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 16, 1996
Xechem International, Inc.
(Exact name of Registrant as Specified in its Charter)
Delaware 0-23788 22-3284803
(State of Incorporation) (Commission File No.) (IRS Employer Identification No.)
100 Jersey Avenue, Bldg. B, #310
New Brunswick, N.J. 08901
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (908) 247-3300
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Item 5. Other Events
On December 16, 1996, Xechem International, Inc. (the "Company") received
a notice from the Nasdaq Stock Market ("Nasdaq") regarding the possible
delisting of the Company's common stock and warrants from the Nasdaq SmallCap
Market due to failure to maintain a minimum bid price of $1.00 or, in the
alternative, to maintain capital and surplus of $2,000,000 and a public float of
$1,000,000 or more.
The Company had previously provided a response to Nasdaq stating that,
among other things, the Company believes that the equity infusion contemplated
by its November 18, 1996 stock purchase agreement with David Blech (the
"Purchase Agreement"), previously announced, if fully funded, will bring the
Company's capital and surplus to substantially in excess of $2,000,000 . The
Company also stated that the value of its public float at all relevant times
exceeded $1,000,000. In addition, the Company expressed its willingness to take
such other actions as may be appropriate to maintain the Company's compliance
with the Nasdaq listing standards.
On December 16, 1996, the Company received a letter from Nasdaq stating
that Nasdaq has not accepted the Company's plan of compliance and raising
certain concerns. A copy of the Nasdaq letter is attached hereto as Exhibit A
and incorporated herein by reference.
The Company believe, but can provide no assurances, that it has not
violated Nasdaq's voting rights policy, and that the transactions contemplated
by the Purchase Agreement are in the best interests of the Company and its
public stockholders. The Company obtained a fairness opinion from The Griffing
Group, Inc. in connection with the transactions contemplated by the Purchase
Agreement.
The Company intends to appeal the staff's decision and request a hearing
of the staff's determination. Should a hearing not be held or should Nasdaq not
provide the Company an extension of time in which to achieve continued listing,
the Company's common stock and warrants will be delisted from Nasdaq effective
with the opening of business on December 26, 1996. The Company intends to use
its best efforts to assure Nasdaq that its present plans will enable the Company
to meet Nasdaq's listing standards, and that the Company has not violated
Nasdaq's requirements in a manner that should cause the delisting of the
Company's securities. However, the Company can provide no assurances that its
plan as presently contemplated, or as it may be modified, will satisfy Nasdaq's
listing concerns.
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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 hereunto duly authorized.
Xechem International, Inc.
By: /s/ Ramesh C. Pandey
Dr. Ramesh C. Pandey, President and Chief
Executive Officer
Dated: December 18, 1996
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THE NASDAQ STOCK MARKET, INC. (Reproduced)
Exhibit A
December 15, 1996
Dr. Ramesh C. Pandley
Chairman, President and CEO
Xechem International, Inc.
100 Jersey Avenue
Building B, Suite 310
New Brunswick, NJ 08091
Dear Dr. Pandley:
Our office is in receipt of your correspondence, dated November 27, 1996. Xechem
International, Inc. (the "Company") presently does not meet the minimum $1 bid
price or the alternative requirement for continued listing on Nasdaq SmallCap
Market. The Company's correspondence outlined Xechem International, Inc.'s
proposed plan of compliance.
The Company provided a Form 8-K, dated November 21, 1996, which outlined a stock
purchase agreement on November 18, 1996 with David Blech and his designees. The
plan called for the purchase of up to $5,500,000 of the Company's Class C
Preferred Series 2 convertible stock. It is the staff's understanding that at
the initial closing on November 18, 1996, Mr. David Blech's designees (the
Edward A. Blech Trust) purchased 5,000 shares of the Series 2 Stock for
$500,000. In addition, the Company's plan of compliance stated that Dr. Pandley,
the Com pany's Chief Executive Officer, would convert approximately $1,107,451
of aggregated loans plus interest and dividends, of the Class B 8% preferred
stock, which is presently outstanding in his name, into Class C Series 3
preferred stock. The Class C Series 2 and Series 3 Preferred Shares are
convertible into shares of the Company's common stock. In addition, the Company
is in the process of converting $320,495 of aggregate indebtness owned to
certain individuals, who provided gap funding to the Company into common stock
and have agreed orally to such conversion.
After careful review, the staff is unable to accept the Company's plan of
compliance. The staff has determined that the Company's plan of compliance
violates the voting rights provision of The Nasdaq Stock Market, as set forth
unde Marketplace Rule 4310 (c)(21) and IM-4310. The staff is also aware of Mr.
Blech's regulatory background and has concerns regarding the appropriateness of
the transactions between Dr. Pandley and the Company.
The staff notes that the Company's present "Total Shares Outstanding" is
7,761,094. As stated in the Company's Form 8-K, if all of the Series 2 and
Series 3 shares are issued and converted into common stock, Mr. Blech and his
designees will acquire 110,000,000 shares of common stock, and Dr. Pandley will
acquire 21,088,000 shares of common stock. The holders of the shares of Series 2
Stock and Series 3 Stock are entitled to vote with the holders of the common
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stock, castin a number of votes per share equal to the number of shares of
common stock into which the Series 2 Stock or Series 3 Stock is convertible.
Pursuant to the Stock Purchase Agreement, signed by Dr. Pandley and Mr. Blech,
these individuals have agreed to vote or execute a written consent to approve
such an amendment to the certificate of incorporation to provide for the
authorization of such additional shares of the Company's common stock to effect
such conversion. The stockholders agreement further permits the Company and its
directors to take such actions after the January 1997 closing as Mr. Bleck may
request to elect his nominees to constitute a majority of the directors of the
Company. The staff believes these transactions have materially affected and
reduced the voting rights of the common stock shareholders of the Company, and
that such actions constitute a violation of the voting rights policy of The
Nasdaq Stock Market.
In addition to the bid price deficiency and the voting rights violation, the
staff notes that the Company presently has not made all of the required filings
with The Nasdaq Stock Market under its Listing of Additional Shares Program. The
staff has had several telephone conversations with both the Company and its
counsel regarding the timely filings of Notifications and supporting
documentation.
In light of the aforementioned concerns, the staff has determined that the
Company will not be afforded an extension of time in which to achieve compliance
with the continuing listing requirements of The Nasdaq SmallCap Market.
Accordingly, the securities of Xechem International, Inc. will be delisted from
The Nasdaq SmallCap Market, effective with the opening of business on Thursday,
December 26, 1996.
Should the Company wish to appeal the staff's decision, it may request a hearing
before The Nasdaq Listing Qualifications Panel. The Company should address its
request for either an oral or written hearing to Mr. David Donohoe, Counsel, The
Nasdaq Stock Market, 1735 K Street., N.W., Washington, D.C. 20006. The hearing
fee1 must accompany the Company's request and must be received no later than the
close of the market on Monday, December 23, 1996.
If you have any questions regarding the compliance issues discussed above,
please contact Ms. Kit Milholland at (800) 955-8105. Please keep
Ms. Milholland apprised of any request for a hearing.
Very truly yours,
/s/Perry Peregoy
Perry Peregoy
Vice President - Listings
Nasday Market Services
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1The hearing fees are: $2,300 for an oral hearing or $1,400 for a written
hearing.
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