UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED APRIL 30, 2004
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Transition Period From ____ to _____
COMMISSION FILE NUMBER 0-9922
---------------
EQUIDYNE CORPORATION
(Name of Small Business Issuer in Its Charter)
DELAWARE 04-2608713
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
3604 Tower 1, Kerry Everbright City,
218 Tian Mu Road West,
Shanghai, P.R. China 200070
(Address of office) (Zip Code)
Issuer's telephone number, including area code: 86-21-6353-0012
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 12 months (or for
such shorter period that the Registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
[X] YES [ ] NO
The number of shares outstanding of the Company's common stock as at June 3 ,
2004 was 15,634,829.
Transitional Small Business Disclosure Format (check one): [ ] YES [X] NO
EQUIDYNE CORPORATION AND SUBSIDIARIES
QUARTERLY REPORT - FORM 10-QSB
THREE AND NINE MONTHS ENDED APRIL 30, 2004
TABLE OF CONTENTS
PART I PAGE
------------------------------------------------------------------- -----
Item 1. Consolidated Financial Statements 3
Item 2. Management's Discussion and Analysis or Plan of Operation 9
Item 3. Controls and Procedures 10
PART II
Item 1. Legal Proceedings 11
Item 2. Changes in Securities and Use of Proceeds 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 13
FORWARD LOOKING STATEMENTS
Certain statements contained in this Quarterly Report and other written
material and oral statements made from time to time by us do not relate strictly
to historical or current facts. As such, they are considered "forward-looking
statements" that provide current expectations or forecasts of future events.
Such statements are typically characterized by terminology such as "believe,"
"anticipate," "should," "intend," "plan," "will," "expect," "estimate,"
"project," "strategy" and similar expressions. Our forward-looking statements
generally relate to the prospects for our ability to identify new business
opportunities, develop new business strategies and execute such business
strategies. These statements are based upon assumptions and assessments made by
our management in light of its experience and its perception of historical
trends, current conditions, expected future developments and other factors our
management believes to be appropriate. These forward-looking statements are
subject to a number of risks and uncertainties, including the following: our
ability to identify and evaluate business opportunities that will achieve
profitable operations while maintaining sufficient cash to operate our business
and meet our liquidity requirements: our ability to obtain financing, if
required, on terms acceptable to us, if at all; our ability to successfully
attract strategic partners and to market both new and existing products and
services domestically and internationally; exposure to lawsuits and regulatory
proceedings; governmental laws and regulations affecting domestic and foreign
operations; our ability to identify and complete diversification opportunities;
and the impact of acquisitions, divestitures, restructurings, product
withdrawals and other unusual items. Except as required by applicable law, the
Company undertakes no obligation to update any forward-looking statements,
whether as a result of new information, future events or otherwise.
2
PART I - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
EQUIDYNE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
APRIL 30, JULY 31,
2004 2003
---- ----
(UNAUDITED)
ASSETS
Current Assets:
Cash and cash equivalents $ 10,599 $ 9,517
Accounts receivable, net -- 7
Inventories, net -- 66
Deferred costs -- 10
Refundable income taxes 3,611 6,441
Prepaid and other current assets 311 59
-------- --------
Total current assets 14,521 16,100
Property and equipment, net -- 50
Deposits -- 5
Patents, net -- 490
-------- --------
Total assets $ 14,521 $ 16,645
======== ========
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 316 $ 450
Accrued liabilities 914 913
Due to a related party 6 --
Accrued income taxes 2,331 2,331
Deferred revenue -- 12
-------- --------
Total current liabilities 3,567 3,706
Commitments and contingencies
Stockholders' Equity:
Common stock 1,713 1,648
Additional paid-in capital 26,744 26,593
Accumulated deficit (12,190) (9,989)
Treasury stock, at cost (5,313) (5,313)
-------- --------
Total stockholders' equity 10,954 12,939
-------- --------
Total liabilities and stockholders' equity $ 14,521 $ 16,645
======== ========
See accompanying notes.
3
EQUIDYNE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
NINE MONTHS ENDED
APRIL 30,
---------
2004 2003
---- ----
Net sales $ 39 $ 65
Cost of goods sold 74 70
------- -------
Gross loss (35) (5)
Selling, general and administrative expenses 2,417 2,358
Research and development -- 212
------- -------
Total operating expenses 2,417 2,570
------- -------
Operating loss (2,452) (2,575)
Other income (expense):
Interest and other 22 108
Gain (loss)on sale of property and equipment 229 (9)
------- -------
251 99
------- -------
Loss before income tax benefit (2,201) (2,476)
Income tax benefit -- (738)
------- -------
Net loss $(2,201) $(1,738)
======= =======
Net loss per common share, basic and diluted $ (0.14) $ (0.12)
======= =======
See accompanying notes.
4
EQUIDYNE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED
APRIL 30,
---------
2004 2003
---- ----
Net sales $ -- $ 14
Cost of goods sold -- 19
------ ------
Gross loss -- (5)
Selling, general and administrative expenses 373 643
Research and development -- 41
------ ------
Total operating expenses 684
------ ------
Operating loss (373) (689)
Other income:
Interest and other 8 31
Gain on sale of property and equipment -- 2
------ ------
8 33
------ ------
Loss before income tax benefit (365) (656)
Income tax benefit -- (197)
------ ------
Net loss $ (365) $ (459)
====== ======
Net loss per common share, basic and diluted $(0.02) $(0.03)
====== ======
See accompanying notes.
5
EQUIDYNE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
NINE MONTHS ENDED
APRIL 30,
---------
2004 2003
---- ----
OPERATING ACTIVITIES:
Net loss $ (2,201) $ (1,738)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 35 194
Deferred income taxes -- (743)
(Gain) loss on sale of property and equipment (229) 9
Changes in operating assets and liabilities:
Accounts receivable 7 39
Refundable income taxes 2,830 --
Inventories 66 88
Other assets (237) (46)
Due to a related party 6 --
Accounts payable and other current liabilities (145) (695)
-------- --------
Net cash provided by (used in) operating activities 132 (2,892)
INVESTING ACTIVITIES:
Proceeds from sale of property and equipment 734 7
Purchase of property and equipment -- (21)
-------- --------
Net cash provided by (used in) investing activities 734 (14)
FINANCING ACTIVITIES:
Proceeds from exercise of stock options 216 --
-------- --------
Net cash provided by financing activities 216 --
-------- --------
Increase (decrease) in cash and cash equivalents 1,082 (2,906)
Cash and cash equivalents, beginning of period 9,517 13,092
-------- --------
Cash and cash equivalents, end of period $ 10,599 $ 10,186
======== ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid $ -- $ 293
See accompanying notes.
6
EQUIDYNE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business
Equidyne Corporation (the "Company") is a holding company, which since its
formation in 1977, has invested in various medical device companies and
technologies. From January 1999 until January 2004, the Company had principally
focused on the development of patented, needle-free drug delivery systems,
principally the reusable INJEX(TM) System.
In early 2002, the Company's executive management evaluated the Company's
technologies, markets and production capabilities and concluded that a change in
the strategic focus of the Company was necessary as the Company's production
capabilities were not cost effective nor were its sales and marketing programs
generating satisfactory results. The Company has since this time been in the
process of evaluating strategic alternatives both within and outside of the
medical products industry.
In September 2003, after seeing the Company's executive management make
little progress on developing the Company's needle-free business or other
diversification opportunities, the stockholders of the Company voted to change
the Board of Directors and executive management. As a result, the previous
executive management team was replaced by the new Board of Directors. The new
Board of Directors had three principal objectives: 1) minimize operating
expenses; 2) further evaluate and realize value from its existing needle-free
technologies; and 3) seek new business opportunities, investments and
acquisitions not necessarily in the medical device field.
On January 6, 2004, Equidyne Systems, Inc. ("ESI"), a wholly owned
subsidiary of Equidyne Corporation, sold all its right, title and interest in
and to its needle-free technologies to HNS International Inc. ("HNS"). The
purchase price for this transaction was $750,000 in cash.
On April 26, 2004, the Company acquired all the stock of Cathay Merchant
Group Limited ("CMG") to pursue merchant banking projects in China, including
but not limited to, trade finance, representation of American and European
companies with respect to Chinese investments, and strategic investments for its
own behalf and on behalf of clients. The purchase price for this transaction was
$50,000 in cash. The purchase was not deemed material to the consolidated
financial statements.
In order to provide a possible source of funding for the international
merchant banking activities of CMG, the Company has entered into a five-year
$20.0 million Revolving Credit Facility (the "Facility") with MFC Merchant Bank,
S.A.("MFC"). The Company has a common director with MFC's parent company. Under
the terms of the Facility, the Company may borrow from MFC up to $20.0 million
from time to time until the maturity date of March 31, 2009. As of April 30,
2004, the Company has not drawn from the facility. The interest rate on all
outstanding amounts under the Facility is the one-month London Inter-Bank
Offered Rate plus 3.5%. Additionally, the Company is required to pay an unused
line fee of 0.75% per year on the daily average of the unused amount of the
credit facility commitment during the term. The Company also agreed to pay MFC
an arrangement fee of $400,000. The proceeds from such borrowings must be used
for general corporate purposes, working capital needs, and in connection with
acquisitions. All outstanding amounts must be repaid by March 31, 2009.
The Facility is secured by a pledge agreement, pursuant to which the
Company has pledged to MFC all of its existing and future pecuniary claims
against third parties. In addition, the Company has granted a security interest
in all of the Company's current and future property and assets.
At any time during the term of the Facility, MFC may convert all available
amounts (whether or not actually borrowed) under the Facility into shares of the
Company's common stock. The conversion price is equal to the ten-day trailing
average of the closing price per share of the Company's common stock immediately
prior to conversion. Under the rules of the American Stock Exchange, the Company
must obtain stockholder approval of any transaction, other than a "public
offering" involving the sale, issuance or potential issuance of its common stock
(or securities convertible into common stock) equal to 20% or more of its
presently outstanding stock for less than the greater of book or market value of
the stock. Under the terms of the Facility, the maximum number of shares into
which the Facility can be converted is equal to 19.9% of the Company's
outstanding stock at the time of such conversion unless the Company obtains
stockholder approval for shares in excess of such amount. The Company has agreed
to use its best effort to obtain stockholder approval permitting MFC to convert
the line of credit into 20% or more of the Company's outstanding common stock.
The Company reserves 20,000,000 common stock for the facility.
7
In order to complete the proposed business plan for the international
merchant banking activities, the Company believes that additional capital will
be required. The Company is considering a number of financing alternatives.
Basis of Presentation
The interim period consolidated financial statements have been prepared by
the Company pursuant to the rules and regulations of the U.S. Securities and
Exchange Commission (the "SEC"). Certain information and footnote disclosure
normally included in financial statements prepared in accordance with accounting
principles generally accepted in the United States have been condensed or
omitted pursuant to such SEC rules and regulations. The interim period
consolidated financial statements should be read together with the audited
consolidated financial statements and accompanying notes included in the
Company's latest annual report on Form 10-KSB for the fiscal year ended July 31,
2003. In the opinion of the Company, the unaudited consolidated financial
statements contained herein contain all adjustments necessary to present a fair
statement of the results of the interim periods presented. The results for the
periods presented herein may not be indicative of the results for any subsequent
period or the entire year.
2. LOSS PER SHARE
Basic loss per share is based upon the weighted average number of common
shares outstanding during the period. Diluted loss per share reflects the effect
of dilutive securities, if any, principally stock options and warrants. Dilutive
securities were not included in the calculation of diluted weighted average
shares for the nine months and three months ended April 30, 2004 and 2003, due
to their anti-dilutive effect.
The following table sets forth the computation of basic and diluted loss
per share (in thousands, except per share amounts):
THREE MONTHS ENDED NINE MONTHS ENDED
APRIL 30, APRIL 30,
--------- ---------
2004 2003 2004 2003
---- ---- ---- ----
Net loss $ (365) $ (459) $ (2,201) $ (1,738)
======= ======= ========= ========
Weighted-average shares 15,635 14,985 15,502 14,985
======= ======= ========= ========
Net loss per share (Basic and Diluted) $ (0.02) $ (0.03) $ (0.14) $ (0.12)
======= ======= ========= ========
3. STOCK-BASED COMPENSATION
In accordance with Statement of the Financial Accounting Standards Board
No. ("FAS") 123, "Accounting for Stock-Based Compensation", the Company accounts
for its two stock option plans and other stock-based employee compensation using
the intrinsic value method prescribed by Accounting Principles Board ("APB")
Opinion No. 25, "Accounting for Stock Issued to Employees", and related
interpretations, as described more fully in the Company's annual report on Form
10KSB for the year ended July 31, 2003. Accordingly, compensation expense is
recorded on the date of grant only to the extent the current market price of the
underlying stock exceeds the option exercise price. The Company did not record
any stock-based compensation expense in the nine months ended April 30, 2004 and
2003.
Had compensation expense been determined based on the fair values at dates
of grant for its stock options under FAS 123, as amended by FAS 148, net loss
and net loss per share would have been reported as indicated in the pro forma
results below (in thousands, except per share amounts):
THREE MONTHS ENDED NINE MONTHS ENDED
APRIL 30, APRIL 30,
--------- ---------
2004 2003 2004 2003
---- ---- ---- ----
Net loss, as reported $ (365) $ (459) $(2,201) $(1,738)
Deduct: Stock-based employee compensation expense determined under fair
value based method -- (95) (507) (286)
------ ------ ------- -------
Pro forma net loss $ (365) $ (554) $(2,708) $(2,024)
====== ====== ======= =======
Net loss per share, as reported $(0.02) $(0.03) $ (0.14) $ (0.12)
====== ====== ======= =======
Net loss per share, pro forma $(0.02) $(0.04) $ (0.17) $ (0.14)
====== ====== ======= =======
8
The fair values under FAS 123 for options granted were estimated at the
date of grant using a Black-Scholes option pricing model with the following
weighted-average assumptions:
2004 2003
---- ----
Expected life (years) 3 3
Interest rate 4.0% 4.0%
Volatility 0.95 0.95
Dividend yield 0.0% 0.0%
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
OVERVIEW
The Company is a holding company, which since its formation in 1977 until
January 2004, had invested in various medical device companies and technologies.
In September 2003, after seeing the Company's executive management make
little progress on developing the Company's needle-free business or other
diversification opportunities, the stockholders of the Company overwhelmingly
voted to change the Board of Directors and executive management. As a result,
the previous executive management team was replaced by the new Board of
Directors. The new Board of Directors had three principal objectives: 1)
minimize operating expenses; 2) further evaluate and realize value from its
existing needle-free technologies; and 3) seek new business opportunities,
investments and acquisitions not necessarily in the medical device field.
On January 6, 2004, Equidyne Systems, Inc. ("ESI"), a wholly owned
subsidiary of Equidyne Corporation, sold all its right, title and interest in
and to its needle free technologies to HNS International Inc. ("HNS"). The
purchase price was $750,000 in cash.
On April 26, 2004, the Company acquired all the stock of Cathay Merchant
Group Limited ("CMC") to pursue merchant banking projects in China, including
but not limited to, trade finance, representation of American and European
companies with respect to Chinese investments, and strategic investments for its
own behalf and on behalf of clients. The purchase price for this transaction was
$50,000 in cash.
The following discussion and analysis of the results of operations and
financial condition of the Company for the nine months and three months ended
April 30, 2004 should be read in conjunction with the consolidated financial
statements and related notes included in this quarterly report, as well as the
Company's most recent annual report on Form 10-KSB for the fiscal year ended
July 31, 2003 filed with the U.S. Securities and Exchange Commission (the
"SEC").
RESULTS OF OPERATIONS - NINE MONTHS ENDED APRIL 30, 2004
Consolidated net product sales ("sales") were $39,000 for the nine months
ended April 30, 2004, compared to $65,000 for the nine months ended April 30,
2003, a decrease of $26,000, or 40%. The decrease in sales through the Company's
distribution partners continues to reflect the Company's change in strategic
focus and the effect of the cessation of most sales and marketing activities for
the needle free business, including advertising and co-marketing expenditures in
prior fiscal year. Such sales and marketing expenditures have not proven to be
effective in generating product sales, and the Company made the strategic
decision to cease all other sales and marketing activities relating to the
Company's needle-free business. The Company sold all of its remaining
inventories to HNS in January 2004. As a result of our acquisition of CMC, we
will be refocusing our business to pursue merchant banking projects in China. We
do not expect to generate significant revenue from these operations in the near
term as it is in the development stage.
Cost of sales for the nine months ended April 30, 2004 was $74,000, as
compared to $70,000 in the nine months ended April 30, 2003. The negative gross
margin results from the production cost of the consumable components of the
Company's products (the polycarbonate plastic ampules and vial adapters) which
is in excess of the respective selling prices in the current fiscal period.
Selling, general and administrative expenses for the nine months ended
April 30, 2004 were $2,417,000, compared to $2,358,000 for the nine months ended
April 30, 2003. The increase reflects payment of $375,000 for reimbursement of
expenses and administrative and management fee to MFC.
9
Research and development expenses decreased to $0 for the nine months
ended April 30, 2004 from $212,000 for the nine months ended April 30, 2003 as
the Company ceased its research and development activities for our needle-free
business in February 2003.
The Company's income tax benefit for the nine months ended April 30, 2003
was $738,000. The prior tax benefit was based on the Company's ability to carry
back the operating losses incurred to recapture a portion of the taxes paid in
fiscal year 2001. The Company recorded no income tax benefits in the current
year. The Company cannot carry back fiscal 2004 losses and determined that it
does not have sufficient taxable income available for future carry forward.
Therefore, the Company believes it is appropriate to record a valuation
allowance against its Federal and State deferred tax assets.
RESULTS OF OPERATIONS - THREE MONTHS ENDED APRIL 30, 2004
Consolidated net product sales ("sales") were $0 for the three months
ended April 30, 2004, compared to $14,000 for the three months ended April 30,
2003. The Company ceased sales and marketing activities for its needle-free
business in January 2004. The Company sold all of its inventories to HNS in
January 2004.
Cost of sales for the three months ended April 30, 2004 was $0, as
compared to $19,000 in the three months ended April 30, 2003.
Selling, general and administrative expenses for the three months ended
April 30, 2004 were $373,000, compared to $643,000 for the three months ended
April 30, 2003, a decrease of $270,000, or 42%. The Company paid $225,000 for
reimbursement of expenses and administrative and management fee to MFC for the
three months ended April 30, 2004.
Research and development expenses decreased to $0 for the three months
ended April 30, 2004 from $41,000 for the three months ended April 30, 2003 as
the Company ceased its research and development activities for the needle-free
business in February 2003.
The Company's income tax benefit for the three months ended April 30, 2003
was $197,000. The prior tax benefit was based on the Company's ability to carry
back the operating losses incurred to recapture a portion of the taxes paid in
fiscal year 2001. The Company recorded no income tax benefits in the current
year. The Company cannot carry back fiscal 2004 losses and determined that it
does not have sufficient taxable income available for future carry forward.
Therefore, the Company believes it is appropriate to record a valuation
allowance against its Federal and State deferred tax assets.
LIQUIDITY AND CAPITAL RESOURCES
At April 30, 2004,the Company had working capital of $11.0 million,
compared to working capital of $12.4 million at July 31, 2003. The decrease of
approximately $1.4 million resulted primarily from the net effect of the
Company's operating losses for the nine months ended April 30, 2004, which was
partially offset by proceeds received from the exercise of stock options and
proceeds from sale of property and equipment.
The Company has entered into a five-year $20.0 million Revolving Credit
Facility with MFC. For additional information regarding our Revolving Credit
Facility please see Note 1 to our interim financial statements included in this
Form 10-Q.
In order to complete the proposed business plan for the international
merchant banking activities, the Company believes that additional capital will
be required. The Company is considering a number of financing alternatives.
The Company is also seeking investments in or acquisitions of companies,
technologies or products in related or other lines of business. There is no
assurance that management will find suitable opportunities or effect the
necessary financial arrangements for such investments or provide the working
capital needed for the acquired activities.
ITEM 3. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Our management evaluated, with the participation of our Chief Executive
Officer and Chief Financial Officer, the effectiveness of our disclosure
controls and procedures as of the end of the period covered by this Quarterly
Report on Form 10-Q. Based on this evaluation, our Chief Executive Officer and
Chief Financial Officer have concluded that our disclosure controls and
procedures are effective to ensure that information we are required to disclose
in reports that we file or submit under the Securities Exchange Act of
10
1934 is recorded, processed, summarized and reported within the time periods
specified in Securities and Exchange Commission rules and forms.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There was no change in our internal control over financial reporting that
occurred during the period covered by this Quarterly Report on Form 10-Q that
has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On October 22, 2003, Marcus R. Rowan, the Company's former Chief Executive
Officer, and Mark Myers, the Company's former President, brought claims against
the Company in the District Court of Dallas County, Texas (the "Texas
Litigation") alleging breach of contract for failure to pay back wages,
severance payments, accrued but unpaid vacation and certain health and welfare
benefits under the terms of their respective employment arrangements. In
addition, the plaintiffs alleged defamation as it relates to their dismissal
from the Company "for cause."
On October 31, 2003, the Company commenced an action against its former
directors, officers and/or employees James R. Gavin, Harry P. Yergey, Mr. Rowan
and Mr. Myers in the Court of Chancery for the State of Delaware (the "Fiduciary
Action") alleging claims for breach of fiduciary duty and breach of contract.
On December 17, 2003, Mr. Rowan and Mr. Myers commenced an action against
the Company in the Court of Chancery for the State of Delaware (the "Advancement
Action") demanding advancement of attorneys' fees and costs incurred by them in
defense of the Fiduciary Action. On January 29, 2004, the Company dismissed the
claims in the Fiduciary Action against Mr. Gavin and Mr. Yergey without
prejudice.
On May 28, 2004, the Company entered into settlement agreements with each
of Mr. Rowan, Mr. Myers, Mr. Gavin and Mr. Yergey regarding the Texas
Litigation, the Fiduciary Action and the Advancement Action. Under the terms of
each settlement agreement, the Company and Mr. Myers agreed to release each
other for all claims either party could assert against the other party relating
to any relationship such persons had with the Company as an employee, officer,
director, indemnitee or stockholder as of May 28, 2004. The parties stipulated
to dismissal of the Texas Action, the Fiduciary Action and the Advancement
Action with prejudice.
In the ordinary course of conducting its business, the Company may become
subject to litigation and claims regarding various matters. There exists a
reasonable possibility that the Company will not prevail in all cases. Although
sufficient uncertainty exists in these cases to prevent the Company from
determining the amount of its liability, if any, the ultimate exposure upon the
resolution of any such litigation or claims is not expected to materially
adversely affect the Company's financial condition or results of operations.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDER
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORMS 8-K
(a) Exhibits
Exhibit 31.1 - Certification of the Chief Executive Officer and Chief
Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
Exhibit 32.1 - Certification of the Principal Executive Officer and
Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
(b) Reports on Form 8-K:
On November 20, 2003, the Company filed a Report on Form 8-K to disclose
the change in auditors.
On December 19, 2003, the Company filed a Report on Form 8-K in relation
to a press release announcing the Company's agreement with HNS
International, Inc. related to sale of needle-free business.
On January 10, 2004, the Company filed a Report on Form 8-K in relation to
a press release announcing the sale of needle-free business.
On April 20, 2004, the Company filed a Report on Form 8-K in relation to
the change in the Company's board of directors.
11
On April 26, 2004, the Company filed a Report on Form 8-K in relation to
acquisition of Cathay Merchant Group Limited and the Revolving Credit
Facility.
12
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
EQUIDYNE CORPORATION
Dated: June 14, 2004 By: /s/ Lewis Cheung
----------------
Lewis Cheung
Chief Executive Officer, President and
Chief Financial Officer
13