U.S. 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: July 28, 2003
VEGA-ATLANTIC CORPORATION
(Exact name of small business issuer as specified in its charter)
COLORADO
(State or other Jurisdiction as Specified in Charter
00-27845 84-1304106
(Commission file number) (I.R.S. Employer Identification No.)
435 Martin Street, Suite 2000
Blaine, Washington 98230
(Address of Principal Executive Offices)
(360) 332-3823
(Issuer's telephone number)
Items 1 through 4, 6 and 8 not applicable.
Item 5. Other Events
Potential Acquisition of Transax Limited
The Board of Directors of Vega-Atlantic Corporation, a Colorado
corporation (the "Company"), at a special meeting, approved the execution of an
agreement in principle dated June 19, 2003 and a subsequent merger agreement
dated July 22, 2203 (the "Merger Agreement") among the Company, Vega-Atlantic
Acquisition Corporation, the Company's wholly-owned subsidiary (Vega-Atlantic"),
Transax Limited, a Colorado corporation ("Transax"), and certain selling
shareholders of Transax. It is anticipated that the Merger Agreement will become
effective and the acquisition of Transax will be consummated by approximately
August 15, 2003 or as promptly as practicable after approval by the shareholders
of Transax of the Merger Agreement, but in no event after August 31, 2003.
The Merger Agreement
In accordance with the terms of the proposed Merger Agreement, it has
been agreed, subject to normal due diligence, satisfaction of conditions
precedent and board of director and shareholder ratification that: (i)
Vega-Atlantic will merge with Transax so that Transax will become a wholly-owned
subsidiary of the Company and the shareholders, warrantholders and optionholders
of Transax will become shareholders, warrantholders and optionholders of the
Company; (ii) the Company's business operations will become that of Transax and
its subsidiaries, that being the development, acquisition and marketing of
information network solutions for healthcare providers and health insurance
companies and other end-users world-wide; (iii) the Company will change its name
to "Transax International Limited" and its trading symbol; and (iv) the Company
will adopt and implement a Stock Option Plan for key personnel of the Company,
subject to approval by the shareholders of the Company.
In accordance with the terms and conditions of the proposed Merger
Agreement and a corresponding contribution agreement: (i) the Company will
contribute to Vega-Atlantic 11,066,207 shares of its restricted Common Stock,
4,500,000 stock options and 4,100,000 share purchase warrants; (ii)
Vega-Atlantic will exchange therefore with the Transax shareholders an aggregate
of 11,066,207 shares of the Company's restricted Common Stock (on the basis of
each two Transax shares of common stock exchanged into the right to receive one
share of Common Stock of the Company); (iii) Vega-Atlantic will exchange
therefore with the Transax optionholders an aggregate of 4,500,000 stock options
to acquire up to 4,500,000 shares of the Company's Common Stock to replace all
stock options presently outstanding in Transax (on the basis of each two Transax
stock options exchanged into the right to receive one stock option of the
Company); and (iv) Vega-Atlantic will exchange therefore with the Transax
warrantholders an aggregate of 4,100,000 share purchase warrants to acquire up
to a further 4,100,000 shares of the Company's Common Stock to replace all share
purchase warrants presently outstanding in Transax (on the basis of each two
Transax share purchase warrants exchanged into the right to receive one share
purchase warrant of the Company).
In the event certain Transax shareholders, but not more than 9.5%,
demand in writing payment for such shares of common stock of Transax held of
record, in accordance with applicable Colorado law, such shares of common stock
of Transax will not be converted into shares of restricted Common Stock of the
Company and such Transax Shareholders will be entitled to receive payment for
the value of the shares of common stock of Transax held of record.
Interim Secured and Convertible Loan Agreement
As a condition to entering into and in accordance with the proposed
Merger Agreement, the Company has agreed to use its commercially reasonable
efforts to advance to Transax the aggregate principal sum of up to $250,000
(collectively, the "Principal Sum") within five (5) business days of raising of
a minimum of $250,000. In accordance with any loan made to Transax, any
principal sum loan amount will bear interest accruing at the rate of ten percent
(10%) per annum (the "Interest"), and any such principal sum loan amount will be
secured pursuant to a fixed and floating charge on all of the assets of Transax
then ranking pari passu with all existing liabilities in and to Transax at that
time (the "Loan Agreement").
Pursuant to the terms and conditions of the proposed Loan Agreement, it
is anticipated that, upon completion of the Merger Agreement, Transax will
promise to repay to the Company all Principal Sum monies which are advanced by
the Company to Transax under the proposed Loan Agreement, together with all
outstanding Interest accrued thereon, at or before the day which is 90 calendar
days from the earlier of one year from the execution date of the Loan Agreement
and the date upon which the Merger Agreement terminates for any reason
whatsoever, failing which the Company may immediately realize upon any of the
security which has been provided by Transax to the Company in accordance with
the terms of the Loan Agreement.
It is further anticipated that the terms of the proposed Loan Agreement
are expected to provide that Transax may prepay and redeem any portion of the
principal sum and accrued interest due and owing (the "Right of Redemption") by
providing the Company with not less than 30 calendar days' prior written notice
and a subsequent certified check or bank draft representing the entire amount
due and owing. Subject to Transax's prior Right of Redemption, the proposed Loan
Agreement is expected to further provide that should the Merger Agreement
terminate for any reason whatsoever or should the final principal sum payment
date be otherwise determined at any time subsequent to the advance of any loan
under the proposed Loan Agreement, the Company will have the sole and exclusive
right and option to elect to convert the entire Principal Sum and accrued
Interest due and owing to up to a five percent participating and voting interest
in and to Transax.
The Company and Transax have agreed that, as a pre-condition to closing
such acquisition and the consummation of the Merger Agreement, both parties may
conduct, to their satisfaction, due diligence which may include, but is not
limited to, financial statements, inventory of assets and liabilities,
confirmation that each party has complied with all regulatory filings and
receipt of necessary approvals regarding the transaction.
Transax - Corporate Profile
Transax is the holding company of TDS Telecommunications Data Systems
Ltda. ("TDS") (being renamed "Transax Brazil Ltda"). TDS is a solutions
provider. Through a licensing agreement from Transax, TDS is using proprietary
software trademarked "MedLink", which is currently operating in Brazil, and
employs approximately 40 staff and contract personnel.
The MedLink solution has been specifically designed for the healthcare
and health insurance industry to allow insurance companies to connect to
healthcare providers and electronically undertake authorization of health claims
in real time. A transaction fee is charged to the insurer for use of the MedLink
system. MedLink has been developed as a "total connectivity" solution where
Transax is able to provide an insurer with the ability to cost effectively
process all of the transactions generated regardless of location of method of
generation.
An in-house authorization system for approximately 1300 healthcare
provider locations was developed by MedLink's software development team and sold
to Sul America/Aetna Life. Management of the Company believes that Sul
America/Aetna Life is the second largest private health insurance company in
Brazil. This stand-alone system is currently in use and processes approximately
350,000 claims monthly.
The strategic focus of Transax is to become a premier international
provider of information network solutions for the healthcare providers and
health insurance companies, enabling the real time automation of routine patient
eligibility verifications, authorization, claims processing and payment
functions that are currently performed manually.
Shareholder Approval - Proxy Statement
The Board of Directors has authorized and directed the submission of a
Proxy Statement pursuant to Section 14(a) of the Securities Exchange Act of
1934, as amended (the "Proxy Statement"). The Proxy Statement was filed with the
Securities and Exchange Commission on June 18, 2003 and amended on July 16,
2003. The Proxy Statement has been circulated to the shareholders of the Company
to provide notice that a special meeting of the shareholders of the Company will
be held at 2:00 p.m. on August 8, 2003 for the following purposes: (i) approval
of a proposed amendment to the Company's Articles of Incorporation to effectuate
a proposed change in the name of the Company to such name as may be approved by
the Board of Directors of the Company in its sole and absolute discretion; (ii)
approval of a proposed stock option plan for key personnel of the Company; and
(iii) ratification of the prior actions by shareholders of the Company taken
pursuant to a written consent dated March 26, 2003 approving a reverse stock
split of one-for-twenty of the Company's issued and outstanding share of Common
Stock effectuated approximately April 2, 2003.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
Not Applicable.
(b) Pro Forma Financial Information.
Not Applicable.
(c) Exhibits.
None
SIGNATURES
In accordance with 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.
VEGA-ATLANTIC CORPORATION
Date: July 28, 2003 By:/s/ GRANT ATKINS
_________________________________
Grant Atkins, President and Chief
Executive Officer