8-K 1 d8k.txt ECOGEN INC. FORM 8-K 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): July 10, 2002 ------------------------------- ECOGEN INC. -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 1-9579 22-247948 -------------------------------------------------------------------------------- (State or Other Jurisdiction of (Commission (I.R.S. Employer Incorporation or Organization) File Number) Identification No.) 2000 W. Cabot Boulevard #170, Langhorne, Pennsylvania 19047 -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (215) 757-1590 -------------------- Item 2. Acquisition or Disposition of Assets On July 10, 2002, Ecogen Inc. (the "Company") completed the sale pursuant to the Asset Purchase Agreement dated as of May 6, 2002 (the "Agreement") of certain assets relating to the Company's sprayable Bt bio-pesticide business and the Company's insecticidal nematode business to Certis U.S.A. L.L.C. ("Certis"), an indirect subsidiary of Mitsui & Co., The assets sold include, but are not limited to, the Company's CryMax, Lepinox, Condor, Condor G, Raven, Bti technicals ("Traditional Bt") and HB nematode product lines. The transaction excludes the Bt CellCap products acquired from Mycogen Corporation and the Company's agreements with the Monsanto Company relating to commercialization success fees, if any, for transgenic plants. The assets sold include all technology and know-how related to the business, including strain libraries for bio-pesticide uses, product registration, trademarks, patents or licenses and certain inventory and fixed assets. Upon the closing of the transaction, the Company received cash proceeds of $3,640,000 from Certis, after giving effect to (i) certain purchase price adjustments provided for in the Agreement ($85,000, representing the amount by which the value of the inventory sold to Certis was less than the value at December 31, 2001, and $250,000 due to the Company's inability to obtain a letter from a licensor of the Company clarifying certain matters regarding the license), and (ii) certain additional purchase price adjustments ($175,000) by virtue of the fact that certain patents and contract rights provided for in the Agreement were unavailable for sale upon closing, as reflected in the amendment of certain Schedules to the Agreement. The cash proceeds do not include the approximately $50,000 of proceeds of the inventory that had previously been purchased and paid for by Certis pursuant to the Pre-Closing Business Arrangement Agreement entered into concurrently with the Agreement. Out of pocket expenses associated with the transaction were approximately $135,000. A summary of assets sold and the expected gain is as follows: Inventory $ 64,000 Other current assets 65,000 Intangibles and other assets 746,000 ------- 875,000 Net Proceeds 3,505,000 --------- Gain on sale of assets $2,630,000 ========== As a condition of closing, the Company was required to repay its past due term loan with Berkshire Bank ("Term Loan") and a substantial portion of its demand promissory notes to Momar Corporation ("Notes"), both of which are affiliated with the Company's majority stockholder. The aggregate amount paid from the proceeds of the sale including accrued interest were $1,775,000 and $1,365,000 under the Term Loan and the Notes, respectively. After such payments, approximately $318,000 remains outstanding under the Notes including accrued interest of $178,000 that is secured by the Company's remaining assets. The holder of the Notes deferred payment of the remaining balance and the accrued interest. Further, the Company has borrowed an additional $60,000 pursuant to the demand promissory notes with Momar Corporation. The net cash proceeds to the Company after the payments of the Company's outstanding obligations referred to above were approximately $365,000. 2 Item 5. Other Events The Company's stockholders approved an amendment to its Restated Certificate of Incorporation which effected a one-for-ten reverse split ("Reverse Split") of the Company's outstanding shares of common stock. It is expected that the Reverse Stock Split will be effected on July 29, 2002. 3 Item 7. Financial Statements, Pro Forma Financial Information and Exhibits (a) Financial Statements of Businesses Acquired Not Applicable (b) Pro Forma Financial Information The following unaudited pro forma consolidated condensed financial information is attached hereto: . Unaudited pro forma consolidated condensed statements of operations data for the six-month period ended April 30, 2002 and the year ended October 31, 2001 . Unaudited pro forma consolidated condensed balance sheet data as of April 30, 2002 . Notes to unaudited pro forma consolidated condensed financial information (c) Exhibits 2.1 Asset Purchase Agreement by and among Certis U.S.A. L.L.C., Ecogen Inc., Ecogen-Bio Inc. and Ecogen Technologies I Incorporated dated May 6, 2002.* 2.2 List of omitted schedules/exhibits to Asset Purchase Agreement by and among Certis U.S.A. L.L.C., Ecogen Inc., Ecogen-Bio Inc. and Ecogen Technologies I Incorporated dated May 6, 2002, as certain such schedules were amended by the Amendment thereto dated July 9, 2002. ---------- * Incorporated by reference from Exhibit 10.163 to the Registrant's Form 10-Q for the fiscal quarter ended April 30, 2002. 4 Item 7(b). Pro Forma Financial Information UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL INFORMATION The following presents certain unaudited pro forma consolidated condensed financial information of Ecogen Inc. for the periods indicated. The unaudited pro forma consolidated condensed financial information gives effect to the sale of the Traditional Bt and Nematode bio-pesticide product lines and the repayment of certain outstanding obligations of the Company in connection with the transaction which occurred on July 9, 2002 as if such transaction had occurred on November 1, 2000 for purposes of the unaudited pro forma consolidated condensed statements of operations data for the year ended October 31, 2001 and the six-month period ended April 30, 2002, and on April 30, 2002 for purposes of the unaudited pro forma consolidated condensed balance sheet data as of April 30, 2002. The pro forma financial information also gives retroactive effect to the Reverse Stock Split. The pro forma financial information was prepared using the assumptions described below and in the related notes thereto. The unaudited pro forma consolidated condensed financial information reflects pro forma adjustments that are based upon available information and certain assumptions that we believe are reasonable. The pro forma financial information does not purport to represent our results of operations or financial position that would have resulted had the transactions to which pro forma effect is given been consummated as of the dates or for the periods indicated nor is it indicative of the Company's future consolidated financial condition or results of operations. For purposes of the unaudited pro forma consolidated condensed financial information, our historical consolidated statements of operations for the year ended October 31, 2001 and the six- month period ended April 30, 2002 and our consolidated balance sheet as of April 30, 2002 were adjusted to reflect the Reverse Stock Spilt, to eliminate the activity and assets associated with the product lines that were sold to Certis and to adjust interest expense on a pro forma basis as a result of the repayment of debt with the proceeds from the sale. The unaudited pro forma consolidated condensed financial information and accompanying notes should be read in conjunction with the historical consolidated financial statements of Ecogen Inc.and subsidiaries as reported in its annual report on Form 10-K for the fiscal year ended October 31, 2001 and its quarterly report on Form 10-Q for the six-month period ended April 30, 2002. 5 ECOGEN INC. AND SUBSIDIARIES Unaudited Pro Forma Consolidated Condensed Statement of Operations Data For the Six-Month Period Ended April 30, 2002

See accompanying notes to unaudited consolidated condensed financial information. 6 ECOGEN INC. AND SUBSIDIARIES Unaudited Pro Forma Consolidated Condensed Statement of Operations Data For the Year Ended October 31, 2001

See accompanying notes to unaudited pro forma consolidated condensed financial information. 7 Ecogen Inc. and Subsidiaries Unaudited Pro Forma Consolidated Condensed Balance Sheet Information As of April 30, 2002

See accompanying notes to unaudited pro forma consolidated condensed financial information. 8 Ecogen Inc. and Subsidiaries Notes to Unaudited Pro Forma Consolidated Condensed Financial Information Year Ended October 31, 2001 and Six Months Ended April 30 2002 (1) On July 9, 2002, the Company completed the sale of certain assets relating to the Company's sprayable Bt bio-pesticide business and the Company's insecticidal nematode business to Certis, an indirect subsidiary of Mitsui & Co., The assets sold include, but are not limited to, the Company's CryMax , Lepinox, Condor, Condor G, Raven, Bti technicals ("Traditional Bt") and HB nematode product lines. The transaction excludes the Bt CellCap products acquired from Mycogen Corporation and the Company's agreements with the Monsanto Company relating to commercialization success fees, if any, for transgenic plants. The assets sold include all technology and know-how related to the business, including strain libraries for bio-pesticide uses, product registration, trademarks, patents or licenses and certain inventory and fixed assets. Upon the closing of the transaction, the Company received cash proceeds of $3,505,000 (net of out of pocket expenses of approximately $135,000.) (2) Adjustments represent the elimination of the assets associated with the Company's Traditional Bt and Nematodes product lines as follows: Inventory $ 63,954 Other current assets 65,000 Intangibles and other assets $ 746,280 ========= (3) Adjustment represents the estimated net gain on the sale of the Traditional Bt and Nematode product lines, net of expenses associated with the transaction. (4) Adjustment represents the payment of the Term Loan and the Notes including accrued interest at April 30, 2002 of $1,755,823 and $1,255,500, respectively and approximately $100,000 in accounts payable and accrued expenses at April 30, 2002 that were paid prior to the closing of the transaction. (5) Adjustment represents the elimination of product sales and other revenue of the Traditional Bt and Nematode product lines. (6) Adjustment represents the elimination of costs of sales associated with the Traditional Bt and Nematode product sales that were eliminated in note 5, above. (7) Adjustment represents the elimination of research and development expenses associated with the Traditional Bt and Nematode product lines. (8) Adjustment represents the elimination of selling and marketing expenses associated with the Traditional Bt and Nematode product lines. 9 Ecogen Inc. and Subsidiaries Notes to Unaudited Pro Forma Consolidated Condensed Financial Information, Continued (9) Adjustment represents a reduction in interest expense as a result of the payoff of debt as described in note 4, above. (10) All shares and per share amounts have been retroactively restated to give effect to the ten-for-one Reverse Stock Split. (11) The unaudited pro forma statements of operations data excludes the expected non-recurring gain on the sale to Certis of approximately $2.6 million. 10 SIGNATURE 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. ECOGEN INC. By: /s/ James P. Reilly, Jr. _________________________________________ Name: James P. Reilly, Jr. Title: Chairman, Chief Executive Officer and Acting Chief Financial and Accounting Officer Date: July 25, 2002

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