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): DECEMBER 12, 1995
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IGI, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE
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(State or other jurisdiction of incorporation)
1-8568 01-0355758
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(Commission File Number) (I.R.S. Employer Identification Number)
WHEAT ROAD AND LINCOLN AVENUE, BUENA, NEW JERSEY 08310
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(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code: (609) 697-1441
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NOT APPLICABLE
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(Former name or former address, if changed since last report)
Item 2. Acquisition or Disposition of Assets
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The Board of Directors of IGI, Inc. (the "Company" or "IGI") declared a
dividend (the "Distribution") of one share of Common Stock of Novavax, Inc.
("Novavax") for each share of Common Stock of the Company held on November 28,
1995 (the "Record Date"), payable on December 12, 1995 (the "Distribution
Date"). In connection with the Distribution, the Company has paid Novavax
$5,000,000 in return for a fully-paid-up, exclusive ten-year license entitling
it to use Novavax's technologies in the fields of (i) animal pharmaceuticals,
biologicals, and other animal health products; (ii) foods, food applications,
nutrients and flavorings; (iii) cosmetics, consumer products and dermatological
over-the-counter and prescription products (excluding certain topically
delivered hormones); (iv) fragrances; and (v) chemicals, including herbicides,
insecticides, pesticides, paints and coatings, photographic chemicals and other
specialty chemicals; and the processes for making the same. Novavax and IGI have
presented the payment under the License Agreement as a capital contribution in
their pro forma financial statements to reflect the substance of the transaction
and its intercompany nature as opposed to its form as a license agreement. The
form was structured as a prepaid license agreement to address tax and financing
considerations of the Distribution. Novavax has recorded the license at its
carryover basis because the transaction is a transfer made among entities under
common control. As all costs of development for this technology have been
expensed with the exception of the patents which are retained by Novavax, the
historical basis is zero. Accordingly, payments to Novavax under the License
Agreement have been reflected as a capital contribution. See Note (b) of Notes
to IGI Pro Forma Financial Statements. IGI has no further obligations to fund
Novavax.
IGI funded the $5,000,000 payment to Novavax from borrowings under its bank
loan agreement which has been amended to reflect the Distribution. The Amended
Loan Agreement with Fleet Bank - New Hampshire and Mellon Bank provides for:
. $12,000,000 revolving credit facility with interest contingent upon
certain financial ratios at the end of each quarter. The interest rate
shall not exceed prime plus 1 1/2. The amount available under the
revolving credit facility decreases by $800,000 on the last day of
each quarter from June 30, 1996 through December 31, 1999. At December
22, 1995 the Company had outstanding borrowings of $12,000,000 under
this facility and the interest rate was 10%.
. $10,000,000 working capital line of credit renewable annually, with
interest on the outstanding borrowings contingent upon certain
financial ratios at the end of each quarter. The interest rate shall
not exceed prime plus 1%. At December 22, 1995, the Company had
$1,256,000 available under this facility and the interest rate was
9.5%.
Novavax has developed proprietary organized lipid structures, lipid vesicle
("Novasome") encapsulation technologies, cellulose structures and micellar
nanoparticles (collectively, the "Novavax Technologies") that it believes have a
wide variety of applications in human vaccines and pharmaceuticals. Novavax's
business plan is to apply its Novavax Technologies principally to the marketing
and licensing of therapeutic products for human infectious diseases, including
new vaccines, new adjuvants for vaccines, anti-bacterial and anti-viral products
and formulations for topical drug delivery.
Novavax's headquarters and research and development facilities are located
in Rockville, Maryland.
Item 7. Financial Statements and Exhibits
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(a) Financial Statements.
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Not applicable.
(b) Pro Forma Financial Statements.
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The following unaudited pro forma financial statements of IGI,
Inc. pursuant to Item 7 (b) of Form 8-K are included herein on
pages 5 to 10 and are incorporated herein by reference:
(1) IGI Unaudited Pro Forma Statements of Operations for the
year ended December 31, 1994 and the nine months ended
September 30, 1995.
(2) IGI Unaudited Pro Forma Balance Sheet as of September 30,
1995.
(c) Exhibits.
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See Exhibit Index attached hereto.
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.
IGI, Inc.
(Registrant)
Date: December 27, 1995 By: /s/ Edward B. Hager, M.D.
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Edward B. Hager, M.D.
Chairman and
Chief Executive Officer
IGI, INC.
PRO FORMA FINANCIAL INFORMATION
The pro forma financial information gives pro forma effect to (i) the
Distribution, (ii) the consolidation of IGI's animal health and cosmetics and
consumer products businesses within itself and its subsidiaries and the
consolidation of the biotechnology business within Novavax and its subsidiaries,
(iii) the recapitalization of Novavax, (iv) the issuance of additional shares of
Novavax Common Stock to IGI in exchange for the transfer by IGI to Novavax of
all of IGI's rights to payments of indebtedness owed to an IGI subsidiary by
Novavax and (v) the payment by IGI to Novavax of $5,000,000 in return for a
fully paid-up exclusive license to use the Novavax Technologies in the IGI Field
(collectively, the "Pro Forma Events") as if the Pro Forma Events had occurred
on January 1, 1994.
PRO FORMA CONSOLIDATED BALANCE SHEET OF IGI, INC.
(UNAUDITED)
September 30, 1995
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Pro Forma Pro
ASSETS Historical Adjustments Forma
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Current assets:
Cash and equivalents(b) $ 891,885 $ 5,000,000
(5,000,000) $ 891,885
Accounts receivable, less allowance
for doubtful accounts of $206,000 7,500,273 - 7,500,273
Inventories 9,046,190 - 9,046,190
Income taxes refundable - - -
Current deferred taxes 36,641 - 36,641
Prepaid expenses and other current assets 960,448 - 960,448
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Total current assets 18,435,437 - 18,435,437
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Notes receivable, less current maturities 423,352 - 423,352
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Property, plant and equipment - at cost:
Land 488,703 - 488,703
Buildings 6,440,041 - 6,440,041
Machinery and equipment 8,505,604 - 8,505,604
Construction in progress 2,464,033 - 2,464,033
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17,898,381 - 17,898,381
Less accumulated depreciation (8,060,622) - (8,060,622)
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9,837,759 - 9,837,759
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Deferred income taxes 1,370,005 1,370,005
Net assets of biotechnology business segment(c) 1,775,779 (1,775,779) -
Other assets(c) 961,656 (252,570) 709,086
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$32,803,988 (2,028,349) $30,775,639
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See accompanying notes to pro forma financial statements.
PRO FORMA CONSOLIDATED BALANCE SHEET OF IGI, INC.
(UNAUDITED)
September 30, 1995
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Pro Forma Pro
LIABILITIES AND STOCKHOLDERS' EQUITY Historical Adjustments Forma
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Current liabilities:
Note payable to bank (b) $ 4,850,000 $ 5,000,000 $ 9,850,000
Current maturities of long-term debt 2,215,460 - 2,215,460
Accounts payable 1,868,603 - 1,868,603
Accrued payroll 188,447 - 188,447
Other accrued expenses 520,291 - 520,291
Income taxes payable 12,824 - 12,824
Deferred income taxes 9,390 - 9,390
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Total current liabilities 9,665,015 5,000,000 14,665,015
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Deferred income taxes 105,075 - 105,075
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Long-term debt, less current maturities 7,827,851 - 7,827,851
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Commitments and contingencies
Stockholders' equity:
Common stock, $.01 par value, 30,000,000
shares authorized; 9,380,184 93,802 - 93,802
Additional paid-in capital (a,b,c) 23,895,905 (7,028,349) 16,867,556
Deficit (5,996,204) - (5,996,204)
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17,993,503 (7,028,349) 10,965,154
Less treasury stock; 179,789 (2,624,098) - (2,624,098)
Stockholders' notes receivable (163,358) - (163,358)
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Total stockholders' equity 15,206,047 (7,028,349) 8,177,698
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$32,803,988 $(2,028,349) $30,775,639
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See accompanying notes to pro forma financial statements.
PRO FORMA STATEMENTS OF OPERATIONS OF IGI, INC.
(UNAUDITED)
Year Ended December 31, 1994
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Pro Forma Pro
Historical Adjustments Forma
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Net sales $28,947,911 $ - $28,947,911
Cost of sales 13,935,242 - 13,935,242
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Gross profit 15,012,669 - 15,012,669
Selling, general and
administrative expenses 10,674,611 10,674,611
Research and development expenses, net 829,983 - 829,983
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Operating profit 3,508,075 - 3,508,075
Interest expense (d) (1,035,691) (400,000) (1,435,691)
Interest income 66,561 - 66,561
Other income(expense), net 10,206 - 10,206
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Income from continuing operations
before provision for income taxes 2,549,151 (400,000) 2,149,151
Provision for income taxes (e) 580,000 (135,000) 445,000
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Net income (loss) $ 1,969,151 $ (265,000) $ 1,704,151
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Net income (loss) per common and common
equivalent share: $ .22 $ (.03) $ .19
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Average number of common and common
equivalent shares 9,155,231 9,155,231 9,155,231
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See accompanying notes to pro forma financial statements.
PRO FORMA STATEMENTS OF OPERATIONS OF IGI, INC.
(UNAUDITED)
Nine Months Ended September 30, 1995
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Pro Forma Pro
Historical Adjustments Forma
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Net sales $22,939,950 $ - $22,939,950
Cost of sales 11,189,381 - 11,189,381
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Gross profit 11,750,569 - 11,750,569
Selling, general and
administrative expenses 8,506,334 - 8,506,334
Research and development expenses 1,010,614 - 1,010,614
Research revenues (730,750) - (730,750)
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Operating profit 2,964,371 - 2,964,371
Interest expense (d) (890,930) (337,500) (1,228,430)
Interest income 137,416 - 137,416
Other income(expense), net - - -
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Income from continuing operations
before provision for income taxes 2,210,857 (337,500) 1,873,357
Provision for income taxes (e) 669,000 (115,000) 554,000
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Net income(loss) $ 1,541,857 $ (222,500) $ 1,319,357
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Net income (loss) per common and common
equivalent share: $ .16 $ (.02) $ .14
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Average number of common and common
equivalent shares 9,798,510 9,798,510 9,798,510
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See accompanying notes to pro forma financial statements.
NOTES TO IGI PRO FORMA FINANCIAL STATEMENTS
(a) Prior to the Distribution Date, IGI received 5,253,494 shares of Novavax
Common Stock after the Restructuring and Recapitalization as payment for
intercompany notes receivables that were used to fund Novavax's operations.
(b) Prior to the Distribution Date, IGI borrowed $5,000,000 under its existing
bank loan agreement to fund a payment to Novavax for a license for
applications of Novavax Technologies. Novavax has presented the payment
under the License Agreement as a capital contribution in its pro forma
financial statements to reflect the substance of the transaction and its
intercompany nature as opposed to its form as a license agreement. The
form was structured as a prepaid license agreement to address tax and
financing considerations of the Distribution. Novavax has recorded the
license at its carryover basis because the transaction is a transfer made
among entities under common control. As all costs of development for this
technology have been expensed with the exception of the patents which are
retained by Novavax, the historical basis is zero. Accordingly, payments
to Novavax under the License Agreement have been reflected as a capital
contribution.
(c) In connection with the Distribution, each stockholder of IGI Common Stock
as of the close of business on the Record Date received one share of
Novavax Common Stock for each share of IGI Common Stock held.
(d) Represents the net interest expense that IGI would have incurred on the
$5,000,000 borrowing for the capital contribution, if the capital
contribution had occurred on January 1, 1994.
(e) Represents the tax benefit computed at the statutory rate that would have
been realized in connection with the additional interest expense.
EXHIBIT INDEX
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Page No.
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2 Plan and Agreement of Distribution dated as of
December 12, 1995 between IGI, Inc. and
Novavax, Inc.
20 Information Statement dated December 1, 1995.
99 Press Release dated December 4, 1995.