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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
JUNE 27, 1997
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
NATIONAL DIAGNOSTICS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 0-24696 59-3248917
(STATE OR OTHER JURISDICTION (COMMISSION FILE (IRS EMPLOYER
OF INCORPORATION) NUMBER) IDENTIFICATION NO.)
755 WEST BRANDON BOULEVARD, BRANDON, FLORIDA 33511
- -------------------------------------------------- ---------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(813) 661-9501
--------------------------------
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NOT APPLICABLE
--------------------------------
(FORMER NAME OR FORMER ADDRESS IF CHANGED SINCE LAST REPORT)
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT
Not Applicable
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Not Applicable
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Not Applicable
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Not Applicable
ITEM 5. OTHER EVENTS
In June of 1997 National Diagnostics, Inc. ("the Company") entered into
certain transactions which were intended to strengthen the Company's financial
position. The transactions may be grouped into two types: first, the conversion
of existing debt into equity by way of issuance of common stock in satisfaction
of the debts; and second, the acquisition of tradeable marketable securities
(with certain restrictions) in exchange for the issuance by the Company
of restricted shares of common stock (see item 9).
Mr. Jugal K. Taneja, Chairman and CEO, and Mr. Curtis L. Alliston,
President and COO accepted individually 115,000 restricted common shares of
stock each as satisfaction for approximately $243,800 owed to them by the
Company. Additionally, the Company's corporate counsel accepted 100,000
restricted common shares of stock as satisfaction for approximately $150,000
owed to them for services previously rendered. The Company's corporate
consultants accepted 14,583 restricted common shares of stock as satisfaction
for approximately $25,500 owed to them for services rendered.
Effective June 27, 1997, the Company acquired 127,773 shares of
Equisure, Inc. Common Stock (net of 14,197 shares given in payment of
commission) valued at $1,800,000 from Sudafric Suisse Trustees (a foreign trust)
in exchange for the issuance by the Company of 1,459,188 shares of Company
Common Stock.
The proforma financial information presented is for the five month
period ending May 31, 1997. The presentation shows the effect of the conversion
of debt to equity upon issuance of the Common Stock as described herein and the
effect of the acquisition by the Company of 127,773 shares of Equisure, Inc.
Common Stock in exchange for 1,459,188 shares of the Company's Common Stock.
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS
Not Applicable
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) & (b) Condensed consolidated balance sheet as of March 31, (historical
and proforma) and May 31, 1997 (proforma).
Condensed consolidated statements of operations for year ended
December 31, 1996 and May 31, 1997 (proforma).
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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
as of March 31 and May 31, 1997 proforma.....................4-5
CONSOLIDATED STATEMENTS OF OPERATIONS
Year ended December 31, 1996 and
proforma five months ended May 31, 1997 ........................6
SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS......................7
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NATIONAL DIAGNOSTICS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, March 31, May 31,
1997 1997 1997
(Unaudited Proforma (Unaudited (Unaudited
Historical) Transactions Proforma) Proforma)
----------- ----------- ------------ ----------
Current Assets:
Cash $ 151,969 $ $ 151,969 $ 82,571
Accounts receivable - net of allowance
of $664,402 and $720,256 in March and 2,349,264 2,349,364 2,474,802
May, 1997, respectively
Prepaid expenses and other current assets 153,972 153,972 138,372
Marketable Securities 1,800,000 a 1,800,000 1,800,000
---------- ------------ -----------
Total current assets 2,655,205 4,455,205 4,495,745
---------- ------------ -----------
Property and Equipment 9,813,530 9,813,530 9,856,634
Less: Accumulated depreciation and
amortization (3,591,870) (3,591,870) (3,810,353)
---------- ------------ -----------
Net property and equipment 6,221,660 6,221,660 6,046,281
---------- ------------ -----------
Other Assets:
Excess of purchase price over net
assets acquired - net of accumulated 422,068 422,068 417,989
Amortization of $61,274 and $71,472
in March and May, 1997, respectively
Deposits 48,063 48,063 48,062
Other 81,454 81,454 63,225
---------- ------------ -----------
Total other assets 551,585 551,585 529,276
---------- ------------ -----------
$9,428,450 $ 11,228,450 $11,071,302
========== ============ -==========
See Accompanying Notes.
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
March 31 March 31 May 31,
1997 1997 1997
(Unaudited Proforma (Unaudited Unaudited
Historical) Transactions Proforma) Proforma)
----------- ----------- ------------ ---------
Current liabilities:
Line of credit $ 1,046,554 $ $ 1,046,554 $ 1,208,047
Note payable, other 160,247 160,247 103,417
Notes due to related parties 220,716 (62,474) b 158,242 127,075
Current installments of 105,000 105,000 105,000
long-term debt
Current installments of obligations
under capital leases 1,104,000 1,104,000 1,104,000
Accounts payable 1,251,569 (150,000) b 1,101,569 1,177,611
Accrued radiologist fees 443,758 443,758 483,731
Accrued expenses, other 805,335 (181,326) b 624,009 594,283
----------- ----------- -----------
Total current liabilities 5,137,179 4,743,379 4,903,164
Long-term liabilities:
Long-term debt, excluding 600,024 600,024 737,152
current installments
Obligations under capital leases,
excluding current installments 3,516,013 3,516,013 3,243,609
Deferred lease payments 221,468 221,468 211,172
----------- ----------- -----------
Total liabilities 9,474,684 9,080,884 9,095,097
----------- ----------- -----------
Commitments and contingencies
Stockholders' equity (deficit):
Preferred stock - - -
Common stock, no par value,
9,000,000 shares as authorized,
2,628,577 and 4,481,220 shares
issued and outstanding in March
and May (proforma), respectively 686 400 a
69 b 1,155 1,164
Additional paid-in capital 2,320,497 1,799,600 a 11,539,348 4,591,143
419,251 b
Retained earnings (deficit) (2,367,417) (25,520)b (2,392,937) (2,616,102)
----------- ----------- ----------- -----------
Net stockholders' equity (deficit) (46,234) 2,147,566 1,976,205
----------- ----------- -----------
$ 9,428,450 $11,228,450 $11,071,302
=========== =========== ===========
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NATIONAL DIAGNOSTICS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Five Months
Year Ended Ended May 31,
December 31, May 31, 1997 1997
1996 (Unaudited Proforma (Unaudited
(Historical) Historical Adjustments Proforma)
------------ ---------- ----------- ---------
Net revenue $ 8,876,652 $ 4,444,417 $ 4,444,417
----------- ----------- -----------
Operating expenses:
Direct operating expenses 4,850,088 2,419,775 2,419,775
General and administrative 3,576,087 1,659,155 25,520 b 1,684,675
Depreciation and amortization 1,210,245 610,828 610,828
----------- ----------- -----------
Total operating expenses 9,636,420 4,689,758 4,715,278
----------- ----------- -----------
Operating loss (759,768) (245,341) (270,861)
Interest expense 563,951 292,679 292,679
Other Income 82,058 5,283 5,283
----------- ----------- -----------
Loss before income taxes (1,241,661) (532,737) (558,257)
Income tax (benefit) - - -
----------- ----------- -----------
Net loss $(1,241,661) $ (532,737) $ (558,257)
=========== =========== ===========
Loss per common share $ (.48) $ (.20) $ (.12)
=========== =========== ===========
Weighted average number of
common shares outstanding 2,579,380 2,628,577 4,481,220
=========== =========== ===========
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NATIONAL DIAGNOSTICS, INC.
AND SUBSIDIARIES
SELECTED NOTES TO CONDENSED PROFORMA FINANCIAL STATEMENTS
MAY 31, 1997
(UNAUDITED)
(1) PROFORMA ADJUSTMENTS
(a) This adjustment represents the acquisition of 127,773 shares of
Equisure, Inc. Common Stock (net of 14,197 shares given in payment of
commission) valued at $1,800,000 in exchange for 1,459,188 shares of restricted
Company Common Stock. Equisure, Inc. is a reinsurance company traded on the
American Stock Exchange; shares outstanding approximately 11,000,000 with a
public float of approximately 6,000,000 shares. Financial status as of December
31, 1996:*
Total Assets $76,691,770
Total Liabilities $39,660,824 ($30+m in underwriting reserves)
Shareholder Equity $37,030,946
1996 Revenues $13,265,274
E.P.S. $.42
* Note: source of this information is from the audited financial statements of
Equisure, Inc. for the year ended December 31, 1996.
(b) These adjustments represent the conversion of existing debt owed by
the Company to its officers ($243,800), legal counsel ($150,000), and
consultants ($25,520).
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ITEM 7 -- EXHIBITS
(c) List of exhibits filed as part of this report:
Exhibit
Number
- ------
10.43 Exchange Agreement dated June 27, 1997 by and between National
Diagnostics, Inc. and Sudafric Suisse Trustees.
ITEM 8. CHANGE IN FISCAL YEAR
Not Applicable
ITEM 9. SALE OF EQUITY SECURITIES PURSUANT TO REGULATION S
(a) Date sold: June 27, 1997
Title: Common Shares of National Diagnostics, Inc.
("Issuer")
Amount: 1,459,188 shares
(b) Purchaser: Sudafric Suisse Trustees (a foreign trust)
(c) The Company received in exchange for 1,459,188 shares of
Company Common Stock 141,970 shares of Equisure, Inc. Common
Stock (a publicly traded company on the American Stock
Exchange). The exchange was valued at $2,000,000 less a ten
percent commission paid in Equisure, Inc. shares by Issuer.
(d) The shares of Company Common were issued by the Company
pursuant to Regulation S promulgated under the Securities
Act of 1933, as amended ("Act"). The Purchaser is an
offshore foreign trust and purchased the Company's Common
stock subject to the restriction that the purchaser is
precluded from offering and selling to U.S. persons or the
account or benefit of a U.S. person, for a period of forty
(40) days commencing with the date of the offering. The
Exchange Agreement includes repurchase options in favor of the
Company and the Purchaser which are exercisable during the
first year after June 27, 1997 pursuant to which the Company
and the Purchaser retain the right to re-purchase their
respective shares.
(e) Conversion or exercise privileges:
Item not applicable.
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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.
July 22, 1997 NATIONAL DIAGNOSTICS, INC.
By: /s/ Curtis L. Alliston
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Curtis L. Alliston, President
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INDEX TO EXHIBITS
Exhibit
Number
- ------
10.43 EXCHANGE AGREEMENT
Dated June 27, 1997......................................11
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