2000 to the persons named in the Summary Compensation Table and to our
directors.
DRAFT - FOR INTERNAL REVIEW ONLY
INDIVIDUAL GRANTS POTENTIAL REALIZED VALUE
------------------------------------------ AT ASSUMED ANNUAL
NUMBER OF % OF TOTAL RATES OF STOCK PRICE
SECURITIES OPTIONS EXERCISE APPRECIATION FOR OPTION
UNDERLYING GRANTED TO OR BASE TERM (1)
OPTIONS EMPLOYEES IN PRICE EXPIRATION ------------------------
GRANTED FISCAL YEAR ($/SH) (2) DATE 5% 10%
---------- ----------- ---------- ---------- ---------- ----------
Manuel Occiano.................... 692,308(3) 100% $0.500 05/29/10 214,615 553,846
John Hindman...................... 100,000(4) 100% $0.625 06/02/09 39,500 99,500
Daniel R. Eder.................... 100,000(5) 50% $0.625 02/01/10 39,500 99,500
Kenneth Leighton.................. 50,000(2) 100% $0.500 07/25/10 15,500 40,000
Farrest Hayden.................... 100,000(4) 100% $0.6875 02/01/10 43,250 109,250
Lacayo Family Trust............... 100,000(4)(6) 100% $0.6875 02/01/10 43,250 109,250
Graham Gill....................... 25,000(4) 100% $0.625 02/01/10 9,875 24,875
Pacific Life Insurance Company.... 10,000(4)(7) 100% $0.6875 02/01/10 4,325 10,925
(1) Potential gains are net of exercise price, but before taxes associated with
exercise. These amounts represent certain assumed rates of appreciation
only, based on the Securities and Exchange Commission rules. Actual gains,
if any, on stock option exercises are dependent on the future performance
of our common stock, overall market conditions and, in some cases, the
option holders' continued employment through the vesting period. The
amounts reflected in this table may not necessarily be achieved.
(2) All options were granted at or above market value on the date of grant.
(3) Options were granted under our 1995 Stock Option Plan. 138,461 of the
shares subject to the options are fully vested and 552,847 of the shares
vest over a three-year period from the date of grant Those options vesting
over a three-year period vest at the rate of one-third on the first, second
and third anniversary of the date of grant.
(4) Options were granted under our 1995 Stock Option Plan and are fully vested.
(5) Options were granted under our 1995 Stock Option Plan. 70,000 of the
shares subject to the options are fully vested and 30,000 of the shares
vest in increments of 10,000 on February 1, 2001, August 1, 2001 and
February 1, 2002.
(6) Mr. Otto Lacayo, a trustee for the Lacayo Family Trust, was a director
until he resigned on May 30, 2000.
(7) Ms. Diane W. Dales, is a director. She is a director, private placements,
at Pacific Life Insurance Company.
Employment Agreements, Termination of Employment and Change-In-Control
Arrangements
In connection with FBR's investment in us in May 2000, more fully described
in "Certain Relationships and Related Transactions" above, Mr. Manuel Occiano
was reappointed our chief executive officer on May 30, 2000 under an employment
agreement expiring on May 30, 2003 that is renewable for one-year periods. He
will receive a base salary of $250,000. He was granted options to purchase
692,308 shares of our common stock exercisable at $0.50 per share, 138,461 of
which are immediately vested. The balance of the options vest at the rate of
one-third on the first, second and third anniversary of the date of grant. If
we terminate his employment without cause or if he resigns within 60 days after
he is removed from his position by us, he is forced to relocate more than 100
miles from the site of his present employment or we reduce his salary, he will
continue to receive his base salary for 180 days after such termination and all
unvested options will immediately become vested. Mr. Occiano had previously
served as our president and chief executive officer and as a director from
September 16, 1998 until December 22, 1999 when he resigned his positions. The
300,000 options that he had been granted in 1998 expired 90 days after Mr.
Occiano's resignation. His employment as president and chief executive officer
at that time was subject to a three-year employment agreement at a base salary
of $180,000 per year. His base salary was subject to an increase of up to 20%
each year if he met certain performance criteria as mutually agreed to with the
Compensation Committee of the board of directors. He was eligible to participate
in the management bonus pool to be established by the board of directors and was
entitled, during 1999 only, to quarterly advances of $22,500 to be credited
against the management bonus when earned.
Mr. John C. Hindman served as chief financial officer under a three-year
agreement expiring August 31, 2001. On December 22, 1999, our board of
directors appointed him to serve as a director and interim chief executive
officer as well as continuing as chief financial officer. Mr. Hindman resigned
these positions on May 30, 2000. During fiscal year 2000, Mr. Hindman received
a base salary of $125,000 per year. Mr. Hindman owed us $50,000 under a
promissory note dated September 4, 1998 whereby he used the $50,000 to purchase
33,000 shares of our common stock on the open market. In February 2000, we
agreed to purchase the 33,000 shares from him in exchange for cancellation of
the $50,000 note. Mr. Hindman held options to purchase 100,000 shares of our
common stock at an exercise price of $1.3125 per share. In February 2000 Mr.
Hindman gave up all rights to these options in exchange for fully vested options
to purchase 100,000 shares of our common stock at an exercise price of $0.625
per share. In connection with the FBR investment, Mr. Hindman also received a
one-time lump sum bonus of $62,500 and a bonus of $27,282.16, which represented
a bonus of $10,417 per month for every month of service that he completed
subsequent to the closing of the FBR transaction.
In connection with our acquisition of CPS, Mr. Russell Mohrmann was
appointed as a senior vice president as well as president of our subsidiary,
CPS, on August 14, 2000 under an employment agreement expiring on July 31, 2003
that is renewable for one-year periods. He will receive a base salary of
$200,000. If we terminate his employment, with or without cause, he will
continue to receive his base salary for 90 days after we provide him with notice
of such termination.
In connection with our acquisition of CPS, Mr. Robert Perez was appointed
as vice president, sales and marketing, on August 14, 2000 under an employment
agreement expiring on
July 31, 2003 that is renewable for one-year periods. He will receive a base
salary of $175,000. If we terminate his employment without cause, or if he
resigns within 60 days after he is removed from his position by us, he is forced
to relocate more than 100 miles from the site of his present employment or we
reduce his salary, he will continue to receive his base salary for 180 days
after such termination or resignation.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Certain Beneficial Owners and Management
The following tables set forth information, as of September 30, 2000,
concerning shares of our voting securities beneficially owned by (i) each
stockholder known by us to be the beneficial owner of more than 5% of any class
of our outstanding voting securities, (ii) each of our directors and our
executive officers, and (iii) all of our directors and executive officers as a
group. Unless otherwise indicated, each person listed has sole voting and
investment power over the shares beneficially owned by him or her.
Name and Address Amount and Nature of Percent
Title of Class of Beneficial Owner Beneficial Ownership(1) of Class
- ----------------- ----------------------------------- ----------------------- --------
common stock FBR Financial Fund II, L.P. (2) 15,000,000 69.7%
Potomac Tower
1001 Nineteenth Street North
Arlington, VA 22209
common stock Pacific Life Insurance Company (3) 2,310,000 10.7%
700 Newport Center Drive
Newport Beach, CA 92660
common stock Farrest Hayden (4) 980,109 4.1%
preferred stock 5400 Orange Ave., Suite 200 121,088 35.1%
Cypress, CA 92026
common stock Lacayo Family Trust (5) 772,048 3.1%
preferred stock 5400 Orange Ave., Suite 200 117,060 33.9%
Cypress, CA 92026
common stock Euro-American Productions, Ltd. (6) 375,900 1.7%
common stock The Belgravia Fund, Ltd (6) 73,400 *
common stock Manuel Occiano (7) 204,461 *
common stock John C. Hindman (8) 100,000
common stock Daniel Eder (9) 84,800 *
common stock Diane W. Dales (10) 2,310,000
common stock George L. McCabe, Jr. (11) 15,000,000
common stock Edward M. Wheeler (12) 15,000,000
common stock Russell Mohrmann (13) $2,278,500
common stock Robert Perez (14) $1,225,000
all directors
and officers Common stock 17,599,261 80.9%
as a group Preferred stock 0
(5 persons)
____________________
(1) Beneficial ownership is determined in accordance with the
applicable rules under the Securities Exchange Act of 1934. In
computing the number of shares beneficially owned by a person and
the percentage ownership of that person, shares of common stock
subject to options held by that person that are currently
exercisable, or become exercisable within 60 days from the date
hereof, are deemed outstanding. However, such shares are not
deemed outstanding for purposes of computing the percentage
ownership deemed outstanding of any other person. Percentage of
ownership is based on 21,526,909 shares of common stock and
345,000 shares of preferred stock.
(2) Messrs. George L. McCabe, Jr. and Edward C. Wheeler, our
directors, are managing directors of FBR Financial Fund II, L.P.
(3) Ms. Diane W. Dales, our director, is a director, private
placements at Pacific Life Insurance Company. Includes 10,000
shares of common stock that can be acquired within 60 days of the
date of this Information Statement upon the exercise of options.
(4) Mr. Farrest Hayden was a director until he resigned in April,
2000. Includes 100,000 shares of common stock that can be
acquired within 60 days of the date of this Information Statement
upon the exercise of options.
(5) Mr. Otto J. Lacayo, a trustee for the Lacayo Family Trust, was a
director until he resigned on May 30, 2000. Includes 100,000
shares of common stock that can be acquired within 60 days of the
date of this Information Statement upon the exercise of options
(6) Mr. Graham E. Gill, is the president of Euro-American Production,
Ltd and the Belgravia Fund, Ltd., was a director until he
resigned in May, 2000. Includes 25,000 shares of common stock
that can be acquired within 60 days of the date of this
Information Statement upon the exercise of options.
(7) Mr. Manuel Occiano is a director and our chief executive officer.
Includes 138,461 shares of common stock that can be acquired
within 60 days of the date of this Information Statement upon the
exercise of options
(8) Mr. John C. Hindman was chief financial officer, interim chief
executive officer and a director until he resigned on May 30,
2000. Includes 100,000 shares of common stock that can be
acquired within 60 days of the date of this Information Statement
upon the exercise of options.
(9) Mr. Eder was chief operating officer. Includes 80,0000 shares of
common stock that can be acquired within 60 days of the date of
this Information Statement upon the exercise of options.
(10) Includes 2,300,000 shares of common stock held by Pacific Life
Insurance Company Includes 10,000 shares of common stock that
can be acquired within 60 days of the date of this Information
Statement upon the exercise of options held by Pacific Life. Ms.
Dales, our director, is a director, private placements, of
Pacific Life Insurance Company, and may be deemed to have voting
or investment control with respect to these shares. Ms. Dales
disclaims beneficial ownership with respect to these shares.
(11) Includes 15,000,000 shares of common stock held by FBR Financial
Fund II, L.P. Mr. McCabe, our director, is a managing director of
FBR, and may be deemed to have voting or investment control with
respect to these shares. Mr. McCabe disclaims beneficial
ownership with respect to these shares.
(12) Includes 15,000,000 shares of common stock held by FBR Financial
Fund II, L.P. Mr. Wheeler, our director, is a managing director
of FBR, and may be deemed to have voting or investment control
with respect to these shares. Mr. Wheeler disclaims beneficial
ownership with respect to these shares.
(13) Mr. Russell Mohrmann is an executive vice president and president
of our subsidiary, CPS. Includes 3,255,000 shares of common stock
that can be acquired within 60 days of the date of this
Information Statement upon the exercise of convertible notes held
by himself, Hospital Employee Labor Pool, Insource Medical
Solutions, and RBA REM-CARE.
(14) Mr. Robert Perez is senior vice president of sales and marketing.
Includes 1,750,000 shares of common stock that can be acquired
within 60 days of the date of this Information Statement upon the
exercise of a convertible note held by himself.
*Represents less than 1% of the class of shares
ANNUAL REPORT
A COPY OUR ANNUAL REPORT ON FORM 10-KSB AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION, INCLUDING FINANCIAL STATEMENTS AND NOTES THERETO, IS BEING
MAILED TO EACH STOCKHOLDER TOGETHER WITH THIS INFORMATION STATEMENT. ADDITIONAL
COPIES OF THE ANNUAL REPORT MAY BE OBTAINED BY STOCKHOLDERS WITHOUT CHARGE BY
WRITING TO US AT OUR ADDRESS SET FORTH ON THE COVER OF THIS INFORMATION
STATEMENT.
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires our directors
and certain of our officers, and persons who own more than 10% of a registered
class of our equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission (the "SEC"). Officers,
directors and greater than 10% stockholders are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file.
Based solely on our review of the copies of such forms received by us, or
written representations from certain reporting persons, we believe that during
the fiscal year ended September 30, 2000, all filing requirements applicable to
our officers, directors and greater than 10% beneficial owners were complied
with during the fiscal year, except that Form 3, Initial Statement of Beneficial
Ownership, and Form 5, Annual Statement of Changes in Beneficial Ownership, for
Mr. Manuel Occiano were not timely filed.
OTHER BUSINESS
No further business was transacted by written consent to corporate action
in lieu of a meeting of stockholders to which this Information Statement
pertains.
COSTS OF INFORMATION STATEMENT
This Information Statement has been prepared by us and our board of
directors, and we will bear the costs of distributing this Information Statement
to our stockholders, including the expense of preparing, assembling, printing,
and mailing this Information Statement and attached materials. Although there
is no formal agreement to do so, we may reimburse banks, brokerage houses, and
other custodians, nominee and fiduciaries for their reasonable expenses in
forwarding this Information Statement and related materials to our stockholders.
We may pay for and use the services of other individuals or companies not
regularly employed by us in connection with the distribution of this Information
Statement if our board of directors determines that this is advisable.
By the order of the Board of Directors,
/s/ George L. McCabe, Jr.
----------------------------
George L. McCabe, Jr.
Chairman of the Board
Cypress, California
January 26, 2001