SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A
Current Report Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
Date of Report: December 30, 1998
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THE MED-DESIGN CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 0-25852 77-0404919
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(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
2810 Bunsen Avenue, Ventura, CA. 93003
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(Address of principal executive offices) (Zip Code)
(805) 339-0375
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(Registrant's telephone number, including area code)
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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
January 6, 1999 By: /s/ James M. Donegan
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James M. Donegan
President and Chief Executive Officer
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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 November 30, 1998.
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The Med-Design Corporation
Unaudited Pro Forma Balance Sheet
November 30, 1998
<TABLE>
<CAPTION>
Pro forma Pro forma
Historical Adjustments As
(Unaudited) DR./(CR.) Adjusted
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<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 110,767 $ 110,767
Available-for-sale securities 212,681 $ 6,000,000(3) 6,212,681
Prepaid expenses and other current assets 180,907 180,907
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Total current assets 504,355 6,000,000 6,504,355
Property, plant, and equipment, net of accumulated
depreciation and amortization 879,599 879,599
Patents, net of accumulated amortization 788,090 788,090
Debt Issue Costs, net of amortization 519,633 519,633
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$ 2,691,677 $ 6,000,000 $ 8,691,677
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 250,000 $ 250,000
Accounts Payable 122,149 122,149
Accrued expenses 162,703 162,703
Current maturities of long-term debt and capital lease obligations 10,492 10,492
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Total current liabilities 545,344 545,344
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Long-term debt and capital lease obligations, less current maturities 1,579,952 1,579,952
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Total liabilities 2,125,296 2,125,296
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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, $.01 par value, 20,000,000 shares authorized;
7,951,570 issued and outstanding 79,516 79,516
Additional paid-in capital 22,445,307 (1,497,000)(2) 23,942,307
Accumulated deficit (21,958,869) (4,500,000)(1) (17,458,869)
Unrealized gain on available-for-sale securities 427 427
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Total stockholders' equity 566,381 (6,000,000) 6,566,381
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$ 2,691,677 $(6,000,000) $ 8,691,677
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</TABLE>
The accompanying notes are an integral part of the
unaudited pro forma balance sheet.
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The Med-Design Corporation
Unaudited Pro forma Financial Information
Basis of Presentation
The pro forma balance sheet at November 30, 1998 gives effect to the
execution of the Licensing Agreement 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 Agreement with Becton Dickinson provides 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 purchased 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 made a pro forma adjustment to record $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 has invested all initial payments received from Becton
Dickinson in Available-for-sale-securities.
