-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AEcNHXxTlLzWoSYcAGRhXY+S3g6/64HgDxENcOGbiZuOl+ZpsXfl4nW0VhRD72Rv B+IEsY2c2W4OPJEtRXTWAw== 0000950135-99-002865.txt : 19990521 0000950135-99-002865.hdr.sgml : 19990521 ACCESSION NUMBER: 0000950135-99-002865 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990520 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAPRIUS INC CENTRAL INDEX KEY: 0000722567 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 222457487 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-11914 FILM NUMBER: 99630947 BUSINESS ADDRESS: STREET 1: 46 JONSPIN RD CITY: WILMINGTON STATE: MA ZIP: 01887 BUSINESS PHONE: 9786578876 MAIL ADDRESS: STREET 1: 46 JONSPIN ROAD STREET 2: 46 JONSPIN ROAD CITY: WILMINGTON STATE: MA ZIP: 01887 FORMER COMPANY: FORMER CONFORMED NAME: ADVANCED NMR SYSTEMS INC DATE OF NAME CHANGE: 19920703 10-Q 1 CAPRIUS INC. 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 ------------------------------ FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ------------ ------------ Commission File Number: 0-11914 CAPRIUS, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 22-2457487 - ------------------------------- --------------------------------- (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 46 JONSPIN ROAD, WILMINGTON, MA 01887 ---------------------------------------- (Address of principal executive offices) (978) 657-8876 ---------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No -- -- As of May 17, 1999, there were 7,346,540 shares of Common Stock, $.01 par value, outstanding. 2 CAPRIUS, INC. AND SUBSIDIARIES INDEX PAGE NO. PART I - FINANCIAL INFORMATION ITEM 1. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS Consolidated Balance Sheets - March 31, 1999 and September 30, 1998 3 Consolidated Statements of Operations - for the three and six months ended March 31, 1999 and 1998 4 Consolidated Statements of Stockholders' Equity 5 Consolidated Statements of Cash Flows - for the six months ended March 31, 1999 and 1998 6 Notes to Consolidated Financial Statements 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 9 PART II - OTHER INFORMATION 11 ITEM 1. LEGAL PROCEEDINGS 11 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 11 SIGNATURES 12 EXHIBIT INDEX -2- 3 CAPRIUS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited)
March 31, September 30, 1999 1998 --------- ------------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 593,650 $ 1,791,476 Accounts receivable, net of reserve for bad debts of $80,259 at March 31, 1999 and $663,314 at September 30, 1998 361,925 2,899,282 Note receivable 530,000 -- Inventory 721,394 720,858 Other current assets 535,672 584,875 ------------ ------------ Total current assets 2,742,641 5,996,491 ------------ ------------ PROPERTY AND EQUIPMENT: Medical equipment 2,026,771 2,145,674 Office furniture and equipment 257,771 251,199 Other equipment 1,516,874 1,518,874 Leasehold improvements 855,840 1,153,576 ------------ ------------ 4,657,256 5,069,323 Less: accumulated depreciation and amortization 1,942,949 1,824,946 ------------ ------------ Total property and equipment, at cost 2,714,307 3,244,377 ------------ ------------ OTHER ASSETS: Goodwill, net of accumulated amortization of $27,007 at March 31, 1999 and $2,357,703 at September 30, 1998 693,175 1,053,797 Other intangibles, net of accumulated amortization of $528,456 at March 31, 1999 and $371,698 at September 30, 1998 1,083,920 1,240,678 Other 31,534 32,037 ------------ ------------ Total other assets 1,808,629 2,326,512 ------------ ------------ $ 7,265,577 $ 11,567,380 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 552,156 $ 810,990 Accrued expenses 335,401 964,922 Accrued compensation 297,807 388,748 Other current liabilities -- 53,664 Current portion of long-term debt and capital lease obligations 647,687 915,608 ------------ ------------ Total current liabilities 1,833,051 3,133,932 ------------ ------------ LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, NET OF CURRENT PORTION 1,039,704 1,207,624 STOCKHOLDERS' EQUITY: Preferred stock, $.01 par value Authorized - 1,000,000 shares Issued - Series A, none; Series B, convertible, 27,000 shares at March 31, 1999 and September 30, 1998 Liquidation preference $2,700,000 2,700,000 2,700,000 Common stock, $.01 par value Authorized - 50,000,000 shares Issued and outstanding - 7,369,040 at March 31, 1999 and September 30, 1998 73,690 73,690 Additional paid-in capital 63,561,672 63,561,672 Accumulated deficit (61,940,290) (59,107,288) Treasury stock (22,500 common shares, at cost) (2,250) (2,250) ------------ ------------ Total stockholders' equity 4,392,822 7,225,824 ------------ ------------ $ 7,265,577 $ 11,567,380 ============ ============
The accompanying notes are an integral part of these consolidated financial statements. -3- 4 CAPRIUS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Six Months Ended March 31, March 31, 1999 1998 1999 1998 REVENUES: ------------------------------ ------------------------------- Net patient service revenues $ 928,762 $ 875,253 $ 2,073,291 $ 1,717,363 ----------- ----------- ----------- ------------ Total revenues 928,762 875,253 2,073,291 1,717,363 ----------- ----------- ----------- ------------ OPERATING EXPENSES: Cost of service operations 887,926 660,016 1,858,601 1,483,500 Research and development 71,478 839,105 496,480 1,399,640 Purchased research and development (see note 2) -- (71,081) -- 7,097,566 Selling, general and administrative 1,142,589 1,611,962 2,011,987 2,817,856 Provision for bad debt and collection costs (8,486) 125,180 114,534 160,772 Loss (gain) on sale of imaging business -- (133,889) 12,670 (61,468) Loss on sale of rehabilitation business 1,427,487 -- 1,427,487 -- ----------- ----------- ----------- ------------ Total operating expenses 3,520,994 3,031,293 5,921,759 12,897,866 ----------- ----------- ----------- ------------ Operating income (loss) from continuing operations (2,592,232) (2,156,040) (3,848,468) (11,180,503) Other income 9,000 3,050 9,000 3,050 Interest income 9,684 112,316 25,842 232,443 Interest expense (60,454) (48,360) (119,376) (81,912) ----------- ----------- ----------- ------------ Income (loss) from continuing operations before minority interests, equity in loss of subsidiary and provision for income taxes (2,634,002) (2,089,034) (3,933,002) (11,026,922) Equity in net loss of unconsolidated subsidiary -- -- -- (67,358) ----------- ----------- ----------- ------------ Loss from continuing operations (2,634,002) (2,089,034) (3,933,002) (11,094,280) Income on disposal of discontinued operations -- -- 1,100,000 -- ----------- ----------- ----------- ------------ Net Loss $(2,634,002) $(2,089,034) $(2,833,002) $(11,094,280) =========== =========== =========== ============ Income (loss) per basic and diluted common share: Loss from continuing operations $ (0.36) $ (0.28) $ (0.53) $ (1.66) Income on disposal of discontinued operations -- -- 0.15 -- ----------- ----------- ----------- ------------ Net loss per share $ (0.36) $ (0.28) $ (0.38) $ (1.66) =========== =========== =========== ============ Weighted average number of common shares outstanding 7,369,040 7,340,038 7,369,040 6,682,325 =========== =========== =========== ============
The accompanying notes are an integral part of these consolidated financial statements. -4- 5 CAPRIUS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)
Preferred Stock Common Stock Treasury Stock ------------------- -------------------- ------------------- Additional Total Number Number $0.01 Number $0.01 Paid-in Accumulated Stockholders' of Shares Amount of Shares Par Value of Shares Par Value Capital Deficit Equity --------- ------ --------- --------- --------- --------- ------- ----------- ------------- BALANCE, SEPTEMBER 30, 1997 27,000 $2,700,000 4,374,763 $43,748 22,500 $(2,250) $56,170,271 $(41,588,585) $17,323,184 Issuance of common stock related to AMS merger -- -- 2,956,741 29,567 -- -- 7,362,287 -- 7,391,854 Conversion of note payable -- -- 27,429 274 -- -- 20,725 -- 20,999 Exercise of stock options -- -- 10,107 101 -- -- 8,389 -- 8,490 Net loss -- -- -- -- -- -- -- (17,518,703) (17,518,703) ------ ---------- --------- ------- ------ ------- ----------- ------------ ----------- BALANCE, SEPTEMBER 30, 1998 27,000 2,700,000 7,369,040 73,690 22,500 (2,250) 63,561,672 (59,107,288) 7,225,824 Net loss (2,833,002) (2,833,002) ------ ---------- --------- ------- ------ ------- ----------- ------------ ----------- BALANCE, MARCH 31, 1999 27,000 $2,700,000 7,369,040 $73,690 22,500 $(2,250) $63,561,672 $(61,940,290) $ 4,392,822 ====== ========== ========= ======= ====== ======= =========== ============ ===========
The accompanying notes are an integral part of these consolidated financial statements. -5- 6 CAPRIUS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended March 31, 1999 1998 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net Loss $(2,833,002) $(11,094,280) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Equity in net loss of unconsolidated subsidiary - 67,358 Gain on disposal of discontinued operations (1,100,000) - Gain on sale of imaging business (12,670) (61,468) Loss on sale of rehabilitation business 1,427,487 - Purchased research and development - 7,097,566 Depreciation and amortization 678,401 507,647 Changes in assets and liabilities: Decrease in restricted cash - 1,744,967 Accounts receivable, net 113,272 (161,486) Inventories (536) (375,025) Other current assets 25,903 (132,637) Accounts payable and accrued expenses (275,348) (111,133) ----------- ------------ Net cash used in operating activities (1,976,493) (2,518,491) ----------- ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of imaging business 12,670 61,468 Proceeds from sale of rehabilitation business 266,438 - Proceeds from disposal of discontinued operations 1,100,000 - Cash used in AMS merger - (128,406) Advances to unconsolidated subsidiaries - (479,673) Purchase of equipment, furniture and leasehold improvements (164,600) (492,806) ----------- ------------ Net cash provided by (used in) investing activities 1,214,508 (1,039,417) ----------- ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of long-term debt 297,484 813,347 Repayment of long-term debt and capital lease obligations (733,325) (348,845) ----------- ------------ Net cash provided by (used in) financing activities (435,841) 464,502 ----------- ------------ NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (1,197,826) (3,093,406) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,791,476 9,752,768 ----------- ------------ CASH AND CASH EQUIVALENTS, END OF PERIOD 593,650 6,659,362 =========== ============ SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid for interest during the period $ 12,727 $ 87,288 =========== ============
The accompanying notes are an integral part of these consolidated financial statements. -6- 7 CAPRIUS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 - BASIS OF PRESENTATION The results of operations of Caprius, Inc. ("Caprius" or the "Company") for the interim periods shown in this report are not necessarily indicative of results to be expected for the fiscal year. In the opinion of management, the information contained herein reflects all adjustments necessary to make the results of operations for the interim periods a fair statement of such operations. All such adjustments are of a normal recurring nature. The accompanying financial statements do not contain all of the disclosures required by generally accepted accounting principles and should be read in conjunction with the financial statements and related notes included in the Company's annual report on form 10-K for the fiscal year ended September 30, 1998. NOTE 2 - THE COMPANY Caprius, Inc. was founded in 1983 and through August 1996, operated under two segments (one of which was discontinued during fiscal 1996) consisting of Imaging Systems and Imaging and Rehabilitation Services. Pursuant to the merger (see below) with Advanced Mammography Systems, Inc. ("AMS"), the Company developed, and began marketing and commercializing a dedicated MRI system for breast imaging known as the Aurora system prior to its sale in April 1999 (see below). The Company currently owns and operates a comprehensive imaging center located in Lauderhill, Florida. On April 27, 1999, pursuant to an Asset Purchase Agreement (the "Agreement") dated the same by and between Caprius, Inc. ("Caprius"), Caprius Systems, Inc., a wholly owned subsidiary of Caprius ("Systems" and, together with Caprius, the "Sellers") and Pacific Republic Capital Corp. ("Pacific"), the Sellers consummated the sale of their Aurora breast scanner technology related assets to Pacific for $854,490.68 in cash and the assumption by Pacific of certain obligations associated with the transferred assets. The assets and obligations transferred included all the shares of Caprius' wholly owned subsidiary, Caprius Imaging Corp., various patents relating to the Aurora technology and assets of Systems, including hospital equipment contracts and equipment leases. The equipment debt of which Caprius is now relieved exceeds $1.1 million. Caprius intends to aggressively pursue ways that can maximize shareholder value. The Company currently has dramatically reduced its overhead, provided for the extinguishment of its debt, and is left with limited funds and the Strax Institute, a comprehensive breast-imaging center in Lauderhill, Florida. Caprius shall focus its efforts in identifying, as quickly as possible, a candidate who can help utilize the Company's assets as a vehicle for the enhancement of shareholder value. In March 1999, the Company transferred its interest in its rehabilitation center to a limited liability company in exchange for $900,000, which is to be paid in installments with $850,000 being due on or before July 1, 1999. In addition, the acquiring group shall assume certain liabilities totaling approximately $400,000 and will be entitled to 10% of any financial recovery obtained for a pending lawsuit by the Company against the former owner of the center. The transfer price of $900,000 will be used in part to pay a balance of approximately $360,000 to the former owner of the center, which is the remaining amount due from the company's acquisition of its interest in the center. The reductions in the line items in the accompanying balance sheet at March 31, 1999 compared to September 30, 1998, primarily relate to this transfer of interest. In July 1998, the Company acquired its first comprehensive breast imaging center, the Strax Institute, located in Lauderhill, Florida. The Strax Institute is a multi-modality breast care center that treats approximately 15,000 patients per year offering x-ray mammography, ultrasound, stereotactic biopsy and bone densitometry. Effective November 10, 1997, the Company completed a merger with AMS, whereby AMS merged into AMS Merger Corp., a wholly owned subsidiary of Caprius, and became a wholly owned subsidiary of Caprius (the "Merger"). AMS was originally formed on July 2, 1992 as a wholly owned subsidiary of Caprius to develop a dedicated breast MRI system. -7- 8 NOTE 3 - PREFERRED STOCK - SERIES B On August 18, 1997, the Company entered into various agreements with General Electric Company ("GE") including an agreement whereby GE purchased 27,000 shares of newly issued Series B Convertible Redeemable Preferred Stock (the "Series B Preferred Stock") for $2,700,000. The Series B Preferred Stock consists of 27,000 shares, ranks senior to any other shares of preferred stock which may be created and the Common Stock. It has a liquidation value of $100.00 per share, plus accrued and unpaid dividends, is non-voting except if the Company proposes an amendment to its Certificate of Incorporation which would adversely affect the rights of the holders of the Series B Preferred Stock, and is initially convertible into 1,597,930 shares of Common Stock, subject to customary anti-dilution provisions, commencing on August 18, 1998, or earlier upon a change of control as defined. No fixed dividends are payable on the Series B Preferred Stock, except that if a dividend is paid on the Common Stock, dividends are paid on the shares of Series B Preferred Stock as if they were converted into shares of Common Stock. NOTE 4 - PATENT INFRINGEMENT SETTLEMENT In December 1998, the Company received $1,100,000 from a major MRI manufacturer to resolve outstanding patent issues unrelated to the patents protecting its Aurora technology. NOTE 5 - PROFORMA INFORMATION The following unaudited pro forma financial information sets forth the results of the company as if the sale of the MVA rehabilitation center had occurred prior to October 1, 1998. The pro forma financial information does not purport to be indicative of what would have occurred had the acquisition been made as of October 1, 1998 or results that may occur in the future. Six Months Ended March 31, 1999 ---------------------- (000's omitted, except per share amount) Net revenues $ 1,022 Operating Expenses $ 2,893 Operating loss from continuing operations $ (1,871) Loss from continuing operations $ (610) Loss per common share $ (0.08) (This space intentionally left blank.) -8- 9 ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998 The results of operations for the three months ended March 31, 1999 and 1998 are not necessarily indicative of the results for future periods. The following discussion should be read in conjunction with the attached notes thereto, and with the audited financial statements and notes thereto for the fiscal year ended September 30, 1998. Due to the Merger of Advanced Mammographys Systems and Advanced NMR Systems in November 1997 and the sale of the Rehabilitation business in March 1999, most of the categories included in the statements of operations will not be comparable to prior year periods. Net patient service revenue totaled $928,762 for the three months ended March 31, 1999 versus $875,253 for the three months ended March 31, 1998. Cost of service operations totaled $887,926 for the three months ended March 31, 1999 versus $660,016 for the three months ended March 31, 1998. These increases were largely the result of the additional net patient revenue and operating expenses for the Faulkner and Strax Centers. Purchased research and development relates to the portion of the AMS purchase price allocated to research and development projects in progress. (See Note 2) Selling, general and administrative expenses totaled $1,142,589 for the three months ended March 31, 1999 versus $1,611,962 for the three months ended March 31, 1998. This decrease reflects the Company's efforts to streamline costs. SIX MONTHS ENDED MARCH 31, 1999 COMPARED TO SIX MONTHS ENDED MARCH 31, 1998 The results of operations for the three months ended March 31, 1999 and 1998 are not necessarily indicative of the results for future periods. The following discussion should be read in conjunction with the attached notes thereto, and with the audited financial statements and notes thereto for the fiscal year ended September 30, 1998. Net patient service revenue totaled $2,073,291 for the six months ended March 31, 1999 versus $1,717,363 for the six months ended March 31, 1998. Cost of service operations totaled $1,858,601 for the six months ended March 31, 1999 versus $1,483,500 for the six months ended March 31, 1998. These increases were largely the result of the additional net patient revenue and operating expenses for the Faulkner and Strax Centers. Purchased research and development relates to the portion of the AMS purchase price allocated to R&D projects in progress. Selling, general and administrative expenses totaled $2,011,987 for the six months ended March 31, 1999 versus $2,817,856 for the six months ended March 31, 1998. This decrease reflects the Company's efforts to streamline costs. Equity in net loss of unconsolidated subsidiary reflects the Company's share of losses in AMS prior to the AMS Merger. LIQUIDITY AND CAPITAL RESOURCES The Company had available cash and cash equivalents of $593,650 at March 31, 1999. The Company intends to pursue efforts to identify a Strategic Partner to utilize the remaining assets of the Company and maximize shareholder value. If no Strategic Partner is identified, the Company's viability could be threatened. The significant cash flows used for investing activities for the three months ended March 31, 1999 consists primarily of $164,600 for medical equipment additions. Cash flows from financing activities include approximately $297,500 of proceeds from financing of medical equipment, offset by principal payments on equipment debt. Cash used for operations amounted to approximately $1,976,500. -9- 10 Since February 1997, the Company has funded its operations principally through the cash obtained from the MDI merger. INFLATION To date, inflation has not had a material effect on the Company's business. The Company believes that the effects of future inflation may be minimized by controlling costs and increasing efficiency through an increase in the volume of MRI examinations performed. The Company is including the following cautionary statement in this Form 10-Q to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for any forward-looking statements made by, or on behalf of, the Company. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements which are other than statements of historical facts. Certain statements contained herein are forward-looking statements and accordingly involve risks and uncertainties which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. The Company's expectations, beliefs and projections are expressed in good faith and are believed by the Company to have a reasonable basis, including without limitations, management's examination of historical operating trends, data contained in the Company's records and other data available from third parties, but there can be no assurance that management's expectation, beliefs or projections will result or be achieved or accomplished. In addition to other factors and matters discussed elsewhere herein, the following are important factors that, in the view of the Company, could cause actual results to differ materially from those discussed in the forward-looking statements: technological advances by the Company's competitors, changes in health care reform, including reimbursement programs, capital needs to fund any delays or extensions of research programs, delays in product development, lack of market acceptance of technology and the availability of capital on terms satisfactory to the Company. The Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof. [This space intentionally left blank] -10- 11 PART II: OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS On January 7, 1998, the Company and Jack Nelson, the Company's Chairman and Chief Executive Officer were served with a complaint in connection with a purported class action brought against them by Dorothy L. Lumsden in the United States District Court of the District of Massachusetts. The complaint contains claimed for alleged violations of Sections 10(b) and 20(a) under the Securities Exchange Act and for common law. Ms. Lumsden purported to bring her action "on behalf of herself and all other persons who purchased or otherwise acquired the common stock of the Company during the period August 10, 1994 through and including December 12, 1997". On February 2, 1998, the Company and Mr. Nelson were served with a second class action complaint naming them as defendants in connection with another action brought in the United States District Court for the District of Massachusetts. This action was brought by Robert Curry and the complaint alleged the same purported class and contained similar allegations and claims as the class action complaint discussed above. On April 24, 1998, the District Court consolidated the two class actions claims into one for pre-trial purposes. On January 7, 1999, the Company announced that it has reached a preliminary settlement in the shareholder class action in Federal Court in Boston. Under the terms of the settlement, Caprius made a cash payment of $150,000 and will issue 325,000 shares of common stock to Plaintiffs. Caprius' insurance carrier contributed $100,000 of the cash payment. In addition, the settlement also stipulated that in the event Caprius sold all or part of its business within 12 months an additional payment of $75,000 and issuance of 100,000 additional shares would be made by Caprius to plaintiffs. Consequently, on April 27, 1999, the additional payment was made and the additional shares will be issued. On October 19, 1998, the Company filed a complaint in the Middlesex Superior Court against Eric T. Shebar, M.D. ("Shebar"), the former Chief Operating Officer and Medical Director for the Company's motor vehicle accident rehabilitation ("MVA") business, and MVA Center for Rehabilitation, Inc. ("MVA, Inc.") whereby the Company alleges breach of contract and certain misrepresentations and seeks damages in an amount to be determined at trial. The Company filed a preliminary injunction to reach and apply a secured promissory note to MVA, Inc. against damages sought from Shebar and to enjoin against any remedies under default of the Note. The final Note payment of $347,000 was paid as part of the sale of the MVA. The ruling on the injunction is pending. In December 1998, the Company received $1,100,000 from a major MRI manufacturer to resolve outstanding patent issues unrelated to the patents protecting its Aurora technology. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 27 Financial Data Schedule (b) Reports of Form 8-K Date of Report -------------- 3/11/99 Interest Transfer Agreement by and among Middlesex MRI Center Inc. ("Middlesex") and MDI Rehab Inc. and Medical Diagnostics and Rehabilitation, LLC ("MDR") the sole general partners of MVA Rehabilitation Associates ("MVA") for the transfer of Middlesex and MDR's partnership interests in MVA. 4/27/99 Asset Purchase Agreement between Caprius Inc., Caprius Systems Inc., and Pacific Republic Capital Corp. for the sale of Caprius' Aurora breast scanner technology related assets. 4/27/99 Press Release, dated April 28, 1999 issued by Caprius Inc. announcing the sale of its Aurora breast scanner technology related assets to Pacific Republic Capital Corp. -11- 12 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 thereunto duly authorized. CAPRIUS, INC. (Registrant) Date: May 20, 1999 /s/ Jack Nelson ----------------------- Jack Nelson Chief Executive Officer Date: May 20, 1999 /s/ Steven J. James ----------------------- Steven J. James Chief Financial Officer -12- EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CAPRIUS, INC. FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS SEP-30-1998 MAR-31-1999 594 0 442 (80) 721 536 4,657 (1,943) 7,266 1,833 0 0 2,700 74 4,393 7,266 2,073 2,073 0 0 5,922 (3,848) 119 (2,833) 0 (2,833) 0 0 0 (2,833) (0.53) (0.53)
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