SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-KA
CURRENT REPORT
Pursuant to Section 13 of 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 14, 1997
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SPECTRUM LABORATORIES, INC.
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(Exact name of Registrant as specified in its charter)
California 0-9478 95-3557359
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(State or other jurisdiction of (Commission File (IRS Employer
incorporation or organization) Number) Identification No.)
23022 La Cadena Drive, Laguna Hills, California 92653
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (714) 581-3880
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Not Applicable
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(Former name or former address, if changed since last report)
<PAGE>
Item 7. Financial Statements and Exhibits
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its current report dated
November 15, 1996 on Form 8-K as set forth in the following pages
attached hereto.
(a) Financial Statements of Spectrum Laboratories, Inc., and Cellco, Inc.
(1) The audited Financial Statements of Cellco, Inc., as of
December 31, 1994 and 1995 and each of the two years in the
period ended December 31, 1995. Also, the audited financial
statements of Cellco, Inc. as of September 30, 1996 and nine
months ended September 30, 1996, and September 30, 1995.
(2) The audited financial statements of Spectrum Laboratories,
Inc. as of December 31, 1995 and the years ended December 31,
1995 and December 31, 1994 incorporated by reference from the
company's 10-KSB for the year ended December 31, 1995.
(3) The unaudited financial statements of Spectrum Laboratories,
Inc. as of September 30, 1996 and the nine month periods ended
September 30, 1996 and September 30, 1995 incorporated by
reference from the company's 10-QSB for the nine months ended
September 30, 1996.
(b) Pro forma financial information of Spectrum Laboratories, Inc. and
Cellco, Inc.
(1) The pro forma combined unaudited Financial Statements at
September 30, 1996, the nine months ended September 30, 1996,
and the year ended December 31, 1995.
<PAGE>
Pro Forma Unaudited Combined Financial Statements
The pro forma unaudited Combined Balance Sheet presents the combined financial
position of Spectrum Laboratories, Inc. ("the Company") and Cellco, Inc.
("Cellco") as if the acquisition had occurred on September 30, 1996, and the pro
forma Combined Statement of Operations for the year ended December 31, 1995 and
the nine months ended September 30, 1996 as if the acquisition occurred on
January 1, 1995.
The pro forma unaudited combined financial statements have been prepared for
comparative purposes and are based upon the historic financial statements of the
Company and Cellco. The pro forma unaudited combined financial statements do not
purport to be indicative of the results which would actually have been obtained
if the acquisition has been effected on the dates indicated nor are they
necessarily indicative of the results of operation that may be achieved in the
future. The pro forma financial statements should be read in conjunction with
the historical financial statements of the Company and Cellco included herein
and incorporated by reference.
<PAGE>
<TABLE>
Spectrum Laboratories, Inc.
Pro Forma Unaudited Combined Balance Sheet
September 30, 1996
<CAPTION>
Cellco, Inc. SLI, Inc. Combined
September 30, 1996 September 30, 1996 Adjustments September 30, 1996
------------------ ------------------ ----------- ------------------
<S> <C> <C> <C> <C>
Assets
Current Assets:
Cash $ 23,675 $ 908,536 $ -- $ 932,211
Accounts receivable-trade 142,214 1,213,702 -- 1,355,916
Accounts receivable-related parties -- 184,870 -- 184,870
Inventories 286,167 1,157,370 -- 1,443,537
Prepaid expenses and other current -- -- -- --
assets 48,104 35,192 -- 83,296
Deferred income taxes -- 377,185 -- 377,185
------------ ------------ ------------ ------------
Total current assets 500,160 3,876,855 -- 4,377,015
Equipment and leasehold improvements, net 254,772 898,157 -- 1,152,929
Goodwill -- 3,052,971 54,501 3,107,472
Other Assets 18,475 24,813 97,500 140,788
------------ ------------ ------------ ------------
Total Assets $ 773,407 $ 7,852,796 $ 152,001 $ 8,778,204
============ ============ ============ ============
Liabilities and shareholder's equity
Current liabilities:
Accounts payable-trade $ 309,827 $ 402,873 $ 85,000 $ 797,700
Accrued liabilities 175,083 362,032 (75,000) 462,115
Current portion, long term debt 92,773 357,144 -- 449,917
Current Notes Payable -- 486,574 -- 486,574
Due to Related Party -- 138,871 -- 138,871
Income tax payable -- 30,379 -- 30,379
Other Current Liabilities -- 134,973 -- 134,973
------------ ------------ ------------ ------------
Total Current liabilities 577,683 1,912,846 10,000 2,500,529
Other liabilities:
Long Term Obligations Related Parties -- 1,305,500 -- 1,305,500
Other Long Term Liabilities -- 192,449 -- 192,449
Long Term Obligations 97,422 1,704,760 -- 1,802,182
------------ ------------ ------------ ------------
Total Liabilities 675,105 5,115,555 10,000 5,800,660
Redeemable preferred stock 7,897,241 -- (7,897,241) --
Minority Interest -- 16,368 2,000,000 2,016,368
Shareholders' equity:
Common stock, no par value 8,986 125,124 (8,986) 125,124
Additional paid in capital 10,420,927 5,237,848 (10,420,927) 5,237,848
Retained earnings, (accumulated deficit) (18,228,852) (2,634,954) 16,469,155 (4,394,651)
Unrealized gain on investment securities -- (7,145) -- (7,145)
------------ ------------ ------------ ------------
Total shareholders' equity $ (7,798,939) $ 2,720,873 $ 6,039,242 $ 961,176
------------ ------------ ------------ ------------
Total liabilities and shareholders' equity $ 773,407 $ 7,852,796 $ 152,001 $ 8,778,204
============ ============ ============ ============
</TABLE>
<PAGE>
<TABLE>
Spectrum Laboratories, Inc.
Pro Forma Unaudited Combined Statements of Operations
Nine Months Ended September 30, 1996
<CAPTION>
Cellco, Inc. SLI, Inc. Consolidated
September 30, 1996 September 30, 1996 Adjustments September 30, 1996
------------------ ------------------ ----------- ------------------
<S> <C> <C> <C> <C>
Net Sales $ 873,198 $ 6,509,014 $ -- $ 7,382,212
------------ ------------ ------------ ------------
Costs and expenses:
Cost of sales 353,794 3,874,671 -- 4,228,465
Selling expenses 256,845 1,028,918 -- 1,285,763
General and administrative expenses 802,369 874,635 25,584 1,702,588
Research and development expenses 392,032 258,673 -- 650,705
Other Income/Expense (6,078) 232,584 -- 226,506
------------ ------------ ------------ ------------
Total costs and expenses 1,798,962 6,269,481 25,584 8,094,027
Income (loss) before income taxes and
minority interest (925,764) 239,533 (25,584) (711,815)
Minority interest -- 25,891 -- 25,891
------------ ------------ ------------ ------------
Net income (loss) $ (925,764) $ 213,642 $ (25,584) $ (737,706)
============ ============ ============ ============
Net income (loss) per share 0.02 (0.06)
============ ============
Average number of common and common
equivalent shares 12,900,000 12,900,000
============ ============
</TABLE>
<PAGE>
<TABLE>
Spectrum Laboratories, Inc.
Pro Forma Unadudited Combined Statements of Operations
Year Ended December 31, 1995
<CAPTION>
Cellco, Inc. SLI, Inc. Combined
September 30, 1995 September 30, 1995 Adjustments September 30, 1995
------------------ ------------------ ----------- ------------------
<S> <C> <C> <C>
Net Sales $ 950,782 $ 6,478,299 -- $ 7,429,081
------------ ------------ ------------ ------------
Costs and expenses:
Cost of sales 379,338 4,406,556 -- 4,785,894
Selling expenses 443,457 952,577 -- 1,396,034
General and administrative expenses 1,535,297 902,653 34,113 2,472,063
Research and development expenses 1,486,687 186,078 -- 1,672,765
Other Income/Expense (63,473) 121,853 -- 58,380
------------ ------------ ------------ ------------
Total costs and expenses 3,781,306 6,569,717 34,113 10,385,136
------------ ------------ ------------ ------------
Loss before income taxes and
minority interest (2,830,524) (91,418) (34,113) (2,956,055)
Minority interest -- 139,848 -- 139,848
------------ ------------ ------------ ------------
Loss before income taxes (2,830,524) (231,266) (34,113) (3,095,903)
Provision for income taxes -- 38,086 -- 38,086
------------ ------------ ------------ ------------
Net loss
$ (2,830,524) $ (269,352) $ (34,113) $ (3,133,989)
Net loss per share =========== =========== =========== ============
Average number of common and common $ (0.05) $ (0.63)
equivalent shares ============ ============
5,014,328 5,014,328
============ ============
</TABLE>
<PAGE>
NOTES TO PRO FORMA UNAUDITED COMBINED FINANCIAL STATEMENTS
1. On October 1, 1996, SLI Acquisition Corp. ("SLI"), a wholly owned
subsidiary of Spectrum Laboratories, Inc. (the "Company") entered into
an Assets Purchase Agreement with Cellco, Incorporated, a Delaware
Corporation ("Cellco"). Pursuant to the Agreement, the Company invested
$500,000, $250,000 in cash at closing and $250,000 by executing and
delivering a promissory note due April 1, 1997. The Agreement provides
that the preferred shareholder of SLI have the right to put their stock
to SLI at any time for from October 1, 2000 to September 30, 2001 for a
purchase price of $2,000,000. The Preferred Shareholders of SLI also
have the right to exchange their shares for 7 to 10 percent of the
combined company in the event Company is combined with SLI and Spectrum
Medical Industries and the combined completes an underwritten offering.
The closing occurred on January 17, 1997 after Cellco entered into a
new agreement with its landlord. Substantially all of the assets are
associated with Cellco's lab products and cellular therapy business and
operating control of the business was taken over by the Company on
October 1, 1996. The assets were acquired in exchange for 10,000 shares
of SLI preferred stock with a value of $2,000,000.
The acquisition was accounted for as a purchase and the purchase price
of $2,085,000 was allocated to $173,302 of net assets acquired,
$150,000 to developed technology, $1,700,000 to in-process research and
development expenses and $61,698 to goodwill.
In accordance with FASB Interpretation No. 4, the Company is required
to write-off the amount allocated to in-process research and
development acquired in the acquisition of $1,700,000. This write-off
will be reflected in the period in which the Acquisition is consummated
and has not been reflected in the Pro Forma Consolidated Statements of
Operations, but is reflected in the Pro Forma Consolidated Balance
Sheet.
The pro forma adjustments to the accompanying financial statements are
as follows:
(A) To allocate the excess purchase price to developed technology
of $150,000 and goodwill of $61,698, the recording of the
costs of the merger of $85,000, and record the value of the
SLI preferred stock of $2,000,000 as a minority interest.
(B) To eliminate the equity of Cellco and record the effect of the
write-off in process research and development expenses of
$1,700,000 as part of the purchase price allocation.
(C) To record amortization expense for developed technology and
goodwill as if the acquisition to place on January 1, 1995.
