<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------------------------------
FORM 8-K/1A
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 30, 1997
AFP Imaging Corporation
(Exact name of registrant as specified in its charter)
New York 0-10832 13-2956272
- ------------------------------------------------------------------------------
(State or other jurisdiction (Commission I.R.S. Employer
of incorporation or File Number) Identification No.)
organization)
250 Clearbrook Road, Elmsford, New York 10523
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (914) 592-6100
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired.
(i) Financial Statements with respect to Regam Medical
Systems International AB are included herewith as
Exhibit 7(a)(i).
(ii) Report of Rolf Franson, Authorized Public Accountant.
Relating to Financial Statements of Regam Medical
Systems International AB is included herewith as
Exhibit 7(a)(ii).
(b) Pro-forma Financial Information.
Pro forma financial information with respect to the
acquisition described in the Form 8-K/1A is included herewith
as Exhibit 7(b)
(c) Exhibits.
Not Applicable
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 thereunto duly authorized.
AFP Imaging Corporation
Dated: June 30, 1997 By: /s/ David Vozick
David Vozick,
Chairman of the Board
<PAGE>
ANNUAL REPORT
for
Regam Medical Systems International AB
(Reg. no. 556222-7370)
The Board of Directors and the Managing Director of Regam Medical Systems
International AB present the following report for the period January 1, 1995 -
August 31, 1996.
ADMINISTRATION REPORT
Operations
The company operates in development, production and selling of medical
electronic.
Group relationship
Purchase from subsidiaries during the year SEK 1,000,000.
Selling to subsidiaries during the year.
The company is a wholly-owned subsidiary to ACG Nystromgruppen AB.
Personnel
The average number of employees and the salaries, wages and other remunerations
were as follows:
1995-09-01
1996-08-31
Average number of employees 10
Whereof women 2
Salaries and other remunerations
Board of Directors and
Managing Directors: 331,937
Other employees: 2,015,133
---------
2,347,070
=========
<PAGE>
REGAM AB
Profit distribution proposal
The annual general meeting has the following profits for its disposal:
Retained earnings --
Net profit of the year 503
---------
503
=========
The Board of Directors and the Managing Director proposes following profit
distribution:
Profit carried forward 503
=========
The result of the company's operations and position at the end of the year are
shown in the following income statement, balance sheet, and related notes.
2
<PAGE>
REGAM AB
INCOME STATEMENT 1995-09-01
1996-08-31
Operating income
Net sales 9,799,136
Other operating income 491,338
-----------
10,290,474
Operating expenses
Cost of goods sold and administration
costs -11,365,718
-----------
Operating income before depreciation -1,075,244
Cost depreciation
Machinery and equipment (Note 2) -153,685
-----------
Operating income after depreciation -1,228,929
Financial income and expenses
Interest income 7,600
Interest expense -53,128
-----------
Income before appropriations and tax -1,274,457
Appropriations
Group contribution received 1,280,000
-----------
Income before tax 5,543
Tax -5,040
-----------
Net profit 503
===========
3
<PAGE>
REGAM AB
BALANCE SHEET (SEK) 1996-08-31 1995-08-31
ASSETS
Current assets
Cash and bank deposits 588 --
Loan from subsidiary 1,330,000 50,000
Trade receivables 1,184,448 --
Prepaid expenses and accrued income 312,551 --
Other current assets 839,752 --
Inventories (Note 1) 722,700 --
--------- ---------
Total current assets 4,390,039 50,000
Fixed assets
Machinery and equipment (Note 2) 358,603 --
--------- ---------
Total fixed assets 358,603 --
Total assets 4,748,642 50,000
========= =========
4
<PAGE>
REGAM AB
LIABILITIES AND SHAREHOLDERS' 1996-08-31 1995-08-31
EQUITY
Current liabilities
Accounts payable to subsidiaries 1,036,840 --
Accounts payable - trade 669,903 --
Accrued expenses and prepaid income 1,199,380 --
Other current liabilities 92,201 --
Other tax provision 3,479 --
--------- ---------
Total current liabilities 3,001,803 --
Long-term liabilities
Loan 1,000,000 --
Bank overdraft facility (limit 1,700,000) 696,336 --
--------- ---------
Total long-term liabilities 1,696,336 --
SHAREHOLDERS' EQUITY
Restricted equity
Share capital, 500 shares
par value SEK 100 50,000 50,000
--------- ---------
Total restricted equity 50,000 50,000
Unrestricted equity
Net profit for the year 503 --
--------- ---------
503 --
Total liabilities and
shareholders' equity 4,748,642 50,000
========= =========
Chattel mortgages 7,000,000 --
Contingent liabilities
Guarantees 2,048,875 --
5
<PAGE>
REGAM AB
Sundsvall January 20, 1997
- ---------------------------- -------------------------
Bengt Gabrielsson Lars Nelvig
My audit report was submitted January 20, 1997
- ----------------------------
Rolf Franson
Authorized Public Accountant
6
<PAGE>
AUDIT REPORT
Regam Medical Systems International AB
(556222-7370)
I have examined the Annual Report, the Accounts and the Administration by the
Board of Directors and the Managing Director for the period September 1, 1995 -
August 31, 1996. The examination was carried out in accordance with generally
accepted accounting standards.
The Annual Report has been carried out in compliance with the Swedish Companies
Act.
I recommend
that the Income Statement and the Balance Sheet be adopted
that the earnings be disposed of as proposed in the Report of the Board of
Directors
that the members of the Board of Directors and the Managing Director be
discharged from liability for the year September 1, 1995 - August 31, 1996.
Boras, January 20, 1997
- ----------------------------
Rolf Franson
Authorized Public Accountant
7
<PAGE>
PRO FORMA FINANCIAL STATEMENTS
On April 17, 1997, AFP Imaging Corporation (the "Registrant"), a New
York Corporation, purchased from ACG Nystromgruppen AB ("Nystrom"), a Swedish
company, 500 common shares of Regam Medical Systems AB ("Regam"), a Swedish
company, representing 100 percent of the issued share capital of Regam. The
Registrant assumed all outstanding assets and liabilities as of the closing
date free and clear of all liens, claims, charges, pledges or encumbrances.
Regam is a manufacturer of a filmless digital dental radiography system, with
an installed base of over 3,500 units in Europe and Asia.
The following unaudited pro forma balance sheet has been prepared
using the historical balance sheets of the Registrant and Regam, and give
effect to the acquisition of all assets and liabilities of Regam for
$2,900,000, including a cash payment of $1,500,000, a note payable for
$1,000,000 bearing interest at 2% above LIBOR per annum (8.4% on April 17,
1997), a letter of credit for $200,000 bearing no interest and a guaranteed
royalty payment of $200,000, as if the transaction occurred on March 31, 1997.
The accompanying unaudited pro forma income statements for the nine month
period ended March 31, 1997 and for the year ended June 30, 1996, give effect
to these adjustments as though each of such events had occurred on July 1, 1996
and July 1, 1995, respectively. Pro forma adjustments are further described in
the accompanying notes.
These pro forma financial statements should be read in conjunction
with the financial statements of the Registrant (refer to June 30, 1996 Form
10-K and March 31, 1997 Form 10-Q not included in this filing), as well as the
financial statements of Regam which are included herein. The pro forma
information does not purport to be indicative of the results which would have
been reported if the combinations had been in effect for the period presented
or which may result in the future.
<PAGE>
PRO FORMA CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Historical, year ended
June 30, 1996
------------------------------
AFP Regam
Imaging Medical Systems Pro Forma Pro
Corporation International AB Adjustments Forma
----------- ---------------- ----------- ------------
<S> <C> <C> <C> <C>
NET SALES $36,528,879 $1,477,712 $ -- $38,006,591
------------
COST OF SALES 24,430,698 761,736 -- 25,192,434
------------ ------------ ------------ ------------
Gross Profit 12,098,181 715,976 -- 12,814,157
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 9,287,858 592,140 196,374 10,076,372
RESEARCH AND DEVELOPMENT EXPENSES 1,273,032 300,310 -- 1,573,342
------------ ------------ ------------ ------------
Operating Income (Loss) 1,537,291 (176,474) (196,374) 1,164,443
INTEREST EXPENSE, NET 776,763 6,538 138,750 922,051
OTHER (INCOME)/EXPENSE
-- (183,808) 183,808 --
------------ ------------ ------------ ------------
Income (Loss) before Provision (Benefit) for 760,528 796 (518,932) 242,392
Income Taxes
PROVISION (BENEFIT) FOR INCOME TAXES 60,000 724 (10,000) 50,724
------------ ------------ ------------ ------------
Net Income (Loss) $700,528 $72 $(508,932) $191,668
============ ============ ============ ============
NET EARNINGS (LOSS) PER SHARE
Primary $0.08 $0.14 $0.02
============ ============ ============
Fully Diluted $0.08 $0.14 $0.02
============ ============ ============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING
Primary 9,112,677 500 9,112,677
============ ============ ============
Fully Diluted 9,628,992 500 9,628,992
============ ============ ============
</TABLE>
- ---------------------------------------------
Notes:
(1) The financial statements of Regam Medical Systems International AB (Regam)
were originally reported in Swedish Krona (SEK). As the SEK represents the
functional currency of Regam, the related income statement of this company
has been translated into U.S. dollars using the average exchange rate
during the fiscal year ended June 30, 1996.
(2) Pro forma adjustments include the following:
(A) Recording of amortization expense for the excess of the purchase
price over the fair value of assets acquired. This goodwill was
assumed to have a useful life of 15 years.
(B) Recording of interest expense associated with the $1.0 million of
long-term debt used to finance the acquisition.
(C) Reduction of interest income on $1.5 million in cash paid to
finance the acquisition.
(D) Elimination of group capital contribution from former parent
(included in Other (Income)/Expense) from the Income Statement.
<PAGE>
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Historical, as of
March 31, 1997
-------------------------------
AFP Regam
Imaging Medical Systems Pro Forma Pro
Corporation International AB Adjustments Forma
----------- ---------------- ----------- ------------
ASSETS
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $2,899,447 $84,577 $(1,500,000) $1,484,024
Accounts receivable, net of allowance for doubtful 4,757,252 316,558 -- 5,073,810
accounts and sales returns
Inventories 6,184,918 349,904 -- 6,534,822
Prepaid expenses and other 100,061 18,049 -- 118,110
------------ ------------ ------------ ------------
Total Current Assets 13,941,678 769,088 (1,500,000) 13,210,766
PROPERTY, PLANT AND EQUIPMENT, (at cost):
Building and building improvements 228,469 -- -- 228,469
Machinery and equipment 6,945,656 68,187 -- 7,013,843
Less: Accumulated depreciation (6,012,951) -- -- (6,012,951)
------------ ------------ ------------ ------------
Total Property, Plant and Equipment 1,161,174 68,187 -- 1,229,361
INTANGIBLE ASSETS, (net of accumulated amortization) 1,642,198 224,813 2,945,610 4,812,621
OTHER ASSETS 233,178 -- -- 233,178
------------ ------------ ------------ ------------
TOTAL ASSETS $16,978,228 $1,062,088 $1,445,610 $19,485,926
============ ============ ============ ============
</TABLE>
- ---------------------------------------------
Notes:
(1) The financial statements of Regam Medical Systems International AB (Regam)
were originally reported in Swedish Krona (SEK). As the SEK represents the
functional currency of Regam, the accompanying balance sheet of this
company has been translated using the spot rate as of March 31, 1997,
where applicable.
(2) Pro forma adjustments include the recording of the purchase transaction,
including cash payment of $1,500,000, long-term note payable of
$1,000,000, accrued short-term payable of $200,000, accrued royalty
expense of $200,000 and goodwill of approximately $2,900,000.
<PAGE>
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Historical, as of
March 31, 1997
--------------------------------
AFP Regam
Imaging Medical Systems Pro Forma Pro
Corporation International AB Adjustments Forma
------------- -------------------------------- ------------
<S> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Current portion of long-term debt 110,000 -- -- 110,000
Accounts payable 1,710,138 599,459 -- 2,309,597
Accrued expenses 1,612,863 148,239 400,000 2,161,102
Convertible subordinated debentures 200,000 -- -- 200,000
------------ ------------ ------------ ------------
Total Current Liabilities 3,633,001 747,698 400,000 4,780,699
LONG-TERM DEBT 3,016,024 360,000 1,000,000 4,376,024
STOCKHOLDERS' EQUITY (DEFICIT):
Convertible preferred stock, Series A 2,474,804 -- -- 2,474,804
Convertible preferred stock, Series B 854,247 -- -- 854,247
Common stock warrants 25,314 -- -- 25,314
Common stock 71,706 6,667 (6,667) 71,706
Paid-in capital in excess of par 8,277,437 -- -- 8,277,437
Retained deficit (1,374,305) (52,277) 52,277 (1,374,305)
------------ ------------ ------------ ------------
Total Stockholders' Equity (Deficit) 10,329,203 (45,610) 45,610 10,329,203
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 16,978,228 $ 1,062,088 $ 1,445,610 $ 19,485,926
============ ============ ============ ============
</TABLE>
- ---------------------------------------------
Notes:
(1) The financial statements of Regam Medical Systems International AB (Regam)
were originally reported in Swedish Krona (SEK). As the SEK represents the
functional currency of Regam, the accompanying balance sheet of this
company has been translated using the spot rate as of March 31, 1997,
where applicable.
(2) Pro forma adjustments include the recording of the purchase transaction,
including cash payment of $1,500,000, long-term note payable of
$1,000,000, accrued short-term payable of $200,000, accrued royalty
expense of $200,000 and goodwill of approximately $2,900,000.
<PAGE>
PRO FORMA CONSOLIDATED INCOME STATEMENT
FOR THE NINE MONTHS ENDED MARCH 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Historical, nine months ended
March 31, 1997
-------------------------------
AFP Regam
Imaging Medical Systems Pro Forma Pro
Corporation International AB Adjustments Forma
------------- ------------------------------ -----------
<S> <C> <C> <C> <C>
NET SALES $26,469,996 $ 1,496,287 $ -- $27,966,283
COST OF SALES 17,917,367 1,127,915 -- 19,045,282
----------- ----------- ----------- -----------
Gross Profit 8,552,629 368,373 -- 8,921,002
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 6,505,394 679,314 147,281 7,331,988
RESEARCH AND DEVELOPMENT EXPENSES 591,083 189,042 -- 780,125
----------- ----------- ----------- -----------
Operating Income (Loss) 1,456,152 (499,983) (147,281) 808,888
INTEREST EXPENSE, NET 335,536 42,087 104,063 481,685
OTHER (INCOME) EXPENSE -- (474,857) 474,857 --
----------- ----------- ----------- -----------
Income (Loss) before Provision (Benefit) for Income 1,120,616 (67,213) (726,200) 327,203
Taxes
PROVISION (BENEFIT) FOR INCOME TAXES 120,000 -- (15,000) 105,000
----------- ----------- ----------- -----------
Net Income (Loss) $ 1,000,616 $ (67,213) $ (711,200) $ 222,203
=========== =========== =========== ===========
NET EARNINGS (LOSS) PER SHARE
Primary $ 0.10 $ (134.43) $ 0.02
=========== =========== ===========
Fully Diluted $ 0.10 $ (134.43) $ 0.02
=========== =========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING
Primary 9,930,148 500 9,930,148
=========== =========== ===========
Fully Diluted 9,930,148 500 9,930,148
=========== =========== ===========
</TABLE>
- ---------------------------------------------
Notes:
(1) The financial statements of Regam Medical Systems International AB (Regam)
were originally reported in Swedish Krona (SEK). As the SEK represents the
functional currency of Regam, the related income statement of this company
has been translated into U.S. dollars using the average exchange rate
during the nine months ended March 31, 1997.
(2) Pro forma adjustments include the following:
(A) Recording of amortization expense for the excess of the purchase
price over the fair value of assets acquired. This goodwill was
assumed to have a useful life of 15 years.
(B) Recording of interest expense associated with the $1.0 million of
long-term debt used to finance the acquisition.
(C) Reduction of interest income on $1.5 million in cash paid to finance
the acquisition.
(D) Elimination of group capital contribution from former parent
(included in Other (Income)/Expense) from the Income Statement.
