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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): December 31, 1997
ESCALON MEDICAL CORP.
(Exact Name of Registrant Specified in Charter)
California 0-20127 33-0272839
(State or Other (Commission File (I.R.S. Employer
Jurisdiction of Number) Identification No.)
Incorporation)
351 East Conestoga Road
Wayne, Pennsylvania 19087
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (610) 688-6830
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS.
On December 31, 1997, the Company issued $1,350,000 of Series
A 6% Convertible Preferred Stock ("Preferred Stock") in a private placement. The
net proceeds will be used by the Company for working capital purposes. After
March 1, 1998, the Preferred Stock may be converted at the option of the holder
into shares of the Company's Common Stock at a rate determined by dividing the
liquidation value of the Preferred Stock being converted by the conversion price
then in effect. The conversion price will be the lesser of (i) $8.6125 (which is
the average of the closing bid price of the Common Stock for each of the five
trading days immediately prior to December 31, 1997) or, (ii) up to 82% of the
five-day average closing bid price prior to the conversion date. Any Preferred
Stock that is outstanding on December 31, 1999 will be automatically converted
into Common Stock. The Preferred Stock pays cumulative dividends of 6% per annum
payable quarterly in cash or Common Stock, at the Company's option. The
Preferred Stock may be redeemed, at the option of the Company. The Preferred
Stock was accompanied by an immediately exercisable five-year Warrant to
purchase 40,000 shares Common Stock at exercise prices ranging from $8.6125 to
$11.626875. The Company also issued to the private placement agent and its
designees a similar Warrant to purchase an aggregate of 50,000 shares of Common
Stock at an exercise price of $10.335 per share. On January 20, 1998, the
Company filed a shelf registration statement on Form S-3 with the Securities and
Exchange Commission to register the Common Stock underlying the Preferred Stock
and the Warrants. (The registration statement will also register the resale of
1,080,193 shares of Common Stock owned by EOI Corp., which are being registered
as a result of EOI's exercise of its piggyback registration rights.) The maximum
number of shares of Common Stock that may be issued upon conversion of the
Preferred Stock plus the aggregate number of shares of Common Stock issued upon
exercise of the Warrants is 19.9% of the issued and outstanding shares of Common
Stock as of December 31, 1997.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
(b) Pro Forma Financial Information
The following unaudited pro forma balance sheet as of November
30, 1997 gives effect to the transaction noted in Item 5 above. The pro forma
balance sheet was prepared by the management of the Company based upon the
historical financial statements of the Company. The pro forma adjustments are
based on the terms of the financing along with management's estimate of related
offering costs. The pro forma balance sheet should be read in conjunction with
the Company's annual report on Form 10-K and its quarterly report on Form 10-Q
filed with the Securities and Exchange Commission in October and November 1997,
respectively.
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ESCALON MEDICAL CORP.
PRO FORMA BALANCE SHEET
(UNAUDITED)
NOVEMBER 30, PRO FORMA PRO FORMA
1997 ADJUSTMENTS BALANCE
------------ ------------ ----------
ASSETS
Current Assets:
Cash and cash equivalents $ 1,552,464 $ 1,158,000 $2,710,464
Investments 95,000 95,000
Accounts receivable, net 717,675 717,675
Inventories, net 713,739 713,739
Other current assets 44,195 44,195
------------ ------------ ----------
Total current assets 3,123,073 1,158,000 4,281,073
Furniture and equipment, at cost, net 83,066 83,066
Long-term receivables 150,000 150,000
License and distribution rights, net 933,072 933,072
Patents, net 486,299 486,299
Goodwill, net 1,042,779 1,042,779
Other assets 12,342 12,342
------------ ------------ ----------
$ 5,830,631 $ 1,158,000 $6,988,631
============ ============ ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of capital lease obligations $ 1,220 $ $ 1,220
Accounts payable 709,780 709,780
Accrued and other liabilities 138,675 138,675
------------ ------------ ----------
Total current liabilities 849,675 849,675
------------ ------------ ----------
Commitments
Shareholders' Equity:
Preferred stock, no par value; 2,000,000 shares
authorized; 1,350 shares issued and outstanding -- 1,158,000 1,158,000
Common stock, no par value; 35,000,000 shares
authorized; 2,629,379 shares issued and outstanding
at November 30, 1997 44,645,440 44,645,440
Accumulated deficit (39,664,484) (39,664,484)
------------ ------------ ----------
Total shareholders' equity 4,980,956 1,158,000 6,138,956
============ ============ ==========
$ 5,830,631 $ 1,158,000 $6,988,631
============ ============ ==========
See notes to pro forma balance sheet
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ESCALON MEDICAL CORP.
NOTES TO PRO FORMA BALANCE SHEET
The November 30, 1997 unaudited pro forma balance sheet reflects the
impact on the Company's capital structure for the issuance of 1,350 shares of
nonvoting Series A 6% Convertible Preferred Stock ("Preferred Stock") on
December 31, 1997 from which the Company received funds totaling approximately
$1,158,000, net of estimated offering costs of $192,000. After March 1, 1998,
the Preferred Stock may be converted into shares of the Company's Common Stock
at a rate determined by dividing the liquidation value of the Preferred Shares
being converted by the stated conversion price which is the lessor of (i)
$8.6125 (which is the average of the closing bid price of the Common Stock for
each of the five trading days immediately prior to December 31, 1997) or, (ii)
up to 82% of the five-day average closing bid price prior to a conversation
date. The maximum number of shares of Common Stock that may be issued upon
conversion of the Preferred Stock plus the aggregate number of shares of Common
Stock issued upon the conversion of the Warrants is 19.9% of the issued and
outstanding shares of Common Stock as of December 31, 1997. The Preferred Stock
must be converted into shares of Common Stock by December 31, 1999.
The Preferred Stock pays cumulative dividends of 6% per annum payable
quarterly in cash or by issuing shares of the Company's Common Stock. The
Preferred Stock may be redeemed, at the option of the Company, at any time prior
to conversion in cash at the redemption price.
In connection with the issuance of the Preferred Stock, the Company
issued immediately exercisable Warrants to purchase 90,000 shares of the
Company's Common Stock to the buyer, underwriter and its designees. These
Warrants have an exercise price ranging from $8.6125 to $11.626875 and expire on
December 31, 2002. While the Company has not yet assigned a value to the
Warrants, the net impact on the pro forma adjustments is $0.
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(c) Exhibits
Exhibit Number Description
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3.1 Certificate of Determination of Series A
6% Convertible Preferred Stock.*
4.1 Certificate of Determination of Series A
6% Convertible Preferred Stock.*
4.2 Registration Rights Agreement, dated as
of December 31, 1997, by and among the
Company and Combination.*
4.3 Warrant to Purchase Common Stock issued
December 31, 1997, to David Stefansky.*
4.4 Warrant to Purchase Common Stock issued
December 31, 1997, to Combination.*
4.5 Warrant to Purchase Common Stock issued
December 31, 1997, to Richard
Rosenblum.*
4.6 Warrant to Purchase Common Stock issued
December 31, 1997, to Trautman Kramer &
Company, Incorporated.*
10.1 Registration Rights Agreement between
the Company and EOI Corp. dated as of
February 12, 1996.**
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* Incorporated by reference to the Company's Registration Statement on Form S-3
filed January 20, 1998.
** Incorporated by reference to the Company's Form 10-K
for the year ended June 30, 1996.
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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.
ESCALON MEDICAL CORP.
(Registrant)
By /s/ John T. Rich
---------------------------
John T. Rich
Vice President, Finance and
Administration, Secretary
Dated: January 21, 1998