SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report: May 11, 1998
(Date of earliest event reported)
Genetic Laboratories Wound Care, Inc.
(Exact name of registrant as specified in its charter)
Minnesota 0-16664 41-1604048
State or other jurisdiction of Commission (I.R.S. Employer
incorporation or organization File No. Identification No.)
2726 Patton Road
St. Paul, MN 55113-3116
(Address of principal executive offices) (Zip
Code)
(612) 633-0805
(Registrant's telephone number, including area code)
Item 5. Other Exhibits.
On May 12, 1998, Genetic Laboratories Wound Care, Inc. issued a press
release that they have signed a Letter of Intent with Derma Sciences, Inc.,
whereby Genetic Laboratories Wound Care, Inc. would be acquired by a
wholly-owned subsidiary of Derma Sciences, Inc.
Item 7(c). Exhibits.
2 Letter of Intent dated May 11, 1998
20 Press Release dated May 12, 1998
SIGNATURE
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.
Dated: May 14, 1998 Genetic Laboratories Wound Care, Inc.
Registrant
By: /s/ Arthur A. Beisang
Arthur A. Beisang
Chairman and
Chief Executive OfficerExhibit 2
Letter of Intent
May 11, 1998
Mr. Arthur A. Beisang
Chief Executive Officer
Genetic Laboratories Wound Care, Inc.
2726 Patton Road
Saint Paul, MN 55113
Re: Derma Sciences, Inc. - Genetic Laboratories Wound Care, Inc.;
Merger Letter of Intent
Dear Art:
This letter sets forth the intent of Derma Sciences, Inc., a Pennsylvania
corporation ("Derma Sciences") and Genetic Laboratories Wound Care, Inc., a
Minnesota corporation ("Genetic Labs (MN)") to merge in accordance with the
terms described hereinbelow (the "Merger Transaction").
This is a non-binding letter of intent save for the obligations of
confidentiality and public disclosure described on pages 2-3 and page 4 hereof,
respectively. With the exception of the foregoing, this letter of intent
imposes no contractual or other legal obligations on either party hereto and
does not constitute an offer which may be accepted by execution hereof. A
binding contract will be created only upon the execution of an agreement and
plan of merger together with such other formal documents as may be necessary to
carry such merger into effect.
We contemplate the principal terms of the Merger Transaction to be as follows:
Structure
Genetic Labs (MN) will merge with and into a 100% subsidiary of Derma Sciences
to be named Genetic Laboratories, Inc. ("Genetic Labs (PA)"). The surviving
corporation in the Merger Transaction shall be Genetic Labs (PA). The Merger
Transaction is intended to qualify as:
(a) a statutory merger under Subchapter C, Section 1921 et seq., of the
Pennsylvania Business Corporation Law of 1988 and Section 302A.601 et seq. of
the Minnesota Business Corporation Act, and
(b) a reorganization under Section 368 (a) (1) (A) of the Internal Revenue
Code.
Mr. Arthur Beisang
May 11, 1998
Page 2
Exchange Ratio - Adjustment
Derma Sciences will issue to the shareholders of Genetic Labs (MN), from its
authorized and unissued shares, a total of 1,706,990 shares of its $0.01 par
value common stock at the rate of 0.7 shares of Derma Sciences common stock for
each share of Genetic Labs (MN) common stock owned and tendered.
Transactions Outside the Ordinary Course of Business
Pending consummation of the Merger Transaction, Genetic Labs (MN) shall not
issue additional shares of its securities (other than pursuant to the exercise
of currently outstanding stock options), declare stock or cash dividends
relative to its common stock, pay bonuses or extraordinary compensation,
purchase or sell assets or incur indebtedness other than in the ordinary course
of its business.
Genetic Laboratories, Inc. (PA) - Officers and Directors
The board of directors of Genetic Labs (PA) shall initially consist of Edward
J. Quilty, Arthur A. Beisang and Robert A. Ersek, M.D. each of whom shall be
elected to serve a one year term or until his successor is elected and
qualifies. The officers of Genetic Labs (PA) shall initially consist of Edward
J. Quilty, Chairman of the Board of Directors, Arthur A. Beisang, Chief
Executive Officer, H. James Thompson, President and Chief Operating Officer,
and Robert A. Ersek, M.D., Medical Director, each of whom shall be elected to
serve a one year term or until his successor is elected and qualifies.
Genetic Laboratories, Inc. (MN) - Executive Contracts
Prior to consummation of the Merger Transaction, Derma Sciences shall accept
assignment from Genetic Labs (MN) of the rights and responsibilities of Genetic
Labs (MN) under those certain executive agreements dated May 1, 1998 with
Arthur A. Beisang, Robert A. Ersek, M.D. and H. James Thompson.
Mr. Arthur Beisang
May 11, 1998
Page 3
Transfer and Conversion of Options
The agreement of merger governing the Merger Transaction shall provide that
options to purchase shares of the common stock of Genetic Labs (MN) outstanding
as of the merger effective date shall be transferred and converted into options
to purchase shares of common stock of Derma Sciences ("Derma Sciences Options")
in the ratio of 0.7 Derma Sciences Options to one Genetic Labs (MN) Option.
Transaction Expenses
Prior to the consummation of the agreement and plan of merger contemplated
hereby, each party shall be responsible for its own expenses, of whatsoever
nature, relative to the Merger Transaction and the negotiation and examination
thereof.
Conditions
Consummation of the merger Transaction shall be subject to the following
conditions, together with such other terms and conditions as are necessarily
incident thereto: (1) execution of an agreement and plan of merger governing
the Merger Transaction; (2) successful completion of due diligence by Derma
Sciences and Genetic Labs (MN); (3) approval of the agreement and plan of
merger by the boards of directors of Derma Sciences and Genetic Labs (MN); (4)
approval of the agreement and plan of merger by majority vote of the holders of
the common stock of Genetic Labs (MN); and (5) the occurrence of no material
adverse change in the business operation or financial condition of Derma
Sciences or Genetic Labs (MN).
Due Diligence
Immediately following the execution hereof, Derma Sciences and Genetic Labs
(MN) will allow each other, and their respective accountants, attorneys and
other authorized representatives, to review each other's books, records,
financial statements, tax returns, inventory, tangible and intangible assets,
material contracts, evidence of liabilities and any and all other material
necessary in order for each of the Derma Sciences and Genetic Labs (MN) to
satisfy themselves as to each other's financial condition and business
operations.
Mr. Arthur Beisang
May 11, 1998
Page 4
Milestones
The parties contemplate that the agreement and plan of merger governing the
Merger Transaction will be executed not later than May 31, 1998 and that the
merger proxy/registration statement on Form S-4 will be filed with the
Securities and Exchange Commission not later than June 30, 1998.
Confidentiality
The parties agree to keep confidential all information regarding the Merger
Transaction, and any information obtained in the process of due diligence
relative thereto, except to the extent otherwise permitted hereby or required
by securities laws or other laws or regulations, and except to the extent
otherwise required by legal process or in response to the inquiries by
governmental officials or agencies. Provided, however, the parties may share
such information with financial and legal advisors, accountants, consultants,
agents and employees.
Public Announcement - Securities Filings
Immediately upon execution hereof, Derma Sciences and Genetic Labs (MN) shall:
(a) prepare and issue press releases announcing the Merger Transaction, and
(b) prepare and file with the Securities and Exchange Commission current
reports on Form 8-K disclosing the contemplated Merger Transaction and the
principal terms thereof.
Very truly yours,
DERMA SCIENCES, INC.
By: /s/ Edward J. Quilty
Edward J. Quilty
Chairman of the Board
Accepted in accordance with the terms hereof.
GENETIC LABORATORIES WOUND CARE, INC.
By: /s/ Arthur A. Beisang
Arthur A. Beisang
Chairman of the Board
Exhibit 20
PRESS RELEASE
DERMA SCIENCES TO ACQUIRE GENETIC LABORATORIES WOUND CARE
PRINCETON, NJ, MAY 12, 1998. DERMA SCIENCES, INC. (NASDAQ:DSCI) and St.
Paul-based Genetic Laboratories Wound Care, Inc., (EBB:GELW) jointly announced
today that they have signed a letter of intent whereby Genetic Laboratories
would be acquired by a wholly owned subsidiary of Derma Sciences. Genetic
Laboratories shareholders would receive 0.7 shares of Derma Sciences Common
Stock in exchange for each share of Genetic Laboratories Common Stock owned.
Closing of the acquisition is subject to execution of a definitive merger
agreement, completion of due diligence, approvals of the Board of Directors and
shareholders of both companies and certain other conditions. The companies
expect to sign a definitive agreement by the end of May, 1998 and to complete
the transaction by September, 1998.
Derma Sciences Chairman Edward J. Quilty commented, "Our acquisition of Genetic
Laboratories is in line with our previously announced goal of implementing
strategic acquisitions and thereby broadening our product lines and increasing
our revenue streams. Genetic Laboratories' extensive line of wound closure
strips and specialty catheter fasteners, together with its recently introduced
wound irrigation system, represent important synergistic additions to our
expanding line of wound care products. We believe that Genetic Laboratories'
well-developed access to hospitals and alternate care facilities and Derma
Sciences' strong presence in the extended care and home healthcare markets will
create a powerful combination."
Quilty further commented, "Genetic Laboratories has a history of consistent
revenue growth and profitability. Its revenues and profits for the nine-month
period ended February 28, 1998 were $2.3 million and $78,253 (unaudited),
respectively. Based on these results, Genetic Laboratories appears to be on
track to achieve its May 31, 1998 fiscal year goal of $3.0 million in sales.
We expect this acquisition to have an immediate and positive impact on Derma
Sciences' revenues, net income and earnings per share."
Arthur A. Beisang, Chairman and Chief Executive Officer of Genetic
Laboratories, added, "We are excited at the prospect of combining the wound
care products and the marketing and sales capabilities of our organizations.
Derma Sciences and Genetic Laboratories have complementary strengths whose
potential will be greatly enhanced by our joining forces."
Upon completion of the transaction, Arthur Beisang will become a member of
Derma Sciences' Board of Directors and H. James Thompson, currently President
and Chief Operating Officer of Genetic Laboratories, will become President and
Chief Operating Officer of the newly formed subsidiary of Derma Sciences to be
named Genetics Laboratories, Inc. Genetic Laboratories will continue to be
headquartered in St. Paul.
Genetic Laboratories Wound Care, Inc., is engaged in the development,
manufacture, marketing and sale of wound closure products, specialty fasteners
used to secure catheters and tubes and a recently introduced wound irrigation
system. For more information about Genetic Laboratories Wound Care, Inc.,
visit its home page on the Internet at http://www.geneticlabs.com .
Derma Sciences, Inc. is engaged in the development, marketing and sales of
topical nutrient-based wound care products using its proprietary zinc
formulation for the management of certain chronic, non-healing skin ulcerations
such as pressure and venous ulcers, surgical incisions and burns. For more
information about Derma Sciences, Inc, visit its home page on the Internet at
http://www.dermasciences.com .
Statements contained in this release that are not statements of historical fact
may be deemed to be forward-looking statements. Without limiting the
generality of the foregoing, words such as "may", "will", "expect", "believe",
"anticipate", "intend", "could", "would", "estimate", or "continue" are
intended to identify forward-looking statements. Readers are cautioned that
certain important factors may affect the timing of signing a definitive
agreement or the completion of the merger and could cause such timing or
completion to differ materially from any forward-looking statements which may
be made in this release or which are otherwise made by or on behalf of Derma
Sciences, Inc., and/or Genetic Laboratories Wound Care, Inc. Factors which may
affect the timing of signing a definitive agreement or completion of the merger
include, but are not limited to, the success or failure of negotiations, Board
or shareholder approvals and trade, legal, social and economic risks.
Additional factors that could cause or contribute to differences between the
timing of signing a definitive agreement or completion of the merger and
forward-looking statements include, but are not limited to, those discussed in
the filings with the Securities and Exchange Commission of Derma Sciences, Inc.
and/or Genetic Laboratories Wound Care, Inc.
- -----------------------------End of Press Release - May 12,
1998-----------------------------