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 (Date of earliest event reported)
November 17, 1999
NUTRITION FOR LIFE INTERNATIONAL, INC.
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(Exact name of registrant as specified in its charter)
Texas
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(State or other jurisdiction of incorporation)
0-26362 76-0416176
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(Commission File Number) (IRS Employer Identification Number)
9101 Jameel, Suite 180, Houston, TX 77040
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (713) 460-1976
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___________________________ (Former address, if changed since last report)
NUTRITION FOR LIFE INTERNATIONAL, INC.
INFORMATION TO BE INCLUDED IN THE REPORT
Item 2. Acquisition or Disposition of Assets
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On November 17, 1999, Nutrition For Life International, Inc. (the
"Company") finalized the acquisitions of Advanced Nutraceuticals, Inc. ("ANI")
and Bactolac Pharmaceutical Inc. The acquisition of ANI was completed through a
merger with the Company's wholly-owned subsidiary, NL Acquisition Company. The
acquisition of Bactolac Pharmaceutical Inc. was completed through a merger with
the Company's wholly-owned subsidiary, BPI Acquisition Company. In connection
with the merger of Bactolac Pharmaceutical Inc. into BPI Acquisition Company,
the name of the surviving corporation was changed to Bactolac Pharmaceutical
Inc.
ANI was formed to pursue a consolidation and integration program in the
nutrition industry. ANI's business plan and arrangements to complete
acquisitions of other companies were factors utilized in determining the amount
of stock of the Company to be issued in connection with the acquisition of ANI.
The former ANI stockholders received an aggregate of 75,000 shares of a newly
created Series A Preferred Stock of the Company. Each one share of Series A
Preferred Stock will be automatically converted into ten shares of the Company's
common stock upon approval of the Company's shareholders. The Series A Preferred
Stock has no voting rights (except as required by law) and no dividend rights.
Upon liquidation, dissolution or winding up of the Company, the Series A
Preferred Stock has a preference of $28.40 per share, payable prior and in
preference to any distribution of any assets or surplus funds of the Company to
the holders of the Company's common stock. The former principal stockholders of
ANI were Gregory Pusey and Barry C. Loder. Upon completion of the Company's
acquisition of ANI, Mr. Pusey became Chairman of the Board of Directors of the
Company and Mr. Loder became Vice President of Corporate Development of the
Company. Prior to the Company's acquisition of ANI, there was no material
relationship between the Company and ANI. Mr. Loder had served as an officer of
the Company from March 1995 to January 1998. Mr. Pusey had served as a director
of the Company from 1994 to 1998.
Bactolac Pharmaceutical Inc. headquartered in Westbury, New York,
manufactures nutritional supplements for private labeled customers. The purchase
price of the Bactolac acquisition consisted of $2,500,000 in cash, a
subordinated promissory note in the principal amount of $2,500,000 and 96,831
shares of Series A Preferred Stock. Additionally, up to 17,606 shares of Series
A Preferred Stock may be issued pursuant to an earnout agreement. Prior to the
Company's acquisition of Bactolac Pharmaceutical Inc., the sole shareholder of
Bactolac was Pailla M. Reddy. Bactolac Pharmaceutical Inc. entered into an
employment agreement and covenant not to compete agreement with Mr. Reddy at the
closing on November 17, 1999. Mr. Reddy will serve as President of Bactolac
Pharmaceutical Inc. Assets acquired from Bactolac Pharmaceutical Inc. consisted
primarily of accounts receivable, inventory, machinery and equipment. The nature
and value of the assets acquired, including the going concern value of Bactolac
Pharmaceutical Inc., were factors utilized in determining the amount of
consideration to be paid to Mr. Reddy who was the sole stockholder of Bactolac
Pharmaceutical Inc. Prior to the merger with Bactolac Pharmaceutical Inc., there
was no material relationship between Bactolac Pharmaceutical Inc. and the
Company, except that Bactolac Pharmaceutical Inc. was a subcontractor to a
supplier to the Company of nutritional supplements. The Company intends to
continue the operations of Bactolac Pharmaceutical Inc. and to use its
inventory, machinery and equipment in connection with the manufacture of
nutritional supplements.
Financing for the acquisition of Bactolac Pharmaceutical Inc. was provided
primarily through a financing arrangement entered into on November 17, 1999 with
General Electric Capital Corporation (the "Lender"). The Company borrowed
$2,360,000 from the Lender pursuant to a term loan payable in three years, and
obtained a revolving credit loan with a maximum availability of $12,000,000,
subject to limitations based upon eligible accounts. The loan facility is
secured by substantially all of the assets of the Company and its subsidiaries.
The interest rate on borrowings is 0.5% above the
prime rate. There is a fee of 0.25% on the unused portion of the facility and an
annual monitoring fee of $10,000. It is required, among other things, that the
Company maintain as of the end of the fiscal year ending September 30, 1999, a
minimum net worth of $18 million, a minimum net worth of $25,500,000 at
September 30, 2000, and a minimum net worth of $27 million for each fiscal year
after September 30, 2000. In addition, the Company is required to maintain a
fixed charge coverage ratio of 2.0 to 1.0 through July 1, 2000, and 1.5 to 1.0
at July 2, 2000 and at all times thereafter. The Company is also subject to
additional covenants, including filing of reports and significant restrictions
on dividend payments, debt and equity issuances, mergers, changes in business
operations and sales of assets.
ITEM 7. Financial Statements and Exhibits.
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(a) Financial Statements of Business Acquired.
It is impractical to provide the required financial information at the
time of filing this Report. The required financial information will be filed by
amendment to this Report within the 60 day extended period for reporting.
(b) Pro forma Financial Information.
It is impractical to provide the required pro forma financial
information at the time of filing this Report. The required pro forma financial
information will be filed by amendment to this Report within the 60-day
extended reporting period.
(c) Exhibits.
2.1 (a) Agreement and Plan of Merger dated as of November 5, 1999 among
Nutrition For Life International, Inc., Advanced Nutraceuticals, Inc., BPI
Acquisition Company, Bactolac Pharmaceutical Inc. and Pailla M. Reddy.
2.1 (b) Agreement and Plan of Merger, dated as of October 20, 1999,
among Nutrition For Life International, Inc., Advanced Nutraceuticals, Inc., NL
Acquisition Company, Gregory Pusey and Barry C. Loder.
2.2 Earnout Agreement, dated November 17, 1999, between Pailla M. Reddy
and Nutrition For Life International, Inc.
4. Statement Establishing a Series of Shares (Series A Preferred
Stock).
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 thereunto duly authorized.
NUTRITION FOR LIFE INTERNATIONAL, INC.
Dated: November 30, 1999 By: /s/ David P. Bertrand
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David P. Bertrand, President