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
January 6, 2004
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(Date of Report)
Equidyne Corporation
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(Exact name of registrant as specified in its charter)
Delaware 0-9922 04-2608713
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1620 - 400 Burrard Street, Vancouver, B.C., Canada, V6C 3A6
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(Address of office)
(604) 408-8538
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(Registrant's telephone number, including area code)
N/A
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(Former name or former address, if changed since last report.)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On January 6, 2004, Equidyne Systems, Inc. ("ESI"), a wholly owned
subsidiary of Equidyne Corporation (the "Company"), sold all of its right, title
and interest in and to (i) its needle-free injection device, known as "INJEX",
and (ii) its patent protection related to INJEX to HNS International Inc.
("HNS"), as described in ESI's Report on Form 8-K filed with the Securities and
Exchange Commission on December 19, 2003. The assets purchased by HNS in the
sale include, without limitation:
- all INJEX inventory;
- all tools, molds and equipment for the production of INJEX;
- all manuals, packaging, artwork, warranty cards and computer
equipment pertaining to INJEX;
- all technology, designs, plans and drawings pertaining to
INJEX;
- the INJEX customer list;
- the internet domain name and related web pages at
www.injex.com;
- all United States trademarks relating to INJEX; and
- with certain exceptions, all issued and pending patent
applications covering INJEX.
The purchase price for the assets purchased was $750,000.
HNS is owned and controlled by Jim Fukushima, who owns a significant
amount of the Company's outstanding common stock. Mr. Fukushima was previously a
member of the Company's board of directors.
In connection with the sale, ESI agreed not to develop, manufacture,
promote, market, sell or otherwise exploit, directly or indirectly, any device
similar or competitive with INJEX for a period of ten years following the
execution of the asset purchase agreement.
A copy of the asset purchase agreement and the amendment agreement
between ESI and HNS is attached to this Current Report on Form 8-K as Exhibit
2.1 and Exhibit 2.2, respectively, and incorporated by reference herein. A copy
of the patent purchase agreement between ESI and HNS is attached to this Current
Report on Form 8-K as Exhibit 2.3 and incorporated by reference herein. A copy
of the press release issued by the Company on December 9, 2003 concerning the
foregoing transaction is attached to this Current Report on Form 8-K as Exhibit
99.1 and incorporated by reference herein.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(b) Pro Forma Financial Information
The pro forma financial information required to be filed
pursuant to Item 7(b) of Form 8-K and prepared in accordance with Article 11 of
Regulation S-X is filed herewith and incorporated herein by reference.
EQUIDYNE CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
OCTOBER 31, 2003
(IN THOUSANDS)
PRO FORMA
AS REPORTED ADJUSTMENTS PRO FORMA
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ASSETS
Current Assets:
Cash and cash equivalents $ 7,783 $ 750 Note 2 $ 8,533
Accounts receivable, net 3 -- 3
Inventories, net 50 (50) Note 2 --
Refundable income taxes 6,441 -- 6,441
Prepaid and other current assets 292 -- 292
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Total current assets 14,575 700 15,275
Property and equipment, net 11 (11) Note 2 --
Deposits 5 -- 5
Patents, net 477 (477) Note 2 --
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Total assets $ 15,068 $ 212 $ 15,280
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LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $ 3,618 $ -- $ 3,618
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Total current liabilities 3,618 -- 3,618
Stockholders' Equity:
Common stock 1,699 -- 1,699
Additional paid-in capital 26,713 -- 26,713
Accumulated deficit (11,649) 212 Note 2 (11,437)
Treasury stock, at cost (5,313) -- (5,313)
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Total stockholders' equity 11,450 212 11,662
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Total liabilities and stockholders' equity $ 15,068 $ 212 $ 15,280
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See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
EQUIDYNE CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED OCTOBER 31, 2003
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
PRO FORMA
AS REPORTED ADJUSTMENTS PRO FORMA
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(Note 3)
Net sales $ 2 $ (2) $ --
Cost of goods sold
19 (19) --
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Gross loss (17) 17 --
Selling, general and administrative expenses 1,632 (115) 1,517
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Total operating expenses 1,632 (115) 1,517
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Operating loss (1,649) 132 (1,517)
Other income (expense):
Interest and other 9 -- 9
Loss on sale of property and equipment (20) -- (20)
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(11) -- (11)
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Loss before income tax benefit (1,660) 132 (1,528)
Income tax benefit -- -- --
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Net loss $ (1,660) $ 132 $ (1,528)
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Net loss per share - basic and diluted $ (0.11) $ 0.01 $ (0.10)
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See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
EQUIDYNE CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 2003
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
PRO FORMA
AS REPORTED ADJUSTMENTS PRO FORMA
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(Note 3)
Net sales $ 82 $ (82) $ --
Cost of goods sold
155 (155) --
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Gross loss (73) 73 --
Selling, general and administrative expenses 3,226 (768) 2,458
Research and development 273 (273) --
Asset impairment 966 (966) --
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Total operating expenses 4,465 (2,007) 2,458
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Operating loss (4,538) 2,080 (2,458)
Other income (expense):
Interest and other 140 -- 140
Loss on sale of property and equipment 8 -- 8
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148 -- 148
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Loss before income tax benefit (4,390) 2,080 2,310
Income tax benefit
(1,063) 335 (728)
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Net loss $ (3,327) $ 1,745 $ (1,582)
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Net loss per share - basic and diluted $ (0.22) $ 0.12 $ (0.10)
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See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
EQUIDYNE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
1. OVERVIEW
The unaudited pro forma condensed consolidated financial statements
reflect the sale by Equidyne Corporation's ("the Company") wholly-owned
subsidiary, Equidyne Systems, Inc. ("ESI") of certain assets related to ESI's
needle-free business to HNS International, Inc. ("HNS"). The assets being sold
include all of the intellectual property related to the needle-free business and
various equipment and inventory. The aggregate purchase price was $750,000,
including a $100,000 deposit which is non-refundable should HNS choose not to
complete the transaction. The sale closed on January 6, 2004. The proceeds of
the sale will be used to finance the Company's ongoing liquidity requirements.
The unaudited pro forma condensed consolidated balance sheet includes
the adjustments necessary to reflect the sale transaction as if it had occurred
on October 31, 2003. Such adjustments include the receipt of the consideration,
subtraction of the assets sold from the Company's balance sheet.
The unaudited pro forma condensed consolidated statements of operations
for the three months ended October 31, 2003 and the year ended July 31, 2003
reflect the Company's results of continuing operations as if ESI had completed
the sale transaction as of August 1, 2003 or 2002, respectively. The unaudited
pro forma condensed consolidated statements of operations for the three months
ended March 31, 2003 and the year ended July 31, 2003 do not include the net
gain of approximately $212,000 to be recorded by the Company in conjunction with
the sale of the needle-free assets.
Higher cash balances resulting from the sale transaction would have
increased interest income for the periods presented in the unaudited pro forma
condensed consolidated statements of operations, net of applicable income taxes.
Such adjustments to interest income, and the related adjustments to the income
tax benefit, have not been reflected in the accompanying unaudited pro forma
condensed consolidated statements of operations.
The unaudited pro forma financial statements have been prepared on the
basis of preliminary estimates, which are subject to adjustment. The unaudited
pro forma financial statements may not be indicative of the results that
actually would have been achieved if the sale transaction had been effected on
the dates indicated above, or the results that will be achieved in the future.
The pro forma financial statements should be read in conjunction with the
consolidated financial statements of Equidyne Corporation included in the
Company's annual report on Form 10-KSB for the year ended July 31, 2003.
Adjustments made to the individual line items in the accompanying
unaudited pro forma financial statements are described in the following notes.
2. DETAILS OF ASSETS SOLD (AS OF OCTOBER 31, 2003)
Cash received $750,000
Inventory sold (net of reserves) 50,000
Property and equipment sold (net of accumulated depreciation) 11,000
Patents sold (net of accumulated amortization) 477,000
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Total book value of assets sold 538,000
Estimated gain on sale of assets $212,000
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3. PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
The pro forma adjustments reflected in the accompanying unaudited pro
forma condensed consolidated statements of operations for the three months ended
October 31, 2003 and the year ended July 31, 2003 for the line items of sales,
cost of sales and operating expenses are all for the purpose of subtracting the
needle-free related activity of such items for the periods presented, as if the
sale transaction had been consummated as of the beginning of such period.
Pro forma adjustments have been made to the credit for income taxes in
each period, reflecting the impact on such credits for income taxes, at the
Company's adjusted effective tax rate, of the adjustments described in the
preceding paragraph.
(c) Exhibits
2.1 Asset Purchase Agreement dated December 8, 2003, between
Equidyne Systems, Inc. and HNS International Inc.(1)
2.2 Amendment Agreement dated December 12, 2003, between Equidyne
Systems, Inc. and HNS International Inc.(1)
2.3 Patent Purchase Agreement dated December 8, 2003, between
Equidyne Systems, Inc. and HNS International Inc.(1)
99.1 Press Release of Equidyne Corporation, dated December 9, 2003,
announcing the results of its first quarter for fiscal year
2004 and announcing its agreement to sell its needle-free
assets to HNS International Inc.(1)
(1) Incorporated by reference to the Report on Form 8-K filed with the
Securities and Exchange Commission on December 19, 2003.
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: January 20, 2004
Equidyne Corporation
By: /s/ John M. Musacchio
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Name: John M. Musacchio
Title: Corporate Secretary
EXHIBIT INDEX
Exhibit Number Description of Document
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2.1 Asset Purchase Agreement dated December 8, 2003, between Equidyne Systems, Inc. and HNS
International Inc.(1)
2.2 Amendment Agreement dated December 12, 2003, between Equidyne Systems, Inc. and HNS
International Inc.(1)
2.3 Patent Purchase Agreement dated December 8, 2003, between Equidyne Systems, Inc. and HNS
International Inc.(1)
99.1 Press Release of Equidyne Corporation, dated December 9, 2003, announcing the results of its
first quarter for fiscal year 2004 and announcing its agreement to sell its needle-free assets
to HNS International Inc.(1)
(1) Incorporated by reference to the Report on Form 8-K filed with the
Securities and Exchange Commission on December 19, 2003.