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.
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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 | |||||||||||
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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 | |||||||||||||||
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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. |
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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, 2017 | By: | /s/ Paul Kinnon | |
| Paul Kinnon | |||
| President and Chief Executive Officer | |||
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