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): October
2, 1996
CRYOMEDICAL SCIENCES, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 0-18170
94-3076866
(State or Other Juris- (Commission File
No.) (IRS Employer
diction of Incorporation)
Identification No.)
1300 Piccard Drive, Rockville, MD
20850
(Address of Principal Executive Offices)
(Zip Code)
Registrant's telephone number, including area code:
(301) 417-7070
N/A
(Former Name or Former Address, if Changed Since
Last Report.)<PAGE>
ITEM 5. Other Events.
On October 2, 1996 (the "Closing Date"),
Cryomedical Sciences, Inc. (the "Corporation")
consummated a private placement of 196 shares of Series
D Convertible Preferred Stock (the "Series D Preferred
Stock") pursuant to Regulation S promulgated under the
Securities Act of 1933, as amended. The gross proceeds
of the offering totalled $1,960,000.
The Series D Preferred Stock shall not pay
dividends and, except as required by applicable law, the
holders of shares of Series D Preferred Stock shall not
have the right or power to vote on any question or in any
proceeding or to be represented at, or to receive notice
of, any meeting of the Corporation's stockholders.
The holder of any share of Series D Preferred
Stock shall have the right to convert such share into that
number of fully paid and non-assessable shares of
common stock of the Corporation, $0.001 par value per
share (the "Common Stock"), as is determined by
dividing $10,000 by a price equal to 82.5% of the
Average Bid Price. Average Bid Price means the average
of the closing bid prices for the Common Stock as
reported on the National Association of Securities Dealers
Automated Quotation System for the five (5) trading days
immediately preceding the date upon which the holder
sends, by facsimile transmission or otherwise, to the
Corporation's executive offices, a conversion notice to the
Corporation.
Subject to the terms of the Certificate of
Designation (as defined below), one-third of the Series D
Preferred Stock may be converted into shares of Common
Stock forty (40) days after the Closing Date, up to an
additional one-third of the Series D Preferred Stock may
be converted into shares of Common Stock seventy-five
(75) days after the Closing Date, and the balance thereof
may be converted into shares of Common Stock one
hundred (100) days after the Closing Date. Any share of
Series D Preferred Stock outstanding on October 2, 1998
automatically shall be converted into Common Stock on
the same basis as the holder of such shares of Series D
Preferred Stock may convert such shares pursuant to the
provisions set forth above.
A complete description and terms of the Series D
Preferred Stock are set forth in the Certificate of
Designation filed with the State of Delaware on
September 17, 1996, a copy of which is attached hereto
as Exhibit A (the "Certificate of Designation").
<PAGE>
ITEM 7. Financial Statements, Pro Forma Financial
Information and Exhibits
Exhibits
A. Certificate of Designation
B. Pro Forma Financial Information
<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.
CRYOMEDICAL SCIENCES, INC.
By: /s/
Richard J. Reinhart
Richard J. Reinhart, President and
Chief
Executive Officer
Date: October 18, 1996<PAGE>
Exhibit A
CERTIFICATE OF DESIGNATION
of
SERIES D CONVERTIBLE PREFERRED STOCK
of
CRYOMEDICAL SCIENCES, INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
____________________________________
Cryomedical Sciences, Inc., a corporation
organized and existing under the General Corporation
Law of the State of Delaware (the "Corporation"), hereby
certifies that the following resolution was adopted by the
Board of Directors of the Corporation as required by
Section 151 of the General Corporation Law at a meeting
duly called and held on September 16, 1996:
RESOLVED, that pursuant to the authority granted
to and vested in the Board of Directors of this
Corporation (the "Board") in accordance with the
provisions of the Certificate of Incorporation, the Board
hereby creates a series of preferred stock of the
Corporation, par value $.001 per share (the "Preferred
Stock"), and hereby states the designation and number of
shares, and fixes the relative rights, preferences, and
limitations thereof as follows:
Section 1. Designation and Amount. The shares
of such series shall be designated as "Series D
Convertible Preferred Stock" (the "Series D Preferred
Stock") and the number of shares constituting the Series
D Preferred Stock shall be two hundred (200). Such
number of shares may be increased or decreased by
resolution of the Board; provided, however, no decrease
shall reduce the number of shares of Series D Preferred
Stock to a number less than the number of shares then
outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights,
or warrants for, or upon the conversion of any
outstanding securities issued by the Corporation
convertible into, Series D Preferred Stock.
Section 2. Dividends. The Series D Preferred
Stock shall not pay dividends.
Section 3. Conversion.
a. Subject to the provisions of Section
4 below, the holder of any share or shares of Series D
Preferred Stock shall have the right at any time, and from
time to time, at such holder's option, without the payment
of any additional consideration, to convert any share of
Series D Preferred Stock held by such holder into that
number of fully paid and non-assessable shares of
common stock of the Corporation, $0.001 par value per
share (the "Common Stock"), as is determined by
dividing $10,000 by a price (the "Conversion Price")
equal to 82.5% of the Average Bid Price (as hereinafter
defined). Each conversion shall be effected by
surrendering to the Corporation the stock certificate or
certificates for the Series D Preferred Stock to be
converted, accompanied by a written notice of such
holder's election to convert his share(s) of Series D
Preferred Stock into Common Stock and the number of
whole shares of Series D Preferred Stock to be so
converted (the "Conversion Notice"). Upon receipt of
such stock certificate or certificates and the Conversion
Notice, the Corporation shall issue and deliver to such
holder a stock certificate or certificates for the number of
shares of Common Stock to which such holder shall be
entitled. As used herein, Average Bid Price shall mean
the average of the closing bid prices for the Common
Stock as reported on the National Association of
Securities Dealers Automated Quotation System
("NASDAQ") (or on such exchange on which the
Common Stock is then traded) for the five (5) trading
days immediately preceding the date upon which the
holder sends, by facsimile transmission or otherwise, to
the Corporation's executive offices, the Conversion
Notice to the Corporation (the "Conversion Date").
b. Subject to the provisions of Section
4 below, any share of Series D Preferred Stock
outstanding on the second anniversary (the "Anniversary
Date") of the date on which the Series D Preferred Stock
was first issued by the Corporation (the "Issuance Date")
automatically shall be converted into Common Stock on
the same basis as the holder of such shares of Series D
Preferred Stock may convert such shares pursuant to
Section 3a above.
c. (1) In the event the Corporation
shall at any time or from time to time declare and pay to
the holders of Common Stock a dividend in shares of
Common Stock, or the Corporation shall subdivide the
outstanding shares of Common Stock into a greater
number of shares of Common Stock, or combine the
outstanding shares of Common Stock into a smaller
number of shares of Common Stock, then the number of
shares of Common Stock into which each share of Series
D Preferred Stock shall be convertible pursuant to the
provisions hereof shall be adjusted so that the holder of
shares of Series D Preferred Stock shall be entitled to
receive the number of shares of Common Stock which he
would have owned or been entitled to receive after the
happening of any of the events described above had the
Series D Preferred Stock been converted in full
immediately prior to the happening of such event, such
adjustment to become effective immediately after the
opening of business of the day following the record date,
in the event of a stock dividend, or the day upon which
the subdivision or combination becomes effective, as the
case may be.
(2) In the event the Corporation
shall, at any time or from time to time after the Issuance
Date for any share of Series D Preferred Stock, make or
issue, or fix a record date for the determination of holders
of shares of Common Stock entitled to receive, a dividend
or other distribution payable in securities of the
Corporation, including a distribution of evidence of
indebtedness of the Corporation, other than shares of
Common Stock, then, and in each such event, provision
shall be made by the Corporation so that the holders of
shares of Series D Preferred Stock shall receive, upon
conversion thereof, in addition to the number of shares of
Common Stock receivable thereupon, the amount of those
securities of the Corporation that such holders would have
received had their shares of Series D Preferred Stock been
converted on the date of such event and had they
thereafter, during the period from the date of such event
to and including the date of conversion, retained such
securities receivable by them as aforesaid during such
period.
(3) If the shares of Common
Stock issuable upon the conversion of shares of Series D
Preferred Stock shall be changed into the same or any
different number of shares of any class or any series of
any class of capital stock, whether by capital
reorganization, reclassification or otherwise (other than a
subdivision or combination of shares or a stock dividend
provided for above, or a reorganization, merger,
consolidation or sale of assets provided for in Section 8
hereof), then, and in each such event, the holder of shares
of Series D Preferred Stock shall have the right thereafter
to convert such shares of Series D Preferred Stock into
the kind and amount of shares of stock and other
securities and property receivable upon such
reorganization, reclassification or other change by holders
of the number of shares of Common Stock into which
such shares of Series D Preferred Stock might have been
converted immediately prior to such reorganization,
reclassification or change.
(4) After any adjustment pursuant
to this Section 3c, the Corporation shall promptly prepare
a certificate, signed by its President or Chief Financial
Officer, setting forth the effect of such adjustment on the
holder of Series D Preferred Stock and explaining such
adjustment and shall promptly cause such certificate to be
delivered to each holder of Series D Preferred Stock.
d. At all times, the Corporation shall
reserve and keep available out of its authorized but
unissued Common Stock, solely for issuance upon the
conversion of shares of the Series D Preferred Stock as
herein provided, such number of shares of Common Stock
as, from time to time, shall be issuable upon the
conversion of all of the shares of the Series D Preferred
Stock at the time outstanding.
e. No fractional shares of Common
Stock shall be issued, and in lieu of the issuance of any
fractional share of Common Stock that would, but for the
foregoing, be issued to a holder of Series D Preferred
Stock on conversion thereof, the Corporation shall pay to
such holder in cash the value of such fractional share,
which value shall be based upon the closing sale price of
the Common Stock on the NASDAQ (or on such
exchange on which the Common Stock is then traded), for
the trading day immediately preceding the effective date
of such conversion.
Section 4. Redemption.
a. If, on any Conversion Date or the
Anniversary Date, the Fair Market Value of the Common
Stock (as defined below) is 80% or more below the Fair
Market Value of the Common Stock on the Issuance Date,
then the Corporation, at its sole option and in lieu of the
conversion, may elect to redeem any or all of the Series
D Preferred Stock submitted for conversion for an amount
equal to $10,000 per share of Series D Preferred Stock so
redeemed.
b. If shares of Series D Preferred Stock
are tendered for conversion, and the aggregate number of
shares of Common Stock to be issued pursuant to such
conversion and any prior conversions equals or exceeds
20% of the number of shares of Common Stock that were
outstanding on the Issuance Date (the "Threshold"), then
the Corporation shall redeem those shares of Series D
Preferred Stock tendered for conversion, which, if
converted, would cause the Corporation to issue shares of
Common Stock equaling or exceeding the Threshold;
provided, however, the Corporation shall redeem shares
of Series D Preferred Stock pursuant to this Section 4b
only at the time and to the extent that the Corporation has
a balance of cash and marketable securities in excess of
$1,000,000 or such lesser amount as the Corporation's
Board of Directors shall reasonably determine to be
sufficient to fund the Corporation's working capital needs.
c. If, pursuant to Sections 4a or 4b
hereof, the Corporation redeems some, but not all, of the
Series D Preferred Stock submitted for conversion, then
the Corporation shall redeem from among the Series D
Preferred Stock submitted by the various holders for
conversion a pro-rata amount from each such holder so
submitting Series D Preferred Stock for conversion.
d. The Corporation shall effect each
such redemption by giving the holder notice (the
"Redemption Notice") of its election (or obligation) to
redeem within three (3) business days following the
receipt of a Conversion Notice from the holder. In
addition, the Redemption Notice shall indicate whether the
Corporation will redeem all or part of the Series D
Preferred Stock submitted for conversion.
e. Each holder whose Series D
Preferred Stock is being redeemed pursuant to this Section
4 shall send the certificates evidencing their Series D
Preferred Stock to be redeemed to the Corporation, and
the Corporation promptly shall pay the applicable
redemption price to such holder. The Corporation shall
not be obligated to deliver the redemption price unless the
certificate(s) evidencing the Series D Preferred Stock so
redeemed are delivered to the Corporation.
f. As used in Section 4a, the term Fair
Market Value per share of Common Stock on a particular
day shall mean (i) the last sale price of the Common
Stock on such day or, in case no such reported sale takes
place on such day, the average of the last reported bid
and asked prices on such day, on the principal national
securities exchange (including the NASDAQ National
Market System and the NASDAQ SmallCap Market
System) on which the Common Stock is admitted to
trading or listed, (ii) if not listed or admitted to trading on
a national securities exchange, the average of the highest
reported bid and lowest reported asked prices on such day
as reported by the National Quotation Bureau, Inc. or
other similar organization, or (iii) if no such market price
information is so available, the fair market price of the
Common Stock as reasonably determined by the Board of
Directors of the Corporation.
Section 5. Voting Rights. Except as required
by applicable law, the holders of shares of Series D
Preferred Stock shall not have the right or power to vote
on any question or in any proceeding or to be represented
at, or to receive notice of, any meeting of the
Corporation's stockholders.
Section 6. Reacquired Shares. Any shares of
Series D Preferred Stock purchased or otherwise acquired
by the Corporation in any manner whatsoever shall be
retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock
and may be reissued as part of a new series of Preferred
Stock subject to the conditions and restrictions on issuance
set forth herein, in the Certificate of Incorporation, or in
any other Certificate of Designation creating a series of
Preferred Stock or any similar stock or as otherwise
required by law.
Section 7. Liquidation, Dissolution or Winding
Up. In the event of any liquidation, dissolution, or
winding up of the Corporation, the holders of shares of
the Series D Preferred Stock are entitled to receive out of
assets of the Corporation available for distribution to
stockholders, after satisfaction of indebtedness, but before
any distribution of assets is made to holders of Common
Stock or to holders of any other class of stock of the
Corporation ranking junior to the Series D Preferred
Stock upon liquidation, liquidating distributions in the
amount of $10,000 per share. If, upon any liquidation,
dissolution, or winding up of the Corporation, the
amounts payable with respect to the Series D Preferred
Stock or any other shares of stock of the Corporation
ranking as to any such distribution on a parity with the
Series D Preferred Stock are not paid in full, the holders
of the Series D Preferred Stock and of such other shares
will share ratably in any such distribution of assets of the
Corporation in proportion to the full distributable amounts
to which they are entitled. After payment of the full
amount of the liquidating distribution to which they are
entitled, the holders of shares of the Series D Preferred
Stock will not be entitled to any further participation in
any distribution of assets by the Corporation.
Section 8. Consolidation, Merger, etc. If the
Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of
Common Stock are exchanged for or changed into other
stock or securities, cash, and/or any other property, then,
in any such case, the Corporation, as a condition
precedent to such transaction, shall cause effective
provisions to be made so that each holder of Series D
Preferred Stock then outstanding shall have the right, by
converting such share(s) of Series D Preferred Stock, to
acquire the kind and amount of shares of stock, securities,
cash and/or other property receivable upon such
consolidation, merger, combination or other transaction
by a holder of the number of shares of Common Stock
which might have been acquired upon conversion of such
Series D Preferred Stock immediately prior to such
consolidation, merger, combination, or other transaction.
Section 9. No Redemption. Except as set forth
in Section 4 hereof, the shares of Series D Preferred
Stock shall not be redeemable.
Section 10. Amendment. This Certificate of
Designation shall not be amended in any manner which
would materially alter or change the powers, preferences,
or special rights of the Series D Preferred Stock so as to
affect them adversely without the affirmative vote of the
holders of at least two-thirds of the outstanding shares of
Series D Preferred Stock, voting together as a single
class.
RESOLVED, FURTHER, that the appropriate
officers of the Corporation hereby are authorized to
execute and acknowledge a certificate setting forth these
resolutions and to cause such certificate to be filed and
recorded, all in accordance with the requirements of
Section 151 of the General Corporation Law of the State
of Delaware.
<PAGE>
IN WITNESS WHEREOF, this Certificate of
Designation is executed on behalf of the Corporation by
its President & Chief Executive Officer and attested by its
Secretary this 17th day of September, 1996.
/s/
Richard Reinhart
Dr.
Richar
d
Reinha
rt,
Ph.D.,
Presid
ent
and
Chief Executive Officer
Attest:
/s/ Howard S. Breslow
Howard S. Breslow, Secretary<PAGE>
Exhibit B
<TABLE>
CRYOMEDICAL SCIENCES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1996 AND 1995
<CAPTION>
<S>
Pro-Forma (1)
ASSETS <C>June 30, 1996 <C>June 30, 1996
CURRENT ASSETS:
Cash and cash equivalents $ 1,250,871 $ 3,175,806 (2)
Short-term investments 105,071 105,071
Receivables - net of allowance for doubtful accounts
of $48,304 and $78,209 1,566,064 1,566,064
Inventories 1,990,548 1,990,548
Prepaid expenses and other 187,269 187,269
Total current assets 5,099,823 7,024,758
EQUIPMENT AND LEASEHOLD IMPROVEMENTS - Less accumulated
depreciation and amortization of $1,408,503 and $1,010,209 695,065 695,065
OTHER ASSETS 18,727 18,727
$ 5,813,615 $ 7,738,550
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses 1,635,140 $ 1,635,140
Accrued settlement of stockholder class action suit - -
Accrued vacation 120,233 120,233
Customer deposits 10,000 10,000
Deferred revenue 58,823 58,823
Warranty reserves 100,000 100,000
Extended warranties - current 624,575 624,575
Current portion of capital lease obligations and notes payable 18,023 18,023
Total current liabilities 2,566,794 2,566,794
EXTENDED WARRANTIES 231,212 231,212
DEFERRED RENT 161,546 161,546
CAPITAL LEASE OBLIGATIONS AND NOTES PAYABLE,
net of current portion 4,632 4,632
Total liabilities 2,964,184 2,964,184
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, par value $.001; authorized, preliminary - 9,379,000,
pro-forma - 9,378,800 shares; issued and outstanding, none. - -
Series D Convertible Preferred Stock, par value $.001 per share,
liquidation value $10,000 per share, authorized, preliminary - 0,
pro-forma - 200 shares; issued and outstanding, preliminary - 0,
pro-forma - 196 shares. - 1,924,935 (2)
Common stock, par value $ .001; authorized,
50,000,000 shares; issued and outstanding,
26,873,026 26,873 26,873
Additional paid-in capital 28,520,203 28,520,203
Accumulated deficit (25,654,612) (25,654,612)
Notes receivable from officers, including
accrued interest (43,033) (43,033)
Total stockholders' equity 2,849,431 4,774,366
$ 5,813,615 $ 7,738,550
<FN>
<F1>
(1) Placement of $1,960,000 of Series D Convertible Preferred Stock
<F2>
(2) Net receipts after deduction of escrow fees and expenses.
<F3>
See notes to consolidated financial statements.
</FN>
</TABLE>
