Transgenomic, Inc. (NASDAQ:TBIO) Files An 8-K Regulation FD Disclosure
Item 7.01.
| Regulation FD Disclosure. |
As previously reported on October 13, 2016, Transgenomic, Inc.
(the Company), New Haven Labs Inc., a wholly-owned subsidiary of
the Company, and Precipio Diagnostics, LLC (Precipio) entered
into an Agreement and Plan of Merger (the Merger Agreement) to
which Precipio will become a wholly-owned subsidiary of the
Company (the Merger), on the terms and subject to the conditions
set forth in the Merger Agreement. Following the Merger,
Transgenomic will change its name to Precipio, Inc (New
Precipio).
As previously reported on June 20, 2017, the Company provided
Nasdaq with certain requested financial information as part of
Nasdaqs review of the Companys previously filed initial listing
application with respect to the New Precipio common stock. On
June 27, 2017, the Company provided Nasdaq with an update to the
June 20, 2017 information. The Company did not consummate the
contemplated preferred stock private placement for $2.5 million
as described in the information furnished to Nasdaq on June 20,
2017 and reported in the Companys Form 8-K dated June 20, 2017,
and is now contemplating the financing described in Note (g) to
the pro forma adjustments included below. The information
contained in this Item7.01 is being furnished under Item7.01 of
Form 8-K and shall not be deemed filed for purposes of Section18
of the Securities Exchange Act of 1934, as amended (the Exchange
Act), or otherwise subject to the liabilities of that section,
nor shall such information be incorporated by reference into any
filing under the Securities Act of 1933, as amended, or the
Exchange Act, except as shall be expressly set forth by specific
reference in such a filing.
The following unaudited pro forma condensed combined financial
statement information was provided to Nasdaq on June 28, 2017 as
explained above.
TRANSGENOMIC, INC. UNAUDITED PRO FORMA
CONDENSED COMBINED BALANCE SHEET
As of March 31, 2017
(in thousands)
| Historical | ||||||||||||||||||
| Transgenomic, Inc. | Precipio | Pro Forma Adjustments | Notes | New Precipio Combined | ||||||||||||||
| ASSETS | ||||||||||||||||||
| Current Assets: | ||||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | 1,200 | g | $ | 1,292 | |||||||||||
| Accounts receivable, net | ||||||||||||||||||
| Inventories, net | ||||||||||||||||||
| Other current assets | ||||||||||||||||||
| Assets held for sale | ||||||||||||||||||
| Total current assets | 1,200 | 2,294 | ||||||||||||||||
| Property and Equipment, net | ||||||||||||||||||
| Other Assets: | ||||||||||||||||||
| Goodwill | 6,748 | a | 6,748 | |||||||||||||||
| Acquired intangibles | 28,950 | b | 28,950 | |||||||||||||||
| Intangibles, net | (531 | ) | c | |||||||||||||||
| Other assets | ||||||||||||||||||
| $ | 1,229 | $ | $ | 36,367 | $ | 38,389 | ||||||||||||
| LIABILITIES AND STOCKHOLDERS DEFICIT | ||||||||||||||||||
| Current Liabilities: | ||||||||||||||||||
| Current maturities of long-term debt | $ | 7,368 | $ | 1,153 | $ | (7,938 | ) | f, h | $ | |||||||||
| Accounts payable | 8,509 | 1,253 | 9,762 | |||||||||||||||
| Accrued Compensation | ||||||||||||||||||
| Accrued Expenses | 3,398 | (1,450 | ) | f, h | 2,706 | |||||||||||||
| Deferred revenue | ||||||||||||||||||
| Other liabilities | 1,529 | 1,576 | ||||||||||||||||
| Liabilities held for sale | ||||||||||||||||||
| Total current liabilities | 21,129 | 3,471 | (9,388 | ) | 15,212 | |||||||||||||
| Long Term Liabilities: | ||||||||||||||||||
| Deferred tax liability | 10,131 | a | 10,131 | |||||||||||||||
| Long-term debt | 4,389 | (3,045 | ) | g, h | 1,344 | |||||||||||||
| Common stock warrant liability | ||||||||||||||||||
| Other long-term liabilities | ||||||||||||||||||
| Total liabilities | 21,872 | 8,011 | (2,302 | ) | 27,581 | |||||||||||||
| Stockholders (deficit) equity: | ||||||||||||||||||
| Convertible preferred stock | 2,895 | (2,897 | ) | e, i | ||||||||||||||
| f | ||||||||||||||||||
| g | ||||||||||||||||||
| h | ||||||||||||||||||
| Common stock | 1,555 | d | ||||||||||||||||
| e | ||||||||||||||||||
| f | 1,981 | |||||||||||||||||
| Additional paid-in capital | 206,342 | (186,423 | ) | a-i | 19,919 | |||||||||||||
| Warrants | 1,434 | (1,434 | ) | d | ||||||||||||||
| Restricted units | (7 | ) | d | |||||||||||||||
| Accumulated deficit | (227,255 | ) | (11,606 | ) | 227,255 | a | (11,606 | ) | ||||||||||
| Total stockholders (deficit) equity | (20,643 | ) | (7,218 | ) | 38,669 | 10,808 | ||||||||||||
| $ | 1,229 | $ | $ | 36,367 | $ | 38,389 | ||||||||||||
TRANSGENOMIC, INC. UNAUDITED PRO FORMA
CONDENSED COMBINED STATEMENT OF OPERATIONS For
the Three Months Ended March 31, 2017
(dollars in thousands)
| Historical | ||||||||||||||||||
| Transgenomic | Precipio | Pro Forma Adjustments | Notes | New Precipio Combined | ||||||||||||||
| Net sales | $ | $ | $ | $ | ||||||||||||||
| Cost of goods sold | (41 | ) | a | |||||||||||||||
| Gross profit | ||||||||||||||||||
| Operating Expenses | 1,754 | a,b | 3,000 | |||||||||||||||
| Operating loss from continuing operations | (1,555 | ) | (596 | ) | (580 | ) | (2,731 | ) | ||||||||||
| Other Income (Expense): | ||||||||||||||||||
| Interest expense, net | (247 | ) | (162 | ) | c | (173 | ) | |||||||||||
| Warrant revaluation | (33 | ) | (33 | ) | ||||||||||||||
| Other, net | ||||||||||||||||||
| Total other income (expense) | (280 | ) | (162 | ) | (206 | ) | ||||||||||||
| Loss from continuing operations before income taxes | (1,835 | ) | (758 | ) | (344 | ) | (2,937 | ) | ||||||||||
| Income tax | ||||||||||||||||||
| Net loss from continuing operations | (1,835 | ) | (758 | ) | (344 | ) | (2,937 | ) | ||||||||||
| Preferred stock/unit dividends | (260 | ) | d | (260 | ) | |||||||||||||
| Deemed dividends on exchange of preferred units | ||||||||||||||||||
|
NET LOSS FROM CONTINUING OPERATIONS AVAILABLE TO COMMON STOCKHOLDERS |
$ | (1,835 | ) | $ | (758 | ) | $ | (604 | ) | $ | (3,197 | ) | ||||||
|
Basic and diluted loss per common share from continuing operations |
$ | (0.07 | ) | $ | (0.02 | ) | ||||||||||||
|
Basic and diluted weighted-average shares of common stock outstanding |
26,779,835 | 171,283,352 | 198,063,187 | |||||||||||||||
Pro Forma Adjustments
The pro forma adjustments included in the unaudited pro forma
condensed combined financial statements are as follows:
Pro Forma Adjustments Balance Sheet
| a) |
Reflects goodwill and deferred tax liability resulting from the acquisition method of accounting based on preliminary estimates of the fair value of the assets and liabilities of Transgenomic. This also includes the elimination of Transgenomics historical stockholders deficit accounts because Transgenomic is not considered to be the accounting acquirer. |
| b) |
Reflects acquired intangibles resulting from the acquisition method of accounting based on preliminary estimates of the fair value of the assets and liabilities of Transgenomic. |
| c) | Elimination of historical intangibles of Transgenomic. |
| d) | Issuance of New Precipio common stock. |
| e) |
Transgenomic pre-merger preferred stock converted to common stock. |
| f) |
Transgenomic pre-merger debt and accrued interest converted to common stock and $3 million of New Precipio preferred stock with an 8% annual dividend. |
| g) |
Issuance of New Precipio preferred stock of $0.4 million and $0.8 million in a convertible note to investors in a private placement. The pro forma reflects an investment of $1.2 million to be received at the time of the merger. The total expected to be received from the investors will be between $1.2 million and $7.0 million. The balance sheet impact of any amount received above the initial $1.2 million would be an increase to both cash and stockholders equity. |
| h) |
Precipio pre-merger debt and accrued interest converted to common stock and $3 million of New Precipio preferred stock with an 8% annual dividend. |
| i) |
Precipio pre-merger preferred shares converted to New Precipio common stock. |
Pro Forma Adjustments Statements of Operations
| a) |
Eliminate amortization expense related to Transgenomic historical intangibles. |
| b) |
Record amortization expense related to newly acquired intangibles assuming useful lives between 2-20 years. |
| c) |
Eliminate interest expense for Transgenomic interest bearing debt that is converted to New Precipio common stock and New Precipio preferred stock. |
| d) |
Elimination of historical dividends and recording dividends on New Precipio preferred stock with 8% annual dividend. |
About Transgenomic, Inc. (NASDAQ:TBIO)
Transgenomic, Inc. is a biotechnology company. The Company is engaged in advancing personalized medicine for the detection and treatment of cancer, and inherited diseases through its molecular technologies and clinical and research services. The Company operates through its Laboratory Services segment. The Company is engaged in the provision of its Multiplexed ICE COLD-PCR (MX-ICP) product to the clinical market, enabling the use of blood and other bodily fluids for diagnosis, monitoring and treatment of cancer. MX-ICP amplifies the ability to detect genetic mutations by approximately 100 to 400 fold. MX-ICP is validated internally on sequencing platforms, including Sanger, Next Gen Sequencing and Digital polymerase chain reaction (PCR). Its laboratory in Omaha, Nebraska is focused on providing genetic analytical services related to oncology and pharmacogenomics research services supporting Phase II and Phase III clinical trials conducted by pharmaceutical and biotechnology companies.
