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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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) OCTOBER 22, 1996
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MICROLYTICS, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
DELAWARE 0-16069 41-1464586
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(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
TWO TOBEY VILLAGE OFFICE PARK, PITTSFORD, NEW YORK 14534
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code 716 248-9150
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SELECTRONICS, INC.
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(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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ITEM 5. OTHER EVENTS
The Company has been named as a defendant in an action brought in the
Federal District Court for the Southern District of New York by Unterberg
Harris Private Equity Partners LP, a venture capital firm in New York City for
alleged securities fraud and breach of contract in connection with Unterberg's
purchase of $2.5 million of the Company's securities in June of 1995. Xerox
Corporation's Venture Capital division and certain of the Company's former
Officers and Directors, Messrs. Haythorn and Riley, have also been sued for
alleged violations of federal securities laws, breach of fiduciary duty, common
law fraud and misrepresentation in connection with the same investment.
The Complaint, which was served on the Company on October 22, 1996,
seeks recovery from the defendants of Unterberg Harris' investment and punitive
damages of $5 million. Central to all of the claims is an alleged scheme to
deceive Unterberg Harris about the Company's true financial condition: Mr.
Haythorn's self-professed gambling addiction and the non-disclosure of this
addiction by Riley and Xerox who are alleged to have known of the addiction at
the time they sponsored Mr. Haythorn's employment by the Company as its Chief
Executive Officer in 1993 and acted thereafter to covering this debilitating
addiction; and an alleged scheme to induce Unterberg Harris to make an
investment in order to repay monies advanced by Xerox Venture Capital to both
the Company and Haythorn and undisclosed borrowings by Haythorn from the
Company. Xerox Corporation is alleged to be a controlling shareholder of the
Company's Common Stock at the time of the alleged violations.
The Company has not yet had an opportunity to review either the
Complaint or the underlying facts in detail, but expects that if the
allegations are true, it will "claim over" against Xerox and Messrs. Haythorn
and Riley for any liability it might have to Unterberg Harris and, in addition,
the Company may seek independent recovery from those other defendants for
damage to the Company arising out of their alleged activities.
The Company is filing with the Securities and Exchange Commission to
terminate its registration under the Securities Exchange Act of 1934. The
effect of such a termination, if granted, would be a cessation of its
obligation to file quarterly and Annual Reports; limitation of future trading
to the "Pink Sheets" (an inter dealer quotation publication) provided that the
Company otherwise publicly disseminates the same type and kind of material
information as would have been required by those reports; and loss of certain
rights to holders of restricted stock to resell those restricted shares under
certain exemptions from the registration requirement of the Securities Act of
1933. The Company noted that its shares had already been removed from the
NASDAQ National Market for failure to meet "price" requirements and was now in
fact only quoted in the Pink Sheets. It also noted that it has not yet filed
certain required Forms 10-Q and the Form 10-K for the year ended March 31,
1996. The Company said the decision to deregister was motivated by the desire
to eliminate the substantial legal and accounting expense associated with
filing the SEC reports.
The Company also announced the previous resignations of Messrs. Donald
Riley and Robert Harris as directors. The sole remaining director is Mr. Elroy
G. Roelke. Mr.
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Roelke is a Vice President of Renaissance Capital which is a holder of 15% of
the Company's Common Stock. Michael McCourt, a Vice President of the Company,
is acting as General Manager for its day to day operations.
Mr. McCourt stated the Company's MicroPages(R), a new proprietary full
text retrieval product has been recently licensed to a "Baby Bell" for use in
that corporation's proprietary "Internet Yellow Page" site. In addition the
Company continues to support its strategic partners Seiko Instruments,
Eurotronics and Fuji Xerox with compression and linguistics technology.
Mr. McCourt stated that while its trade accounts are basically current,
that it is seeking to develop a restructuring plan to handle its other debt
obligations totaling $3.2 million, all of which are in substantial default, and
to raise additional capital for its MicroPages(R) business.
No date has been set for an annual meeting of shareholders, normally
held in August of each year, pending identification of new directors and
development of a plan for restructuring the Company.
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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.
MICROLYTICS, INC.
October 25, 1996 By: /s/ Elroy G. Roelke
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Elroy G. Roelke
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