SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
Date of Report: December 30, 1998
THE MED-DESIGN CORPORATION
----------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 0-25852 77-0404919
----------------- ---------------------- -----------------
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
</TABLE>
2810 Bunsen Avenue, Ventura, CA. 93003
- --------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
(805) 339-0375
----------------------------------------
(Registrant's telephone number, including area code)
<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 thereunto duly authorized.
THE MED-DESIGN CORPORATION
December 30, 1998 By: /s/ James M. Donegan
----------------------------------------
James M. Donegan
President and Chief Executive Officer
<PAGE>
Item 5. Other Events
On December 11, 1998 The Med-Design Corporation (the "Company") signed
a licensing agreement (the "Agreement") with Becton Dickinson and Company
("Becton Dickinson"). Under the Agreement, the Company granted an exclusive
worldwide license to Becton Dickinson to manufacture and sell several
applications of the Company's proprietary safety retractable needle devices in
the areas of blood collection and I.V. catheter insertion. In addition, the
Agreement provides an option for one year to Becton Dickinson to license certain
additional Company products on terms and conditions to be negotiated. In
connection with the license agreement, Becton Dickinson made an initial,
non-refundable payment of $4.5 million to the Company. Additional royalties will
be payable on Becton Dickinson's net sales of licensed products, as defined in
the Agreement, with certain minimum payments required at specified dates if
Becton Dickinson wishes to maintain exclusivity of its license.
In addition, in a separate agreement, Becton Dickinson purchased
300,000 shares of the Company's Series A Convertible Preferred Stock (the
"Preferred Stock") for $1.5 million. Dividends are payable semi-annually on the
Preferred Stock in cash or in additional shares of Preferred Stock (at the
option of the Company) at the rate of 8% per annum. The Preferred Stock is
convertible, at Becton Dickinson's option, at the conversion price of $5.00 per
share (i.e., initially on a share-for-share basis). Beginning in September 1999,
the Company may automatically convert the Preferred Stock into Common Stock at a
conversion price ranging from $3.25 to $5.00 per share, depending on the price
of Company Common Stock during the 20 trading days prior to the date the Company
gives notice of the conversion. By virtue of its Preferred Stock holdings,
Becton Dickinson has the right to elect one director to the Company's Board of
Directors.
As a result of the Company's receipt of $6 million in the transactions
described above, the Company is in compliance with the net tangible assets
requirement for continued listing on the Nasdaq SmallCap Market. Included in
this report is unaudited pro forma financial information giving effect to the
transactions described above as if they had occurred on September 30, 1998.
<PAGE>
The Med-Design Corporation
Unaudited Pro Forma Balance Sheet
September 30, 1998
<TABLE>
<CAPTION>
Pro forma Pro forma
Historical Adjustments As
(Unaudited) DR./(CR.) Adjusted
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 138,437 $ 138,437
Available-for-sale securities 643,430 $ 6,000,000(3) 6,643,430
Prepaid expenses and other current assets 219,556 219,556
------------ ------------ ------------
Total current assets 1,001,423 6,000,000 7,001,423
Property, plant, and equipment, net of accumulated
depreciation and amortization 919,016 919,016
Patents, net of accumulated amortization 776,810 776,810
Debt Issue Costs, net of amortization 537,207 537,207
------------ ------------ ------------
$ 3,234,456 $ 6,000,000 $ 9,234,456
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 250,000 250,000
Accounts Payable 95,269 95,269
Accrued expenses 188,838 188,838
Current maturities of long-term debt and
capital lease obligations 10,492 10,492
------------ ------------ ------------
Total current liabilities 544,599 544,599
------------ ------------ ------------
Long-term debt and capital lease obligations,
less current maturities 1,583,166 1,583,166
------------ ------------ ------------
Total liabilities 2,127,765 2,127,765
------------ ------------ ------------
Commitments and contingencies
Stockholders' Equity:
Preferred stock, $.01 par value,
5,000,000 shares authorized;
300,000 issued and outstanding (3,000)(2) 3,000
Common stock, $.01 par value,
20,000,000 shares authorized;
7,951,570 issued and outstanding 79,516 79,516
Additional paid-in capital 22,405,934 (1,497,000)(2) 23,902,934
Accumulated deficit (21,379,704) (4,500,000)(1) (16,879,704)
Unrealized gain on
available-for-sale securities 945 945
------------ ------------ ------------
Total stockholders' equity 1,106,691 (6,000,000) 7,106,691
------------ ------------ ------------
$ 3,234,456 $ 6,000,000 $ 9,234,456
============ ============ ============
</TABLE>
The accompanying notes are an integral part of the
unaudited pro forma balance sheet.
<PAGE>
The Med-Design Corporation
Unaudited Pro forma Financial Information
Basis of Presentation
The pro forma balance sheet at September 30, 1998 gives effect to the
execution of the Licensing Agreements and Stock Purchase Agreement as if they
occurred on that date.
The pro forma adjustments are based upon certain assumptions (see notes
to pro forma financial information). The pro forma financial information is not
necessarily indicative of the Company's future financial condition.
<PAGE>
The Med-Design Corporation
Notes to the Unaudited Pro forma Balance Sheet
(1) The Company's Licensing Agreements with Becton Dickinson provide for an
initial, non-refundable payment to the Company of $4.5 million. The pro forma
financial information does not include an unaudited pro forma income statement
as the sole income statement effect of the transaction is a non-recurring credit
to income of $4.5 million in respect of the intial, non-refundable payment by
Becton Dickinson, however a credit to additonal paid-in capital of $4.5 million
has been made in this regard.
(2) Becton Dickinson will purchase 300,000 shares of Preferred Stock,
convertible into Med- Design's common stock at $5.00 per share at the option of
Becton Dickinson. The Preferred Stock accrues dividends at a rate of 8% payable
in cash or in additional shares of Preferred Stock at the option of the Company.
The Company has therefore recorded $3,000 to Preferred Stock and $1,497,000 to
additional paid-in capital as of September 30, 1998 on a pro forma basis.
(3) The Company intends to invest all initial payments under the agreement in
Available-for-sale-securities.
