Transgenomic, Inc. (NASDAQ:TBIO) Files An 8-K Regulation FD Disclosure

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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).

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. 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 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 $ $ $ 2,500 g $ 2,592
Accounts receivable, net
Inventories, net
Other current assets
Assets held for sale
Total current assets 2,500 3,594
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 $ $ 37,667 $ 39,689
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 (3,845 ) h
Common stock warrant liability
Other long-term liabilities
Total liabilities 21,872 8,011 (3,102 ) 26,781
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 (184,492 ) a-i 21,850
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 ) 40,769 12,908
$ 1,229 $ $ 37,667 $ 39,689

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 to investors in a
private placement. The pro form reflects a minimum investment
of $2.5 million to be received at the time of the merger. The
total expected to be received from the investors will be
between $2.5 million and $7.0 million. If the full $7.0
million is received, the balance sheet impact would be an
increase of $4.5 million 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.

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