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):
April 9, 1997
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ROMTECH, INC.
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(Exact name of registrant as specified in its charter)
Pennsylvania 0-27102 23-2694937
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
2000 Cabot Boulevard, Suite 110, Langhorne, Pennsylvania 19047
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (215) 750-6606
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N/A
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(Former name or former address, if changed since last report)
Item 5. Other Events
RomTech, Inc. (the "Company") has to date sold in a private offering to
three accredited investors 1,000,000 shares of Class Three Convertible Preferred
Stock (the "Convertible Preferred Stock"), without par value, and 50,000 Common
Stock Purchase Warrants (the "Warrants") to purchase 50,000 shares of the
Company's Common Stock, without par value (the "Common Stock"), for an aggregate
purchase price of $1,000,000. The Company intends to continue the private
offering, which is exempt from the registration requirements of the Securities
Act of 1933 (the "Act"), as amended, pursuant to Section 4(2) of the Act and
Rule 506 promulgated thereunder. Neither the Convertible Preferred Stock nor the
Warrants have been registered under the Act and may not be offered or sold by
the purchasers in the United States absent registration or an applicable
exemption from the registration requirements of the Act and applicable state
securities laws.
The Company has agreed to file a registration statement with the
Securities and Exchange Commission within twenty days of the closing of the
private placement registering for sale by the holders the Common Stock
underlying the Convertible Preferred Stock and the Common Stock issuable upon
exercise of the Warrants. One-half of the Convertible Preferred Stock is
convertible at the option of the holder beginning five days following the date
that the registration statement for the Common Stock underlying the Convertible
Preferred Stock has been declared effective by the Securities and Exchange
Commission ("First Conversion Date"). The remaining one-half of the Convertible
Preferred Stock will become convertible thirty days after the First Conversion
Date. In the event that the registration statement does not become effective on
or before six months following the closing date, all of the outstanding shares
of the Convertible Preferred Stock will become convertible at any time beginning
six months from the closing date. The conversion price per share ("Conversion
Price"), will be determined as follows:
(A) Beginning on the First Conversion Date and ending on the thirtieth
day thereafter, the Conversion Price will equal 80% percent of the Average
Quoted Price (as defined in the Certificate of Designation for the Convertible
Preferred Stock) for the five (5) trading days immediately preceding the
conversion date;
(B) Beginning on the thirty-first day after the First Conversion Date
and ending on the sixtieth day after the First Conversion Date, the Conversion
Price will equal 78% percent of the Average Quoted Price for the five (5)
trading days immediately preceding the conversion date;
(C) Beginning on the sixty-first day after the First Conversion Date
and ending on the ninetieth day after the First Conversion Date, the Conversion
Price will equal 76% percent of the Average Quoted Price for the five (5)
trading days immediately preceding the conversion date;
(D) Beginning on the ninety-first day after the First Conversion Date
and ending on the one hundred twentieth day after the First Conversion Date, the
Conversion Price will equal 74% percent of the Average Quoted Price for the five
(5) trading days immediately preceding the conversion date;
(E) Beginning on the one hundred twenty-first day after the First
Conversion Date and ending on the one hundred fiftieth day after the First
Conversion Date, the Conversion Price will equal 72% percent of the Average
Quoted Price for the five (5) trading days immediately preceding the Conversion
Date; and
(F) Beginning on the one hundred fifty-first day after the First
Conversion Date and ending on the one hundred eightieth day after the First
Conversion Date, the Conversion Price will equal 70% percent of the Average
Quoted Price for the five (5) trading days immediately preceding the Conversion
Date. In no event will the Conversion Price exceed $5.95 or be less than $.66.
Each Warrant entitles the holder to purchase one share of Common Stock
at an exercise price of $3.94, subject to the condition that the Warrants will
not be exercisable until the closing bid price of the Company's Common Stock has
reached $5.66. The exercise price and the number of shares of Common Stock (or
any other securities) to be obtained upon exercise of the Warrants are subject
to adjustment upon the occurrence of certain events, including a stock dividend
on, or a split of, Common Stock, a reorganization or recapitalization of the
Company or the merger or consolidation of the Company, or in the event of
distributions to the holders of Common Stock.
The holders of the Convertible Preferred Stock and the Warrants are
entitled to certain registration rights pursuant to a Registration Rights
Agreement, which provides that within 20 days after the date of issuance of the
Convertible Preferred Stock, the Company will file with the Securities and
Exchange Commission a shelf registration statement (the "Registration
Statement") covering resales by holders of the Common Stock issuable upon
conversion of the Convertible Preferred Stock and upon exercise of the Warrants.
The Company will use its best efforts to cause the registration statement to
become effective as promptly as is practicable (but in any event, no later than
90 days after the date of issuance of the Convertible Preferred Stock and
Warrants) and to keep the registration statement effective for two (2) years
from the date of issuance of the Convertible Preferred Stock. The Company will
pay all expenses of the registration statement. If the Registration Statement
has not been declared effective on or within 90 days after the date of issuance
of the Convertible Preferred Stock and the Warrants (the "Registration
Deadline"), the Company will be subject to a penalty equal to one percent of the
aggregate purchase price paid for the Convertible Preferred Stock and the
Warrants for the first 30 days after the Registration Deadline. A penalty equal
to two percent of the aggregate purchase price paid for the Convertible
Preferred Stock and the Warrants will be incurred for each 30 day period
thereafter, but in no event will the penalties be greater than the aggregate
purchase price paid for the Convertible Preferred Stock and the Warrants.
The Company has agreed to pay H.J. Meyers & Co., Inc. ("H.J. Meyers"),
as placement agent of the Convertible Preferred Stock and the Warrants, a
commission equal to six percent (6%) of the aggregate sale price of the
Convertible Preferred Stock and the Warrants, as well as 7,000 shares of Common
Stock (the "Agent Shares") upon completion of the placement of 1,000,000 shares
of Convertible Preferred Stock. The Company has agreed to register for resale
the Agent Shares. In addition, H.J. Meyers will be paid an amount equal to 2% of
the aggregate sale price of the Convertible Preferred Stock for payment of
expenses incurred in connection with the performance of its services.
Financial Statements and Exhibits.
(a) Financial Statements.
Not applicable.
(b) Pro Forma Financial Statements.
(i) Consolidated unaudited Pro Forma Balance Sheet and Statement
of Operations.
(c) Exhibits.
Exhibit No. Description of Exhibit Page Number
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4.9 Certificate of Designation, Preferences, Powers, Rights and
Number of Shares of Class Three Convertible Preferred Stock
(Exhibit 4.9)
4.10 Form of Securities Purchase Agreement (Exhibit 4.10)
4.11 Form of Warrant Agreement (Exhibit 4.11)
4.12 Form of Registration Rights Agreement (Exhibit 4.12)
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.
ROM TECH, INC.
(Registrant)
Date: April 9, 1997 /s/ Joseph A. Falsetti
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Joseph A. Falsetti
Chief Executive Officer
Principal Financial Officer
/s/ Gerald W. Klein
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Gerald W. Klein
Vice President and
Chief Financial Officer
RomTech, Inc.
Consolidated Pro Forma Balance Sheet
(Unaudited)
February 28, February 28,
1997 1997
Unadjusted Adjustments As Adjusted
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ASSETS
Current assets:
Cash and cash equivalents $ 344,639 $ 800,000 $ 1,144,639
Restricted cash 14,788 14,788
Accounts receivable, net of allowance 803,084 803,084
for doubtful accounts of $97,521
Inventory 395,566 395,566
Prepaid expenses 284,869 284,869
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Total current assets 1,842,946 800,000 2,642,946
Furniture and equipment, net 179,606 179,606
Other assets 176,767 176,767
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Total assets $ 2,199,319 $ 800,000 $ 2,999,319
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 131,903 $ 131,903
Accounts payable 803,971 803,971
Accrued expenses 527,041 527,041
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Total current liabilities 1,462,915 1,462,915
Capital lease obligations net of current portion 60,226 60,226
Notes payable-long term portion 305,992 305,992
Convertible subordinated debt 150,000 150,000
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Total liabilities 1,979,133 1,979,133
Stockholders' equity:
Convertible preferred stock 2,271,340 1,000,000 3,271,340
Common stock, no par value (40,000,000
shares authorized; 6,483,815 issued and
outstanding) 4,316,861 4,316,861
Additional paid in capital 685,355 (200,000) 485,355
Accumulated deficit (7,053,370) (7,053,370)
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Total stockholders' equity 220,186 800,000 1,020,186
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Total liabilities and stockholders' equity $ 2,199,319 $ 800,000 $ 2,999,319
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RomTech, Inc.
Consolidated Pro Forma Statement of Operations
(Unaudited)
Eight months ended
February 28,
1997
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Net revenues $2,843,194
Cost of revenues 917,630
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Gross profit 1,925,564
Operating expenses:
Product development 377,479
Selling, general and administrative 2,904,367
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Total operating expenses 3,281,846
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Operating loss (1,356,282)
Interest expense, net (42,084)
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Net loss ($1,398,366)
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Net loss per common share ($0.22)
Weighted average common
shares outstanding 6,309,964