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) December 24, 1998
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TECHNICLONE CORPORATION
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(Exact name of registrant a specified in its Charter)
Delaware 0-17085 95-3698422
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
14282 Franklin Avenue, Tustin, California 92780-7017
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (714) 508-6000
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Not Applicable
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(Former name or former address, if changed since last report)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On December 24, 1998, Techniclone Corporation, a Delaware corporation
(the "Company"), completed the sale/leaseback of its two corporate facilities
totaling 47,500 square feet with TNCA, LLC, an unrelated Delaware limited
liability company, for an aggregate sale price of $6,100,000. Consideration
received by the Company includes a cash payment of $4,175,000 and receipt of a
Note totaling $1,925,000 issued by TCNA Holding, LLC, a Delaware limited
liability company and parent of TNCA, LLC. The Note Receivable bears 7%
interest, is payable monthly based on a 20-year amortization, and is due upon
the earlier to occur of: the sale of the property or the end of the initial
lease term (12 years). The consideration received by the Company for the
sale/leaseback of the facilities was determined pursuant to arm's-length
negotiation between the Company and the buyer/landlord, taking into account the
value of similar facilities in the same geographic region, comparable
transactions, and the market for such facilities generally.
The leaseback is a Triple Net Lease, wherein the lessee (the Company)
is responsible for all expenses incurred in the maintenance of the building
including property taxes and insurance. The Company negotiated a twelve-year
lease with two five-year extension options. The initial base rent is $56,250 per
month, with 3.35% rent increases at two year intervals. Concurrently, the
Company borrowed $200,000 from TNCA Holdings, LLC pursuant to a 7% note payable
over a three year period. The net cash received by the Company, reduced by the
amounts required to satisfy existing mortgages (totaling $1,942,000), expenses
of the sale, lease deposits, prorated rent and the increase of the $200,000
borrowing, amounted to $1,921,000.
The Company's continued existence is dependent on obtaining funding for
operations from all possible sources. As such, the Company entered into this
sale/leaseback transaction in order to obtain the net cash proceeds mentioned
above. Under the terms of the sale/leaseback, the Company recovered its original
building purchase price and substantially all of its investment in facility
improvements. The remaining unrecovered investment resulted in a non-cash charge
of approximately $730,000 based on the excess of the net book value of the
sale/leaseback assets sold over the net consideration received after commissions
and other transaction costs which totaled approximately $256,000. The Company's
new management has revised its manufacturing strategy from one of investing in
facilities and equipment to produce potential future products in-house to having
this production performed by outside contract manufacturers. As a result of this
decision, the Company recorded a non-cash charge of approximately $440,000
related to the write-off of manufacturing facility design costs capitalized in
the prior fiscal year which will not be utilized. The total of these non-cash
charges recorded in December 1998 was approximately $1,170,000.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired. Not applicable.
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(b) Pro Forma Financial Information. Not applicable.
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(c) Exhibits.
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99.1 Text of Press Release dated December 28, 1998.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly cause this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: January 6, 1998 TECHNICLONE CORPORATION
By: /S/ STEVEN C. BURKE
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Steven C. Burke, Chief Financial Officer
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