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) July 21, 2000
DIALYSIS CORPORATION OF AMERICA
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(Exact name of registrant as specified in its charter)
Florida 0-8527 59-1757642
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
27 Miller Avenue, Lemoyne, Pennsylvania 17043
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (717) 730-6164
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Item 5. Other Events
On July 21, 2000, the Company entered into a Loan and Security Agreement
with South Georgia Nephrology, P.C. ("SGN"), wholly owned by Dr. Andrew
Queler, the medical director of our planned new dialysis facility in Georgia,
to loan SGN up to $300,000 in periodic advances over an 18-month period to
January 20, 2002, at an annual interest rate of 1% over prime. The loan is
to provide SGN with working capital to establish and operate a medical
practice and to purchase or lease real property and equipment necessary to
operate a medical practice. The loan is evidenced by a promissory note
requiring payments from the practice proceeds of SGN, defined as all the
proceeds of the practice less base salaries and overhead. SGN many not re-
borrow any amounts paid under the promissory note. The loan is secured by
SGN's accounts receivable, fixtures, intangibles, furniture and equipment, as
well as all of Dr. Queler's equity ownership of SGN. The parties simultane-
ously entered into a Stock Transfer Restriction Agreement, restricting Dr.
Queler from all transfer of his equity ownership of SGN, and automatically
upon any transfer event, which term includes but is not limited to Dr.
Queler becoming incompetent or permanently disabled to be unable to provide
medical services to SGN, is disqualified from practicing medicine, or other-
wise terminates his relationship with SGN, his SGN ownership is transferred
to the next designated medical director for the Company's Georgia dialysis
facility. The Company is holding Dr. Queler's equity interest in escrow
under the Loan and Stock Transfer Restriction Agreements. No advance has
been made under the Loan Agreement to date. The Company's Georgia facility
is in its initial stages of construction.
On August 9, 2000, the Company loaned to its parent, Medicore, Inc.,
$200,000 for 30 days at an annual interest rate of 10%. The parent had
previously borrowed $2,000,000 at the same interest rate, which is due
January 26, 2001. These funds were loaned by the parent to Linux Global
Partners, Inc., a private holding company investing in Linux software
companies, under the same terms as its borrowings from the Company. The
parent has a pro rata security interest in the Linux software companies in
which Linux is investing, and also holds an 8% equity interest in Linux
Global Partners. Thomas K. Langbein, Chairman of the Board and CEO of the
Company and Medicore, of which parent he is also the President, is one of
the directors of Linux Global Partners.
The proposed merger with MainStreet IPO.com Inc. ("MainStreet") has
been terminated and will not proceed. In October, 1999, the Company
entered into an Agreement and Plan of Merger ("Merger Agreement") with
MainStreet, pursuant to which it was proposed to effect a merger, among
other proposed transactions, resulting in the Company's operations being
owned 100% by its parent, Medicore, Inc. (presently, Medicore owns 59% of
the equity of the Company), the Company becoming a wholly-owned subsidiary
of MainStreet, and the Company's shareholders receiving MainStreet common
stock. These proposed transactions were subject to the approval of the
Company's public minority shareholders. That approval could only be
obtained through a proxy solicitation for a special meeting of shareholders.
MainStreet filed a registration statement with the Securities and Exchange
Commission ("SEC") on February 9, 2000, which included the Company's proxy
statement. No solicitation could be effected until such time that Main-
Street's registration statement would be declared effective by the SEC.
The staff of the SEC provided extensive comments to MainStreet's registra-
tion statement, including concerns as to regulatory issues relating to
MainStreet's proposed operations. The Merger Agreement provided, among
other factors, that the closing, which anticipated an effective registration
and subsequent Company shareholder approval and satisfaction of all
conditions of the Merger Agreement, would occur no later than May 31, 2000.
Although the Company has been patient, too much time has elapsed without
MainStreet's resolving its issues with the SEC, and without pursuing the
initial amendment to its registration statement relating to the comments of
the staff of the SEC, as well as the failure of certain of the conditions of
the Merger Agreement, including, but not limited to, no material change in
MainStreet's business, receipt of all consents and approvals of governmental
authorities, and MainStreet's satisfying
Nasdaq listing requirements. Accordingly, under the terms and conditions of
the Merger Agreement, that Agreement and the proposed merger between the
Company and MainStreet, and the ancillary proposed sale of the Company's
assets to its parent, are terminated. It is anticipated that MainStreet
will be filing a withdrawal of its registration statement relating to these
now-terminated proposed transactions.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Businesses Acquired
Not Applicable
(b) Pro Forma Financial Information
Not Applicable
(c) Exhibits
(10) Material Contracts
10.1 Loan and Security Agreement between South Georgia
Nephrology, P.C. and the Company dated July 21, 2000.
10.2 Stock Transfer Restriction Agreement by and among South
Georgia Nephrology, P.C., Dr. Andrew Queler, and the
Company dated July 21, 2000.
(99) Additional Exhibits
(i) Promissory Note from Medicore, Inc. to the Company dated
August 9, 2000.
(ii) Press Release re: termination of the proposed merger
between the Company and MainStreet IPO.com Inc. dated
August 21, 2000.
SIGNATURES
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.
DIALYSIS CORPORATION OF AMERICA
/s/ Stephen W. Everett
By--------------------------------
STEPHEN W. EVERETT, President
Dated: August 21, 2000
EXHIBIT INDEX
(10) Material Contracts
10.1 Loan and Security Agreement between South Georgia Nephrology, P.C.
and the company dated July 21, 2000.
10.2 Stock Transfer Restriction Agreement by and among South Georgia
Nephrology, P.C., Dr. Andrew Queler, and the Company dated July
21, 2000.
(99) Additional Exhibits
(i) Promissory Note from Medicore, Inc. to the Company dated August 9,
2000.
(ii) Press Release re: termination of proposed merger between the
Company and MainStreet IPO.com Inc. dated August 21, 2000.