SECURITIES AND 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): JUNE 28, 1996
GEN/RX, INC.
(EXACT NAME OF REGISTRANT)
NEW YORK 0-24496 11-2728666
(State or other jurisdiction Commission IRS Employer
of incorporation) File Number Identification No.
1776 BROADWAY, SUITE 1900, NEW YORK NEW YORK 10019
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code(212) 581-5100
_______________________________N/A_________________________________________
(Former name or former address, if changed since last report.)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Gen/Rx, Inc. (the "COMPANY" or the "REGISTRANT") sold its shares of
the capital stock of its wholly owned subsidiary AUSA, Inc., a Delaware
corporation ("AUSA") in exchange for forgiveness of $1 million of
indebtedness owed to Apotex USA Inc., a Delaware corporation ("APOTEX
USA"), the Company's principal shareholder and principal creditor as of
July 1, 1996. The Company engaged Hill Thompson Capital Markets, Inc.
("HILL THOMPSON"), to act as financial advisor to the Board of Directors.
Hill Thompson identified potential purchasers for AUSA, prepared a
confidential descriptive memorandum and sought to solicit interest in AUSA
on behalf of the Company. Hill Thompson was not successful in soliciting
any interested parties.
AUSA is a development-stage, generic pharmaceutical company, which has
selected 18 parenteral pharmaceutical products for developments. Some
products are already off-patent, but most go off-patent over the next three
years.
The Company held an auction to sell the 100 shares of AUSA common
stock outstanding; all of such shares were subject to a perfected security
interest in favor of Apotex USA. The auction was held at 2 p.m., June 28,
1996, at Hill Thompson's office at 437 Madison Avenue, New York, New York
10022; the minimum price was $1,000,000 for the AUSA shares.
The Company's Board of Directors has four seats, three of which are
vacant. The sole director currently in office is Jack Schramm, the
Company's President. Mr. Schramm is also President of Apotex USA; Mr.
Schramm is also President of AUSA.
Apotex USA bid $1,000,000 for the shares of AUSA at the auction, and
the Company and Apotex consummated the purchase, with an effective date of
July 1, 1996, promptly after the auction. Apotex USA was the only bidder at
the auction. Although Apotex USA's acquisition of AUSA from the Company
resulted in a reduction of the Company's indebtedness in favor of Apotex
USA, approximately $4 million of indebtedness remains outstanding after
such disposition of AUSA to Apotex USA, and Management does not know of any
source of funds with which to repay such indebtedness, but Management
intends to pursue a strategy of creating value in the Company.
Apotex USA has also sought a receiver for the real property of the
Company's subsidiary American Veterinary Products, Inc., a Colorado
corporation ("AVP"), located at 1413 Duff Drive, Fort Collins, Colorado
80524 (the "FT. COLLINS PROPERTY"); Jack Roberts is currently acting as
receiver for the property, as an appointee of the Larimer County, Colorado
District Court. Management believes that Apotex USA is likely to institute
a foreclosure action under Apotex USA's interest under a deed of trust to
which the Ft. Collins Property is subject. Management believes the amount
of the Company's debt in favor of Apotex USA far exceeds the aggregate
value that the Company is likely to receive for the Ft. Collins Property in
any foreclosure sale.
The receiver has liquidated approximately $200,000 of AVP's assets and
is continuing to liquidate the Company's assets located at three locations
in or near Ft. Collins, Colorado. The receiver has used such proceeds for
disposal of hazardous and other wastes at the Ft. Collins Property and for
continued care of AVP's inventory. None of such amount was paid to Apotex
USA.
AVP has discontinued production of veterinary products at the Ft.
Collins Property and laid off the workers there. AVP's inventory of
veterinary products is negligible. AUSA's products have been the source of
almost all the revenue the consolidated group of which the Company is a
member received in 1996. After the Company's sale of the AUSA shares,
Management believes the Company will not receive any material amount of
revenue in the absence of successful pursuit of a strategic partner or
other source of value for the Company. The Company's shares may become
worthless. The Company may consider seeking protection from creditors
under the bankruptcy laws.
Management does not know of any likely source of revenue for revival
of production of veterinary products at the Ft. Collins Property.
AVP has begun a voluntary recall of Atropine Sulfate injection 1/120
solution with the concurrence of the Federal Food & Drug Administration,
but Management believes the impact of the recall will not be material. AVP
made and shipped the solution that has been recalled in primarily May and
June, 1995.
Management believes that, during the period on or about August 12,
1995 through October 12, 1995, John DeTemple, formerly president of AVP and
the Company and then an independent sales representative of AVP, caused a
series of orders to be issued by J.D.T., Inc. d/b/a American Veterinary
Pharmaceuticals ("J.D.T./AMVET"), which Management believes is owned by Mr.
DeTemple, directed to the Company's subsidiary American Veterinary
Products, Inc., each instructing that bills should be directed to
J.D.T./AmVet. The aggregate amount of the invoices was $104,905.94, and
none of that amount has been paid. The receiver has instituted legal
action to recover payment of such amount.
Robinson & Wayne has resigned as counsel for the Company.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF ACQUIRED BUSINESS
None
(b) PRO FORMA FINANCIAL INFORMATION
(i)Unaudited Pro forma Consolidated Condensed Balance Sheet of the
Company without AUSA as of March 31, 1996
(ii)Unaudited Pro forma Consolidated Condensed Statements of Income of
the Company without AUSA for the fiscal years ended December 31, 1995,
and the three months ended March 31, 1996
(iii)Notes
(c) EXHIBITS
None
<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 thereto duly authorized.
GEN/Rx, INC.
By:/S/ JACK H. SCHRAMM
-----------------------------
JACK H. SCHRAMM, President
<PAGE>
PRO FORMA FINANCIAL STATEMENTS
GEN/RX INC.
INTRODUCTION TO PRO FORMA FINANCIAL STATEMENTS
The following unaudited pro forma financial information of Gen/Rx, Inc.
consists of the unaudited pro forma balance sheet as of March 31, 1996 and the
unaudited pro forma statements of operations for periods ended March 31, 1996
and December 31, 1995 (collectively, the "Pro Forma Financial Statements").
The unaudited pro forma balance sheet removes AUSA, Inc. from the consolidated
entity as if the sale had occurred on March 31, 1996. The unaudited pro forma
statements of operations for the periods ended December 31, 1995 and March 31,
1996 remove AUSA, Inc. from the consolidated entity as if the sale had occurred
at the beginning of those periods.
Additional periods were not included in the pro forma presentation because the
merger of AUSA, Inc. into a subsidiary of Gen/Rx, Inc. occurred on April 13,
1995. Gen/Rx, Inc.'s statements prior to that time do not include AUSA, Inc.
These unaudited Pro Forma Financial Statements are not necessarily indicative
of the results that actually would have occurred if the sale had occurred as of
the dates and for the periods indicated or which may be attained in the future.
The Pro Forma Financial Statements should be read in conjunction with the
historical financial statements of Gen/Rx, Inc. and AUSA, Inc.
<PAGE>
GEN/RX INC.
PRO FORMA CONSOLIDATED BALANCE SHEET WITHOUT AUSA INC. (UNAUDITED)
MARCH 31, 1996
(In Thousands)
<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENTS RESULTS
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and Bank Balance 54 54
Accounts Receivable (Net) 130 130
Inventories 191 191
Prepaid expenses and other current 5 5
assets
Assets of discontinued operations 1,059 1,059
----- --- -----
Total Current Assets 1,439 380 1,059
Property, Plant & Equipment 393 392
Deposits and other assets 51 51
----- --- -----
Total Other assets 443 443 0
Total Assets 1,882 823 1,059
===== === =====
LIABILITIES
Current Liabilities
Due to Apotex USA, Inc. 4,425 4,425
Due to AUSA Inc. (138) 138
Accounts Payable 481 481
Accrued expenses and other current 531 531
liabilities
Estimated liabilities of 1,447 1,447
discontinued operations ----- ----- -----
TOTAL CURRENT LIABILITIES 6,884 874 6,010
Shareholders' equity:
Common Stock 84 84
Paid in capital 7,889 3,064 4,825
Retained earnings (12,294) (2,503) (9,791)
Profit (Loss) for period (681) (612) (69)
------- ------ -------
Total Shareholders' Equity (5,002) (51) (4,951)
------- ------ -------
Total Liabilities & Shareholders' Equity 1,882 823 1,059
===== ====== ======
</TABLE>
<PAGE>
GEN/RX INC.
PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF INCOME WITHOUT AUSA INC.
(UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1995
(In Thousands)
<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENTS RESULTS
<S> <C> <C> <C>
Revenues
Net Sales 4,976 4,976
Cost of Goods Sold 3,274 3,274
Gross Profit 1,702 1,702 0
Operating Expenses
Product Development 1,093 1,093
Selling & Distribution 2,149 2,149
General & Administrative 843 843
Total Operating Expenses 4,085 4,085 0
Operating Loss from continuing operations (2,383) (2,383) 0
Interest expense 1,069 118 951
------- ------- -----
Net Operating Profit (Loss) for period (3,452) (2,501) (951)
======= ======= =====
</TABLE>
<PAGE>
GEN/RX INC.
PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF INCOME WITHOUT
AUSA INC. (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(In Thousands)
<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENTS RESULTS
<S> <C> <C> <C>
Revenues
Net Sales 471 471
Cost of Goods Sold 33 33
--- --- ---
Gross Profit 438 438
Operating Expenses
443
Product Development 577 577
Selling & Distribution 291 291
General & Administrative 158 89 69
----- ----- -----
Total Operating Expenses 1,026 957 69
Operating Loss (588) (519) (69)
Interest expense 93 93
----- ----- -----
Net Profit (Loss) for period (681) (612) (69)
===== ===== =====
</TABLE>
