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