U.S. Securities and Exchange Commission
Washington, D.C. 2054
FORM 10-QSB/A
(Amendment No. 4)
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended September 30, 1998
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number 0-25828
Electropharmacology, Inc.
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Exact name of small business issuer as specified in its charter
Delaware 95-4315412
-------- ----------
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
12085 Research Drive, Alachua, Florida 32615
--------------------------------------------
(Address of principal executive offices)
(904) 462-2249
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(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No ___
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State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Number of Shares Outstanding
Class On September 30, 1998
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Common Stock, $ .01 par value 12,505,485
Transitional Small Business Disclosure Format:
Yes____ No X
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<PAGE>
The following information is hereby amended as follows:
Part II. Item 2. Exhibits and Reports on Form 8-K, contained in Part
II, Item 2.
Exhibit 10.3 has been revised and Schedule
3(g)1 to Exhibit 10.7 has been added to said
exhibit.
SIGNATURES
In accordance with 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 thereunto authorized.
ELECTROPHARMACOLOGY, INC.
Registrant
Dated: December 30, 1999 /s/ Arup Sen
--------------------------------------
Arup Sen
President and Chief Executive Officer
Dated: December 30, 1999 /s/ Arup Sen
--------------------------------------
Arup Sen
Acting Chief Financial Officer
Exhibit 10.3 /*/
David Saloff, Executive Vice President - Sales and Marketing
Electropharmacology, Inc.
2301 NW 33rd Court; Suite 102 Pompano Beach, Florida 33069
The following summarizes your compensation package and incentives for your
employment as Executive Vice President - Sales and Marketing of
Electropharmacology, Inc. (as reorganized recently), effective as of August 25,
1998. Your previous employment contract is terminated by mutual agreement. Your
compensation will, as shown below, be dependent on revenues of the Gemini
Biotech Division.
1. Annual base compensation:
-- -------------------------
<TABLE>
<CAPTION>
<S> <C>
Initial (effective September 1, 1998) $ 80,000
Completion of 6 months OR achieving $[omission] annual revenue 100,000
Achieving $[omission] annual revenue 110,000
</TABLE>
Annual revenue will be calculated by annualizing based on prior six
months' revenues.
2. Override on Sales revenue:
-- --------------------------
Starting on month 7 or achieving $[omission] annualized revenue run
rate: [omission] on first $[omission], [omission] on the next $[omission] and
[omission] on amounts over $[omission]; the override amounts will be paid on the
15th day of the month for the prior month based on the annualized rate
calculated based on the revenue of said month. Once your aggregate annual
compensation equals or exceeds $200,000, you and the Company agree to negotiate
a new, mutually agreeable compensation arrangement.
3. Stock Option:
-- -------------
Total grant 200,000 shares, pursuant to EPI Stock Option Plan (exercise
price is EPi common stock price at close of trading day on August 25, 1998; term
of exercise - 10 years from date of grant) and subject to approval by the new
Board of Directors:
o Vesting at 20% per year starting with first anniversary of the
grant date over five years.
o Vesting will accelerate based on sales revenue growth as follows:
achieving $[omission] annual revenue 25%, achieving $[omission]
annual revenue, additional 25%, achieving $[omission] annual
revenue, remaining 50% (revenue excludes those through business
acquisition/merger).
o Vesting will accelerate (at a rate to be determined by the Board
of Directors) in the event the Company successfully demonstrates
that PEMS facilitates cell regeneration for wound healing and
` based upon such demonstration, the Company pursues a product
approval in the US or in a major country in Europe or in Japan
o Vesting will accelerate (at a rate to be determined by the Board
of Directors) in the event that EPI receives warrants from ADM
Tronics as set forth in the Asset Purchase Agreement
/*/ Confidential portions of this Exhibit have been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule
24b-2 under the Securities Exchange Act of 1934 as amended.
<PAGE>
1. One time Bonuses: Cash and/or Stock: at the discretion of the
Board
2. Miscellaneous:
You are entitled to all standard employee benefits, incl. disability
and four weeks paid vacation per year; maximum carryover of vacation - two
weeks.
In the event that your employment is terminated without "cause" before
18 months, a severance equal to compensation for the prior six months. The
severance payment is subject to your mitigation of such payment by diligently
seeking other employment unless: (i) you have not been given notice of
termination at least three months prior to the end of the 18-month period and
(ii) Dr. Sen is no longer serving as the Company's Chief Executive Officer at
such time. All stock options vest immediately and will remain exercisable for
the original term of exercise (10 years from date of grant) in the event
employment is terminated (a) due to acquisition by or merger with a third party
not recommended and/or approved by you or (b) without "cause".
<TABLE>
<CAPTION>
<S> <C>
Sincerely,
Accepted and Agreed:
/s/ Arup Sen
- ----------------------
Arup Sen, PhD ____/s/ Richard K. Kneipper______________________
Chairman & CEO for HTD: Richard K Kneipper
____/s/ Krishna Jayaraman _____________________
for Gemini: Dr. Krishna Jayaraman
____/s/ David Saloff_____________________________
David Saloff
</TABLE>
Schedule 3(g)-1 to Exhibit 10.7
Unaudited Pro Forma Condensed Combined Balance Sheet
June 30, 1998
<TABLE>
<CAPTION>
Merger Merger
---------------- -------------
Historical Historical
------------------------ -------------
ASSETS Pro Forma Pro Forma Pro Forma
EPi HTD Adjustments Combined GBLP Adjustments
---------- --------- --------------- -------------- -------- -------------
Current assets :
<S> <C> <C> <C> <C>
Cash 62,465 48 62,513 285,064
Trade accounts receivable, net 126,723 126,723 57,697
Inventory 159,043 159,043 7,528
Trade notes and other receivables 2,181 2,181 30,200
Prepaid expenses 161,962 161,962 -
---------- --------- ----------- --------- --------- ------------
Total current assets 512,374 48 - 512,422 380,488 -
---------- --------- ----------- --------- --------- ------------
Rental and other equipment, net 568,497 966 569,463 252,976
Patents & Organization Cost, net 86,088 86,088 67,034
Deposits 5,075 5,075 3,350
Acquired Developed Technology 2,000,000 (1) 2,000,000 2,000,000(2)
Investment in ADM Tronics -
========== ========= =========== ========= ========= ============
Total Assets 1,172,034 1,014 2,000,000 3,173,048 703,848 2,000,000
========== ========= =========== ========= ========= ============
LIABILITIES AND NET CAPITAL DEFICIENCY
Current liabilities:
Note Payable 719,276 719,276 97,185
Accounts payable 509,330 44,500 553,830 (480)
Accrued expenses 308,224 308,224 68,958
Accrued commissions 14,262 14,262 -
Accrued payroll 1,767 1,767 22,361
Customer deposits - -
Deferred Revenue 75,000 75,000
Notes payable to related parties 65,926 63,654 (4) 129,580
-
---------- --------- ----------- --------- --------- ------------
Total current liabilities 1,693,785 44,500 63,654 1,801,939 188,025 -
---------- --------- ----------- --------- --------- ------------
Long term Note Payable 90,260 90,260 932,791
Minority Interest in Limited Partnership 1,692,985 (2)
========== ========= =========== ========= ========== ============
Total Liabilities 1,784,045 44,500 63,654 1,892,199 1,120,816 1,692,985
========== ========= =========== ========= ========== ============
Commitments and contingencies
Net capital deficiency/Equity:
Convertible Preferred Stock 2,430 2,430
Common Stock 41,325 32 61,689 (1) 103,046
Additional paid-in capital 15,277,249 194,522 1,703,225 (1) 17,174,996
Deferred Compensation (67,678) (67,678)
General Partner (1%) (85,656) 87,919 (2)
Limited Partners (99%) 5,000 219,096 (2)
Deficit/Retained Earnings (15,865,337) (238,040) 171,432 (1) (15,931,945) (336,312)
---------- --------- ----------- --------- --------- -----------
Net capital deficiency/Total Equity (612,011) (43,486) 1,936,346 1,280,849 (416,967) 307,015
========== ========= =========== ========= ========= ============
Total liabilities and net capital
deficiency 172,034 1,014 2,000,000 3,173,048 703,848 2,000,000
========== ========= =========== ========= ========= ============
</TABLE>
[RESTUBBED TABLE]
<TABLE>
<CAPTION>
Medical Device
Divestiture
--------------------
Pro Forma
ASSETS Pro Froma Pro Forma Combined
Combined Adjustments (as adjusted)
------------- ------------------ ----------------------
Current assets :
<S> <C> <C> <C> <C>
Cash 347,577 135,000 (3) 482,577
Trade accounts receivable, net 184,420 184,420
Inventory 166,571 (152,233) (3) 14,338
Trade notes and other receivables 32,381 32,381
Prepaid expenses 161,962 7,500 (5) 169,462
----------- ---------- ------------
Total current assets 892,910 (9,733) 883,177
----------- ---------- ------------
Rental and other equipment, net 822,439 (613,466) (3) 208,973
Patents & Organization Cost, net 153,122 153,122
Deposits 8,425 8,425
Acquired Developed Technology 4,000,000 4,000,000
Investment in ADM Tronics - 606,667 (3) 606,667
=========== ========== ============
Total Assets 5,876,896 (16,532) 5,860,364
=========== ========== ============
LIABILITIES AND NET CAPITAL DEFICIENCY
Current liabilities:
Note Payable 816,461 (672,750) (3) 143,711
Accounts payable 553,350 (48,169) (3) 505,181
Accrued expenses 377,182 (21,581) (3), (5) 355,601
Accrued commissions 14,262 14,262
Accrued payroll 24,128 24,128
Customer deposits - -
Deferred Revenue 75,000 75,000
Notes payable to related parties 129,580 129,580
- -
----------- ---------- ------------
Total current liabilities 1,989,964 (742,500) 1,247,464
----------- ---------- ------------
Long term Note Payable 1,023,051 1,023,051
Minority Interest in Limited Partnership 1,692,985 1,692,985
=========== ========== ============
Total Liabilities 4,706,000 (742,500) 3,963,500
=========== ========== ============
Commitments and contingencies
Net capital deficiency/Equity:
Convertible Preferred Stock 2,430 2,430
Common Stock 103,046 3,226 (3) 106,272
Additional paid-in capital 17,174,996 96,774 (3) 17,271,770
Deferred Compensation (67,678) (67,678)
General Partner (1%) 2,263 2,263
Limited Partners (99%) 224,096 224,096
Deficit/Retained Earnings (16,268,257) 625,968 (3) (15,642,289)
----------- ----------------- ------------
Net capital deficiency/Total Equity 1,170,896 725,968 1,896,864
=========== ================= ============
Total liabilities and net capital
deficiency 5,876,896 (16,532) 5,860,364
=========== ================= ============
</TABLE>
(1) To reflect the elimination of HTD equity accounts, issuance of EPI shares
and allocation of the purchase price in excess of net tangible assets
acquired, see Note 2 to the Pro Forma Condensed Combined Financial
Statements.
(2) To reflect the elimination of the GBLP equity accounts, issuance of EPI
shares and allocation of the purchase price in excess of net tangilble
assets acquired, see Note 2 to the Pro Forma Condensed Combined Financial
Statements.
(3) To reflect the sale of the Medical Device Business for $150,000 cash (net of
$15,000 registration fee) and ADM stock (2,925,000 shares) pursuant to the
Asset Purchase Agreement.
(4) To record additional liability uncurred to Arup Sen as if the change in
control occurred on June 30, 1998.
(5) To record purchase of a one-year product liability policy for discontinued
products coverage.
