SELWAY CAPITAL ACQUISITION CORP. FILES (8-K/A) Disclosing Completion of Acquisition or Disposition of Assets, Financial Statements and Exhibits - Insurance News | InsuranceNewsNet

InsuranceNewsNet — Your Industry. One Source.™

Sign in
  • Subscribe
  • About
  • Advertise
  • Contact
Home Now reading Newswires
Topics
    • Advisor News
    • Annuity Index
    • Annuity News
    • Companies
    • Earnings
    • Fiduciary
    • From the Field: Expert Insights
    • Health/Employee Benefits
    • Insurance & Financial Fraud
    • INN Magazine
    • Insiders Only
    • Life Insurance News
    • Newswires
    • Property and Casualty
    • Regulation News
    • Sponsored Articles
    • Washington Wire
    • Videos
    • ———
    • About
    • Meet our Editorial Staff
    • Advertise
    • Contact
    • Newsletters
  • Exclusives
  • NewsWires
  • Magazine
  • Newsletters
Sign in or register to be an INNsider.
  • AdvisorNews
  • Annuity News
  • Companies
  • Earnings
  • Fiduciary
  • Health/Employee Benefits
  • Insurance & Financial Fraud
  • INN Exclusives
  • INN Magazine
  • Insurtech
  • Life Insurance News
  • Newswires
  • Property and Casualty
  • Regulation News
  • Sponsored Articles
  • Video
  • Washington Wire
  • Life Insurance
  • Annuities
  • Advisor
  • Health/Benefits
  • Property & Casualty
  • Insurtech
  • About
  • Advertise
  • Contact
  • Editorial Staff

Get Social

  • Facebook
  • X
  • LinkedIn
Newswires
Newswires RSS Get our newsletter
Order Prints
May 16, 2013 Newswires
Share
Share
Post
Email

SELWAY CAPITAL ACQUISITION CORP. FILES (8-K/A) Disclosing Completion of Acquisition or Disposition of Assets, Financial Statements and Exhibits

Edgar Online, Inc.

Item 2.01 Completion of Acquisition or Disposition of Assets.

As previously reported on a Current Report on Form 8-K, on January 25, 2013, an Agreement and Plan of Merger (the "Agreement") was entered into by and among Selway, Selway Merger Sub, Inc., a New Jersey corporation and wholly owned subsidiary of Selway ("Merger Sub"), HCCA, a New Jersey corporation, PCA, Gary Sekulski, as the representative of the stockholders of HCCA, and Edmundo Gonzalez, as Selway's representative. On April 10, 2013 (the "Closing Date"), the Merger and other transactions contemplated by the Agreement closed.

Pursuant to the Agreement, Merger Sub merged with and into HCCA, resulting in HCCA becoming a wholly owned subsidiary of Selway. PCA and PCA Benefits, Inc., a dormant entity, remain wholly owned subsidiaries of HCCA.

Holders of all of the issued and outstanding shares of common stock of HCCA immediately prior to the time of the Merger had each of their shares of common stock of HCCA converted into the right to receive: (i) a proportional amount of 5,200,000 shares of Selway Series C common stock and promissory notes with an aggregate face value of $7,500,000 (collectively, the "Closing Payment"); plus (ii) a proportional amount of up to 2,800,000 shares of Selway common stock, if any, (the "Earnout Payment Shares") issuable upon the combined company achieving certain consolidated gross revenue thresholds as more fully described below; plus (iii) the right to receive a proportional amount of the proceeds from the exercise of certain warrants being issued to Selway Capital Holdings, LLC, a Delaware limited liability company, Selway's sponsor, as more fully described below. A portion of the Closing Payment (520,000 shares and promissory notes with an aggregate face value of $750,000) is being held in escrow for a period of 12 months following the Merger to satisfy indemnification obligations of the HCCA, if any, as more fully described below. The promissory notes included in the Closing Payment are non-interest bearing and subordinated to all senior debt of the combined company in the event of a default under such senior debt. The notes will be repaid from 75% of 25% of the combined company's free cash-flow (defined as in the notes) in excess of $2,000,000. The combined company will be obligated to repay such notes if, among other events, there is a transaction that that results in a change of control of the combined company.

The Earnout Payment Shares, if any, will be issued as follows: (i) 1,400,000 shares if the combined company achieves consolidated gross revenue of $150,000,000 for the twelve months ended March 31, 2014 or June 30, 2014; and (ii) 1,400,000 shares if the combined company achieves consolidated gross revenue of $300,000,000 for the twelve months ended March 31, 2015 or June 30, 2015. In the event the combined company does not achieve the first earnout threshold, but does achieve the second earnout threshold, then all of the Earnout Payment Shares shall be issued. If the combined company consolidates, merges or transfers substantially all of its assets prior to June 30, 2015 at a valuation of at least $15.00 per share, then all of the Earnout Payment Shares not previously paid out shall be issued immediately prior to such transaction. If, prior to achieving either earnout threshold the combined company acquires another business in exchange for its equity or debt securities, then any remaining earnout thresholds may be adjusted by the independent members of the combined company's board of directors in their sole discretion.

In connection with a bridge financing (the "Bridge Financing") completed by the HCCA in September 2012, HCCA issued 59.25 units, each unit consisting of 10,000 preferred shares and a promissory note with a face value of $100,000. At the time of the Merger, holders of all of the issued and outstanding shares of preferred stock of HCCA, by virtue of the Merger, had each of their shares of preferred stock of HCCA converted into the right to receive a proportional amount of 592,500 shares of Selway Series C common stock and warrants to purchase 296,250 shares of Selway Series C common stock. In accordance with the terms of the promissory notes issued in the Bridge Financing, at the time of the Merger, notes in the aggregate amount of $3,159,591.78 (including principal and interest accrued to date) were converted into 315,959 shares of Selway Series C common stock and notes in the aggregate principal amount of $3,025,000 were repaid in full.

   5       

In connection with transactions contemplated by the Agreement, Selway also entered into a registration rights agreement to register all shares included in the Closing Payment, the Earnout Payment Shares, the shares underlying the Exchange Warrants, and the Selway shares issued as compensation for the Bridge Financing completed by HCCA in September 2012, pursuant to the terms of a Registration Rights Agreement entered into at the closing of the merger (all such securities issued in connection with the merger, the "Merger Securities"). The holders of the majority of the Merger Securities are entitled to make up to two demands that Selway register such securities at any time commencing six months following the consummation of the merger. In addition, the holders have certain "piggy-back" registration rights with respect to registration statements filed subsequent to Selway's consummation of an acquisition transaction. Selway will bear the expenses incurred in connection with the filing of any such registration statements.

In conjunction with the merger of Merger Sub into HCCA:

· Selway entered into exchange agreements with 3 beneficial holders of HCCA's

   bridge loan who were also beneficial holders of greater than 5% of Selway's    Series A common stock. Pursuant to the exchange agreements, such holders    converted an aggregate of 281,554 shares of Selway's Series A common stock to    Selway's Series C common stock. In conjunction with the exchange, such holders    were repaid bridge notes in the aggregate principal amount of $3,025,000.    

· Selway entered into exchange agreements with 3 beneficial holders of greater

   than 5% of Selway's Series A common stock. Pursuant to the exchange agreements,    such holders converted an aggregate of 878,481 shares of Selway's Series A    common stock to Selway's Series C common stock and received $3.53 per share of    Series A common stock exchanged, or an aggregate of $3,101,037.93.    

· An aggregate of $11,948,360.50 was released from Selway's trust account,

   reflecting the number of shares of Series A common stock that were converted    into Series C common stock, of which $232,007 was paid to the underwriters from    Selway's initial public offering.    

· The placement warrants held by Selway's founders were converted into the right

   to receive: (i) an aggregate of 100,000 shares of Selway common stock; and (ii)    warrants to purchase an aggregate of 1,000,000 shares of Selway common stock at    an exercise price of $10.00 per share. The proceeds from the exercise of the    exchange warrants will be paid: (i) 75% to the holders of all of the issued and    outstanding shares of common stock of HCCA immediately prior to the time of the    merger; and (ii) 25% to certain members of HCCA management. The exchange    warrants are only exercisable for cash, may not be exercised on a cashless    basis, and must be exercised if the closing price for the combined company's    common stock exceeds $12.00 per share for 20 trading days in any 30-trading-day    period.    

Selway paid Chardan Capital Markets LLC the following in consideration of its services in connection with the transactions described above:

· Five percent of all equity consideration issued in the transaction.

· Promissory notes having an aggregate principal amount of five percent of all

promissory notes issued in connection with the transaction, on the same terms

and conditions as the promissory notes issued in the transaction.

In addition, HCCA waived the condition to closing that a revolving credit facility in the aggregate amount of $5 million be in place at closing. Such facility subsequently closed on April 11, 2013 and is described in Item 1.01 to this report.

Following the transactions described above, none of Selway's Series A shares and Units were outstanding and there were 839,965 shares of Selway's Series B shares issued and outstanding, 9,368,494 shares of Selway's Series C shares issued and outstanding, 2,296,250 public warrants issued and outstanding, warrants to purchase 1,000,000 shares of Selway common stock owned by the pre-initial public offering stockholders of Selway, and unit purchase options exercisable for 100,000 shares of Selway common stock and warrants to purchase 100,000 shares of Selway common stock.

   6                                            BUSINESS   

Selway is a company organized under the laws of the State of Delaware on January 12, 2011 to acquire, through a merger, capital stock exchange, asset acquisition, stock purchase or similar acquisition transaction, one or more operating businesses. Although we were not limited to a particular geographic region or industry, we focused on acquiring operating businesses in the United States. Until the acquisition of HCCA, Selway did not operate a business and its activities were limited to locating a business to acquire.

As a result of the closing of the Merger and the other transactions contemplated by the Agreement, Selway operates its business through its wholly owned subsidiary, Healthcare Corporation of America, or HCCA. HCCA is a rapidly growing Pharmacy Benefit Manager, or PBM. HCCA's mission is to reduce prescription drug costs for clients while improving the quality of care. HCCA administers prescription drug benefit programs for employers who contract with HCCA directly in order to provide this component of healthcare benefits to their employees. HCCA also is the PBM for health benefit companies who partner with HCCA in order to provide prescription drug benefits along with their core offering, other health benefits like medical insurance, to their clients. HCCA's growing customer base includes commercial clients of various sizes and industries, business associations and trade groups, and local government entities, labor unions and charitable and non-profit organizations. HCCA's business model is firmly based on price transparency and proactive benefit cost management. HCCA's brand in the marketplace is Prescription Corporation of America, or PCA.

HCCA is a New Jersey corporation incorporated on February 26, 2008. Selway's and HCCA's principal executive offices are located at 66 Ford Road, Suite 230, Denville, NJ 07834, and the telephone number at its principal executive office is 973-983-6300. HCCA maintains a website at www.hca-pca.com. The information contained in, or that can be accessed through, HCCA's website is not part of, and is not incorporated into, this current report on Form 8-K or other filings we make with the SEC. Selway makes available free of charge on its website annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after it electronically files such material with, or furnishes it to, the SEC.

On May 9, 2013, Selway issued a Current Report on Form 8-K announcing that our Board of Directors, after consultation with, and upon recommendation from, our management, concluded the previously issued audited financial statements for the years ended December 31, 2011 and 2012 for HCCA, which Selway recently acquired and which is currently Selway's subsidiary, should no longer be relied upon and that disclosure should be made, and action should be taken, to prevent future reliance on such financial statements. For a description of the basis for the Board's determination, please see our Current Report on Form 8-K dated May 9, 2013, which description is incorporated by reference herein.

Our officers discussed the foregoing matters with our current independent registered public accounting firm, Thomas J. Harris, Certified Public Accountant, which was the auditor of HCCA's financial statements. The Board of Directors authorized and directed that our officers take the appropriate and necessary actions to amend and restate the Original 8-K, pursuant to which HCCA's financial statements were filed with the SEC. The restated financial statements reflecting the foregoing corrections are attached herein as Exhibits 99.1 and 99.2 to this Amendment.

   Products and Services   

HCCA's primary products and services consist of a variety of Pharmacy Benefit Management (PBM) products, in addition to mail order pharmacy services. HCCA's suite of PBM products provides flexible and cost-effective alternatives to traditional PBM offerings typically used by health plans, government agencies and employers. HCCA provides a broad range of pharmacy benefit management solutions to managed care organizations, self-insured employer groups, unions, third party healthcare plan administrators, and local government entities. HCCA's PBM products include solutions for self-insured entities such as employers, townships, counties and unions, as well as smaller fully-funded entities that typically require a fixed cost structure. The majority of HCCA's client base is currently in New Jersey, and HCCA plans to expand its services out of New Jersey.

   7       

HCCA started its business by focusing on the needs of the local government market in New Jersey. HCCA believes that our growth to date has been the result of clients (we refer to employers contracting with HCCA as "clients" while the employees to whom HCCA provides services to are referred to as "members" throughout this document) finding HCCA's transparent pricing model, and its resulting savings, more attractive than other options. A transparent PBM gives clients visibility into actual drug costs. This differs from the traditional PBM model, where actual drug spend may be kept deliberately vague, due to practices where a client is billed a price for a drug, while the PBM pays a lower effective price due to rebates or other spread pricing techniques. Conversely, HCCA's model aligns HCCA with its clients' interests.

HCCA has started to expand its business geographically, and also added products to address attractive market segments. HCCA's PBM products include: . . .

   Item 9.01     Financial Statements and Exhibits    Exhibit   No.                                   Description 2.1        Agreement and Plan of Merger, dated January 25, 2013, by and among            Selway Capital Acquisition Corporation, Selway Merger Sub, Inc.,            Healthcare Corporation of America, Prescription Corporation of            America, Gary Sekulski, and Edmundo Gonzalez (incorporated by            reference to Selway's Current Report on Form 8-K dated January 25,            2013).* 3.1        Certificate of Merger.* 4.1        Form of Sponsor Payment Warrant.* 10.1       Voting Agreement, dated January 25, 2013, by and among Selway Capital            Acquisition Corporation, Healthcare Corporation of America, and            certain shareholders.* 10.2       Voting Agreement, dated April 10, 2013, by and among Selway Capital            Acquisition Corporation and certain shareholders.* 10.3       Exchange Agreement, by and between Selway Capital Acquisition            Corporation and certain shareholders.* 10.4       Exchange Agreement, by and between Selway Capital Acquisition            Corporation and certain shareholders.* 10.5       Registration Rights Agreement, dated April 10, 2013, by and among            Selway Capital Acquisition Corporation and Gary Sekulski, as            representative of the stockholders of Healthcare Corporation of            America.* 10.6       Closing Payment Escrow Agreement, dated April 10, 2013, by and among            Selway Capital Acquisition Corporation, Selway Merger Sub, Inc.,            Healthcare Corporation of America, Gary Sekulski, Edmundo Gonzalez,            and American Stock Transfer & Trust Company LLC, as transfer agent.* 10.7       Management Share Escrow Agreement, dated April 10, 2013, by and among            Selway Capital Acquisition Corporation, Healthcare Corporation of            America, certain key personnel signatories thereto, and American Stock            Transfer & Trust Company LLC, as transfer agent.* 10.8       Credit and Security Agreement, dated April 11, 2013, by and among            Prescription Corporation of America, PCA Benefits, Inc., and SCM            Specialty Finance Opportunities Fund, LP.* 10.9       Employment Agreement, dated September 15, 2012, by and between            Healthcare Corporation of America and Gary Sekulski.* 10.10      Marketing and Consulting Agreement, dated January 3, 2012, by and            between Prescription Corporation of America and Otis Fund.* 10.11      Employment Agreement, dated September 15, 2012, by and between            Healthcare Corporation of America and Ruth Ackerman.* 10.12      Employment Agreement, dated September 15, 2012, by and between            Healthcare Corporation of America and Ann Saskowitz.* 10.13      Employment Agreement, dated September 15, 2012, by and between            Healthcare Corporation of America and John M. Phelps, Jr.* 10.14      Consulting Agreement, dated October 1, 2012, by and between Healthcare            Corporation of America, its subsidiaries, Rx Services Inc., Nitin            Khandwala, and Hemil Khandwala.* 10.15      Lease, dated October 23, 2009, by and between W.P. Properties, LLC and            Healthcare Corporation of America, its affiliates and subsidiaries.* 10.16      Lease, dated October 20, 2011, by and between W.P. Properties, LLC and            Prescription Corporation of America.* 10.17      Lease Extensions, dated February 28, 2012.* 21.1       List of Subsidiaries.* 99.1       Audited financial statements of HCCA for the years ended December 31,            2011 and 2012.** 99.2       Pro-forma financial statements.** 99.3       Unaudited financial statements of HCCA for the three months ended            March 31, 2013 and 2012.**     * Previously filed.  ** Filed herewith.    

60

Wordcount:  2744

Older

NICB: Questionable Claims In The U.S.

Advisor News

  • Flourish brings private-bank-like cash solution to MassMutual’s network
  • Majority of Americans concerned recent market highs are unsustainable
  • GLP-1 users choose between medication and retirement saving
  • Gen X and millennials seek new retirement model
  • Are families ready for the costs of aging at home?
More Advisor News

Annuity News

  • A client remarried: Does their annuity still fit?
  • Gen X and millennials seek new retirement model
  • Global Atlantic names Dan Farrelly head of IMO and IBD channels
  • A rising retirement challenge: The license to spend
  • What lower interest rates mean to annuity payouts
More Annuity News

Health/Employee Benefits News

  • Fairview sues UnitedHealthcare over 2027 Medicare plan info
  • Women can face challenges in obtaining LTCi
  • Health affordability task force considers utility model
  • Best’s Market Segment Report: AM Best Maintains Stable Outlook on Indonesia’s Non-Life Insurance Segment
  • Research from University of Edinburgh Broadens Understanding of Cancer (Health insurance coverage for medical nutrition therapy in older women with cancer: a comparative health policy perspective on long-term care, frailty, and survivorship …): Cancer
Sponsor
More Health/Employee Benefits News

Life Insurance News

  • Life insurance applications rise 15.2% in September, MIB reports
  • Flourish brings private-bank-like cash solution to MassMutual’s network
  • What ‘above and beyond’ means for today’s advisor
  • Best’s Market Segment Report: AM Best Maintains Stable Outlook on Indonesia’s Non-Life Insurance Segment
  • CP13/26 THE PRUDENTIAL REGULATION AUTHORITY'S AUTOMATIC THRESHOLDS INDEXATION FRAMEWORK
Sponsor
More Life Insurance News

NEWS INSIDE

  • Companies
  • Earnings
  • Economic News
  • INN Magazine
  • Insurtech News
  • Newswires Feed
  • Regulation News
  • Washington Wire
  • Videos

FEATURED OFFERS

Press Releases

  • Lauren Sinnott Named to Ragan’s Top Women in Marketing Awards, Class of 2026 
  • Classic Car Insurer OpenRoad Insurance Expands to 40 U.S. States in Two Years
  • How Aspire General Turned an Early Technology Bet Into Claims Automation at Scale with Kyber
  • Adjusto launches AI-Native contents claims services powered by its technology platform
  • URL Insurance Group Celebrates 40 Years of Service, Growth, and Industry Leadership
More Press Releases > Add Your Press Release >

How to Write For InsuranceNewsNet

Find out how you can submit content for publishing on our website.
View Guidelines

Topics

  • Advisor News
  • Annuity Index
  • Annuity News
  • Companies
  • Earnings
  • Fiduciary
  • From the Field: Expert Insights
  • Health/Employee Benefits
  • Insurance & Financial Fraud
  • INN Magazine
  • Insiders Only
  • Life Insurance News
  • Newswires
  • Property and Casualty
  • Regulation News
  • Sponsored Articles
  • Washington Wire
  • Videos
  • ———
  • About
  • Meet our Editorial Staff
  • Advertise
  • Contact
  • Newsletters

Top Sections

  • AdvisorNews
  • Annuity News
  • Health/Employee Benefits News
  • InsuranceNewsNet Magazine
  • Life Insurance News
  • Property and Casualty News
  • Washington Wire

Our Company

  • About
  • Advertise
  • Contact
  • Meet our Editorial Staff
  • Magazine Subscription
  • Write for INN

Sign up for our FREE e-Newsletter!

Get breaking news, exclusive stories, and money- making insights straight into your inbox.

select Newsletter Options
Facebook Linkedin Twitter
© 2026 InsuranceNewsNet.com, Inc. All rights reserved.
  • Terms & Conditions
  • Privacy Policy
  • InsuranceNewsNet Magazine

Sign in with your Insider Pro Account

Not registered? Become an Insider Pro.