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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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): February 23, 1998
ACCUMED INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-20652 36-4054899
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
900 N. FRANKLIN STREET, SUITE 401, CHICAGO, ILLINOIS 60610
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (312) 642-9200
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
EXCHANGE OF CERTAIN CONVERTIBLE NOTES AND INTEREST THEREON FOR
CONVERTIBLE PREFERRED STOCK AND EXCHANGE WARRANTS
On February 23, 1998, the Company consummated the exchange (the "Note
Exchange") of $5,275,000 in principal amount of the Company's 12% Convertible
Promissory Notes due 2000 (the "Convertible Notes") together with the right to
receive an aggregate of $329,030 in accrued and unpaid interest thereon for (i)
1,245,340 shares of Series A Convertible Preferred Stock, par value $0.01 of the
Company having an aggregate stated value equal to $5,604,030 (the "Series A
Stated Value") and convertible into 4,981,360 shares of Common Stock (at an
initial conversion price of $1.125 per share (the "Series A Conversion Price"),
and (ii) 1,245,340 five-year warrants (the "Exchange Warrants") each exercisable
to purchase one share of Common Stock at an exercise price of $1.125 per share.
As a result of the Note Exchange, the Company's net tangible assets increased by
$4,860,000 and the interest expense will be reduced by approximately $1,320,000
through March 2000. The balance of $3,225,000 of Convertible Notes remain
outstanding and unaffected by the Note Exchange.
AUTOMATIC CONVERSION. If, prior to February 23, 2004, (i) the Common
Stock trades at or above $4.50 per share for 20 consecutive trading days, and
(ii) the resale of the shares of Common Stock into which the Series A Preferred
is convertible are then covered by an effective registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), each share of Series
A Preferred then outstanding shall, at the option of the Company, be converted,
automatically and without any action by the holders, into shares of Common Stock
at then effective Series A Conversion Price.
DIVIDEND PENALTY FOR FAILURE TO REGISTER SHARES. The Company has granted
registration rights with respect to the Common Stock issuable upon conversion of
the Series A Preferred and exercise of the Exchange Warrants (collectively the
"Note Exchange Registerable Securities"). The holders of Note Exchange
Registerable Securities are entitled to (i) one demand registration during the
five-year period beginning on May 23, 1998, and (ii) the right to participate,
on a so-called "piggyback" basis, in registrations by the Company under the
Securities Act, other than on Forms S-8, S-4, and similar forms until such time
as the Registerable Note Exchange Securities can be sold without restriction
pursuant to Rule 144 under the Securities Act. If, prior to June 23, 1998, a
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registration statement under the Securities Act has not been declared effective
with respect to the resale of a minimum of one-third of the aggregate number of
shares of Common Stock issuable upon conversion of the Series A Preferred, a
cash dividend of 16% per annum, payable quarterly in arrears, shall be paid on
the Series A Preferred until such time as such registration statement is
declared effective under the Securities Act.
RESTRICTIONS ON RESALE. Each holder of Note Exchange Registrable
Securities has agreed, not to sell, transfer, or otherwise dispose 64% of its
shares of Series A Preferred and shares of Common Stock issuable upon conversion
thereof prior to February 23, 1999.
VOTING RIGHTS. The Series A Preferred is entitled to the following
voting rights in addition to any voting rights which may be required under the
General Corporation Law of the State of Delaware ("Delaware Corporate Law") and
except as follows. The Company may not take any of the following actions without
the affirmative vote of a majority of the shares of Series A Preferred (i) issue
any series of preferred stock senior as to liquidation and/or dividend, (ii)
alter or change the rights of the Series A Preferred as to adversely affect the
Series A Preferred, and (iii) incur certain indebtedness.
On any matters on which the Series A Preferred may be entitled to vote
together with the Common Stock and other shares of convertible Preferred Stock,
the holders thereof shall be entitled to one vote per share of Common Stock into
which its shares of Series A Preferred are then convertible. As to matters upon
which the Series A Preferred is entitled to vote as a separate class, each share
of Series A Preferred shall be entitled to one vote per share.
LIQUIDATION PREFERENCE. Upon a liquidation of the Company, each holder
of Series A Preferred shall be entitled to receive, before and in preference to
any distribution or payment to holders of Common Stock or other security junior
to the Series A Preferred, an amount in cash equal to the Series A Stated Value
of such holder's shares of Series A Preferred then outstanding plus an amount
equal to the accrued and unpaid dividends on such Series A Preferred, if any.
If, upon such liquidation, the assets of the Company available for distribution
to holders of Series A Convertible Preferred and any other series of Preferred
Stock then outstanding ranking on parity with the Series A Convertible Preferred
upon liquidation shall be insufficient to permit payment in full to the holders
of the Series A Convertible Preferred and
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such parity stock, then the entire assets and funds of the Company legally
available for distribution to such holders and the holders of such parity stock
then outstanding shall be distributed ratably among such holders.
EXCHANGE WARRANTS. Each Exchange Warrant is exercisable to purchase one
share of Common Stock at an exercise price of $1.125 per share, subject to
adjustment upon the occurrence of certain events, including, certain dividends,
split-up, reclassification, issuances of stock and convertible securities for
less than the current fair market value, mergers and asset sales. The Company,
at its option, may redeem the Exchange Warrants for $0.25 per Exchange Warrant
upon a minimum of 30 days' notice if the Common Stock has traded at or above
$4.50 per share during 20 consecutive trading days prior to sending the
redemption notice. The Exchange Warrants expire March 31, 2001.
PLACEMENT AGENT COMPENSATION. Commonwealth Associates ("Commonwealth")
served as placement agent in the Note Exchange for which it has received or will
receive from the Company, (i) 50,000 shares of Common Stock in lieu of a cash
retainer, (ii) $175,000 in cash (due 60 days following February 23, 1998), (iii)
350,000 warrants each exercisable to purchase one share of Common Stock at an
exercise price of $1.125 per share during the seven-year exercise period, and
(iv) reimbursement of out-of-pocket expenses, including legal fees. In addition,
200,000 Common Stock purchase warrants issued to Commonwealth or its designees
as compensation for the original placement of the Convertible Notes with an
exercise price of $3.125 will be replaced with warrants having identical terms
except that the exercise price will be reduced to $1.125 per share.
PRIVATE PLACEMENT OF UNITS
On March 19, 1998, the Company sold an aggregate of 5,857,333 shares of
Common Stock and warrants to purchase 5,857,333 shares of Common Stock for
aggregate gross proceeds of $4,393,000 (the "Initial Closing"). Such securities
were issued and sold in units (the "Units"), each Unit consisting of 133,333
shares of Common Stock (determined by dividing (x) $100,000 by (y) $0.75 (the
average closing bid price per share of Common Stock on the three trading days
immediately preceding the closing date plus $0.03125), and seven-year warrants
(expiring on March 19, 2005) to purchase 133,333 shares of Common Stock (the
"Unit Warrants"), at an exercise price of $0.75 per share (the "Unit Warrant
Exercise Price"). The Units were sold in a private placement to accredited
investors (as defined in Rule 501(a) under the Securities Act) only
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(the "Private Placement").
POSSIBLE SALE OF ADDITIONAL UNITS
In accordance with the terms of the Private Placement, the Company may
accept subscriptions for approximately up to an additional $2,200,000 of Units
following the Initial Closing. In such case, a final closing would be held
pursuant to which such additional Units would be issued and sold on the same
terms on which the Units were issued and sold in the Initial Closing, including
payment of additional cash commissions and finders' fees and issuance of
additional agent's warrants and finders' warrants. However, there can be no
assurance that any additional Units will be sold.
REGISTRATION RIGHTS
The Company has agreed to register for resale under the Securities Act
the shares of Common Stock sold in the Units and the shares of Common Stock
underlying the Unit Warrants (collectively, the "Unit Registrable Shares"). The
holders of Units shall have (i) one demand registration during the five-year
period commencing June 19, 1998, and (ii) the right to participate, on a
"piggyback" basis, in registrations by the Company under the Securities Act,
other than on Forms S-8, S-4, etc. until such time as the Common Stock can be
sold (without restriction) pursuant to Rule 144 promulgated under the Securities
Act.
TERMS OF UNIT WARRANTS
Each Unit Warrant is exercisable to purchase one share of Common Stock
at the Unit Exercise Price, subject to adjustment upon the occurrence of certain
events, including, certain dividends, split-up, reclassification, issuances of
stock and convertible securities for less than the current fair market value,
mergers and asset sales. However, the Company currently has insufficient
authorized and unissued shares of Common Stock available to reserve for issuance
upon exercise of all of the Unit Warrants issued in the Initial Closing.
Therefore, certain of the Unit Warrants will become exercisable if and when the
Company has available a sufficient number of authorized and unissued shares of
Common Stock to reserve for issuance upon exercise thereof. If the Company does
not have such sufficient shares of Common Stock so reserved on or prior to July
15, 1998, each original holder of Unit Warrants will be entitled to receive, at
its option, in exchange
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for its Unit Warrants, shares of Series C Convertible Preferred Stock, par value
$0.01 per share of the Company (the "Series C Preferred") having a stated value
of $0.01 per share (the "Series C Stated Value"), convertible into the number of
shares of Common Stock issuable upon exercise other the Unit Warrants, upon
payment in cash of the amount of the Unit Warrant Exercise Price in effect at
the time of such exchange (the "Series C Conversion Price"), subject to
adjustment.
The Company, at its option, may redeem the Unit Warrants for $0.25 per
Unit Warrant upon a minimum of 20 days' notice if (i) the Common Stock has
traded at or above $4.50 per share during 20 consecutive trading days prior to
sending the redemption notice, and (ii) resale of shares of Common Stock
underlying the Unit Warrants is then covered by an effective registration
statement under the Securities Act.
TERMS OF SERIES C PREFERRED
Holders of Series C Preferred, if issued, will receive a cash dividend
of $0.16 per annum per share of Common Stock issuable upon conversion of its
shares of Series C Preferred, payable quarterly in arrears, until such time, if
any, as there is a sufficient number of authorized and unissued shares of Common
Stock reserved for issuance upon conversion in full of all shares of Series C
Preferred issued in exchange for the Unit Warrants.
DIVIDEND PENALTY FOR FAILURE TO REGISTER SHARES. If a registration
statement under the Securities Act has not been declared effective with respect
to the resale of all of the shares of Common Stock issuable upon conversion of
the Series C Preferred within 120 days following the date on which the Series C
Preferred is issued, if any, a cash dividend of $0.16 per annum per share
issuable upon conversion of the Series C Preferred, payable quarterly in
arrears, shall be paid on the Series C Preferred until such time as such
registration statement is declared effective under the Securities Act.
VOTING RIGHTS. The Series C Preferred, if issued, will be entitled to
the following voting rights in addition to any voting rights which may be
required under Delaware Corporate Law. The Company may not take any of the
following actions without the affirmative vote of a majority of the shares of
Series C Preferred (i) issue any series of preferred stock senior as to
liquidation and/or dividend, (ii) alter or change the rights of the Series C
Preferred as to adversely affect the Series A Preferred, and (iii) incur certain
indebtedness.
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On any matters on which the Series C Preferred may be entitled to vote
together with the Common Stock and other shares of convertible Preferred Stock,
the holders thereof shall be entitled to one vote per share of Common Stock into
which its shares of Series C Preferred are then convertible. As to matters upon
which the Series C Preferred is entitled to vote as a separate class, each share
of Series C Preferred shall be entitled to one vote per share.
LIQUIDATION PREFERENCE. Upon a liquidation of the Company, each holder
of Series C Preferred shall be entitled to receive, before and in preference to
any distribution or payment to holders of Common Stock or other security junior
to the Series C Preferred, an amount in cash equal to the Series C Stated Value
of such holder's shares of Series C Preferred then outstanding plus an amount
equal to the accrued and unpaid dividends on such Series C Preferred, if any.
If, upon such liquidation, the assets of the Company available for distribution
to holders of Series C Convertible Preferred and any other series of Preferred
Stock then outstanding ranking on parity with the Series C Convertible Preferred
upon liquidation shall be insufficient to permit payment in full to the holders
of the Series C Convertible preferred and such parity stock, then the entire
assets and funds of the Company legally available for distribution to such
holders and the holders of such parity stock then outstanding shall be
distributed ratably among such holders.
REDEMPTION. The Company, at its option, may redeem the Series C
Preferred for $0.01 per share upon a minimum of 30 days' notice if (i) the
Common Stock has traded at or above $4.50 per share during 20 consecutive
trading days prior to sending the redemption notice, and (ii) resale of shares
of Common Stock underlying the Series C Preferred is then covered by an
effective registration statement under the Securities Act.
POSSIBLE EXCHANGE OF UNITS FOR ALTERNATE UNITS
If the Common Stock is delisted from The Nasdaq Stock Market at any time
on or prior to December 31, 1998, original purchasers of Units will be entitled
to receive, at their option, in exchange for the Units, units (the "Alternate
Units"), each Alternate Unit consisting of (i) shares of Series B Convertible
Preferred Stock, par value $0.01 per share of the Company (the "Series B
Preferred") having an aggregate stated value of $100,000 (the "Series B Stated
Value"), convertible into shares of Common Stock at an initial conversion price
(the "Series B Conversion Price") of $0.75 per share, subject to reset as
described below, and (ii) warrants (the
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"Alternate Warrants") exercisable to purchase the number of shares of Common
Stock issuable upon exercise of the Unit Warrants at the same initial Unit
Warrant Exercise Price, subject to reset as described below.
TERMS OF SERIES B PREFERRED
The Series B Preferred, if issued, will be immediately convertible at
the option of the holder into shares of Common Stock at the Series B Conversion
Price. If, on or prior to December 31, 1998, the average closing bid price per
share of Common Stock for five consecutive trading days is less than $0.50 and
the then current Series B Conversion Price is higher than $0.50, then the Series
B Conversion Price will be reduced to $0.50. However, the Company may not have
sufficient authorized and unissued shares of Common Stock available to reserve
for issuance upon conversion of all of shares of Series B Preferred, if the
Series B Conversion Price is reset. In which case, holders of Series B Preferred
would only be able to convert such shares into its pro rata percentage of shares
available for issuance upon conversion of Series B Preferred. If the Company
does not have such sufficient shares of Common Stock reserved for issuance of
all shares of Common Stock into which the Series B Convertible Preferred are
then convertible on or prior to July 15, 1998, each holder of Series B Preferred
will be entitled to receive a cash dividend of 16% per annum on the Series B
Stated Value, payable quarterly in arrears, until such time, if any, as there
are sufficient authorized and unissued shares reserved for issuance upon
exercise in full of the Series B Preferred issued in the Alternate Units.
AUTOMATIC CONVERSION. If during the six-year period beginning on March
19, 1998, (i) the Common Stock has traded at or above $4.50 per share during 20
consecutive trading days, and (ii) resale of shares of Common Stock underlying
the Series B Preferred is then covered by an effective registration statement
under the Securities Act, the Series B Preferred, at the option of the Company
and without action of the holders, may be converted into Common Stock at the
then effective Series B Conversion Price.
DIVIDEND PENALTY FOR FAILURE TO REGISTER SHARES. If a registration
statement under the Securities Act has not been declared effective with respect
to the resale of all of the shares of Common Stock issuable upon conversion of
the Series B Preferred on or prior to July 15, 1998, a cash dividend of 16% per
annum per on the Series B Stated Value, payable quarterly in arrears, shall be
paid on the Series B Preferred until such time as such registration statement is
declared effective under the Securities
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Act.
VOTING RIGHTS. The Series B Preferred, if issued, will be entitled to
the following voting rights in addition to any voting rights which may be
required under Delaware Corporate Law. The Company may not take any of the
following actions without the affirmative vote of a majority of the shares of
Series B Preferred (i) issue any series of preferred stock senior as to
liquidation and/or dividend, (ii) alter or change the rights of the Series B
Preferred as to adversely affect the Series B Preferred, and (iii) incur certain
indebtedness.
On any matters on which the Series B Preferred may be entitled to vote
together with the Common Stock and other shares of convertible Preferred Stock,
the holders thereof shall be entitled to one vote per share of Common Stock into
which its shares of Series B Preferred are then convertible. As to matters upon
which the Series B Preferred is entitled to vote as a separate class, each share
of Series B Preferred shall be entitled to one vote per share.
LIQUIDATION PREFERENCE. Upon a liquidation of the Company, each holder
of Series B Preferred shall be entitled to receive, before and in preference to
any distribution or payment to holders of Common Stock or other security junior
to the Series B Preferred, an amount in cash equal to the Series B Stated Value
of such holder's shares of Series B Preferred then outstanding plus an amount
equal to the accrued and unpaid dividends on such Series B Preferred, if any.
If, upon such liquidation, the assets of the Company available for distribution
to holders of Series B Preferred and any other series of Preferred Stock then
outstanding ranking on parity with the Series B Preferred (including the Series
A Preferred) upon liquidation shall be insufficient to permit payment in full to
the holders of the Series B Preferred and such parity stock, then the entire
assets and funds of the Company legally available for distribution to such
holders and the holders of such parity stock then outstanding shall be
distributed ratably among such holders.
PLACEMENT AGENT COMPENSATION; FINDERS' FEES
Commonwealth acted as placement agent in the Private Placement for which
it received from the Company, (i) 133,333 shares of Common Stock in lieu of a
cash retainer, (ii) $126,113 in cash, (iii) and seven-year warrants to purchase
336,302 shares of Common Stock at an exercise price of $0.75 per share, and (iv)
reimbursement of out-of-pocket expenses, including legal fees, up
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to a maximum of $100,000. In addition, the 350,000 Common Stock purchase
warrants issued to Commonwealth or its designees as compensation for its
services in connection with the Note Exchange at an exercise price of $1.125
will be replaced with warrants having identical terms except that the exercise
price will be reduced to $0.75 per share.
Harold S. Blue and Lincoln Enterprises served as finders in the Private
Placement for which each received approximately $107,000 in cash and seven-year
warrants to purchase an aggregate of approximately 284,000 shares of Common
Stock at an exercise price of $0.75 per share.
BELLINGHAM INVESTMENT; NEW DIRECTORS
Bellingham Capital Industries ("Bellingham") purchased $3,000,000 of
Units in the Private Placement pursuant to which Bellingham received 4,000,000
shares of Common Stock and 4,000,000 Unit Warrants. Upon consummation of the
Private Placement, Bellingham became the single largest holder of Common Stock
and owned approximately 14% of the shares of Common Stock issued and outstanding
as of March 19, 1998. The Company's Board of Directors has agreed to expand the
Board from seven to nine members and to appoint two individuals recommended by
Bellingham to fill the newly created directorships.
One of the individuals is Harold S. Blue, who was a director of the
Company from July 1996 through May 23, 1997. Since February 1993, Mr Blue has
served as Chairman of the Board and Chief Executive Officer of ProxyMed, Inc., a
healthcare information technology company. From July 1992 until February 1995,
Mr. Blue served as Chairman of the Board and Chief Executive Officer of
Health Services of Miami Lakes, Inc., Health Services of Pembroke Lakes, Inc.
and Health Services of North Miami, Inc., each a physician practice management
group. From June 1979 to February 1992, Mr. Blue was President and Chief
Executive Officer of Budget Drugs, Inc., a retail discount pharmacy chain. From
September 1984 to August 1988, Mr. Blue was Executive Vice President of Best
Generics Incorporated, a national generic distribution company, which he
co-founded.
CHANGES IN COMPOSITION OF AUDIT COMMITTEE
Effective March 3, 1998, the Company's Audit Committee is comprised of
the following non-employee directors, Jack H. Halperin, Chairman, J. Donald
Gaines and Joseph W. Plandowski.
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POSSIBLE REVERSE STOCK SPLIT; RECENT DEVELOPMENTS RELATING TO
POSSIBLE DELISTING OF COMMON STOCK FOR THE NASDAQ SMALLCAP MARKET
On March 17, 1998, Nasdaq granted the Company's request for an extension
of the deadline for achieving compliance with the minimum $1.00 bid price per
share of Common Stock for continued listing of the Common Stock on The Nasdaq
SmallCap Market. The Company must still meet the $7,000,000 minimum net tangible
assets requirement established by the Nasdaq Oral Hearing Panel (the "Panel") as
well as all criteria for continued listing of the Common Stock on The Nasdaq
SmallCap Market on or prior to March 20, 1998. However, the Panel has modified
the terms of the temporary exemption for inclusion of the Common Stock on The
Nasdaq SmallCap Market to allow the Company until May 29, 1998 to effect a
reverse stock spilt sufficient to rase the bid price per share of Common Stock
to over $1.00. The bid price must also remain over $1.00 per share during the
ten consecutive trading days following the effectiveness of such reverse stock
split. The Company's Board of Directors has approved such a reverse stock split
and will recommend that the stockholders vote in favor therefor at the Combined
Annual and Special Meeting of Stockholders currently scheduled to be held on May
19, 1998. However,there can be no assurance that the stockholders will approve
such proposal prior to such deadline or that such reverse stock split will have
the effect of so increasing the bid price.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) Pro Forma Financial Information:
AccuMed International, Inc.:
1. Pro Forma Condensed Consolidated Balance Sheet as
of February 28, 1998.
2. Pro Forma Condensed Consolidated Statement of
Operations for the two months ended February 28, 1998.
3. Notes to Pro Forma Condensed Consolidated Financial
Statements.
(c) Exhibits:
4.1 Certificate of Designation, Rights and Preferences of Series A
Convertible Preferred Stock.
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4.2 Certificate of Correction to Certificate of Designation, Rights and
Preferences of Series A Convertible Preferred Stock.
4.3 Warrant Agreement dated as of February 23, 1998 between the Company
and Commonwealth Associates, including form of Warrant Certificate
attached as Exhibit A thereto, representing an aggregate of
1,245,340 Common Stock purchase Warrants.
4.4 Subscription Agreement and Registration Rights Agreement dated as
of February 23, 1998 between the Registrant and each of the
investors in the Note Exchange.
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ACCUMED INTERNATIONAL, INC.
PRO-FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
UNAUDITED
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ASSETS February 28, 1998 Adjustments Pro-Forma
----------------- ----------- ------------
Current Assets
Cash and cash equivalents $ 317,668 $ 3,393,000 (1) $ 3,710,668
Accounts receivable, net 5,453,535 5,453,535
Prepaid expenses and deposits 274,989 274,989
Production inventory 3,389,346 3,389,346
------------ ----------- ------------
Total current assets 9,435,538 3,393,000 12,828,538
------------ ----------- ------------
Fixed assets, net 4,836,709 4,836,709
------------ ----------- ------------
Notes receivable 164,199 164,199
Deferred financing costs 244,024 244,024
Purchased technology 4,889,762 4,889,762
Other assets 760,143 760,143
------------ ----------- ------------
$ 20,330,375 $ 3,393,000 $ 23,723,375
============ =========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 3,844,824 $ 439,300 (2) $ 4,284,124
Other current liabilities 1,266,101 1,266,101
Deferred revenue 142,423 142,423
Notes payable, current portion 3,867,795 (1,000,000) (1) 2,867,795
------------ ----------- ------------
Total current liabilities 9,121,143 (560,700) 8,560,443
------------ ----------- ------------
Warranty reserves 267,299 267,299
Long term debt 6,566,572 6,566,572
Minority interest 48,775 48,775
------------ ----------- ------------
6,882,646 - 6,882,646
------------ ----------- ------------
Stockholders' equity
Preferred stock, series A convertible 5,604,030 5,604,030
Common stock, $0.01 par value 229,040 59,906 (1,3) 288,946
Additional paid-in capital 52,171,867 3,893,794 (1,2,3) 56,065,661
Cumulative translation adjustment 22,589 22,589
Accumulated deficit (53,484,203) (53,484,203)
Less treasury stock (216,737) (216,737)
------------ ----------- ------------
Total stockholders' equity 4,326,586 3,953,700 8,280,286
------------ ----------- ------------
$ 20,330,375 $ 3,393,000 $ 23,723,375
============ =========== ============
See notes to the Pro-Forma Consolidated Financial Statements.
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ACCUMED INTERNATIONAL, INC.
PRO-FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE TWO MONTHS ENDED FEBRUARY 28, 1998
UNAUDITED
------------------------------------------------------------
Two Months Ended
February 28,1998 Adjustments Pro-Forma
---------------- ------------------- -----------
Sales $ 3,845,914 $ 3,845,914
Less cost of sales (2,095,568) (2,095,568)
----------- ------------------- -----------
Gross profit (loss) 1,750,346 1,750,346
----------- ------------------- -----------
Operating expenses:
General and administrative 1,268,607 1,268,607
Research and development 675,078 675,078
Sales and marketing 558,419 558,419
----------- ------------------- -----------
Total operating expenses 2,502,104 2,502,104
----------- ------------------- -----------
Operating income (loss) (751,758) (751,758)
----------- ------------------- -----------
Other income (expense):
Interest income 1,545 1,545
Interest expense (357,702) (357,702)
Other income (expense) (43,080) (43,080)
Debt conversion (expense) (1,147,610) (1,147,610)
Minority interest 68,291 68,291
----------- ------------------- -----------
Total other income (expense) (1,478,556) - (1,478,556)
----------- ------------------- -----------
Loss before income taxes (2,230,314) - (2,230,314)
Income tax expense - -
----------- ------------------- -----------
Net loss $(2,230,314) $ - $(2,230,314)
=========== =================== ===========
Net loss per share $ (0.10) $ (0.10)
=========== ===========
Weighted average common shares outstanding 22,904,000 22,904,000
=========== ===========
See Notes to the Pro-Forma Consolidated Financial Statements.
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ACCUMED INTERNATIONAL, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - DESCRIPTION OF THE OFFERING
The Company engaged an investment banking firm as placement agent in
a private placement (the "Offering") of units, each unit consisting of the
Company's Common Stock and detachable warrants to purchase Common Stock of the
Company. Terms of the agency agreement call for a "best efforts" method to sell
a minimum of $4,000,000 of units and a maximum of $6,000,000 of units, subject
to increase upon mutual agreement of the Company and the placement agent,
which is to be completed by April 15, 1998.
The accompanying condensed consolidated financial statements illustrate
the effect of the Offering ("Pro Forma") on the Company's financial position and
results of operations. The condensed consolidated balance sheet as of February
28, 1998 is based on the historical balance sheet of the Company as of that date
and assumes the Offering took place on that date. The condensed consolidated
statement of operations for the two months ended February 28, 1998 is based on
the historical statement of operations of the Company for that period. The pro
forma condensed consolidated statement of operations assumes the Offering took
place on February 28, 1998.
The pro forma condensed consolidated financial statements reflect the
Initial Closing of the Offering and may not be indicative of the results of the
Offering if additional units are sold.
The accompanying pro forma condensed consolidated financial statements
should be read in connection with the historical financial statements of the
Company.
NOTE B - PRO FORMA ADJUSTMENTS
The following adjustments are reflected in the Pro Forma Condensed
Consolidated Financial Statements under the columns headed "Adjustments".
(1) $4,393,000 of units consisting of Common Stock and detachable warrants
to purchase Common Stock of the Company are issued. The Company
exchanges a $1,000,000 note payable into $1,000,000 of units in lieu of
cash as part of the Offering.
(2) $439,300 of investment banking fees and estimated expenses are incurred
in connection with the issuance of the units described above.
(3) Shares of Common Stock having a market value of $100,000 are issued
for investment banking fees incurred in connection with the issuance
of the units described above.
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16
SIGNATURE
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.
Dated: March 20, 1998
ACCUMED INTERNATIONAL, INC.
By: /S/ LEONARD R. PRANGE
-----------------------------
Leonard R. Prange
Chief Financial Officer
and Chief Operating Officer
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