CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM	© Lumiere Consulting 2000

 
 

OFFERING MEMORANDUM SUMMARY TC "OFFERING MEMORANDUM SUMMARY"     

 

The following summary is qualified in its entirety by more detailed information and financial information appearing elsewhere in this memorandum. Partners may be subject to certain information requirements of the Securities Act of 1933 and 1934 and Regulation D, Rules 504, 505 or 506, and its exemption there from. In accordance therein, Partners would file such required forms and information at public reference facilities maintained by the Commission at room 1024, 450 Fifth Street N.W., Washington D.C. 20549

 

Partners may furnish its Members, after the close of the calendar year, with an annual report which may contain financial statements.  The term calendar year shall refer to the (12) twelve month period ended or ending December 31 of a given year.  In addition, Partners may furnish the Members quarterly reports containing financial information prepared by Partners, press releases and updates as determined by Partners.

 

This Memorandum contains forward-looking statements which involve risks and uncertainties.  Partners’ actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth in the “RISK FACTORS” section and elsewhere in this Memorandum.

 

Partners 

RMTEC Partners I, LLC, a Colorado limited liability company (the "Partners") will be formed upon confirmation of acceptance of the reorganization plan for Rocky Mountain Technical Engineering Corporation (“RMTEC”) and providing Partners’ minimum funding requirements are met.   The purpose of Partners is to provide funding of the reorganization plan for RMTEC, to the initial expense reserve for the patent infringement litigation, and to provide RMTEC with working capital.  See “Litigation”. The information contained in this Memorandum will be in reference to Partners’ involvement and investment in RMTEC.  The business of Partners is it’s investment into RMTEC, and reference to “Partners” will apply to Partners involvement with RMTEC and to the business of RMTEC. The Partners has not engaged, not will it engage, in any significant business activity until the Partner has been funded to minimum proceeds and the reorganization plan for RMTEC is confirmed.

           

RMTEC is dependent upon the proceeds of this Offering to survive bankruptcy and to proceed with its intended business and patent infringement litigation.   See “THE BUSINESS” and “Litigation” for a more detailed description below.

 

The Units offered hereby will carry a restrictive legend, and no market for the Units of Partners presently exists and there can be no assurance that a market will develop upon the completion of this Offering.

 

There can be no assurance either that any of Partners’ proposed activities will produce any revenues or that the revenues generated, if any, will permit Partners to attain profitable operations. See “RISK FACTORS”.

 

 

 

 

 

 

The Offering

 

 

 

 

Plan of Distribution:

 

The Units are being offered by officers of RMTEC for Partners on a “best efforts” basis with a minimum seventy (70) Units and maximum one hundred (100) Units. The Units offered hereby are being offered by Officers of RMTEC who, except as provided herein, will receive no selling commissions or other remuneration in connection with such sales.  Up to 100 percent of this Offering may be sold through selected outside consultants and agents.  The Units are offered when and if issued are subject to prior sale, withdrawal or cancellation of the offer without notice. The selling commissions provided herein assume that 0 percent of the Units are sold through outside agents/broker-dealers or outside management consultants. On sales made by or through outside agents and NASD-registered broker-dealers, applicable securities laws allow commissions of up to 10 percent of sale proceeds: 

 

Proceeds of Offering:

 

 

Assuming sale of the maximum number of Units offered hereby, Partners would receive gross cash proceeds of approximately $500,000.  If only the minimum number of Units is sold, Partners will receive gross cash proceeds of  $350,000.  If all the Units being offered are sold, the proceeds of the offering will be used according to the “USE OF PROCEEDS” section herein. 

 

Risk Factors

 

 

There are numerous risk factors unique to Partners and its proposed business. The prospective investor should understand that an investment in the Units offered hereby involves a high degree of risk and is suitable only for those persons who (i) have a continuing high annual income and substantial net worth, (ii) have no need for liquidity from such investment and (iii) can afford to bear the economic risk of the complete loss of their investment.  See “RISK FACTORS.”

 

 

 

PARTNERS - RMTEC TC "THE PARTNER"     

 

RMTEC Partners I, LLC, a Colorado limited liability company ("Partners") will be formed upon confirmation of acceptance of the reorganization plan for Rocky Mountain Technical Engineering Corporation (“RMTEC”) and providing the offering’s minimum funding requirements are met.   The purpose of Partners is to provide funding of the reorganization plan for RMTEC and to proceed with patent infringement litigation.  See “Litigation”.  The information contained in this Memorandum will be in reference to Partners’ investment in RMTEC and reference to RMTEC will apply to the business of RMTEC. Partners has not engaged, and will not engage, in any significant business activity until the project has been funded and the reorganization plan confirmed.

 

RMTEC was formed to manufacture and sell a multi-patent pneumatic, locking pin system installed on a growing number of the trailers used today by freight trucking companies.  Sliding the tandem axle assembly on trailers is required to properly distribute axle loads for changing road per axle weight restrictions, and to reduce the turning radius of the tractor-trailer combination in tight quarters, such as in cities.  These requirements are local, State, and Department of Transportation regulations.  To date the Handi-Slide® has proven to be a vastly superior automated system to the manual system currently in use on the majority of trailers now in service.  The Handi-Slide® has an optional in the cab electronic control which can be purchased, creating additional profit.

 

The Handi-Slide® has proven that it resolves many problems and hazards truckers face on a daily basis and increases the efficiency of the operation.  The Handi-Slide® operates off air supplying the trailer brake system and provides safety features that eliminate the possibility of accidental disengagement of the pins found on current systems.  The Handi-Slide® should provide operating cost savings and add to a company’s revenue, by reducing the amount of non-productive tractor/trailer combination operating time.  The substitution of Handi-Slide® as a retrofit to the manual system is expected to provide a one year rate of return of over 100 percent for each trailer upon which it is installed and other intangible benefits such as an increase in driver satisfaction/morale, fewer injuries, and increased driver retention.  In addition, the Department of Transportation ("DOT") places time limitations per day on the truck driver.  Handi-Slide® reduces the time spent in manual slide adjustments and can increase "on-the-road" time up to an hour per day increasing the daily revenue.  The system has received DOT approval.

 

Mission

RMTEC’s mission is to manufacture and sell the patented Handi-Slide® pneumatic, slider pin extractor system in the trucking industry.  RMTEC will sell direct and through distributors.

 

Vision:

Humanistic and profit centered approach

To solve problems and to make peoples lives easier, safer and more productive, to create a growing and enduring company which enriches shareholders, to create a pleasant work environment, to reward proficient and productive employees, and to contribute some of RMTEC profits to the community we belong to.

 

 

RISK FACTORS

 

 

The securities offered hereby represent a speculative investment and involve a high degree of risk.  Prior to making an investment decision, prospective investors should carefully consider each of the following risk factors, which are illustrative of the substantial risks affecting the proposed activities of Partners, as well as all other matters set forth elsewhere in this Memorandum. 

 

The primary reasons for failure of any venture generally are insufficient funding, strong competition/ insufficient market development, management failure/mismanagement of costs, and improper product pricing.  These and other risks associated with Partners and RMTEC are addressed here.

 

Under-funding.  

RMTEC must secure the funds necessary to acquire its essential assets (including the rights to the crucial patents), to initiate operations, to turn initial sales into cash, and to grow to sustaining levels of profitable production.  Should RMTEC be unable to secure sufficient funding, RMTEC’s patents may be lost in legal proceedings and this offering will be terminated and funds will be returned in full to investors with no accrued interest. 

 

In the event sales growth is slower than projected, RMTEC intends to take cash saving measures, and will seek additional financing to ensure long-term success of the corporation.

 

Product Failure

 RMTEC and this business will not succeed if the Handi-Slide® product fails to provide the projected benefits under operating conditions over the operating life of the trailers upon which it has been installed.  This situation can best be addressed by referring to the operating experience of the 2,000 units which have been installed over the last several years.  These units have been reliable and trouble free over this time period, with a nominal replacement rate of less than 1% seen in the field.

 

Competition and Market Penetration TC "Competition and Market Penetration" \f C \l "2" .  Existing producers of the product that Handi-Slide® replaces could offer their product at great discounts or for free as part of the overall trailer package.  Handi-Slide however has real monetary and operational benefits over existing manual technology.  RMTEC believes that the vast majority of the trucking industry will see that benefit and will buy Handi-Slide® as a retrofit, regardless of what price incentive is offered by the competition.  RMTEC believes Handi-Slide® may see market penetration and acceptance, and to some extent, non-effective competition.  In addition, alternative, pneumatic locking mechanisms are protected from competing production by patents that are currently owned by RMTEC.

 

Due to the RMTEC’s belief that all producers of competitive products are in violation of the patents held by RMTEC, the Handi-Slide® product would expect to have a legal monopoly on the manufacture, distribution, and sale of all pneumatically-operated, lock pin extraction products.

 

New product and competing products.

 "New product and competing products that with the patents issued, these patents significantly protect from the risk of a new competing pneumatic product being introduced.  Compensation from patent infringing companies will be pursued.  Indications are that the trailer buying market is demanding more and more use of pneumatic systems on the new trailers purchased.  Handi-Slide, the only fully patented product in the market, produces the simplest, lightest, most cost effective, and is arguably the best product on the market. RMTEC expects to eventually receive revenue from the infringing companies. There is a risk that competing companies will continue to violate existing patents and to attempt to price Handi-Slide out of the market.  RMTEC intends to aggressively defend itself from illegal infringement on its patents.

 

Product Pricing.  

The Handi-Slide® product is projected to be initially priced at $450 per uninstalled unit with discounts for volume sales or for strategic relationships.  An average base case sales price of $450 has been assumed.  With a cost of sales averaging around $300 per unit, this yields a gross profit margin of 33%. Often companies’ price products using a volume approach, resulting in a low price, and then try to make a profit by selling large numbers of the product.  RMTEC believes that potential for competition will be virtually eliminated through patent protection.  There does appears to be a genuine need for the product, a significant value to be provided to the ultimate customer, and a very large market.

 

Marketing strategy

 The product must be brought to market quickly and effectively.  The marketing appears to show truckers need the product and should benefit substantially from its use.  If market penetration occurs dramatically slower than projected, RMTEC will experience cash flow problems resulting in potential high employee turnover and loss of management and sales teams.  RMTEC believes its marketing strategy will focus customers on the value added to all departments within a trucking organization.  The marketing program is intended to demonstrate value to financial personnel like the CFO, operations managers, maintenance managers, and also to the drivers themselves.  

 

Economic Decline.  

  Decline of economic prosperity could have a significant adverse affect on the Companies ability to be profitable.  However, the trucking industry is considered one of the more recession proof industries most markets are served by the trucking industry, including supplying food. 

 

Risks of Rapid Growth. TC "Risks of Rapid Growth."       Once litigation proceeding begin and the infringing companies are put on notice, RMTEC’s monopoly on the industry will begin and RMTEC may find itself overwhelmed with orders that may be quite difficult to satisfy.  This may place strains upon RMTEC’s management and operational resources. RMTEC's ability to manage growth effectively will require RMTEC to integrate successfully its business, financial and administrative operations into one, management structure.  This may require RMTEC to seek additional funding in the form of investment or loan.  RMTEC may not be able to secure funding that is on terms acceptable to the itself or Partners and it’s members.

 

Management.

The management team has not yet proven itself in this market.   However RMTEC is assembling a strong, dynamic, and creative management team that has the entrepreneurial and trucking industry experience.  Performance management plans will be implemented to track successful goal achievement. 

 

Dependence/Reliance upon Key Personnel.

      RMTEC will be heavily dependent upon the continued services of Larry Wessels, CEO, Terre Lane, President, Stephen C. Finch, CFO and independent professionals of RMTEC.  RMTEC’s success will be largely dependent on the decisions made by Mr. Wessels, Ms. Lane, Mr. Finch, and independent professionals. 

 

Continued Control by Management and Present Members.

   The purchasers of the Units will not have voting control of RMTEC.  Thus it is necessary to rely on management’s expertise to run the operations of RMTEC.  There can be no assurance that the management team and other officers and independent professionals will be able to manage this new business successfully.

 

Limited Liability of Officers.

The Management Operating Agreement provide that the officer’s liability to partners for monetary damages will be limited.  In addition, Partners is obligated under the Management Operating Agreement to indemnify its officers, employees, advisors, consultants and other agents against certain liabilities incurred when serving in such capacities.  These measures will reduce the legal remedies available to Partners and the Members against such individuals.  See “Indemnification of Officers.”

 

“Best Efforts” Offering.

  Units are being offered by Partners on a “best efforts – minimum 70 Units, Maximum 100 Units” basis. If at least 70 Units are sold prior to the termination of this Memorandum (the “Offering Period”) and the reorganization plan is confirmed, all subscription proceeds will be paid over to Partners.  In the event Partners is unable to sell significant additional numbers of Units, Partners maybe unable to accomplish all of its goals as outlined in this Memorandum.  See “USE OF PROCEEDS.”

 

No Firm Commitment to Purchase Units. T

  No commitment exists by any individual, corporation, broker-dealer and/or agents to purchase all or any part of the Units being offered hereby.  Partners will sell the Units on a “best efforts” basis for the minimum of 70 Units and on a “best efforts” basis for the remaining 100 Units. The funds available to Partners from the proceeds of this Offering will be reduced to the extent that less than all of the Units offered hereby are sold.  Sale of less than the maximum number of Units may curtail Partners’ proposed operations. The proceeds of the sale of the Units offered hereby will not be returned to the subscribers if at least 70 Units are sold. There can be no assurance that any of the Units will be sold. Furthermore, if the minimum number of Units is not sold by October 5^th 2002 (the Offering Period can be shortened at the option of Partners), all funds received from the subscription will be promptly returned in full, without interest to the subscribers. During the Offering Period, subscriptions will be irrevocable and subscribers, depending upon applicable status, may not have the opportunity to have their funds returned.  Subscribers will not have use of, or earn interest on, their funds. Subscribers will receive further information about Partners, as it is available during that period. Partners may choose to extend offering period at its discretion and all possessors of this memorandum will receive notice of its extension.

 

Arbitrary Offering Price. Th  price at which the Units are offered hereby has been arbitrarily set by Partners’ management, and does not necessarily have any relationship to the book value per Unit, current earnings of Partners, or other generally accepted measurement of value.

 

Limited Transferability.  The Offering presented hereby will not be registered under the Act nor state securities laws in reliance upon the exemption afforded by the Act and Regulation D thereunder and similar provisions of state securities laws. The availability of such exemptions depends in part upon the investment intent of the investor.  Furthermore, Partners has no present intention to register under Section 5 of the Act or file information pursuant to the Securities and Exchange Act of 1934; which will further restrict the transferability of the Membership Units. Accordingly, subscribers for the Units may bear the economic risk from this investment for an indefinite period of time.

 

Sufficiency of Funds.

  The net proceeds of this Offering and loans (if any) obtained by Partners may not be sufficient to enable Partners to develop its operations to the stage that it will be generating sufficient cash flow to enable it to engage in business on a profitable basis.  If these funds are insufficient to permit the attainment of profitable operations, Partners may not be able to obtain additional debt or equity financing on terms acceptable to Partners and, in such event, the ongoing viability of Partners would be materially adversely affected.

 

Limited Financial Statements.

 Partners’ financial statements are limited to the information attached hereto as Exhibit A.  This statement is not audited and prepared internally by members of Partners.

 

THE FOREGOING RISK FACTORS DO NOT PURPORT TO BE COMPLETE EXPLANATIONS OF ALL THE RISKS INVOLVED IN THIS OFFERING.  POTENTIAL INVESTORS SHOULD READ THIS ENTIRE CONFIDENTIAL OFFERING MEMORANDUM BEFORE DETERMINING TO INVEST IN PARTNERS, SHOULD BE FAMILIAR WITH PARTNERS’S BUSINESS IN GENERAL, AND SHOULD CONSULT THEIR OWN LEGAL, FINANCIAL AND TAX ADVISORS WITH RESPECT TO AN INVESTMENT IN PARTNERS.

DILUTION  

 

As Partners is a new limited liability company, to be formed, there are no current members and therefore, there is no dilution to prior members.  A member will earn one percent (1%) ownership in partners for each Five Thousand Dollars ($5,000) invested in Partners.  Partners will earn up to ten percent (10%) ownership interest in RMTEC by providing RMTEC a minimum of $350,000 to a maximum of $500,000.

 

Should Partners be oversubscribed, RMTEC will provide additional ownership to Partners pro rata to the increased investment at the rate of 0.1% ownership in RMTEC for each additional Five Thousand Dollars ($5,000) contributed to RMTEC.

 

USE OF PROCEEDS

 

The anticipated net proceeds from the sale of the minimum number of Units offered by this Memorandum will be approximately $350,000. The anticipated proceeds, in the event all Units offered hereby are sold, will be approximately $500,000. The officers of RMTEC intend to utilize the net proceeds of this Offering over the next 12 months as follows:

 

                                                                        Minimum                      Maximum

 

Reorganization plan                                           $250,000                       $325,000

Working Capital                                                $  50,000                       $125,000

Patent infringement litigation                              $  50,000                       $  50,000

 

Total investment                                                $350,000                       $500,000

 

 

The initial start up expense will be used to satisfy the reorganization plan, provide working capital for the commencement of sales of the Handi-Slide Unit and to fund litigation expenses of the pending patent infringement litigation.  For a more detailed description of these expenses please see the attached financial section in Exhibit A.

 

The allocation of net proceeds set forth in the financial sections of this Memorandum represent estimates based on its present plans and certain assumptions regarding legal factors and industry conditions and  projected revenues.  If any of these factors or assumptions change, the officers of RMTEC may find it advisable or necessary to reallocate some of the proceeds or use portions thereof for other business purposes. 

 

Additionally, some of the projected expenditures are estimates or approximations only.  Future events, including the problems, expenses, difficulties, complications and delays frequently encountered by the legal system may make shifts in the allocation of funds necessary or desirable.  Although there are no current plan or intention to reallocate the proceeds of this Offering, management of RMTEC may reallocate the proceeds of the offering in such manner as it deems appropriate.  A reallocation of funds may include but is not limited to management consulting fees and other expenses incurred in the funding.

 

 

 

 

 

CAPITALIZATION

 

The following table sets forth the capitalization of Partners as of August 5, 2002 and is adjusted to give effect to the issuance and sale of the Maximum Offering (100 Units) amount:

 

 

THE BUSINESS   

 

Mr. Larry Wessels, Chairman of the Board of RMTEC, has invented and patented several devices used within the trucking transportation industry.  One of these patented devices, the Handi-Slide®, is a pneumatic, slider pin extractor system which replaces the manually operated locking pin mechanism with a more reliable, easier to use, and safer, pneumatically operated locking pin system used on sliding tandem-axle trailers.  The Handi-Slide® may optionally include an electronic in-cab control system.

 

Sliding tandem trailers are widely used in van trailer applications. Sliding tandem trailers are a benefit to trucking companies by providing a means of redistributing axle loads and by shortening the semi-tractor trailer turning radius. The sliding tandem axles (tandems) slide longitudinally under the trailer in what is called a slider.  The shorter turning radius is important in metro areas and in tight quarters.   The sliding tandem trailers are also important on roads and highways with changing axle load ratings are required to meet state and Department of Transportation regulations.

 

Handi-Slide® resolves many problems and hazards truckers face on a daily basis and increases the efficiency of the operation.  It operates off air supplying the trailer brake system and provides safety features that eliminate the possibility of accidental disengagement of the pins found on current systems.  The Handi-Slide delivers operating cost savings and adds to a company’s revenue, by reducing the amount of non-productive tractor/trailer combination operating time.  The substitution of Handi-Slide as a retrofit to the manual system should provide a rate of return of over 100 percent for each combined tractor-trailers upon which it is installed and should provide other intangible benefits such as an increase in driver satisfaction/morale and in driver retention. The system has received Department of Transportation approval. 

 

Background

 

In previous marketing efforts, approximately 2,000 Handi-Slides have been sold at an average price of $450.  They appear to have been well received by the companies that purchased them. RMTEC now intends to begin aggressive commercial production and sales.

 

The Handi-Slide® costs more than the manual system, however, the higher cost of the Handi-Slide should be quickly recovered through reduced operating cost, higher equipment availability, increased driver retention, and savings from reduced injuries and injury liability.  The Handi-Slide is assembled from components produced by several suppliers, and can be installed in as little as 20 minutes.  The replacement rate has been less than 0.5% per year.  Replacements are generally the result of normal wear and tear, and are installed during routine trailer maintenance.

 

RMTEC has negotiated an agreement with one of the largest industry suppliers to provide nearly all the components at very competitive prices.  As a benefit to RMTEC, the supplier will stock parts in Denver, at its cost, in quantities sufficient for 3 months projected Handi-Slide production.  The supplier has also agreed to provide a 90-day net invoice payment plan.  This improves RMTEC's cash flow requirements.  RMTEC believes it can obtain additional volume price discounts as sales increase.

 

RMTEC may choose to only license it’s patent rights to other manufactures of pneumatic sliders and therefore not be responsible for inventory and labor expense and liability.

 

Three companies are manufacturing and selling pneumatic, slider pin extractors.  Those products appear to be, or have in the past, infringed on RMTEC's patents.  RMTEC has retained competent legal patent counsel to pursue protection of its patent rights.  RMTEC will offer the infringing companies an opportunity to compensate RMTEC for past infringements and participate in the future production of their products, through licensing agreements.  Should these infringing companies refuse to reach an agreement with RMTEC, RMTEC will pursue compensation for infringements through the courts.

 

Description of Business

 

RMTEC has rented warehousing space at: 1163 S. Cherokee Street, Denver, CO  80222.  The space is sufficient to store, assemble the Handi-Slide product.. 

 

Initial Startup of Business

 

RMTEC will hire the necessary staff as the business progresses after funding of operations is in place and demand increases.  Initial capital will be used to set up the business and accounting systems, to prepare marketing materials and programs, to begin the sales effort, and to assemble and package product for sale.  The sales effort will include involvement of senior management who intend to work with sales personnel to implement a nationwide marketing program.  

 

The initial sales program will include visits to manufactures of semi-trailers, sliders, and large trucking companies.  RMTEC plans to build an onsite finished product inventory equivalent to 1 month’s sales.  The plan also contemplates that 3 months unfinished projected inventory will be stored at the supplier’s cost in his warehouse.

 

Handi-Slide Description

 

The Problem

The trucking industry transports 70% of the nation's freight and employs 1 out of 12 workers in the United States. The industry grows an estimated 5% every year and is one of the top 5 growth occupations in the country.  A large majority of the semi-trailers currently traveling our highways have variable positioning undercarriages known as sliders.  Sliders give the trucking industry a way to move the trailer axle forward or backward.  By moving the axle on the trailer, it gives the advantage of balancing the weight of the trailer among different axles.

 

The  Department of Transportation ("DOT")  regulates weight limitations for each axle and the weight limit varies from state to state. The variable positioning undercarriages (sliders) allow the trailers to shift axle weight to comply with varying state regulations.  According to a recent survey conducted by the American Trucking Association, the majority of operating semi trailers require interstate travel, making sliding under carriages necessary for compliance. Another advantage of the sliders is better mobility by moving the axles of the trailer forward aids in backing and moving in tight spots.  Moving the slider forward also shortens the turning radius, which is beneficial in populated areas where streets are frequently narrow. 

 

The sliding under carriage axles of a trailer is attached to the trailer through pins which protrude through holes in the slider rails.  When the sliding pins are set in the sliding rails, the locking pins hold the under carriage in that position.  When the locking pins are pulled, the shifting of the undercarriage along the slider rails is possible.

 

The most common system in use today to disengage the locking pins is the cantilever system or the “manual system.”   The manual systems consist of a hand lever that is attached to a cam lever devise which in turn is attached to four locking pins.  This system must be pulled by manual force and works as a unit requiring all four pins to be pulled and set at the same time.  Many problems and injuries can arise during this procedure.  Manuel force must be applied to the hand lever to overcome the 60 lbs (or more) springs attached to each pin.  Other difficulties such as rust, corrosion, friction from the operation of the cam lever and other unforeseen difficulties often arise making removal of the pins nearly impossible.

 

Many personal injuries occur during this operation.  The manual system forces the operator into an awkward position that puts the operator in risk of  back and shoulder injury or even a hernia.  If the trailer is parked on uneven ground or an incline, the locking pins become wedged against the slider rails and prevent retraction.  Because the system acts as a unit, one wedged pin will prevent any of the pins from retracting.  This procedure is physically and emotionally demanding, time consuming, and quite possibly dangerous for the operator and any other person involved in the procedure.  Due to the difficulties involved with the manual system, the truck operators, will at times, severely damage the manual system by using hammers, crow bars, etc. in an attempt to free wedged pins.  All four pins must line up with the holes in the slider rails before the pins can be retracted or reinserted.  This can be more of a problem if the slider rails get bent from manual force. 

 

Other problems arise from corrosion, twisted rails resulting from uneven ground or uneven loads and other additional problems in the winter months.  The build up ice and snow add to the force required to operate the manual system. 

 

Operators often find themselves soliciting the aid of a second person to assist them in this maneuver.  One person puts force on the hand lever, which is very close to the wheels of the trailer, while the other person rocks the trailer back and forth.  This procedure is very dangerous and has been know to cause many injuries such as the trailer wheel rolling over the foot of the helper.

 

If the operator forgets to reinsert the locking pins or does not set them properly, the undercarriage can slide out from under the trailer, shearing off the rear safety bar.  This has happened many times in the past and has resulted in injury and fatality. 

 

The Solution – Handi-slide

 

The Handi-slide overcomes human error because it ensures that the locking pins are locked into the rail when the parking brake is released and the semi trailer begins to travel.  The Handi-slide is a relatively new, all pneumatic, locking pin system that is significantly easier to use, and it is state of the art.

 

The Handi- Slide system operates from air pressure that is currently available on the trailer.  The air supply is connected to an air valve that directs the airflow to cylinders that are attached to locking pins.  The air supply on a semi  trailer is usually maintained at 120 PSI ( pounds per square inch).  The force generated by each cylinder is roughly 400 pounds per pin.  The DOT requires all sliders that operate in this manner be equipped with a pressure protection valve.  That pressure protection valve is patented by RMTEC and it appears this patent is currently being infringed upon.

 

The Handi-Slide system operates only when the parking brake is engaged.  The pins can be pulled when the parking brake is engaged, by the push of the control button. To reinsert the pins, pull the button back out, and/or release the parking brake.  The Handi-Slide would appear to reduces personal injuries, hernias, back injuries, groin pulls, shoulder injuries etc. due to pulling and straining required by the manual system.  Manual slider adjustment is the number two cause of workman compensation claims in the trucking industry. The Handi-Slide operates with the flip of a lever. 

 

The components of the Handi-Slide are all DOT rated and approved.  The hardware is off the shelf, easy to install, and cost effective.  The valve used on the Handi- Slide is a pneumatic valve that directs the airflow.  The valve operates with the push of a button provided the parking brake has been set.  This is achieved through the use of a pilot port on the left side of the valve which is attached to the parking brake line. When the parking brake is engaged, air pressure is removed from the brake line thus enabling the operation of the system.  When the parking brake is released, air pressure goes into the line putting a constant 120-psi in to the system and returning the pneumatic valve to the insert pins position. This makes sure that the pins are always extended into the rail in a locked position with approximately 400lbs of force. 

 

Two safety features ensure that the pins remain in an extended position.  Constant air pressure and the locking valve.  A pressure protection valve is attached to the air supply tank on the  trailer.  This safety feature ensures braking systems on the trailer always have ample air pressure to operate efficiently.  The protection valve only lets air into the Handi-Slide system if pressure in the tank is above 90 psi.  It will shut the air supply to the system off when pressure in the tank goes below 80-psi.   The air cylinders in the system are 2"x2" cylinders with 120 lbs of air pressure generating approximately 400 lbs of force in each cylinder.  Each cylinder works its pin independently and with constant force.    The manual system  pulls or inserts all four pins as a unit.  When using the Handi-Slide, if 3 pins go in and one hangs up, the 4^th will go into its hole once the trailer is moved.

 

The Handi-Slide air lines are color coded for installation safety.  The cylinders have a 1/4 inch yellow line and a 3/8 inch black line.  A 3/8 inch red line goes from the parking brake line to the pilot port on the valve.  A 3/8 inch blue line hooks the air supply tank to the valve which operates the system.  The safety aspects of the Handi-Slide make it superior to the manual system.  The Handi-Slide system cannot be installed incorrectly because of the different size fittings on the cylinders and valves use different size and color air lines.

 

The Handi-Slide system is not affected by adverse weather.  Ice and snow on frozen pins do not affect the Handi-Slide operation.  This is not the case with the manual system. The manual system usually requires more than one person to operate it and is still unable to be done effectively or efficiently. The Handi-Slide is a one person operation.  The Handi-Slide can be operated on uneven surfaces, which is impossible with the manual system. 

 

Each cylinder and pin acts independent of each other.  The Handi-Slide ensures a constant 400 lbs of  force to each  pin during highway travel.  This ensures that the pins will stay in the locked position.  Air pressure from the parking brake line to the pilot on the valve and the locking latch ensure that the pins stay in the locked position during travel.  A 60 lb spring attached to locking pins also ensures that the pin will stay in a locked position even if a line would break on the system.  Pressure protection valves ensure braking systems on a trailer cannot be affected. 

 

The time required to reposition the undercarriage with the Handi-Slide is a fraction of that on the manual system.  This will reduce carelessness and frustration which usually leads to personal injury. The Handi-Slide ease of operation and time saving ability will undoubtedly ensure that drives will use the sliders more than they do with the manual system.  This is especially true in populated traffic situation.  Many drivers say that they presently neglect moving the under carriage because of the time and hassles required with the manual system.  The Handi-Slide locking pin system offers the industry improved safety and increased operating efficiency.  These two features are needed now more than ever with the increasing cost of fuel and DOT tighten regulation on operator hours of service.

 

Detailed Description of Benefits of Using Handi-Slide

 

Ease (& time) of use

Slider adjustments using the Handi-Slide system can be completed much more easily and much more quickly than sliders made using the manual system.  Using Handi-Slide, locking pins are independently retracted and inserted with approximately 400 lbs of pneumatic force.  Pins that are still stuck or miss aligned are instantly retracted or inserted when the tractor begins to move (nudges) the trailer.  This feature makes it easy for drivers to perform sliders adjustment without help from others.  Test slider adjustments were completed in an average of 5 minutes using Handi-Slide verses 19 minutes using a manual system.  The study also determined that 7 sliders adjustments per week were averaged by the test company.  A total of 133 minutes per week was spent performing manual slider adjustments.  That equates to 2.5% to 5% of the tractor operating time spent adjusting sliders. Using Handi-Slide, the projected slider adjustment was reduced from the 133 minutes to 35 minutes.  The economic and operational cost of slider adjustment is addressed under “The Summary of Economic Benefit” below. 

 

Driver retention

Drivers are more satisfied using the Handi-Slide for two reasons.  First, one of the more physically difficult and injury prone tasks a driver is required to perform, manually adjusting the slider, is made easier.  The second reason is that the adjustment using Handi-Slide can be accomplished in 5 minutes rather than 19 minutes.  The faster adjustment time results in increased driver earnings and reduced time away from home.  In addition, drivers are subjected to reduced injury risk.  Because the driver will be more content and have greater earning potential working for companies that install Handi-Slide, they will be more likely to stay with that company.

 

Equipment Maintenance

Handi-Slide reduces the wear and tear resulting from numerous jerky moves trying to get the slider pins free and then resetting the pins in the right hole common to slider adjustment using the manual system.  Secondly, Handi-Slide will virtually eliminate damage caused to sliders in distribution yards as a result of the pins not being properly inserted. Some truck drivers are not reinserting the manually operated locking pins because the drivers must make several time consuming moves to reinsert the pins, and those drivers apparently believe they are traveling slowly enough that problems are unlikely.  However, even at these slow speeds, when the driver is forced to stop quickly, the undercarriage slides and frequently damages the slider and attached mechanisms.  Lastly, fewer turning radius collisions will result in reduced trailer damage and increased revenue from less down time.

 

Therefore, equipment maintenance is reduced increasing equipment availability and reducing total non-productive hours on equipment maintenance – lubricant changes, preventative maintenance schedules, and rebuilds.

 

 

 

Driver safety TC "Driver safety" \f C \l "3"

Using Handi-Slide should result in fewer lost time injuries (including smashed fingers, slips and falls, smashed and run over toes, bumped heads) mean higher driver availability, reduced turnover, and fewer absentees resulting in a lowering of the total work force number.   Considering that slider accidents are the 2^nd highest workman compensation claim, RMTEC will lobby congress to make it a requirement on all sliding undercarriages. This would truly solidify Handi-slide’s position as a legal monopoly.

 

Compliance with state highway load regulations

Fines resulting from improper axle load distribution will be less likely to occur because drivers will be more likely to and can better make the proper slider adjustments on Handi-Slide equipped trailers.

 

Summary of Economic Benefit

 

Handi-Slide saves the trucking company money resulting in increased profits.

 

1. More time spent on the road producing revenue.  Fixed owner costs like purchase, lease, interest, property tax, and insurance, are spread over more miles per month.  Handi-Slide equipped trailers should realize two additional hours on the road giving two more hours of revenue.

2. Lower driver standby results in happier, more productive drivers.

3. Less wear and tear on the equipment.

4. Reduced operating costs – reduced fuel consumption and less frequent oil changes, preventative maintenance, etc.

5. Fewer accidents and reduced lost time accidents.

6. Lower driver turn over – reducing new operator training and associated costs.

7. The actual cost of Handi-Slide is low.

8. The incremental cost of Handi-Slide on new trailers, at rebuild, or for replacement of broken manual systems is very low.

9. Higher equipment availability as a result of fewer turn related accidents caused by drivers not making needed time consuming, difficult slides.

10. Reduced liability costs through fewer accidents.

11. Lower insurance rates.

12. No additional weight and slightly less weight on new trailers.

 

Insurance company and workman’s compensation support

 

Insurance companies and workman’s compensation companies support the implementation of Handi-Slide because using Handi-Slide should reduce the claims they will be required to pay.  First, fewer injuries will result using Handi-Slide because of a safer and easier slider adjustments and, second, fewer turning radius accidents will happen because needed slider adjustments are more likely to be made.  Finally, public motorist injuries or death resulting from catastrophic loss of the tandem axle/wheel assembly will be significantly reduced due of improperly resetting of the locking pins. RMTEC has found the support of individuals in Washington that are looking into the potential of Handi-slide becoming a requirement on all new sliding undercarriages.

 

Potential federal and state tax breaks for companies using Handi-Slide

Federal and state governments recognize the social and safety benefits resulting from using a safer product, and some have given indications that they will consider providing tax incentives to companies that install Handi-Slide on their trailers.

 

 

THE MARKET   

 

Introduction

Many types of trailers are produced in this country.  They include, van type, flat bed, rock and dirt haul, liquid container, towed pup trailers, and more.  The market is broken into two categories, the new trailer market, and the retrofit trailer market.  For RMTEC, the new market is subdivided into two target markets, manufacturers which assemble the complete trailer and slider manufacturers (one of many trailer components).

 

The new trailer market – Trailer Assembly Companies

Approximately 271,000 trailers were produced in 2000.  Of this total production, the dry van and refer van trailers commonly use sliding axle assemblies total approximately 202,000 units.  The major manufacturers of trailers are listed below with their respective 2000 production.

 

Overall the trucking industry is considered one of the more recession proof industries most markets are served by the trucking industry, including supplying food.  With the trucking industry being hard hit lately by high fuel prices, increasing insurance costs, consolidation of under performing companies, and low profit margins, trucking companies are receptive to anything that can show real cost savings.  Handi-Slide will measurably reduce costs and assist trucking companies realize higher margins in a difficult economy. 

 

New trailer market – slider manufacturing companies

Almost all trailer assembly manufacturers buy sliders from third-party suppliers.  The suppliers supply spring assemblies, air bag shock systems, slider assembly’s and other equipment used in the trailer’s construction.  Handi-Slide products are used on slider assemblies as a replacement for the manually operated.  (see the “LEGAL” section for discussion of patent infringements by companies making competing pneumatic pin removers.) 

 

The main slider manufacturing companies include:

 

Hutchens Industries

Hendrickson

Watson

Reyco

Meritor

Holland Binkley / Neway

 

Hutchens Industries is by far the largest slider manufacturing company with estimated slider production approaching 100,000 units per year.  Actual production quantities are difficult to obtain for most these companies are privately held and do not publish sales data.

 

The new trailer market penetration TC "The new trailer market penetration" \f C \l "2"

RMTEC believes its market penetration model is conservative.  RMTEC projects a base case penetration of the new slider market of 16 percent (or 24,000 units) to be realized over 3 years.  This could be achieved by licensing Handi-Slide through just one of the top 4 trailer manufacturing companies, or through one of the main slider manufacturing companies.

 

The retrofit market or aftermarket

There are an estimated 2.5 million sliding tandem trailers in use in the United States today.  This market represents a very large and immediate opportunity for Handi-Slide.  Trailer life is typically around 10 years.  The retrofit market will exist for several years even with high sales success in the new trailer market. Approximately 60% of the retrofit market consists of large trucking companies, and approximately 40% of this market is small fleet or individual truck owners.

 

RMTEC has used sales penetration for the retrofit market realized in the base case in year 3 of 1.9% of the trailer fleet.  This equates to 48,000 units sold per year.  RMTEC believes its marketing strategy should result in higher sales than projected in the base case.

 

COMPETITION TC "Competition"     

 

Introduction

While there are many manufacturers of  parts for the trailer market, only three are significant manufacturers of pneumatically assisted, slider pin, extraction systems.  These current market competitors are Hendrickson International, Inc. Hutchens Industries, Inc., and Holland Binkley, Inc.. AlvinMeritor, Inc. may be considering an entry into the marketplace.  RMTEC believes that each of the following manufacturers are in violation of RMTEC’s patents.  Upon successful infringement litigation, RMTEC will enjoy a legal monopoly on the manufacture, distribution, and sale of pneumatic pin extraction products.

 

 

 

Hendrickson International, Inc.

Hendrickson International, Inc., Woodridge, IL, started in 1913 as a commercial truck manufacturer.  In 1926, it introduced the first tandem suspension.  Over the years, Hendrickson expanded its product line to include truck, tractor, and trailer suspensions; lift able suspensions; steel leaf spring suspensions; metal bumpers; and stamped components for the heavy-duty transportation market.

 

In 1977, The Boler Company, located in Illinois, a manufacturer of leaf springs and metal bumpers, acquired Hendrickson.  In the subsequent five years, Hendrickson grew five-fold.  In 1985, Hendrickson began to emphasize its international operations.

 

Today, Hendrickson, operates 28 facilities worldwide and is one of the world's largest suppliers of truck, tractor, and trailer suspensions; liftable suspensions; steel leaf spring suspensions; metal bumpers; and stamped components.

 

Hendrickson markets the Quik-Draw^® product which they describes as "a fully pneumatic slider suspension pin-pulling system that eliminates manual pin pulling."  RMTEC has performed a technical analysis of the Quik-Draw^® product and is convinced the Quik-Draw^® is in direct violation to patents held by RMTEC.

 

Hutchens Industries, Inc.

Hutchens Industries, Inc., Springfield, MO, began in 1950 as a manufacturer of trailer suspensions, sub-frames, and a wide variety of steel fabrications and castings.  In 1962, it expanded by opening its "Marshfield Steel" plant in nearby Marshfield, MO.  Today, Hutchens operates from more than 750,000 square feet of manufacturing space and has over 1000 employees.

 

Hutchens manufactures a mechanically assisted pin extractor named the “EZ-Pull Release System.”  While this system eases the effort needed to pull the pin release handle, it still has the inherent disadvantages of all pins needing to release simultaneously and to be inserted simultaneously.  The EZ-Pull system should not materially reduce the time required to make a slider adjustment and therefore, cannot realize the significant operational cost reductions available inherent with the pneumatic system.

 

Hutchens also manufactures the "Hutch P-3" pneumatic pin puller.  It describes the P-3 as "an air-operated, lock pin retraction system - which utilizes your trailer's own air supply to effectively retract and release the slider lock pins."  RMTEC has performed a technical analysis of the P-3 product and is convinced the P-3 is in direct violation to patents held by RMTEC.

 

Holland Binkley Company Axle Products, Inc., TC "Holland Binkley Company Axle Products, Inc.," \f C \l "2"  a division of the Holland Group

Holland Binkley Company – Axle Products Division is located in the Toledo, Ohio, area.  The Holland Group of companies began in 1910 as manufacturer of fifth wheels, kingpins, pintle hooks and landing gear for the transportation industry.  It currently has manufacturing facilities throughout the world.

 

More recently, Holland has added mechanical trailer suspensions, Pro-Par axle, brake and wheel end components, air suspensions, valving, spring breaks, and truck life axles.  Holland Binkley manufacturers the “UltraLite2” as mechanically assisted pin removing system for sliders.  Options include an “Air Release”-equipped version for pneumatic pin retraction.  As with other manufactures of pneumatically operated pin extractor systems, RMTEC has performed a technical analysis of the pneumatically assisted, UltraLite2  product and is convinced the pneumatically assisted, UltraLite2  is in direct violation to patents held by RMTEC.

 

 

ArvinMeritor, Inc.

ArvinMeritor, Inc., located in Troy, Michigan, represents the joining of two strong companies and their heritages:

 

Arvin Industries, Inc., with 1999 sales of $3.1 billion, established its reputation as a global manufacturer of automotive components and systems. Arvin has ranked as a leading manufacturer of automotive exhaust systems; ride and motion control products; air, oil, and fuel filters and gas-charged lift supports. Its products are sold under various trademarks including Arvin, Maremont, Timax, ANSA and ROSI exhaust systems; Gabriel and RydeFX shock absorbers; Purolator filters and StrongArm gas-charged lift supports.

 

Meritor Automotive, Inc., with 1999 sales of $4.5 billion, established its reputation as a global automotive supplier of a broad range of components and systems for commercial, specialty and light vehicle OEMs and the aftermarket. The Meritor product line consists of two businesses: Commercial Vehicle Systems, a leading supplier of complete drive train systems and components for medium- and heavy-duty trucks, trailers and off-highway equipment and specialty vehicles, including military, bus and coach, and fire and rescue; and Light Vehicle Systems, a major supplier of roof, door, automotive body, access control and suspension systems, and wheel products for passenger cars, light trucks and sport utility vehicles.

 

Meritor International, Inc. was a spin-off of Rockwell International’s automotive business in 1997.  Prior to the merger with Alvin Industries, Inc., Meritor announced the marketing of a pneumatically driven slider pin extractor.  This product appeared to be in direct violation to patents held by RMTEC.

An extensive search of the Internet did not identify a current product pneumatic pin extractor product.

 

RMTEC has not identified any other significant competitors.  The tables below summarize the major product competitors with a feature comparison.

 

 

TABLE CONTINUED ON NEXT PAGE

 

 

 

 

Marketing Plan

 

The marketing plan consists of selling the Handi-Slide concept and product to three main target groups;

 

            New

1.       Slider manufacturing companies

2.       Trailer assembly companies

 

Retrofit

3.       Large trucking companies

4.       Small trucking companies or individual truck owners.

5.       Installation at selected large truck stops.

 

 

RMTEC intends to contact the three largest slider manufacturing companies directly with personal sales calls.  A computer presentation will present RMTEC, the product, and an overview of how RMTEC plans to market the product to the trucking industry.  The presentation will also include a description of how the opportunity to work with RMTEC will benefit the slider company by them helping them exceed their current sales and revenue goals.  The presentation will also show that participation in Handi-Slide would give them more access to the retrofit/aftermarket and a very large potential market.

 

The three to five largest trailer assembly companies will also be contacted directly with personal sales calls.  A computer presentation similar to the Slider Manufacturing company presentation will be used to present RMTEC, the product, an overview of how RMTEC plans to present the product to the industry, and the mutual benefits involved with working with RMTEC.  Again, the focus will be that if they agree to install Handi-Slide on their trailers, then they will be able to say that their trailers save trucking companies money, are 3-5% more time efficient and more cost effective in a substantial way than the competition’s trailer.  RMTEC will also point out that participation in Handi-Slide could provide the trailer assembly company substantial additional revenue from the retrofit/aftermarket.

 

The presentation to the large and smaller trucking companies is intended to occur in a similar fashion.  Several companies will initially be approached for participation in Handi-Slide.  The sales and marketing program will pursue contacts via direct mail and phone calls to the more than 3,000 trucking companies with a fleet of more than 500 trailers.  The trucking companies will get a detailed presentation of how the product may increase safety, improve driver retention, save money and increase revenue and immediately increase corporate value.

 

Located on interstates and main highways throughout the United States are large truck stops.  Many of these stops have maintenance facilities in addition to food, lodging, and shower facilities.  With the ease of installation, the Handi-Slide can be installed while a trucker is eating, sleeping, and/or showering.  RMTEC plans to train truck stop personnel and market Handi-Slide through these maintenance facilities.

 

In order to gain market acceptance and create and maintain product awareness, Handi-Slide will market the product through many mediums.  RMTEC intends to focus on traditional marketing methods, including personal sales visits, focused effective direct mail campaigns, internet web sites and links to relevant web sites, advertising within trade publications, creation of sales information/brochures, point of purchase displays, as well as trade show participation.  Handi-Slide may also carefully develop business alliances with associations, organizations, insurance companies, and government agencies to support the product and its use.

 

Personal Sales Visits TC "Personal Sales Visits" \f C \l "2"

The Marketing Team intends to create a client focus list.  This list may be categorized into A, B and C target companies within the industries of trailer manufacturing and trucking. The A target companies may be composed of large financially healthy organizations with the need and ability to purchase the product.  The sales team would then segregate these accounts and create the opportunity for a power point presentation followed by an actual demonstration.

 

Direct Mail Campaigns

Direct mail campaigns will be on-going. The campaign is tentatively planned to be with a three-part mailer designed to inform and persuade. The first part would focus on the shortcomings of the current manual system.  The second part may focus on the fact that there is a new, automatic alternative.  The third part may focus on the benefits of using the Handi-Slide system in terms of financial hard and soft dollar savings.  There may be a call to action within the third mailer to motivate the recipient to act.  For large potential customers that call to action may include a demonstration of the product.

 

Links to Relevant Web Sites

Handi-Slide is planning to design and create a web site explaining the features and benefits of the system.  Web surfers may be able to purchase the product online.  RMTEC may leverage the web site through strategic alliances and hot links.  For instance, RMTEC may negotiate with insurance companies to create a link between the two web sites by explaining the benefits of the system to insurance companies (fewer claims).  Eventually, there may be links to web sites of trucking companies and trailer manufacturers as well as trucking component manufacturers.  Also, RMTEC may gain listings with a majority of the important search engines and with indexes specializing in the field.  RMTEC may incorporate the web address onto business cards, stationary, and all advertising.

 

 

Advertising

Advertising initially will be focused on national trade publications.  The advertising will be constant and repetitive to create product awareness.  Trade publication advertising would include a perforated response card to send for additional information.  RMTEC may also proactively solicit magazines and trade journals for articles, technical reports and editorial coverage.  RMTEC intends to develop a video infomercial to air through close circuit TV at truck stops, dealer locations, conferences and seminars as well as sending it to prospective clients.

 

Creation of Sales Information/Brochures

RMTEC plans to create sales information and brochures to market the system.  The information will be used to educate the consumer on the features and benefits of Handi-Slide; the sales information and brochures will compare the current manual system to that of the automated Handi-Slide system.  The sales information and brochures will be distributed at trade shows, sent with the direct marketing material, distributed to dealers and manufacturers in the trucking industry as well as to people within the insurance industry/associations.  The marketing concept is to supply the market with information on Handi-Slide focused towards direct beneficiaries (drivers, and trucking companies) and indirect beneficiaries (insurance agencies, government organizations, associations).

 

Trade Show Participation

RMTEC will participate in trade shows relevant to the trucking and trailer industries to create awareness.  Trade show participation may incorporate the before-during-after strategy.  Because RMTEC understands the importance of trade show participation, RMTEC would try to maximize the use of generated leads immediately.

 

LEGAL      

 

Introduction

RMTEC was formed as a Colorado corporation with the assistance of RMTEC’s legal counsel, Mr. Rick Stone.  Article of Incorporation and By-laws are included as Appendix D.  RMTEC corporate records and board minutes are held at Mr. Stone’s office, located at:

 

Holley, Albertson, and Polk PC

Building 19, Suite 100

1667 Cole Blvd.

Golden, CO 80401-3313

 

Insurance

RMTEC maintains corporate insurance through Chamberlin and Rienheimer insurers and Mt. Hawley Insurance Company. 

 

Patents

Patents by Mr. Wessels were obtained with the assistance of Edward Crabtree, attorney at law, and are currently owned by RMTEC – owned in majority by Larry Wessels.  Legal opinion on patents is provided by Mr. Crabtree.  The patents are believed to provide extensive and enforceable limitation to potential competition.  The patents have a life of 20 years from the date on which they were applied.  The earliest patent expiration date is in December 24, 2012.  Mr. Wessels has also patented potentially viable alternatives to protect the main product patent.  This process is called continuation in part. The patents can be described as functional patents rather than device patents.  The patents are to be purchased by Handi-Slide Inc.  These patents include patents for the in the cab electronic control. 

 

CURRENT LEGAL SUMMARY TC "CURRENT LEGAL SUMMARY"     

 

Mr. Larry Wessels, majority owner of Rocky Mountain Technology Engineering Corporation (RMTEC), conceived innovative concepts and created new products for the truck trailer (trucking) industry beginning in 1988. These ideas were patented in 1992 with the assistance of Edward Crabtree, a well-respected patent attorney in Colorado.  Beginning in 1994, Mr. Wessels introduced a product to the market that could potentially eliminate the 2^nd highest workman compensation claim in the industry.  Although the product could have been easily manufactured by RMTEC and purchased for a reasonable price it was not one that trailer manufactures wanted to pay. Mr. Wessels attempted to negotiate licensing and other arrangements with this closely held network of companies only to be shun consistently by each one.   Shortly there after, several variations of his patented product began showing up on the market, clearly infringing on his patent.  Each company that was manufacturing a version of Mr. Wessels product had been given a sample one of his.  Additionally, many of these companies were selling the locking pin systems among each other and giving them a different name.  All of these companies knew that Mr. Wessels held the patent on the technology and mostly likely assumed there was safety in numbers. Legal opinion on the patent infringement is provided by Mr. Crabtree, Mr. Rick Martin, and Shughart, Thomson & Kilroy.

 

The patents currently held by RMTEC are believed to provide a legal monopoly with extensive and enforceable limitation to potential competition. The industry produces over 160,000 trailers each year; well over half are believed to be manufactured using technology that is in clear infringement of these patents. The fact that over half of these undercarriages are assembled with the same locking pin system is tremendous considering only a few years ago they were almost unknown.  Not only is the trend heading in that direction but also it is believed that legislation could be passed requiring this on all trailer tractors. Previous methods of sliding trailer undercarriages were unsafe and time consuming, which translates into lost revenues.  Out of necessity, the industry is steadily shifting to the safer, faster, more reliable, pneumatic systems. All of these systems require the use of technology that was invented and developed by Mr. Larry Wessels.

 

RMTEC sells each unit for $450 with a profit margin just under $150 per unit.  The cost of the unit is nominal and the overall profit, although lucrative, is not excessive.  Even with a profitable product and legal patents RMTEC currently does not make a profit.  RMTEC sales are only 5 to 10 units per month due to market control by large infringing companies.  Damage can range from about 5% of units sold, to the lost profits RMTEC would have had if their legal monopoly existed from the start. Potential damages from the planned litigation range from a low of $10 million to in excess of a $100 million depending on the final court accepted method of calculation of damage.  There is a potential that damages will be subject to treble damages bringing the total up. RMTEC intends to investigate those seemingly apparent avenues that give support for the awarding of treble damages. Patent infringement litigation through appeal could take up to 5 years.

 

Litigation

 

One of Colorado's top litigation firms, Shughart, Thomson & Kilroy (STK), to date, has spent several hundred unbilled hours reviewing this case for potential patent infringement.  Their initial response was very positive and after very careful consideration have offered to litigate this case on a contingency basis.  STK accepts very few of these cases each year and there win ratio is above 90%.  The Managing Partner of the Denver office Steve Long will litigate this case and is listed as one of the top litigation attorneys in Colorado, and is listed as being one of the best lawyers in America, by The Best Lawyers in America in the category of corporate law.  Mr. Palmer of the firm’s Kansas City, Missouri, branch has reviewed the case.  Mr. Palmer is among the top patent attorneys in the country.  To learn more about the Shughart, Thomson & Kilroy, please visit their web site at www.stklaw.com

 

The hundreds of hours spent by STK reviewing the case cost has not been billed to RMTEC.  The law firm would normally bill clients at a rate of $200 to $300 per hour.  This review has been performed at a considerable investment to the firm.  The two local litigation attorneys who have been working closely with RMTEC are William Fischer and Steve Long.  Both are available for a personal meeting or telephone call to discuss their findings and assessment.  The firm has committed to litigating this case on contingency once the bankruptcy is settled and there is funding in place for litigation expenses. See Exhibit C

 

The law concerning patent life changed in 1997, from having a life of 20 years from the date on which they were applied to having a life of 17 years from when they were patented.  The earliest patent expiration date of any of Mr. Wessels patents is December 24, 2012.  Mr. Wessels patented conceivable alternative product designs further protecting his inventions. Mr. Wessels patented additional technology and products, a process called continuation in part patent. RMTEC patents can be described as functional patents rather than device patents, where the function of the invention is patented rather than the mechanical design of the device.  RMTEC patents include patents for in-cab electronic slider control, automatic weight balancing, and satellite based home office and weight station (Pre-Pass) interaction.  All of these are revolutionary to the trucking industry, making it faster, cheaper and easier.  The real key lies in the fact that it’s safer, which is far more interesting to the insurance companies as well as the state and federal governments.

 

Bankruptcy of RMTEC

 

RMTEC's inability to operate at a profitable level due to unfair competition through infringing products has forced RMTEC to breach a settlement agreement with a Mr. Randy Havener.  RMTEC was obligated to pay Mr. Havener approximately $250,000 on July I8th, 2001. The obligations under the Settlement Agreement and Mutual Release were secured by a security interest in five of RMTEC's six U.S. Patents. (The patent not subject to Mr. Havener’s lien is the pressure protection valve, the most important patent). In response to the threat that Mr. Havener might foreclose on these patents, RMTEC filed for Chapter 11 bankruptcy to preserve its value for the benefit of all creditors and shareholders.

 

RMTEC and its Bankruptcy attorney believe an investment of at least $350,000 into RMTEC will fund the plan of reorganization as submitted to the Court. RMTEC intends for $250,000 to be used to eliminate all outstanding debt and claims against RMTEC and its patents. The remaining $100,000 will be used to fund the operations of RMTEC and some litigation expenses for the patent infringement action.

 

Once litigation commences and all manufacturers and sellers of the infringing products are put on notice, they will need to terminate their manufacture, distribution, sale, and/or use immediately or run the risk of incurring treble-damage awards penalties.   Some of the infringing companies may already be guilty of treble damages.  Any company that builds, sells, or uses the infringed product is guilty of patent violation.     

This will generate a situation in which the users of Handi-slide®-type products will be forced to either buy the product from RMTEC or to license the use of the technology.  

 

RMTEC is in Chapter 11 Bankruptcy and has created a reorganization plan that is pending acceptance by the bankruptcy court.  RMTEC hopes to submit a plan with approximately $350,000 cash investment. $250,000 of which will be used to pay pre-petition creditors, with the residual used to partially pay post petition administrative costs, litigation and as working capital for RMTEC going forward.

 

MANAGEMENT     

 

Each officer is appointed to hold office until the next annual meeting of members and until his successor is elected and qualified.  All officers serve at the discretion of the Membership Committee.

 

The management is a blend of extensive experience in the trucking industry coupled with startup and financial management experience.  RMTEC has also retained the management consulting firm of Strategic Finance International to review RMTEC's business and marketing plans.  

 

Chairman of the Board -  Larry Wessels

Mr. Wessels studied Mechanical Engineering at Colorado State University. He worked for 32 years within the aerospace industry managing large space-based programs. He has managed teams of over 500 people, and programs with annual budgets in excess of $20 million on projects in the Space Shuttle, Apollo, Gemini, Voyager, Viking, Skylab, and Titan programs.  Mr. Wessels became involved in the trucking transportation industry through his father and brother.  Mr. Wessels’ father owned a trucking company located in Clear Lake Iowa..  Mr. Wessels patented the Handi-Slide ideas he created and he founded Handi-Slide, Inc. to develop, produce, and market the product.  Mr. Wessels created prototypes, tested the Handi-Slide and eventually began test marketing the product.  Handi-Slide has been installed on 1500 trailers over the last 5 years.

 

President – Terre A. Lane

Terre’s experience has been largely in the mining industry.  She is a graduate of Michigan Technological University with a BS in Mining Engineering.  She has held senior management positions at several companies and has been involved with operations, engineering, economic and financial analysis, marketing services, and administration.  Terre has been involved in the startup, management, and financing of both private and public companies, including the Initial Public Offering of a successful mining company.

 

Chief Financial Officer – Stephen Finch

Mr. Finch has been a business and management consultant for the past 20 years.  Prior to that he held positions with large companies in research & development, process engineering, plant management, and corporate-level finance.  He has been the CEO or CFO of five start up companies and has helped over 100 small businesses.  As a consultant, he has prepared feasibility studies, strategic and business plans, functioned as a project manager, and provided management consulting to companies for projects in the United States, West Africa, the Caribbean, Central and South America, and Europe.  Currently, he is a Partner in Strategic Finance International, LLC, a financial consulting firm specializing in raising capital and international financial guarantees.

 

Mr. Finch has a Chemical Engineering degree and an MBA emphasizing finance and management.  He teaches college courses in management, marketing, international business, finance, and economics at the undergraduate level and strategic planning and implementation, international business, and global management at the graduate level

 

VP Engineering – Certain candidates are currently being considered for this position.  The

Company does not anticipating filling this position until late 2002.

 

Both Management and legal counsel are available to answer questions.

 

 

Patents Currently Owned by RMTEC

 

Patent Number	Issue Date	Product	Additional coverage
5,314,201	May 24, 1994	Locking system for semi-trailer sliding undercarriage	Safety valve
Canadian 2,122,315	October 19, 1999	Same as above	Same as above
5,565,990	November 14,1995	Locking system for semi-trailer sliding undercarriage	Continuation in part
5,620,195	April 15, 1997	Locking system for a semi-trailer sliding undercarriage	Continuation in part

 

 

Indemnification of Officers –  

 

The Articles of Incorporation and Bylaws of RMTEC provides for indemnification of officers and agents to the fullest permitted by law. For non-derivative actions, indemnification covers litigation expenses, judgments, fines and settlement payments. In derivative actions, indemnification does not cover judgments or settlements paid, and expenses of an unsuccessful defense are covered only if the court approves; indemnification in derivative actions is permitted otherwise. There are certain preconditions to the right of an officer to receive indemnification, including requirements that the person must have acted with due care, in good faith and in the reasonable belief his act was in the best interest of RMTEC. If the officer is successful in the merits in a proceeding or any claim, issue or matter therein, related expenses are covered without the need to satisfy the stated preconditions.

 

Insofar as indemnification for liabilities arising under the Act may be permitted to officers or persons controlling RMTEC pursuant to the foregoing provisions, it has been surmised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act and is therefore unenforceable.

 

Limitation of Officer’s Liability / Indemnification

 

The RMTEC’s Articles of Incorporation and Bylaws provide that, to the fullest extent permitted by the Colorado Limited Liability Company Act, an officer of RMTEC shall not be liable to RMTEC or its members for monetary damages for breach of fiduciary duty as officer. Under current law, liability of an officer may not be limited (i) for any breach of the officer’s duty of loyalty to RMTEC and to its members, (ii) for acts or omission not in good faith or which involved intentional misconduct or a knowing violation of law, (iii) in respect of certain unlawful dividend payments or stock redemption or repurchases and (iv) for any transaction from which the officer derives an improper benefit. The effect of this provision on RMTEC’s Management Operating Agreement is to limit or to eliminate the rights of RMTEC and its members (through members derivative suites on behalf of RMTEC) to recover monetary damages against an officer for breach of fiduciary duty of care as an officer (including breaches resulting from negligent or grossly negligent behavior) except in those circumstance described in clause (i) through (iv) above. This provision does not limit or eliminate the right of RMTEC or any member to seek non-monetary relief such as an injunction or rescission in the event of a breach of an officer’s duty of care. In addition, RMTEC’s Certificate of Incorporation and Management Operating agreement provide that RMTEC shall indemnify its officers, employees and agents to the fullest extent permitted by law.

 

Key-man Life Insurance

 

Upon completion of funding and the commencement of operations RMTEC will obtain Key-man policies on the officers of RMTEC.

 

PRINCIPAL UNIT HOLDERS     

 

As of August 5, 2002, with respect to the beneficial ownership of Units of Partners’ securities (i) each person known to Partners to own beneficially more than 10% of the outstanding Membership Units of Partners, (ii) each Officer of Partners and (iii) all Officers and executive officers of Partners as a group is zero percent.

 

DESCRIPTION OF SECURITIES

 

Units

 

Partners is authorized to issue 100 Units, of which 0 Units were issued and outstanding as of August 5, 2002.  The holders of Membership Units are entitled to voting right in equal proportion to ownership for each vote held of record on matters submitted to a vote of Members.  There is no cumulative voting in the election of officers with result that the holders of more than 50% of the Units voted in the election of officers can elect all of the officers and/or managers.  Holders of Membership Units are entitled to receive ratably such distributions as may be declared by the Membership committee out of funds legally available therefore and, in the event of liquidation, dissolution or winding up of Partners, they are entitled to Unit ratably in all assets remaining after payment of liabilities.  Holders of Membership Units have no preemptive rights and have no rights to convert their Membership Units into any other securities.  All of the outstanding Units of Membership are validly issued, fully paid and non-assessable.

 

The Membership Units are offered hereby pursuant to Rule 504 of Regulation D promulgated under Sections 3(b) and 4(2) of the Act, which provides for an exemption from registration. Although the Units offered hereby will be required to carry a restrictive legend, the potential investor should be aware that no market for the Membership Units of Partners presently exists, and there can be no assurance that a market will materialize upon completion of this Offering.

 

Units Eligible for Future Sale

 

There will be no additional units offered in RMTEC Partners I, however that company may wish to sell shares of RMTEC to other individuals or investment groups.  At this time Partners has no wish or intention to do so.

 

Prior to the Offering, there has been no public market for the Membership Units of Partners and no prediction can be made as to when, if ever, a public market for the Units will develop. If a public market for the Units does develop at a future time, sales of by Members of substantial amounts of Units in the public market could adversely affect the prevailing market price and could impair Partners’ future ability to raise capital through the sale of its equity securities.

 

The investor, by executing the Subscription Agreement and purchasing Units being offered herein, agrees to contractual limitation on their right to resell their Units in the public market, if one were to develop. Each Unit certificate to be issued will bear a restrictive legend, including among other things that commencing upon filing of a registration statement under the Securities Act and continuing for a period of ninety (90) days after the effective date of such registration statement, the investor may only sell a number of Units in the public market that will generate proceeds equal to such investors original cash investment in this Offering. At all other times, investors may sell their Units to a third party who shall acquire units subject to the same restrictions to which the original holder is subject.

 

PLAN OF DISTRIBUTION

 

The Units are being offered by Partners on a “best efforts, minimum 70 Units, maximum 100 Units” basis. Partners is offering the Units through its officers, and members or RMTEC, who will not receive any commissions. Units may also be offer through selected outside consultants and broker-dealers who are members of the NASD, and compensate such in the amount up to 10% of the cost of a Unit. Such securities broker-dealers may be deemed “Underwriters” as such term is defined in the Act.  Pending the sale of the minimum number of Units offered hereby, all proceeds of this Offering will be deposited into a special segregated escrow account with Partners.  In the event the minimum number of Units is not sold prior to the termination of the Offering Period, including extensions, all funds will be promptly returned, without interest or deduction, to the subscribers.

 

The Offering period will commence on the date of this Memorandum and shall continue for a period of Sixty (60) calendar days.  The initial closing of this Offering will occur within five (5) business days following the acceptance by Partners of subscriptions for the minimum number of Units offered hereby.  If the minimum 70 Units has been sold prior to the termination of the Offering period, then the remaining Units, up to the Maximum of 100 Units, will be offered by on a “best efforts” basis and will be issued on one or more closing dates as subscriptions are received and accepted until the earlier of the date by which all of the Units offered hereby are sold or the termination of the Offering period.

 

The management of RMTEC reserves the right, in its absolute discretion, to reject any subscription, in whole or in part, for the purchase of Units offered hereby.  In the case of orders, which are rejected or partially rejected, Partners will refund, without interest or deduction, the amount of the subscription or that portion thereof which has not been accepted.

 

Certificates

 

The certificates representing the Units shall be evidenced by a Subscription Agreement and Acceptance Letter, executed by the officers of RMTEC and sent to each subscriber hereof, until the close of the Offering on August 5, 2003. This Offering may be terminate without notice, prior to the Closing Date.  Within thirty (30) days of the Closing Date, or earlier, the investors hereof shall receive the underlying certificates evidencing their respective subscriptions.

 

 

Investor Suitability Standards

 

THE SUITABILITY STANDARDS DISCUSSED HEREIN REPRESENT MINIMUM SUITABILITY STANDARDS FOR PROSPECTIVE INVESTORS. EACH PROSPECTIVE INVESTOR SHOULD DETERMINE WHETHER THIS INVESTMENT IS APPROPRIATE FOR SUCH INVESTOR.

 

The Units offered hereby are neither registered under the Securities Act nor registered or qualified under any state securities laws, and are being offered pursuant to exemptions from the registration and qualification requirements thereof.  Accordingly, officers of RMTEC will offer and sell the Units only to investors who, in their sole judgment, satisfy the stringent standards of suitability set forth herein.  Investment in the Units is only suitable for persons who have adequate means of providing for their current needs and personal contingencies and have no need for liquidity in such an investment.

 

Prior to the purchase of any of the Units, each prospective unaccredited investor, or the partners or beneficiaries, as the case may be, of a purchasing entity that is an IRA, Keogh Plan, trust or partnership, will be required to represent (directly or through his purchaser representative), among other things, that he meets each of the following requirements:  (i) he has the requisite knowledge and experience in financial, business or investment matters to evaluate the merits and risks of the investment so as to be able to protect his own interests; (ii) he is acquiring the Units for investment and not with the view to resale or distribution thereof; and (iii) he has the ability to bear the economic risks of investing in the Units.

 

Sales may be made to persons or entities who are “accredited investors” as that term is defined in Securities Act Rule 501 (a) and unaccredited investors who satisfy the suitability requirements set forth in this Memorandum. Accredited investors include:  (I) any officer or officer of Partners; (ii) any natural person whose individual net worth or joint net worth with spouse exceeds $1,000,000; (iii) any natural person who had an individual income in excess of $200,000 in each of the two most recent years, or joint income with that person’s spouse in excess of $300,000 in each of those years and who reasonably expects the same income level in the current year; (iv) any organization described in Section 501 (c) (3) of the Code (i.e. tax exempt entities), any corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the Units, with total assets in excess of $1,000,000; (v) any trust, with assets in excess of $1,000,000, not formed for the purpose of acquiring the Units, whose purchases are directed by a sophisticated person who has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment; (vi) any employee benefit plan within the meaning of the Title of ERISA if (a) the investment decision is made by a plan fiduciary, as defined in Section 3(21).

 

Unaccredited Investor

 

Unaccredited investors, for the purpose of this Offering, are people who do no meet the definition of an “Accredited Investor.”  The Units will be sold to an unaccredited investor only if the management of RMTEC has reasonable grounds to believe, after making reasonable inquiry, that such investor, either alone or with his purchaser representative, has such knowledge and experience in financial business matters that he or she is capable of evaluating the merits of making an investment in Partners upon reviewing the Confidential Purchaser Questionnaire in the Subscription Agreement.

 

In addition, an investment in the Units subscribed for must not exceed 10% of the subscriber’s net worth.

 

The foregoing suitability standards represent the minimum requirements for prospective investors, and the satisfaction of such standards does not necessarily mean that an investment in Partners is a suitable investment for the purchaser. Management of RMTEC may, in circumstances it deems appropriate, modify such requirements. They may also reject subscriptions for whatever reasons, in their sole discretion, that they deems appropriate. Subscribers who are residents of certain states may be required to meet certain additional suitability requirements.

 

Subscription Procedures  

The Subscription materials to be executed accompany this Memorandum as a separate package. In order to purchase Units an investor must complete and execute the Subscription Agreements accompanying this Memorandum.

 

Each investor will be notify of their acceptance or rejection of such investor’s subscription promptly after receipt of all necessary documents as described above. Any subscription not accepted will be returned to the investor. Upon each closing of the Offering, Partners will issue Units to each investor whose subscriptions are accepted for such closing.

 

Securities Law Considerations

 

The Units offered hereby have not been registered under the Act or under the securities laws of any state. The Membership Subscription Agreement will contain various representations and warranties on the part of each subscriber, which will be relied upon to ensure that exemptions form registration under the Act and any applicable state securities laws will be applicable to this Offering. To further ensure compliance by Partners with the securities laws, each investor will be required to agree in the Subscription Agreement that he or she will not sell or otherwise transfer the Units except (a) pursuant to the registration under the Act; or (b) in accordance with an opinion of council satisfactory to Partners or no-action letters from the Securities and Exchange Commission and the appropriate state regulatory agencies prior to such transfer to effect that registration under the Act or any applicable state securities law is not required in connection with the transaction resulting in such transfer.  A legend may be placed on all certificates representing the Units stating that the securities represented thereby have not been registered under the Act or any applicable state securities laws.  A notion to the same effect will also be made in the appropriate records of Partners.

 

Accommodation Account

 

For information regarding the Accommodation Account please contact

 

Funds will be released to RMTEC upon the sale of the minimum number of Units and RMTEC’s reorganization plan approval by bankruptcy court.

 

Capital Gains Deductions For Subscribers

 

A provision in the Omnibus Budget Reconciliation Act of 1993, which became effective on August 10, 1993 may be of interest to potential investors considering purchase hereby. This law provides, in certain circumstances, a reduction in the capital gains tax for individuals of certain other taxpayers who acquire “qualified small business stock” at its original issue and hold it for more than five (5) years. One-half of the gain (up to certain limits) on such stock is generally excluded from taxable income for regular tax purposes and 25% of such gain (up to certain limits) is generally excluded for alternative minimum tax purposes.

 

The new law has many limitations and because it is not yet clear how this new tax provision will apply to Partners and to the investors in its Membership Units, Partners makes no representation as to the availability of the benefits of this law to the prospective purchasers of its Membership Units. Potential investors are advised to consult tax council for further details.

 

Distribution Policy

 

The investment Group RMTEC Partners I will receive 33.3% of all litigation funding within 5 days of distribution to RMTEC.  The funds will then be distributed pro-rata to each member.  When dividends are generated, distribution will be equal for each unit owned by the members of RMTEC Partners I.   Distributions will be calculated and distributed quarterly.

 

Federal, State And Local Taxes

 

Because no attempt is made to provide information as to the federal, state and local income or other tax consequences of ownership of the Membership Units, prospective investors should consult their own tax counsel or advisors with respect to these matters.

 

Additional Information

 

Should any potential investor or purchaser representative desire any additional information regarding Partners’ services or wish to review any of the underlying documents referred to herein, they may do so by requesting such material from xxx.  All such requests will be accommodated immediately.

 

Subscription Documents

 

Each prospective Member herein will be required to execute a Membership Subscription Agreement, which describes the terms of this offering and the responsibilities of Partners and the Members, respectively.

 

APPENDIX – EXHIBITS  

Financial Section……………….……..  Exhibit A

Subscription Documents……………… Exhibit B

Letter Shugart, Thomson and Kilroy …. Exhibit C

 

ANY FORWARD-LOOKING STATEMENTS IN THIS RELEASE ARE MADE PURSUANT TO THE “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. INVESTORS ARE CAUTIONED THAT ACTUAL RESULTS MAY DIFFER SUBSTANTIALLY FROM SUCH FORWARD-LOOKING STATEMENTS