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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): November 3, 1997
Noise Cancellation Technologies, Inc.
(Exact name of Registrant as specified in Charter)
Delaware 0-18267 59-2501025
(State or other juris- (Commission (IRS Employer
diction of incorporation) File Number) Identification
Number)
1025 West Nursery Road, Linthicum, Maryland 21090
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (410) 636-8700
None
(Former name or former address, if changes since last report)
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Item 5. Other Events.
The following transactions were reported previously in Note 6 --
Subsequent Events -- of the notes to the condensed consolidated financial
statements (unaudited) in the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997 (the "Third Quarter 10-Q").
Between October 28, 1997 and November 13, 1997, the Company entered into a
series of subscription agreements (the "Subscription Agreements") to sell an
aggregate amount of $13.3 million of the Company's Series C Convertible
Preferred Stock (the "Preferred Stock") in a private placement pursuant to
Regulation D of the Securities Act to 32 unrelated accredited investors through
two dealers (the "1997 Preferred Stock Private Placement"). Subscription
Agreements totalling $11.3 million have been received and accepted by the Comany
through November 13, 1997. Of the total Preferred Stock Offering, sales of
Preferred Stock in the aggregate amount of $6.1 million were completed as of
November 13, 1997, with the balance of the sales in the aggregate amount of $7.2
million scheduled to be completed by November 18, 1997. Assuming such
completion, the aggregate net proceeds to the Company of the 1997 Preferred
Stock Private Placement are estimated at $11.9 million. Each share of the
Preferred Stock has a par value of $.10 per share and a stated value of one
thousand dollars ($1,000) with an accretion rate of four percent (4%) per annum
on the stated value. Each share of Preferred Stock is convertible into fully
paid and nonassessable shares of the Company's common stock subject to certain
limitations. Under the terms of the Subscription Agreements the Company is
required to file a registration statement ("Registration Statement") on Form S-3
covering the resale of all shares of common stock of the Company issuable upon
conversion of the Preferred Stock then outstanding within sixty (60) days after
the first Closing of the 1997 Preferred Stock Private Placement. The shares of
Preferred Stock become convertible into shares of common stock at any time
commencing after the earlier of (i) the effective date of the Registration
Statement; or (ii) ninety (90) days after the date of filing of the Registration
Statement. Each share of Preferred Stock is convertible into a number of shares
of common stock of the Company as determined in accordance with the following
formula (the "Conversion Formula"):
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[(.04) x (N/365) x (1,000)] + 1,000
Conversion Price
where
N = the number of days between (i) the closing date of the
Preferred Stock being converted, and (ii) the
conversion date thereof.
Conversion
Price = the lesser of (x) 120% of the five (5) day average
closing bid Price of common stock immediately
prior to the closing date of the Preferred Stock
being converted or (y) 20% below the five (5) day
average closing bid price of common stock
immediately prior to the conversion date thereof.
Closing
Date = the date of the closing as set forth in the
subscription agreement pertaining to the Preferred
Stock being converted.
The conversion terms of the Preferred Stock also provide that in no
event shall the average closing bid price referred to in the Conversion
Formula be less than $0.625 per share and in no event shall the Company be
obligated to issue more than 26,000,000 shares of its common stock in the
aggregate in connection with the conversion of the Preferred Stock. Under
the terms of the Subscription Agreement the Company may be subject to a
penalty if the Registration Statement is not declared effective within one
hundred twenty (120) days after the first closing of any incremental portion
of the offering of Preferred Stock, such penalty to be in an amount equal to
one and one half percent (1.5%) per month of the aggregate amount of
Preferred Stock sold in the offering up to a maximum of ten percent (10%) of
such aggregate amount. The Subscription Agreements also provide that for a
period commencing on the date of the signing of the Subscription Agreements
and ending ninety (90) days after the closing of the offering the Company
will be prohibited from issuing any debt or equity securities other than
Preferred Stock, and that the Corporation will be required to make certain
payments in the event of its failure to effect conversion in a timely manner
or in the event it fails to reserve sufficient authorized but unissued common
stock for issuance upon conversion of the Preferred Stock.
The following are condensed consolidated balance sheets (unaudited) of
the Company and its subsidiaries as of September 30, 1997, as previously
filed in the Third Quarter 10-Q, and as of November 13, 1997, reflecting the
transactions noted above. The presentation in the balance sheet as of
November 13, 1997, is consistent with the presentation in the balance sheet
as of September 30, 1997. In the opinion of management, all adjustments
(consisting of normal recurring accruals and certain adjustments to reserves
and allowances) considered necessary for a fair presentation have been
included. This balance sheet should be read in conjunction with the condensed
consolidated financial statements (unaudited) and the notes thereto contained
in the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997. For further information, refer to the
consolidated financial statements and the notes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996, as
amended.
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NOISE CANCELLATION TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Thousands of dollars)
September 30, November 13,
1997 1997
_____________ ____________
ASSETS:
Current Assets:
Cash and cash equivalents $ 1,038 $ 6,179
Accounts receivable:
Trade:
Technology license fees and royalties $ 210 $ 210
Joint Ventures and affiliates 21 21
Other 630 510
Unbilled 7 17
Allowance for doubtful accounts (124) (124)
___________ __________
Total accounts receivable $ 744 $ 634
Inventories, net of reserves 1,350 1,146
Other current assets 35 (6)
___________ __________
Total current assets $ 3,167 $ 7,953
Property and equipment, net 1,466 1,332
Patent rights and other intangibles, net 1,572 1,544
Other assets 49 51
__________ __________
$ 6,254 $ 10,880
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 2,383 $ 1,838
Accrued expenses 981 1,085
Accrued payroll, taxes and related expenses 427 484
Customers' advances 87 3
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Total current liabilities $ 3,878 $ 3,410
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Commitments and contingencies
STOCKHOLDERS' EQUITY
Preferred stock, $.10 par value, 10,000,000
shares authorized
11,250 issued as of November 13, 1997 $ - $ 1
Common stock, $.01 par value, 185,000,000
shares authorized, issued and outstanding
132,214,081 and 132,842,791 shares,
respectively $ 1,312 $ 1,319
Additional paid-in-capital 89,804 100,925
Accumulated deficit (88,851) (90,371)
Cumulative translation adjustment 116 185
Common stock subscriptions receivable (5) (4,589)
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Total stockholders' equity $ 2,376 $ 7,470
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$ 6,254 $ 10,880
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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.
NOISE CANCELLATION TECHNOLOGIES, INC.
By /s/ CY E. HAMMOND
Senior Vice President,
Chief Financial Officer
Dated: November 14, 1997
