-----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, AqntToHuiDMGhPpk5hl011NVosS10vLiICB4Nlty3BiwxTBvN3Uls78rG7OznIrp DXnyobQikWsJWhnlm+2M3w== 0000950152-03-010425.txt : 20031219 0000950152-03-010425.hdr.sgml : 20031219 20031219165213 ACCESSION NUMBER: 0000950152-03-010425 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20031208 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20031219 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EQUIDYNE CORP CENTRAL INDEX KEY: 0000352281 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 042608713 STATE OF INCORPORATION: DE FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-16283 FILM NUMBER: 031065765 BUSINESS ADDRESS: STREET 1: STE 1620 BURRARD ST STREET 2: VANCOUVER BRITISH COLUMBIA CITY: CANADA STATE: A1 ZIP: V6C9A6 BUSINESS PHONE: 6046835767 MAIL ADDRESS: STREET 1: STE 1620 BURRARD ST STREET 2: VANCOUVER BRITISH COLUMBIA CITY: CANADA STATE: A1 ZIP: V6C9A6 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN ELECTROMEDICS CORP DATE OF NAME CHANGE: 19920703 8-K 1 j0454501e8vk.txt EQUIDYNE CORP. 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 December 8, 2003 ---------------- (Date of Report) Equidyne Corporation -------------------- (Exact name of registrant as specified in its charter) Delaware 0-9922 04-2608713 --------- ------ ---------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 1620 - 400 Burrard Street, Vancouver, B.C., Canada, V6C 3A6 ----------------------------------------------------------- (Address of office) (604) 408-8538 -------------- (Registrant's telephone number, including area code) N/A --- (Former name or former address, if changed since last report.) ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On December 8, 2003, Equidyne Systems, Inc. ("ESI"), a wholly owned subsidiary of Equidyne Corporation (the "Company"), agreed to sell to HNS International Inc. ("HNS") all of ESI's right, title and interest in and to (i) its needle-free injection device, known as "INJEX", and (ii) its patent protection related to INJEX, pursuant to an asset purchase agreement and a patent purchase agreement. The asset purchase agreement was amended on December 12, 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 is $750,000, $100,000 of which was paid by HNS upon execution of the asset purchase agreement and is non-refundable, and $650,000 of which is due and payable on January 6, 2004. The transaction is scheduled to close on January 6, 2004, but if HNS fails to make the second payment of the purchase price on January 6, 2004, ESI may retain the $100,000 non-refundable deposit paid by HNS and the asset purchase agreement and patent purchase agreement will automatically terminate. ESI agreed not to engage in discussions with other persons, firms or corporations concerning the sale of the assets covered by the asset purchase agreement during the period between December 8, 2003 and the earlier of (i) the closing of the sale or (ii) the termination of the asset purchase agreement. 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. As a mutual condition to closing of the transaction, the parties also agreed to deliver mutual releases. The release to be delivered by HNS will be signed and delivered by Jim Fukushima, and will release ESI, Equidyne Corporation and their respective affiliates. The release to be delivered by ESI will be signed and delivered by Equidyne Corporation, and will release HNS, Jim Fukushima and their respective affiliates. 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 --------------------------- --------- 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 -- Deferred costs 6 -- 6 Refundable income taxes 6,441 -- 6,441 Prepaid and other current assets 292 -- 292 --------------------------- -------- 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 -- --------------------------- -------- Total assets $ 15,068 $ 212 $ 15,280 =========================== ======== LIABILITIES & STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable and accrued liabilities $ 3,618 $ -- $ 3,618 -------------- -------- 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) --------------------------- -------- Total stockholders' equity 11,450 212 11,662 --------------------------- -------- Total liabilities and stockholders' equity $ 15,068 $ 212 $ 15,280 =========================== ========
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 ------------------------------------------- (Note 3) Net sales $ 2 $ (2) $ -- Cost of goods sold 19 (19) -- ------------------------------------------- Gross loss (17) 17 -- Selling, general and administrative expenses 1,632 (115) 1,517 ------------------------------------------- Total operating expenses 1,632 (115) 1,517 ------------------------------------------- Operating loss (1,649) 132 (1,517) Other income (expense): Interest and other 9 -- 9 Loss on sale of property and equipment (20) -- (20) ------------------------------------------- (11) -- (11) ------------------------------------------- Loss before income tax benefit (1,660) 132 (1,528) Income tax benefit -- -- -- ------------------------------------------- Net loss $(1,660) $ 132 $(1,528) =========================================== Net loss per share - basic and diluted $ (0.11) $ 0.01 $ (0.10) ===========================================
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 ------------------------------------------- (Note 3) Net sales $ 82 $ (82) $ -- Cost of goods sold 155 (155) -- ------------------------------------------- Gross loss (73) 73 -- Selling, general and administrative expenses 3,226 (768) 2,458 Research and development 273 (273) -- Asset impairment 966 (966) -- ------------------------------------------- Total operating expenses 4,465 (2,007) 2,458 ------------------------------------------- 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 ------------------------------------------- 148 -- 148 ------------------------------------------- Loss before income tax benefit (4,390) 2,080 (2,310) Income tax benefit (1,063) 335 (728) ------------------------------------------- Net loss $(3,327) $ 1,745 $(1,582) =========================================== Net loss per share - basic and diluted $ (0.22) $ 0.12 $ (0.10) ===========================================
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 is expected to close 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 ------- Total book value of assets sold 538,000 Estimated gain on sale of assets $212,000 ========
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. 2.2 Amendment Agreement dated December 12, 2003, between Equidyne Systems, Inc. and HNS International Inc. 2.3 Patent Purchase Agreement dated December 8, 2003, between Equidyne Systems, Inc. and HNS International Inc. 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. 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: December 19, 2003 Equidyne Corporation By: /s/ John M. Musacchio --------------------- Name: John M. Musacchio Title: Corporate Secretary EXHIBIT INDEX Exhibit Number Description of Document - -------------- ----------------------- 2.1 Asset Purchase Agreement dated December 8, 2003, between Equidyne Systems, Inc. and HNS International Inc. 2.2 Amendment Agreement dated December 12, 2003, between Equidyne Systems, Inc. and HNS International Inc. 2.3 Patent Purchase Agreement dated December 8, 2003, between Equidyne Systems, Inc. and HNS International Inc. 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. EX-2.1 3 j0454501exv2w1.txt EXHIBIT 2.1 Exhibit 2.1 ASSET PURCHASE AGREEMENT AGREEMENT made the 8th day of December, 2003, between Equidyne Systems, Inc., a California corporation with its principal place of business located at 11300 Sorrento Valley Road, Ste 255, San Diego, California ("Seller") and HNS International Inc., a California corporation with its principal place of business located at 17662 Irvine Boulevard, Suite #20, Tustin, California ("Buyer"). RECITALS: Seller has developed and markets a needle-free injection device ("Device") known as Injex, a registered trademark. Seller has previously sold to Rosch GmbH Medizintechnik ("Rosch") certain patent and other rights to the Device in Europe pursuant to a sales agreement dated July 8, 1999 (the "Rosch Agreement"). Seller has also previously entered into distribution agreements with Buyer dated September 22, 1998 and April 15, 1999 (the "HNS Agreements"). Seller wishes to sell to Buyer on an "as is, where is" basis and Buyer wishes to purchase from Seller all of Seller's right, title and interest in and to (1) the Device and (2) the patent protection thereon, and (3) the materials, manufacturing and marketing rights relating thereto. NOW THEREFORE. Seller and Buyer hereby agree as follows: 1. SALE OF THE DEVICE, ISSUED PATENTS AND THOSE PENDING, AND RELATED TOOLING. (a) Seller hereby sells, transfers and assigns to Buyer, and Buyer hereby purchases from Seller, all of Seller's right, title and interest in and to the Device, related patents, (except for the Japanese Patent No. 32130088 Issued July 19, 2001 (the "Japanese Patent")) both issued and applied for, inventory on hand, all tools, molds and equipment for the production of the Device and the materials and rights relating thereto, owned by Seller as of the date hereof, including, without limitation: (i) the inventory, the tooling and equipment for and the components of the Device, and the operating manuals, packaging, artwork, warranty cards, computer equipment including the server, office furniture in the Sorrento Valley office and the Poway storage location, but excluding the office equipment in the Sorrento Valley office; In reference to the Sortimat Convertible Assembly Equipment located in Stuttgart, Germany (the "Sortimat Machine"), Seller agrees upon signing this Agreement to provide an introduction to its contacts at Sortimat Technology GmbH & Co. ("Sortimat") in Germany and assist in arranging for immediate inspection of the Sortimat Machine. Also, the Seller will provide reasonable assistance to Buyer in obtaining operating instructions and shipping specifications from Seller or Sortimat, provided that Seller does not have to incur any additional costs or expenses relating thereto. (ii) all technology, designs, plans and drawings pertaining to the Device or any part thereof; (iii) Seller's customer list of approximately 600 names; (iv) any files of Seller pertaining to the Device including, without limitation, those records maintained in the Sorrento Valley and Poway office, reviews and letters of comments; (v) brochures, posters and promotional materials pertaining to the Device; (vi) Except for the Japanese Patent, all issued and pending patents including applications for same covering the Device (the "Patents") and the United States trademark (the "Trademark") respecting the Device owned by Seller as of the date hereof. In addition, the United States trademark Injex, the www.injex.com internet domain name and related web pages, along with assignments of the Patents and Trademark. (b) Seller will then refer to Buyer all inquiries and orders for the purchase of the Device for a three year period. (c) If Seller receives any requests for replacement of a defective Device under warranty, Seller will promptly notify Buyer thereof and Buyer will promptly replace the defective Device at no cost to Seller; but apart from this undertaking by Buyer, Buyer assumes no responsibility--and Seller assumes all responsibility-- for any claims whatsoever with respect to any unit of the Device, and component of the Device sold, marketed, delivered or otherwise exploited by Seller prior to the date hereof. (d) Seller agrees to be responsible for all storage charges with respect to the Properties up until and including the date of Closing and Buyer agrees to be responsible for all storage charges following the date of Closing. (e) Seller will use reasonable commercial efforts to effect the transfer of the 510(K) FDA approvals for the Device to the Buyer, provided that Seller does not have to incur any additional costs or expenses relating thereto. 2 2. PRICE AND PAYMENT. (a) Buyer will pay Seller for the Device and the materials and rights which Buyer is purchasing pursuant to Section 1 of this Agreement (collectively called the "Properties") the sum of $750,000.00 (the "Purchase Price"), payable as follows: (i) $100,000.00, U.S. (the "Deposit") upon the signature of the parties to this Agreement; and (ii) $650,000.00 U.S. on December 31, 2003 (the "2nd Payment"). (b) The Purchase Price is allocated as follows: $700,000 for the intellectual property, including the Patents and Trademark, $25,000 for the Sortimat Machine and $25,000 for the remaining inventories and other tangible assets. (c) All payments of the Purchase Price by Buyer to Seller will be made by wire transfer to the following account: Harris Bank, New York Swift Code: HATRUSS 33 ABA No. 026007760 For Further Credit to Bank of Montreal Call Loan Dept For Further Credit to First Associates Investments Inc. Transit No. 0002 Account No. 4669-605 For Further Credit to Account: 5A8666F, Equidyne Corporation Message: Notify CAROL SEREDA at First Associates at (604) 640-0256 3. SELLER'S WARRANTIES. (a) Except for the Rosch Agreement and the HNS Agreements, Seller is the sole owner of all of the rights in and to all of the Properties; to the knowledge of Seller, the Patents and Trademark are, respectively, a valid patent (or patent application) and trademark under the laws of the United States and to the knowledge of Seller, they are duly and properly registered in the name of Seller; the Properties are not subject to any lien or other encumbrance or other right in favor of a third party; except for the provisions of this Agreement, there are no monies owing or obligations outstanding with respect to any of the Properties; and no consent or approval by or notice to any third party is required in connection with the sale of the Properties to Buyer pursuant to this Agreement. (b) Except for the Japanese Patent indicated above and those rights sold to Buyer under this Agreement, Seller does not own or have any rights in or to any patent, copyright, trademark, service mark or other right pertaining to any of the Properties; 3 (c) There is no litigation or claim pending or, to the knowledge of Seller, threatened with respect to any of the Properties; the execution, delivery and performance of this Agreement has been duly authorized by the Seller's board of directors. (d) The representations and warranties of Seller under this section 3 will survive execution of this Agreement. 4. BUYER'S WARRANTY. Buyer represents and warrants to Seller that the execution, delivery and performance of this Agreement have been duly authorized by Buyer's board of directors. 5. CONDITION OF PROPERTIES. APART FROM THE REPRESENTATIONS AND WARRANTIES SET FORTH ABOVE, SELLER MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE PROPERTIES OR THE STATUS, CONDITION, POTENTIAL OR PROSPECTS OF ANY OF THE PROPERTIES OR THE BUSINESS TO WHICH THEY PERTAIN, OR WITH RESPECT TO THE MERCHANTABILITY OF ANY OF THE PROPERTIES OR THEIR SUITABILITY OF FITNEESS FOR ANY PURPOSE, OR WITH RESPECT TO ANY OTHER MATTER PERTAINING TO ANY OF THE PROPERTIES OR TO SUCH BUSINESS OR TO THE TRANSACTION. BUYER CONFIRMS THAT IT HAS MADE ITS OWN INDEPENDENT INVESTIGATION OF THE PROPERTIES AND THE BUSINESS TO WHICH THEY PERTAIN AND OF THIS TRANSACTION, THAT IT HAS RELIED ON THAT INVESTIGATION, AND THAT IT HAS NOT RELIED ON ANY STATEMENT OF OR INFORMATION FURNISHED BY SELLER EXCEPT FOR THOSE STATEMENTS AND THAT INFORMATION SET FORTH IN THIS AGREEMENT. BUYER WILL HAVE NO CLAIM AGAINST SELLER BASED ON MISREPRESENTATION OR FAILURE TO DISCLOSURE EXCEPT FOR THE BREACH OF AN EXPRESS REPRESENTATION OR WARRANTY UNDER THIS AGREEMENT. 6. COMPETING PRODUCTS. (a) Other than under the Rosch Agreement and the HNS Agreements, Seller has not granted any continuing rights in respect to the Device, its patents, trademarks or service marks. (b) For a period of ten years from the date of this Agreement, Seller will not develop, manufacture, promote, market, sell or otherwise exploit, and will not participate, directly or indirectly, in the development, manufacture, promotion, marketing, sale or other exploitation of any device similar to or competitive with the Device. (c) Seller acknowledges that violation of any of the provisions of this section 5 will cause irreparable loss and harm to Buyer which cannot be reasonable or adequately compensated by damages in an at law, and, accordingly, that Buyer will be entitled to injunctive and other equitable relief to prevent or cure any breach or threatened breach thereof, but no action for any such relief shall be 4 deemed to waive the right of Buyer to an action for damages. For purposes of any such proceeding, Seller submits to the non-exclusive jurisdiction of the courts of the State of California, located in the County of Los Angeles; and Seller agrees not to raise and waives any objection to or defense based on the venue of any such court or forum non conveniens. (d) A court of competent jurisdiction, if it determines any provision of this Agreement to be unreasonable in scope, time or geography, is hereby authorized by Seller and Buyer to enforce same in such narrower scope, shorter time or lesser geography as such court determines to be reasonable and proper under all the circumstances. (e) Buyer will also have such other legal remedies as may be appropriate under the circumstance including inter alia, recovery of damages occasioned by a breach. Buyer's rights and remedies are cumulative and the exercise or enforcement of any one or more of them will not preclude Buyer from exercising or enforcing any other right or remedy. 7. CLOSING OF TRANSACTION. (a) If it is determined that this sale of assets is subject to California sales tax, Buyer agrees to assume responsibility for such payment. (b) The closing date shall be January 6, 2004 . (c) In the event that Buyer does not make the 2nd Payment pursuant to Section 2(a), Buyer will forfeit the Deposit to Seller and Seller will have no further obligation to complete the transaction under this Agreement; and this Agreement shall be terminated without any further action by the parties. (d) Seller, at its discretion, will in no less than 10 days prior to the closing, cause to be published in a newspaper of general circulation in San Diego County, notice of the pending sale of assets. The parties agree that Seller will not engage in discussions with other persons, firms, or corporations concerning the sale of assets by Seller after the date of execution of this Agreement until the closing date or the termination of this Agreement. 8. FURTHER ASSURANCES BY SELLER. (a) Seller will execute such additional documents as Buyer may reasonably request to vest or confirm the vesting in Buyer of all of the Properties and title thereto. (b) For a period of six months after the date of this Agreement Seller will, in response to inquiries by Buyer, without charge, reasonably advise Buyer with respect to matters pertaining to the Device, the technology involved in the Device, and the manufacturing and assembly of the Device and parts thereof, 5 provided that Seller possesses the requisite knowledge and information, and Seller does not have to incur any additional costs or expenses relating thereto. 9. RELEASES. As a mutual condition to the closing of the transactions herein provided, on the closing date: (a) Buyer will, and Buyer will cause Jim Fukishima to, sign and deliver a release in favour of Seller, Equidyne Corporation ("Equidyne") and Equidyne's and Seller's affiliates, past and present officers and directors and agents in the form attached hereto as Appendix A; and (b) Seller will, and Seller will cause Equidyne to, sign and deliver a release in favour of Buyer and Jim Fukishima and their affiliates in the form attached hereto as Appendix A. 10. CONFIDENTIALITY. The terms of this Agreement will be kept confidential except where Equidyne has, under applicable securities laws, an obligation to make public disclosures. 11. AMENDMENT. This Agreement may be amended only by an instrument in writing signed by Seller and Buyer. 12. GOVERNING LAW. This Agreement will be governed by and construed in accordance with the law of the State of California. Should a dispute arise between the parties and litigation ensues, the prevailing party will entitled to costs and reasonable attorney fees. 13. SECTION HEADINGS. Section headings are for convenient reference only and shall not affect the meaning or have any bearing on the interpretation of any provision of this Agreement. 14. COUNTERPARTS. This Agreement may be executed in one or more counterparts and by facsimile, each part of which is to be construed an original, and all of which taken together constitute one agreement. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. By: /s/ Michael Smith By: /s/ Jim Fukushima --------------------------- --------------------------- Seller Buyer Name: Michael Smith Name: Jim Fukushima Title: Title: 6 EX-2.2 4 j0454501exv2w2.txt EXHIBIT 2.2 Exhibit 2.2 AMENDMENT AGREEMENT between Equidyne Systems, Inc (`ESI') and HNS International Inc. (`HNS') together, the `Parties' WHEREAS, the Parties have entered into an Asset Purchase Agreement dated December 8, 2003 (the `Agreement'); AND, the Parties wish to amend the Agreement; It is hereby agreed that the date in Section 2 (a) (ii) of the Agreement will be changed from "December 31, 2003" to "January 6, 2004". Agreed as of December 12, 2003. /s/ Jim Fukushima - --------------------------- HNS International, Inc. /s/ Michael Smith - --------------------------- Equidyne Systems, Inc. EX-2.3 5 j0454501exv2w3.txt EXHIBIT 2.3 Exhibit 2.3 PATENT PURCHASE AGREEMENT Agreement made the 8th day of December, 2003 between Equidyne Systems, Inc., a California corporation with its principal place of business located at 11300 Sorrento Valley Road, Ste 255, San Diego, California ("Seller") and HNS INTERNATIONAL, INC., A California corporation with its principal place of business located at 17662 Irvine Boulevard, Suite #20, Tustin California ("Buyer"). RECITALS: Seller has developed and markets a needle-free injection device known as Injex, a registered trademark and has been granted patents on such device. Seller is in the process of conveying assets related to this device and seeks to dispose of the patent granted in Japan as part of the conveyance of its assets. Buyer is seeking to obtain such assets of Seller in a separate transaction and seeks to purchase the Japanese Patent entitled Hypodermic Jet Injector, numbered 3213008, issued on July 19, 2001. NOW THEREFORE, Seller and Buyer hereby agree as follows: 1. Sale of the Patent. Seller hereby sells, transfers and assigns to Buyer and Buyer hereby purchases from Seller, all of Seller's right, title and interest in the Patent entitled Hypodermic Jet Injector, number 3213008. 2. Transfer and Closing. The completion of this agreement is conditional upon the closing of the asset purchase agreement between Seller and Buyer dated December 8, 2003 (the "Asset Purchase Agreement"). If the Asset Purchase Agreement does not complete on January 6, 2004, this agreement will be terminated. 3. Sellers Warranties. Seller is currently the sole owner of the Patent and confirms that, to its knowledge, the Patent is valid under the laws of Japan. The Patent is not subject to any lien or other encumbrance or other right in favor of a third party and there are no monies owing or obligations outstanding with respect to the Patent. 4. General Matters. This agreement may be amended only by an instrument in writing. This Agreement will be governed by and construed in accordance with the law of the State of California. Should a dispute arise between the parties and litigation ensues, the prevailing party will be entitled to costs and attorney fees. The Section headings are for convenient reference only and shall not affect the meaning or have any bearing on the interpretations of any provision of this Agreement. 5. Counterparts. This Agreement may be executed in one or more counterparts and by facsimile, each part of which is to be construed an original, and all of which taken together constitute one agreement. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. By: /s/ Michael Smith By: /s/ Jim Fukushima -------------------------- --------------------------- Seller, by: Buyer, by: Title Title EX-99.1 6 j0454501exv99w1.txt EXHIBIT 99.1 Exhibit 99.1 EQUIDYNE CORPORATION Press release EQUIDYNE CORPORATION REPORTS FIRST QUARTER RESULTS FY 2003 AND ANNOUNCES AGREEMENT TO SELL NEEDLE-FREE ASSETS VANCOUVER, BRITISH COLUMBIA, CANADA, December 9, 2003 ------- EQUIDYNE CORPORATION (AMEX:IJX) announced today unaudited financial results for its first quarter ended October 31, 2003. Net loss for the three months ended October 31, 2003 was $1,660,000, or $0.11 per share, compared to $616,000, or $0.04 per share for the three months ended October 31, 2002, an increase of 169%. The increase principally reflects increased professional service fees and corporate expenditures including costs associated with the Company's 2003 Annual Meeting of Stockholders held on September 9, 2003 and associated proxy contest thereon and related employee severance costs. Further, the Company no longer has the ability to carry back its operating losses, thus has no income tax benefits associated with its losses incurred in the current period. Equidyne reported that consolidated net sales decreased by 91% to $2,000 for the three months ended October 31, 2003, compared to $22,000 for the three months ended October 31, 2002. Equidyne also reported that it had cash and cash equivalents of $7.8 million and working capital of $10.9 million as of October 31, 2003. This compares to cash and working capital of $9.5 million and $12.4 million, respectively as of July 31, 2003. The decrease in cash and working capital reflects the net effect of the Company's operating losses. In November 2003, the Company received an income tax refund of approximately $2.8 million. The Company also announced that its wholly owned subsidiary, Equidyne Systems, Inc. ("ESI") had entered into an agreement with HNS International Inc. ("HNS") to sell certain assets related to ESI's needle-free business to HNS. The assets being sold include all of the intellectual property related to the needle-free business and various equipment and inventories. The purchase price is $750,000, including a $100,000 deposit which is non-refundable should HNS choose not to complete the transaction. The sale is expected to close on January 6, 2004. HNS is a company owned by Jim Fukushima, a former director of Equidyne and a stockholder of the Company. The Company further announced that it is pursuing discussions in respect of certain acquisition opportunities in a field not related to the medical product or health care field. The Company updated stockholders on the progress of its cost cutting program. In the previous fiscal year, the Company had an operating loss of $4.5 million on net sales of only $82,000. Included in this loss were G&A expenses of $3.2 million, of which over $800,000 was salaries and bonuses for the Company's CEO, President, and Chief Financial Officer. Since the Stockholders' Meeting, the Company has: i) terminated the former CEO, President and Chief Financial Officer; ii) relocated its "executive office space" from Dallas to shared office space in Vancouver; iii) prepared to shut down its San Diego office by calendar year end; iv) terminated the investment bankers formerly engaged by the Company; v) discontinued the Company's D&O insurance, thus receiving a refund of almost $275,000 on the cancelled policy; vi) discontinued a lawsuit the Company had been pursuing against various stockholders and other persons related to postings made on an internet chat board about the Company; vii) sold redundant assets; and viii) generally lowered overhead expenses and operating costs. Michael Smith, the Company's President, commented, "Since being elected in September, the new Boards of Directors' objectives have been to preserve cash by minimizing overhead expenses, rationalize and realize value from the Company's existing needle-free technologies and seek new business opportunities, investments and acquisitions. We feel we have made substantial progress in all of these areas." Mr. Smith continued, "At the time of the Stockholders' Meeting, the Company's staffing consisted of the CEO, the President, a CFO, a controller and a human resources manager with no employees in R&D, marketing or operations. R&D and most marketing activities had been discontinued by former management. The Company no longer had the product or technical expertise to further develop or customize its technology. Prior management had allowed the Company's technology to stagnate while the rest of the industry had moved forward. Sales of product are now at a trivial level ($2,000 in the three months ended October 31, 2003). Further, prior management had made no material progress in establishing licensing or similar relationships with pharmaceutical companies or in any other sort of transaction regarding the technology. All of these factors have led to a diminishment in the value of the needle-free business, as well as severely limiting the Company's options going forward. Further, it is clear that additional delays in implementing a plan for the needle free business will only lead to further diminishment of the value of the technology, as well as cause the company to incur additional operating losses. In light of all circumstances, and after consideration of all options, we believe that the sale of the assets to HNS clearly presents the best economic alternative for the Company." Mr. Smith concluded, "After a lengthy period of costly stagnation, we are happy to inform stockholders that progress at the Company is being made. The drain on company resources due to excessive G&A and management compensation and needless legal expenses has been relieved, and we have made significant progress towards charting a new course for the Company. We would like to thank stockholders for the support they continue to give us in our efforts." The Company also announced that Roy Zanatta has resigned as a director and secretary of the Company in order to pursue other business interests. The Company would like to thank Mr. Zanatta for his efforts on behalf of Equidyne. For further information, please call Rene Randall, Investor Relations, at 604-408-8538. All statements included in this press release, other than statements of historical facts, that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future are forward-looking statements (as such term is defined in Section 27A of the Securities Exchange Act of 1934, as amended). Such statements are typically characterized by terminology such as "believe," "anticipate," "should," "intend," "plan," "will," "expect," "estimate," "project," "positioned," "strategy" and similar expressions. These statements are based upon assumptions and assessments made by the Company's management in light of its experience and its perception of historical trends, current conditions, expected future developments and other factors it believes to be appropriate. These forward-looking statements are subject to a number of risks and uncertainties, including risks and uncertainties associated with excess or obsolete inventory; the success of research and development activities and the speed with which regulatory authorizations and product launches may be achieved; trends toward managed care and healthcare containment and the ability of the Company to obtain favorable insurance reimbursement coverage for the Company's products; market acceptance of the Company's products; changes in government laws and regulations affecting the Company and its products; exposure to product liability and other types of lawsuits; the Company ability to protect its intellectual property; the Company's ability to manufacture its products in sufficient quantities to meet the demands of the marketplace; the Company's dependence on key customers and suppliers and their financial viability; the impact of competition in the Company's markets; the Company's ability to effectively manage its growth; the potential impairment of the Company's assets; the effect of losses and other factors on the Company's business, financial condition and results of operations; and the Company's capital resources and its ability to fulfill its existing obligations and ongoing capital needs. A further list and description of these risks, uncertainties and other matters can be found in the Company's Annual Report on Form 10-KSB, as amended, for the fiscal year ended July 31, 2003, and the Company's other filings with the Securities and Exchange Commission. Any such forward-looking statements are not guarantees of future performance and actual results, developments and business decisions may differ materially from those contemplated by such forward-looking statements. Except as required by applicable law, the Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. - FINANCIAL TABLES FOLLOW - EQUIDYNE CORPORATION Suite 1620 400 Burrard Street Vancouver BC V6C 3A6 Phone (604)408-8538 Fax (604) 683-3205 EQUIDYNE CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
OCTOBER 31, JULY 31, 2003 2003 ----------- -------- (Thousands) ASSETS Cash and cash equivalents $ 7,783 $ 9,517 Other current assets 6,772 6,583 ------- ------- Total current assets 14,575 16,100 Property and equipment, net 11 50 Deposits 5 5 Patents, net 477 490 ------- ------- $ 1,068 $16,645 ======= ======= LIABILITIES & STOCKHOLDERS' EQUITY Total current liabilities $ 3,618 $ 3,706 Total stockholders' equity 11,450 12,939 ------- ------- $15,068 $16,645 ======= =======
EQUIDYNE CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED OCTOBER 31, --------------------------- 2003 2002 ------- ------- (Thousands, except per share amounts) Net sales $ 2 $ 22 Cost of goods sold (19) 25 ------- ------- Gross loss (17) (3) Operating expenses 1,632 928 ------- ------- Operating loss (1,649) (931) Other income (expense): Interest and other, net (11) 53 ------- ------- Loss before income tax benefit (1,660) (878) Income tax benefit -- (262) ------- ------- Net loss $(1,660) $ (616) ======= ======= Net loss per common share, basic $ (0.11) $ (0.04) ======= ======= Net loss per common share, diluted $ (0.11) $ (0.04) ======= =======
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