UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 14, 2004
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TENET INFORMATION SERVICES, INC.
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(Exact name of registrant as specified in its charter)
Utah 000-18113 87-0405405
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(State of Incorporation) (Commission File Number) (I.R.S. Employer
Identification No.)
3380 North El Paso Street, Suite G
Colorado Springs, Colorado 80907
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(Address of principal executive offices) (Zip Code)
(719) 630-3800
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(Registrant's telephone number, including area code)
53 West 9000 South
Sandy, Utah 84870
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(Former name or former address, if changed since last report)
Item 1. Changes in Control of Registrant
On July 14, 2004, and effective as of June 30, 2004, Tenet Information Services,
Inc. ("Tenet") and Let's Go Aero Inc., Colorado Springs, Colorado, ("LGA")
entered into a definitive agreement for LGA's shareholders to acquire a
controlling interest in Tenet through a stock-for-stock exchange. All of LGA's
shareholders will exchange all of their shares of LGA common stock for a total
of 5,762,232 newly issued shares of Tenet's $.001 par value common stock. The 14
former LGA shareholders will then own in the aggregate 85% of the issued and
outstanding shares of Tenet.
The following table contains information as of June 30, 2004, summarizing the
expected beneficial ownership of Tenet common stock by (1) each person known to
Tenet to be the beneficial owner of more than 5% of its issued and outstanding
common stock, (2) Tenet's executive officers and directors individually, and (3)
all Tenet's executive officers and directors as a group. Except as stated in the
footnotes to the table, each of these persons exercises sole voting and
investment power over the shares of common stock listed for that person.
Name and Address Number of Percentage of
of Beneficial Owner Tenet Common Outstanding
as of June 30, 2004 Position Shares Held Shares Held
--------------------------- ----------------- ------------- -------------
Marty Williams (1, 2) President, 2,241,742 30.4
5565 Teakwood Terrace Chief Executive
Colorado Springs, CO 80918 Officer,
Director
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Sara Williams (1, 3) Secretary, 2,241,742 30.4
5565 Teakwood Terrace Treasurer,
Colorado Springs, C) 80918 Director
--------------------------- ----------------- ------------- -------------
Eric J. Nickerson (4) Director 2,008,667 27.7
1711 Chateau Ct.
Falston, MD 21047
--------------------------- ----------------- ------------- -------------
Floyd Murray NA 1,134,038 16.1
13020 Caraway Dr.
Sun City West, AZ 85375
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Matthew Tynan NA 463,390 6.6
Tynan's VW
700 S. Havana
Denver, CO 80012
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Matthew Drabczyk NA 455,198 6.6
Restaurant Interiors, Inc.
5530 Joliet St.
Denver, CO 80239
--------------------------- ----------------- ------------- -------------
Third Century II (5) NA 2,008,667 27.7
1711 Chateau Ct.
Falston, MD 21047
--------------------------- ----------------- ------------- -------------
All Officers and Directors 4,250,409 55.7
as a Group (3 Persons (6)
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Notes to Table:
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1. Sara Williams and Marty Williams are husband and wife.
2. Includes 1,855,000 shares owned as joint tenant with Sara Williams, options
to acquire 193,971 shares and options to acquire 193,971 shares owned by
Sara Williams.
3. Includes 1,855,000 shares owned as joint tenant with Marty Williams,
options to acquire 193,971 shares and options to acquire 193,971 shares
owned by Marty Williams.
4. Includes 1,714,111 shares owned by Third Century II and options to acquire
261,827 shares owned by Third Century II. Mr. Nickerson is Senior Partner
of the investment company Third Century II. Mr. Nickerson disclaims
beneficial ownership of all of the shares and options owned by Third
Century II. Includes 245,000 shares of Tenet owned prior to Tenet's
acquisition of LGA.
5. Includes 32,729 shares owned by Eric J. Nickerson.
6. The Directors are Marty Williams, Sara Williams and Eric J. Nickerson and
includes the shares deemed directly or indirectly beneficially owned by
each of them.
2
Note: Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Shares subject to options, warrants and
convertible notes currently exercisable or convertible, or exercisable or
convertible within 60 days are deemed outstanding for computing the percentage
of the person or entity holding such securities, but are not outstanding for
computing the percentage of any other person or entity. Except as indicated by
footnote, and subject to community property laws where applicable, the persons
named in the table above have sole voting and investment power with respect to
all Shares shown as beneficially owned by them.
The former Directors of Tenet appointed Marty Williams and Sara Williams as
Directors of Tenet pursuant to the terms of the Acquisition Agreement, Stock for
Stock. Marty Williams was appointed by the new Tenet Board of Directors as
President and Chief Executive Officer of Tenet and Sara Williams was appointed
as Secretary, Treasurer and Chief Financial Officer of Tenet. Under the terms of
that same agreement, Jerald L. Nelson and Fred J. Anderson resigned as officers
and Directors of Tenet. Eric J. Nickerson continued his position as a Director
of Tenet.
Brief resumes of Marty Williams, Sara Williams and Eric J. Nickerson follow:
MARTY WILLIAMS is the Company founder and is responsible for establishing and
maintaining the corporate mission and culture. He is responsible for product
creation, strategic planning, and the entrepreneurial spirit. He also directs
and coordinates the Company's financing to provide funding for new and
continuing operations. Mr. Williams' professional experience includes many
different areas in the securities industry where he applied his knowledge of
small business operations, finance, strategic development and business modeling.
As an independent broker at Schneider Securities, Inc., Denver, Colorado, from
1988 to 1991 and again from 1993 to 1999, Marty was principally involved in
development of private placement offerings for early stage companies and the
subsequent sales of those offerings. From 1991 to 1993 he was a stock broker
with RAF Financial, Denver, Colorado. He has a Bachelor of Science in Business
Administration, University of South Dakota.
SARA WILLIAMS manages daily business flow, business development, product
inquiries, marketing, promotions, account management, dealer relations, sales
and customer service, order fulfillment, shipping and accounting. Mrs. Williams'
professional experience includes many areas in advertising, software
development, operations, and product development. She has been involved in
direct sales, account management and start-up business management in the areas
of print advertising, new business development, customer relations, and
marketing. At Sunset Publishing Corporation, Menlo Park, California, as a Direct
Sales Representative, Mrs. Williams was involved in the development of new
accounts and new advertising promotions. While working for Saligent, Inc.,
Colorado Spring, Colorado, Mrs. Williams was occupied with inside sales
management, program development, supervision and training. She has a Bachelor of
Arts in Political Science, The Colorado College.
ERIC J. NICKERSON has served as a Director of Tenet since June of 1990 and as a
Director of LGA since April 2001. Mr. Nickerson was a member of the faculty of
the United States Military Academy at West Point, New York from 1989 to 1993. In
June 1993, Mr. Nickerson retired as a United States Air Force officer.
Currently, Mr. Nickerson is a private investor and directs personal accounts and
two investing partnerships: "Third Century II" and "Z Fund."
3
Item 2. Acquisition or Disposition of Assets.
On July 13, 2004, and effective as of June 30, 2004, Tenet Information Services,
Inc. ("Tenet") and Let's Go Aero Inc., Colorado Springs, Colorado, ("LGA")
entered into a definitive agreement for LGA's shareholders to acquire a
controlling interest in Tenet through a stock-for-stock exchange. As a result of
the exchange of shares, Tenet now holds LGA as a wholly owned subsidiary.
Therefore, Tenet has effectively acquired all of the assets of LGA. At the same
time, however, control of Tenet has shifted to the former shareholders of LGA
who now own in the aggregate (or will own after all of the shares of LGA are
tendered) 85% of the outstanding stock of Tenet (5,762,232 newly issued shares
of Tenet's $.001 par value common stock). Tenet has also moved its principal
office and business operations to 3380 North El Paso Street, Suite G, Colorado
Springs, Colorado 80907.
The consideration involved in the transaction, that is, the number of shares of
Tenet common stock issued to LGA's shareholders, was determined through
negotiations between Tenet's former officers and LGA's officers taking into
account various factors including, but not limited to, the amount of cash that
Tenet had prior to the acquisition, the book value of LGA prior the acquisition,
LGA's future business prospects, the post-acquisition control of Tenet by former
LGA shareholders, Tenet's shareholder base and trading market for its common
stock, and interests of the principal shareholders common to each of the
companies. (Third Century II and Eric J. Nickerson were direct or indirect
beneficial owners of stock in both of the companies prior to the acquisition. In
addition, Mr. Nickerson was a Director of both companies prior to the
transaction. Please refer to Item 1 of this Form 8-K.)
Prior to the transaction, LGA note holders agreed to convert substantially all
of their approximately $1.3 million principal and accrued interest into common
stock of LGA which will then be exchanged for shares of Tenet common stock as
those persons tender their shares of LGA. These shares of Tenet common stock are
included in the 5,762,232 shares of newly issued Tenet common stock referred to
above. In addition, LGA has a commitment from an existing shareholder, Third
Century II, to act as a purchaser of last resort, following the transaction, of
up to $250,000 in new equity. The commitment to purchase this new equity is
contingent on LGA first using its best efforts to find an alternative source for
the $250,000 investment.
Prior to the acquisition, Tenet, as a result of the sale of all its remaining
operations on October 22, 2003, was a publicly traded company with no business
operations, but with approximately $200,000 in cash and receivables after
subtraction of liabilities. The Company had 1,016,860 shares of common stock
outstanding at June 30, 2004, just prior to the effective date of the
acquisition.
LGA was a privately held company and is a product design and engineering company
based in Colorado Springs, Colorado. It develops and sells novel cargo
management solutions for the automotive, recreation vehicle and recreation
industries.
Let's Go Aero, Inc.
LGA is in the business of designing and selling gear management solutions for
the automotive and recreation industries. LGA's family of products use patented
designs, and includes the Herman(R) line of Sport Performance Trailers(R), and
the Remora(TM) line of hitch-mount cargo carriers. LGA was formed in 1998. For
the year ended 12/31/2003 it had sales of approximately $152,000, a gross profit
of approximately $55,500 and a net operating loss of approximately $273,000
(including approximately $78,000 of interest that had accrued and will be
converted into common stock as mentioned above). LGA's financial statements have
been audited through December 31, 2003 and will be audited through June 30,
2004. The financial statements will be filed as an amendment to this Form 8-K
within 60 days of its original filing date. LGA will change its fiscal year end
to June 30 to match that of Tenet and take advantage of reduced accounting costs
and the low point of the natural cycle of LGA's business.
4
Company
LGA was founded as a product design, development and engineering company. It
specializes in providing novel solutions for vehicular cargo carrying
enhancements. LGA has patents issued and pending that protect its intellectual
property. These patents and claims relate to how cargo can be attached and
carried on a vehicle's hitch receiver, frame, or body surface. Some examples
are:
o Silent Hitch Pin(TM) rigidly couples the connection between the trailer
hitch receiver and any inserted ball mount or accessory;
o TwinTube(TM)provides a universal mounting structure for carrying gear and
equipment with a receiver style hitch;
o The fully-enclosed, encapsulated, and easy-opening designs of LGA's product
enclosures for cargo safety, security, and accessibility;
o Extensive designs for the use of C-Channel for making "Hardpoint"
attachments to LGA's carriers, trailers, and all vehicular surfaces; and
o A system for spare tire and cargo carrying for the General Motors Hummer
line of vehicles.
LGA also has numerous product extensions and accessories that complement and
expand these core technologies.
LGA's intellectual property has broad application in the automotive industry,
and several automotive original equipment manufacturers (OEM's) are in various
stages of integrating aspects of LGA's technology into their product lines. In
May 2002, LGA licensed various pieces of its intellectual property to Valley
Industries, Inc., an affiliate of Advanced Accessory Systems, LLC, (AAS), the
largest supplier to automotive manufacturers worldwide of LGA style products.
These product licenses resulted in the payment to LGA of $300,000 and an ongoing
royalty of 10% of the revenues (after $300,000) Valley Industries generates with
the technology.
At the November 2002 Specialty Equipment Manufacturers Association (SEMA) annual
trade show, LGA won the GMC Professional Grade Challenge for the Best New SUV
Accessory Idea. This prestigious award from General Motors Corp. is for the
Company's TwinTube system technology.
LGA has and will continue to develop intellectual property for the Automotive,
recreation vehicle and recreation industries. It is LGA's intent to license its
technology to the industry leaders that can most effectively bring the licensed
technology to market. LGA will generally license the production and sales of its
products for an up-front fee and an ongoing royalty based on unit sales.
Products
LGA currently has four product lines that it has been selling for over four
years and two product lines that are emergent. These product lines are describes
as follows:
o HERMAN(R) Sport Performance Trailers(R). LGA's Herman(R) line of Sport
Performance Trailers(R) are designed for carrying all types of personal,
recreational, and commercial gear in an aerodynamic, weather-resistant,
secure and attractive transport.
5
o REMORA(TM) Carriers. The Remora(TM) hitch based carrier line consists of
two fully enclosed cargo carrier models, Remora(TM) SUV and Mini, with
three structural options to choose from for varying function while on the
vehicle's hitch receiver. These patented designs offer versatility,
security and safety.
o SILENT HITCH PIN(TM). This anti-vibration device takes all movement out of
the connection between the vehicle towing system and what's being towed or
carried. In short, it freezes the attachment securely in place. Universal
and adaptable, it works with most consumer vehicle towing systems.
o TWINTUBE(TM) System. The TwinTube(TM) (TT(TM)) System is a new,
patent-pending design that has been licensed to Advanced Accessory Systems
for sale to the automotive OEM's and the after-market. TwinTube(TM) is a
universal mounting structure for carrying gear and equipment with a hitch
receiver. Let's Go Aero is integrating this technology into all of its
hitch based carriers during the second half of 2004. TwinTube(TM) is also
available as a UBI(TM) system (U-Build-It).
o GEARDECK(TM) System. Incorporating LGA's novel TwinTube(TM) technology,
GearDeck(TM) is a modular carrier that functions as an open platform
carrier or a fully-enclosed carrier through the use of a modular hardtop
lid enclosure that is easily attached and removed. The open platform can
carry bicycles, among many other large items; the full enclosure system
carries all kinds of general cargo as well as items such as power
generators.
o SPIDERGEAR(TM) H2 Carrier System. SpiderGear(TM) is a novel patent pending
design for carrying gear, bikes and the General Motors Hummer H2 spare tire
on the rear of the vehicle. This project has the potential to generate an
up front license fee and ongoing royalties for LGA. The technology involved
in this system has broad potential for use on vehicles beyond the Hummer
line.
o Hardpoint(TM) Technology. LGA has patents issued and patents pending for
the integration of C-Channel onto vehicle surfaces, including pickup truck
beds, vehicle roofs and tailgates. The Hardpoint(TM) system is another
potential source of royalty revenue for LGA in the future.
Business History
The impetus for LGA was a 1990 concept for a lightweight aerodynamic trailer to
carry recreational gear. This concept led to the creation of a prototype product
that was tested in 1997. In the fall of 1997, LGA began work on what came to be
the Herman(R) line of Sport Performance Trailers(R) (SPT). The first Herman(R)
SPT hit the road in July 1998, and LGA debuted two Herman(R) SPT's at the
Interbike Trade Show in October 1998.
During the development of the Herman(R) product, several additional product
opportunities became apparent. The Herman(R) Hardpoint(TM) system was designed
using Unistrut(TM) and/or B-Line(TM) engineering C-Channel. The Hardpoint(TM)
system appeared to have great promise for use in the motor vehicle and
recreation vehicle industries, and LGA filed patent claims for the integration
of C-Channel on vehicular surfaces in 1998. The original patent claims for
Hardpoint(TM) technology were issued in 2001. LGA has also filed many
continuation claims for this technology.
After the Interbike Show in the Fall of 1998, LGA began receiving orders for
Herman(R) trailers. Medallion Plastics in Elkhart, IN became LGA's manufacturer
of Herman(R) trailers in January 1999.
6
In early 1999, LGA joined the Specialty Equipment Market Association (SEMA).
SEMA is the largest trade organization for the automotive aftermarket industry.
Basically, SEMA is the entire automotive industry worldwide, less new vehicle
sales. LGA displayed its products at SEMA's industry convention in November 1999
as a debut to the automotive industry.
During the development of the Herman(R) line, the Company developed a concept
for a hitch based cargo carrier line that resulted in LGA's Remora(TM) product
line. The Remora(TM) SUV capsule also debuted at the 1999 SEMA convention.
LGA went on to design the Silent Hitch Pin(TM). LGA's patent application for the
Silent Hitch Pin(TM), which was filed in mid-2000, was granted in May 2003. In
early 2000, LGA moved the production of its products from Medallion's operation
in Elkhart to Prodesign, a Division of Coachmen Industries, Inc., which is also
based in Elkhart, IN.
After the SEMA 2001 convention LGA entered into a relationship with J.S.
Chamberlain and Associates. Chamberlain and Associates has been an automotive
supplier developer since the early 1960's. Through a series of meetings arranged
by Chamberlain, LGA and Valley Industries, Inc. agreed to a product license for
LGA's Silent Hitch Pin(TM) and Twin-Tube(TM) Technology in May 2002.
At the SEMA 2002 convention LGA won the Best New SUV Accessory Idea from General
Motors Corporation for its TwinTube(TM) carrier system.
The Future
LGA has the Herman(R) trailer line, Remora(TM) line, Silent Hitch Pin(TM) line,
the GearDeck(TM) system, and TwinTube(TM) UBI(TM) that are patent protected. LGA
also has a novel new carrier system designed for GM's Hummer line of vehicles.
LGA's Hardpoint(TM) technology may also be a significant royalty generator for
LGA in the future.
LGA's future focus is on partner and product development. There is a very large
consumer market for LGA's products and its approach to this market is to enter
it through partnership arrangements with large existing participants.
LGA has been doing product testing, primarily with its Herman(R) trailer, with
the U.S. Military for 18 months. LGA recently delivered a customized Herman(R)
trailer to the Air Force Rapid Deployment Security Forces for use with their
Honda ATV's.
LGA is in discussions with various automotive and recreation vehicle OEM's for
custom versions of its products and technology that compliment and extend the
capabilities of the OEMs' vehicles.
Sales and Objectives
Objectives
To establish manufacturing, sales and marketing partners for LGA's products
domestically and internationally To continue product development and invention
work where a clear payoff is predictable To establish positive operating cash
flow and earnings
LGA has begun licensing Valley Industries, Inc. and its affiliate, Sport Rack
International, Inc., to manufacture and sell LGA designs in the consumer market.
At the same time, LGA is focusing on numerous opportunities to customize its
products for business, military, police department, homeland security and
governmental use.
7
Customer Direct Sales
Close to 50% of LGA's sales revenue has come from direct-to-customer sales that
are the result of the customer finding its web site. LGA has exhibited products
at several trade shows over the last four years. Primarily LGA has attended the
SEMA automotive trade show that is held annually in early November in Las Vegas.
LGA has also displayed its products at the Denver International Auto show and
the Denver Sportsman show.
LGA has promoted its products primarily through a "Public Relations" approach.
As a result of these efforts, LGA has spent little on direct advertising, yet
has been featured in many national magazines, newspapers, and TV and radio
shows. Because LGA's product designs are novel, publishers of magazines
frequently feature its products in the magazines "New Product Review" sections
along with LGA's address and web site. This approach has been key to LGA's
products getting discovered, while keeping its promotional expenses low.
LGA's customers also provide great leads for product sales. In addition to
current owners giving LGA positive reviews to prospective new owners, LGA's
products all feature its web site address on its product logo. LGA regularly
gets inquiries from individuals who have seen LGA products in the field.
It is LGA's intent to establish a sales relationship with market partners or an
OEM, to promote, manage and distribute its product lines for gear transport
through the partner's established market channels.
Market for Products
For many years, people have been increasing their recreation time and recreation
interests. This trend has spurred a dramatic increase in the purchase of sport
utility vehicles (SUV), mini-vans, and pick-up trucks. The purchase of these
style vehicles reflects in part the consumers' perceived need for increased
cargo capacity.
Today nearly 50% of American households own a SUV, mini-van, or pick-up truck,
and 70% of these vehicles are equipped with tow packages from the factory in
addition to aftermarket hitch installations of nearly 6 million estimated for
2003 alone.(1) Accessory item sales for these vehicles, a segment of the
automotive specialty equipment industry, have grown nearly 60% in the past ten
years, and hitch accessories continue to represent the fastest growing segment
of the SUV's aftermarket accessory sales.(2) LGA's Sport Performance
Carriers(TM) and products serve this expanding market. According to the
Specialty Equipment Manufacturers Association (SEMA), the overall automotive
retail after-market equipment sales for 2000 exceeded $23 billion.(3) Accessory
and appearance products are estimated to represent 54% of those sales.(4) In
addition, SEMA reports that the marketplace has expanded nearly 60% since
1990.(5) Sales of sport utility vehicles and passenger vans have increased by
more than 10% annually during the same time period.(6) For the first time in the
history of the automotive industry, in 2002 more SUV's and Trucks were sold than
passenger cars. Many of these SUV's and trucks are coming with hitch receivers
from the factory, and the trend of towing equipment being a standard vehicle
feature is accelerating.
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(1) Specialty Equipment Market Association, Market Highlights, 2001 & 2002
Market Study.
(2) Ibid.
(3) Ibid.
(4) Ibid.
(5) Ibid.
(6) Ibid.
8
Based on SEMA research, in 1999 there were 3,800,000 receiver style hitches
either installed by the aftermarket or delivered on new vehicles. In 2002, that
number climbed to 4,900,000 and by 2005 it's projected that the number will
increase to 5,800,000 units.
The installed base of receiver style hitches presents a large latent market for
LGA's products. Further, LGA believes that the automotive OEM's would like to
migrate the accessories currently being carried on the roofs of SUV's to the
receiver hitch to lower the roll-over risk of already top heavy SUV's and
provide consumers with more convenient cargo carrying solutions.
Competition
The sport equipment carrier market is a competitive environment with numerous
participants that are larger than LGA and have the following advantages relative
to LGA:
Name recognition
Several competitors, like Yakima Products and Thule have long established names
with the consuming public. LGA is still relatively unknown. It can take years to
establish a Brand name and LGA is at the beginning of exposing it's products and
brand to the public
Distribution programs
Several competitors products are widely distributed in multiple market channels.
LGA has limited distribution and a small dealer base compared to the
competition. It is a difficult process to establish distribution and quality
dealers.
OEM programs
Several competitors have established supply agreements with the OEM's in the
automotive and RV industries. LGA has had limited success at supplying OEM's
with it's products for resale to the OEM's customers. LGA is just beginning the
sales process with OEM's and there is no guarantee of success.
Product Lines
Several competitors have broad product lines compared to LGA. LGA does not
participate in the roof top market and does not plan to participate in this
market, except potentially in a limited way with one emergent product line.
In terms of product strength, LGA has several distinct advantages over the
competition:
o Large cargo capacities and lightweight designs easily surpass the cargo
transport capabilities of roof top products and other receiver based
products currently on the market
o The opening systems enable LGA products to enclose space more efficiently
o LGA enclosed carrier products offer increased security over open carriers
o LGA products are safer than rooftop carriers, their primary competitor
o Patent filings protect LGA products' excellent ergonomics and efficiencies
o LGA products' superior aerodynamic efficiencies minimize impact on fuel
economy
o Multiple product offerings provide consumers with various options and price
consideration
9
Opening Systems
LGA's Herman(R) and Remora(TM) capsules represent a new category of container.
These containers have shells that are concave so that the lids open by dropping
and "nesting" under the base. When closed, the shells are "self-reinforcing" and
very tough.
Content Security
LGA's Herman(R) and Remora(TM) carriers are lockable and fully enclosed so the
owner's gear is in a water and dust free environment. When traveling, having
gear out of sight is one of the best theft prevention. This means high value
lightweight objects like cameras and computers can be stowed in LGA's carriers.
Safety Factor
Safety comes in many forms for LGA customers. When compared to roof-based
systems, LGA carriers do not raise a vehicle's center of gravity and therefore,
when compared to a similar weight on the roof of a vehicle, make the vehicle
less prone to rollover.
LGA's carriers are also loaded by standing on the ground. Roof carriers are
commonly loaded by standing on a running board, a doorsill or a stepladder--all
very precarious positions from which to be lifting and moving gear. Most roof
systems are limited to 100 pounds of gear weight. Most SUV hitch receivers are
rated for 500 pounds of load carrying.
Patent Protection
Starting in 1998, LGA has been very diligent at protecting its technology with
"utility" patent protection, which is the highest form of invention protection.
Utility patents are issued for truly novel technological achievements. The
method by which LGA's product capsules open, the Hardpoints(TM) used on LGA's
products, the way LGA's Remora(TM) carrier platforms slide and pivot, and the
features of the Silent Hitch Pin(TM) are all patented key aspects of LGA's
products. The advantages of patent protection can be seen most clearly with the
Silent Hitch Pin(TM) and the TwinTube(TM) system. LGA has licensed this
technology to Valley Industries, Inc. and is currently supplying the Silent
Hitch Pin(TM) to, among others, U-Haul. Before LGA licensed the pin to Valley,
it was sold it as a private label product to Dalan towing equipment, Sure-Pull
and Hidden Hitch.
Aerodynamic Efficiencies and Fuel Economy
LGA's Herman(R) line of Sport Performance Trailers(R) are extremely fuel
efficient. During informal testing, it took one more gallon of gas to pull an
empty Herman(R) SPT 300 miles than without pulling it.
LGA's Remora(TM) carriers have no noticeable effect on fuel economy. When used
on an SUV, these carriers sit in the vehicle's draft.
Volume and Weight Advantages
Because of LGA's superior capsular designs, its products offer the best
"space-to-weight" ratio of any cargo carrying products on the market. The
Herman(R) SPT weighs in at 235 pounds empty and encloses approximately 86 cubic
feet. A standard "Box" trailer with similar storage capability weighs close to
1,000 pounds empty, meaning that a fully loaded Herman(R) SPT weighs less than a
comparable empty box trailer. LGA's Remora(TM) line attaches to the strongest
point on a vehicle, the hitch receiver. LGA rates its Remora(TM) carriers for
300 pounds of cargo carrying, which gives the owner of a standard SUV three
times the weight carrying ability of a roof top box. Further, LGA's Remora(TM)
mounting systems have been independently tested to more than four times the
rated capacity with room to spare.
10
Manufacturing and Development
Manufacturing
LGA's focus is on product and technology development. LGA's licensees are
responsible for manufacturing the designs. LGA does have numerous vendors it
successfully utilizes to fabricate its products. LGA has had four different
vendors produce over 15,000 Silent Hitch Pins(TM) in Taiwan and India and
deliver the pins packaged and carded to its warehouse in Colorado. X xxLGA has
had a four-year relationship with Prodesign, LLC of Elkhart, Indiana, a division
of Coachmen Industries, Inc., a NYSE company. Prodesign fabricates LGA's
Herman(R) trailers, Remora SUV(TM), and Remora Mini(TM) capsules. Prodesign
"turn-key" manufactures these products to 100% finished goods and packages them
for shipment. Upon completing the products and packaging them, Prodesign
invoices LGA for its negotiated part cost. LGA then delivers orders with
shipping information to Prodesign for pick up by one of LGA's preferred
shippers.
LGA also has relationship with Welded Products of Elkhart, Indiana for the
fabrication of its hitch carrier structural systems including TwinTube(TM).
Welded has completed numerous production runs over the last three years and
ships the systems to LGA in bulk form for final assembly and packaging.
LGA has manufacturers that contact it regularly to solicit contract
manufacturing business, but management is currently satisfied with its vendors
and does not anticipate changing these relationships in the foreseeable future.
LGA is actively engaged in specifying sources for all its assembly services, raw
materials and parts in order to ensure that its products meet its quality and
performance standards. All specified raw materials and parts or acceptable
substitutions are available from many suppliers, and LGA does not rely on any
one supplier the loss of which would cause any long term adverse consequences to
LGA. That being said, however, LGA has formed close working relationships with
its current suppliers, such as Bayer(R) Plastics and Prodesign.
Shipping
The shipping cost of LGA's products is reasonable considering some of the
products' sizes. LGA has shipped over 500 units from Elkhart to destinations
throughout the United States. LGA has had few freight claims for damaged goods
and believes it has the packaging adequate to properly protect the product.
Both Herman(R) and Remora(TM) products have modest final assembly requirements
for the customer or dealer to complete.
LGA utilizes the shipping services of Roadway and R&L Carriers among others.
Research and Development
LGA will continue product development and invention work where a clear payoff is
predictable. LGA's staff is considering numerous ways to branch and grow its
current products depending on market demand. LGA's staff is constantly working
on new product designs and improvements to protect and expand LGA's existing
intellectual property.
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Regulation
LGA has adopted all applicable standards from United States National Highway
Transportation Safety Administration regulations and maintains adherence to
Society of Automotive Engineers guidelines and specifications. In addition, both
federal and state authorities regulate the manufacturers and sellers of
recreational and family cargo transports. LGA is a licensed vehicle manufacturer
in the State of Colorado and has obtained federal and state permits, licenses,
and bonds required to operate.
LGA's products have been independently tested for impact and temperature
extremes. LGA's Silent Hitch Pin(TM) and Remora(TM) Spine and Frame structural
systems have been tested for load carrying strength.
LGA has had Corporate and Product Liability insurance for the last four years
and has not had a product liability claim. Further, as LGA successfully licenses
its designs, generally the licensee will be responsible for carrying
manufacturer and product liability insurance.
LGA has registered with or obtained memberships, licenses, permits, or
certificates from the following organizations and agencies:
Society of Automotive Engineers (SAE);
National Highway Transportation Safety Administration (NHTSA); Dealer Section of
the Department of Motor Vehicles, State of Colorado; Specialty Equipment Market
Association (SEMA); and Family Motor Coaching Association (FMCA).
Employees
LGA currently has three full-time employees including its officers, Marty
Williams and Sara Williams, and an office manager. LGA has one part-time
products engineer, Matthew Drabczyk, who is also a major LGA shareholder. Please
refer to Item 1 of this Form 8-K, above.
Property
LGA currently leases 2,500 square feet of office and warehouse space at its
principal place of business in Colorado Springs. LGA entered into this lease in
June 2004 and expects its facilities will be sufficient for the three-year term
of the lease.
Item 4. Changes in Registrant's Certifying Accountant.
As a consequence of the change in control of Tenet to the former shareholders of
LGA and the move of Tenet's principal office and business operations to Colorado
Springs, Colorado, Tenet's new Board of Directors approved of the dismissal of
its certifying accountant in Salt Lake City, Utah, and the change to LGA's
certifying accountant, Cordovano & Honeck, P.C., Denver, Colorado. The effective
date of the dismissal and the appointment of the new accountant was June 30,
2004.
Neither of the reports on the financial statements for the past two years
contained an adverse opinion or disclaimer of opinion, or was modified as to
uncertainty, or accounting principles.
There were no disagreements with the former accountant on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which, if not resolved to the former accountant's
satisfaction, would have caused it to make reference to the subject matter of
the disagreement in connection with its report.
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Neither the issuer (nor anyone on its behalf) consulted the new accountant
regarding the application of accounting principles to a specific completed or
contemplated transaction, or the type of audit opinion that might be rendered on
Tenet's financial statements.
Item. 5. Other Events and Regulation FD Disclosure.
Tenet's Form 10-Q for the period ended March 31, 2004 mistakenly stated that the
Acquisition Agreement, Stock for Stock between it and LGA was subject to the
approval of the shareholders of both companies. LGA shareholders' approval is
manifested through their execution of Subscription Agreements regarding the
Tenet shares and tender of their LGA shares for the exchange. Tenet's
shareholders, however, will not be solicited for approval of the transaction.
Under Utah law, Tenet's Board of Directors has all sufficient power and
authority to approve the transaction and issue the Tenet shares under the terms
of the Acquisition Agreement.
Item 7. Financial Statement and Exhibits.
Financial statements and pro forma financial information required by this item
will be filed by amendment to this Report no later than 60 days after the date
this Report is filed, that is on or before September 19, 2004.
Exhibits:
2(A)-----------Acquisition Agreement, Stock for Stock
16(A)----------Letter on Change in Certifying Accountant (to be filed by
amendment when available)
23(A)----------Consent of Cordovano & Honeck, P.C. (to be filed by amendment
with filing of financial statements and pro forma financial
information)
Certain statements made herein are forward-looking statements under the Private
Securities Litigation Reform Act of 1995. They include statements regarding the
timing and expected benefits of the acquisition of LGA by Tenet. These
statements are based on management's current expectations and estimates; actual
results may differ materially due to certain risks and uncertainties. For
example, the ability of LGA to achieve expected results may be affected by
external factors such as competitive price pressures, conditions in the economy
and industry growth, and internal factors, such as future financing of the
acquired operations and the ability to control expenses.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TENET INFORMATION SERVICES, INC.
(Registrant)
By: /s/ Marty Williams
---------------------------------------------------------
Marty Williams
President, Chief Executive Officer, Chairman of the Board
Date: July 21, 2004
EXHIBITS
2(A)-----------Acquisition Agreement, Stock for Stock
16(A)----------Letter on Change in Certifying Accountant (to be filed by
amendment when available)
23(A)----------Consent of Cordovano & Honeck, P.C. (to be filed by amendment
with filing of financial statements and pro forma financial
information)
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