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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): January 29, 1999
ACCUMED INTERNATIONAL, INC.
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(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)
920 N. Franklin Street, Suite 402, Chicago, Illinois 60610
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (312) 642-9200
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) On January 29, 1999, AccuMed International, Inc. (the "Company")
completed the sale of substantially all the assets and certain liabilities
related to the Company's Microbiology Division, including the Company's formerly
wholly-owned subsidiary AccuMed International Ltd., an English registry company
("AccuMed UK" and collectively such assets and liabilities are referred to as
the "Microbiology Business"). The Microbiology Business was sold to Trek
Diagnostic Systems, Inc. (formerly known as AMI Acquisition Corp., the
"Purchaser") pursuant to the Asset Purchase Agreement dated as of November 20,
1998, as amended (the "Purchase Agreement") between the Company and the
Purchaser.
The Microbiology Business assets include all of the outstanding stock of
AccuMed UK, which sells a variety of FDA-cleared products under the SensititreTM
name for the minimum inhibitory concentration and identification testing of
bacteria and susceptibility measurement. The U.S. Microbiology Business assets
relate to the ESPTM Culture System II product line consisting of disposables,
software and instruments for the growth and detection of microorganisms in blood
cultures, sterile body fluids and mycobacteria samples, and the alamarBlueTM
product line. Assets sold include intellectual property such as patents,
trademarks and intellectual property license rights, accounts receivable,
inventory, and equipment. The Company assigned and the Purchaser assumed
liabilities under various contracts relating to the Microbiology Business,
including real property leases and customer contracts, as well as agreements
with Becton Dickinson and Company relating to the purchase of certain real
property and equipment, inventories and personal property related to the ESP
Culture System II product line.
The sales price was negotiated at arms-length through a competitive bid
process. The Board of Directors of the Company accepted the Purchaser's offer as
the offer providing the best value for the Company and its stockholders. The
stockholders approved the principal terms of the sale of the Microbiology
Business at a Special Meeting of Stockholders held on December 22, 1998.
The Purchase Agreement called for an initial purchase price of
$15,750,000 (assuming a minimum $4,500,000 of net working capital in the
Microbiology Business at closing), of which $15,150,000 was to be paid in cash
and $600,000 was to be deposited in an escrow account. The final purchase price
was to be reduced, dollar for dollar, to the extent the net working capital of
the Microbiology Business at closing is less than $4,500,000.
At closing, the net working capital of the Microbiology Business was
estimated to be at least $500,000 less than the $4,500,000 minimum assumed in
the Purchase Agreement. Recognizing that at least $500,000 of the initial
purchase price would be refunded to the Purchaser pursuant to the post-closing
adjustment procedures in the Purchase Agreement, the parties agreed to a
corresponding $500,000 reduction in the initial purchase price, the escrowed
funds and the minimum net working capital. Thus, the Company received
$15,150,000 in cash at closing and an additional $100,000 was deposited into an
escrow account. The escrowed funds will be disposed of upon the completion of an
independent audit of the closing net
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working capital and post-closing adjustment to the final purchase price as
required by the Purchase Agreement.
The Purchaser is a newly formed Delaware corporation created to acquire
and, after the closing, operate the Microbiology Business. The Purchaser's
stockholders are Key Equity Capital Corporation, certain of its affiliates and
certain members of the Purchaser's management, including Michael D. Burke. Mr.
Burke served as an executive officer of the Company from December 1995 through
December 1997 and is a stockholder of the Company.
A portion of the proceeds, totaling $9,415,000, was used to retire a
revolving line of credit, secured notes payable, unsecured notes payable,
accrued interest thereon, and expenses related to the transaction. The balance
of the proceeds, about $5,700,000, was retained for general corporate purposes,
including working capital.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) Pro Forma Financial Information.
AccuMed International, Inc. and Subsidiaries.
1. Pro Forma Condensed Consolidated Balance Sheet as of September
30, 1998.
2. Pro Forma Condensed Consolidated Statements of Operations for
the year December 31, 1997.
3. Pro Forma Condensed Consolidated Statements of Operations for
the nine months ended September 30, 1998.
4. Notes to Pro Forma Condensed Consolidated Financial Statements.
(c) Exhibits.
2.1 Asset Purchase Agreement dated November 20, 1998 between the
Company and AMI Acquisition Corp.
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ACCUMED INTERNATIONAL, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(1) (2)
UNAUDITED
-------------- Asset Sale Loan Payoff
ASSETS Sept. 30, 1998 Adjustments Adjustments Pro Forma
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CURRENT ASSETS
Cash and cash equivalents $ 114,339 $ 14,400,000 $ (8,504,986) $ 6,009,353
Accounts receivable, net 4,289,957 (4,061,445) 228,512
Prepaid expenses 319,768 (203,894) 115,874
Production inventory 5,194,688 (2,773,909) 2,420,779
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TOTAL CURRENT ASSETS 9,918,752 7,360,752 (8,504,986) 8,774,518
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FIXED ASSETS, NET 3,655,305 (1,979,821) 1,675,484
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Notes receivable 164,199 -- 164,199
Deferred financing costs 196,824 -- (196,824) --
Purchased technology 5,244,573 -- 5,244,573
Other assets 812,165 (32,709) 779,456
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$ 19,991,818 $ 5,348,222 $ (8,701,810) $ 16,638,230
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 2,519,842 $ (822,471) $ 1,697,371
Payroll and related accruals 120,000 -- 120,000
Accrued interest 94,865 -- (94,865) --
Other current liabilities 753,924 (519,711) 234,213
Notes payable 1,636,582 -- (1,636,582) --
Long term debt, current portion 802,900 -- (802,900) --
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TOTAL CURRENT LIABILITIES 5,928,113 (1,342,182) (2,534,347) 2,051,584
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Warranty reserves, non-current 430,626 (430,626) --
Long term debt 6,289,139 -- (5,738,639) 550,500
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6,719,765 (430,626) (5,738,639) 550,500
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STOCKHOLDERS' EQUITY
Preferred stock, series A convertible 4,329,466 4,329,466
Common stock, $0.01 par value 54,855 54,855
Additional paid-in capital 59,539,595 59,539,595
Other comprehensive income 14,783 14,783
Accumulated deficit (56,378,022) 7,121,030(4) (428,824) (49,685,816)
Treasury stock (216,737) (216,737)
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TOTAL STOCKHOLDERS' EQUITY 7,343,940 7,121,030 (428,824) 14,036,146
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$ 19,991,818 $ 5,348,222 $ (8,701,810) $ 16,638,230
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See accompanying notes to pro forma condensed
consolidated financial statements.
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ACCUMED INTERNATIONAL, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 1997
Unaudited Adjustments Pro Forma
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SALES $ 19,109,661 $ 18,108,885 (3) $ 1,000,776
COST OF SALES (11,850,692) (10,293,517)(3) (1,557,175)
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Gross profit (loss) 7,258,969 7,815,368 (556,399)
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OPERATING EXPENSES:
General and administrative 7,891,320 1,692,655 (3) 6,198,665
Research and development 5,315,411 1,632,008 (3) 3,683,403
Asset impairment 3,582,068 - (3) 3,582,068
Sales and marketing 4,289,447 2,861,712 (3) 1,427,735
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TOTAL OPERATING EXPENSES 21,078,246 6,186,375 14,891,871
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OPERATING INCOME (LOSS) (13,819,277) 1,628,993 (15,448,270)
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OTHER INCOME (EXPENSE):
Interest expense (3,584,160) (2,570,557)(3) (1,013,603)
Other income (expense) 484,861 (26,284)(3) 511,145
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TOTAL OTHER INCOME (EXPENSE) (3,099,299) (2,596,841) (502,458)
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LOSS BEFORE INCOME TAXES (16,918,576) (967,848) (15,950,728)
INCOME TAX EXPENSE -- -- --
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NET LOSS FROM CONTINUING OPERATIONS $(16,918,576) $ (967,848) $(15,950,728)
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BASIC NET LOSS PER SHARE
FROM CONTINUING OPERATIONS $ (4.60) $ (4.34)
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WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 3,675,488 3,675,488
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See accompanying notes to pro forma condensed
consolidated financial statements.
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ACCUMED INTERNATIONAL, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Nine Months Ended September 30, 1998
Unaudited Adjustments Pro Forma
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SALES $ 15,451,174 $ 15,379,864 (3) $ 71,310
COST OF SALES (8,825,530) (8,353,362)(3) (472,168)
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Gross profit (loss) 6,625,644 7,026,502 (400,858)
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OPERATING EXPENSES:
General and administrative 4,928,149 914,213 (3) 4,013,936
Research and development 2,621,889 567,490 (3) 2,054,399
Sales and marketing 2,560,261 1,474,299 (3) 1,085,962
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TOTAL OPERATING EXPENSES 10,110,299 2,956,002 7,154,297
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OPERATING INCOME (LOSS) (3,484,655) 4,070,500 (7,555,155)
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OTHER INCOME (EXPENSE):
Interest expense (1,267,913) (886,322)(3) (381,591)
Other income (expense) 796,515 13,189 (3) 783,326
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TOTAL OTHER INCOME (EXPENSE) (471,398) (873,133) 401,735
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LOSS BEFORE INCOME TAXES (3,956,053) 3,197,367 (7,153,420)
INCOME TAX EXPENSE -- -- --
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NET LOSS FROM CONTINUING OPERATIONS $ (3,956,053) $ 3,197,367 $ (7,153,420)
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BASIC NET LOSS PER SHARE
FROM CONTINUING OPERATIONS $ (0.80) $ (1.44)
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WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 4,950,396 4,950,396
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See accompanying notes to pro forma condensed
consolidated financial statements.
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ACCUMED INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - DESCRIPTION OF DIVESTITURE
On January 29, 1999, AccuMed International, Inc. (the "Company") sold
all of the net assets related to its Microbiology Business, pursuant to an Asset
Purchase Agreement dated November 20, 1998 (the "Agreement") between the Company
and the Purchaser.
The accompanying condensed consolidated financial statements illustrate
the effect of the divestiture ("Pro Forma") on the Company's financial position
and results of operations. The condensed consolidated balance sheet as of
September 30, 1998 is based on the historical balance sheet of the Company on
that date and assumes the divestiture took place on that date. The condensed
consolidated statements of operations for the year ended December 31, 1997 and
nine months ended September 30, 1998 are based on the historical statements of
operations of the Company as of those dates and assumes the divestiture took
place on the first day of operations in the period.
The pro forma condensed consolidated financial statements may not be
indicative of the actual results of the divestiture. In particular, the pro
forma condensed consolidated financial statements are based on management's
current estimate of the final purchase price, the actual amount of which may
differ based on a final audit (pursuant to the Agreement) reporting the value of
the assets purchased and liabilities assumed by the Purchaser.
The accompanying condensed consolidated pro forma 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) Sale of Net Assets of the Microbiology Business.
To reflect the receipt of the $15,150,000 in cash from the sale of the
Microbiology Business, less $750,000 of expenses related to the sale paid at the
closing. The final sales price may be adjusted per terms of the Agreement
depending on the value of net working capital transferred as determined by an
independent audit. The additional adjustments to accounts receivable, prepaid
expenses, production inventory, property and equipment, current liabilities and
warranty reserves in the Pro Forma Condensed Consolidated Balance Sheet as of
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September 30, 1998 are based on the Microbiology Business book values of those
items as of that date assumed by the Purchaser.
(2) Debt retirement
A portion of the funds received from the sale of the Microbiology
Business were used to retire debt secured by the assets sold, the related
unsecured debt issued to acquire certain of such assets and the related accrued
interest thereon. The unamortized deferred financing costs and debt discount
associated with the retired debt is also written off. The adjustments to
deferred financing costs, accrued interest and debt in the Pro Forma Condensed
Consolidated Balance Sheet as of September 30, 1998 are based on the book values
of those items as of that date.
(3) Eliminate Microbiology Business revenues and expenses
All recorded revenues and expenses of the Microbiology Business are
eliminated to reflect the sale of the Microbiology Business as of the first day
of the reported period. Interest expense associated with the debt of the
Microbiology Business is also eliminated.
(4) Record gain on Microbiology Business disposal
The estimated gain on the disposal of the Microbiology Business is
reported as a discontinued operation. The gain is based on the estimated sales
price and the net book value of the assets to be sold to and liabilities assumed
by the Purchaser as of the date of the balance sheet presented.
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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 thereunto duly authorized.
ACCUMED INTERNATIONAL, INC.
Dated: February 12, 1999 By: /s/ GARY A. NEWBERRY
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Gary A. Newberry
Chief Financial Officer
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EXHIBIT INDEX
No. Exhibit
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2.1 Asset Purchase Agreement dated November 20, 1998 between the
Company and AMI Acquisition Corp.
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