FORM 10-Q/A-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-14306
INTERCELL CORPORATION
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(Exact name of registrant as specified in its charter)
Colorado 84-0928627
- --------------------------------------------- ----------------------
(State or other jurisdiction of incorporation (I.R.S. employer
or organization) identification number)
999 West Hastings Street, Suite 1750
Vancouver, B.C., Canada, V6C 2W2
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (604) 684-1533
No Change
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(Former name, former address or former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No
As of January 31, 1997 there were 17,795,021 shares of the registrant's sole
class of common shares, 190 Class B Preferred Shares and 525 Series C Preferred
Shares outstanding.
<PAGE>
INTERCELL CORPORATION AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
December 31 and September 30, 1996 1
Condensed Consolidated Statement of Operations
For the Three Months Ended December 31, 1996 and 1995 2
Condensed Consolidated Statement of Cash Flows
For the Three Months Ended December 31, 1996 and 1995 3
Notes to Condensed Consolidated Financial Statements
December 31, 1996 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 5
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 8
Item 2. Changes in Securities 8
Item 6. Exhibits and Reports on Form 8-K 9
SIGNATURES 10
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
INTERCELL CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheet
<CAPTION>
(Unaudited)
December 31, 1996 September 30, 1996
----------------- ------------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 8,116,000 $ 4,224,000
Short term investments 975,000 3,063,000
Accounts receivable, net 810,000 746,000
Inventories 1,156,000 1,066,000
Prepaid expenses and other current assets 141,000 102,000
Investment land held for sale 1,424,000 1,424,000
------------ ------------
Total current assets 12,622,000 10,625,000
Property, plant and equipment, net 1,638,000 1,418,000
Goodwill and other intangible assets, net 1,510,000 1,583,000
Other assets 213,000 200,000
------------ ------------
Total assets $ 15,983,000 $ 13,826,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable $ -- $ 266,000
Notes payable to related parties -- 932,000
Current portion of long-term debt 15,000 120,000
Accounts payable and accrued liabilities 858,000 742,000
------------ ------------
Total current liabilities 873,000 2,060,000
Long term debt, less current portion 29,000 86,000
------------ ------------
Total liabilities 902,000 2,146,000
------------ ------------
Commitments
Stockholders' equity:
Convertible preferred stock: 10,000,000 shares authorized
Series B; 228 and 787 issued and outstanding as of
December 31, 1996 and September 30, 1996 respectively 1,603,000 5,533,000
Series C; 525 and 0 issued and outstanding as of
December 31, 1996 and September 30, 1996 respectively 3,492,000 --
Warrants to acquire common stock 3,051,000 1,870,000
Common stock; no par value; 100,000,000 shares authorized
17,663,459 and 15,734,229 shares outstanding as of
December 31, 1996 and September 30, 1996 respectively 16,690,000 12,187,000
Deferred compensation (254,000) (331,000)
Accumulated deficit (9,501,000) (7,579,000)
------------ ------------
Total stockholders' equity 15,081,000 11,680,000
------------ ------------
$ 15,983,000 $ 13,826,000
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
1
<PAGE>
INTERCELL CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statement of Operations
(Unaudited)
Three Months Ended
December 31
--------------------
1996 1995
---- ----
Net sales $ 1,599,000 $ 853,000
Cost of goods sold 1,143,000 571,000
------------ ------------
Gross profits 456,000 282,000
Selling, general and administrative expenses 2,064,000 541,000
Research and development 374,000 12,000
------------ ------------
Operating loss (1,982,000) (271,000)
Other income (expense) 60,000 (20,000)
------------ ------------
Loss before income taxes (1,922,000) (291,000)
Income taxes -- --
------------ ------------
Net loss $ (1,922,000) $ (291,000)
Deemed Preferred Stock Dividend relating to
in-the-money conversion terms 221,000 --
Accretion on Preferred Stock 139,000 --
------------ ------------
Net loss applicable to common stockholders $ (2,282,000) $ (291,000)
============ ============
Net loss per common share $ (.14) $ (0.03)
============ ============
Weighted average number of shares of
common stock outstanding 16,527,588 10,457,547
============ ============
See accompanying notes to condensed consolidated financial statements.
2
<PAGE>
<TABLE>
INTERCELL CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statement of Cash Flows
(Unaudited)
<CAPTION>
Three Months Ended
December 31
--------------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities
Net loss $(1,922,000) $ (291,000)
Adjustments to reconcile net loss to
cash (used in) provided by operating activities:
Depreciation and amortization 143,000 11,000
Amortization of deferred compensation 607,000 210,000
Common stock issued for interest 43,000 --
Changes in operating assets and liabilities
Accounts receivable (64,000) 127,000
Inventory (90,000) (6,000)
Prepaid expenses (39,000) 3,000
Current liabilities 116,000 6,000
----------- -----------
Net cash provided by (used in) operating activities (1,206,000) 60,000
----------- -----------
Cash flows from investing activities
Proceeds from sales and maturities of short-term investments 2,088,000 --
Acquisition of property, plant and equipment (290,000) (15,000)
Acquisition of other assets (13,000) --
----------- -----------
Net cash provided by (used in) investing activities 1,785,000 (15,000)
----------- -----------
Cash flows from financing activities
Proceeds from issuance of common stock -- 39,000
Proceeds from issuance of Series C preferred stock 4,673,000 --
and warrants
Repayments of notes payable (1,198,000) (86,000)
Repayments of long term debt (162,000) (1,000)
----------- -----------
Net cash provided by (used in) financing activities 3,313,000 (48,000)
----------- -----------
Net increase (decrease) in cash and cash equivalents 3,892,000 (3,000)
Cash and cash equivalents at beginning of period 4,224,000 57,000
----------- -----------
Cash and cash equivalents at end of period $ 8,116,000 $ 54,000
=========== ===========
Cash paid during the period for interest $ -- $ 25,000
=========== ===========
Non-cash investing and financing activities
Series B preferred stock converted to common $ 3,930,000 $ --
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
INTERCELL CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts
of Intercell Corporation and its wholly owned subsidiaries (the
"Company"). All intercompany transactions have been eliminated.
The condensed consolidated financial statements are unaudited (except
for the balance sheet information as of September 30, 1996, which is
derived from the Company's audited financial statements) and reflect
all adjustments (consisting only of normal recurring adjustments) which
are, in the opinion of management, necessary for a fair presentation of
the financial position and operating results for the periods presented.
The condensed consolidated financial statements should be read in
conjunction with the September 30, 1996 audited financial statements of
Intercell Corporation and the notes thereto. The results of operations
for the three months ended December 31, 1996 are not necessarily
indicative of the results for the entire year ended September 30, 1997,
or any future period.
2. NET LOSS PER SHARE
Net loss applicable to common stockholders is computed by dividing the
sum of net loss, deemed preferred stock dividends and accretion on
preferred stock by the weighted average number of common shares and
dilutive common equivalent shares outstanding during each period
presented. Common stock equivalent shares consist of stock options that
are computed using the treasury stock method.
3. INVENTORIES
Inventories consist of: December 31, 1996 September 30, 1996
----------------- ------------------
Raw materials $ 483,000 $ 422,000
Work in process 482,000 453,000
Finished goods 191,000 191,000
---------- ----------
$1,156,000 $1,066,000
========== ==========
4. SERIES C PREFERRED SHARES
In December 1996, the Company issued 525 shares of no par value Series
C preferred stock (Series C preferred) and detachable warrants in a
private placement for $4,672,500 (net of issuance costs of $577,500).
Each share of Series C preferred is convertible into common stock at
the exchange rate in effect at the time of the conversion, as described
in the preferred stock agreements, and is subject to appropriate
adjustment for common stock splits, stock dividends, and other similar
transactions. Conversion of the Series C preferred is automatic upon
the expiration of three years from the original date of issuance. At
the date of issuance, the exchange rate was less than the prevailing
market rate, resulting in a deemed dividend of $932,000, of which
$81,000 has been recognized on a pro rata basis in the first quarter of
the 1997 fiscal year. The Series C preferred are junior to the
Company's Series B preferred shares and contain a liquidation
preference equal to the original issue price plus 8% of the original
issue price per annum to the date of liquidation, Series C preferred
shares are not entitled to voting rights.
Shares of Series C preferred purchased in excess of certain quantities
as described in the preferred stock agreements, or purchased in
addition to previous purchases of Series B preferred shares are
accompanied by detachable warrants to purchase a number of shares of
common stock of the Company equal to between 20% and 50% of the
original aggregate purchase price of the Series C preferred shares
divided by a fixed conversion rate of $3.25 per share, exercisable 105
days after original issuance.
5. STOCK-BASED COMPENSATION
In October 1996, the Company recognized compensation expense totaling
$530,0000 related to the transfer of 150,000 stock options from certain
officer/shareholders to an officer of the Company. The options are
exercisable at $.50 per share, expire ten years from the date of grant
and vest immediately. The fair value of the stock on the date of
transfer was $4.03 per share. The Company recognized compensation
expense associated with these options using the intrinsic value method.
4
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
GENERAL
The following discussion should be read in conjunction with the attached
condensed consolidated financial statements and notes thereto, and with the
Company's audited consolidated financial statements and notes thereto for the
year ended September 30, 1996. This report contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 31E of the Securities Exchange Act of 1934, as amended. Actual results
could differ materially from those anticipated in forward-looking statements.
The Company is currently engaged in three lines of business: (i) the design,
development and production of shielded cellular phone antennas that use the
Company's proprietary antenna technology (the "Antenna Technology") as well as
the manufacture of miniature and subminiature coils, transformers and other
electronic assemblies; (ii) the manufacture and rebuilding of specialty electron
power tubes; and (iii) the design, development and production of patented
particle interconnect products that use the Company's patented particle
interconnect technology (the "PI Technology") and a proprietary trade secret
electroplating process (the "Proprietary Electroplating Process").
The Company's operations are conducted by and through its wholly owned
subsidiaries, California Tube Laboratory, Inc. ("CTL"), Cellular Magnetics, Inc.
("Cellular Magnetics"), Intercell Wireless Corp., and Particle Interconnect
Corporation ("PI Corp.").
In July 1995, the Company acquired CTL, a manufacturer and rebuilder of a wide
variety of electron power tubes. Currently, CTL provides rebuilt and new
electron tubes to a wide variety of customers who use microwave technology in
various types of applications, including AM and VHF radio, television, linear
accelerators, radar, electron guns and industrial microwave and heating use.
The Company has the rights to certain patent applications relating to the
Antenna Technology that the Company jointly developed with the
Telecommunications Research Center at Arizona State University ("ASU"). The
Antenna Technology is designed to reduce actual or perceived health hazards that
may be associated with exposure to electromagnetic signals by using a "shielded"
antenna. The Antenna Technology has been tested in working prototypes in
cellular phones by ASU. These tests indicated a significant reduction in
radiation emissions caused by wireless devices, and cellular phones in
particular. The tests also indicated several other benefits, including increased
range and reception and improved battery life.
In September 1996, the Company formed a wholly owned subsidiary, Cellular
Magnetics, which acquired all the assets and liabilities of M.C. Davis Company
("M.C. Davis") in exchange for 277,778 shares of Common Stock valued at
$1,000,000 and $800,000 in cash. This acquisition, accounted for by the purchase
method of accounting, provides the Company with both a facility for the
immediate production of its Antenna Technology and established manufacturing
facility. The Company has continued to produce the miniature and subminiature
electronic components previously produced by M.C Davis and does not anticipate
that the production of the Antenna Technology will significantly impact its
ability to manufacture these electronic assemblies.
In September 1996, the Company formed a wholly owned subsidiary, PI Corp., which
merged with Particle Interconnect, Inc., a California corporation ("Particle
California"). The Company exchanged 1,400,000 shares of Common Stock for all of
the outstanding stock of Particle California. The transaction was accounted for
as an immaterial pooling-of-interest as the prior operations of Particle
California are not material to the Company's consolidated financial position,
results of operations or cash flows. From the date of the merger, PI Corp. has
been engaged primarily in the construction of production capabilities at its
plant and the continuing development of the PI Technology. PI Corp. expects to
commence commercial production of Particle Interconnect Products in 1997.
As the Antenna Technology and the PI Technology are in the development stage,
the Company does not anticipate operating revenues from such lines of business
until such time, if ever, as products developed using the Antenna Technology and
PI Technology are completed, developed, manufactured in commercial quantities,
available for commercial delivery, and accepted in the market place.
5
<PAGE>
On July 7, 1996, the Company completed an offering pursuant to Regulation S
under the Securities Act (the "Regulation S Offering") of 1,000 shares of its
Series B Preferred Stock, with attached warrants, pursuant to which it received
net proceeds of $8,900,000. The Series B Preferred Stock is convertible into
Common Stock at the exchange rate in effect at the date of conversion, as
described in the preferred stock agreements. At the date of issuance, the
exchange rate was equal to 85% of the then prevailing market rate, resulting in
a deemed dividend of $1,765,000. The Company recognized on a pro rata basis
$1,625,000 of the dividend in its fiscal 1996 net loss per common share
calculation and the balance of $140,000 in the first quarter of the 1997 Fiscal
year.
To further improve the Company's working capital position, the Company completed
an offering pursuant to Regulation D to institutional investors on December 15,
1996, of 525 shares of its Series C Preferred Stock, with attached warrants,
pursuant to which it received net proceeds of $4,672,500. The Series C Preferred
Stock is convertible into Common stock at the exchange rate in effect at the
date of conversion, as described in the preferred stock agreements. At the date
of issuance, the exchange rate was less than the prevailing market rate,
resulting in a deemed dividend of $932,000, of which $81,000 has been recognized
on a pro rata basis in the first quarter of the 1997 fiscal year.
RESULTS OF OPERATIONS
REVENUES
Total revenues in the first quarter of 1997 were $1,599,000 and represented an
87% increase over the first quarter revenues in the prior fiscal year. This
increase in revenue was primarily attributable to the inclusion of revenues from
the Company's new electronic components operations of $536,000 in the 1997
fiscal year and a $211,000 increase in first quarter sales of electron tube
products over the first quarter sales of the prior fiscal year.
In September 1996, the Company, through its wholly owned subsidiary Cellular
Magnetics merged with AC Magnetics, Inc. doing business as M.C. Davis. M.C.
Davis was acquired by the Company to provide industrial engineering and
production capabilities for the Company's antenna technology. M.C. Davis has
production facilities located in Arizona City, Arizona and Sonora, Mexico, and
has been engaged in the production of miniature and subminiature electronic
components since 1968. The first quarter of the 1997 fiscal year represents the
first quarter in which the results of the Company's new electronic components
operations have been consolidated with the Company's.
Sales of electron tube products increased by 25% in the first quarter of 1997
compared to the first quarter of 1996. This increase was primarily due to new
defense related contracts entered into in the final quarter of the 1996 fiscal
year for which production did not begin until the first quarter of the 1997
fiscal year. The Company anticipates that sales under these contracts will
continue for the remainder of the year at the rate experienced in the first
quarter of the 1997 fiscal year. The balance of the Company's operations have
remained stable in the first quarter of 1997 compared to the first quarter sales
of the 1996 fiscal year.
GROSS PROFITS
Gross profits were 29% in the first quarter of the 1997 fiscal year compared
with 33% in the 1996 fiscal year. This decrease in margins was primarily
attributable to lower margins experienced on the sale of electronic components
(30%) and increased costs associated with the manufacture of new electron tube
products. In the first quarter of 1996, the Company focused primarily on the
rebuild of electron tube products which generally carry higher margins than the
manufacture and sale of new electron tube products.
RESEARCH AND DEVELOPMENT
Research and development expenses increased to $374,000 in the first quarter of
fiscal 1997 compared to $12,000 in the first quarter of fiscal 1996. This
increase was primarily attributable to research and development activities
incurred in connection with the Company's new PI Technology ($341,000) as the
Company commenced assembly of its pre-production line and began testing of the
line and the technology. In addition, the Company continued its developmental
work on its Antenna Technology in conjunction with Arizona State University
which commenced in December, 1995.
6
<PAGE>
GENERAL, SELLING AND ADMINISTRATIVE
General, selling and administrative expenses increased by 278% to $2,064,000 in
the first quarter of the 1997 fiscal year compared to $541,000 in the first
quarter of fiscal 1996. This increase was primarily attributable to the
inclusion of general, selling and administrative expenses for the Company's new
electronic components and cellular antenna operations ($169,000), particle
interconnect operations ($358,000) and compensation recognized on the transfer
of stock options from three principal shareholders to an officer and director of
the Company ($530,000). In addition, the Company incurred additional legal and
accounting costs in the first quarter of 1997 related to the filing of a
Registration Statement on Form S-1 in January 1997.
OTHER INCOME/EXPENSE
The Company earned $98,000 in interest income on its cash and short term
investments in the first quarter of the 1997 fiscal year while incurring
interest expense of $43,000. In the first quarter of the 1996 fiscal year, the
amount of interest income earned by the Company was insignificant and interest
expense was $25,000.
INCOME TAXES
As of December 31, 1996 the Company had a net operating loss carryover for
federal and California income tax purposes. The benefit of these net operating
loss carryforwards has not been recorded by the Company as it is uncertain that
the Company will generate sufficient income in future periods to utilize the
loss carryforwards.
LIQUIDITY AND CAPITAL RESOURCES
During the three months ended December 31, 1996, operating working capital
increased by $3,130,000. This increase was due primarily to net proceeds of
$4,672,500 from the private placement of 525 Series C Preferred Shares and
warrants in December, 1996. A portion of these proceeds were used to pay off
liabilities (total $1,198,000) assumed on the acquisition of PI Corp. and M.C.
Davis.
In the 1997 fiscal year, the Company intends to make capital expenditures of
approximately $1,700,000. These expenditures will be made on the Company's new
manufacturing facility in Watsonville, California, establishing the Company's
initial full production line and facility using its PI Technology in Colorado
Springs, Colorado and purchasing new equipment for the Company's manufacturing
plants in Arizona City, Arizona and Sonora, Mexico in connection with the
manufacture of the Antenna Systems. In the first quarter of fiscal 1997, capital
expenditures totaled $290,000.
The Company believes that current and known future capital resources will be
adequate to fund its operations over the next 12 months. The Company also
believes that sales of its Antenna Systems and Particle Interconnect Products,
both anticipated to commence in the 1997 fiscal year, in combination with the
sales of the electronic assemblies of Cellular Magnetics and electron tube
products of CTL will provide sufficient funds to meet the Company's capital
requirements for the next two years. At this time, the Company does not intend
to raise additional capital through the sale of additional capital stock or
through the issuance of debt.
7
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company has recently been notified of a potential litigation matter (the
"Complaint") that may be filed by American Microcell Corp. ("AMC") and
MicroAntenna, Inc. (collectively, "Plaintiffs") against, among others, the
Company, Terry Neild, a director and Executive Vice President of the Company,
and Lucius Ross, a consultant to the Company, in Superior Court of Maricopa
County, No. CV 97-00642. The Complaint alleges that Messrs. Ross and Neild,
former directors of Plaintiffs, breached their fiduciary duties to Plaintiffs by
appropriating a corporate opportunity, the acquisition of the Antenna
Technology, of Plaintiffs for their personal benefit and the benefit of the
Company. The Complaint requests both compensatory damages, an assignment of all
rights to the Antenna Technology and a lien or constructive trust on the Antenna
Technology and all proceeds therefrom.
The Company's management categorically denies all allegations made in the
Complaint and believes the Complaint is meritless. The Company intends to defend
the matter to the full extent of the law.
Other than the complaint, no material legal proceedings (other than routine
litigation incidental to the business) to which the Company (or any officer or
director of the Company, or any affiliate or owners of record or beneficially of
more than 5% of the common stock) to management's knowledge, is a party or to
which the property of the Company is subject, is pending and no such material
proceedings are known by management of the Company to be contemplated.
ITEM 2. CHANGES IN SECURITIES
On December 16, 1996, the Company completed an offering of 525 shares of Series
C Preferred Stock (the "Series C Preferred Stock"). Each share of Series C
Preferred Stock is convertible at the option of the holder into Common Stock as
described below during the following period: (i) up to 20% of the Series C
Preferred Stock initially issued to the holder at any time on and after April
15, 1997; and (ii) an additional 20% per month on the 15th day of each month
thereafter; provided, however, that the holder of the Series C Preferred Stock
may not convert more than 25% of the aggregate Series C Preferred Stock
initially issued to such holder in any given one month period beginning April
15, 1997 and ending on April 15, 1998.
In general, each share of Series C Preferred Stock is convertible into shares of
Common Stock pursuant to the following formula (the Conversion Formula") (800) x
(N/365) + 10,000/Conversion Price (with N being the number of days that have
expired between the date of conversion and December 16, 1996, and the
"Conversion Price" being the lessor of: $3.25 (the "Fixed Conversion Price") or
85% of average closing bid price (the "Closing Bid Price") of the Common Stock
for the five trading days immediately preceding the date of conversion (the
"Variable Conversion Price")). If at the time of conversion the Variable
Conversion Price is less than the Fixed Conversion Price, the Company may elect,
in its sole discretion, to redeem the shares of Series C Preferred Stock offered
for conversion in an amount equal to $10,000 x 117.60%.
The Company also has the right to redeem the Series C Preferred Stock on or
after December 16, 1997, provided the Company purchases at least $1,500,000 of
Series C Preferred Stock (based on the Original Issuance Price defined below)
for a price equal to 130% of the Original Issuance Price for the first 18
months. For each six months thereafter, the redemption percentage decreases by
5% until the expiration of three years.
Each share of Series C Preferred Stock outstanding at December 16, 1999,
automatically shall either be converted in accordance with the Conversion
Formula or the Original Issuance Price plus an accrued premium of 8% per year
(the "Accrued Premium").
8
<PAGE>
The holders of the Series C Preferred Stock are not entitled to receive
dividends and shall have no voting power, except as otherwise provided by the
Colorado Business Corporation Act (which generally provides voting rights for
any action that directly adversely affects the rights of the holders of the
Series C Preferred Stock). In the event of any liquidation, dissolution or
winding up of the Company (a "Liquidation Event"), the holders of Series C
Preferred Stock shall be entitled to receive, after any distribution to the
holders of the Series B Preferred Stock and other senior securities, if any, and
prior to any Distribution to any junior securities (including holders of Common
Stock) the sum of $10,000 (the "Original Issue Price") and the Accrued Premium.
At the option of each holder of Series C Preferred Stock, a sale, conveyance or
disposition of substantially all of the assets of the Company or the
effectuation by the Company of a transaction, or series of transactions, in
which more than 50% of the voting power of the Company is disposed of, will
generally be deemed to be a Liquidation Event.
So long as the shares of Series C Preferred Stock are outstanding, the Company
may not, without the written approval of the holders of at least 75% of the then
outstanding shares of Series C Preferred Stock (i) alter or change the rights,
preferences or privileges of the Series C Preferred Stock or any senior
securities, if any that would adversely effect the holders of the Series C
Preferred Stock; (ii) create any class or series of capital stock having a
preference over or on parity with the Series C Preferred Stock with respect to
Distributions; (iii) cause the holders of the Series C Preferred Stock to be
taxed under Section 305 of the Internal Revenue Code; or (iv) issue any
additional shares of Series C Preferred Stock.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
Exhibit 11.1: Statement of computation of earnings per share.
(b) Reports:
1) Form 8-K, dated October 14, 1996, disclosed the acquisition of
all assets, properties and business operations of A.C.
Magnetics, Inc., d/b/a M.C. Davis & Company through the merger
of A.C. Magnetics, Inc. d/b/a M.C. Davis & Company into
Cellular Magnetics, Inc., a wholly owned subsidiary of the
Company.
2) Form 8-K/A-l, dated October 14, 1996, amendment to Form 8-K
dated October 14, 1996, disclosed the financial statements of
A.C. Magnetics, d/b/a M.C. Davis & Company. A.C. Magnetics,
d/b/a M.C. Davis & Company was acquired by the Company through
the merger of A.A. Magnetics, d/b/a M.C. Davis & Company into
Cellular Magnetics, Inc. a wholly owned subsidiary of the
Company.
3) Form 8-K, dated December 16, 1996 disclosed the offering of up
to Six Hundred (600) of the Company's Series C No Par Value
Preferred Stock, with attached Warrants, for an aggregate of
Six Million Dollars ($6,000,000) pursuant to Regulation D
under the Securities Act of 1933, as amended.
9
<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, thereunto duly authorized.
INTERCELL CORPORATION
(Registrant)
Date: April 29, 1997 By: /s/ Alan M. Smith
----------------------------------------------------
Alan M. Smith, Secretary and Chief Financial Officer
10
EXHIBIT 11.1
COMPUTATIONS OF EARNINGS PER SHARE
Three months ended
December 31
---------------------
1996 1995
---- ----
Net loss $ (1,922,000) $ (291,000)
Deemed preferred stock dividend relating to
in-the-money conversion terms (221,000) --
Accretion on Preferred Stock (139,000) --
------------ ------------
Net loss applicable to common stockholders $ (2,282,000) $ (291,000)
============ ============
Weighted average number of shares of
common stock outstanding 16,527,588 10,457,547
============ ============
Net (loss) applicable to common share $ 0.14 $ 0.03
============ ============
11
