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): December 20, 2007 (December
18, 2007)
CHEMBIO
DIAGNOSTICS, INC.
(Exact
name of registrant as specified in its charter)
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Nevada
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0-30379
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88-0425691
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(State
or other jurisdiction
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(Commission
File Number)
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(IRS
Employer
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of
Incorporation)
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Identification
Number)
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3661
Horseblock Road
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Medford,
NY 11763
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(Address
of principal executive offices)
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631-924-1135
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(Registrant’s
Telephone Number)
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N/A
(Former
name or former address, if changed since last report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
ITEM
3.02 UNREGISTERED
SALES OF EQUITY SECURITIES
In
connection with the exercise of warrants on a cash basis pursuant to the
Plan
(defined below in Item 7.01), on December 19, 2007, the Company issued
2,723,403
shares of common stock. The Company received $1,089,361 as consideration
for
these issuances. These issuances were completed in reliance on
exemptions from registration under Section 4(2) of the Act and Rule 506
of
Regulation D promulgated under the Securities Act of 1933, as amended (the
“Act”). These transactions qualified for exemption from registration
because (i) the securities were issued to accredited investors only; (ii)
the
Company did not engage in any general solicitation or advertising to market
the
securities; (iii) each purchaser was provided the opportunity to ask questions
and receive answers from the Company regarding the offering; and (iv) the
warrant exercisers received “restricted securities.”
In
connection with the exercise of warrants on a cashless basis pursuant to
the
Plan, on December 19, 2007, the Company issued 963,163 shares of common
stock. The Company did not receive any cash as consideration for
these issuances, but rather these warrants were exercised on a cashless
basis
(described below in Item 7.01). These issuances were completed in
reliance on exemptions from registration under Section 4(2) of the Act
and Rule
506 of Regulation D promulgated under the Act. These transactions
qualified for exemption from registration because (i) the securities were
issued
to accredited investors only; (ii) the Company did not engage in any general
solicitation or advertising to market the securities; (iii) each purchaser
was
provided the opportunity to ask questions and receive answers from the
Company
regarding the offering; and (iv) the purchasers received “restricted
securities.”
On
December 19, 2007, the Company also issued 1,273,235 shares of common stock
as
payment of dividends to holders of its Series A, Series B and Series C
Preferred
Stock. No cash was exchanged in this issuance. These
dividend shares were issued in connection with the Company’s sale of Series A
Preferred Stock in May 2004, the Company’s sale of Series B Preferred Stock in
January 2005 and March 2006, and its sale of Series C Preferred Stock in
September and October 2006, which were exempt from registration under the
Securities Act of 1933, as amended (the “Securities Act”) and applicable state
laws pursuant to Section 4(2) of the Securities Act and Rule 506 of Regulation
D. These issuances qualified for exemption from registration because
(i) the securities were issued to accredited investors only; (ii) the Company
did not engage in any general solicitation or advertising to market the
securities; and (iii) each purchaser was provided the opportunity to ask
questions and receive answers from the Company regarding the
offering.
On
December 19, 2007, the Company also issued 2,395,466 warrants to purchase
shares
of common stock to holders of certain of the Company’s Non-Employee Warrants
that did not consent to the Plan transactions. No cash was exchanged
in these issuances, and these warrants were issued pursuant to the application
of the anti-dilution provisions existing in certain of the Non-Employee
Warrants. The exercise prices of certain of the Non-Employee Warrants
held by non-consenting holders was also reduced to $0.40 pursuant to the
terms
of these warrants, and these non-consenting holders are permitted to exercise
their warrants for cash only at $0.40 per share until the expiration of
the
warrants. These issuances were exempt from registration under the
Securities Act of 1933, as amended (the “Securities Act”) and applicable state
laws pursuant to Section 4(2) of the Securities Act and Rule 506 of Regulation
D. These issuances qualified for exemption from registration because
(i) the securities were issued to accredited investors only; (ii) the Company
did not engage in any general solicitation or advertising to market the
securities; (iii) each purchaser was provided the opportunity to ask questions
and receive answers from the Company regarding the offering; and (iv) the
purchasers received “restricted securities.”
On
December 19, 2007, the Company issued 41,260,568 shares of Common Stock
based on
the conversion of the Company’s Series A, Series B and Series C Preferred
Stock. No cash was exchanged in these issuances. These
issuances were exempt from registration under the Securities Act of 1933,
as
amended (the “Securities Act”) and applicable state laws pursuant to Section
4(2) of the Securities Act and Rule 506 of Regulation D. These
issuances qualified for exemption from registration because (i) the securities
were issued to accredited investors only; (ii) the Company did not engage
in any
general solicitation or advertising to market the securities; (iii) each
purchaser was provided the opportunity to ask questions and receive answers
from
the Company regarding the offering; and (iv) the purchasers received “restricted
securities.”
ITEM
5.03 AMENDMENTS
TO ARTICLES OF INCORPORATION OR BYLAWS, CHANGE IN FISCAL
YEAR
On
December 19, 2007, the Company’s Board of Directors amended its bylaws to adopt
a new bylaw to limit the application of Nevada Revised Statutes 78.378
to
78.3793, inclusive, to the Company. The Company’s adoption of the new
bylaw will exempt the Company from the provisions of the Nevada Revised
Statutes
applicable to the acquisition of a controlling interest by existing or
future
stockholders.
ITEM
7.01. REGULATION
FD DISCLOSURE.
On
December 18, 2007 (the “Proposed Plan Closing Date”), the Company extended the
date for the voting period to December 19, 2007, on the proposed amendments
to the governing documents for the Company’s Series A, Series B and Series C
Convertible Preferred Stock (collectively, the “Preferred Stock”) and for
certain warrants and options (collectively, the “Non-Employee Warrants”) not
including options or warrants issued to employees or directors in their
capacity
as such (these actions collectively, the “Plan”). On December 19,
2007 (the “Closing Date”), the Plan transactions were approved by the Company
and the requisite percentages of the holders of the Preferred Stock and
the
Non-Employee Warrants, and the Plan was consummated. The results of
the Plan and the modified terms of the Preferred Stock and the Non-Employee
Warrants are set forth below.
Pursuant
to the terms of the Plan, on the Closing Date, all of the outstanding Series
A
and Series B Preferred Stock, other than the Series A Preferred and Series
B
Preferred held by the Company’s Chief Executive Officer, Lawrence A. Siebert,
was converted into 21,538,479 shares of the Company’s $.01 par value common
stock (the “Common Stock”) at a conversion rate of $0.40 per share of Common
Stock. The Series A Preferred and Series B Preferred held by Mr.
Siebert was converted at the rate of $0.48 per share into 2,534,593 shares
of
Common Stock. All of the outstanding Series C Preferred Stock was
also converted into 17,187,496 shares of Common Stock at the rate of $0.48
per
share, and the Company issued 1,273,235 shares of Common Stock as payment
for
any accrued but unpaid dividends on any shares of the Preferred Stock
outstanding on the Closing Date.
On
the
Closing Date, the holders of all the Non-Employee Warrants were permitted
to
exercise their Non-Employee Warrants for cash at a reduced exercise price
of
$0.40 per share, or on a cashless basis at an exercise price of $0.45 per
share. The exercise of these Non-Employee Warrants on a cash and
cashless basis resulted in the Company issuing 3,686,566 shares of Common
Stock.
Non-Employee Warrant Holders that exercised at least 10% of their Non-Employee
Warrants for cash at $0.40 per share on the Closing Date are now permitted,
but
not required, to exercise the remaining balance of their Non-Employee Warrants
for cash or on a cashless basis at an exercise price of $0.45 per share
at any
time on or before June 30, 2008.
Pursuant
to the terms of the approved Plan, if a Non-Employee Warrant holder exercised
at
least 10% of its warrants for cash at the Closing Date, but does not exercise
the remaining balance of its warrants for cash or on a cashless basis on
or
before June 30, 2008, the exercise price of its remaining warrants will
revert
to the original exercise price on July 1, 2008, at which time they will be
permitted to exercise their Non-Employee Warrants on a cash or a cashless
basis.
For
a
consenting Non-Employee Warrant holder that did not exercise at least 10%
of its
warrants for cash at the Closing Date, the exercise price of its warrants
will
revert to the original exercise price, subject to any applicable adjustment,
on
December 20, 2007. Beginning April 1, 2008, in addition to being
exercisable for cash, a Non-Employee Warrant holder that did not exercise
at
least 10% of its warrants for cash at the Closing Date will be permitted
to
exercise their warrants on a cashless basis based on the VWAP for the
ten-trading day period that ends on the first trading day immediately preceding
the date of such warrant exercise. The Plan amendments also provide
that for those Non-Employee Warrant holders that consented to the Plan,
the
anti-dilution and price reduction provisions of the Non-Employee Warrants
will
not cause any adjustment to the exercise price or number of shares issuable
based on any issuance or other action taken in connection with the
Plan.
Certain
holders of the Non-Employee Warrants did not consent to the Plan
transactions. Pursuant to the anti-dilution terms existing in certain
of the Non-Employee Warrants held by these non-consenting holders, the
number of
warrants that theses non-consenting holders are permitted to exercise has
been
increased by 2,395,466. In addition, the exercise prices of certain
of the Non-Employee Warrants held by non-consenting holders was reduced
to $0.40
pursuant to the terms of these warrants, and these non-consenting holders
are
permitted to exercise their warrants for cash only at $0.40 per share until
the
expiration of the warrants.
The
Plan’s cashless exercise provision permits Non-Employee Warrant holders to use
any excess of the market price of the Company’s Common Stock over the exercise
price of a Non-Employee Warrant as part of the exercise price for another
Warrant by submitting both warrants at the time of exercise. Pursuant
to the Plan, Non-Employee Warrant holders were permitted at the Closing
Date to
use the greater of (i) $0.53 or (ii) the VWAP for the ten-trading day period
that ended on December 17, 2007 as the value of the Common Stock, so that
each
Non-Employee Warrant used as part of the exercise price payment on the
Closing
Date represented the difference between the greater of these two values
and the
$0.45 Non-Employee Warrant exercise price. In addition, Non-Employee
Holders that exercised at least 10% of all of such holder's Non-Employee
Warrants for cash on the Closing Date are permitted between the Closing
Date and
June 30, 2008 to use the difference between the greater of these two values
and
the $0.45 Non-Employee Warrant exercise price as part of their exercise
price
payment. Non-Employee Warrant Holders that did not exercise (x) at
least 10% of all of such holder's Non-Employee Warrants for cash at the
Closing
Date, or (y) its Non-Employee Warrants on cashless basis at $0.45 per share
on
the Closing Date will only be permitted to exercise its Non-Employee Warrants
on
a cashless basis beginning on April 1, 2008, and at that point the value
of a
warrant to be used as part of the exercise price payment in such cashless
exercise will equal the excess of the VWAP for the ten-trading day period
that
ends on the first trading day immediately preceding the date of such warrant
exercise over the exercise price of a warrant.
In
connection the Plan closing, the Company obtained $1,089,361 of Non-Employee
Warrant cash exercises on the Closing Date.
The
Company worked with Collins Stewart LLC (“Collins Stewart”), an investment
banking advisor, with respect to the Plan transactions. As
compensation for the services rendered by Collins Stewart, the Company
will pay
Collins Stewart certain cash fees, as well as reimbursement, up to specified
thresholds, for its reasonable counsel and out-of-pocket expenses related
to the
Plan.
ITEM
9.01. FINANCIAL STATEMENTS AND EXHIBITS
Exhibits.
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3
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New
Article VI of Bylaws for Chembio Diagnostics,
Inc.
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99.1
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Press
Release titled “Chembio Diagnostics Completes Plan To Simplify Its Capital
Structure, Raises Approximately $1.1 Million” issued December 20,
2007.
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* * * * *
In
accordance with General Instruction B.2 of Form 8-K, the information in this
Current Report on Form 8-K shall not be deemed “filed” for the purpose of
Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed
incorporated by reference in any filing. This Current Report on Form
8-K does not constitute a determination of whether any information included
herein is material.
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.
Date: December
20,
2007 Chembio
Diagnostics, Inc.
By: /s/
Lawrence A.
Siebert
Lawrence
A. Siebert
Chief
Executive Officer