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PRPO Precipio

Filed: 27 Jun 17, 8:00pm

 

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):June 28, 2017 (June 28, 2017)

 

Transgenomic, Inc.

(Exact Name of Registrant as Specified in Charter)

 

Delaware 001-36439 91-1789357

(State or Other Jurisdiction of 

Incorporation)

 

(Commission 

File Number) 

 

(IRS Employer 

Identification No.) 

  

8813 F Street, Omaha, NE 68127

(Address of Principal Executive Offices) (Zip Code)

 

Registrant’s telephone number, including area code:(402) 452-5400

 

N/A

(Former Name, or Former Address, if Changed Since Last Report)

 

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: 

 

 ¨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))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨

 

 

 

 

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”) pursuant 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 Nasdaq’s review of the Company’s 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 Company’s 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 Item 7.01 is being furnished under Item 7.01 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 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 $59  $33  $1,200   g $1,292 
Accounts receivable, net  279   380        659 
Inventories, net  15   106        121 
Other current assets  190   8        198 
Assets held for sale  24           24 
Total current assets  567   527   1,200     2,294 
                   
Property and Equipment, net  127   256        383 
Other Assets:                  
Goodwill        6,748   a  6,748 
Acquired intangibles        28,950   b  28,950 
Intangibles, net ��531      (531)  c   
Other assets  4   10        14 
  $1,229  $793  $36,367    $38,389 
                   
LIABILITIES AND STOCKHOLDERS’ DEFICIT                  
Current Liabilities:                  
Current maturities of long-term debt $7,368  $1,153  $(7,938)  f, h $583 
Accounts payable  8,509   1,253        9,762 
Accrued Compensation  192   168        360 
Accrued Expenses  3,398   758   (1,450)  f, h  2,706 
Deferred revenue  133   92        225 
Other liabilities  1,529   47        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  615          615 
Other long-term liabilities  128   151        279 
Total liabilities  21,872   8,011   (2,302)    27,581 
                   
Stockholders’ (deficit) equity:                  
Convertible preferred stock  2   2,895   (2,897)  e, i    
           241   f    
           32   g    
           241   h  514 
Common stock  268   52   1,555   d    
           2   e    
           104   f  1,981 
Additional paid-in capital  206,342     (186,423)  a-i  19,919 
Warrants     1,434   (1,434)  d   
Restricted units     7   (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  $793  $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 $658  $249  $—      $907 
Cost of goods sold  459   220   (41)  a  638 
Gross profit  199   29   41     269 
Operating Expenses  1,754   625   621   a,b  3,000 
Operating loss from continuing operations  (1,555)  (596)  (580)    (2,731)
Other Income (Expense):                  
Interest expense, net  (247)  (162)  236   c  (173)
Warrant revaluation  (33)  —     —       (33)
Other, net  —     —     —       —   
Total other income (expense)  (280)  (162)  236     (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 Transgenomic’s 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.

 

 

 

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.

 

 Transgenomic, Inc. 
    
    
Date: June 28, 2017By:/s/ Paul Kinnon 
  Paul Kinnon 
  President and Chief Executive Officer