U.S. SECURITIES & 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) May 20, 1997
-------------------------------
AQUAGENIX, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-24490 65-0419263
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission File Number) I.R.S. Employer
of incorporation) Identification No.)
6500 Northwest 15th Avenue, Fort Lauderdale, Florida 33309
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (954) 975-7771
------------------------------
Not Applicable
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
Page 1
<PAGE>
ITEM 5. Other Events
------------
On May 2, 1997, the Company issued 100,000 shares of common stock to a
financial consultant resulting from the exercise of stock options granted to
them in 1996 as consideration for financial consulting services rendered. The
Company received an aggregate purchase price of $500,000.
On May 19, 1997, the Company issued 47,500 shares of common stock to
one of the directors of Aquagenix, Inc. (the "Company"), namely Mr. Fred S.
Katz, upon the exercise of options granted to him under the Company's Directors
Stock Option Plan. The aggregate purchase price was $200,200, all of which has
been received in cash by the Company.
On the same day, the Company completed an equity private placement of
83,333 shares (the "Shares") at $6.00 per share to Tarragona Fund, Inc.
("Tarragona") pursuant to the terms of a Subscription Agreeement, dated as of
May 19, 1997, between the Company and Tarragona. The aggregate purchase price
was $500,000, all of which has been received in cash by the Company.
The Shares have been acquired by Tarragona solely for investment
purposes. The Shares have not been registered under the the Securities Act of
1933, as amended, or the securities laws of any state, based upon an exemption
from such registration requirements for non-public offerings pursuant to an
exemption under the Act. The Shares may not be sold or transferred unless they
have been first registered under the Act and all applicable state securities
law, or unless exemptions from such registration provisions are permitted under
the said Act. The Company has undertaken to file a registration statement for
the Shares within thirty days from the transaction date.
During April 1997, the Company also issued a total of 3,100 shares of
common stock to employees of the Company resulting from the exercise of their
employee stock options. Total proceeds amounted to $12,028.
Since December 31, 1996, the Company has issued a total of 300,233
shares of common stock resulting from the exercise of stock options by its
employees, directors, financial consultant and private investors, thereby
increasing its total stockholders' equity by $1,526,816, all of which were cash
proceeds, out of which $314,588 related to issuance of stock during the three
months ended March 31, 1997.
ITEM 7. Pro Forma Financial Statements and Exhibits
-------------------------------------------
(a) Pro Forma Consolidated Balance Sheet (Unaudited) of Aquagenix, Inc.
-------------------------------------------------------------------
The following pro forma consolidated balance sheet as of March 31,
1997 has been prepared giving effect to the additional equity
provided by the financial consultant, Mr. Fred Katz, Tarragona and
the employees of the Company as if the transactions had taken place
on March 31, 1997. The computation of the resulting pro forma net
tangible assets as of March 31, 1997 has been separately presented
in the attached schedule. Reference is made to the consolidated
statement of operations for the three months ended March 31, 1997
filed as part of the Form 10-QSB for the quarterly period ended
March 31, 1997.
Page 2
<PAGE>
(b) Exhibits
--------
10.93 Subscription Agreement, dated as of May 19, 1997, between the
Company and Tarragona Fund, Inc.
Page 3
<PAGE>
AQUAGENIX, INC. & SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET (UNAUDITED)
<TABLE>
<CAPTION>
March 31, Pro Forma Pro Forma
Assets 1997 Adjustments Consolidated
-------------- -------------- ---------------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 607,529 $ 1,212,228 $ 1,819,757
Marketable securities 0 0
Accounts receivable, net of allowance for doubtful 0
accounts of $107,436 and $88,541, respectively 1,058,615 1,058,615
Inventories 538,131 538,131
Prepaid expenses and other 561,495 561,495
-------------- -------------- ---------------
Total current assets 2,765,770 1,212,228 3,977,998
Accounts receivable, non-current 1,269,909 1,269,909
Property and equipment, net 2,562,680 2,562,680
Intangible assets, net 4,882,796 4,882,796
Deferred financing costs, net 148,632 148,632
Other assets 306,527 306,527
-------------- -------------- ---------------
Total assets $ 11,936,314 $ 1,212,228 $ 13,148,542
============== ============== ===============
Liabilities and Stockholders' Equity
Current liabilities:
Short term borrowings - acquisitions $ 0 $ $ 0
Borrowings under credit agreement 578,161 578,161
Current maturities of long-term debt 178,576 178,576
Accounts payable 860,357 860,357
Net liabilities of discontinued operations 228,275 228,275
Other current liabilities 245,497 245,497
-------------- -------------- ---------------
Total current liabilities 2,090,866 0 2,090,866
Long-term debt, net of current maturities 5,363,129 5,363,129
-------------- -------------- ---------------
Total liabilities 7,453,995 0 7,453,995
-------------- -------------- ---------------
Stockholders' equity:
Preferred stock, par value $.01, 1,000,000 shares
authorized, no shares issued and outstanding 0 0
Common stock, par value $.01, 10,000,000 shares
authorized, 4,463,624 shares issued and outstanding 42,297 2,339 44,636
Additional paid-in capital 12,985,545 1,209,889 14,195,434
Accumulated deficit (8,336,068) (8,336,068)
Unearned compensation (209,455) (209,455)
Unrealized gain on securities 0 0
-------------- -------------- ---------------
Total stockholders' equity 4,482,319 1,212,228 5,694,547
-------------- -------------- ---------------
Total liabilities and stockholders' equity $ 11,936,314 $ 1,212,228 $ 13,148,542
============== ============== ===============
Pro Forma Adjustments
- ---------------------
To record the issuance of 233,933 shares of common stock since March 31, 1997, proceeds of
which amounted to $1,212,228.
</TABLE>
Page 3
<PAGE>
AQUAGENIX, INC. & SUBSIDIARIES
COMPUTATION OF PRO FORMA NET TANGIBLE ASSETS
AS AT MARCH 31 ,1997
Total Assets $ 13,148,542
Less: Total Liabilities (7,453,995)
-------------
5,694,547
Less: Goodwill (3,149,868)
-------------
Pro Forma Net Tangible Assets $ 2,544,679
=============
Page 4
<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, hereunto duly authorized.
AQUAGENIX, INC.
Date: May 20, 1997 By: /s/ Andrew P. Chesler
---------------------
Andrew P. Chesler,
Chairman of the Board
Chief Executive Officer
President and Treasurer
(Principal Executive Officer)
Date: May 20, 1997 By: /s/ Helen Chia
--------------
Helen Chia,
Chief Financial Officer
(Principal Financial and
Accounting Officer)
Page 5
SUBSCRIPTION AGREEMENT
----------------------
Aquagenix, Inc.
6500 N.W. 15th Avenue
Fort Lauderdale, Florida 33309
Gentlemen:
Pursuant to the discussion between Aquagenix, Inc., a Delaware corporation
(the "Company") and Tarragona Fund, Inc. (the "Undersigned"), the Undersigned is
writing to advise you of the following terms and conditions under which the
Undersigned hereby offers to subscribe (the "Offer") for the purchase of Eighty
Three Thousand Three Hundred Thirty Three (83,333) shares ("Shares") of Common
Stock, par value $.01 per share, at a purchase price of $6.00 per Share for an
aggregate amount of $500,000.
1. SUBSCRIPTION. Subject to the terms and conditions hereinafter set
forth in this Subscription Agreement, the Undersigned hereby offers to purchase
the Shares for an aggregate purchase price of $500,000.
If the Offer is accepted, the Shares shall be paid for by the
delivery of $500,000 by wire transfer payable to Aquagenix, Inc., BankAtlantic,
1750 East Sunrise Boulevard, Fort Lauderdale, Florida, 33304; ABA #267083763,
Account #0055937302 and the certificate evidencing the Shares shall be delivered
to the Undersigned immediately thereafter.
2. Representations and Warranties.
-------------------------------
(i) In order to induce the Company to accept this subscription, the
Undersigned hereby represents and warrants to, and covenants with, the Company
as follows:
(a) The Undersigned has received and reviewed the Company's Annual
Reports on Form 10-KSB for the years ended December 31, 1994, 1995 and
1996 the Form 10-QSB for the quarter ended March 31, 1997 (collectively
the "Disclosure Documents");
(b) The Undersigned has had a reasonable opportunity to ask
questions of and receive answers from the Company concerning the Company
and the Shares, and all such questions, if any, have been answered to the
full satisfaction of the Undersigned;
(c) The Undersigned has such knowledge and expertise in financial
and business matters that the Undersigned is capable of evaluating the
merits and risks involved in an investment in the Company;
<PAGE>
(d) Except as set forth herein and in the Disclosure Documents, no
representations or warranties have been made to the Undersigned by or on
behalf of the Company or any agent, employee or affiliate of the Company
and in entering into this transaction the Undersigned is not relying upon
any information, other than that contained in the Disclosure Documents and
the results of independent investigation by the Undersigned;
(e) The Undersigned understands that (A) the Shares have not been
registered under the Act or the securities laws of any state, based upon
an exemption from such registration requirements for non-public offerings
pursuant to an exemption under the Act; (B) the Shares are and will be
"restricted securities", as said term is defined in Rule 144 of the Rules
and Regulations promulgated under the Act; (C) the Shares may not be sold
or otherwise transferred unless they have been first registered under the
Act and all applicable state securities laws, or unless exemptions from
such registration provisions are available with respect to said resale or
transfer; (D) other than as set forth in the Disclosure Documents and this
Subscription Agreement, the Company is under no obligation to register the
Shares under the Act or any state securities laws, or to take any action
to make any exemption from any such registration provisions available; (E)
the certificates for the Shares will bear a legend to the effect that the
transfer of the securities represented thereby is subject to the
provisions hereof; and (F) stop transfer instructions will be placed with
the transfer agent for the Shares;
(f) The Undersigned is acquiring the Shares solely for the account
of the Undersigned, for investment purposes only, and not with a view
towards the resale or distribution thereof;
(g) The Undersigned will not sell or otherwise transfer any of the
Shares, or any interest therein, unless and until (i) said Shares shall
have first been registered under the Act and all applicable state
securities laws; or (ii) the Undersigned shall have first delivered to the
Company a written opinion of counsel (which counsel and opinion (in form
and substance) shall be reasonably satisfactory to the Company), to the
effect that the proposed sale or transfer is exempt from the registration
provisions of the Act and all applicable state securities laws;
(h) The Undersigned is a corporation duly organized under the laws
of the Panama; has full power and authority to execute and deliver this
Subscription Agreement and to perform the obligations of the Undersigned
hereunder; and this Subscription Agreement is a legally binding obligation
of the Undersigned in accordance with its terms;
(i) The Undersigned is an "accredited investor," as such term is
defined in Regulation D of the Rules and Regulations promulgated under the
2
<PAGE>
Act and the Undersigned understands that the Company has determined that
the exemption from the registration provisions of the Securities Act of
1933, as amended (the "Act"), which is based upon non-public offerings are
applicable to the offer and sale of the Shares, based, in part, upon the
representations, warranties and agreements made by the Undersigned herein
and in the this Subscription Agreement.
(j) Funding of this Subscription Agreement shall be made by wire
transfer of funds on or before 2:30 P.M. on Monday, May 19, 1997.
(ii) In order to induce the undersigned to enter into this Subscription
Agreement, the Company hereby represents and warrants to, and covenants with the
Company, as follows:
(a) The Company is a corporation duly organized under the laws of
Delaware; has full power and authority to execute and deliver this
Subscription Agreement and perform its obligations hereunder, and
this Agreement is a legally binding obligation of the Company in
accordance with its terms.
(b) The Shares when issued and paid for in accordance with the terms of
this Subscription Agreement will be validly issued and fully paid
and non-assessable; the holders thereof will not be subject to any
personal liability as such holders; all corporate action required to
be taken for the authorization, issuance sale of the Shares has been
duly and validly taken.
(c) The execution and delivery of the Subscription Agreement does not
(i) conflict with or will conflict with, result in a material breach
of, or constitute a default under (x) the articles or bylaws of the
Company; (y) any material contract, indenture mortgage, deed of
trust or other material agreement or instrument to which the Company
is a party or by which any of the properties or assets of the
Company may be bound.
(d) The Company has filed with the Securities and Exchange Commission
("SEC") Disclosure Documents which reports do not contain any
material misstatements of facts or omit to state any material facts.
Since the date of filing of the last such report there has been no
material adverse change in the business or financial condition of
the Company. Except as disclosed in the Disclosure Documents, there
are no pending or threatened litigations or other proceedings which
could have a material adverse effect on the business or financial
condition of the Company, except as described on Schedule 1 hereto.
3. UNDERTAKING TO REGISTER SHARES. The Company shall file a
registration statement for the Shares within thirty days from the date hereof
3
<PAGE>
and will use its best efforts to cause such registration statement to become
effective as soon as reasonably possible.
4. The Undersigned understands that this subscription is not binding
upon either party unless and until accepted by both parties, which acceptance is
at the sole discretion of each party and is to be evidenced by each party's
execution of this Subscription Agreement where indicated.
5. Each party agrees to indemnify the other and hold it harmless from
and against any and all losses, damages, liabilities, costs and expenses which
it may sustain or incur in connection with the breach by the other party of any
representation, warranty or covenant made by the other party herein.
6. Neither this Subscription Agreement nor any of the rights of the
Undersigned hereunder may be transferred or assigned by the Undersigned.
7. This Subscription Agreement (i) may only be modified by a written
instrument executed by the Undersigned and the Company; and (ii) sets forth the
entire agreement of the Undersigned and the Company with respect to the subject
matter hereof; (iii) shall be governed by the laws of the State of Florida
applicable to contracts made and to be wholly performed therein; and (iv) shall
inure to the benefit of, and be binding upon the Company and the Undersigned and
its respective successors and assigns.
8. All notices or other communications hereunder shall be in writing
and shall be deemed to have been duly given if delivered personally or mailed by
certified or registered mail, return receipt requested, postage prepaid, as
follows: if to the Undersigned, Falcon Cliff Palace Road, Douglas, Isle of Man,
IM99 1EP, and if to the Company, to Aquagenix, Inc., 6500 N.W. 15th Avenue, Fort
Lauderdale, Florida 33309 or to such other address as the Company or the
Undersigned shall have designated to the other by like notice.
9. JURISDICTIONAL NOTICE
FOR FLORIDA RESIDENTS: EACH FLORIDA RESIDENT WHO SUBSCRIBES FOR THE PURCHASE OF
SECURITIES HEREIN HAS THE RIGHT, PURSUANT TO SECTION 517.061(11)(A)(5) OF THE
FLORIDA SECURITIES ACT, TO WITHDRAW HIS SUBSCRIPTION FOR THE PURCHASE AND
RECEIVE A FULL REFUND OF ALL MOINES PAID WITHIN THREE (3) BUSINESS DAYS AFTER
THE EXECUTION OF THE SUBSCRIPTION AGREEMENT OR PAYMENT FOR THE PURCHASE HAS BEEN
MADE, WHICHEVER IS LATER. WITHDRAWAL WILL BE WITHOUT ANY FURTHER LIABILITY TO
ANY PERSON. TO ACCOMPLISH THIS WITHDRAWAL, A SUBSCRIBER NEED ONLY SEND A LETTER
OR TELEGRAM TO THE COMPANY AT THE ADDRESS SET FORTH IN THIS CONFIDENTIAL TERM
SHEET INDICATING HIS INTENTION TO WITHDRAW.
4
<PAGE>
FOR RESIDENTS OF ALL STATES: THE SHARES OFFERED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF CERTAIN
STATES AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. THE SHARES ARE SUBJECT IN
VARIOUS STATES TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE
TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SAID ACT AND SUCH LAWS PURSUANT
TO REGISTRATION OR EXEMPTION THEREFROM. THE SHARES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES
COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING
AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY
OF ADEQUACY OF THE CONFIDENTIAL TERM SHEET. ANY REPRESENTATION TO THE CONTRARY
IS UNLAWFUL.
10. NO WAIVER. Notwithstanding any of the representations, warranties,
acknowledgements or agreements made herein by the Undersigned, the Undersigned
does not thereby or in any manner waive any rights granted to the Undersigned
under federal or state securities laws.
11. REVOCATION. The Undersigned agrees that he shall not cancel,
terminate or revoke this Subscription Agreement or any agreement of the
Undersigned made hereunder other than as set forth under Section 9 above, and
that this Subscription Agreement shall survive the death or disability of the
Undersigned.
12. MISCELLANEOUS.
(a) This Subscription Agreement constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof and may be
amended only by a writing executed by all parties.
(b) The provisions of this Subscription Agreement shall survive the
execution thereof.
5
<PAGE>
IN WITNESS WHEREOF, the Undersigned has executed this Subscription
Agreement on the date indicated below.
TARRAGONA FUND, INC.
By: /s/ Jared Bluestein
----------------------------------
Jared Bluestein
Dated: May 19, 1997
--------------------------------
Accepted as of the 19th day
of May, 1997.
AQUAGENIX, INC.
By: /s/ Andrew P. Chesler
----------------------------------
Andrew P. Chesler President
6
<PAGE>
SCHEDULE 1
NASDAQ, by letters dated April 4, 1997 and May 12, 1997, advised the
Company that as of December 31, 1996 it had failed to maintain the requisite net
worth for listing on the NASDAQ National Market System. The Company was granted
until May 19, 1997, to complete a placement of $1,500,000. With the funding of
this Subscription Agreement, together with other financing obtained by the
Company, the Company will have complied with the requirements of NASDAQ National
Market System. Filing will be made with NASDAQ to evidence compliance.
If for any reason the Company had failed to comply with their listing
requirements, the Company would be moved to the SmallCap rather than National
Market System.
