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)
January 15, 1998
SPECIALIZED HEALTH PRODUCTS INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-26694 93-0945003
(Commission file number) (IRS employer identification no.)
655 East Medical Drive, Bountiful, Utah 84010
(Address of principal executive offices) (Zip code)
(801) 298-3360
(Registrant's telephone number, including area code)
This document contains a total of 6 pages.
<PAGE>
Item 5. Other Events
The Company completed a private placement (the "Private Placement")
wherein the Company was seeking to raise between $1,000,000 and $5,500,000. As
of January 15, 1998, the Company had closed on $4,500,000 and was waiting for
funds to clear relating to additional subscriptions. In the Private Placement
the Company offered Units to certain accredited investors for two dollars ($2)
per Unit. Each Unit consisted of one (1) share of the Company's $.02 par value
common stock and one Series D Warrant to purchase one (1) share of Common Stock
at a price of $2.00 per share. The Series D Warrants will expire two years from
the date of effectiveness of a registration statement under the Securities Act
of 1933 (the "Act") covering the resale of the shares of Common Stock underlying
the Series D Warrants by the holder, which period shall be extended day-for-day
for any time that a prospectus meeting the requirements of the Act is not
available. The Company may accelerate the expiration of the Series D Warrants in
the event that the average market price of the Company's Common Stock for ten
(10) consecutive trading days exceeds $6.00 per share. In the event that the
Company accelerates the expiration of the Series D Warrants, the holders of the
Series D Warrants would be permitted to exercise the Series D Warrants during a
period of not less than 20 days following notice of such event. The Company has
agreed to file a registration statement covering the resale of the Common Stock
and Common Stock underlying the Series D Warrants.
An unaudited condensed consolidated balance sheet as of January 15,
1998 and consolidated statements of operations for the period ended January 15,
1998 and for the period from inception to January 15, 1998 begins on page F-1
hereof. The accompanying condensed consolidated financial statements do not
reflect any adjustments for the subscription agreements that the Company has
received, but for which funds have not cleared.
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.
SPECIALIZED HEALTH PRODUCTS
INTERNATIONAL, INC.
Date: January 19, 1998 By /s/ David A. Robinson
------------------------------------
David A. Robinson
President, Chief Executive Officer
and Director
<PAGE>
SPECIALIZED HEALTH PRODUCTS INTERNATIONAL, INC. AND SUBSIDIARY
(A Company in the Development Stage)
Condensed Consolidated Balance Sheets
(Unaudited)
January 15,
Assets 1998
-------------------
Current assets:
Cash $ 4,032,400
Accounts receivable 135,705
Inventories 71,934
Related party receivables 20,582
Prepaid expenses and other 52,438
-------------------
Total current assets 4,313,059
Property and equipment, net 1,445,694
Other assets, net 227,068
-------------------
Total assets $ 5,985,821
===================
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 241,873
Accrued liabilities 288,741
Amounts due to related parties 1,108
-------------------
Total current liabilities 531,722
Long-term liabilities:
Unearned royalty revenues 1,750,000
-------------------
Total liabilities 2,281,722
-------------------
Stockholders' equity:
Preferred stock, $.001 par value;
5,000,000 shares authorized, no
shares outstanding -
Common stock, $.02 par value;
50,000,000 shares authorized,
11,629,842 shares outstanding 232,597
Additional paid-in capital 14,073,815
Series C and D warrants to purchase
common stock 1,638,494
Common stock subscriptions receivable (209,200)
Deferred consulting expense (40,200)
Deficit accumulated during the
development stage (11,991,407)
-------------------
Total stockholders' equity 3,704,099
-------------------
Total liabilities and stockholders' equity $ 5,985,821
===================
See accompanying notes to condensed consolidated financial statements.
F-1
<PAGE>
<TABLE>
<CAPTION>
SPECIALIZED HEALTH PRODUCTS INTERNATIONAL, INC. AND SUBSIDIARY
(A Company in the Development Stage)
Condensed Consolidated Statements of Operations
(Unaudited)
Period from
Inception to
Period Ended January 15,
January 15, 1998 1998
------------------- -------------------
Operating Revenue:
<S> <C> <C>
Sales $ 143 $ 738,169
Cost of sales 114 528,068
------------------- -------------------
Gross margin on sales 29 210,101
Development fees 110,000 360,000
------------------- -------------------
Net Operating Revenues 110,029 570,101
------------------- -------------------
Operating expenses:
Selling, general and administrative 76,988 8,820,609
Research and development 31,279 3,576,161
Write-off of operating assets - 419,992
------------------- -------------------
Total operating expenses 108,267 12,816,762
------------------- -------------------
Income (loss) from operations 1,762 (12,246,661)
Interest income, net - 238,938
Other income - 44,485
------------------- -------------------
Net income (loss) 1,762 (11,963,238)
Less preference stock dividends - (28,169)
------------------- -------------------
Net loss applicable to common shares $ 1,762 $ (11,991,407)
=================== ===================
Net income per common share $ Nil
===================
Weighted average number of common shares
outstanding 10,129,842
===================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-2
<PAGE>
SPECIALIZED HEALTH PRODUCTS INTERNATIONAL, INC. AND SUBSIDIARY
(A Company in the Development Stage)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) Interim Condensed Consolidated Financial Statements
The accompanying condensed consolidated financial statements have been
prepared by the Company without audit. In the opinion of management, all
adjustments (consisting of normal recurring adjustments) necessary to present
fairly the financial position and results of operations as of the dates and for
the periods presented herein have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the Securities and
Exchange Commission rules and regulations. It is suggested that these condensed
consolidated financial statements be read in conjunction with the consolidated
financial statements and notes thereto included in the Company's December 31,
1996 Annual Report on Form 10-K and the interim unaudited financial statements
filed with Forms 10-Q for the quarters ended March 31, 1997, June 30, 1997 and
September 30, 1997. The results of operations for the period ended January 15,
1998, are not necessarily indicative of the operating results that may result
for the year ending December 31, 1998. The accounting policies followed by the
Company are set forth in Note 1 to the Company's consolidated financial
statements in its December 31, 1996 Annual Report on Form 10-K.
(2) Net Income Per Common Share
Net income per common share is based on the weighted average number of
common shares outstanding. Stock options, warrants and preferred shares prior to
conversion are not included in the calculation because their inclusion would be
antidilutive, thereby increasing the net income per common share.
(3) Development and License Agreement
On December 22, 1997, the Company entered into a development and
license agreement (the "Agreement") with Johnson & Johnson Medical, Inc.
("JJMI") relating to two applications of the Company's ExtreSafe(R) safety
needle withdrawal technology. Pursuant to the terms of the Agreement, JJMI will
pay the Company monthly development fees, share field related patent costs,
enable the Company to earn revenue from low volume manufacturing and earn
ongoing royalties from the sale of product related to the two applications. JJMI
will invest in molds, assembly equipment and other capital costs related to the
commercialization of each product. The Agreement also provides for an ongoing
joint cooperative program between the Company and JJMI with the Company deriving
future funding directly from sales of Company created products, low volume
manufacturing revenue and an ongoing royalty stream for additional safety
products that are jointly approved for development.
(4) Private Placement
The Company completed a private placement (the "Private Placement")
wherein the Company was seeking to raise between $1,000,000 and $5,500,000. As
of January 15, 1998, the Company had closed on $4,500,000 and was waiting for
funds to clear relating to additional subscriptions. The accompanying condensed
consolidated financial statements do not reflect any adjustments for the
subscription agreements that the Company has received, but for which funds have
not cleared.
In the Private Placement the Company offered Units to certain
accredited investors for two dollars ($2) per Unit. Each Unit consisted of one
(1) share of the Company's $.02 par value common stock and one Series D Warrant
to purchase one (1) share of Common Stock at a price of $2.00 per share. The
Series D Warrants will expire two years from the date of effectiveness of a
registration statement under the Securities Act of 1933 (the "Act") covering the
resale of the shares of Common Stock underlying the Series D Warrants by the
holder, which period shall be extended day-for-day for any time that a
prospectus meeting the requirements of the Act is not available. The Company may
F-3
<PAGE>
accelerate the expiration of the Series D Warrants in the event that the average
market price of the Company's Common Stock for ten (10) consecutive trading days
exceeds $6.00 per share. In the event that the Company accelerates the
expiration of the Series D Warrants, the holders of the Series D Warrants would
be permitted to exercise the Series D Warrants during a period of not less than
20 days following notice of such event. The Company has agreed to file a
registration statement covering the resale of the Common Stock and Common Stock
underlying the Series D Warrants.
(5) Quantum Imaging Corporation
The Company and Zerbec, Inc. ("Zerbec"), as joint venturers, formed Quantum
Imaging Corporation ("Quantum") to develop, manufacture, and market an improved
filmless digitized imaging system. Pursuant to the terms of the joint venture
agreement, until and unless at least $3,000,000 in funding is raised, Zerbec has
the right to acquire two-thirds of Company's interest in Quantum for one dollar
(the "Zerbec Option"). On November 4, 1997, an agreement (the "Option
Agreement") was entered into granting to the Company an option to acquire
Zerbec's interest in Quantum. The Option Agreement, as amended, provided for a
payment of $250,000 no later than December 31, 1997, with the Company having the
option to acquire all of the shares of QIC common stock currently owned by
Zerbec for additional payments of $1,750,000 on or before April 1, 1998 and
$1,500,000 on or before July 1, 1998. The Company and Zerbec have orally agreed
to extend the December 31, 1997 date upon which the $250,000 payment that may be
paid pursuant to the Option Agreement for a reasonable period of time to allow
certain due diligence to be completed by various third parties.
F-4
