UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
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PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) March 13, 1998
HENLEY HEALTHCARE, INC.
(Exact name of registrant as specified in its charter)
Commission File Number 0-28566
TEXAS 76-0335587
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
120 Industrial Boulevard, Sugar Land, Texas 77478-3128
(Address of principal executive offices)
281-276-7000
(Registrant's telephone number, including area code)
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HENLEY HEALTHCARE, INC.
FORM 8-K
CURRENT REPORT
ITEM 5. OTHER EVENTS
On February 20, 1998, and on March 13, 1998, Henley Healthcare, Inc.
(the "Company") entered into agreements with Maxxim Medical, Inc. ("Maxxim")
pursuant to which Maxxim converted an aggregate of $4,000,000 of its convertible
subordinated promissory note in the original principal amount of $7,000,000
issued by the Company, into an aggregate of 2,000,000 shares of the
Companys' common stock, par value $.01 per share (the "Common Stock"). The
conversions were based on the current conversion price of $2.00 per share under
the convertible note. The agreements also provide that the entire $4 million of
the convertible note so converted reduces the principal amount of the
convertible note and such sum shall be applied to the Company's full redemption
obligation due in the year 2003 and partially to the Company's redemption
obligation due in the year 2002 as provided in the convertible note.
On March 13, 1998, the Company entered into an agreement with some
private accredited investors pursuant to which the Company issued to the
investors $1,800,000 of its Series A Convertible Preferred Stock (the "Preferred
Stock"). Under the agreement, the Preferred Stock is convertible into the
Company's Common Stock at the lesser of (i) 75% of the average closing bid price
for the Company's Common Stock as reported by Nasdaq for the 5 trading days
prior to conversion, or (ii) 100% of the closing bid price for the Company's
Common Stock on March 13, 1998. In connection with the agreement, the Company
also issued to the investors 5-year warrants to purchase 144,000 shares of the
Company's Common Stock at exercise prices ranging from the closing bid price to
135% of the closing bid price of the Common Stock on March 13, 1998. The Company
has agreed to file a registration statement covering the resale of the shares of
Common Stock issued to Maxxim as a result of the conversions described above and
the Common Stock issuable upon the conversion of the Preferred Stock and
exercise of the warrants sold to the investors described above.
These transactions have increased the Company's net tangible assets,
under Nasdaq rules, to well over $4,000,000. Under the Nasdaq Marketplace Rules,
"Net Tangible Assets" means total assets (including the value of patents,
copyrights and trademarks but excluding the value of goodwill) less total
liabilities. The transaction also placed the market value of the approximately
2,000,000 shares in the public float at approximately $12,000,000 based on the
recent bid price of the Company's shares of $6.25 per share. Henley has 5 years
of operating history, approximately 800 shareholders and 3 market makers.
The Company currently files with the SEC and NASDAQ its annual report
containing audited financial statements of the Company and its subsidiaries as
well as its quarterly reports on Form 10-QSB. The Company also distributes its
annual report to its shareholders (along with notice of annual meeting of
shareholders) within a reasonable time prior to the annual meeting of
shareholders which are held each year. The quarterly reports are distributed to
the shareholders as soon as practicable after they are filed with the SEC and
Nasdaq.
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Henley's Board of Directors (the "Board") is made up of six members four
of whom are outside independent directors. The Board has an audit committee made
up of two outside independent directors. The audit committee routinely reviews
all related party transactions on an ongoing basis for potential conflict of
interest situations.
All annual meetings of the Company's shareholders are held in the
presence of a quorum of at least 50% of the outstanding shares of the Company's
common voting stock. The Company solicits proxies and provides proxy statements
for all meetings of shareholders to the shareholders, SEC and NASDAQ.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION, AND EXHIBITS
(b) Pro Forma Financial Information: The pro forma financial information
furnished with this Form 8-K is included herein as follows:
(i) Unaudited pro forma balance sheet as of January 31, 1998 (for the
Company.)
(c) The following relevant exhibits shall be filed by amendment to this
report on Form 8-K:
EXHIBIT
NUMBER DESCRIPTION
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*3.1 Statement of designation of rights and preferences of the Company's
Series A Preferred Stock.
*10.1 Private Securities Subscription Agreement dated March 13, 1998 by and
between the Company and certain accredited investors.
*10.2 Letter agreement dated February 20, 1998, between the Company and Maxxim
relating to the conversion of the note into the Company's Common Stock.
*10.3 Letter agreement dated March 13, 1998, between the Company and Maxxim
relating to the conversion of the note into the Company's Common Stock.
* To be filed by amendment
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.
HENLEY HEALTHCARE, INC.
(Registrant)
Date: March 13, 1998 By: DAN D. SUDDUTH
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DAN D. SUDDUTH
Executive Vice President &
Principal Financial Officer
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HENLEY HEALTHCARE, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
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January 31, January 31,
1998 1998
Unadjusted Adjustments Adjusted
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ASSETS
Current Assets:
Cash and cash equivalents $ 235,525 $ 1,800,000 $ 2,035,525
Accounts receivable, net 6,674,852 6,674,852
Inventory 8,952,397 8,952,397
Prepaid expenses 540,030 540,030
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Total current assets 16,402,804 1,800,000 18,202,804
Property, plant and equipment, net 4,144,441 4,144,441
Goodwill and other intangibles, net 5,250,867 5,250,867
Other assets 1,571,850 1,571,850
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TOTAL ASSETS $ 27,369,962 $ 1,700,000 $ 29,169,962
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Line of credit - bank $ 7,250,868 $ 7,250,868
Accounts payable 3,120,418 3,120,418
Accrued expenses and other current liabilities 2,312,086 2,312,086
Current maturities of long-term debt 433,763 433,763
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Total current liabilities 13,117,135 13,117,135
Interest payable 536,667 536,667
Long-term debt, net of current maturities 9,513,816 (4,000,000) 5,513,816
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Total liabilities 23,167,618 (4,000,000) 19,167,618
Stockholders' Equity:
Preferred stock - $.10 par value; authorized
2,500,000 shares; issued and outstanding 1,800,000 1,800,000
Common stock - $.01 par value; authorized
20,000,000 shares; issued 5,662,205
shares at January 31, 1998 35,942 20,680 56,622
Additional paid-in-capital 14,344,443 3,979,932 18,323,763
Accumulated deficit (9,951,862) (9,951,862)
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4,428,523 5,700,000 10,228,523
Treasury stock, at cost, 279,000 common shares (226,179) (226,179)
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Stockholders' equity 4,202,344 5,700,000 10,002,334
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 27,369,962 $ 1,800,000 $ 29,169,962
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