SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) of the
SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of earliest event reported): May 20, 2000
TECHNICAL CHEMICALS AND PRODUCTS, INC.
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(Exact name of registrant as specified in its charter)
0-25406 65-0308922
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(Commission File Number) (I.R.S. Employer Identification No.)
3341 S.W. 15th Street
Pompano Beach, Florida 33069
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: 954/979-0400
Not Applicable
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
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On May 20, 2000 our wholly-owned Cayman Islands subsidiary, TCPI
Holdings, Ltd. ("TCPI Holdings") entered into a business and asset purchase
agreement with Roche Diagnostics GmbH ("Roche Diagnostics")of Mannheim, Germany.
Pursuant to such agreement, TCPI Holdings will acquire certain trademarks,
distribution rights and business assets of the worldwide over-the-counter
pregnancy and ovulation testing business carried on by Roche Diagnostics. The
trademarks include EVATEST(R), EVAPLAN(R), EVENT-TEST(R), DIAGNOSIS(R) and
related goodwill. The Company has guaranteed TCPI Holdings' performance under
the asset purchase agreement. See below for a description of certain patent
litigation relating to these products.
The purchase price for the assets set forth in the asset purchase
agreement and the local asset purchase agreements is $7 million plus the value
added tax, if applicable. TCPI Holdings made a down payment of $500,000 upon
signing of the asset purchase agreement. A second down payment of $3 million is
due when a certain registration statement to be filed with the United States
Securities and Exchange Commission is declared effective, but no later than
September 17, 2000. The balance of $3,500,000 is payable in installments, which
could begin as early as August 1, 2000, prior to the closing of each local asset
purchase agreement in Germany, Uruguay, Switzerland, Spain, Italy and Argentina
and is described in Exhibit X of the Agreement. The majority of the assets being
acquired are located in Argentina, the closing of which must occur by December
31, 2001. Attached as exhibits are the asset purchase agreement, payment
schedule exhibit X, list of trademarks and guarantee.
The Company is seeking to secure the funds necessary for the second and
third payments through financing activities in the capital markets, such as the
private equity line with Swartz Private Equity, LLC, funds generated in the
ordinary course of business, and funds generated by the acquired operations
subsequent to the local closings. However, the Company cannot assure you that it
will obtain the necessary funds. Since the funds available under our private
equity line with Swartz Private Equity, LLC are subject to the future market
price and volume of trading of our common stock, the Company may be unable to
obtain sufficient funds pursuant to the Swartz transaction on a timely basis, or
at all. If the Company does not make the required payments, the Company will
forfeit the $500,000 down payment. The failure to complete the acquisition will
have a material adverse effect on the Company.
European Patent Litigation
In 1994, seven parties, including the Company, initiated an opposition
action in the European Patent Office in Munich, Germany, against European Patent
No. 291,194 ("European Patent"), presently owned by Unilever N.V. ("Unilever").
This patent was opposed in European Opposition Case No. T0681/9 in its entirety
on the grounds that it lacked novelty and inventiveness.
In March 1998, the European Patent Office Opposition Board found in
favor of Unilever, whereupon six of the seven opposers, including the Company,
filed an appeal. Upon substantial appellate oral proceedings held on January
26-27, 2000 and numerous auxiliary requests, the Opposition Board maintained the
European Patent, as amended. However, this ruling is subject to adaptation of
the specifications contained in the amended patent and approval by the
Opposition Board. Unilever is presently awaiting invitation from the Opposition
Board to submit its proposed adaptations to the specification of the European
Patent, after which the Company and the other parties intend to vigorously
contest such action.
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On January 26, 2000, the Company; Roche Diagnostics GmbH, a German
company; Roche Diagnostics S.p.A., an Italian company; and Hestia Pharma GmbH, a
German distributor wholly-owned by Roche, filed a Declaratory Judgment action
relating to Italy and Germany in the District Court of Torino, Italy requesting
the court to find that (1) the European Patent granted to Unilever is invalid,
and (2) the EVATEST(R) product manufactured, distributed and sold by the
Plaintiffs does not infringe the European Patent ("Italian Action"). On July 19,
2000, an oral hearing is scheduled to discuss the court's jurisdiction to hear
the Declaratory Judgment action. The Company is the manufacturer of the EVATEST
test devices.
Subsequent to the filing of the Italian Action and on February 3, 2000,
Unilever filed a patent infringement action in the Administrative Court of
Munich, Germany against Hestia Pharma GmbH and four (4) of its officers alleging
infringement of the European Patent that is the subject of the Italian Action.
On April 27, 2000, the complaint was amended to allege infringement of European
Patent Application No. 93108764.7. In this action, Unilever has asked that
Hestia Pharma GmbH refrain from commercializing, using, importing or possessing
analytical test devices which comprise features of Unilever's patent claims.
On April 20, 2000, Unilever filed a patent infringement action in the
Administrative Court of Munich, Germany against Roche Diagnostics GmbH and the
Company alleging infringement of the patent involved in the Italian Action and
European Patent Application No. 93108764.7. In this action, Unilever has asked
that Roche Diagnostics GmbH and the Company refrain from offering, having
offered, commercializing, having commercialized, using, having used, importing,
having imported or possessing analytical test devices that fall under the claims
of Unilever's patent and patent application.
The Company has agreed to indemnify Roche and Roche's affiliates and
their respective officers against all damages, back royalties, costs, attorneys'
fees and the like, arising from and/or related to any and all patent
infringement actions. Management of the Company intends to vigorously prosecute
the Company's claims against the Unilever Patent in the Italian Action and
vigorously defend the claims asserted by Unilever in the German actions. The
Company, as the manufacturer of these products, has previously provided the same
indemnity to Roche. A majority of the Company's sales in Europe relate to
products covered by the patents that are the subject of the Italian Action and
the German Actions. Consequently, a loss in this litigation may have a material
adverse effect on our results of operations and financial condition.
HIV Saliva Collector Technology
On May 31, 2000, the Florida Fourth District Court of Appeals in West
Palm Beach, Florida denied the Company's motion for a rehearing or rehearing en
banc on the affirmance of a judgment against the Company of approximately
$328,000 for tortious interference with a business relationship. The Company
intends to vigorously pursue all proceedings available to it to set aside this
judgment, including the Company's pending trial court motion to set aside this
judgment. Previously, on March 29, 2000, the appellate court reversed a lower
court jury verdict and $500,000 judgment against Jack L. Aronowitz, TCPI's
Chairman, President and Chief Technical Officer. The trial jury had found that
TCPI had not misappropriated trade secrets, which finding was not appealed.
Information in this Form 8-K, including any information incorporated by
reference herein, includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Act of 1934, as amended, and is subject to the safe-harbor created by
such sections. The Company's actual results may differ significantly from the
results discussed in such forward-looking statements.
Statements regarding development and FDA clearance of future products,
future prospects, business plans and strategies, future revenues and revenue
sources, the resolution of pending litigation, future liquidity and capital
resources, health care market directions, future acceptance of the Company's
products, possible recommendations of health care professionals or governmental
agencies regarding use of diagnostic products, possible growth in markets for
at-home diagnostic testing, the possibility of additional equity investments,
mergers, acquisitions or other strategic transactions, as well as other
statements contained in this report that address activities, events or
developments that the Company expects, believes or anticipates will or may occur
in the future, and similar statements are forward-looking statements. These
statements are based upon assumptions and analyses made by the Company in light
of current conditions, future developments and other factors the Company
believes are appropriate in the circumstances, or information obtained from
third parties and are subject to a number of assumptions, risks and
uncertainties. Readers are cautioned that forward-looking statements are not
guarantees of future performance and that actual results might differ materially
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from those suggested or projected in the forward-looking statements. Factors
that may cause actual future events to differ significantly from those predicted
or assumed include, but are not limited to: the satisfactory completion of
clinical trials demonstrating efficacy of the TD GlucoseTM Monitoring System;
FDA and foreign regulatory clearance of the TD Glucose Monitoring System; delays
in product development and clinical testing; risks associated with the Company's
ability to successfully develop and market new products on a profitable basis or
at all; availability of labor and sufficient parts and materials to complete the
design, construction and manufacturing scale-up of required equipment; ability
to complete the design, construction and manufacturing scale-up on a timely
basis within budget parameters; receipt of any required regulatory approvals for
manufacturing equipment or related facilities; future advances in technologies
and medicine; the uncertainties of health care reform; risks related to the
early stage of the Company's existence and its products' development; the
Company's ability to execute its business plans, including payment for and
integration of acquired assets such as the transaction described above;
engineering development; lead time for delivery of equipment; the Company's
dependence on outside parties such as its key customers, suppliers, licensing
and alliance partners; competition from major pharmaceutical, medical and
diagnostic companies; risks and expense of government regulation, including
foreign government approvals which may be necessary to complete an acquisition
or effectuate the use of acquired assets, and effects of changes in regulation
(including risks associated with obtaining requisite FDA and other governmental
approvals for the Company's products); the limited experience of the Company in
manufacturing and marketing products; uncertainties connected with product
liability exposure and insurance; risks associated with domestic and
international growth and expansion; risks associated with international
operations (including risk associated with international economies, currencies,
business conditions and foreign currency translations); risks associated with
obtaining and maintaining patents and other protections of intellectual
property; risks associated with uncertainty of litigation and appeals, and the
payment of judgments not reversed on appeal or otherwise; the Company's limited
cash reserves and sources of liquidity; uncertainties in availability of
expansion capital in the future and other risks associated with capital markets,
including funding of ongoing operations and acquisitions, risks associated with
the Company's ability to negotiate and obtain additional financing, equity
investments or strategic transactions on favorable terms or at all, as well as
those listed in the Company's other press releases and in its other filings with
the Securities and Exchange Commission. The Company may determine to discontinue
or delay the development of any or all of its products under development at any
time. Moreover, the Company may not be able to successfully develop and market
new products, enter into strategic alliances or implement any or all of its
operating strategy unless it is able to generate additional liquidity and
working capital.
For a complete description of the Company's products and business, see
Part I, Item 1 of the Company's Annual Report on Form 10-K for the year ended
December 31, 1999.
Item 7. Financial Statements and Exhibits.
Exhibits attached with this filing.
Exhibit Number Exhibit Description
2.1 Business and Asset Purchase
Agreement dated May 20,
2000 between Roche
Diagnostics GmbH and TCPI
Holdings, Ltd.
2.2 Guarantee Agreement dated
May 20, 2000 between Roche
Diagnostics GmbH and the
Company
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SIGNATURE
Pursuant to the requirement 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.
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Dated: June 8, 2000 TECHNICAL CHEMICALS AND PRODUCTS, INC.
By: /s/ WALTER V. USINOWICZ, JR.
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WALTER V. USINOWICZ, JR.
Vice President of Finance and Chief
Financial Officer (Principal Financial
Officer and Principal Accounting Officer)
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