FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 30, 1996
EDITEK, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
1-11394 95-3863205
(Commission File Number) (IRS Employer Identification No.)
1238 Anthony Road
Burlington, North Carolina 27215
(Address of principal executive offices) (Zip Code)
(910) 226-6311
(Registrant's telephone number, including area code)
Item 5. Other Events.
To date the Registrant has received requests to convert 354 shares
of its Series A Convertible Preferred Stock ("Series A Preferred"), of which
conversion notices for 163 shares of Series A Preferred were received on
April 30, 1996. At the conversion rates in effect on the conversion dates,
such conversion notices require the issuance of 29,566,380 shares of Common
Stock. The Company has issued 12,047,987 shares of Common Stock upon
conversion of the Series A Preferred, but has been unable to issue additional
shares of Common Stock to satisfy the remaining conversions due to there being
an insufficient number of authorized, unissued and unreserved shares of Common
Stock. The Registrant issued shares to converting holders of Series A
Preferred based on the day and time the conversion notice was received by the
Registrant. As of May 6, 1996, the Registrant has not received conversion
notices for 53 shares of Series A Preferred.
The Registrant's charter provides that each share of Series A
Preferred is convertible into a number of shares obtained by dividing (i) the
purchase price of the Series A Preferred Stock ($50,000 per share) by (ii) the
lower of (x) $2.775 or (y) 75% of the Market Price of the Common Stock on the
day the shares of Series A Preferred are converted into Common Stock. "Market
Price" is defined for this purpose as the daily average of the closing bid
prices quoted on the American Stock Exchange or other exchange on which the
Common Stock is traded for the five trading days immediately preceding the
date the shares are converted. The charter indicates that the shares of
Series A Preferred are converted on the business day the Registrant receives
the written notice of conversion. Consequently, when the Registrant has
sufficient shares of Common Stock to satisfy conversion notices, holders of
Series A Preferred from whom the Registrant receives conversion notices will
be issued a number of shares of Common Stock that is based on the Market
Price of the Common Stock for the five trading days prior to the date the
Registrant received the conversion notice notwithstanding that the Registrant
is not able to deliver the stock certificates therefor within the three day
period after receipt of the conversion notice as required by the charter of
the Registrant. The Registrant also has agreements with holders of Series A
Preferred who do not receive shares of Common Stock upon conversion due to
there being an insufficient number of authorized shares. The agreements
require the Registrant to compensate such shareholders if between the
conversion date and the date shares of Common Stock are issued the market
price of the of the Common Stock of the Registrant declines. In such case,
shareholders with the number of additional shares of Common Stock to have a
market price equal to the decline in market price of the Common Stock of the
Registrant. The number of shares of Common Stock issuable upon conversion
will not decline if between the conversion date and the issuance date the
market price of the Common Stock of the Registrant increases. The agreements
provide that additional shares will not be issued to any shareholder who
prior to the issuance of the additional shares engages in short sales of the
Registrant's Common Stock, acquires any put option, sells any call option or
loans any shares of Common Stock to someone the shareholder knows is engaging
in any such trading activity or who encourages or assists another person to
engage in any such trading activity.
In connection with the closing of the acquisition of MEDTOX
Laboratories, Inc. ("MedTox") in January 1996 the Registrant issued 2,517,306
shares of Common Stock to MedTox, which distributed the shares to holders of
MedTox Common Stock. The Registrant agreed that if after the Closing Date the
market value of the Common Stock of the Registrant declines below
approximately $1.98 per share, the Registrant will issue additional shares of
Common Stock ("Additional Shares") to shareholders of MedTox who retain their
shares of Common Stock through specified dates (the "Repricing Dates") to
compensate the MedTox shareholders for decreases after the closing of the
MedTox Transaction in the market price of the Common Stock of the Registrant
below approximately $1.98 per share. The first Repricing Date is the fifth
trading day following the date the Registrant issues a press release
announcing its financial performance for the fiscal quarter ended on March
31, 1996. Because the number of Additional Shares that may become issuable
is tied to decreases in the market price of the Common Stock, the number of
Additional Shares issuable in the future to the MedTox shareholders cannot
be determined at this time and will depend upon changes in the Market Price
of the Common Stock, as well as the extent to which MedTox shareholders retain
the MedTox shares on each of the Repricing Dates. However, if the market
price of the Common Stock is the same as the market price of the Common Stock
on April 30, 1996, 1,927,138 Additional Shares of Common Stock would be
issuable to MedTox shareholders. The foregoing assumes that prior to the
first Repricing Date the MedTox shareholders do not sell any of the 2,517,306
shares of Common Stock issued at the closing of the MedTox acquisition. The
Registrant will not be able to issue any Additional Shares to Medtox
shareholders until the number of authorized shares of Common Stock of the
Registrant increases.
On May 1, 1996 the Registrant filed with the Securities and Exchange
Commission a preliminary proxy statement for a special meeting of the
shareholders at which the shareholders will be asked to approve an amendment
to the Registrant's charter to increase the number of authorized shares of
Common Stock from the current 30,000,000 shares to 60,000,000 shares.
Holders of Common Stock of the Registrant on the May 13, 1996 record date
will be entitled to vote at the special meeting. The Registrant expects such
meeting of shareholders will be held in mid-June. There can be no assurance,
however, as to the timing of the meeting or that the holders of Common Stock
will approve the amendment to increase the number of shares of authorized
Common Stock.
The Company may be subject to litigation from holders of Series A
Preferred and/or from MEDTOX shareholders who do not receive shares of Common
Stock issuable to them under the Registrant's charter or contractual
obligation. The Registrant believes that litigation would have a material
adverse effect on the Registrant and the Registrant intends to seek to avoid
litigation through discussions with shareholders who do not receive shares on
time and by holding a Special Meeting of shareholders as soon as possible to
cause shares to become available for issuance. There can, however, be no
assurance that litigation can be avoided or that the shareholders of the
Registrant will approve the proposed amendment to the Registrant's certificate
of incorporation.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EDITEK, INC.
Date: May 6, 1996 By:/s/ Peter J. Heath
Name: Peter J. Heath
Title: Vice President of Finance and
Chief Financial Officer