-----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, PbL9gA2XQGjEaw8zbWwWmJZSXE+Di8ucT5ZD1X2Ld1i7fOwjV2axgyq6oatOCBEt DczcX1RTRv66iEJiluWjIg== 0000893220-99-000349.txt : 19990322 0000893220-99-000349.hdr.sgml : 19990322 ACCESSION NUMBER: 0000893220-99-000349 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990305 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990319 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ESCALON MEDICAL CORP CENTRAL INDEX KEY: 0000862668 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 330272839 STATE OF INCORPORATION: CA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-20127 FILM NUMBER: 99569116 BUSINESS ADDRESS: STREET 1: 351 EAST CONESTOGA ROAD STREET 2: PLZ LEVEL CITY: WAYNE STATE: PA ZIP: 19087 BUSINESS PHONE: 6106886830 MAIL ADDRESS: STREET 1: 351 EAST CONESTOGA ROAD CITY: WAYNE STATE: PA ZIP: 19087 FORMER COMPANY: FORMER CONFORMED NAME: INTELLIGENT SURGICAL LASERS INC DATE OF NAME CHANGE: 19930328 8-K 1 FORM 8-K ESCALON MEDICAL CORP. 1 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): March 5, 1999 ------------- Escalon Medical Corp. ------------------------------------------------------ (Exact name of registrant as specified in its charter) California 0-20127 33-0272839 - ---------------------------- ------------------------ ------------- (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification No.) 351 East Conestoga Road, Wayne, Pennsylvania 19087 - -------------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (610) 688-6830 -------------- N/A -------------------------------------------------------------- (Former name or former address, if changed since last report.) 2 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On March 5, 1999, Escalon Medical Corp. (the "Registrant") consummated transactions under a Bill of Sale and Acceptance Agreement between the Registrant and Alcon Laboratories, Inc. ("Alcon Laboratories") and a Bill of Sale and Acceptance Agreement between the Registrant and Alcon Universal, Ltd. ("Alcon Universal" and collectively with Alcon Laboratories, the "Buyers"), pursuant to which: (i) for a cash purchase price of $959,835, Alcon Laboratories purchased all of the Registrant's inventory of 5% Betadine Sterile Ophthalmic Solution ("5% Betadine Solution"); and (ii) for an aggregate purchase price of $1,100,000, the Registrant: (A) transferred to Alcon Universal the Registrant's customer list for 5% Betadine Solution; (B) terminated the Distribution and License Agreement dated August 31, 1995 between the Registrant, as assignee of EOI Corp. (formerly Escalon Ophthalmics, Inc.), and The Purdue Frederick Company ("Purdue Frederick"), pursuant to which the Registrant had the exclusive right to distribute 5% Betadine Solution, in order to permit Purdue Frederick to enter into an exclusive distribution agreement for 5% Betadine Solution with Alcon Universal; and (C) agreed with Alcon Universal that the Registrant will not distribute or sell 5% Betadine Solution in the United States for a period of five years after the date of the Agreement. No material relationship exists between (i) the Registrant and either of the Buyers, (ii) any director or officer of the Registrant and any director or officer of either of the Buyers or (iii) any associate of any director or officer of the Registrant and any associate of any director or officer of either of the Buyers. The purchase prices under the Agreements were determined by arms' length negotiations between the Registrant and the Buyers. -2- 3 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (a) Financial Statements of Businesses Acquired. Not applicable. (b) Unaudited Pro Forma Financial Information. The following unaudited pro forma condensed consolidated financial information has been prepared to reflect the transaction under a Bill of Sale and Acceptance Agreement between the Registrant and Alcon Laboratories, Inc. and a Bill of Sale and Acceptance Agreement between the Registrant and Alcon Universal, Ltd. (the "Transaction"). The unaudited pro forma condensed consolidated financial information should be read in conjunction with the audited historical consolidated financial statements and related notes included in the Registrant's Annual Report on Form 10-K for the period ended June 30, 1998 and the condensed consolidated financial statements for the six months ended December 31, 1998 in the Registrant's Quarterly Report on Form 10-Q for period ended December 31, 1998, which reports are incorporated herein by reference. The unaudited pro forma condensed consolidated statement of operations gives effect to the Transaction as if it had occurred at the beginning of the periods presented. The unaudited pro forma condensed consolidated balance sheet gives effect to the Transaction as if it had occurred on December 31, 1998. The unaudited pro forma condensed consolidated financial information is presented for illustrative purposes only and does not purport to be indicative of the operating results or financial position that would have actually occurred if the Transaction had been in effect on the dates indicated, nor is it necessarily indicative of future operating results or financial position. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 1998
REGISTRANT PRO FORMA ACTUAL ADJUSTMENTS PRO FORMA ------ ----------- --------- Sales revenues $ 5,942,004 $ (976,447) (1) $ 4,965,557 Costs and expenses: Cost of goods sold 2,588,500 (416,980) (2) 2,171,520 Research and development 494,895 - 494,895 Marketing, general and administrative 2,805,454 (335,081) (3) 2,470,373 ----------------- --------------------- -------------------- Total costs and expenses 5,888,849 (752,061) 5,136,788 ----------------- --------------------- -------------------- Income (loss) from operations 53,155 (224,386) (171,231) Other income, net 118,317 - 118,317 ----------------- --------------------- -------------------- Net income (loss) $ 171,472 $ (224,386) $ (52,914) ================= ===================== ====================
-3- 4
REGISTRANT PRO FORMA ACTUAL ADJUSTMENTS PRO FORMA ------ ----------- --------- Basic and diluted net loss per share (a) $ (0.039) $ (0.123) ================= ==================== Weighted average shares - basic and diluted 2,673,093 2,673,093 ================= ====================
(a) For earnings per share computations, net income was decreased by $ 276,750 for preferred stock dividends and accretion. (1) Net Betadine sales for fiscal year ended June 30, 1998, $ 976,447. (2) Direct expenses related to Betadine sales; cost of goods sold, $ 364,758; freight, $ 21,199; and warehousing expense, $ 31,023. (3) Other direct expenses related to the Betadine product line; license and distribution rights amortization, $ 52,722;.goodwill amortization, $ 66,752; royalties to Purdue Frederick, $95,923; and sales commissions, $119,684. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 31, 1998
REGISTRANT PRO FORMA ACTUAL ADJUSTMENTS PRO FORMA ------------------------------------------------- --------- Sales revenues $ 3,460,097 $ (574,365) (1) $ 2,885,732 Costs and expenses: Cost of goods sold 1,509,004 (248,025) (2) 1,260,979 Research and development 341,250 - 341,250 Marketing, general and administrative 1,397,973 (182,309) (3) 1,215,664 ---------------- ----------------- ---------------- Total costs and expenses 3,248,227 (430,334) 2,817,893 ---------------- ----------------- ---------------- Income from operations 211,870 (144,031) 67,839 Other income, net 68,567 - 68,567 ---------------- ----------------- ---------------- Net income $ 280,437 $ (144,031) $ 136,406 ================ ================= ================ Basic net income per share (a) $ 0.084 $ 0.037 ================ ================= Diluted net income per share $ 0.068 $ 0.033 ================ ================= Weighted average shares - basic 3,028,668 3,028,668 ================ ================= Weighted average shares - diluted 4,103,394 4,103,394 ================ =================
(a) Net income is reduced by $ 24,540,for dividends paid to preferred shareholder and not available for common shareholders' in earnings per share computation. (1) Net Betadine sales for six months ended December 31, 1998, $ 574,365 (2) Direct expenses related to Betadine sales; cost of goods sold, $ 214,005; freight, $ 14,323; and warehousing expense, $ 19,697. (3) Other direct expenses related to the Betadine product line; license and distribution rights amortization,$ 26,361; goodwill amortization, $ 33,376; royalties to Purdue Frederick, $ 56,851; and sales commissions,$ 65,721. -4- 5 (4) The sale of the Betadine product line will result in a non-recurring gain of approximately $854,000, net of sale expenses of approximately $25,000. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1998
REGISTRANT PRO FORMA ACTUAL ADJUSTMENTS PRO FORMA --------------------- --------------------- --------------------- ASSETS Current Assets: Cash and cash equivalents $ 2,406,665 $ 2,059,835 (1) $ 4,466,500 Accounts receivable, net 873,975 - 873,975 Inventory, net 688,079 (274,760) (2) 413,319 Investments and other current assets 613,954 - 613,954 --------------------- --------------------- --------------------- Total current assets 4,582,673 1,785,075 6,367,748 License and distribution rights, net 809,657 (268,007) (3) 541,650 Goodwill, net 904,451 (472,829) (4) 431,622 Other assets 751,601 - 751,601 --------------------- --------------------- --------------------- Total assets $ 7,048,382 $ 1,044,239 $ 8,092,621 ===================== ===================== ===================== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities $ 861,941 $ - $ 861,941 Shareholders' Equity: Preferred stock 679,231 - 679,231 Common stock 45,321,687 - 45,321,687 Treasury stock (118,108) - (118,108) Accumulated deficit (39,696,369) 1,044,239 (1)(2) (38,652,130) --------------------- --------------------- (3)(4) --------------------- Total shareholders' equity 6,186,441 1,044,239 7,230,680 --------------------- --------------------- --------------------- Total liabilities and shareholders' equity $ 7,048,382 $ 1,044,239 $ 8,092,621 ===================== ===================== =====================
(1) Proceeds from sale of Betadine product line, $ 2,059,835. (2) To reflect the sale of Betadine inventory valued at $274,760. (3) To reflect the retirement of $ 268,007 in unamortized license and distribution rights, allocated at acquisition, to the Betadine product line. (4) To reflect the retirement of $ 472,829 in unamortized goodwill allocated, at acquisition, to the Betadine product line. -5- 6 (c) Exhibits. Exhibit No. Document ----------- -------- 2.1 Bill of Sale and Acceptance Agreement dated March 5, 1999 between Escalon Medical Corp. and Alcon Laboratories, Inc. 2.2 Bill of Sale and Acceptance Agreement dated March 5, 1999 between Escalon Medical Corp. and Alcon Universal, Ltd. -6- 7 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized. ESCALON MEDICAL CORP. Date: March 19, 1999 By:/s/ Douglas R. McGonegal -------------------------------------- Douglas R. McGonegal, Vice President--Finance -7- 8 EXHIBIT INDEX Exhibit No. Document ----------- -------- 2.1 Bill of Sale and Acceptance Agreement dated March 5, 1999 between Escalon Medical Corp. and Alcon Laboratories, Inc. 2.2 Bill of Sale and Acceptance Agreement dated March 5, 1999 between Escalon Medical Corp. and Alcon Universal, Ltd. -8- EX-2.1 2 BILL OF SALE/ACCEPTANCE AGREEMENT-ALCON LAB. 1 EXHIBIT 2.1 BILL OF SALE AND ACCEPTANCE AGREEMENT This Bill of Sale and Acceptance Agreement ("Bill of Sale") is dated the 5th day of March, 1999. PARTIES The parties to this Bill of Sale are Escalon Medical Corp., Inc. ("Seller"), a corporation organized and existing under the laws of the State of California, and Alcon Laboratories, Inc. ("Buyer"), a corporation organized and existing under the laws of the State of Delaware. Seller does hereby bargain, sell, grant, convey, transfer and assign unto Buyer all of Seller's right, title and interest in and to the assets as described herein. RECITALS WHEREAS, pursuant to a Distribution and License Agreement, dated 8/31/1995, ("License Agreement") between Escalon Ophthalmics, Inc., Seller's predecessor, and The Purdue Frederick Company ("Purdue Frederick"), Seller has the exclusive right to distribution of 5% Betadine Sterile Ophthalmic Solution ("5% Betadine"); and WHEREAS, Seller has agreed to transfer and convey to Buyer all of Seller's Inventory of 5% Betadine as identified on Schedule A for a purchase price equal to Nine Hundred Fifty-Nine Thousand Eight Hundred Thirty-Five and 00/100 Dollars ($959,835.00); and WHEREAS, Seller is executing and delivering this Bill of Sale to Buyer for the purpose of assigning, transferring, selling, conveying, and vesting in Buyer, all of Seller's right, title, and interest in the Inventory and in order that Buyer shall be in possession of an instrument evidencing Seller's transfer of the Inventory; and WHEREAS, Buyer is executing and delivering this Bill of Sale to Seller for the purpose of assuming all of Seller's right, title and interest in the Inventory in order that Seller is in possession of an instrument evidencing Buyer's acceptance of the Inventory; NOW, THEREFORE, in consideration of the foregoing premises and the mutual promises and covenants herein, and intending to be legally bound, the parties do hereby agree as follows: 1 2 AGREEMENT 1. Sale. Seller, by these presents and upon the terms and conditions set forth herein, hereby sells, grants conveys, assigns, transfers, and sets over to and vest in Buyer, its successors and assigns, all of Seller's right, title and interest legal and equitable, in and to all of the Inventory. Seller further agrees to transfer to Buyer all open and future purchase orders Seller has or will have with third party purchasers of the Inventory. 2. Purchase Price. The purchase price for the Inventory shall be Nine Hundred Fifty-Nine Thousand Eight Hundred Thirty-Five and 00/100 Dollars ($959,835.00). 3. Acceptance. Buyer hereby accepts Seller's transfer of, as well as all of Seller's right, title and interest in the Inventory. Seller authorizes Buyer to use the current NDC (No. 00340410-20) for all Inventory purchased pursuant to this Agreement. 4. Benefit. Nothing in this instrument, expressed or implied, is intended or shall be construed to confer upon or give to any person, corporation, or entity, other than Seller and Buyer and its respective successors and assigns, any remedy or claim under or by reason of this instrument or any term, covenant, or condition hereof, and all of the terms, covenants, conditions, promises and agreements contained in this Bill of Sale shall be for the sole and exclusive benefit of Seller and Buyer and their respective successors and assigns. 5. Inventory. Inventory shall consist of 50 ml Betadine 5% Sterile Ophthalmic Prep Solution in finished goods form. Buyer shall purchase all Seller's Inventory wherever located, but including the public warehouse facility Livingston Heathcare Services, Inc., at 220 Lake Drive, Newark, DE 19702. The purchase price for the Inventory shall be Nine Hundred Fifty-Nine Thousand Eight Hundred Thirty-Five and 00/100 Dollars ($959,835.00) and shall be paid upon confirmation of Inventory quantities by Buyer and from the report of Livingston Heathcare Services, Inc. as of the closing of the transaction contemplated by this Bill of Sale. 6. Warranties and Representations. Seller hereby warrants and represents to Buyer that the Inventory is (i) delivered free and clear from any security interest or other liens, encumbrances, equities or claims, (ii) good and salable with at least 24 months dating, and (iii) free from defects. Seller further warrants and represents that it has operated in the normal course of business over the preceding six (6) months, and that all returns, credits, allowances, rebates, discounts, charge backs, or any other credits due a customer of Seller relating to a sale of product prior to the date hereof will be Seller's obligation. 2 3 7. Indemnification. Seller will indemnify and hold Buyer harmless from and against any and all liability, damage, loss, cost, or expense, including attorney's fees and expenses, resulting from any third party claims made or suits brought against Buyer which arise from the products sold to Buyer pursuant to this Bill of Sale or Seller's breach of any warranty set forth herein. 8. Insurance. Seller shall maintain at its expense product liability insurance with limits of liability of $1 million per occurrence for a period of four years from the date of this Bill of Sale. The certificate should name Buyer as an additional insured and Seller agrees to furnish Buyer certificates of insurance showing compliance with the foregoing requirements. 9. Termination of License Agreement. This Bill of Sale is subject to and contingent upon the termination of Seller's License Agreement with Purdue Frederick; Seller agrees to provide Buyer with documentation evidencing the termination of the License Agreement on or before this Bill of Sale is executed by Buyer. 10. Closing. Closing of the transaction contemplated by this Bill of Sale shall be March 4, 1999. IN WITNESS WHEREOF, the parties duly execute this Bill of Sale on the date first herein above written. Attested: ESCALON MEDICAL CORP., INC. /s/ Richard J. DePiano, Jr. By: /s/ Richard J. DePiano Assistant Secretary ------------------------- Richard J. DePiano CEO & Chairman Attested: ALCON LABORATORIES, INC. By: ------------------------- Name: Title: 3 4 SCHEDULE A INVENTORY 168,216 BOTTLES @ $5.705967 4 EX-2.2 3 BILL OF SALE/ACCEPTANCE AGREEMENT-ALCON UNIVERSAL 1 EXHIBIT 2.2 BILL OF SALE AND ACCEPTANCE AGREEMENT This Bill of Sale and Acceptance Agreement ("Bill of Sale") is dated the 5th day of March, 1999. PARTIES The parties to this Bill of Sale are Escalon Medical Corp., Inc. ("Seller"), a corporation organized and existing under the laws of the State of California, and Alcon Universal, Ltd. ("Buyer"), a joint stock corporation organized and existing under the laws of Switzerland. Seller does hereby bargain, sell, grant, convey, transfer and assign unto Buyer all of Seller's right, title and interest in and to those certain assets as described herein. RECITALS WHEREAS, pursuant to a Distribution and License Agreement, dated 8/31/1995, ("License Agreement") between Escalon Ophthalmics, Inc., Seller's predecessor, and The Purdue Frederick Company ("Purdue Frederick"), Seller has the exclusive right to distribution of 5% Betadine Sterile Ophthalmic Solution ("5% Betadine"); and WHEREAS, Seller has agreed to transfer and convey to Buyer certain assets that are listed on Schedule A attached hereto ("Acquired Assets"); and WHEREAS, in order to induce Seller to terminate its Licensing Agreement with Purdue Frederick, Buyer shall buy the Acquired Assets for a Purchase Price of One Million One Hundred Thousand Dollars ($1,100,000.00); and WHEREAS, Seller is terminating its exclusive distribution rights with Purdue Frederick in order for Purdue Frederick to enter into an agreement with Buyer for the exclusive global distribution of 5% Betadine; and WHEREAS, Seller is executing and delivering this Bill of Sale to Buyer for the purpose of assigning, transferring, selling, conveying, and vesting in Buyer, all of Seller's right, title, and interest in the Acquired Assets and in order that Buyer shall be in possession of an instrument evidencing Seller's transfer of the Acquired Assets; and WHEREAS, Buyer is executing and delivering this Bill of Sale to Seller for the purpose of assuming all of Seller's right, title and interest in the Acquired Assets in order that Seller is in possession of an instrument evidencing Buyer's acceptance of the Acquired Assets; 1 2 NOW, THEREFORE, in consideration of the foregoing premises and the mutual promises and covenants herein, and intending to be legally bound, the parties do hereby agree as follows: AGREEMENT 1. Sale. Seller, by these presents and upon the terms and conditions set forth herein, hereby sells, grants, conveys, assigns, transfers, and sets over to and vests in Buyer, its successors and assigns, all of Seller's right, title and interest, legal and equitable, in and to all of the Acquired Assets. 2. Purchase Price. The purchase price for the Acquired Assets shall be One Million One Hundred Thousand Dollars ($1,100,000.00). 3. Acceptance. Buyer hereby accepts Seller's transfer of, as well as all of Seller's right, title and interest in the Acquired Assets. 4. Benefit. Nothing in this instrument, expressed or implied, is intended or shall be construed to confer upon or give to any person, corporation, or entity, other than Seller and Buyer and its respective successors and assigns, any remedy or claim under or by reason of this instrument or any term, covenant, or condition hereof, and all of the terms, covenants, conditions, promises and agreements contained in this Bill of Sale shall be for the sole and exclusive benefit of Seller and Buyer and their respective successors and assigns. 5. Warranties and Representations. Seller warrants and represents that it has operated in the normal course of business over the preceding six (6) months, and that all returns, credits, allowances, rebates, discounts, charge backs, or any other credits due a customer of Seller relating to a sale of product prior to the date hereof will be Seller's obligation. 6. Indemnification. Seller will indemnify and hold Buyer harmless from and against any and all liability, damage, loss, cost, or expense, including attorney's fees and expenses, resulting from any third party claims made or suits brought against Buyer which arise from the products sold to Buyer pursuant to this Bill of Sale or Seller's breach of any warranty set forth herein. 7. Insurance. Seller shall maintain at its expense product liability insurance with limits of liability of $1 million per occurrence for a period of four years from the date of this Bill of Sale. The certificate should name Buyer as an additional insured and Seller agrees to furnish Buyer certificates of insurance showing compliance with the foregoing requirements. 8. Termination of License Agreement. This Bill of Sale is subject to and contingent upon the termination of Seller's License Agreement with Purdue 2 3 Frederick; Seller agrees to provide Buyer with documentation evidencing the termination of the License Agreement on or before this Bill of Sale is executed by Buyer. Further, Seller agrees that it will not distribute or sell 5% Betadine in the United States for a period of five years from the date of this Bill of Sale. 9. Closing. Closing of the transaction contemplated by this Bill of Sale shall be March 4, 1999. IN WITNESS WHEREOF, the parties duly execute this Bill of Sale on the date first herein above written. Attested: ESCALON MEDICAL CORP., INC. By: /s/ Richard J. DePiano ---------------------- Richard J. DePiano CEO & Chairman Attested: ALCON UNIVERSAL, LTD. By: s/s Guido Koller ------------------- Name: Guido Koller Title: 3 4 SCHEDULE A ACQUIRED ASSETS 1. Customer List for 5% Betadine. 2. Seller's termination of its Licensing Agreement with Purdue Frederick. 4 -----END PRIVACY-ENHANCED MESSAGE-----