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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
Date of Report (Date of earliest event reported) January 3, 2000
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ZILA, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-17521 86-0619668
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
5227 North 7th Street Phoenix, Arizona 85014
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (602) 266-6700
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On December 20, 1999, Zila, Inc. (the "Company"), through its wholly owned
subsidiary, Integrated Dental Technologies, Inc. ("IDT"), completed the sale of
substantially all of IDT's assets and liabilities related to its PracticeWorks
division located in Gold River, California to InfoCure, Corporation
("InfoCure"), of Atlanta, Georgia for approximately $4.7 million. InfoCure is a
national provider of healthcare practice management software products and
services to targeted healthcare practice specialties and is listed on the NASDAQ
under the symbol INCX.
Under the terms of the agreement, the purchase price will be subject to
adjustment based on the net worth of the PracticeWorks division as of November
30, 1999, which will be determined over the next 60 days. In addition, ten
percent (10%) of the sales price will be held in escrow for one year in order to
secure the representations, warranties, and covenants made by the Company to
InfoCure. It is currently estimated that the adjusted sales price will be
approximately $4.6 million.
As previously disclosed in Form 10K/A for the fiscal year ended July 31, 1999,
on October 28, 1999, the Company's wholly owned subsidiary, Cygnus Imaging
("Cygnus"), completed the sale of substantially all of its assets and certain of
its liabilities to Procare Laboratories, Inc. ("Procare"), of Scottsdale,
Arizona for approximately $4.0 million. Procare is controlled by the former
owner and President of Cygnus, Egidio Cianciosi. The purchase price was paid
through the issuance to the Company of a note collateralized by the assets of
Procare. The note was paid in full on November 10, 1999. The sale resulted in a
$139,000 gain which was recognized in the Company's financial statements for the
period ended October 31, 1999.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Assets Sold
None
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(b) Pro Forma Financial Information
The following unaudited pro forma condensed statement of operations
data for the year ended July 31, 1999 and the three months ended
October 31, 1999, present historical statements of operations data for
the Company, Cygnus and IDT as if the Cygnus and IDT transactions had
occurred as of August 1, 1998. The following unaudited pro forma
condensed balance sheet at October 31, 1999 presents historical
information as if the IDT transaction had occurred on October 31, 1999.
The pro forma data are not necessarily indicative of the financial
position or results of operations which would actually have been
reported had the transactions been consummated at the date mentioned
above or which may be reported in the future.
The pro forma data should be read in conjunction with the notes to
unaudited pro forma condensed financial information and the historical
financial statements and notes thereto of Zila, Inc.
Unaudited Pro Forma Condensed Statement of Operations
Year ended July 31, 1999
(in thousands except per share data)
Historical
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Zila Pro forma
Consolidated Cygnus IDT Adjustments Pro Forma
------------ ------ --- ----------- ---------
(a) (a) (b)
--- --- ---
Net revenues $71,295 $1,781 $4,516 $64,998
Cost of products sold 34,335 1,759 280 32,296
Selling, general & administrative expenses 31,853 3,243 3,159 25,451
Research & development expenses 3,989 - 476 3,513
Depreciation & amortization 3,582 423 103 3,056
(Loss) income from operations (2,464) (3,644) 498 682
Net (loss) income (1,967) (3,662) 509 1,186
Net (loss) income (basic) $(0.05) $0.03
Basic shares outstanding 38,013 38,013
Net (loss) income (diluted) $(0.05) $0.03
Diluted shares outstanding 38,013 40,394
a. Represents Cygnus and IDT balances for the year ended July 31, 1999.
These amounts are removed to reflect the sale of assets and the
corresponding revenue and expenses thereby reducing the consolidated
balances for pro forma purposes.
b. The Company believes that no pro forma adjustments are required on the
sales.
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Unaudited Pro Forma Condensed Statement of Operations
Three months ended October 31, 1999
(in thousands except per share data)
Historical
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Zila Pro forma
Consolidated Cygnus IDT Adjustments Pro Forma
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(a) (a) (b)
--- --- ---
Net revenues $19,172 $193 $1,118 $17,861
Cost of products sold 9,477 110 52 9,315
Selling, general & administrative expenses 8,744 491 873 7,380
Research & development expenses 730 155 120 455
Depreciation & amortization 917 110 26 781
(Loss) income from operations (696) (673) 47 (70)
Net (loss) income (51) (673) 48 (139) 435
Net (loss) income (basic) $(0.00) $0.01
Basic shares outstanding 40,868 40,868
Net (loss) income (diluted) $(0.00) $0.01
Diluted shares outstanding 40,868 43,638
a. Represents Cygnus and IDT balances for the three months ended October
31, 1999. These amounts are removed to reflect the sale of assets and
the corresponding revenue and expenses thereby reducing the
consolidated balances for pro forma purposes.
b. The Company believes that no pro forma adjustments are required on the
sales other than the elimination of the gain on the sale of Cygnus
assets recorded in the consolidated statement of operations.
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Unaudited Pro Forma Condensed Balance Sheet as of October 31, 1999
(in thousands)
Historical
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Zila Pro Forma
Consolidated IDT (a) Adjustments (b) Pro Forma
------------ ------- --------------- ---------
Cash $3,495 $518 $4,230 $7,207
Cash held in escrow 470 470
Trade receivables-net 9,493 167 9,326
Note receivable 4,000 4,000
Inventories - net 10,438 30 10,408
Prepaid expenses and other current assets 1,315 147 1,168
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Total current assets 31,805 862 4,700 35,643
Property & equipment - net 5,597 230 5,367
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Total assets $76,517 $1,092 $4,700 $80,125
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Accounts payable $3,581 $136 $3,445
Accrued expenses 3,259 307 $405 3,357
Deferred revenue 1,098 1,056 42
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Total current liabilities 8,492 1,499 405 7,398
Long-term debt 9,554 - 9,554
Redeemable preferred stock 6,843 - 6,843
Stockholders equity 51,628 (407) 4,295 56,330
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Total liabilities & stockholders equity $76,517 $1,092 $4,700 $80,125
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a. Represents IDT balances as of October 31, 1999. These amounts are
removed to reflect the sale of assets and assumption of liabilities
thereby reducing the consolidated balances for pro forma purposes. No
adjustments for the Cygnus transaction are required as the transaction
was completed prior to October 31, 1999.
b. Reflects the proceeds received and accrued expenses related to the IDT
sale.
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(c) Exhibits
Exhibit No. Description
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28 Asset Purchase Agreement Dated as of
November 30, 1999 by and among Zila, Inc.,
Integrated Dental Technologies, Inc.,
InfoCure Systems, Inc. and InfoCure
Corporation.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized, this 3rd day of January, 2000.
ZILA, INC., a Delaware corporation
By /s/ BRADLEY C. ANDERSON
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Bradley C. Anderson
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
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Exhibit Index
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Exhibit No. Description
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28 Asset Purchase Agreement Dated as of
November 30, 1999 by and among Zila, Inc.,
Integrated Dental Technologies, Inc.,
InfoCure Systems, Inc. and InfoCure
Corporation.