SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) of the
SECURITIES EXCHANGE ACT OF 1934
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Date of Report: May 9, 2003
KRONOS ADVANCED TECHNOLOGIES, INC.
(Exact Name of Registrant as Specified in Charter)
Nevada 000-30191 87-0440410
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
464 Common Street, Suite 301, Belmont, Massachusetts 02478
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (617) 993-9965
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ITEM 7. FINANCIAL STATEMENT, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
99.1 Master Loan and Investment Agreement, dated May 9, 2003, by
and among Kronos Advanced Technologies, Inc., f/k/a TSET, Inc.
a Nevada corporation ("Kronos"), Kronos Air Technologies,
Inc., a Nevada corporation ("Kronos Air") and FKA Distributing
Co. d/b/a HoMedics, Inc., a Michigan corporation ("HoMedics").
99.2 Secured Promissory Note, dated May 9, 2003, in the principal
amount of $2,400,000 payable to HoMedics
99.3 Secured Promissory Note, dated May 9, 2003, in the principal
amount of $1,000,000 payable to HoMedics
99.4 Security Agreement, dated May 9, 2003, by and among Kronos,
Kronos Air and HoMedics
99.5 Registration Rights Agreement, dated May 9, 2003 by and
between Kronos and HoMedics
99.6 Warrant No.1, dated May 9, 2003, issued to HoMedics
99.7 Warrant No.2, dated May 9, 2003, issued to HoMedics
ITEM 9. REGULATION FD DISCLOSURE
KRONOS OBTAINS $3.5 MILLION IN SECURED DEBT FINANCING
FROM ITS STRATEGIC CUSTOMER, HOMEDICS, INC.
Kronos Rapidly Completing Its Transition from a
Development Company to an Operating Entity
BELMONT, MA - MAY 15, 2003: KRONOS ADVANCED TECHNOLOGIES, INC. (OTC BB: KNOS)
has entered into an agreement with a strategic customer, HoMedics, Inc., for
$3.5 million in secured debt financing. $2.5 million was advanced to Kronos upon
execution of the agreement and $1.0 million will be advanced upon the start of
production for the Kronos-based air purification product line to be marketed and
distributed by HoMedics. As previously announced, Kronos Air Technologies, Inc.,
a wholly owned subsidiary of Kronos Advanced Technologies, Inc., and HoMedics
executed a multiyear, multi-million-dollar licensing agreement to bring KronosTM
proprietary technology to the consumer under an exclusive agreement for North
American, Australian and New Zealand retail distribution rights for next
generation consumer air movement and purification products based on patented
KronosTM technology.
"The extension of our relationship with HoMedics dramatically accelerates and
increases our capability to further market, develop and sell Kronos-based
products throughout the world," commented Kronos President and CEO, Daniel R.
Dwight. "The additional funding further validates HoMedics' belief in the
potential of the Kronos technology and continues to strengthen our ability to
properly position the Kronos technology in the global air movement, filtration
and purification marketplace."
"HoMedics is pleased with the opportunity to strengthen our relationship with
Kronos and is making this investment based on our belief in the potential for
the Kronos technology," stated Ron Ferber, President of HoMedics, Inc. "By
making this investment in Kronos, HoMedics not only ensures the rapid
development of the consumer retail products that we will look to market and
distribute globally but also allows HoMedics to participate financially in the
exponential growth of Kronos. HoMedics fully supports the Kronos management team
in their expansion to serve not only HoMedics consumer customer base but
industrial and commercial customers seeking a high technology solution to their
air movement and purification needs."
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This funding should assist Kronos to rapidly complete its transition from a
development company to an operating entity generating revenue from sale of mass
produced Kronos-based products. The terms of the debt include an annual stated
interest rate of six percent and a five year term with no payments required for
the first twelve months. Proceeds will be used by Kronos to meets its current
commitments, including customer commitments in the consumer, military and
transportation marketplaces, as well as expansion into additional revenue
generating applications for the Kronos technology.
EXPANSION OF KRONOS AND HOMEDICS RELATIONSHIP
Kronos and HoMedics plan to expand their relationship into other consumer
products on a global basis. Kronos and HoMedics will seek to market and sell the
Kronos-based HoMedics air purification product line globally. Kronos and
HoMedics will also seek to develop, market and sell globally other Kronos-based
products.
The previously announced licensing agreement provides for an initial term of
three and one half years with the option to extend the agreement for six
additional years. Kronos will be compensated through an initial royalty payment
and ongoing quarterly royalty payments based on a percentage of sales. HoMedics
will pay minimum royalty payments of at least $2 million during the initial term
and on-going royalty payments to extend the agreement. Kronos will retain full
rights to all of its intellectual property.
HoMedics commitment includes a multi-million-dollar marketing and advertising
campaign to promote the Kronos-based HoMedics air purification product line. The
products will be manufactured and distributed by HoMedics. HoMedics currently
distributes their products through major domestic retailers, including Wal-Mart,
Home Depot, Sears, Bed Bath & Beyond, and Linens 'N Things. Kronos will
manufacture and provide HoMedics with Kronos' proprietary electronics.
ABOUT KRONOS ADVANCED TECHNOLOGIES, INC.
Through its wholly owned subsidiary, Kronos Air Technologies, Inc., Kronos
Advanced Technologies focuses on the development and commercialization of a new,
proprietary air movement and purification technology. Kronos(TM) technology
utilizes state-of-the-art high voltage electronics and electrodes to create an
efficient but simple electrical device. As a result of this combined technology,
the Kronos(TM) air movement and purification device can move and clean air
without any moving parts. The device is versatile, energy and cost-efficient,
and exhibits multiple design attributes, creating a broad range of applications.
More information about Kronos Advanced Technologies is available at
www.kronosati.com.
ABOUT HOMEDICS
Founded in 1987, HoMedics built the home personal healthcare and wellness
products category, establishing its reputation initially as the leading
manufacturer of back and body massagers, then expanding its product offerings to
include footbaths, handheld massagers, home spa items, sensory relaxation
systems and magnetic therapy products. Today, the privately owned company is
known for creating whole new product categories and introducing innovative,
fully featured products at affordable retail prices.
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Headquartered in Commerce Township, Mich., HoMedics manufactures the most
complete line of home personal healthcare, wellness and relaxation products sold
in America. Marketed under the HoMedics(R), Thera P(TM), Therapist Select(TM)
and Body Basics(TM) brand names, the company's products are available worldwide
at most major department, discount, drug and specialty stores. For more
information, refer to the HoMedics website at www.homedics.com.
WITH THE EXCEPTION OF HISTORICAL INFORMATION CONTAINED IN THIS FILING, THIS
FILING INCLUDES FORWARD-LOOKING STATEMENTS AND COMMENTS. SUCH STATEMENTS ARE
NECESSARILY SUBJECT TO RISKS AND UNCERTAINTIES, SOME OF WHICH ARE SIGNIFICANT IN
SCOPE AND NATURE BEYOND THE COMPANY'S CONTROL. FORWARD-LOOKING STATEMENTS, BY
THEIR NATURE, INVOLVE SUBSTANTIAL RISKS AND UNCERTAINTIES. AS A RESULT, ACTUAL
RESULTS MAY DIFFER MATERIALLY DEPENDING ON MANY FACTORS, INCLUDING THOSE
DESCRIBED ABOVE. THE COMPANY CAUTIONS THAT HISTORICAL RESULTS ARE NOT
NECESSARILY INDICATIVE OF THE COMPANY'S FUTURE PERFORMANCE. OTHER RISKS ARE
SUMMARIZED UNDER THE CAPTION "CERTAIN BUSINESS RISK FACTORS" IN THE COMPANY'S
ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED JUNE 30, 2002 AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION.
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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.
KRONOS ADVANCED TECHNOLOGIES, INC.
Date: May 15, 2003 By: /s/ Daniel R. Dwight
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Name: Daniel R. Dwight
Its: Chief Executive Officer and President
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