UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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): March 29, 2016
CAS MEDICAL SYSTEMS, INC.
(Exact name of Registrant as specified in its charter)
|
Delaware
(State or other jurisdiction
of incorporation)
|
0-13839
(Commission File Number)
|
06-1123096
(I.R.S. Employer
Identification No.)
|
|
44 East Industrial Road, Branford, Connecticut 06405
(Address of principal executive offices, including zip code)
(203) 488-6056
(Registrant's telephone number, including area code)
|
||
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 2.01 | Completion of Acquisition or Disposition of Assets |
On March 28, 2016, CAS Medical Systems, Inc. (the "Company") entered into an Asset Purchase Agreement (the "Purchase Agreement") with Trinity Medical Devices Inc. (the "Buyer"), pursuant to which the Company simultaneously sold to the Buyer substantially all of the assets of the Company's neonatal intensive care disposables product line (the "Neonatal Business").
Pursuant to the Purchase Agreement, the Company received aggregate consideration of $3,350,000 of which (i) $3,034,682 was paid at closing in cash, and (ii) $100,000 was placed into escrow for a period of twelve (12) months to secure certain indemnification obligations. Further, the closing consideration was reduced by $215,318 for the value of inventory of the Neonatal Business at closing, provided that the Buyer shall purchase all Neonatal Business inventory upon conclusion of a transition services period. The Purchase Agreement also provides for an earn-out payment of up to $400,000 if certain net sales targets are achieved in the twelve (12) months following the closing. 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 transition services during 2016 to facilitate customer and manufacturing transition.
[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.]
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Item 9.01
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Financial Statements and Exhibits.
|
(b)(1) Pro forma financial information.
The following tables represent the pro forma financial results of the Company, as adjusted to reflect the divestiture of the Neonatal Business operations, for the twelve (12) months ended December 31, 2015 and December 31, 2014.
2
CAS MEDICAL SYSTEMS, INC.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
|
Twelve Months Ended December 31, 2015
|
||||||||||||
|
(In thousands, except per share information)
|
||||||||||||
|
Pro Forma
|
||||||||||||
|
Historical
|
Adjustment
|
Pro Forma
|
||||||||||
|
Net sales from continuing operations
|
$
|
21,639
|
$
|
2,152
|
$
|
19,487
|
||||||
|
Cost of sales
|
10,987
|
1,470
|
9,517
|
|||||||||
|
Gross profit
|
10,652
|
682
|
9,970
|
|||||||||
|
Operating expenses:
|
||||||||||||
|
Research and development
|
3,514
|
—
|
3,514
|
|||||||||
|
Selling, general and administrative
|
13,164
|
66
|
13,098
|
|||||||||
|
Total operating expenses
|
16,678
|
66
|
16,612
|
|||||||||
|
Operating loss
|
(6,026
|
)
|
616
|
(6,642
|
)
|
|||||||
|
Interest expense
|
859
|
—
|
859
|
|||||||||
|
Other income
|
(4
|
)
|
—
|
(4
|
)
|
|||||||
|
Loss from continuing operations before income taxes
|
(6,881
|
)
|
616
|
(7,497
|
)
|
|||||||
|
Income tax (benefit)
|
—
|
216
|
(216
|
)
|
||||||||
|
Loss from continuing operations
|
(6,881
|
)
|
400
|
(7,281
|
)
|
|||||||
|
(Loss) income from discontinued operations,
|
||||||||||||
|
net of income taxes
|
(18
|
)
|
400
|
382
|
||||||||
|
Net loss
|
(6,899
|
)
|
—
|
(6,899
|
)
|
|||||||
|
Preferred stock dividend accretion
|
1,383
|
1,383
|
||||||||||
|
Net loss applicable to common stockholders
|
$
|
(8,282
|
)
|
$
|
—
|
$
|
(8,282
|
)
|
||||
|
(Loss) income per common share from continuing
|
||||||||||||
|
operations - basic and diluted
|
$
|
(0.32
|
)
|
$
|
0.02
|
$
|
(0.34
|
)
|
||||
|
(Loss) income per common share from discontinued
|
||||||||||||
|
operations - basic and diluted
|
(0.00
|
)
|
0.02
|
0.02
|
||||||||
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Per share basic and diluted loss applicable to
|
||||||||||||
|
common stockholders
|
$
|
(0.32
|
)
|
$
|
—
|
$
|
(0.32
|
)
|
||||
|
Weighted-average number of common
|
||||||||||||
|
shares outstanding:
|
||||||||||||
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Basic and diluted
|
25,701
|
25,701
|
25,701
|
|||||||||
(1) See accompanying notes to the unaudited pro forma financial information
3
CAS MEDICAL SYSTEMS, INC.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
|
Twelve Months Ended December 31, 2014
|
||||||||||||
|
(In thousands, except per share information)
|
||||||||||||
|
Pro Forma
|
||||||||||||
|
Historical
|
Adjustment
|
Pro Forma
|
||||||||||
|
Net sales from continuing operations
|
$
|
19,215
|
$
|
2,196
|
$
|
17,019
|
||||||
|
Cost of sales
|
10,657
|
1,446
|
9,211
|
|||||||||
|
Gross profit
|
8,558
|
750
|
7,808
|
|||||||||
|
Operating expenses:
|
||||||||||||
|
Research and development
|
3,316
|
—
|
3,316
|
|||||||||
|
Selling, general and administrative
|
11,957
|
51
|
11,906
|
|||||||||
|
Total operating expenses
|
15,273
|
51
|
15,222
|
|||||||||
|
Operating loss
|
(6,715
|
)
|
699
|
(7,414
|
)
|
|||||||
|
Interest expense
|
787
|
—
|
787
|
|||||||||
|
Other income
|
(18
|
)
|
—
|
(18
|
)
|
|||||||
|
Loss from continuing operations before income taxes
|
(7,484
|
)
|
699
|
(8,183
|
)
|
|||||||
|
Income tax (benefit)
|
—
|
245
|
(245
|
)
|
||||||||
|
(Loss) income from continuing operations
|
(7,484
|
)
|
454
|
(7,938
|
)
|
|||||||
|
(Loss) income from discontinued operations,
|
||||||||||||
|
net of income taxes
|
(118
|
)
|
454
|
336
|
||||||||
|
Net loss
|
(7,602
|
)
|
—
|
(7,602
|
)
|
|||||||
|
Preferred stock dividend accretion
|
1,290
|
—
|
1,290
|
|||||||||
|
Net loss applicable to common stockholders
|
$
|
(8,892
|
)
|
$
|
—
|
$
|
(8,892
|
)
|
||||
|
(Loss) income per common share from continuing
|
||||||||||||
|
operations - basic and diluted
|
$
|
(0.46
|
)
|
$
|
0.02
|
$
|
(0.48
|
)
|
||||
|
(Loss) income per common share from discontinued
|
||||||||||||
|
operations - basic and diluted
|
(0.00
|
)
|
0.02
|
0.02
|
||||||||
|
Per share basic and diluted loss applicable to
|
||||||||||||
|
common stockholders
|
$
|
(0.46
|
)
|
$
|
—
|
$
|
(0.46
|
)
|
||||
|
Weighted-average number of common
|
||||||||||||
|
shares outstanding:
|
||||||||||||
|
Basic and diluted
|
19,235
|
19,235
|
19,235
|
|||||||||
(1) See accompanying notes to the unaudited pro forma financial information
4
The following table presents the assets and liabilities of the Company as of December 31, 2015 adjusted to reflect the divestiture of the Neonatal Business operations.
CAS MEDICAL SYSTEMS, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
Unaudited
|
(In thousands)
|
||||||||||||
|
Historical
|
Pro Forma
|
|||||||||||
|
December 31,
|
Pro Forma
|
December 31,
|
||||||||||
|
2015
|
Adjustment
|
2015
|
||||||||||
|
Cash and cash equivalents
|
$
|
7,528
|
$
|
—
|
$
|
7,528
|
||||||
|
Accounts receivable, net
|
3,278
|
(356
|
)
|
2,922
|
||||||||
|
Inventories
|
1,572
|
(144
|
)
|
1,428
|
||||||||
|
Other current assets
|
416
|
—
|
416
|
|||||||||
|
Assets associated with discontinued operations
|
722
|
518
|
1,240
|
|||||||||
|
Total current assets
|
13,516
|
18
|
13,534
|
|||||||||
|
Property and equipment
|
8,840
|
(433
|
)
|
8,407
|
||||||||
|
Less accumulated depreciation
|
(6,600
|
)
|
427
|
(6,173
|
)
|
|||||||
|
2,240
|
(6
|
)
|
2,234
|
|||||||||
|
Intangible and other assets, net
|
1,279
|
(12
|
)
|
1,267
|
||||||||
|
Total assets
|
17,035
|
—
|
17,035
|
|||||||||
|
Accounts payable
|
1,473
|
(13
|
)
|
1,460
|
||||||||
|
Accrued expenses
|
1,834
|
—
|
1,834
|
|||||||||
|
Note payable
|
82
|
—
|
82
|
|||||||||
|
Current portion of long-term debt
|
2,818
|
—
|
2,818
|
|||||||||
|
Liabilities associated with discontinued operations
|
187
|
13
|
200
|
|||||||||
|
Total current liabilities
|
6,394
|
—
|
6,394
|
|||||||||
|
Deferred gain on sale and leaseback of property
|
226
|
—
|
226
|
|||||||||
|
Long-term debt, less current portion
|
4,462
|
—
|
4,462
|
|||||||||
|
Other long-term liabilities
|
300
|
—
|
300
|
|||||||||
|
Total liabilities
|
11,382
|
—
|
11,382
|
|||||||||
|
Series A convertible preferred stock
|
8,802
|
—
|
8,802
|
|||||||||
|
Series A exchangeable preferred stock
|
5,136
|
—
|
5,136
|
|||||||||
|
Common stock
|
109
|
—
|
109
|
|||||||||
|
Treasury stock
|
(101
|
)
|
—
|
(101
|
)
|
|||||||
|
Additional paid-in capital
|
29,636
|
—
|
29,636
|
|||||||||
|
Accumulated deficit
|
(37,929
|
)
|
—
|
(37,929
|
)
|
|||||||
|
Total stockholders' equity
|
5,653
|
—
|
5,653
|
|||||||||
|
Total liabilities and stockholders' equity
|
$
|
17,035
|
$
|
—
|
$
|
17,035
|
||||||
(1) See accompanying notes to the unaudited pro forma financial information
5
|
(1)
|
Notes to Unaudited Pro Forma Financial Information
|
The historical financial statements have been adjusted in the pro forma consolidated financial statements to give effect to pro forma events that are (1) directly attributable to the divestiture of the Neonatal Business, 2) factually supportable and (3) with respect to the pro forma consolidated statement of operations, expected to have a continuing impact on the results following the divestiture.
The pro forma consolidated 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 consolidated financial information does not reflect the realization of any expected cost savings from the divestiture of the Neonatal Business.
The pro forma adjustments are based on our preliminary estimates and assumptions that are subject to change.
6
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CAS MEDICAL SYSTEMS, INC. | |||
|
|
|||
|
Date: March 29, 2016
|
By:
|
/s/ Jeffery A. Baird | |
|
Jeffery A. Baird
|
|||
| Chief Financial Officer | |||
7