[THIS DOCUMENT IS A COPY OF THE FORM 8-K FILED ON JUNE 3,
1996, PURSUANT TO A RULE 202 PERMANENT HARDSHIP EXEMPTION]
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_______________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): MAY 31, 1996
NEW IMAGE INDUSTRIES, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
DELAWARE 0-17928 95-4088548
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(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
2283 COSMOS COURT, CARLSBAD, CALIFORNIA 92009
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code: (619) 930-9900
NONE
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(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
Item 2. Acquisition or Disposition of Assets.
On May 31, 1996, ("Effective Date") the transactions contemplated by an
Agreement and Plan of Reorganization ("Agreement"), by and among New Image
Industries, Inc. (the "Company"), a Delaware corporation, Wisdom Acquisition
Corp. ("Sub"), a California corporation, a subsidiary of the Company, and
Insight Imaging Systems, Inc. ("Insight"), a California corporation, and the
related Agreement of Merger ("Merger Agreement") were consummated by the parties
(which followed a closing of such transactions on May 17, 1996). Under the
Merger Agreement, Sub was merged into Insight and Insight survived as a wholly-
owned subsidiary of the Company. The Company accounted for the transaction as a
pooling of interests.
Insight, for the twelve-month period ended March 31, 1996, had sales in
excess of $13 million. Insight was a privately-owned corporation headquartered
in San Carlos, California, with software operations in Richmond, Virginia, and
an optical assembly operation in Mission Viejo, California. Insight designs,
manufactures, and markets imaging systems for dental offices. It has had
success in generating rapid revenue growth in recent years, however, increases
in marketing and other expenses have exceeded revenue growth. New Image
management believes efficiencies can be realized from the combination of the two
companies.
The current Insight product line includes intraoral and extraoral video
cameras, monitors, printers, mobile carts, and video capture, periodontal and
restorative charting, and cosmetic imaging software. Insight camera systems are
available in a variety of models: cart, portable, or wall-mounted systems. Its
MultiLink network product links individual offices with a dentistry facility.
At the Effective Date, the only class of Insight's capital stock with
shares outstanding was its common stock, without par value ("Insight Common
Stock"). At the Effective Date, there were 6,373,764 shares of Insight Common
Stock issued and outstanding. For each share of Insight Common Stock, the
holder received 0.0554392 shares of the Company's Common Stock, $.001 par value,
353,356 in total. In addition, the Company issued 296,603 shares of the
Company's Common Stock in exchange for each dollar of principal and interest
outstanding on loans to Insight from shareholders which were made prior to
March 1, 1996; and the Company assumed Insight obligations under outstanding
options and warrants to purchase Insight Common Stock and in connection
therewith reserved 158,040 shares of the Company's Common Stock for issuance
upon exercise of such stock options and warrants. Subject to differences caused
by the Company's agreement to round-up all fractional shares, if all options and
warrants are exercised, the Company will have issued 807,999 shares of the
Company's Common Stock to holders of Insight Common Stock, options, warrants,
and shareholder loans made prior to March 1, 1996.
The basis for the exchange was the evaluation by the board of directors and
its advisors of the value of the Insight business on a going-forward basis.
There were no common shareholders, officers, directors or holders of 10% or more
of the Common Stock of the Company and Insight.
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The Company required additional funding in connection with the acquisition
from the following sources:
1. The Company's primary line of credit was increased from $2.5 million
to $4 million and is secured by all of the assets of the Company and Insight.
The amount of availability under the line will be a function of the size and age
of the receivables, inventory, and other assets of the combined companies
2. The Company has borrowed $500,000 of secured subordinated debt. Under
the terms of this loan, the principal sum will be subordinated to the bank's
primary lending relationship and will be senior to the Series A Notes described
below. The loan will bear interest at the rate of 10% per annum. In connection
with this debt, the Company granted the lender a five year warrant to purchase
the Company's Common Stock at $3.06 per share. The warrant will expire if not
exercised by the sooner of (i) expiration of the warrant term or (ii) completion
of a 20 day period where the Company's Common Stock closes at $8.00 or more per
share on the exchange where the stock is primarily traded following the second
year after issuance of the warrant.
3. An Insight shareholder had lent $650,000 and New Image had lent
$200,000 to Insight all prior to or as of the Effective Date, which loans are
evidenced by Insight Series A Unsecured Subordinated Notes ("Series A Notes").
The Series A Notes bear interest at the rate of ten percent (10%) per annum and
are subordinated to up to $8 million of Senior Debt designated from time to
time.
In connection with this acquisition, the Company will be consolidating the
operations of the combined companies into the Company's Carlsbad facility. The
Company plans to reduce the number of employees previously involved in the
Insight Operations and to consolidate certain of the Insight equipment and
facilities. This consolidation effort will result in a significant
restructuring charge in the Company's quarter ending June 30, 1996.
Item 7. Financial Statements, PROFORMA Financial Information and Exhibits.
(a) Financial Statements of Business Acquired. It was impractical to
file the required financial statements of Insight by the date this filing was
required. The audited consolidated balance sheets of Insight as of September
30, 1995 and 1994, and audited consolidated statements of income and cash flow
for the years ended September 30, 1995, 1994 and 1993; and an unaudited balance
sheet of Insight as of March 31, 1996 and unaudited consolidated statements of
income and cash flow for the six months ended March 31, 1996 and 1995, and a
Closing Date Financial Statement will be filed on or before the date required by
Item 7(a) of Form 8-K.
(b) PROFORMA Financial Information. It was impractical to file the
required Proforma Financial Information by the date this filing was required but
such information will be filed on a Form 8 to this report on or before the date
required by Item 7(b) of Form 8-K
(c) Exhibits. Exhibits filed herewith are identified in the Schedule of
Exhibits appearing at page 5 hereof.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
Date: May 31, 1996 New Image Industries, Inc.
By: _________________________________
Dewey F. Edmunds, President
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SCHEDULE OF EXHIBITS
EXHIBIT NO. DESCRIPTION PAGE
2.1 Agreement and Plan of Reorganization (including all
material exhibits thereto) ___
2.2 Undertaking Concerning Certain Registration Rights ___
4.1 Form of Certificate for the Registrant's Common Stock,
$.001 Par Value ___
10.1 Senior Subordinated Secured Promissory Note and Common
Stock Purchase Warrant between Mercury Partners and New
Image Industries, Inc. ___
10.2 Amended and Restated Loan and Security Agreement between
Coast Business Credit and New Image Industries, Inc. ___
10.3 Series A Subordinated Promissory Note ___
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