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
November 10, 1999
(Date of earliest event reported)
UNIDYNE CORPORATION
(Exact name of small business issuer
as specified in its charter)
DELAWARE 0-10372 23-2154902
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation or organization) Identification No.)
118 PICKERING WAY, SUITE 104, EXTON, PENNSYLVANIA 19341
(Address of principal executive offices)
(610) 363-8237
(Issuer's telephone number)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
In November, 1999, the Corporation negotiated an out-of-court settlement in an
action filed by former stockholders of Sabina Industries, Inc. on December 31,
1997, in the United States District Court for the Central District of
California. On September 30, 1997, UNIDYNE acquired Sabina in a stock for stock
transaction. UNIDYNE exchanged 500,000 shares of its common stock for all the
issued and outstanding shares of Sabina Industries, Inc., which included all the
assets and liabilities of Sabina as well as trade names and technology. In
December, 1997, the former stockholders of Sabina filed suit alleging
misrepresentation, failure to release them from personal guarantees, and
undisclosed liabilities of UNIDYNE and sought recission of the acquisition
agreement. UNIDYNE denied all allegations and contested the recission.
The settlement became effective November 10, 1999. UNIDYNE will retain the
company known as Sabina Industries, Inc. The Sabina name, along with its
associated trade names and the rights, title, and interests to Sabina's
technology, along with Sabina inventory located at Anaheim, California will be
transferred to the former stockholders of Sabina. The agreement further calls
for a) return to UNIDYNE of the 500,000 shares of UNIDYNE Common Stock, b) a
sales type lease transfer of machinery and equipment to the former Sabina
stockholders over a three year period with a total lease value of $310,788, c)
Sabina to enter three-year service contracts for technical consulting and for
warranty service with a total value of $361,188, d) cancellation of the real
property leases with a remaining value of approximately $1,000,000 for Sabina's
Anaheim operations, e) a payment to UNIDYNE of $150,000 less amounts due and
owing under the real estate leases, f) dismissal of all actions brought against
UNIDYNE. Mutual releases and covenants not to sue were exchanged among the
parties.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Pro Forma Financial Information
In November, 1999, the Corporation negotiated an out-of-court settlement in an
action filed by former stockholders of Sabina Industries, Inc. on December 31,
1997, in the United States District Court for the Central District of
California. The settlement became effective November 10, 1999. UNIDYNE will
retain the company known as Sabina Industries, Inc. The Sabina name, along with
its associated trade names and the rights, title, and interests to Sabina's
technology, along with Sabina inventory located at Anaheim, California will be
transferred to the former stockholders of Sabina. The agreement further calls
for a) return to UNIDYNE of the 500,000 shares of UNIDYNE Common Stock, b) a
sales type lease transfer of machinery and equipment to the former Sabina
stockholders over a three year period with a total lease value of $310,788, c)
Sabina to enter three-year service contracts for technical consulting and for
warranty service with a total value of $361,188, d) cancellation of the real
property leases with a remaining value of approximately $1,000,000 for Sabina's
Anaheim operations, e) a payment to UNIDYNE of $150,000 less amounts due and
owing under the real estate leases, f) dismissal of all actions brought against
UNIDYNE. Mutual releases and covenants not to sue were exchanged among the
parties.
<PAGE>
The pro forma financial information is presented for the year ended December 31,
1998, and for the nine-months ended September 30, 1999, and presents the
disposition of the Sabina assets involved in the transaction as if it occurred
on January 1, 1999.
UNIDYNE Corporation and Consolidated Subsidiaries
Unaudited Pro Forma Statement of Income
(in thousands, except share and per share data)
<TABLE>
<CAPTION>
Year ended December 31, 1998
Historical Adjustments(1) Pro forma
<S> <C> <C> <C>
Sales 24,629 7,593 17,036
Cost of sales 17,105 5,168 11,937
-------------------------------------
Gross income 7,524 2,425 5,099
Selling and administrative expense 8,572 3,461 5,111
Research and development expense 187 187
-------------------------------------
8,759 3,461 5,298
-------------------------------------
Loss from operations (1,235) (1,036) (199)
Other income 25 25
Interest expense 751 51 700
-------------------------------------
Loss before taxes (1,961) (1,062) (899)
Income tax provision 435 435
Net loss (2,396) (1,062) (1,334)
Preferred dividends (350) (350)
-------------------------------------
Loss applicable to common shareholders (2,746) (1,062) (1,684)
=====================================
Basic and diluted loss per share ($0.29) ($0.18)
Weighted average number of shares of Common Stock 9,335,352 9,335,352
</TABLE>
(1) Represents the historical results of operations of the discontinued Sabina
operation for the year ended December 31, 1998.
<TABLE>
<CAPTION>
Nine months ended September 30, 1999
Historical Adjustments(2) Pro forma
<S> <C> <C> <C>
Sales 13,262 13,262
Cost of sales 8,385 (219) 8,604
--------------------------------------
Gross income 4,877 (219) 4,658
Selling and administrative expense 7,343 (226) 7,569
Research and development expense 204 204
--------------------------------------
7,547 (226) 7,773
--------------------------------------
Loss from continuing operations (2,670) (445) (3,115)
Interest expense 525 525
Loss from contininuing operations before taxes (3,195) (445) (3,640)
Income tax provision
Loss from continuing operations (3,195) (445) (3,640)
Loss from discontinued operation (1,203) (1,203)
--------------------------------------
Net loss (4,398) (445) (4,843)
Preferred dividends (175) (175)
--------------------------------------
Loss applicable to common stockholders (4,573) (445) (5,018)
======================================
Basic and diluted loss per share from continuing operations ($0.33) ($0.37)
Basic and diluted loss per share ($0.47) ($0.51)
Weighted average number of shares of Common Stock 9,795,352 9,795,352
</TABLE>
(2) The historical results of operations of the discontinued Sabina operation
for the nine months ended September 30, 1999 were reflected as Loss from
discontinued operations in the interim statement of operations included in
the Corporation's 10-Q filing for the period ended September 30, 1999. The
adjustments here reflected are those triggered by the transfer of assets to
third parties in connection with the settlement.
<PAGE>
Condensed Pro Forma Balance Sheet
(in thousands)
<TABLE>
<CAPTION>
December 31, 1998
Historical Adjustments(3) Pro forma
<S> <C> <C> <C>
Assets
Current Assets
Cash 126 (82) 44
Accounts Receivable 3,032 (1,334) 1,698
Inventory 7,429 (1,224) 6,205
Other current assets 358 (92) 266
-----------------------------
10,945 (2,732) 8,213
Property, plant & equipment
Buildings 3,640 3,640
Machinery & Equipment 9,589 (866) 8,723
Other fixed assets 484 (114) 370
-----------------------------
13,713 (980) 12,733
Accumulated depreciation (5,269) (704) (5,973)
-----------------------------
Net property, plant & equipment 8,444 (1,684) 6,760
Other assets 5,959 (2,800) 3,159
-----------------------------
Total Assets 25,348 (7,216) 18,132
=============================
Current Liabilities
Accounts Payable 5,262 (1,244) 4,018
Short term debt 3,625 (781) 2,844
Other accrued liabilities 2,677 (252) 2,425
-----------------------------
Total Current Liabilities 11,564 (2,277) 9,287
Long-term debt 3,797 (94) 3,703
Post-retirement benefits payable 4,491 4,491
Preferred dividends payable 700 700
-----------------------------
8,988 (94) 8,894
-----------------------------
Stocholders' equity
Common stock 9 9
Preferred stock 5,000 5,000
Additional paid in capital 13,127 (251) 12,877
Treasury stock (7) (7)
Retained deficit (13,333) (4,595) (17,928)
-----------------------------
4,796 (50)
-----------------------------
Total Liabilities and Stockholders' Equity 25,348 18,132
-----------------------------
</TABLE>
(3) Represents the adjustments to show the deletion of the discontinued Sabina
operation, along with the elimination of the goodwill attributable to the
assets sold or leased as part of the settlement.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
UNIDYNE Corporation
November 20, 1999 /s/ Wayne R. Lorgus
-----------------------------------
Wayne R. Lorgus
President and Chief Executive Officer
