-----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, Cv1HXyFyF+OfxBxru8Dw9CanIlYtK9X9QZae8bmUhc7lf0qX2JDzZ73/m9DbJzQW SnlyXHYLPMOl6w9YnU4QUA== 0000950135-96-003109.txt : 19960718 0000950135-96-003109.hdr.sgml : 19960718 ACCESSION NUMBER: 0000950135-96-003109 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960502 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960717 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEMASURE INC CENTRAL INDEX KEY: 0000919745 STANDARD INDUSTRIAL CLASSIFICATION: SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841] IRS NUMBER: 043216862 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-23776 FILM NUMBER: 96596026 BUSINESS ADDRESS: STREET 1: 140 LOCKE DR CITY: MARLBOROUGH STATE: MA ZIP: 01752 BUSINESS PHONE: 5084856850 MAIL ADDRESS: STREET 1: 140 LOCKE DR CITY: MARLOBOROUGH STATE: MA ZIP: 01752 FORMER COMPANY: FORMER CONFORMED NAME: HEMEASURE INC DATE OF NAME CHANGE: 19940303 8-K/A 1 HEMASURE, INC. AMENDMENT NO. 1 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A Amendment No. 1 to Current Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): May 2, 1996 ----------- HemaSure Inc. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware - -------------------------------------------------------------------------------- (State or other jurisdiction of incorporation) 0-19410 04-3216862 - ------------------------------------ --------------------------------- (Commission File Number) (IRS Employer Identification No.) 140 Locke Drive, Marlborough, Massachusetts 01752 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (508) 485-6850 -------------- Not Applicable - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report) 2 Item 2. Acquisition or Disposition of Assets. - ------ ------------------------------------ On May 2, 1996, HemaSure Inc., a Delaware corporation, acquired, through its U.S. and Danish subsidiaries, the plasma product unit of Novo Nordisk A/S, a Denmark corporation. The purchase price for the transaction is comprised of three portions. The first portion of $1,500,000 is payable in 1998 in cash or common stock of HemaSure or a subsidiary of HemaSure, at the Company's option. The second portion of approximately $13,000,000 is payable from time to time upon sale of acquired inventory (valued at approximately $13,000,000) but no later than 1998, provided that up to $4,000,000 of this portion may be forgiven in certain circumstances. The third portion of the purchase price of approximately $8,600,000 is payable in 1998 in cash or common stock of HemaSure or a subsidiary of HemaSure, at the Company's option, provided that all of this portion may be forgiven in certain circumstances. Item 7. Financial Statements and Exhibits. - ------ --------------------------------- (a) Financial Statements of Business Acquired. ----------------------------------------- The following financial statements of the Blood Plasma Product Business of Novo Nordisk A/S, together with the report thereon manually signed by Coopers & Lybrand, appear as Exhibit 99-1 to this report and are incorporated herein by reference: Report of Independent Accountants on Financial Statements Balance Sheets as of December 31, 1994 and 1995 and April 30, 1996 (unaudited) Statement of Operations for the years ended December 31, 1993, 1994 and 1995 and for the four month periods ended April 30, 1995 and 1996 (unaudited) Statement of Parent Company Investment for the years ended December 31, 1993, 1994 and 1995 and the four month period ended April 30, 1996 (unaudited) Statement of Cash Flows for the years ended December 31, 1993, 1994 and 1995 and for the four month periods ended April 30, 1995 and 1996 (unaudited) Notes to Financial Statements - 2 - 3 (b) Pro Forma Financial Statements. ------------------------------ The following unaudited pro forma combined financial statements appear as Exhibit 99-2 to this report and are incorporated herein by reference: Pro forma Balance Sheet as of March 31, 1996 Pro forma Statements of Operations for the year ended December 31, 1995 and the three month period ended March 31, 1996 (c) Exhibits. -------- See Exhibit Index attached hereto. - 3 - 4 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. HEMASURE INC. (Registrant) Date: July 17, 1996 By: /s/ James Murphy ----------------------- James Murphy Senior Vice President Finance and Administration - 4 - 5 EXHIBIT INDEX ------------- *2.1 Asset Purchase Agreement dated as of May 2, 1996, among HemaSure Inc., HemaPharm Inc., HemaPharm A/S and Novo Nordisk A/S. **24.1 Press Release dated May 6, 1996. 99.1 Financial Statements of Business Acquired: Report of Independent Accountants on Financial Statements Balance Sheets as of December 31, 1994 and 1995 and April 30, 1996 (unaudited) Statement of Operations for the years ended December 31, 1993, 1994 and 1995 and for the four month periods ended April 30, 1995 and 1996 (unaudited) Statement of Parent Company Investment for the years ended December 31, 1993, 1994 and 1995 and the four month period ended April 30, 1996 (unaudited) Statement of Cash Flows for the years ended December 31, 1993, 1994 and 1995 and for the four month period ended April 30, 1995 and 1996 (unaudited) Notes to Financial Statements 99.2 Pro Forma Financial Statements: Pro forma Balance Sheet as of March 31, 1996 Pro forma Statements of Operations for the year ended December 31, 1995 and the three month period ended March 31, 1996 - ------------ * Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1996. ** Previously filed.
EX-99.1 2 FINANCIAL STATEMENTS 1 Exhibit 99.1 BLOOD PLASMA PRODUCT BUSINESS FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995 INDEX TO FINANCIAL STATEMENTS
Page - ---- Report of Independent Accountants F-2 Balance Sheets as of December 31, 1994 and 1995 and April 30, 1996 (unaudited) F-3 Statement of Operations for the years ended December 31, 1993, 1994 and 1995 and for the four month periods ended April 30, 1995 and 1996 (unaudited) F-4 Statement of Parent Company Investment for the years ended December 31, 1993, 1994 and 1995 and the four month period ended April 30, 1996 (unaudited) F-5 Statement of Cash Flows for the years ended December 31, 1993, 1994 and 1995 and for the four month periods ended April 30, 1995 and 1996 (unaudited) F-6 Notes to Financial Statements F-7 to F-16
2 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of HemaSure Inc. We have audited the balance sheets of the Blood Plasma Product Business of Novo Nordisk A/S (on the basis described in Note A), as of December 31, 1994 and 1995, and the related statements of operations, company investment and cash flows for each of the three years in the period ended December 31, 1995 (as described in Note A). These financial statements are the responsibility of management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the aforementioned financial statements present fairly, in all material respects, the financial position of the Blood Plasma Product Business of Novo Nordisk A/S (on the basis described in Note A), as of December 31, 1994 and 1995, and the related statements of operations, company investment and cash flows for each of the three years in the period ended December 31, 1995 (as described in Note A), in conformity with generally accepted accounting principles in the United States. As discussed in Note A of Notes to Financial Statements, the Blood Plasma Product Business was one of the commercial activities of Novo Nordisk A/S for all of the periods presented and was entirely dependent on the financial support of Novo Nordisk A/S for each of those periods, as evidenced on the Statement of Parent Company Investment. COOPERS & LYBRAND Copenhagen, Denmark June 27, 1996 F-2 3 BLOOD PLASMA PRODUCT BUSINESS BALANCE SHEETS
December 31, April 30, 1994 1995 1996 --------------------- -------- (unaudited) ASSETS (DKK thousands) Current assets: Accounts receivable (Note E) 23,237 18,691 20,445 Inventories (Note F) 123,381 102,583 83,701 Deferred charges and other assets 342 337 358 ------- ------- ------- Total current assets 146,960 121,611 104,504 Fixed assets, net (Note G) 68,549 57,450 53,190 Deposits 1,602 1,582 1,582 ------- ------- ------- Total assets 217,111 180,643 159,276 ======= ======= ======= LIABILITIES AND PARENT COMPANY INVESTMENT Accounts payable 14,839 3,161 753 Other liabilities 17,450 6,717 7,581 ------- ------- ------- Total liabilities 32,289 9,878 8,334 Commitments and contingencies Parent company investment 184,822 170,765 150,942 ------- ------- ------- Total liabilities and parent company investment 217,111 180,643 159,276 ======= ======= =======
The accompanying notes are an integral part of the financial statements. F-3 4 BLOOD PLASMA PRODUCT BUSINESS STATEMENTS OF OPERATIONS
Year Ended December 31, Four months ended April 30, 1993 1994 1995 1995 1996 (DKK thousands) (unaudited) Revenues: Product sales 83,708 99,038 86,824 30,551 24,253 ------- -------- ------- ------- ------- Total revenues 83,708 99,038 86,824 30,551 24,253 Cost of goods sold (Note D) 78,423 179,212 112,643 35,021 23,283 ------- -------- ------- ------- ------- Gross profit 5,285 (80,174) (25,819) (4,470) 970 Selling expenses 9,647 10,262 7,938 2,793 5,186 Research and development expenses 8,903 10,965 7,625 2,683 3,773 General and administrative expenses 11,116 14,356 15,243 5,364 9,034 ------- -------- ------- ------- ------- Operating loss (24,381) (115,757) (56,625) (15,310) (17,023) Interest expense - - - - - ------- -------- ------- ------- ------- Loss before income taxes (24,381) (115,757) (56,625) (15,310) (17,023) Provision for income taxes - - - - - ------- -------- ------- ------- ------- Net loss (24,381) (115,757) (56,625) (15,310) (17,023) ======= ======== ======= ======= =======
The accompanying notes are an integral part of the financial statements. F-4 5 PLASMA PRODUCT BUSINESS STATEMENT OF PARENT COMPANY INVESTMENT FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995 AND THE FOUR MONTHS ENDED APRIL 30, 1996
Company Investment (DKK thousands) Balance at December 31, 1992 113,569 Net loss in 1993 (24,381) Investment by the Company 42,805 ------- Balance at December 31, 1993 131,993 Net loss in 1994 (115,757) Investment by the Company 168,586 ------- Balance at December 31, 1994 184,822 Net loss in 1995 (56,625) Investment by the Company 42,568 ------- Balance at December 31, 1995 170,765 Net loss during the four months ended April 30, 1996 (17,023) Distribution to Parent Company (2,800) ------ Balance at April 30, 1996 (unaudited) 150,942 =======
The accompanying notes are an integral part of the financial statements. F-5 6 BLOOD PLASMA PRODUCT BUSINESS STATEMENTS OF CASH FLOWS
Year Ended Dec. 31, Four months ended April 30, 1993 1994 1995 1995 1996 -------- -------- -------- -------- -------- (unaudited) (DKK thousands) Cash flows from operating activities: Net loss (24,381) (115,757) (56,625) (15,310) (17,023) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 6,462 12,581 13,428 4,450 4,476 Loss from disposal of tangible assets 57 7 47 - - Provision for doubtful accounts receivable (1,486) 2,047 4,139 (50) 1,172 Reserve for obsolete products and slow moving items 3,438 76,951 (7,499) 15,122 (2,674) Changes in operating assets and liabilities: Accounts receivable 2,047 (1,976) 407 (667) (2,926) Inventories (62,788) (70,494) 28,297 (10,973) 21,556 Deferred charges, other assets and deposits (31) 113 25 4 (21) Accounts payable 53,296 (67,562) (11,678) (3,902) (2,408) Other liabilities 555 11,477 (10,733) (11,076) 864 ------- -------- ------- ------- ------- Net cash used in/provided by operating activities (22,831) (152,613) (40,192) (22,402) 3,016 ------- -------- ------- ------- ------- Cash flows from investing activities: Additions to fixed assets (19,974) (15,973) (2,376) (750) (216) ------- -------- ------- ------- ------- Net cash used in investing activities (19,974) (15,973) (2,376) (750) (216) ------- -------- ------- ------- ------- Cash flows from financing activities: Proceeds from Parent Company investment/ (dividend to parent company) 42,805 168,586 42,568 23,152 (2,800) ------- -------- ------- ------- ------- Net cash provided from financing activities 42,805 168,586 42,568 23,152 (2,800) Net increase (decrease) in cash - - - - - ======= ======== ======= ======= =======
The accompanying notes are an integral part of the financial statements. F-6 7 BLOOD PLASMA PRODUCT BUSINESS NOTES TO FINANCIAL STATEMENTS NOTE A. THE BUSINESS: NATURE OF THE BUSINESS The Plasma Product Business (the "Business") was established in 1974 as a business unit of Nordisk Insulinlaboratorium (a private foundation). In 1986 Nordisk Insulinlaboratorium's commercial activities were separated into a new company, Nordisk Gentofte A/S. From 1987 the plasma fractionation has taken place in an independent production division in Nordisk Gentofte A/S. In 1989 Novo Industri A/S and Nordisk Gentofte A/S merged into Novo Nordisk A/S (the "Parent Company") and the plasma business became a part of the Biopharmaceuticals Division. The Business is subject to risks common to companies in the medical technology industry, including, but not limited to, development by the Company or its competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, and compliance with FDA regulations. BASIS OF PRESENTATION These carve-out financial statements have been prepared as if the Business had been a stand alone entity in the period 1993 to 1995. Certain overhead expenses incurred by the Company have not in the accounting records been applied directly to the Business. Accordingly, a reasonable share of these overheads have manually been allocated to the Business. The allocation has been made as described below: ALLOCATION OF OVERHEAD The Business has benefited from the central overhead costs incurred by the Parent Company, comprising administrative functions and quality assurance. As a consequence, a portion of these overhead costs have been allocated to the Business. The Business' share in 1995 of the total overhead costs of the Parent Company's Health Care Business has been allocated to the Business on the basis of the revenue of the Business relative to the total revenue of the Parent Company's Health Care Business. In 1995, the costs allocated to the Business amounted to DKK 10.5 million. For 1994 and 1993 the overhead cost basis has been estimated based on the total 1995 overhead costs for the Parent Company's Health Care Business deflated by 3% and 6%, respectively. The calculated overheads has as in 1995 been allocated to the Business based on the revenue of the Business relative to the total revenue of the Parent Company's Health Care Business. In addition selling expenses relating to the Parent Company's foreign sales force have been estimated as 10% of the Business' annual revenue with foreign customers. The management of the Parent Company believes that these methods of allocation are reasonable. Such allocations are not necessarily indicative of the costs that would have been incurred if the Business had been a separate entity. F-7 8 BLOOD PLASMA PRODUCT BUSINESS NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTE B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies are in accordance with US GAAP. FOREIGN CURRENCY TRANSLATION Monetary assets and liabilities denominated in foreign currencies are translated into Danish kroner at the rate of exchange ruling at the balance sheet date. Income and expenses are translated into Danish kroner at average exchange rates applicable to the month in which the transactions occur. Gains or losses arising from increases or decreases in foreign currency exchanges rates in the period between the recognition of an asset or a liability in a foreign currency until the date of payment or alternatively the balance sheet date have not been recognized in the statement of operations. The accounting records did not allow to separate such realized and unrealized gains or losses relating to the Business. However, receivables and payables at year end included in the balance sheets have been translated at year end exchange rates. INCOME TAXES Because the Business as a stand-alone entity based on the existing earnings can not utilize the tax benefit from the significant accounting losses in the period 1993 to 1995 no deferred tax asset has been set up based on these losses. Furthermore, it has for the purposes of compiling these financial statements not been possible to separate any taxes in subsidiaries relating to income from the Business from taxes relating to income from other businesses of the Parent Company. STATEMENT OF OPERATIONS REVENUE RECOGNITION Revenues from product sales are recognized at the time of delivery. Product sales represents amounts invoiced excluding value added tax and after deduction of goods returned, trade discounts and allowances. COST OF GOODS SOLD Cost of products sold comprise material, energy, wages and salaries directly related to goods sold and production overheads. Production overheads comprise mainly depreciation, quality assurance, rent and allocation of quality assurance from the Parent Company. F-8 9 BLOOD PLASMA PRODUCT BUSINESS NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTE B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) SELLING EXPENSES Selling expenses comprise salaries, rent, depreciation and the allocated costs representing the Business' share of sales force in respect of foreign operations. RESEARCH AND DEVELOPMENT EXPENSES Research and development costs include clinical trials, salaries, rent and depreciation attributable to the research and development activities of the Business. Research and development costs are expensed in the year incurred. GENERAL AND ADMINISTRATIVE EXPENSES General and administrative expenses comprise salaries, rent, depreciation and the allocated costs of the Parent Company's general and administrative functions. BALANCE SHEET ACCOUNTS RECEIVABLE Accounts receivable are stated net of a provision for losses on doubtful accounts receivable. The provision is based on an individual evaluation of each receivable which also includes an evaluation of payment difficulties associated with individual countries. The accounts receivable as of December 31, 1995 have been compiled based upon the actual outstanding invoices with external customers relating to the Business at that date. The accounts receivable as of December 31, 1994 and 1993, respectively, have been estimated based upon the number of days sales outstanding at December 31, 1995 for each customer relative to the actual revenue of the individual customers in these years. The number of days sales outstanding for customers with no revenue during 1995, have been estimated to equal the average number of days sales outstanding at December 31, 1995. The accounts receivable do not include any receivable in subsidiaries. Furthermore, the accounts receivable have been disclosed exclusively of value added taxes because it has not been possible to include a reasonable estimate of these figures. F-9 10 BLOOD PLASMA PRODUCT BUSINESS NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTE B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) INVENTORIES Inventories are stated at the lower of cost or market. Cost is determined on the first-in first-out basis and comprises direct materials, energy, wages and production overheads attributable to the Business. Production overheads are included in the inventory valuation based on the turnover rates of finished and semi-finished goods compared to the annual production. FIXED ASSETS PLANT, MACHINERY AND OTHER EQUIPMENT Plant, machinery and other equipment are stated at cost less depreciation. Cost of major additions and improvements of assets are capitalised, while maintenance and repairs which do not improve or extend the life of the respective assets are charged to operations. On disposal, the related cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. All laboratory, manufacturing and office equipment have estimate useful lives of 5 to 16 years. Minor fixed assets under DKK 8,400 together with fixed assets with a limited expected useful life are charged to expense in the year of acquisition. Interest cost have not been allocated to the Business. Accordingly, no interest cost has been capitalized. Leasehold improvements are being amortized over the period of the lease (for exception - see Note G). ACCOUNTS PAYABLE The accounts payable comprises only payables related to the purchase of blood plasma. OTHER LIABILITIES The accounting records of the Parent Company did not allow to separate value added tax payables and receivables relating to the Business. Accordingly, these financial statements do not include any value added taxes. PROVISION FOR RETURNED GOODS The accounting records of the Parent Company did neither allow to separate provisions for returned goods nor to separate actual returns relating to the Business from returns relating to other businesses of the Parent Company. Accordingly, such provisions and costs have not been included in the financial statements. USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at December 31, 1994, 1995 and April 30, 1996 and the reported amounts of revenues and expenses during the years ended December 31, 1993, 1994, and 1995 and the four month periods ended April 30, 1995 and 1996. Actual results could differ from those estimates. F-10 11 BLOOD PLASMA PRODUCT BUSINESS NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTE B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) STATEMENT OF CASH FLOWS CASH FLOWS The cash flow is presented in accordance with the indirect method commencing with net income for the year. The statement shows cash flow for the year, the net movement in available funds for the year and the available funds at the beginning and end of the year. The effect of changes in foreign currency exchange rates has not been included in the cash flow statements. NOTE C. RELATED PARTY TRANSACTIONS The Financial Statements include allocated costs relating from functions and services (such as accounting administration, legal administration, and data processing) that were provided for the Business by centralised Novo Nordisk functions. The costs of these functions and services have been allocated to the Business. Selling, General and Administrative expenses include (all in thousands) DKK 13,521, DKK 14,480 and DKK 11,798 for the years 1993, 1994 and 1995, respectively, representing allocations of general corporate expenses and the Parent Company's foreign sales force to the Business. Production overheads include the allocation of quality assurance expenses from the Parent Company of (all in thousands) DKK 2,920, DKK 2,924 and DKK 2,418 for the years 1993, 1994 and 1995, respectively. The allocation methods are described in Note A. NOTE D. COST OF GOODS SOLD The cost of goods sold comprises the direct costs and production overheads, inclusive provision for obsolete products and slow moving items and write-off of such goods as follows:
Year Ended December 31, 1993 1994 1995 ---- ---- ---- (DKK thousands) Direct material and wages 48,879 50,053 62,717 Direct material, Nordiocto Kryopasta - 1,500 10,100 Production overheads 24,014 25,624 42,274 Provision for obsolete products and slow-moving items - 39,686 1,895 Additional provision to net realizable value 3,438 37,265 (9,394) Write-off of obsolete products 2,092 13,834 8,676 Provision relating to committed purchases - 11,250 (3,625) ------ ------- ------- Cost of goods sold 78,423 179,212 112,643 ====== ======= =======
In the accounting records of the Parent Company inventories are valued exclusive of production overheads. Accordingly, the additional provision to net realizable value have been estimated after allocation of production overheads and provision for obsolete products and slow moving items. The provision necessary in order to value the inventory at net realizable value relates only to goods for export. F-11 12 BLOOD PLASMA PRODUCT BUSINESS NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTE E. ACCOUNTS RECEIVABLE Accounts Receivable are net of allowance for doubtful accounts of (all in thousands) DKK 3,012 and DKK 7,151 at December 31, 1994 and 1995, respectively. Included in General and Administrative Expenses were charges for doubtful accounts of (all in thousands) DKK (1,486), DKK 2,047 and DKK 4,139 for years 1993, 1994 and 1995, respectively. Accounts receivable do not include Accounts receivable in subsidiaries. Accounts Receivable arising from sales to Danish customers are stated exclusive of value added tax. NOTE F. INVENTORIES: Inventories consist of the following:
December 31, 1994 1995 (DKK in thousand) Raw materials 46,263 18,471 Work in progress 41,811 39,449 Finished goods 35,307 44,663 ------- ------- 123,381 102,583 ======= =======
Inventory is net of reserve for obsolete products and slow moving items and an additional write-down to net realizable value of (all in thousands) DKK 95,418 and DKK 87,919 at December 31, 1994 and 1995, respectively. NOTE G. FIXED ASSETS:
December 31, 1994 Work Total Leasehold Plant and Other in fixed improvements machinery equipment progress assets (DKK in thousand) Cost at January 1 31,578 29,142 11,503 21,101 93,324 Additions during year 6,142 1,831 743 7,257 15,973 Disposal during year - (8) - - (8) Transfer from(to) other items 2,844 17,702 283 (20,829) - ------ ------ ------ ------- ------- Cost at December 31 40,564 48,667 12,529 7,529 109,289 Amortization and Depreciation at January 1 19,554 4,147 4,459 - 28,160 Amortization and Depreciation for the year 3,949 6,863 1,769 - 12,581 Amortization and Depreciation eliminated on disposal during year - (1) - - (1) ------ ------ ------ ------- ------- Amortization and Depreciation at December 31 23,503 11,009 6,228 - 40,740 ------ ------ ------ ------- ------- BOOK VALUE AT DECEMBER 31 17,061 37,658 6,301 7,529 68,549 ====== ====== ====== ======= =======
F-12 13 BLOOD PLASMA PRODUCT BUSINESS NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTE G. FIXED ASSETS (CONTINUED): In 1994 leasehold improvements in the amount of DKK 5,286,000 was purchased from the lessor of the Business' premises, whereby the annual lease was reduced by DKK 857,000. This improvement of the leasehold is amortized over a period of 10 years.
December 31, 1995 Work Total Leasehold Plant and Other in fixed improvements machinery equipment progress assets ------------ --------- --------- -------- -------- (DKK in thousand) Cost at January 1 40,564 48,667 12,529 7,529 109,289 Additions during year 93 1,764 519 - 2,376 Disposal during year - - (124) - (124) Transfer from(to) other items 1,418 6,020 - (7,438) - ------ ------ ------ ----- ------- Cost at December 31 42,075 56,451 12,924 91 111,541 Amortization and Depreciation at January 1 23,503 11,009 6,228 - 40,740 Amortization and Depreciation for the year 3,812 7,906 1,710 - 13,428 Amortization and Depreciation eliminated on disposal during year - - (77) - (77) ------ ------ ------ ----- ------- Amortization and Depreciation at December 31 27,315 18,915 7,861 - 54,091 ------ ------ ------ ----- ------- BOOK VALUE AT DECEMBER 31 14,760 37,536 5,063 91 57,450 ====== ====== ====== ===== =======
Amortization and depreciation expense was (all in thousands) DKK 6,462, DKK 12,581 and DKK 13,428 in 1993, 1994 and 1995, respectively. Amortization and depreciation expenses were included in the statement of operation as follows:
Year Ended December 31, 1993 1994 1995 -------------------------------------- (DKK thousands) Production overheads 4,094 9,675 10,621 Research and development expenses 1,298 1,543 1,490 Selling expenses 421 592 572 General and administrative expenses 649 771 745 ----- ------ ------ Amortization and depreciation in total 6,462 12,581 13,428 ===== ====== ======
F-13 14 BLOOD PLASMA PRODUCT BUSINESS NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTE H. OTHER LIABILITES Other Liabilities consist of the following:
December 31, 1994 1995 ----------------------- Accrued Vacation 4,854 4,995 Taxes withheld 1,346 1,339 Provision related to committed purchases (see Note D) 11,250 - Other - 383 ------ ----- Total 17,450 6,717 ====== =====
NOTE I. LEASES Future minimum lease payments under the operating sublease Agreements with Novo Nordisk A/S are as follows:
Operating leases Year (DKK thousands) --------------- 1996 2,280 1997 2,326 1998 2,387 1999 2,449 2000 2,512 Remainder 20,929 ------ Total minimum lease payments 32,883 ======
The actual rental expenses relating to the Business amounts to (all in thousands) DKK 6,315, DKK 5,356 and DKK 5,309 for the years 1993, 1994 and 1995, respectively, which has been reflected in the financial statements. According to a valuation from a chartered surveyor, the rental expenses would have been (all in thousands) DKK 2,783, DKK 2,310 and DKK 2,368 for the years 1993, 1994 and 1995, respectively, based on the market value of the lease. F-14 15 BLOOD PLASMA PRODUCT BUSINESS NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTE J. SEGMENT INFORMATION: Revenues include distribution of plasma products in Denmark. The revenue earned in Denmark amounts to (all in thousands) DKK 46,484, DKK 52,367 and DKK 46,675 for the years 1993, 1994 and 1995, respectively. The agreement between the Parent Company and the government concerning distribution of plasma products in Denmark was not renewed in 1995. Consequently, the distribution of goods in Denmark ceased at the end of 1995. NOTE K. FOREIGN EXCHANGE RATES Below are the average exchange rates for the years 1993, 1994 and 1995, respectively, and the exchange rates ruling at December 31, 1993, 1994 and 1995, respectively, for the more significant currencies for the Business shown:
1993 1994 1995 ------ ------ ------ USD exchange rate at December 31 6.7725 6.0830 5.5460 USD average exchange rate 6.4833 6.3606 5.6026 PTE at December 31 0.0383 0.0382 0.0371 PTE average exchange rates 0.0404 0.0383 0.0374 DEM at December 31 3.9023 3.9270 3.8724 DEM average exchange rates 3.9206 3.9190 3.9113 HKD at December 31 0.8800 0.7950 0.7210 HKD average exchange rates 0.8424 0.8229 0.7217
NOTE L. EMPLOYEES At December 31, 1993, 1994 and 1995 the Business had 115, 123 and 127 full-time employees, respectively. F-15 16 BLOOD PLASMA PRODUCT BUSINESS NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTE M. COMMITMENTS AND CONTINGENCIES The Plasma Product Business does not take over any contingent liabilities upon its transfer to HemaSure Inc. from the Parent Company. NOTE N. SUBSEQUENT EVENT On May 2, 1996, the Parent Company sold the Business to Hemasure Inc. The purchase price for the transaction is comprised of three portions. The first portion of $1,500,000 is payable in 1998 in cash or common stock of HemaSure or a subsidiary of HemaSure, at the Company's option. The second portion of approximately $13,000,000 is payable from time to time upon the sale of acquired inventory (valued at approximately $13,000,000) but no later than 1998, provided that up to $4,000,000 of this portion may be forgiven in certain circumstances. The third portion of the purchase price of approximately $8,600,000 is payable in 1998 in cash or common stock of HemaSure or a subsidiary of HemaSure, at the Company's option, provided that all of this portion may be forgiven in certain circumstances. F-16 EX-99.2 3 PRO FORMA FINANCIAL STATEMENTS 1 Exhibit 99.2 Pro Forma Financial Statements The following pro forma financial statements of HemaSure, Inc. present the pro forma balance sheet as of March 31, 1996 and the pro forma statements of operations for the year ended December 31, 1995 and the three months ended March 31, 1996, giving effect to the acquisition of the Blood Plasma Product Business of Novo-Nordisk ("Blood Plasma Business Acquisition"). The pro forma information is based on historical financial statements modified for the effects of the acquisition. The pro forma balance sheet represents the financial position of HemaSure, Inc. at March 31, 1996 adjusted to reflect the acquisition of certain assets and assumption of certain liabilities of the Blood Plasma Business as if the Blood Plasma Business Acquisition had occurred at March 31, 1996. The pro forma financial information for the year ended December 31, 1995 and the three months ended March 31, 1996 represents the combination of the results of operations of the Company for the year ended December 31, 1995 and the three months ended March 31, 1996 with the corresponding results of operations for the Blood Plasma Business. The information has been prepared in accordance with the rules and regulations of the Securities and Exchange Commission and is provided for comparative purposes only. The pro forma financial statements should be read in conjunction with the notes thereto and the historical financial statements of the Company and the Blood Plasma Business of Novo-Nordisk A/S and the related notes thereto included elsewhere herein. The pro forma information does not purport to be indicative of the results that actually would have occurred had the Blood Plasma Business Acquisition been effected on such date, nor do they project the Company's results of operations for any future periods. S-1 2 HemaSure, Inc. Pro Forma Balance Sheet As of March 31, 1996 (In thousands, except per share amounts)
Hemasure Pro forma Pro forma Historical Adjustments(1) Results ---------- -------------- --------- CURRENT ASSETS: Cash and cash equivalents $14,467 $ $14,467 Marketable securities 30,557 30,557 Accounts receivable 55 55 Inventories 737 14,219 14,956 Prepaid expenses 260 260 ------- ------- ------- Total current assets 46,076 14,219 60,295 ------- ------- ------- Property and equipment, net 1,725 9,036 10,761 Other assets 99 99 ------- ------- ------- Total assets $47,900 $23,255 $71,155 ======= ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $1,136 $ 847 $ 1,983 Payable to related parties 30 30 Accrued expenses 784 784 Current portion of capital lease obligation 123 123 ------- ------- ------- Total current liabilities 2,073 847 2,920 ------- ------- ------- Capital lease obligation 263 263 Notes payable to Novo-Nordisk A/S 23,129 23,129 Commitments and contingencies ------- ------- ------- Total liabilities 2,336 23,976 26,312 ------- ------- ------- STOCKHOLDERS' EQUITY: Preferred stock Common stock 81 81 Additional paid-in capital 60,425 60,425 Unrealized holding loss of available for sale marketable securities (11) (11) Unearned compensation (546) (546) Accumulated deficit (14,385) (721)(2) (15,106) ------- ------- ------- Total stockholders' equity 45,564 (721) 44,843 ------- ------- ------- Total liabilities and stockholders' equity $47,900 $23,255 $71,155 ======= ======= ======= (1) Pro forma adjustment amounts are based on the acquisition closing amounts as of April 30, 1996. (2) This transaction is accounted for as a purchase of the Blood Plasma Business by HemaSure, Inc. The excess of the aggregate purchase price over the net book value of the Blood Plasma Business has been allocated (based upon preliminary management estimates) to write off $721,000, upon the closing of the transaction, for the purchase of in-process research and development representing the Blood Plasma Business' ongoing research and development projects which have not yet resulted in commercially viable product.
S-2 3 HemaSure, Inc. Pro Forma Statement of Operations For the year ended December 31, 1995 (In thousands, except per share amounts)
Blood Plasma Hemasure Business Pro forma Pro forma Historical Historical Adjustments Results ---------- ------------ ----------- --------- Revenues: Product sales $ 20 $ 15,497 $ 15,517 Product sales to related parties 514 514 Collaborative research and development 300 300 ------- -------- -- -------- Total revenues: 834 15,497 0 16,331 ------- -------- -- -------- Cost and expenses: Cost of products sold 662 20,105 20,767 Cost of products sold to related parties 411 411 Cost of collaborative research and development 283 283 Research and development 4,061 1,361 5,422 Selling, general and administrative 3,881 4,138 8,019 ------- -------- -- -------- Total costs and expenses 9,298 25,604 0 34,902 ------- -------- -- -------- Loss from operations (8,464) (10,107) 0 (18,571) ------- -------- -- -------- Interest income (net) 1,014 1,014 ------- -------- -- -------- Net loss ($ 7,450) ($ 10,107) $0 ($ 17,557) ======= ======== == ======== Net loss per share ($ 1.20) ($ 2.83) Weighted average number of common and common equivalent shares outstanding 6,205 6,205
S-3 4 HemaSure, Inc. Pro Forma Statement of Operations For the three month period ended March 31, 1996 (In thousands, except per share amounts)
Blood Plasma Hemasure Business Pro forma Pro forma Historical Historical Adjustments Results ---------- ------------ ----------- --------- Revenues: Product sales $ 22 $2,718 $2,740 Product sales to related parties 14 14 Collaborative research and development 46 46 ------- ------- -- ------- Total revenues: 82 2,718 0 2,800 ------- ------- -- ------- Cost and expenses: Cost of products sold 390 2,475 2,865 Cost of products sold to related parties 13 13 Cost of collaborative research and Research and development 1,577 562 2,139 Selling, general and administrative 1,216 2,259 3,475 ------- ------- -- ------- Total costs and expenses 3,196 5,296 0 8,492 ------- ------- -- ------- Loss from operations (3,114) ($2,578) 0 ($5,692) ------- ------- -- ------- Interest income (net) 584 584 ------- ------- -- ------- Net loss ($ 2,530) ($2,578) $0 ($5,108) ======= ======= == ======= Net loss per share ($ 0.31) ($ .64) Weighted average number of common and common equivalent shares outstanding 8,041 8,041
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