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
February 9, 1998
(Date of earliest
event reported)
AN-CON GENETICS, INC.
(exact name of registrant)
DELAWARE
(State or other Jurisdiction
of incorporation)
0-12183
(Commission
File Number)
11-2644611
(IRS Employer
Identification Number)
734 Walt Whitman Road
Melville, NY 11747
(address of principal executive officer)
Registrant's telephone number
including are code (516) 421-5452
One Huntington Quadrangle
Melville, NY 11747
(former name or former address, if changed
since last report)
The information to be included in the report.
Item 2. Acquisition of Assets.
2(a) On February 9, 1998 registrant entered into a
series of contemporaneous agreements and transactions
involving two non-affiliated companies, Advanced
Refractory Technologies, Inc. ("ART") a privately held
New York corporation engaged in research and development
of a certain patented diamond-like nanocomposite
technology for the coating of products ("DYLYN
Technology"), and BSD Development Beta Corporation, a
privately held Delaware corporation with no prior
operating history.
As a result of the aforesaid transactions, the registrant
acquired certain jobcoating equipment valued at
$2,000,000 and consisting of two DYLYN deposition
reactors inclusive of components and two electro-blade
surgical mounting fixtures (the "Equipment") for coating
electro-surgical blades and other specified medical
devices utilizing the DYLYN Technology.
Pursuant to a Stock Exchange Agreement dated February 9,
1998 among BSD, ART and registrant and a Securities
Exchange Agreement between BSD and registrant dated
February 9, 1998 (hereinafter described), BSD assigned to
registrant which also assumed, a certain (a) Purchase
Agreement (b) License Agreement and (c) Manufacturing
Agreement, each between BSD and ART dated February 9,
1998. The aforesaid, in addition to the acquisition by
registrant of the Equipment, resulted in the acquisition
by registrant of an exclusive 10-year license to use the
DYLYN Technology to jobcoat specified medical products
together with a manufacturing arrangement with ART
whereby ART will operate and maintain the Equipment for
the use of the DYLYN Technology under the License
Agreement at ART's location in Buffalo, New York.
Finally, as a result of the Securities Exchange Agreement
registrant also acquired all of the outstanding
securities of BSD which is now a wholly owned subsidiary
of registrant.
The license is an exclusive 10-year license to use the
DYLYN technology to jobcoat specified medical products
for marketing anywhere in the world. It provides
essentially for payment of a royalty to ART based upon
net revenues derived by the registrant directly or
indirectly from the sale of products or fees from sub-
licensees utilizing the DYLYN Technology. The
exclusivity of the license is contingent upon ART
receiving minimum jobcoating fees of $200,000 in the
first contract year (estimated to commence August 1,
1998) and increasing by $100,000 per year for each
succeeding contract year up to a minimum of $500,000 in
the fourth contract year and each succeeding year
thereafter.
The 10-year license is renewable for an additional 10-
year period upon notice prior to 180 days of expiration,
plus the payment by the registrant of $2 Million in cash
or in shares of common stock of registrant having a fair
market value aggregating $2 Million. .
The license may be terminated by ART in the event of (a)
registrant's failure to pay any fee due, (b) breach or
default by registrant of any material term of the License
Agreement or other related agreements between ART, BSD
and or registrant; (c) breach or default of the
Manufacturing Agreement; (d) registrant files a petition
in bankruptcy or for an arrangement under any federal or
state bankruptcy laws or is adjudicated insolvent; or (e)
a petition is filed proposing adjudication of registrant
as bankruptcy or insolvent, and such petition is not
dismissed within 90 days after filing thereof.
Exchange of Shares
Pursuant to the Stock Exchange Agreement dated February
9, 1998 between ART, BSD and registrant, the registrant
exchanged 2,000,000 shares of common stock of registrant
for 1000 shares of Class A Preferred Stock of BSD
constituting all of the outstanding shares of Class A
Preferred Stock of BSD. In addition, pursuant to a
certain Securities Exchange Agreement dated February 9,
1998, between the registrant and the Eric Bashford
Charitable Remainder Unitrust and the Norman Fuchs
Individual Retirement Account and Gregory Konesky ("BSD
shareholders"), the Company acquired all of the
outstanding shares of common stock of BSD and an 8%
Convertible Debenture of BSD in the principal amount of
$750,000 in exchange for 3,000,000 shares of common stock
of registrant. Upon completion of such transactions, the
registrant owned all of the outstanding securities of BSD
which had licensing and manufacturing rights to operate
the Equipment (which rights have been assigned to
registrant), $250,000 in cash and a $750,000 secured note
receivable.
Future Obligation of Registrant
Pursuant to the Stock Exchange Agreement relating to the
exchange of 2,000,000 shares of registrant's common stock
for 1,000 shares of BSD's Class A Preferred Stock, ART is
entitled to exchange the common shares for 2,000,000
shares of registrant's Series A Preferred Stock
containing specified rights and preferences (Preferred
Stock), on or before September 6, 1998, subject to the
approval of shareholders of a Certificate of Amendment of
registrant's Certificate of Incorporation authorizing the
issuance of such shares of Preferred Stock. The
Preferred Stock is to be convertible into 2,000,000
shares of common stock of An-Con and shall have certain
preferences on liquidation and anti-dilution aspects. In
the event An-Con is unable, for any reason, to deliver
the Preferred Stock to ART on or before September 6,
1998, then, prior to September 15, 1998, An-Con is to
issue and deliver, without payment of any additional
consideration by ART, an additional number of shares of
An-Con's common stock having an aggregate fair market
value of $500,000. Furthermore, in the event An-Con
should issue any shares of any series or class of its
preferred stock having substantially the same rights and
preferences as the Preferred Stock, then An-Con is to
issue and deliver to ART, without payment of any
additional consideration by ART, an additional number of
shares of An-Con's common stock having an aggregate fair
market value equal to $500,000.
Item 7. Financial Statements, Pro-Forma Financial
Information and Exhibits.
(i) Balance Sheet of BSD Development Beta Corp. as of
February 9, 1998.
(ii) Pro-Forma Statements of An-Con Genetics, Inc. and
BSD Development Beta Corp. as of December 31, 1997.
Signature
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant is duly caused this report to
be signed on its behalf by the undersigned hereunto duly
authorized.
An-Con Genetics, Inc.
by s/Andrew Makrides
Andrew Makrides, President
Date: February 25, 1998
c: 8K
