<PAGE>
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) December 31, 1996
SCRIPTEL HOLDING, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-20938 31-1069865
(State or other jurisdiction ( Commission ( IRS Employer
of incorporation) file number) Identification No.)
4153 Arlingate Plaza Columbus, OH 43228
( Address of principal executive offices)
(614) 276-8402
(Registrant's telephone number,
including area code)
<PAGE>
Item 2. Acquisition Or Disposition Of Assets
On December 31, 1996, Coloray Display Corporation ("Coloray")-- until then a
majority owned subsidiary of the Company -- and the Company entered into a
consulting agreement with M. Kathy Vieth, former president of Coloray, for the
purpose of having Ms. Vieth promote Coloray's technology, license that
technology to other companies, and seek a monetary return on that technology.
As part of the agreement with Ms. Vieth, Scriptel transferred to Ms. Vieth
50,000 of its shares of Coloray common stock. This reduced Scriptel's
ownership interest in Coloray to forty-six percent (46%), and Coloray then
ceased to be a consolidated subsidiary of Scriptel. Because of this, Scriptel
expects to report approximately $3.5 million lower liabilities at December 31,
1996 than if it had continued to consolidate Coloray.
The following unaudited pro forma condensed consolidated financial statements
are filed with this report:
Pro forma condensed consolidated balance sheet as of September 30, 1996.
Pro forma condensed consolidated statements of operations for the year ended
December 31, 1995, and for the nine months ended September 30, 1996.
The pro forma condensed consolidated balance sheet of the Company as of
September 30, 1996 reflects the financial position of the Company after giving
effect to the elimination of Coloray from the consolidated financial
statements for the reasons disclosed above and assumes the disposition took
place on September 30, 1996. The pro forma condensed consolidated statements
of operations for the year ended December 31, 1995 and for the nine months
ended September 30, 1996 assume that the disposition of a majority interest in
Coloray occurred on January 1, 1995, and are based on the operations of the
Company for those periods.
The unaudited pro forma condensed consolidated financial statements have been
prepared by the Company based upon assumptions deemed proper by it. The
unaudited pro forma condensed consolidated financial statements presented
herein are for illustrative purposes only and are not necessarily indicative
of the future financial position or results of operations of the Company, or
of the financial position or results of operations of the Company that would
have actually occurred had the transaction been in effect as of the date or
for the periods presented. In addition, it should be noted that the Company's
financial statements will reflect the disposition only as of December 31,
1996, the date of the transfer of Coloray's shares.
The unaudited pro forma condensed consolidated financial statements should be
read in conjunction with the historical financial statements and related notes
of the Company.
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Scriptel Holding, Inc. and Subsidiaries
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
September 30, 1996
Pro Forma
Historical Adjustments Pro Forma
---------- -------------- ----------
Assets
Total current assets $ 191,000 $ --- $ 191,000
Property and equipment, net 562,000 --- 562,000
Patents, net 130,000 (130,000) (A) ---
Other assets 60,000 --- 60,000
---------- ---------- ----------
Total assets $ 943,000 $ (130,000) $ 813,000
========== ========== ==========
Liabilities and Stockholder's Deficit
Current liabilities:
Notes payable $5,041,000 $ (48,000) (A) $4,993,000
Accounts payable 1,959,000 (592,000) (A) 1,367,000
Accrued interest 1,441,000 (2,000) (A) 1,439,000
Accrued loss on discontinued
operations 450,000 --- 450,000
Other accrued liabilities 6,762,000 (2,883,000) (A) 3,879,000
---------- ---------- ----------
Total current liabilities 15,653,000 (3,525,000) 12,128,000
Notes payable, long-term 1,520,000 --- 1,520,000
Commitments and contingencies
Stockholders' deficit:
Common stock 2,637,000 --- 2,637,000
Additional paid in capital 42,174,000 --- 42,174,000
Accumulated deficit (61,033,000) 3,395,000 (A) (57,638,000)
Notes receivable - stockholders (8,000) --- (8,000)
---------- ---------- ----------
Total stockholders' deficit (16,230,000) 3,395,000 (12,835,000)
---------- ---------- ----------
Total liabilities and
stockholders' deficit $ 943,000 $ (130,000) $ 813,000
========== ========== ==========
(A) To eliminate Coloray assets and liabilities included in the historical
balance sheet as of September 30, 1996.
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Scriptel Holding, Inc. and Subsidiaries
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
For the year ended December 31, 1995
Pro Forma
Historical Adjustments Pro Forma
---------- -------------- ----------
Revenues $ 431,000 $ (201,000) (A) $ 230,000
Cost of sales 360,000 --- 360,000
---------- ---------- ----------
71,000 (201,000) (130,000)
Costs and expenses:
General and administrative 3,708,000 (800,000) (A) 2,908,000
Sales and marketing 258,000 --- 258,000
Research and development 5,117,000 (2,950,000) (A) 2,167,000
---------- ---------- ----------
Total costs and expenses 9,083,000 (3,750,000) 5,333,000
---------- ---------- ----------
Loss from operations (9,012,000) 3,549,000 (5,463,000)
Other expense (income):
Interest expense 1,967,000 (34,000) (A) 1,933,000
Finance charge 2,958,000 --- 2,958,000
Other expense, net (66,000) 66,000 (A) ---
(Income)loss on sale of assets 323,000 27,000 (A) 350,000
---------- ---------- ----------
Total other expense 5,182,000 59,000 5,241,000
---------- ---------- ----------
Loss from continuing operations (14,194,000) 3,490,000 (10,704,000)
Loss from discontinued operations (955,000) --- (955,000)
---------- ---------- ----------
Net loss $(15,149,000) $3,490,000 $(11,659,000)
========== ========== ==========
Loss per share of common stock:
Continuing operations $ (0.81) $ (0.62)
Discontinued operations (0.05) (0.05)
------- -------
Net loss per share $ (0.86) $ (0.67)
======= =======
Weighted average number of common
shares used in computing net
loss per share 17,519,171 17,519,171
========== ==========
(A) To eliminate the results of Coloray's operations included in the
historical statement of operations for the year ended December 31, 1995.
<PAGE>
Scriptel Holding, Inc. and Subsidiaries
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
For the nine months ended September 30, 1996
Pro Forma
Historical Adjustments Pro Forma
---------- -------------- ----------
Revenues $ 372,000 $ --- $ 372,000
Cost of sales 319,000 --- 319,000
---------- ---------- ----------
53,000 --- 53,000
Costs and expenses:
General and administrative 3,172,000 (79,000) (A) 3,093,000
Sales and marketing 177,000 --- 177,000
Research and development 3,665,000 (2,741,000) (A) 924,000
---------- ---------- ----------
Total costs and expenses 7,014,000 (2,820,000) 4,194,000
---------- ---------- ----------
Loss from operations (6,961,000) 2,820,000 (4,141,000)
Other expense (income):
Interest expense 756,000 --- 756,000
Finance charge 2,610,000 --- 2,610,000
Other expense, net --- --- ---
(Income)loss on sale of assets 148,000 (148,000) (A) ---
---------- ---------- ----------
Total other expense 3,514,000 (148,000) 3,366,000
---------- ---------- ----------
Loss from continuing operations (10,475,000) 2,968,000 (7,507,000)
Loss from discontinued operations --- --- ---
---------- ---------- ----------
Net loss $(10,475,000)$ 2,968,000 $(7,507,000)
========== ========== ==========
Loss per share of common stock:
Continuing operations $ (0.45) $ (0.32)
Discontinued operations --- ---
------- -------
Net loss per share $ (0.45) $ (0.32)
======= =======
Weighted average number of common
shares used in computing net
loss per share 23,303,970 23,303,970
========== ==========
(A) To eliminate the results of Coloray's operations included in the
historical statement of operations for the nine months ended
September 30, 1996.
<PAGE>
Item 5. Other Events
On December 31, 1996, Walter T. Krumm, a major creditor of the Company,
converted his interest in the $772,399 indebtedness due by Scriptel to him on
that date into 7,723,994 shares of Scriptel Common Stock. In addition, as
further inducement to effect the conversion and for other consideration,
including the prior relinquishment of 1,800,000 warrants to the Company so as
to provide the Company with sufficient authorized shares to effectuate certain
private offerings last year, Mr. Krumm and the Company also agreed to cancel
Mr. Krumm's currently owned warrants to purchase 5,669,332 shares of Scriptel
Common Stock at prices ranging from $0.40 to $0.75 per share and expiring at
various dates through November 2002 and replace them with a new warrant to
purchase 5,669,332 shares at an exercise price of $0.14 per share. The new
warrant is exercisable until December 31, 2001, subject to earlier termination
if the Company's stock price exceeds $1.00 per share. The shares which were
issued, and the shares to be issued if the new warrant is exercised, are
subject to the provisions of Rule 144 promulgated by the Securities and
Exchange Commission, and Mr. Krumm has demand registration rights on them. A
copy of the agreement with Mr. Krumm is attached to this Form 8-K as an
exhibit.
After the 7,723,994 shares were issued, Scriptel had 41,935,451 shares issued
and outstanding. Including shares Mr. Krumm previously owned, his total
shares held on that day were 8,741,616 shares, or 20.8% of total outstanding
shares. If all of the new warrants were also exercised, Mr. Krumm would own
approximately 30.3% of the shares then outstanding.
Item 7. Financial Statements And Exhibits
(a) Financial statements of business acquired.
Not applicable.
(b) Pro forma financial information.
See the pro forma financial statements included with this Form 8-K as
part of item 2 above.
(c) Exhibits.
10.X SECURITIES EXCHANGE AGREEMENT dated December 31, 1996 between
Scriptel and Walter T. Krumm.
Signatures
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
January 13, 1997
Scriptel Holding, Inc.
(Registrant)
By: /s/ Frederick A. Niebauer
Frederick A. Niebauer
Treasurer (principal financial and accounting officer)
SECURITIES EXCHANGE AGREEMENT
THIS SECURITIES EXCHANGE AGREEMENT (the "Agreement") is made and entered into
as of this 31st day of December, 1996 by and among Scriptel Holding, Inc., a
Delaware corporation ("Scriptel") and Walter T. Krumm, an individual
("Krumm").
RECITALS
WHEREAS, Krumm has loaned money to Scriptel on the dates and amounts shown
below, which loans are evidenced by convertible notes or demand notes as
provided herein;
WHEREAS, the Company is desirous of having Krumm convert into equity both the
existing convertible notes and non-convertible notes and the interest thereon;
and
WHEREAS, the Company and Krumm are willing to resolve all other matters
between them relating to any obligations, legal, moral or otherwise, to issue
additional equity to Krumm in consideration of prior equity conversions,
surrender of previously outstanding options and warrants, and forbearance with
respect to notes in default; and
WHEREAS, Krumm is willing to convert all outstanding indebtedness and release
Scriptel from all outstanding obligations to him on the terms set forth
herein;
NOW, THEREFORE, the parties agree as follows.
1. Exchange of Securities.
(a) Scriptel is indebted to Krumm in the amounts set forth below
Interest Thru Convertible
Date of Loan Current Principal Dec. 31, 1996 Note
- - ------------ ----------------- ------------- -----------
July 1, 1991 $125,000 $68,982.69 yes
February 1, 1993 75,000 38,502.57 yes
May 18, 1993 100,000 32,244.84 yes
Jan. 31, 1996 200,000 99,666.00 no
June 7, 1996 30,000 3,003.29 no
-------- -----------
Totals $530,000 $242,399.39
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(b) Krumm agrees to convert all outstanding indebtedness, including interest,
in an amount equal to $772,399.39, into shares of Scriptel Common Stock, $.10
par value (the "Shares"), at a conversion rate equal to $0.10 per share, for a
total of 7,723,994 shares. In addition, as a further inducement to Krumm to
convert his indebtedness and in exchange for the release set forth in Section
2 below and the cancellation of currently owned warrants to purchase 5,669,332
Shares at exercise prices ranging from $0.40 to $0.75 per share and expiring
at various dates through October 23, 2002, Scriptel shall issue to Krumm a
warrant (the "Warrant") to purchase 5,669,332 shares at an exercise price of
$0.14 per share. The Warrant shall have an expiration date of December 31,
2001, subject to earlier termination if the fair value of the Company's shares
of common stock equals or exceeds $1.00 per share. The Warrant shall be in
the form of Exhibit A hereto.
2. Mutual Release. Except as to their respective covenants, representations,
warranties and obligations under this Agreement, (i) Krumm agrees to fully
release, acquit and discharge Scriptel and its officers, directors, employees
and subsidiaries from and against any and all actions, causes of actions,
claims and demands of whatever kind or nature, known and unknown, foreseen and
unforeseen, suspected and unsuspected, asserted or unasserted, that Krumm has
or may have against them by reason of any fact, matter or thing through the
date of this Agreement, and (ii) Scriptel agrees to fully release Krumm from
and against any and all actions, causes of actions, claims and demands of
whatever kind or nature, known and unknown, foreseen and unforeseen, suspected
and unsuspected, asserted or unasserted, that Scriptel has or may have against
him by reason of any fact, matter or thing through the date of this Agreement.
3. Representations, Warranties and Covenants of Scriptel. As a material
inducement to Krumm to enter into this Agreement and consummate the
transactions contemplated hereby, Scriptel represents, warrants and, where
applicable, covenants to Krumm as follows:
(a) Corporate Status. Scriptel is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware.
Scriptel has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now conducted.
(b) Corporate Power and Authority. Scriptel has the corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder and consummate the transactions contemplated hereby. Scriptel has
taken all necessary corporate action to authorize the execution, delivery and
performance of this Agreement and the transactions contemplated hereby.
(c) Enforceability. This Agreement has been duly executed and delivered by
Scriptel and constitutes a valid, legal and binding obligation of Scriptel,
enforceable against Scriptel in accordance with its terms, except as may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and
general equitable principles regardless of whether such enforceability is
considered in a proceeding at law or in equity.
(d) No Violation. The execution and delivery by Scriptel of this Agreement,
the consummation of the transactions contemplated hereby, and the compliance
by Scriptel with the terms and provisions hereof, will not: (i) result in a
breach of, or constitute a material default under (with or without due notice
or lapse of time or both), or give rise to any right of termination,
cancellation or acceleration under, or create any obligations to pay money or
otherwise perform a material act pursuant to, any of the terms, conditions, or
provisions of any contract, agreement, promissory note or other instrument to
which Scriptel is a party or by which Scriptel or a material portion of its
assets or properties may be bound; (ii) conflict with, or result in any breach
of any provision of, the Certificate of Incorporation or Bylaws or other
governing instruments of Scriptel (iii) violate any domestic or foreign,
federal, state or local law, rule, regulation, statute or ordinance
application to or binding on Scriptel or its properties, or any determination,
ruling, decree or judgment of any arbitrator or a court or any other
governmental or quasi-governmental entity, official or authority having
jurisdiction over Scriptel or any material portion of its assets or
properties; or (iv) result in the imposition of any lien or encumbrance upon
any of the capital stock, properties or assets of Scriptel.
(e) Consents and Approvals. No consent, approval, waiver or other action by
any person or entity who is not a party to this Agreement or under any
domestic or foreign, federal, state or local law, rule, regulation, statute or
ordinance applicable to or binding on Scriptel or is properties is required or
necessary for the execution or delivery by Scriptel of this Agreement or the
consummation of the transactions contemplated hereby, or the performance by
Scriptel of its obligations hereunder.
(f) Capitalization. The authorized capital stock of Scriptel consists of
125,000,000 shares of common stock, $0.10 par value per share. As of the date
of this Agreement, 34,211,457 shares of the common stock of Scriptel are
issued and outstanding. Except a maximum of 53,000,000 shares subject to
outstanding option, warrants or convertible notes reserved for issuance under
the Company's employee benefit plans or otherwise, there are (Y) no rights,
options, warrants, convertible securities, subscription rights or other
agreements, calls, plans, contracts or commitments of any kind relating to the
issued and unissued capital stock of, or other equity interests in, Scriptel,
and (Z) no contractual obligations of Scriptel to repurchase, redeem or
otherwise acquire any shares of the common stock of Scriptel or any capital
stock of, or any equity interest in, any of its subsidiaries.
(g) Although the Shares being issued to Krumm have not been registered under
the Securities Act of 1933, as amended, the Shares issuable in exchange for
the principal of the convertible notes, pursuant to Rule 144 promulgated by
the SEC under the Act, may tack the holding period relating to the original
convertible notes. Scriptel will request a no-action letter from the SEC with
respect to its belief that Rule 144 would also allow Krumm to tack the holding
period of the notes that were not convertible notes. The holding period with
respect to the accrued interest does not commence until the interest has been
paid.
4. Representations and Warranties of Krumm. As a material inducement to
Scriptel to enter into this Agreement and consummate the transactions
contemplated hereby, Krumm represents and warrants to Scriptel as follows:
(a) Enforceability. This Agreement has been duly executed and delivered by
Krumm and constitutes a valid, legal and binding obligation of Krumm,
enforceable against him in accordance with its terms, except as may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally and general
equitable principles regardless of whether such enforceability is considered
in a proceeding at law or in equity.
(b) Investment Intent. Krumm is acquiring the Shares and Warrant solely for
the purpose of investment and not with the intent of re-selling the Shares or
Warrant except pursuant to a valid registration statement under applicable law
or a valid exemption from such registration.
(c) Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based on any arrangement or
agreements made by or on behalf of Krumm.
5. Demand Registration.
(a) Request for Registration. In the event that Scriptel shall receive from
Krumm a written request that it effect any registration, qualification or
compliance with respect to all or any portion of the Scriptel Shares then held
by Krumm, Scriptel will, as soon as practicable, use its best efforts, at its
sole cost and expense, to effect all such registrations, qualifications, and
compliances (including, without limitation, the execution of an undertaking to
file post-effective amendments, appropriate qualifications under the
applicable blue sky or other state securities laws and appropriate compliance
with exemptive regulations issued under the Securities Act and any other
governmental requirements or regulations) as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion of
Scriptel Shares as are specified in such request.
(b) Filing of Registration Statement. Scriptel shall file a registration
statement covering Krumm's Scriptel Shares so requested to be registered as
soon as practical, but in any event within 90 days, after receipt of the
request of Krumm; provided that if Scriptel shall furnish to Krumm a
certificate signed by the President of Scriptel stating in the good faith
judgment of the Board of Directors that it would be detrimental to Scriptel
and its stockholders for such registration statement to be filed at the date
filing would be required and it is therefore essential to defer the filing of
such registration statement, Scriptel shall have an additional period of not
more than 90 days within which to file such registration statement. Such
certificate and deferral of registration may be given only once in any 360 day
period.
(c) Limitation on Request. Krumm shall have three demand registration
statements and an unlimited number of rights to demand registration under a
Form S-3, provided that only one demand to register may be made in any one
year period.
6. Miscellaneous.
(a) Survival. The representations, warranties, covenants and agreements made
herein shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, notwithstanding any
investigation made by any of the parties, or their agents or representatives.
(b) SEC Filings Relating to Transfer of Shares. Each party to this Agreement
shall, at its own expense, file whatever documents with the SEC or state
securities agreement as may be necessary or advisable under the Exchange Act
and the rules and regulations promulgated thereunder or state law to report
the issuance of Shares and Warrants contemplated by this Agreement.
(c) Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
(d) Entire Agreement, Amendment. This Agreement constitutes the entire
agreement between Krumm and Scriptel with respect to the subject matter
hereof; supersedes all prior or contemporaneous negotiations, communications,
discussions and correspondence concerning the subject matter hereof; and may
be amended or modified only with the written consent of all the parties
hereto.
(e) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware exclusive of choice of law
provisions which would direct the application of another jurisdiction's law.
(f) Counterparts. This Agreement may be executed in separate counterparts,
each of which, when so executed, shall be deemed to be an original and all of
which, when taken together, shall constituted but one and the same agreement.
(g) Expenses. Except as otherwise provided in this Agreement, the parties
shall pay their own fees and expenses, including their own counsel fees,
incurred in connection with this Agreement or any transaction contemplated
hereby.
(h) Further Action. Each party hereto agrees to perform all further acts and
to execute and deliver or cause to be executed and delivered all documents,
instruments and agreements which may be reasonably necessary to carry out the
intents and purposes of this Agreement or to enable the other party to enforce
any of its rights under this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the day and year first written above.
SCRIPTEL HOLDING, INC.
by: /s/ Bernard H. Eckstein
Bernard Eckstein, Chairman and Chief Executive Officer
/s/ Walter T. Krumm
Walter T. Krumm
