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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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) January 21, 1999
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RADIANCE MEDICAL SYSTEMS, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 0-28440 68-0328265
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
13700 Alton Parkway, Suite 160, Irvine, California 92618
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (949) 457-9546
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(Not Applicable)
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On January 21, 1999, Radiance Medical Systems, Inc., Delaware
corporation, formerly known as CardioVascular Dynamics, Inc. (the "Company" or
"Registrant") sold substantially all of the properties and assets used
exclusively in the Company's Vascular Access division to Escalon Vascular
Access, Inc., a Delaware corporation and wholly owned subsidiary of Escalon
Medical Corp., a California corporation (collectively, "Escalon"). The Company's
Vascular Access division manufactured and distributed a vascular access system
for arterial and venous localization and catherization. Under the terms of the
Assets Sale and Purchase Agreement dated January 21, 1999 between the Company,
Escalon Vascular Access, Inc. and Escalon Medical Corp., the Company received an
initial payment of One Million One Hundred Four Thousand Four Hundred Forty Two
Dollars ($1,104,442). This payment represented One Million Dollar ($1,000,000)
consideration payment increased by the excess of the actual inventory
transferred of Seven Hundred Four Thousand Four Hundred Forty-Two Dollars
($704,442) over the contractual estimate of Six Hundred Thousand Dollars
($600,000). The Company also will receive an additional One Million Dollars
($1,000,000) upon the completion of the transfer of the assets and technology,
and royalty payments upon the sale of products for a five-year period. In
addition, the Company will continue to manufacture certain products for up to
180 days.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Not applicable
(b) Pro Forma Financial Information.
UNAUDITED PRO FORMA CONDENSED COMBINED SELECTED FINANCIAL INFORMATION
The unaudited pro forma condensed combined financial information is
provided for informational purposes only and does not purport to be indicative
of the future results or financial position of the Registrant (formerly named
Cardiovascular Dynamics, Inc.)1 or what the results of operation or financial
position would have been had the sale of the Vascular Access division been
effected on the date indicated.
The unaudited pro forma condensed combined financial information of
Registrant, RMS Acquisition and Clinitec GmbH ("Clinitec") set forth below gives
effect to the sale of the Vascular Access division, the RMS Acquisition and the
Clinitec acquisition, under the purchase accounting method, as if the
transactions had occurred as of January 1, 1997 for the sale of the Vascular
Access division, as of August 15, 1997 and January 1, 1998 for RMS Acquisition
and as of January 1, 1997 for Clinitec for the pro forma condensed combined
statements of operations for the periods ended December 31, 1997 and September
30, 1998, respectively, and as of September 30, 1998, for the pro forma
condensed combined balance sheet.
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1 On January 14, 1999, CardioVascular Dynamics, Inc., a Delaware corporation
(now named Radiance Medical Systems, Inc.)(the "Registrant") acquired Radiance
Medical Systems, Inc., a Delaware corporation ("RMS") pursuant to an Agreement
and Plan of Merger, dated as of November 3, 1998 by and among the Registrant,
CVD/RMS Acquisition Corp., a wholly owned subsidiary of Registrant (the "RMS
Acquisition"), and RMS. The acquisition was effected by the merger (the
"Merger") of RMS with and into the RMS Acquisition, with RMS Acquisition
surviving the Merger. In connection with the Merger, Registrant changed its name
to Radiance Medical Systems, Inc.
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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
RMS
REGISTRANT(A) ACQUISITION CLINITEC PRO FORMA
ACTUAL(B) ACTUAL(C) ACTUAL(D) ADJUSTMENTS(3) PRO FORMA
-------------- ------------ ---------- --------------- -----------
(IN THOUSANDS)
CONSOLIDATED STATEMENT OF OPERATIONS
DATE:
Revenue:
Sales ............................... $ 11,332 $ -- $ 301 $ (2,419)(1) $ 9,214
License fee and other ............... -- -- 242 (2) 242
-------- -------- -------- -------- --------
Total Revenue .......................... 11,332 -- 301 (2,177) 9,456
-------- -------- -------- -------- --------
Costs and expenses:
Cost of sales ........................ 6,418 -- 560 (937)(1) 6,041
Research and development ............. 7,041 132 -- (76)(1)(4) 7,097
Marketing and sales .................. 6,691 -- 442 (506)(1) 6,627
General and administrative ........... 2,179 18 -- (465)(1) 1,732
-------- -------- -------- -------- --------
Total operating costs and expenses . 22,329 150 1,002 (1,984) 21,497
-------- -------- -------- -------- --------
Loss from operations ................... (10,997) (150) (701) (193) (12,041)
Other income ........................... 2,225 19 -- 46 (1)(5) 2,290
-------- -------- -------- -------- --------
Net loss ............................... $ (8,772) $ (131) $ (701) $ (147) $ (9,751)
======== ======== ======== ======== ========
Basic and diluted net loss per share(6) $ (0.96) $ (0.98)
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Shares used in computing basic and
diluted net loss per share(6) ........ 9,118 9,957
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(a) Radiance Medical Systems, Inc. (formerly CardioVascular Dynamics, Inc.).
(b) Although not reflected in this pro forma statement, at the date of the
Merger, $3,842 was expensed for in-process research and development.
(c) Formerly Radiance Medical Systems, Inc. ("Radiance"), a development stage
company, which began operations in August of 1997. On January 14, 1999,
Registrant acquired all of the Common Stock of Radiance not held by
Registrant. In order to present pro forma operating results as if
Radiance's and Registrant's operations were combined for the year ended
December 31, 1997, the operating results from Radiance's inception in
August 1997 until year end are included.
(d) On July 29, 1997, Registrant acquired all of the Common Stock of its
independent distributor in Germany, Clinitec. In order to present pro
forma operating results as if Clinitec and Registrant's operations were
combined at the beginning of the year ended December 31, 1997, the
operating results for the seven months before the acquisition date are
included.
(1) To exclude the operating results of the Vascular Access division from the
consolidated operating results for the period.
(2) To reflect license fee income on net sales of $2,419 at a 10% royalty
rate. This assumes that Escalon would have earned the same net sales level
as Registrant actually did during the period.
(3) Although not reflected in this pro forma statement, the Company expects
to record a gain from the sale of the Vascular Access assets of $1,154.
(4) To reflect amortization of the Radiance developed technology and
identified intangible assets using lives of 3 to 7 years.
(5) To reflect reduction of interest income from cash portion of the Radiance
acquisition consideration of $692 and acquisition costs of $400 and an
increase in interest income from the proceeds from the sale of the
Vascular Access assets at an average rate of 5.5% per annum.
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(6) To reflect an increase in the weighted average shares outstanding as 91%
of the Radiance acquisition consideration was paid using Registrant Common
Stock at $3.33 and $3.43 per share based upon the election of the former
(pre-acquisition) Radiance stockholders to convert their shares at either
the average signing price or average closing price of Registrant Common
Stock:
9,118 Registrant shares used in computing basic and diluted net loss
per share.
839 Shares to former (pre-acquisition) Radiance stockholders,
assuming an August, 1997 acquisition date.
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9,957 Pro forma shares used in computing pro forma basic and diluted
====== net loss per share.
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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
RMS
REGISTRANT(a) ACQUISITION PRO FORMA
ACTUAL(b) ACTUAL(c) ADJUSTMENTS(7) PRO FORMA
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CONSOLIDATED STATEMENT OF OPERATIONS DATE:
Revenue:
Sales ................................. $ 7,031 $ -- $ (2,244)(1) $ 4,787
License fee and other ................. 1,605 -- 224 (2) 1,829
-------- -------- -------- --------
Total revenue ..................... 8,636 -- (2,020) 6,616
Costs and expenses:
Cost of sales ......................... 4,339 -- (1,086)(1) 3,253
Research and development .............. 5,038 1,025 120 (3)(4) 6,183
Marketing and sales ................... 3,801 -- (411)(1) 3,390
General and administrative ............ 1,855 45 (482)(1) 1,418
Minority interest ..................... (68) -- 68 (4) (0)
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Total operating costs and expenses 14,965 1,070 (1,791) 14,244
-------- -------- -------- --------
Loss from operations ..................... (6,329) (1,070) (229) (7,628)
Other income ............................. 1,136 44 (65)(5) 1,245
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Net loss ................................. $ (5,193) $ (1,026) $ (164) $ (6,383)
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Basic and diluted net loss per share(6) .. $ (0.59) $ (0.58)
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Shares used in computing basic and diluted
net loss per share(6) .................... 8,857 11,075
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(a) Radiance Medical Systems, Inc., (formerly CardioVascular Dynamics, Inc.).
(b) Although not reflected in this pro forma statement, at the date of the
Merger, $3,842 was expensed for in-process research and development.
(c) Formerly Radiance Medical Systems, Inc., ("Radiance") a development stage
company, which began operations in August of 1997. On January 14, 1999,
Registrant acquired all of the Common Stock of Radiance not held by the
Registrant. In order to present pro forma operating results as if
Radiance's and Registrant's operations were combined for the nine months
ended September 30, 1998, the operating results of Radiance for the same
period are included.
(1) To exclude the operating results of the Vascular Access division from the
consolidated operating results for the period.
(2) To reflect license fee income on net sales of $2,244 at a 10% royalty
rate. This assumes that Escalon would have earned the same net sales level
as Registrant actually did during the period.
(3) To reflect amortization of the Radiance developed technology and
identified intangible assets using lives of 3 to 7 years.
(4) To reverse entries to record to Registrant's share of RMS Acquisition
operating results at September 10, 1998, which consisted of $136 of
research and development expenses and $68 in minority interests share of
losses.
(5) To reflect reduction of interest income from cash portion of the Radiance
acquisition consideration of $692 and acquisition costs of $400 at an
average rate of 5.5% per annum.
(6) To reflect an increase in the weighted average shares outstanding as 91%
of the Radiance acquisition consideration was paid using Registrant Common
Stock at $3.33 and $3.43 per share based upon the election of the former
(pre-acquisition) Radiance stockholders to convert their shares at either
the average signing price or average closing price, respectively, of
Registrant Common Stock:
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8,857 Registrant shares used in computing basic and diluted net
loss per share.
2,218 Shares to former (pre-acquisition) Radiance shareholders,
assuming an August, 1997 acquisition date.
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11,075 Pro forma shares used in computing pro forma basic and
====== diluted net loss per share.
(7) Although not reflected in this pro forma statement, the Company expects to
record a gain from the sale of the Vascular Access assets of $1,154.
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UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF SEPTEMBER 30, 1998
REGISTRANT(a) PRO FORMA
ACTUAL(b) ADJUSTMENTS(1) PRO FORMA
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(IN THOUSANDS)
ASSETS:
Cash and cash equivalents .................. $ 3,627 $ -- $ 3,627
Marketable securities available-for-sale ... 23,301 (192)(1)(2) 23,109
Other current assets ....................... 5,161 (600)(1) 4,561
-------- -------- --------
Total current assets .......................... 32,089 (792) 31,297
Property and equipment, net ................... 1,537 (146)(1) 1,391
Goodwill and other acquired intangibles, net .. 2,288 3,771 (2) 6,059
Other assets .................................. 378 -- 378
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Total assets ............................. $ 36,292 $ 2,833 $ 39,125
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LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities ........................... $ 3,532 $ -- $ 3,532
Minority interest ............................. 910 (910)(2) --
Stockholders' equity: ......................... -- -- --
Common stock ............................... 10 2 (2) 12
Additional paid-in capital ................. 60,679 7,429 (2) 68,108
Accumulated deficit ........................ (25,014) (3,688)(1)(2) (28,702)
Other stockholders' equity ................. (3,825) -- (3,825)
-------- -------- --------
Total stockholder's equity ............... 31,850 3,743 35,593
-------- -------- --------
Total liabilities and stockholder's equity $ 36,292 $ 2,833 $ 39,125
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(a) Radiance Medical Systems, Inc., (formerly CardioVascular Dynamics, Inc.).
(b) The accounts of RMS Acquisition are included in the consolidated balance
sheet of Registrant at September 30, 1998.
(1) To reflect sale of the Vascular Access division to Escalon, including a
$1,000 payment due and earned on the signing of the sale agreement for the
rights to the related technology, current inventory of $600 and net
property and equipment of $146 with estimated expenses of $100.
(2) To reflect the total purchase price of $8,523 which was paid 9% in cash,
or $692, and 91% by the issuance of 2,218,000 shares of Registrant Common
Stock valued at $7,431. Included in these amounts are shares of Registrant
Common Stock issuable for outstanding options for former (pre-acquisition)
Radiance Common Stock, which under the Merger Agreement fully vested upon
the closing of the transaction and were converted into options for
Registrant Common Stock. Lastly, Registrant expects to incur approximately
$400 of direct transaction costs that are also treated as part of the
purchase price.
The estimated total purchase price has been allocated as follows:
Book value of minority interest in the former (pre-acquisition) Radiance ................. $ 910
Estimated fair value of developed technology and related intangible assets ............... 3,072
Estimated fair value of acquired in-process research and development ..................... 3,842
Covenant not to compete .................................................................. 1,191
Reclassify amounts assigned to goodwill for previous purchases of former (pre-acquisition)
Radiance Preferred Stock ................................................................. (492)
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Estimated total purchase price ........................................................... $ 8,523
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(c) Exhibits.
EXHIBIT NUMBER DESCRIPTION
2 Assets Sale and Purchase Agreement dated
January 21, 1999, by and between
Radiance Medical Systems, Inc., Escalon
Vascular Access, Inc. and Escalon
Medical Corp. Schedules and Exhibits
omitted. The Registrant shall furnish
supplementally to the Securities and
Exchange Commission a copy of any
omitted Schedule or Exhibit upon
request.
20 Press Release dated January 22, 1999.
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.
RADIANCE MEDICAL SYSTEMS, INC.
Date: January 28, 1999 By: /s/ Stephen R. Kroll
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Stephen R. Kroll
Chief Financial Officer
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EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
2 Assets Sale and Purchase Agreement dated
January 21, 1999, by and between
Radiance Medical Systems, Inc., Escalon
Vascular Access, Inc. and Escalon
Medical Corp. Schedules and Exhibits
omitted. The Registrant shall furnish
supplementally to the Securities and
Exchange Commission a copy of any
omitted Schedule or Exhibit upon
request.
20 Press Release dated January 22, 1999.