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 15, 2005
ASHLIN DEVELOPMENT CORPORATION
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(Exact Name of Registrant as Specified in its Charter)
Florida 000-29245 65-0452156
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State of Commission IRS Employer
Incorporation File Number I.D. Number
1479 North Clinton Avenue, Bay Shore, NY 11706
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Address of principal executive offices
Registrant's telephone number: (631)968-5000
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(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 (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| 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.
On December 15, 2005, Ashlin Development Corporation, a Florida
corporation ("we", "Ashlin" or the "Company"), privately issued 220.672 shares
of its Series A Convertible Preferred Stock, $.001 par value per share
("Preferred Stock"), to accredited investors (the "Second Closing"). We had
previously issued 679.328 shares of Preferred Stock as of November 30, 2005 (the
"First Closing") and such issuance and the transactions relating thereto were
reported in our Current Report on Form 8-K filed with the Commission on December
6, 2005.
In connection with the Second Closing, the gross purchase price of
$2,206,720 was paid by investors and, in connection with the First Closing, the
gross purchase price of $6,793,280 had been paid by investors. Together, in the
First Closing and the Second Closing, we issued 900 shares of Preferred Stock to
investors and the investors paid an aggregate purchase price of $9,000,000. Our
issuances of shares of Preferred Stock to investors in connection with the First
Closing and the Second Closing were in exchange for the cancellation of the same
number of shares of series A convertible preferred stock of Gales Industries
Incorporated, a privately-held Delaware corporation ("Gales"), which merged into
our wholly-owned subsidiary as of November 30, 2005 (the "Merger"). The
investors had acquired such shares of Gales preferred stock by paying Gales (and
its successor) the aggregate purchase price of $9,000,000 in connection with
Gales' private offering to accredited investors of up to 900 shares of its
series A convertible preferred stock, which offering was completed by Gales on
the date of the First Closing with respect to 679.328 shares of its preferred
stock and on the date of the Second Closing with respect to 220.672 shares of
its preferred stock. The terms of our Preferred Stock and Gales series A
convertible preferred stock are substantially the same.
The 220.672 shares of Preferred Stock which we issued in the Second
Closing (not taking into account additional shares of Preferred Stock issuable
to the investors as dividends) are convertible at any time, at the option of the
holders, into an aggregate of approximately 10,030,646 shares of our common
stock, $.001 par value per share ("Common Stock") (or 45,455 shares of Common
Stock for each share of Preferred Stock), and will automatically convert into
shares of Common Stock if and when a registration statement covering such shares
of Common Stock underlying the Preferred Stock is declared effective and such
shares thereby become available for resale under the Securities Act of 1933, as
amended.
In connection with the Second Closing, GunnAllen Financial, Inc. acted as
the placement agent and received: (i) a sales commission equal to 6%, and a
management fee equal to 4%, of the aggregate purchase price of the preferred
stock sold and (ii) a non-accountable expense allowance equal to 2% of the
aggregate purchase price of the preferred stock sold. In addition, the placement
agent received warrants, exercisable during a five-year term, to purchase the
number of shares of Common Stock (1,003,065 shares) equal to 10% of the number
of shares of Common Stock into which the Preferred Stock sold in the Second
Closing may be converted. Such warrants have a "cashless exercise" feature and
are exercisable at $0.22 per share.
We believe that the issuances of our securities in connection with the
First Closing and the Second Closing were exempt from registration under Section
4(2) of the Securities Act of 1933, as amended.
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Item 4.01 CHANGES IN REGISTRANT'S CETIFYING ACCOUNTANT.
(a) On December 15, 2005, the Company selected the firm of Goldstein
Golub Kessler LLP ("GGK") as the Company's independent auditor. The firm of
Daszkal Bolton LLP ("DB") had been serving as Ashlin's independent auditor. The
change in auditors is in connection with the Merger and the change in control of
Ashlin relating thereto.
(b) The reports of DB on Ashlin's financial statements for the
fiscal years ended December 31, 2004 and December 31, 2003 did not contain an
adverse opinion, a disclaimer of opinion or any qualifications or modifications
related to uncertainty, limitation of audit scope or application of accounting
principles, except that such reports of DB express "substantial doubt about the
Company's ability to continue as a going concern" and state that "The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty". These "going concern" qualifications relate only to periods
prior to the Merger and do not relate to the financial statements of Gales or
Air Industries Machining, Corp. During the period DB was retained by Ashlin,
there were no disagreements (within the meaning of Instruction 4 of Item 304 of
Regulation S-K) with DB as to any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure and there have
been no reportable events (as defined in Item 304 of Regulation S-K).
(c) The Company has not consulted with GGK regarding the application
of accounting principles to a specified transaction or the type of audit opinion
that might be rendered on the Company's financial statements during the two most
recent fiscal years through the present.
(d) A letter of DB addressed to the Securities and Exchange
Commission is included as Exhibit 16 to this Form 8-K. Such letter states that
such firm agrees with the statements made by the Company in this Item 4 as they
refer to such firm.
(e) The change of auditors was approved by the Board of Directors of
the Company as of December 15, 2005.
Item 9.01. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
Exhibit No.
16.1 Letter of Daszkal Bolton LLP to the Securities and Exchange
Commission pursuant to the requirements of Item 304(a)(3) of
Regulation S-K.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Current Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: December 20, 2005
ASHLIN DEVELOPMENT CORPORATION
By: /s/ Michael A. Gales
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Michael A. Gales, Executive Chairman
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