-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BJmRXUOMSCnRIjX7YsF3zYyPumtHNF+53WX74mKlsyOGfR/OLZdeN7LfjpGKG23R Qn94YnYdeYPe42IRbH9CVA== 0000350644-04-000006.txt : 20041022 0000350644-04-000006.hdr.sgml : 20041022 20041022151336 ACCESSION NUMBER: 0000350644-04-000006 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040901 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Completion of Acquisition or Disposition of Assets ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20041022 DATE AS OF CHANGE: 20041022 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SCIENCE DYNAMICS CORP CENTRAL INDEX KEY: 0000350644 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE & TELEGRAPH APPARATUS [3661] IRS NUMBER: 222011859 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-10690 FILM NUMBER: 041091740 BUSINESS ADDRESS: STREET 1: 1919 SPRINGDALE RD CITY: CHERRY HILL STATE: NJ ZIP: 08003 BUSINESS PHONE: 8564240068 MAIL ADDRESS: STREET 1: SCIENCE DYNAMICS CORP STREET 2: 1919 SPRINGDALE RD CITY: CHERRY HILL STATE: NJ ZIP: 08003 8-K 1 scidyn8k102204.txt 8K DATED SEPTEMBER 1, 2004 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 Date of Report (Date of earliest event reported): September 1, 2004 Science Dynamics Corporation ---------------------------- (Exact name of registrant as specified in its charter) Delaware 000-10690 22-2011859 - ---------------------------------------------------------------------------- (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification No.) 7150 N. Park Drive, Suite 500 Pennsauken, NJ 08109 (Address of principal executive offices and Zip Code) Registrant's telephone number, including area code: (856) 910-1166 Copies to: Gregory Sichenzia, Esq. Sichenzia Ross Friedman Ference LLP 1065 Avenue of the Americas New York, New York 10018 Phone: (212) 930-9700 Fax: (212) 930-9725 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 1.01 Entry into a Material Definitive Agreement. On September 1, 2004, M3 Acquisition Corp., a New Jersey corporation and a majority owned subsidiary of Science Dynamics Corporation (the "Company"), entered into an Asset Purchase Agreement (the "Agreement") with Modern Mass Media Group, Inc., a New Jersey corporation. Pursuant to the Agreement, M3 Acquisition Corp. sold substantially all of its tangible and intangible assets that were used in its audio and visual systems integration business, including: (a) all related intellectual property; (b) all fixed assets; (c) all customer lists; and (d) the goodwill associated therewith; all free and clear of any security interests, mortgages and other encumbrances. The assets sold under the Agreement were valued by the Company at $812,452, which includes $250,498 of goodwill. In consideration for the assets sold under the Agreement, Modern Mass Media Group, Inc. assumed liabilities of M3 Acquisition Corp. amounting to $1,116,749, although M3 Acquisition Corp. did not receive releases from its creditors. Paul Burgess, Chief Operating Officer of the Company, incorporated Modern Mass Media Group and is an executive officer of Modern Mass Media Group. Mr. Burgess has agreed to remain an officer of Modern Mass Media Group to facilitate the transition in ownership of the assets sold under the Agreement. Mr. Burgess also has the right to purchase shares of common stock of Modern Mass Media Group in an amount and at a price to be determined at such time that Mr. Burgess decides to purchase such shares. The Company's management believes that the terms of the Agreement are at least as favorable to the Company as could have been obtained from an unrelated third party. In connection with the asset sale, on October 21, 2004, Laurus Master Fund, Ltd. consented to the asset sale according to the terms of the Agreement. Laurus Master Fund, Ltd. also consented to the filing of a UCC-3 to release its security interest in the assets of M3 Acquisition Corp., where applicable, to effect the asset sale. Item 2.01 Completion of Acquisition or Disposition of Assets. See Item 1.01 above. Item 9.01 Financial Statements and Exhibits. (a) Financial statements of business acquired. Not applicable. (b) Pro forma financial information. Science Dynamics Corp. and Subsidiaries Unaudited combined Pro Forma Balance Sheet as of June 30, 2004, unaudited combined Pro Forma Statement of Operations for the Six months ended June 30, 2004; Unaudited combined Pro Forma statement of Operations for the year ended December 31, 2003. (c) Exhibits. Exhibit Number Description - ----------------------------------------------------------------------------- 2.1 Asset Purchase Agreement effective September 1, 2004 between Modern Mass Media Group, Inc. and M3 Acquisition Corp., a subsidiary of Science Dynamics Corporation. 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. Science Dynamics Corporation Date: October 22, 2004 /s/ Alan C. Bashforth --------------------- Alan Bashforth President and Chief Executive Officer UNAUDITED COMBINED PRO FORMA FINANCIAL STATEMENTS The following unaudited pro forma combined balance sheet of Science Dynamics Corp.as of June 30, 2004 gives effect to the Pro Forma events described below as if such events occurred at June 30, 2004. The unaudited pro forma consolidated statements of operations for the six months ended June 30, 2004 and the year ended December 31, 2003 give effect to the pro forma events as if such events occurred on January 1, 2003. The unaudited pro forma consolidated financial statements are based upon the historical financial statements of Science Dynamics Corp. and MMM for each period presented. In the opinion of Science Dynamics and Modern Mass Media management, all adjustments and/or disclosures necessary for a fair presentation of the pro forma data have been made in accordance with Article 11 of SEC Regulation S- X. The pro forma event is Science Dynamics sale of $812,452 in assets, which includes $250,498 of goodwill and the assumption of M3 liabilities amounting to $1,116,749 of its majority owned subsidiary M3 Acquisition Corp. SCIENCE DYNAMICS INDEX TO UNAUDITED FINANCIAL STATEMENTS Pages ----- Unaudited Pro Forma Combined Statement of Operations for the year ended December 31, 2003 1 Unaudited Pro Forma Combined Balance Sheet as of June 30, 2004 2 Unaudited Pro Forma Combined Statement of Operations for the period ended June 30,2004 3 Notes to Unaudited Pro Forma Combined Financial Statements 4 Science Dynamics Corporation & Subsidiaries Unaudited Pro Forma Consolidated Condensed Statement of Operations Year ended December 31, 2003
Science Modern Mass Science Dynamics Media Pro Forma Dynamics Historical Historical(1) Adjustments Pro Forma ---------- ---------- ----------- --------- Net Sales $ 4,108,510 $ 2,617,676 $ 1,490,834 ---------- ---------- ---------- ---------- Operating costs and expenses: Cost of sales 1,940,959 1,516,974 423,985 Research and development 382,764 - 382,764 Selling, general and administrative 2,952,218 1,521,396 1,430,822 ---------- ---------- ---------- ---------- 5,275,941 3,038,370 2,237,571 ---------- ---------- ---------- ---------- Operating income (loss) (1,167,431) (420,694) (746,737) Other income (expenses): NJ NOL 217,021 - 217,021 Sale of Intangible Asset 1,350,000 1,350,000 Write Down of Assets (105,603) (105,603) Other Income - - - Interest expense (199,713) (768) (198,945) Finance Expense (125,942) - (125,942) ---------- ---------- ---------- ---------- Net Loss before cumulative effect of accounting change (31,668) (421,462) 389,794 Cumulative effect of accounting Change (250,499) (2) 250,499 - ---------- ---------- ---------- ---------- Net Income (Loss) $ (282,167) $ (421,462) $ 250,499 $ 389,794 Net Income (Loss) per common share Basic (0.01) 0.01 Diluted (0.01) 0.01 Weighted average shares outstanding Basic 41,418,655 41,418,655 Diluted 41,418,655 69,495,535 The accompanying notes are integral part of this unaudited Pro Forma Statement of Operation
- -1- Science Dynamics Corporation & Subsidiaries Unaudited Pro Forma Consolidated Statement of Balance Sheet June 30, 2004
Science Modern Mass Science Dynamics Media Pro Forma Dynamics Historical Historical(1) Adjustments Pro Forma ---------- ---------- ----------- --------- Current assets: Cash and cash equivalents $ 78,483 $ (8,838) $ 69,645 Accounts receivable - trade 531,553 (262,237) 269,316 Inventories 133,345 (72,047) 61,298 Other current assets 2,842 (30) 2,812 ---------- ---------- ---------- --------- Total current assets 746,223 (343,152) 403,071 ---------- ---------- ---------- --------- Property and equipment, net 140,063 (47,193) 92,870 Deferred Asset 21,955 - 21,955 Other assets 2,812 2,812 Goodwill - - ---------- ---------- ---------- ---------- Total assets $ 911,053 (390,345) $ 520,708 ========== ========== ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short term payable $ 261,860 $ (80,000) $ 181,860 Current portion of convertible note - - - Customer deposits 191,290 (61,290) 130,000 Deferred Income 44,377 (44,377) - Revolving Credit Line 227,998 227,998 SBA Loan 50,000 50,000 Loan payable stockholders 163,192 - 163,192 Accounts payable 1,328,520 (472,646) 855,874 Accrued expenses 550,908 (63,660) 487,248 Convertible Debenture 1,198,360 - 1,198,360 ---------- ---------- ---------- --------- Total current liabilities 4,016,505 (721,973) 3,294,532 ---------- ---------- ---------- --------- Long term liabilities: Long term Debt 332,963 (240,000) 92,963 Non current portion of bank note - - - ---------- ---------- ---------- --------- Total liabilities $ 4,349,468 $ (961,973) $3,387,495 Shareholders' equity - Common stock - .01 par value, 200,000,000 shares authorized, 43,844,455 issued 43,718,655 outstanding in 2004 . 458,505 458,505 Preferred stock, .01 par value, no shares issued and outstanding - - - Additional paid-in capital 15,944,517 - 15,944,517 (Deficit) (19,443,604) 571,627 (18,871,976) ---------- ---------- ---------- --------- (3,040,582) 571,627 (2,468,955) Common stock held in treasury, at cost (397,833) - (397,833) ---------- ---------- ---------- --------- Total shareholders' equity (3,438,415) 571,627 (2,866,788) ---------- ---------- ---------- --------- Total liabilities and shareholders' equity $ 911,053 $ (390,345) $ 520,708 ========== ========== ========== ========= The accompanying notes are integral part of this unaudited Pro Forma Balance Sheet
- -2- Science Dynamics Corporation & Subsidiaries Unadudited Pro Forma Combined Statement of Operations June 30, 2004
Science Modern Mass Science Dynamics Media Pro Forma Dynamics Historical Historical(1) Adjustments Pro Forma ---------- ---------- ----------- --------- Net Sales $ 2,581,451 $(1,442,245) $1,139,206 Total Cost of Sales 984,697 (795,177) 189,520 ---------- ---------- ---------- --------- Gross Profit 1,596,754 (647,068) 949,686 ---------- ---------- ---------- --------- Operating costs and expenses: Research and development 153,423 - 153,423 Selling, general and Administrative 1,450,687 (823,279) 627,408 ---------- ---------- ---------- --------- Total Operation Expenses 1,604,110 (823,279) 780,831 Write-off of Goodwill 250,498 (2) (250,498) - ---------- ---------- ---------- --------- Total Operating income (loss) (257,854) 176,212 250,498 168,855 Other income (expenses): Sale of Intangable Asset 60,000 60,000 Write Down of Assets - Other Income (4,809) (4,809) - Interest expense (75,407) - (75,407) Finance Expense (44,891) - (44,891) ---------- ---------- ---------- --------- (55,489) 4,809 (60,298) Net Income (Loss) $ (313,343) $ 181,021 $ 250,498 $ 118,176 ========== ========== ========== ========= Net (Loss) per common share Basic (0.01) 0.00 Net (Loss) per common share Diluted (0.00) 0.00 Weighted average shares outstanding Basic 45,612,134 45,612,134 Weighted average shares outstanding Diluted 45,612,134 66,679,089 The accompanying notes are integral part of this unaudited Pro Forma Balance Sheet
- -3- Notes to Science Dynamics Unaudited Pro Forma Consolidated Financial Information 1. Elimination of the historical information from Modern Mass Media 2. In accordance with SFAS 142, Goodwill and Other Intangible Assets, Science Dynamics tests goodwill and other intangible assets for impairment during the fourth quarter of each year and on an interim date should factors or indicators become apparent that would require an interim test. For pro forma purposes no impairment adjustments would be necessary. - -4- EX-99 2 assetpuragree.txt ASSET PURCHASE AGREEMENT EXHIBIT 2.1 ASSET PURCHASE AGREEMENT between Modern Mass Media Group, Inc. ("Buyer") And M3 Acquisition Corp. ("M3" or "Seller") A subsidiary of Science Dynamics Corporation ("SDC") 1. Prices and Terms. The principal terms of the agreement are as follows: (a) Business to be Acquired: Liabilities to be Assumed. The Buyer will acquire substantially all of the assets, tangible and intangible, owned by Seller that are used in, or necessary for the conduct of, audio and visual systems integration business, including, without limitation: (i) all related intellectual property; (ii) the fixed assets of Seller, (iii) any and all customer lists; and (iv) the goodwill associated therewith, all free and clear of any security interests, mortgages or other encumbrances. (b) Consideration. The aggregate consideration for the assets and business to be purchased would be the assumption of M3 's liabilities as outlined in Exhibit A and as shown on the balance sheet dated June 30, 2004 prepared in accordance with generally accepted accounting principles. (c) Transition Period. Promptly following the execution of this agreement, the Seller will assist the Buyer in transitioning the operations from the current corporate structure to the Seller's corporate structure. This includes but is not limited to the transfer of assets and dissolving all inter company transactions and agreements. (d) Employment Agreement. Simultaneously with the execution of this Agreement, the Buyer will assume all responsibility of Chip Del Coro's employment agreement and the employment agreements of other key personnel. The Buyer will also be offering employment to a majority of Seller's employees and would expect the management team to use its reasonable best efforts to assist in employing these individuals. (e) Timing. This agreement is effective as of September 1, 2004. 2. Expenses. Each party will pay their respective expenses incident to this agreement and the transactions contemplated hereby and thereby. 3. Public Announcements. Neither party will make any announcement of this Agreement without the prior written approval of the other, which approval will not be unreasonably withheld or delayed. The foregoing shall not restrict in any respect the ability of either party to communicate information concerning this Agreement and the transactions contemplated hereby to respective affiliates', officers, directors, employees and professional advisers, and, to the extent relevant, to third parties whose consent is required in connection with this transaction. 4. Broker's Fees. The Buyer and Seller have represented to each other that no brokers or finders have been employed who would be entitled to a fee by reason of the transaction contemplated by this letter of intent. 6. Miscellaneous. This letter shall be governed by the substantive laws of the State of New Jersey without regard to conflict of law principles. This letter constitutes the entire understanding and agreement between the parties hereto and their affiliates with respect to its subject matter and supersedes all prior or contemporaneous agreements, representations, warranties and understandings of such parties (whether oral or written). No promise, inducement, representation or agreement, other than as expressly set forth herein, has been made to or by the parties hereto. This letter may be amended only by written agreement, signed by the parties to be bound by the amendment. Evidence shall be inadmissible to show agreement by and between such parties to any term or condition contrary to or in addition to the terms and conditions contained in this letter. This letter shall be construed according to its fair meaning and not strictly for or against either party. - -2- If the foregoing terms and conditions are acceptable to you, please so indicate by signing the enclosed copy of this letter and returning it to the attention of the undersigned. Very truly yours, [Buyer] By: /s/ B. Joyal ----------------------- Title: Director / CFO ----------------------- ACCEPTED AND AGREED ------------------- [Seller] By: /s/ Alan C. Bashforth ----------------------- Title: CEO & President ----------------------- - -3- EXHIBIT A Liabilities to be Assumed - ------------------------- The Buyer will assume all current liabilities and all long-term liabilities of the M3 as of August 31, 2004 with the exception of the following liabilities in which the Buyer will not assume: 1) Any of Chip Del Coro's expenses and liabilities as outlined in the note payable between Chip Del Coro and Science Dynamics Corporation, dated August 23, 2004. 2) All taxes including, municipal, state, federal, and sales collected and not paid as of August 31, 2004. 3) Any inter company accounts. -----END PRIVACY-ENHANCED MESSAGE-----