CAS MEDICAL SYSTEMS, INC. (NASDAQ:CASM) Files An 8-K Completion of Acquisition or Disposition of Assets

CAS MEDICAL SYSTEMS, INC. (NASDAQ:CASM) Files An 8-K Completion of Acquisition or Disposition of Assets
Item 2.01 Completion of Acquisition or Disposition of Assets

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On July 25, 2017, CAS Medical Systems, Inc. (the "Company") entered into an Asset Purchase Agreement (the "Purchase Agreement") with SunTech Medical Inc. (the "Buyer"), to which the Company simultaneously sold to the Buyer substantially all of the assets of the Company's non-invasive blood pressure product line (the "NIBP Business"), and the Buyer assumed certain specified liabilities in connection therewith.

to the Purchase Agreement, the Company is receiving aggregate consideration of up to $6,500,000 consisting of: (i) $4,500,000 paid at closing in cash and (ii) up to $2,000,000 of contingent consideration, payable in 2019, based upon the amount of sales of the NIBP Business during the 24-month period ending June 30, 2019. In addition to the foregoing, the Purchase Agreement contains customary representations, warranties, covenants, and indemnification obligations of the parties. The Company will also provide the Buyer with certain services through September 2017 to facilitate customer and manufacturing transition, and the Buyer shall purchase any remaining product inventory of the NIBP Business upon the completion of a transition services period.

The Company intends to use the proceeds from the transaction for general working capital purposes.

The foregoing description of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Purchase Agreement, which is included as Exhibit 2.1 hereto and is incorporated herein by reference. The Company issued a press release with respect to the foregoing, a copy of which is included as Exhibit 99.1, hereto.

Item 9.01

Financial Statements and Exhibits.

(b)(1)

Pro forma financial information.

The following tables provide the pro forma financial results of the Company, as adjusted to reflect the discontinued NIBP Business, at and for the three months ended March 31, 2017, and for the 12 months ended December 31, 2016.

CAS MEDICAL SYSTEMS, INC.

PRO FORMA CONSOLIDATED BALANCE SHEET

Unaudited

(In thousands)

Historical

Pro Forma

March 31,

Pro Forma

March 31,

Adjustments

Cash and cash equivalents

$

4,663

$

4,663

Accounts receivable, net

3,095

(347

)

2,748

Notes and other receivables

Inventories

1,784

(327

)

1,457

Other current assets

Assets associated with discontinued operations

Total current assets

9,919

9,923

Property and equipment

9,145

(84

)

9,061

Less accumulated depreciation

(6,641

)

(6,558

)

2,504

(1

)

2,503

Intangible and other assets, net

(3

)

Total assets

13,223

13,223

Accounts payable

1,138

(38

)

1,100

Accrued expenses

1,785

(2

)

1,783

Note payable

Current portion of long-term debt

1,518

1,518

Liabilities associated with discontinued operations

Total current liabilities

4,503

4,503

Deferred gain on sale and leaseback of property

Long-term debt, less current portion

5,972

5,972

Other long-term liabilities

Total liabilities

10,853

10,853

Series A convertible preferred stock

8,802

8,802

Series A exchangeable preferred stock

5,135

5,135

Common stock

Treasury stock

(101

)

(101

)

Additional paid-in capital

31,354

31,354

Accumulated deficit

(42,933

)

(42,933

)

Total stockholders' equity

2,370

2,370

Total liabilities and stockholders' equity

$

13,223

$

$

13,223

1) See accompanying notes to the unaudited pro forma financial information

CAS MEDICAL SYSTEMS, INC.

PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

Unaudited

Three Months Ended March 31, 2017

(In thousands, except per share information)

Pro Forma

Historical

Adjustments

Pro Forma

Net sales

$

5,225

$

(682

)

$

4,543

Cost of sales

2,381

(320

)

2,061

Gross profit

2,844

(362

)

2,482

Operating expenses:

Research and development

(37

)

Selling, general and administrative

3,574

3,574

Total operating expenses

4,398

(37

)

4,361

Operating loss

(1,554

)

(325

)

(1,879

)

Interest expense

Other income

Loss from continuing operations before income taxes

(1,814

)

(325

)

(2,139

)

Income tax expense (benefit)

(114

)

(104

)

Loss from continuing operations

(1,824

)

(211

)

(2,035

)

(Loss) income from discontinued operations,

(30

)

Income tax (benefit) expense

(10

)

(Loss) income from discontinued operations

(20

)

Net loss

(1,844

)

(1,844

)

Preferred stock dividend accretion

Net loss applicable to common stockholders

$

(2,231

)

$

$

(2,231

)

Loss per common share from continuing

operations – basic and diluted

$

(0.08

)

$

(0.01

)

$

(0.09

)

(Loss) income per common share from discontinued

operations – basic and diluted

(0.00

)

0.01

0.01

Per share basic and diluted loss applicable to

common stockholders

$

(0.08

)

$

$

(0.08

)

Weighted average number of common

shares outstanding:

Basic and diluted

26,827

26,827

26,827

1) See accompanying notes to the unaudited pro forma financial information

CAS MEDICAL SYSTEMS, INC.

PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

Twelve Months Ended December 31, 2016

(In thousands, except per share information)

Pro Forma

Historical

Adjustments

Pro Forma

Net sales

$

22,238

$

(3,564

)

$

18,674

Cost of sales

10,091

(1,915

)

8,176

Gross profit

12,147

(1,649

)

10,498

Operating expenses:

Research and development

3,437

(160

)

3,277

Selling, general and administrative

13,575

(5

)

13,570

Total operating expenses

17,012

(165

)

16,847

Operating loss

(4,865

)

(1,484

)

(6,349

)

Interest expense

1,048

1,048

Other income

(43

)

(43

)

Loss from continuing operations before income taxes

(5,871

)

(1,484

)

(7,355

)

Income tax benefit

(948

)

(519

)

(1,468

)

Loss from continuing operations

(4,923

)

(965

)

(5,887

)

(Loss) income from discontinued operations

(201

)

1,484

1,283

Gain on sale of discontinued operations

2,911

2,911

Income tax expense

1,468

Income from discontinued operations

1,761

2,726

Net loss

(3,161

)

(3,161

)

Preferred stock dividend accretion

1,483

1,483

Net loss applicable to common stockholders

$

(4,644

)

$

$

(4,644

)

Loss per common share from continuing

operations – basic and diluted

$

(0.24

)

$

(0.03

)

$

(0.27

)

Income per common share from discontinued

operations – basic and diluted

0.07

0.03

0.10

Per share basic and diluted loss applicable to

common stockholders

$

(0.17

)

$

$

(0.17

)

Weighted-average number of common

shares outstanding:

Basic and diluted

26,827

26,827

26,827

1) See accompanying notes to the unaudited pro forma financial information

(1)

Notes to Unaudited Pro Forma Financial Information

The historical financial statements have been adjusted in the pro forma financial statements to give effect to pro forma events that are (1) directly attributable to the divestiture of the NIBP Business, 2) factually supportable and (3) with respect to the pro forma statement of operations, expected to have a continuing impact on the results following the divestiture.

The pro forma financial statements do not necessarily reflect what the Company's financial condition or results of operations would have been had the divestiture occurred on the dates indicated. The statements also may not be useful in predicting the future financial condition and results of operations of the Company. The actual financial position and results of operations may differ from the pro forma amounts reflected herein due to a variety of factors.

The pro forma financial information does not reflect the realization of any expected cost savings or other synergies from the divestiture of the NIBP Business.

The pro forma adjustments are based on our preliminary estimates and assumptions that are subject to change.

(d)Exhibits

2.1 Asset Purchase Agreement dated July 25, 2017 between the Company and SunTech Medical Inc.
99.1 Press release dated July 26, 2017


CAS MEDICAL SYSTEMS INC Exhibit
EX-2.1 2 exh2-1_18091.htm ASSET PURCHASE AGREEMENT EXHIBIT 2.1                             ASSET PURCHASE AGREEMENT   BY AND BETWEEN   SUNTECH MEDICAL INC. (as “Buyer”,…
To view the full exhibit click here

About CAS MEDICAL SYSTEMS, INC. (NASDAQ:CASM)

CAS Medical Systems, Inc. is a medical technology company that develops, manufactures and markets non-invasive patient monitoring products for patient care. The Company designs, manufactures and distributes the FORE-SIGHT and FORE-SIGHT ELITE brand tissue oximeters and sensors. It also sells various legacy products called Traditional Monitoring, which includes non-invasive blood pressure measurement technologies, neonatal medical disposables and service sales. It operates through two categories of sales: Tissue Oximetry Monitoring, which includes sales of its FORE-SIGHT tissue oximeter monitors, sensors and accessories, and Traditional Monitoring, which includes sales of its legacy products comprising the original equipment manufacturer (OEM) sales of its non-invasive blood pressure technology (MAXNIBP and MAXIQ), and monitor service and repair. The FORE-SIGHT Tissue Oximeter technology provides clinicians a non-invasive, quantitative measurement of oxygenation in cerebral tissue.

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