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): October 19,
2007
CHEMBIO
DIAGNOSTICS, INC.
(Exact
name of registrant as specified in its charter)
|
Nevada
|
0-30379
|
88-0425691
|
||
|
(State
or other jurisdiction
|
(Commission
File Number)
|
(IRS
Employer
|
||
|
of
Incorporation)
|
Identification
Number)
|
|||
|
3661
Horseblock Road
|
||||
|
Medford,
NY 11763
|
||||
|
(Address
of principal executive offices)
|
||||
|
631-924-1135
|
||||
|
(Registrant’s
Telephone Number)
|
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
7.01. REGULATION FD DISCLOSURE.
The
Company and the holders of the Company’s Series A, Series B and Series C
Convertible Preferred Stock (collectively, the “Preferred Stock”), and the
holders of certain of the Company’s other outstanding warrants and options (the
“Non-Employee Options”) not including options or warrants issued to employees or
directors in their capacity as such, are considering amendments to the terms
of
the Preferred Stock and those warrants and options. These amendments
and the related transactions are collectively referred to herein as the
“Plan.”
Pursuant
to the terms of the Plan, 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, would be converted into
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 would be converted at
the
rate of $0.48 per share of Common Stock. The Plan also provides for
all the outstanding Series C Preferred Stock to be converted into shares
of
Common Stock at the rate of $0.48 per share of Common Sock, and for any accrued
but unpaid dividends on any shares of the Preferred Stock to be converted
into
shares of Common Stock.
The
Plan would reduce, for a limited
time period, the exercise price of all of the warrants so that at the time
of
the closing of the Plan (the “Closing”) (i) the warrants would be exercisable
for cash for $0.40 per share; and (ii) the warrants would be exercisable
on a
cashless basis at an exercise price of $0.45 per share. Warrant
holders who exercise at least 25% of their warrants for cash at $0.40 per
share
at the Closing would be permitted, but not required, to exercise the remaining
balance of their warrants for cash or on a cashless basis at an exercise
price
of $0.45 per share at any time on or before March 31, 2008. If a
Warrant holder exercises at least 25% of its warrants for cash at the Closing,
but does not exercise the remaining balance of its warrants for cash or on
a
cashless basis on or before March 31, 2008, then the exercise price of the
remaining warrants would revert to the original exercise price on April 1,
2008,
subject to any applicable adjustment. For a Warrant holder that does
not exercise at least 25% of its warrants for cash at the Closing, the exercise
price of its warrants would revert to the original exercise price, subject
to
any applicable adjustment, on the first trading day after the
Closing. Beginning April 1, 2008, in addition to being
exercisable for cash, such holders would 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.
In
addition to the amendments to the warrants, the Plan includes amendments
to the
(i) Non-Employee Options and (ii) the warrants previously issued in connection
with the Company’s Securities Purchase Agreement, dated as of June 29, 2006,
that are similar to the proposed amendments to the warrants. The
warrants also would be amended to provide that the anti-dilution provisions
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.
The
Plan’s cashless exercise provision
would permit a Warrant holder to use any excess of the market price of the
Company’s Common Stock over the exercise price of a Warrant as part of the
exercise price for another Warrant by submitting both warrants at the time
of
exercise. Pursuant to the Plan, at the Closing a Warrant holder would
be entitled to use the greater of (i) $0.53 or (ii) the VWAP for the ten-trading
day period that ends on the second trading day prior to the Closing as the
value
of the Common Stock, so that each Warrant used as part of the exercise price
payment will represent the difference between the greater of these two values
and the $0.45 Warrant exercise price. After the Closing, the value of
a warrant to be used as part of the exercise price payment in such cashless
exercise would 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.
The
Company will not consummate the Plan unless it obtains a minimum of $2,000,000
of Warrant exercises for cash pursuant to the Plan. In this regard,
Crestview Capital Master, LLC (“Crestview”), Inverness Medical Innovations, Inc.
and Big Bend Investments XXXI, LP have indicated that they intend to exercise
all of their Series C warrants for cash at Closing. In addition,
Lawrence A. Siebert has indicated that he will exercise 250,000 his of Series
A
warrants for cash at Closing. As a result of these transactions, the
Company expects to receive at least $787,500 at Closing. Crestview
has also indicated that, to the extent necessary for the Company to obtain
the
$2,000,000 capital infusion, in addition to exercising 100% of its Series
C
warrants (approximately 9% of Crestview’s total warrants) for cash at the
Closing, it will agree to exercise up to $1,000,000 of its Series B warrants
on
or before March 31, 2008, provided that all its other Series B warrants
will be amended to provide that they can be exercised for $0.45 cash or $0.45
on
a cashless basis at any time on or before March 31, 2008.
The
Company is working 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.
The
Plan will not be implemented, in
part or whole, unless substantially all of the Plan is approved by the required
number of holders of Preferred Stock, the warrants and Non-Employee
Options. The Company will use a portion of any new equity to pay
certain expenses incurred in implementing the Plan, including fees payable
to
Collins Stewart, legal fees and other costs of the Plan, as well as for general
working purposes.
* * * * *
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: October
19,
2007 Chembio
Diagnostics, Inc.
By: /s/
Lawrence A.
Siebert
Lawrence
A. Siebert
Chief
Executive Officer