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) September 6, 1996
Medcross, Inc.
(Exact name of registrant as specified in its charter)
Florida 0-17973 59-2291344
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
3227 Bennet Street North, St. Petersburg, Florida 33713
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (813) 521-1793
(Former name or former address, if changed since last report.)
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Item 5. Other Events.
On September 6, 1996, Medcross, Inc. (the "Company") closed a Private Placement
of 240,000 shares of its Class C Convertible Cumulative Convertible Preferred
Stock (the "Class C Preferred Stock"), $10 par value per share, at $60 per
share. Each share of Class C Preferred Stock entitles the holder to receive a
quarterly dividend of $1.20 (8% per annum) payable in cash or at the option of
the Company, in shares of common stock, $.007 par value (the "Common Stock") of
the Company. Unless previously redeemed, the Class C Preferred Stock is
convertible into shares of the Company's Common Stock , at any time after three
months from August 21, 1996, at the option of the holder, into such number of
shares of the Company's Common Stock as shall equal $60 divided by the lower
of (i) $2.50 or (ii) the closing bid price for any five consecutive trading
days during the period commencing on September 6, 1996 (the "Final Closing")
and ending eighteen months thereafter (the "Conversion Price"). Unless
previously redeemed, the shares of the Class C Preferred Stock are automatically
converted into the Conversion Shares on the fifth anniversary of the Final
Closing at a Conversion Price equal to the lower of the then current Conversion
Price or 50% of the average closing bid price of the Company's Common Stock for
the 10 trading days immediately preceding the fifth anniversary of the Final
Closing. In no event shall the Conversion Price be adjusted below $1.25 on
account of this adjustment. The Conversion Price is also subject to further
adjustment under certain circumstances. Except as otherwise provided by law,
the shares of Class C Preferred Stock have no voting rights. The Class C
Preferred Stock is not listed or contemplated to be listed for quotation on the
Nasdaq Small-Cap Market[SM] ("Nasdaq"). The shares of Class C Preferred Stock
have not been registered under the Securities Act of 1933 or applicable state
securities laws.
In addition, the Company issued $717,000 of principal amount of Convertible
Promissory Notes payable on April 1, 1997 and bearing interest at 8% per annum
(the "8% Notes"). The 8% Notes provide for the accrual of interest at the
simple annual rate of 8%, payable quarterly (18% following the Event of Default
which remains uncured). The 8% Notes are due on April 1, 1997 (the "Maturity
Date"). The unpaid principal balance of the 8% Notes may be prepaid by the
Company without penalty upon 30 days notice to the holder; provided, however,
that certain conditions be met. The unpaid principal amount of an 8% Note will
be automatically converted at the option of the holder into shares of Class C
Preferred Stock at any time prior to the close of business on the Maturity Date
into shares of Class C Preferred Stock of the Company at the rate of $60 per
share of Class C Preferred Stock (the "8% Note Conversion Price") upon certain
conditions being met.
The Company received net proceeds of approximately $12.8 million, after
commissions and other expenses related to the offering, which are earmarked
for furthering operations of its subsidiary, I-Link Worldwide Inc. ("I-Link").
The net proceeds will be used to repay short-term debt, to pay for software
licensing fees and current payables, to fund network operations, to pay for
marketing and advertising programs, to expand I-Link's network infrastructure
and marketing, and for general working capital purposes.
As a result of the closing of the Private Placement, 1.6 million shares of the
Company's restricted Common Stock held in escrow for the benefit of the former
shareholders of ILINK, Ltd. will be immediately released from escrow, in
accordance with the terms of the Stock Purchase Agreement between ILINK, Ltd.
and the Company. Upon such release the Company will record additional
intangible assets of $9.8 million, which will be expensed over the 18-month
period remaining in the life of the intangible assets. In addition, the Company
will record a $9.8 million increase in shareholders' equity.
In accordance with the 10% Promissory Notes (the "10% Notes") issued on February
21, 1996, $25,000 of the principal amount was converted into 350,000 shares of
Common Stock and the remaining principal balance was discharged.
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Attached as Exhibit 99(a) is an unaudited Pro Forma Consolidated Balance Sheet
(and notes thereto) as of June 30, 1996 (the date of the Company's last
reported statement of financial condition). The attached information does not
purport to reflect any changes in the Company's financial condition which may
have occurred subsequent to June 30, 1996 other than the specific events
referenced therein.
THE ATTACHED INFORMATION IS NOT THE TYPE OF INFORMATION REQUIRED TO BE FILED
UNDER THE SECURITIES EXCHANGE ACT OF 1934 AND THE RULES AND REGULATIONS
THEREUNDER, NOR IS IT NECESSARILY COMPARABLE WITH THE REPORTS PREVIOUSLY FILED
BY THE COMPANY BECAUSE OF THE LIMITED NATURE OF THE PRO FORMA INFORMATION
PRESENTED. THE ATTACHED INFORMATION SHOULD NOT BE RELIED UPON BY ANY INVESTORS
OR PROSPECTIVE INVESTORS AS INDICATIVE OF THE COMPANY'S PRESENT NET WORTH OR
FINANCIAL CONDITION SINCE THE CLOSE OF THE PERIOD COVERED BY THE FORM 10-QSB
FOR THE QUARTER ENDED JUNE 30, 1996.
Investors and prospective investors should refer to the Company's Annual Report
on Form 10-KSB/A#1 for the fiscal year ended December 31, 1995 and Quarterly
Reports on Form 10-QSB for the quarters ended March 31 and June 30, 1996 for
more complete financial information relating to the Company.
Item 7. Exhibits. Page
2(a) Form of 8% Convertible Promissory Note 2(a)1
99(a) Pro Forma Consolidated Balance Sheet and Notes 99(a)1
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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 hereunto duly authorized.
MEDCROSS, INC.
By:/s/ Henry Y.L. Toh
Henry Y.L. Toh
President, CEO, Acting CFO
Date September 6, 1996
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