UNITED STATES
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): October 29, 1997
ECHOCATH, INC.
(Exact name of registrant as specified in its charter)
New Jersey 0-27380 22-3273101
(State or other jurisdiction of (Commission File Number) (IRS Employer Identification
incorporation) No.)
P.O. Box 7224, Princeton, NJ 08543
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 609-987-8400
Not Applicable
(Former name or former address, if changed from last report)
Item 5. Other Events.
On October 30, 1997 EchoCath, Inc. (the "Company") announced that
it had reached a second definitive licensing and development agreement with
Medtronic, Inc. pursuant to which Medtronic will license the Company's EchoMark
and ColorMark technologies for use in guiding devices during cardiac surgery.
Under the terms of the Agreement, the Company has received an aggregate of
approximately $1.8 million in initial payments from Medtronic; $1,000,000 from
the sale of 363,636 shares of Class A Common Stock and $800,000 of upfront
licensing fees. The license and development agreement also provides for future
payments upon product commercialization and a six month option for Medtronic to
evaluate the uses of certain other Company technologies for use in
cardiovascular surgery under a possible future licensing arrangement. A copy of
the press release issued by the Company on October 30, 1997 announcing the
license and development agreement with Medtronic is attached as an Exhibit
hereto and incorporated by reference herein.
In a separate matter, on October 30, 1997 the Company amended
certain provisions of an agreement dated July 7, 1995 (the "Alliance Agreement")
between the Company and Alliance Partners ("Alliance"). Under the terms of the
Alliance Agreement, the Company had agreed, among other things, to pay $750,000
to Alliance upon the receipt by the Company of $23,040,000 in proceeds from the
exercise of the Company's outstanding Class B Warrants. The $750,000 contingent
payment (the "Contingent Payment") is reflected on the Company's balance sheet
as a capital contribution subject to repayment. Under the terms of the amendment
(the "Amendment") to the Alliance Agreement, Alliance has agreed to release and
discharge the Company from making the Contingent Payment and the Company has
agreed to issue to Alliance (i) 50,000 shares of its Class A Common Stock and
(ii) a seven-year option to purchase 50,000 shares of Class A Common Stock at an
exercise price of $2.00 per share. Upon closing under the Amendment, the
Contingent Payment will be reclassified as equity of the Company. Closing under
the Amendment is conditioned upon approval by NASDAQ of the continued listing of
the Company's Class A Common Stock in the NASDAQ Small C Market.
The descriptions contained in this Item 5 of the transactions set
forth in the Agreement with Medtronic and the Amendment with Alliance Partners
are each qualified in its entirety by reference to the full text of each
Agreement, copies of which are filed as Exhibits hereto.
Item 7. Financial Statements and Exhibits.
The following financial statements and exhibits are filed
herewith unless otherwise indicated:
(b) Pro Forma Financial Information
Pro forma condensed balance sheets at September 30, 1997
and August 31, 1997.
Pro forma condensed statement of operation for the 3 month
period ended August 31, 1997 and the month ended September
30, 1997.
ECHOCATH, INC.
The pro forma Balance Sheet and Statement of Operations gives effect to an
agreement entered into October 29, 1997 for an exclusive license and stock
purchase agreement with Medtronic, Inc.
The terms of the agreements allow the Company to immediately recognize $800,000
of license fees and record $1,000,000 of equity capital.
The pro forma Balance Sheet also gives effect to the release of a contingent
liability of $750,000 in exchange for 50,000 shares of common stock and a
warrant to purchase 50,000 shares of class A common stock.
ECHOCATH, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF OPERATION
FOURTH QUARTER ENDED AUGUST 31, 1997
AND THE MONTH OF SEPTEMBER
(UNAUDITED)
FOURTH ONE MONTH
QUARTER ENDING
HISTORIC AS ADJUSTED SEPT. 30, 1997
REVENUE:
LICENSE FEES $ -- $ 800,000 $ --
PRODUCT SALES 5,900 5,900 --
----------- ---------- -----------
TOTAL REVENUE 5,900 805,900 --
COST OF SALES 2,102 2,102 --
----------- ---------- -----------
GROSS PROFIT 3,798 803,798 --
OPERATING EXPENSES:
R&D 328,985 328,985 129,581
MARKETING AND G&A 399,061 399,061 101,909
----------- ---------- -----------
TOTAL OPERATING EXPENSES 728,046 728,046 231,490
----------- ---------- -----------
LOSS FROM OPERATIONS (724,248) 75,752 (231,490)
NET INTEREST INCOME (EXPENSE) 6,278 6,278 (6,542)
----------- ---------- -----------
NET INCOME(LOSS) $(717,970) $82,030 $(238,032)
=========== ========== ==========
NET INCOME(LOSS) PER SHARE $ (.32) $ .04 $ (.07)
SHARES & COMMON SHARE EQUIVALENT 2,277,000 2,281,496 3,327,000
ECHOCATH, INC.
(FORMERLY ECHOCATH, LTD.)
(A Development Stage Enterprise)
BALANCE SHEETS
(UNAUDITED)
ASSETS
August 31, 1997 September 30, 1997
--------------- ------------------
Historic As Adjusted Historic As Adjusted
-------- ----------- -------- ------------
Current assets:
Cash and cash equivalents $ 788,933 $ 2,588,933 $ 588,517 $ 2,388,517
Inventory 200,565 200,565 203,248 203,248
Prepaid expenses 109,994 109,994 99,136 99,136
----------- ----------- ----------- -----------
Total current assets 1,099,492 2,899,492 890,901 2,690,901
Furniture, equipment and leasehold improvements, net 324,243 324,243 315,827 315,827
Intangible assets, net 264,076 264,076 263,225 263,225
Other assets 27,827 27,827 27,827 27,827
----------- ----------- ----------- -----------
$ 1,715,638 $ 3,515,638 $ 1,497,780 $ 3,297,780
=========== =========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Note Payable $ 540,000 $ 540,000 $ 540,000 $ 540,000
Accounts payable 90,270 90,270 81,230 81,230
Accrued expenses 373,145 373,145 405,398 405,398
Obligations under capital leases, current portion 25,852 25,852 25,281 25,281
----------- ----------- ----------- -----------
Total current liabilities 1,029,267 1,029,267 1,051,909 1,051,909
Obligations under capital leases 28,702 28,702 27,336 27,336
Other liabilities 87,519 87,519 86,362 86,362
----------- ----------- ----------- -----------
Total liabilities 1,145,488 1,145,488 1,165,607 1,165,607
----------- ----------- ----------- -----------
Capital contribution subject to repayment 750,000 -- 750,000 --
----------- ----------- ----------- -----------
Stockholders' equity:
Preferred stock, no par value, 5,000,000 shares
authorized;
280,000 shares of Series B Cumulative
Convertible issued and outstanding,
senior in liquidation to Class A and Class B
Common Stock, (liquidation value $1,400,000) 1,356,089 1,356,089 1,356,089 1,356,089
Class A Common Stock, no par value, 18,500,000 shares
authorized;
1,615,331 issued and outstanding historic and
2,028,967 issued as adjusted 6,198,611 7,198,611 6,198,667 7,198,667
Class B Common Stock, no par value, 1,500,000 shares
authorized;
1,494,669 shares issued and outstanding, convertible
into one share of Class A Common Stock 3,273,470 4,023,470 3,273,470 4,023,470
Deficit accumulated during the development stage (11,008,020) (10,208,020) (11,246,053) (10,446,053)
----------- ----------- ----------- -----------
Total stockholders' equity (Deficit) (179,850) 2,370,150 (417,827) 2,132,173
----------- ----------- ----------- -----------
$ 1,715,638 $ 3,515,638 $ 1,497,780 $ 3,297,780
=========== =========== ============= ============
(c) Exhibits:
99.1 Text of Press Release dated, October 29, 1997
issued by the Company with respect to Medtronic
transaction.
99.2 Subscription Agreement dated October 29, 1997 by
and between the Company and Medtronic Asset
Management, Inc.
99.3 License and Development Agreement dated October 29,
1997 by and between the Company and Medtronic, Inc.
99.4 Agreement dated October 30, 1997 by and between the
Company and Alliance Partners.
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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.
ECHOCATH, INC.
By: /s/Frank DeBernardis
_____________________________
Frank DeBernardis
President, Chief Executive Officer,
Principal Financial and Accounting Officer
Date: October 31, 1997
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EXHIBIT INDEX
Exhibit
- ------------------------------------------------------------------------------
99.1 Text of Press Release dated October 29, 1997 issued by the Company with
respect to the Medtronic transaction.
99.2 Subscription Agreement dated October 29, 1997 by and between the
Company and Medtronic Asset Management, Inc.
99.3 License and Development Agreement dated October 29, 1997 by and between
the Company and Medtronic, Inc.
99.4 Agreement dated October 30, 1997 by and between the Company and
Alliance Partners.