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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
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Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 14, 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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CARDIOVASCULAR DYNAMICS, INC.
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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 14, 1999, CardioVascular Dynamics, Inc., Delaware corporation
(now named Radiance Medical Systems, Inc.) ("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 Registrant,
CVD/RMS Acquisition Corp., a wholly owned subsidiary of Registrant (the "Merger
Subsidiary"), and RMS. The acquisition was effected by the merger (the "Merger")
of RMS with and into the Merger Subsidiary, with Merger Subsidiary surviving the
Merger. As described in Item 5 below, in connection with the Merger, Registrant
changed its name to Radiance Medical Systems, Inc. Both the Merger and the name
change were approved by the Registrant's stockholders at a Special Meeting of
the Stockholders held January 14, 1999.
RMS is a research and development stage company in the field of
radiation therapy for the treatment of cardiovascular disease. RMS is focused on
research technology to develop proprietary devices for the prevention of
restenosis, the recurrence of atherosclerotic blockages following the
interventional treatment of atherosclerosis. RMS's primary product under
development is a catheter-based delivery system to deliver radioactive materials
to the area of an artery that has been treated with conventional interventional
therapy such as Percutaneous Transluminal Coronary Angioplasty ("PTCA"),
atherectomy and/or stent deployment.
RMS currently is focusing on the development of the RMS Radiation
Delivery Balloon Catheter System (the "RDX Catheter"). The RDX Catheter consists
of an expandable dual balloon system which enables the radiation dosage to be
delivered precisely to the vessel wall. Since the balloon is in contact with the
wall, this method of delivering radiation is appropriate for vessels of any
diameter with proper balloon size selection. The catheter design incorporates a
beta emitting source in a solid, fully encapsulated configuration within the
walls of a balloon angioplasty catheter. This design provides the physician with
a familiar format which does not differ from conventional procedural techniques
used in everyday interventional practice.
Upon completion of the Merger, Registrant paid the stockholders of RMS
the primary consideration of $3.00 for each share of RMS Preferred Stock and
$2.00 for each share of RMS Common Stock, for a total of $7,033,366. Such
consideration was paid by delivery of an aggregate of 1,900,157 shares of
Registrant Common Stock, and $692,325 in cash to certain RMS stockholders who
elected cash. In addition, RMS stockholders and optionholders may receive
milestone payments of up to $2.00 for each share of RMS Series A Preferred
Stock and $3.00 for each share of RMS Common Stock (or underlying options)
owned prior to the Merger based on the occurrence of milestone events leading
to regulatory approval, and an additional adjusted payment upon the
registration of the Registrant Common Stock with the Commission if the price of
the Registrant's Common Stock falls below the Average Closing Price in the
Merger. Assuming all product development milestones are met on scheduled dates,
and there is no adjustment upon registration of the Registrant Common Stock
with the Commission, an additional amount of approximately $6.9 million will be
paid to RMS stockholders and optionholders. Holders of RMS Common Stock and
options will receive Registrant Common Stock and holders of RMS Series A
Preferred Stock will receive Registrant Common Stock and, at Registrant's
option and under certain circumstances, may receive up to 30% of the aggregate
milestone consideration in cash.
Options for 546,250 shares of Radiance Common Stock accelerated and
vested immediately prior to the completion of the Merger. Of these, 1,250 were
exercised, and the holder received the same consideration for their shares of
RMS Common Stock as other holders of Radiance Common Stock. The options not
exercised prior to completion of the Merger were assumed by Registrant and
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converted into options at the same exercise price to purchase an aggregate of
317,775 shares of Registrant Common Stock. Holders of these options will also
receive the milestone payments for each share of RMS Common Stock to which they
were entitled, whether or not they exercise those options.
The milestones represent important steps in the United States Food and
Drug Administration and European approval processes which Registrant has
determined are critical in bringing the RMS technology to the marketplace. The
four milestones consist of: (i) FDA approval of an Investigational Device
Exemption application for the initiation of human clinical trial; (ii) approval
of the CE mark for European marketing; (iii) the acceptance by the FDA of a
Pre-Market ("PMA") application filing in the United States; and (iv) PMA
approval in the United States.
The amount of each milestone payment that stockholders receive for their
shares depends on the date that each milestone is achieved. If all of the
milestones are reached on the target dates, Registrant will pay the former
stockholders and optionholders of Radiance an additional $3.00 for each share of
Common Stock and $2.00 for each share of Preferred Stock. In addition, for each
30-day period the milestone is reached ahead of the target date, RMS
stockholders and optionholders will receive an additional ten percent (10%) of
that milestone payment, up to a maximum of thirty percent (30%). However, for
each 30-day period behind the target date the milestone payment will be reduced
ten percent (10%). RMS stockholders will not receive any milestone payments if a
milestone is not reached within 120 days of the target date.
Registrant will file a registration statement with the Commission
covering the resale of the shares of Registrant Common Stock issued to Radiance
stockholders in the Merger within five days of completion of the Merger. In
addition to the primary consideration and any possible milestone payment, if
such registration statement is not effective within 30 days of the Closing of
the Merger and on the trading day before such registration is effective the
price of Registrant Common Stock is less than $3.43 (the Average Closing Price
of Registrant Common Stock pursuant to the Merger), Registrant will pay former
RMS stockholders, for each share of Registered Common Stock issued upon Closing,
the difference between the price of the Registrant Common Stock on the day
before the Common Stock is registered and the Average Closing Price.
The acquisition of Radiance is more fully described in the Registrant's
Proxy Statement for its Special Meeting of Stockholders held January 14, 1999,
filed with the Commission on December 18, 1998, and is incorporated herein by
reference.
ITEM 5. OTHER EVENTS.
On January 14, 1999, Registrant amended its Amended and Restated
Certificate of Incorporation, pursuant to stockholders approval, to change its
corporate name to Radiance Medical Systems, Inc. from CardioVascular Dynamics,
Inc.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired.
The following financial statements of Radiance Medical Systems, Inc.
have been filed with the Commission in the Registrant's Proxy Statement for its
Special Meeting of Stockholders, filed with the Commission on December 18, 1998,
and are incorporated herein by reference.
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1. Balance Sheets as of December 31, 1997 and September 30, 1998.
2. Statements of Operations for the Periods from August 15, 1997
(inception) to December 31, 1997, and for the Nine Months Ended
September 30, 1998.
3. Statements of Stockholders' Equity for the Periods from August
15, 1997 (inception) to December 31, 1997, and for the Nine
Months Ended September 30, 1998.
4. Statement of Cash Flows for the Periods from August 15, 1997
(inception) to December 31, 1997, and for the Nine Months Ended
September 30, 1998.
5. Notes to Financial Statements.
(b) Unaudited Pro Forma Financial Information.
The following unaudited pro forma condensed combined financial
information is attached hereto as Exhibit 99.2.
1. Unaudited Pro Forma Condensed Combined Statement of Operations
for the Year Ended December 31, 1997.
2. Unaudited Pro Forma Condensed Combined Statement of Operations
for the Nine Months Ended September 30, 1998.
3. Unaudited Pro Forma Condensed Combined Balance Sheet as of
September 30, 1998
(c) Exhibits.
EXHIBIT NUMBER DESCRIPTION
2.4 Agreement and Plan of Merger dated November 3, 1998 by and
between CardioVascular Dynamics, Inc. and Radiance Medical
Systems, Inc., incorporated by reference to Exhibit 2.4 of
the Form 8-K filed by Registrant on November 12, 1998.
3.5 Amended and Restated Certificate of Incorporation and
Certificates of Amendment thereof.
20 Press Release dated January 14, 1999.
23.1 Consent of Ernst & Young LLP with respect to the financial
statements of Radiance Medical Systems, Inc.
99.1 Financial Statements of Radiance Medical Systems, Inc.
listed in Item 7(a) are incorporated by reference from
Registrant's Proxy Statement, filed December 18, 1998.
99.2 Pro Forma Financial Statements listed in Item 7(b) above.
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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.
CARDIOVASCULAR DYNAMICS, INC.
Date: January 21, 1999 By: /s/ Stephen R. Kroll
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Stephen R. Kroll
Chief Financial Officer
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EXHIBIT INDEX
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<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION SEQUENTIALLY
NUMBERED PAGE
<S> <C> <C>
2.4 Agreement and Plan of Merger dated November 3, 1998 by
and between CardioVascular Dynamics, Inc. and Radiance
Medical Systems, Inc., incorporated by reference to
Exhibit 2.4 of the Form 8-K filed by Registrant on
November 12, 1998.
3.5 Amended and Restated Certificate of Incorporation and
Certificates of Amendment thereof.
20 Press release dated January 14, 1999.
23.1 Consent of Ernst & Young LLP with respect to the
financial statements of Radiance Medical Systems, Inc.
99.1 Financial Statements of Radiance Medical Systems, Inc.
listed in Item 7(a) are incorporated by reference from
Registrant's Proxy Statement, filed December 18, 1998.
99.2 Pro Forma Financial Statements listed in Item 7(b) above.
</TABLE>
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EXHIBIT 3.5
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CERTIFICATE OF AMENDMENT
OF
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
CARDIOVASCULAR DYNAMICS, INC.,
A DELAWARE CORPORATION
CARDIOVASCULAR DYNAMICS, INC., a Delaware corporation organized and
existing under and by virtue of the Delaware General Corporation Law (the
"Corporation"), does hereby certify:
(1) That the Board of Directors of the Corporation, at a meeting of the
Board of Directors, duly adopted a resolution proposing and declaring advisable
the following amendment to the Amended & Restated Certificate of Incorporation
of the Corporation, directing that such amendment be submitted to the
stockholders of the Corporation for consideration thereof. The resolution
setting forth the proposed amendment are as follows:
"BE IT RESOLVED, that contingent upon the completion of the
acquisition of Radiance Medical Systems, Inc. by the Company, that
Article I of the Company's Certificate of Incorporation be amended to
state that the name of the Company shall be Radiance Medical Systems,
Inc."
(2) That thereafter, the holders of the necessary number of shares of
capital stock of the Corporation voted in favor of the foregoing amendment in
accordance with the provisions of Section 228 of the Delaware General
Corporation Law.
(3) That such amendment was duly adopted in accordance with the
provisions of Section 242 of the Delaware General Corporation Law of the State
of Delaware.
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IN WITNESS WHEREOF, CARDIOVASCULAR DYNAMICS, INC. has caused this Certificate of
Amendment to be signed by its duly authorized Chief Financial Officer and
Secretary, Stephen R. Kroll, on January 14, 1999.
CARDIOVASCULAR DYNAMICS, INC.,
a Delaware corporation
By: /S/ Stephen R. Kroll
--------------------------------------
Stephen R. Kroll
Chief Financial Officer and Secretary
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CERTIFICATE OF AMENDMENT
OF
AMENDED & RESTATED CERTIFICATE OF INCORPORATION
OF
CARDIOVASCULAR DYNAMICS, INC.
A DELAWARE CORPORATION
CARDIOVASCULAR DYNAMICS, INC., a Delaware corporation organized and
existing under and by virtue of the Delaware General Corporation Law (the
"Corporation"), does hereby certify:
(1) The Board of Directors of the Corporation, at a meeting of the Board
of Directors, duly adopted resolutions proposing and declaring advisable the
following amendments to the Amended & Restated Certificate of Incorporation of
the Corporation, directing that such amendments be submitted to the stockholders
of the Corporation for consideration thereof. The resolutions setting forth the
proposed amendments are as follows:
NOW, THEREFORE, BE IT RESOLVED, that Article IV, Section 4 of the
Company's Amended and Restated Certificate of Incorporation be amended
to read as follows:
"4. Voting Rights. The holder of each share of Common Stock shall
have the right to one vote, and shall be entitled to notice of any
stockholders' meeting in accordance with the Bylaws of this corporation,
and shall be entitled to vote upon such matters and in such manner as
may be provided by law."
NOW, THEREFORE, BE IT RESOLVED, that Article VIII of the
Company's Amended and Restated Certificate of Incorporation be amended
to add the following:
"The Board of Directors shall be divided into three (3) classes,
as nearly equal in number as possible, designated Class I, Class II and
Class III. The number of directors constituting each Class shall be
fixed from time to time by a resolution duly adopted by the Board of
Directors. Class I directors shall hold office for an initial term
expiring at the annual meeting of stockholders in 1999. Class II
directors shall hold office for an initial term expiring at the annual
meeting of stockholders in 2000, and Class III directors shall hold
office for a term expiring at the annual meeting of stockholders in
2001. At each annual
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meeting of stockholders held thereafter, directors shall be elected for
a three-year term to succeed the directors of the Class whose terms then
expire."
(2) That thereafter, the holders of the necessary number of shares of
capital stock of the Corporation voted in favor of the foregoing amendments in
accordance with the provisions of Section 228 of the Delaware General
Corporation Law.
(3) That such amendment was duly adopted in accordance with the
provisions of Section 242 of the Delaware General Corporation Law of the State
of Delaware.
IN WITNESS WHEREOF, CARDIOVASCULAR DYNAMICS, INC. has caused this
Certificate of Amendment to be signed by its duly authorized Chief Financial
Officer and Secretary, Stephen R. Kroll, on November 12, 1998.
CARDIOVASCULAR DYNAMICS, INC.,
a Delaware corporation
By: /S/ Stephen R. Kroll
-------------------------------------
Stephen R. Kroll
Chief Financial Officer and Secretary
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AMENDED & RESTATED
CERTIFICATE OF INCORPORATION
OF
CARDIOVASCULAR DYNAMICS, INC.
(Pursuant to Sections 228, 2422 and 245 of the
General Corporation Law of the State of Delaware)
Cardiovascular Dynamics, Inc., a corporation organized and existing
under the General Corporation Law of the State of Delaware (the "General
Corporation Law").
DOES HEREBY CERTIFY:
FIRST: That the name of this corporation is Cardiovascular Dynamics,
Inc, and that this corporation was originally incorporated on June 2, 1993,
pursuant to the General Corporation Law.
SECOND: That the Board of Directors duly adopted resolutions proposing
to amend and restate the Certificate of Incorporation of this corporation,
declaring said amendment and restatement to be advisable and in the best
interests of this corporation and its stockholders, and authorizing the
appropriate officers of this corporation to solicit the consent of the
stockholders therefore, which resolution setting forth the proposed amendment
and restatement is as follows:
"RESOLVED, that the Amended and Restated Certificate of Incorporation of
this corporation be amended and restated in its entirety as follows:
ARTICLE I
The name of this corporation is Cardiovascular Dynamics, Inc.
ARTICLE II
The address of the registered office of this corporation in the State of
Delaware is 1013 Centre Road, in the City of Wilmington, County of New Castle.
The name of its registered agent at such address if The Prentice-Hall
Corporation System, Inc.
ARTICLE III
The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
ARTICLE IV
(A) Classes of Stock. This corporation is authorized to issue two
classes of stock, to be designated, respectively, "Common Stock" and "Preferred
Stock." The total number of shares that this corporation is authorized to issue
is thirty seven million five
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hundred and sixty thousand (37,560,000). The number of shares of Preferred Stock
authorized to be issued is seven million five hundred sixty thousand
(7,560,000), par value $.001 per share, 2,060,000 of which shares have been
designated Series A Preferred Stock (the "Series A Preferred Stock") and 500,000
of which shares have been designated Series B Preferred Stock (the "Series B
Preferred Stock"). The number of shares of Common Stock authorized to be issued
is thirty million (30,000,000), par value $.001 per share.
Upon filing this Amended and Restated Certificate of
Incorporation, each share of Common Stock shall be, and is, hereby reclassified
and divided into two (2) shares of Common Stock.
(B) Rights, Preferences and Restrictions of the Preferred Stock. The
Preferred Stock authorized by this Restated Certificate of Incorporation may be
issued from time to time in one or more series. The rights, preferences,
privileges, and restrictions granted to and imposed on the Series A Preferred
Stock, which series shall consist of 2,060,000 shares, and the Series B
Preferred Stock, which series shall consist of 500,000 shares, are as set forth
below in this Article IV(B). The Board of Directors is hereby authorized to fix
or alter the rights, preferences, privileges and restrictions granted to or
imposed upon additional series of Preferred Stock, and the number of shares
constituting any such series and the designation thereof, or of any of them.
Subject to compliance with applicable protective voting rights which have been
or may be granted to the Preferred Stock or series thereof in Certificates of
Determination or the corporation's Restated Certificate of Incorporation
("Protective Provisions"), but notwithstanding any other rights of the Preferred
Stock or any series thereof, the rights, privileges, preferences and
restrictions of any such additional series may be subordinated to, pari passu
with (including, without limitation, inclusion in provisions with respect to
liquidation and acquisition preferences, redemption and/or approval of matters
by vote or written consent), or senior to any of those of any present or future
class or series of Preferred or Common Stock. Subject to compliance with
applicable Protective Provisions, the Board of Directors is also authorized to
increase or decrease the number of shares of any series (other than the Series A
Preferred Stock and the Series B Preferred Stock), prior or subsequent to the
issue of that series, but not below the number of shares of such series then
outstanding. In case the number of shares of any series shall be so decreased,
the shares constituting such decrease shall resume the status that they had
prior to the adoption of the resolution originally fixing the number of shares
of such series.
1. Dividend Provisions. Subject to the rights of series of Preferred
Stock that may from time to time come into existence, the holders of shares of
Series A Preferred Stock and Series B Preferred Stock shall, on a pari passu
basis, be entitled to receive dividends, out of any assets legally available
therefor, prior and in preference to any declaration or payment of any dividend
(payable other than in Common Stock or other securities and rights convertible
into or entitling the holder thereof to receive, directly or indirectly,
additional shares of Common Stock of this corporation) on the Common Stock of
this corporation, at the rate of $.50 per share per annum for the Series A
Preferred Stock, and $1.50 per share per annum for the Series B Preferred Stock,
or, if greater (as determined on a per annum basis and on an as converted basis
for the Series A Preferred Stock and Series B Preferred Stock), plus an amount
equal to that paid on any other outstanding shares of this corporation, payable
quarterly, when, as, and if declared by the Board of Directors. Such dividends
shall not be cumulative.
2. Liquidation Preference.
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(a) In the event of any liquidation, dissolution or winding up of
this corporation, either voluntary or involuntary, subject to the rights of
series of Preferred Stock that may from time to time come into existence, the
holders of Series A Preferred Stock and Series B Preferred Stock shall, on a
pari passu basis, be entitled to receive, prior and in preference to any
distribution of any of the assets of this corporation to the holders of Common
Stock by reason of their ownership thereof, (i) with respect to the Series A
Preferred Stock, an amount per share equal to the sum of (A) $6.58 for each
outstanding share of Series A Preferred Stock (the "Original Series A Issue
Price"), and (B) an amount equal to declared but unpaid dividends on such share;
and (ii) with respect to the Series B Preferred Stock, an amount per share equal
to the sum of (A) $20.00 for each outstanding share of Series B Preferred Stock
(the "Original Series B Issue Price"), and (B) an amount equal to declared but
unpaid dividends on such share. If upon the occurrence of such event, the assets
and funds thus distributed among the holders of the Series A Preferred Stock and
Series B Preferred Stock shall be insufficient to permit the payment to such
holders of the full aforesaid preferential amounts, then, subject to the rights
of series of Preferred Stock that may from time to time come into existence, the
entire assets and funds of this corporation legally available for distribution
shall be distributed ratably among the holders of the Series A Preferred Stock
and Series B Preferred Stock in proportion to the amount of such stock owned by
each such holder.
(b) After the distributions described in subsection (a) above have
been paid, subject to the rights of series of Preferred Stock which may from
time to time come into existence, the remaining assets of the corporation
available for distribution to shareholders shall be distributed among the
holders of Common Stock pro rata based on the number of shares of Common Stock
held by each.
(c)(i) For purposes of this Section 2, a liquidation, dissolution
or winding up of this corporation shall be deemed to be occasioned by, or to
include (A) the acquisition of the corporation by another entity by means of any
transaction or series of related transactions (including, without limitation,
any reorganization, merger or consolidation but, excluding any merger effected
exclusively for the purpose of changing the domicile of the corporation); or (B)
a sale of all or substantially all of the assets of the corporation; unless the
corporation's shareholders of record as constituted immediately prior to such
acquisition or sale will, immediately after such acquisition or sale (by virtue
of securities issued as consideration for the corporation's acquisition or sale
or otherwise) hold at least 50% of the voting power of the surviving or
acquiring entity.
(ii) In any of such events, if the consideration received
by the corporation is other than cash, its value will be deemed its fair market
value. Any securities shall be valued as follows:
(A) Securities not subject to investment letter or
other similar restrictions on free marketability covered by (B) below:
(i) If traded on a securities exchange or
through the Nasdaq National Market, the value shall be deemed to be the average
of the closing prices of the securities on such exchange over the thirty-day
period ending three (3) days prior to the closing;
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(ii) If actively traded over-the-counter,
the value shall be deemed to be the average of the closing bid or sale prices
(whichever is applicable) over the thirty-day period ending three (3) days prior
to the closing; and
(iii) If there is no active public market,
the value shall be the fair market value thereof, as mutually determined by the
corporation and the holders of at least a majority of the voting power of all
then outstanding shares of Preferred Stock.
(B) The method of valuation of securities subject
to investment letter or other restrictions on free marketability (other than
restrictions arising solely by virtue of a shareholder's status as an affiliate
or former affiliate) shall be to make an appropriate discount from the market
value determined as above in (A) (1), (2) or (3) to reflect the appropriate fair
market value thereof, as mutually determined by the corporation and the holders
of at least a majority of voting power of all then outstanding shares of such
Preferred Stock.
(iii) In the event the requirements of this subjection
2(c) are not complied with, this corporation shall forthwith either:
(A) cause such closing to be postponed until such
time as the requirements of this Section 2 have been complied with; or
(B) cancel such transaction, in which event the
rights, preferences and privileges of the holders of the Series A Preferred
Stock and Series B Preferred Stock shall revert to and be the same as such
rights, preferences and privileges existing immediately prior to the date of the
first notice referred to in subsection 2(c)(iv) hereof.
(iv) The corporation shall give each holder of record of
Series A Preferred Stock and Series B Preferred Stock written notice of such
impending transaction not later than twenty (20) days prior to the shareholders'
meeting called to approve such transaction, or twenty (20) days prior to the
closing of such transaction, whichever is earlier, and shall also notify such
holders in writing of the final approval of such transaction. The first of such
notices shall describe the material terms and conditions of the impending
transaction and the provisions of this Section 2, and the corporation shall
thereafter give such holders prompt notice of any material changes. The
transaction shall in no event take place sooner than twenty (20) days after the
corporation has given the first notice provided for herein or sooner than ten
(10) days after the corporation has given notice of any material changes
provided for herein; provided, however, that such periods may be shortened upon
the written consent of the holders of Preferred Stock that are entitled to such
notice rights or similar notice rights and that represent at least a majority of
the voting power of all then outstanding shares of such Preferred Stock.
3. Conversion. The holders of Series A Preferred Stock and Series B
Preferred Stock shall have conversion rights as follows (the "Conversion
Rights"):
(a) Right to Convert. Each share of Series A Preferred Stock and
Series B Preferred Stock shall be convertible, at the option of the holder
thereof, at any time after the date of issuance of such share, at the office of
this corporation or any transfer agent for the Series A Preferred Stock and
Series B Preferred Stock, into such number fully paid and nonassessable shares
of Common Stock as is determined by dividing the Original Issue Price for such
series by the
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Conversion Price at the time in effect for such series. The initial Conversion
Price per share for shares of Series A Preferred Stock and Series B Preferred
Stock shall be the Original Series A Issue Price and Original Series B Issue
Price, respectively.
(b) Automatic Conversion. Each share of Series A Preferred Stock
and Series B Preferred Stock shall automatically be converted into shares of
Common Stock at the Conversion Price at the time in effect for such series
immediately upon the earlier of (A) the consummation of this corporation's sale
of its Common Stock in a bona fide, firm commitment underwriting pursuant to a
registration statement on Form S-1 under the Securities Act of 1933, as amended,
the public offering price of which was $7,500,000 in the aggregate, or (B) the
date upon which this corporation obtains the consent of the holders of a
majority of the then outstanding shares of Series A Preferred Stock and Series B
Preferred Stock, voting together as a single class on an as-converted to Common
Stock basis.
(c) Mechanics of Conversion. Before any holder of Series A
Preferred Stock or Series B Preferred Stock shall be entitled to convert the
same into shares of Common Stock, he or she shall surrender the certificate or
certificates therefor, duly endorsed, at the office of this corporation or of
any transfer agent for the Series A Preferred Stock and Series B Preferred
Stock, and shall give written notice by mail, postage prepaid, to this
corporation at its principal corporate office, of the election to convert the
same and shall state therein the name or names in which the certificate or
certificates for shares of Common Stock are to be issued. This corporation
shall, as soon as practicable thereafter, issue and deliver at such office to
such holders of Series A Preferred Stock or Series B Preferred Stock, or to the
nominee or nominees of such holder, a certificate or certificates for the number
of shares of Common Stock to which such holder shall be entitled as aforesaid.
Such conversion shall be deemed to have been made immediately prior to the close
of business on the date of such surrender of the shares of Series A Preferred
Stock or Series B Preferred Stock to be converted, and the person or persons
entitled to receive the shares of Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder or holders of such shares
of Common Stock as of such date. If the conversion is in connection with an
underwritten offer of securities registered pursuant to the Securities Act of
1933, the conversion may, at the option of any holder tendering Series A
Preferred Stock or Series B Preferred Stock for conversion, be conditioned upon
the closing with the underwriter of the sale of securities pursuant to such
offering, in which event the person(s) entitled to receive the Common Stock
issuable upon such conversion of the Series A Preferred Stock or Series B
Preferred Stock shall not be deemed to have converted such Series A Preferred
Stock or Series B Preferred Stock until immediately prior to the closing of such
sale of securities.
(d) Conversion Price Adjustments of Preferred Stock. The
Conversion Price of the Series A Preferred Stock and Series B Preferred Stock
shall be subject to adjustment from time to time as follows:
(i) In the event this corporation should at any time or
from time to time after the date upon which this corporation first issued any
shares of Series B Preferred Stock (the "Purchase Date"), fix a record date for
the effectuation of a split or subdivision of the outstanding shares of Common
Stock or the determination of holders of Common Stock entitled to receive a
dividend or other distribution payable in additional shares of Common Stock or
other securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly, additional
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shares of Common Stock (hereinafter referred to as "Common Stock Equivalents")
without payment of any consideration by such holder for the additional shares of
Common Stock or the Common Stock Equivalents (including the additional shares of
Common Stock issuable upon conversion or exercise thereof), then, as of such
record date (or the date of such dividend distribution, split or subdivision if
no record date is fixed), the Conversion Price of the Series A Preferred Stock
and Series B Preferred Stock shall be appropriately decreased so that the number
of shares of Common Stock issuable on conversion of each share of Series A
Preferred Stock and Series B Preferred Stock shall be increased in proportion to
such increase of the aggregate of shares of Common Stock outstanding and those
issuable with respect to such Common Stock Equivalents.
(ii) If the number of shares of Common Stock outstanding
at any time after the Purchase Date is decreased by a combination of the
outstanding shares of Common Stock, then, following the record date of such
combination, the Conversion Price for the Series A Preferred Stock and Series B
Preferred Stock shall be appropriately increased so that the number of shares of
Common Stock issuable on conversion of each share of Series A Preferred Stock
and Series B Preferred Stock shall be decreased in proportion to such decrease
in outstanding shares.
(e) Other Distributions. In the event this corporation shall
declare a distribution payable in securities of other persons, evidences of
indebtedness issued by this corporation or other persons, assets (excluding cash
dividends) or options or rights not referred to in subsection (3)(d)(i), then,
in each such case for the purpose of this subsection 3(e), the holders of the
Series A Preferred Stock and Series B Preferred Stock shall be entitled to a
proportionate share of any such distribution as though they were the holders of
the number of shares of Common Stock of this corporation into which their shares
of Series A Preferred Stock and Series B Preferred Stock are convertible as of
the record date fixed for the determination of the holders of Common Stock of
this corporation entitled to receive such distribution.
(f) Recapitalizations. If any time or from time to time there
shall be a recapitalization of the Common Stock (other than a subdivision,
combination or merger or sale of assets transaction provided for elsewhere in
this Section 3 or Section 5) provision shall be made so that the holders of the
Series A Preferred Stock and Series B Preferred Stock shall thereafter be
entitled to receive upon conversion of the Series A Preferred Stock and Series B
Preferred Stock the number of shares of stock or other securities or property of
the Company or otherwise, to which a holder of Commons Stock deliverable upon
conversion would have been entitled on such recapitalization. In any such case,
appropriate adjustment shall be made in the application of the provisions of
this Section 3 with respect to the rights of the holders of the Series A
Preferred Stock and Series B Preferred Stock after the recapitalization to the
end that the provisions of this Section 3 (including adjustment of the
Conversion Price then in effect and the number of shares purchasable upon
conversion of the Series A Preferred Stock and Series B Preferred Stock ) shall
be applicable after that event as nearly equivalent as may be practicable.
(g) No Impairment. This corporation will not, by amendment of
this Restated Certificate of Incorporation or through any reorganization,
recapitalization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by this corporation, but will at all times in good faith assist in the
carrying out of all the provisions of this Section 3 and in the taking of all
such action as may be necessary or appropriate in
-10-
<PAGE> 11
order to protect the Conversion Rights of the holders of the Series A Preferred
Stock and Series B Preferred Stock against impairment.
(h) No Fractional Shares and Certificates as to Adjustments.
(i) No fractional shares shall be issued upon conversion
of the Series A Preferred Stock and Series B Preferred Stock, and the number of
shares of Common Stock to be issued shall be rounded to the nearest whole share.
Whether or not fractional shares are issuable upon such conversion shall be
determined on the basis of the total number of Series A Preferred Stock and
Series B Preferred Stock the holder is at the time converting into Common Stock
and the number of shares of Common Stock issuable upon such aggregate
conversion.
(ii) Upon the occurrence of each adjustment or
readjustment of the Conversion Price of Series A Preferred Stock and Series B
Preferred Stock pursuant to this Section 3, this corporation, at its expense,
shall promptly compute such adjustment or readjustment in accordance with the
terms hereof and prepare and furnish to each holder of Series A Preferred Stock
and Series B Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. This corporation shall, upon the written request at any
time of any holder of Series A Preferred Stock or Series B Preferred Stock,
furnish or cause to be furnished to such holder a like certificate setting forth
(A) such adjustment or readjustment, (B) the Conversion Price at the time in
effect, and (C) the number of shares of Common Stock and the amount, if any, of
other property which at the time would be received upon the conversion of a
share of Series A Preferred Stock and Series B Preferred Stock .
(i) Notices of Record Date. In the event of any taking by this
corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, this
corporation shall mail to each holder of Preferred Stock, at least 20 days prior
to the date specified therein, a notice specifying the date on which any such
record is to be taken for the purpose of such dividend, distribution or right,
and the amount and character of such dividend, distribution or right.
(j) Reservation of Stock Issuable Upon Conversion. This
corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock solely for the purpose of effecting the
conversion of the shares of the Preferred Stock such number of its shares of
Common Stock as shall from time to time be sufficient to effect the conversion
of all outstanding shares of the Preferred Stock; and if at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of all then outstanding shares of the Preferred Stock, in
addition to such other remedies as shall be available to the holder of such
Preferred Stock, this corporation will take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purposes.
(k) Notices. Any notice required by the provisions of this
Section 3 to be given to the holders of shares of Preferred Stock shall be
deemed given if deposited in the United States
-11-
<PAGE> 12
mail, postage prepaid, and addressed to each holder of record at his address
appearing on the books of this corporation.
4. Voting Rights. The holder of each share of Series A Preferred Stock
and Series B Preferred Stock shall have the right to one vote for each share of
Common Stock into which such share could then be converted (with any fractional
share determined on an aggregate conversion basis being rounded to the nearest
whole share), and with respect to such vote, such holder shall have full voting
rights and powers equal to the voting rights and powers of the holders of Common
Stock, and shall be entitled, notwithstanding any provision hereof, to notice of
any stockholders' meeting in accordance with the by-laws of this Corporation,
and shall be entitled to vote, together with holders of Common Stock, with
respect to any question upon which holders of Common Stock have the right to
vote.
5. Protective Provisions. Subject to the rights of series of Preferred
Stock that may from time to time come into existence, this corporation shall not
without first obtaining the approval (by vote or written consent, as provided by
law) of at least a majority of the then outstanding shares of Series A Preferred
Stock and Series B Preferred Stock, voting together as a single class and on an
as-converted to Common Stock basis:
(i) sell, convey, or otherwise dispose of or encumber all
or substantially all of its property or business or merge into or consolidate
with any other corporation (other than a wholly owned subsidiary corporation) or
effect any transaction or series of related transactions in which more than 50%
of the voting power of this corporation is disposed of;
(ii) create any new class or series of stock or any other
securities convertible into equity securities of the corporation (i) having a
preference over, or being on a parity with, Series A Preferred Stock and Series
B Preferred Stock with respect to voting, dividends or upon liquidation, or (ii)
having rights similar to any of the rights of the Series A Preferred Stock and
Series B Preferred Stock under this Section 5; or
(iii) alter or change the rights, preferences or
privileges of the shares of Series A Preferred Stock and Series B Preferred
Stock so as to affect adversely the shares.
6. Status of Converted or Redeemed Stock. In the event any shares of
Series A Preferred Stock or Series B Preferred Stock shall be converted pursuant
to Section 3 hereof, the shares so converted shall be cancelled and shall not be
issuable by this corporation. This Restated Certificate of Incorporation shall
be appropriately amended to effect the corresponding reduction in this
corporation's authorized capital stock. In the event all outstanding shares of
Preferred Stock are automatically converted into Common Stock pursuant to
Section 3 hereof, any designated but unreserved shares of Series A Preferred
Stock and Series B Preferred Stock shall be deemed "converted" pursuant to this
Section.
(C) Common Stock.
1. Dividend Rights. Subject to the prior rights of holders of all
classes of stock at the time outstanding having prior rights as to dividends,
the holders of the Common Stock shall be entitled to receive, when and as
declared by the Board of Directors, out of any assets of this
-12-
<PAGE> 13
corporation legally available therefor, such dividends as may be declared from
time to time by the Board of Directors.
2. Liquidation Rights. Upon the liquidation, dissolution or winding up
of this corporation, the assets of this corporation shall be distributed as
provided in Section 2 of Division (B) of this Article IV hereof.
3. Redemption. The Common Stock is not redeemable.
4. Voting Rights. The holder of each share of Common Stock shall have
the right to one vote, and shall be entitled to notice of any stockholders'
meeting in accordance with the Bylaws of this corporation, and shall be entitled
to vote upon such matters and in such manner as may be provided by law. The
holders of Common Stock shall be entitled to cumulate votes in any election of
directors.
ARTICLE V
A director of this corporation shall not be personally liable to this
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to this corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived any improper
personal benefit. If the Delaware General Corporation Law is amended after
approval by the stockholders of this Article to authorize corporation action
further eliminating or limiting the personal liability of directors, then the
liability of a director of this corporation shall be eliminated or limited to
the fullest extent permitted by the Delaware General Corporation Law, as
amended.
Any repeal or modification of the foregoing paragraph by the
stockholders of this corporation shall not adversely affect any right or
protection of a director of this corporation existing at the time of such repeal
or modification.
ARTICLE VI
This corporation reserves the right to amend, alter, change or repeal
any provision contained in this Amended and Restated Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon stockholders herein are granted to this reservation.
ARTICLE VII
The Board of Directors may from time to time make, amend, supplement or
repeal the Bylaws; provided, however, that the stockholders may change or repeal
any Bylaw adopted by the Board of Directors; and provided, further, that no
amendment or supplement to the Bylaws adopted by the Board of Directors shall
vary or conflict with any amendment or supplement adopted by the stockholders.
-13-
<PAGE> 14
ARTICLE VIII
The number of directors of this corporation shall be fixed from time to
time by a bylaw or amendment thereof duly adopted by the Board of Directors or
by the stockholders.
ARTICLE IX
Elections of directors need not be by written ballot unless the Bylaws
of this corporation shall so provide.
ARTICLE X
Meetings of stockholders may be held within or without the State of
Delaware, the Bylaws may provide. The books of this corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the Bylaws of this corporation.
THIRD: The foregoing amendment was approved by the holders of the
requisite number of shares of said corporation in accordance with Section 228 of
the General Corporation Law.
FOURTH: That said amendments were duly adopted in accordance with the
provisions of Section 242 and 245 of the General Corporation Law.
IN WITNESS WHEREOF, this Restated Certificate of Incorporation has been
signed by the Vice President, Finance and Administration and Chief Financial
Officer and the Assistant Secretary of this corporation this 1st day of May,
1996.
/S/ Dana P. Nickell
------------------------------------
Dana P. Nickell
Vice President, Finance and
Administration and Chief Financial
Officer
ATTEST
/S/ Edward M. Leonard
- ----------------------------------
Edward M. Leonard
Assistant Secretary
-14-
<PAGE> 1
EXHIBIT 20
[CVD Letterhead]
FOR FURTHER INFORMATION
CONTACT STEPHEN KROLL, CFO
(949) 457-9546
CARDIOVASCULAR DYNAMICS AND RADIANCE
MEDICAL SYSTEMS SHAREHOLDERS APPROVE MERGER
-- CVD CHANGES NAME TO REFLECT NEW FOCUS, RENEWED OPPORTUNITIES --
Irvine, CA -- Thursday, January 14, 1999 -- CardioVascular Dynamics, Inc.
(Nasdaq NM: CCVD) (CVD) and Radiance Medical Systems, Inc. announced today the
approval of the acquisition of Radiance Medical Systems, Inc. by CVD at a
Special Meeting of the share holders held today at CVD.
The combined company, which will be named Radiance Medical Systems, Inc., will
focus its research and development on the use of radiotherapy in the treatment
of coronary and peripheral vascular disease. CVD/Radiance expects to begin
trading on the Nasdaq National Market under the symbol "RADX" beginning on
Monday, January 25, 1999.
"This is a landmark day for our companies which will result in a combined entity
that we believe creates significant opportunities for profitable growth and
long-term enhancement of shareholder value," said Michael R. Henson, Chairman of
Radiance and who will also become Chief Executive Officer in February 1999. "As
a result of this acquisition, we believe we have brought together innovative
technologies that are extremely complementary and which could result in
clinically superior products that serve real medical needs in growing markets.
We have established a sound plan to integrate the development of Radiance
technology with CVD's SEAL [Self Expanding Arterial Liner] devices and are ready
to deploy our collective resources to successfully develop and commercialize
these technologies."
- more -
<PAGE> 2
page 2
The total value of the CVD Common Stock to be issued to the Radiance
Stockholders at closing was approximately $7 million. Assuming all product
development milestones are met on scheduled dates, no options are exercised and
there is no adjustment upon registration of the CVD Common Stock with the SEC,
an additional amount of approximately $6.9 million of CVD Common Stock will be
issued to former Radiance Stockholders.
Under the terms of the merger agreement, CVD agreed to pay the stockholders of
Radiance $3.00 for each share of Radiance Preferred Stock and $2.00 for each
share of Radiance Common Stock. In addition, Radiance stockholders may receive
product development milestone payments of up to $2.00 for each share of Radiance
Series A Preferred Stock and up to $3.00 for each share of Radiance Common Stock
based on the achievement of certain events including regulatory approvals, and
an additional adjusted payment upon the registration for resale of the CVD
Common Stock with the Securities and Exchange Commission. Such milestone
payments may increase by up to 30% percent by early achievement and may decrease
or be eliminated by late achievement or non-achievement of such milestones.
Holders of Radiance Common Stock will receive CVD Common Stock for their shares.
A majority of the holders of Radiance Series A Preferred Stock will receive CVD
Common Stock while an aggregate of approximately $690,000 will be paid to those
preferred holders who elected a cash payment. In addition, all outstanding stock
options of Radiance accelerated and vested immediately prior to the closing of
the merger. To the extent not exercised, such options were assumed by CVD and
converted into an option, at the same exercise price, to purchase $2.00 worth of
CVD Common Stock. Option holders shall also receive up to $3.00 per share in
milestone payments, when and if paid to holders of Radiance Common Stock,
subject to adjustment as described above. CVD has agreed to register for resale
the shares of CVD Common Stock issued to the holders of Radiance stock and
options.
- more -
<PAGE> 3
page 3
Radiance Medical Systems, Inc. develops radiotherapy catheter delivery systems
for the site-specific delivery of radiation to prevent reoccurrence following
interventional treatment of atherosclerosis.
CardioVascular Dynamics develops peripheral and coronary stents, coronary stent
delivery systems, balloon dilatation catheters for coronary and peripheral
vascular use, site-specific drug delivery catheters systems.
Except for historical information contained herein, this Press Release contains
forward looking statements, the accuracy of which are necessarily subject to
risks and uncertainties. Actual results may be affected by, among other things,
new product development and introduction cycles, research and development
activities, including failure to demonstrate clinical efficacy, delays by
regulatory authorities, scientific and technical advances by CVD/Radiance
Medical Systems or third parties, introduction of competitive products, third
party reimbursement and physician training, and other risk factors and matters
set forth in the Company's Form 10-K for the year ended December 31, 1997 and
the Company's Quarterly Report on Form 10-Q for the quarter ended September 30,
1998.
# # #
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements on
Form S-8 No. 333-07959, No. 333-42161 and No. 333-59305 of our report dated May
8, 1998, with respect to the financial statements of the former Radiance
Medical Systems, Inc. included on page F-21 in the Registrant's Proxy Statement
addressing the Special Meeting of Shareholders held January 14, 1999 which are
incorporated by reference in Registrant's Current Report on Form 8-K.
/s/ ERNST & YOUNG LLP
Orange County, California
January 22, 1999
<PAGE> 1
EXHIBIT 99.2
------------
ITEM 7(b)
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 Radiance Medical Systems, Inc.
(formerly Cardiovascular Dynamics, Inc.) or what the results of operation or
financial position would have been had the acquisition been effected on the date
indicated. The information should be read in conjunction with the audited
financial statements of the Registrant and CVD/RMS Acquisition Corp. ("RMS
Acquisition") (formerly Radiance Medical Systems, Inc.) incorporated by
reference in this document.
The unaudited pro forma condensed combined financial information of
Registrant, RMS Acquisition and Clinitec GmbH ("Clinitec") set forth below gives
effect to the acquisitions of the former Radiance (now RMS Acquisition) and
Clinitec under the purchase accounting method, as if the acquisition had
occurred as of August 15, 1997 and January 1, 1998 for the (former) Radiance 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.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
RMS
REGISTRANT(a) ACQUISITION CLINITEC PRO FORMA
ACTUAL(b) ACTUAL(c) ACTUAL(d) ADJUSTMENTS PRO FORMA
------------- ----------- --------- ----------- ---------
(In thousands)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS
DATE:
Revenue:
Sales............................... $ 11,332 $ -- $ 301 $ -- $ 11,633
Costs and expenses:...................
Cost of sales....................... 6,418 -- 560 -- 6,978
Research and development............ 7,041 132 -- 316 (1) 7,489
Marketing and sales................. 6,691 -- 442 -- 7,133
General and administrative.......... 2,179 18 -- -- 2,197
-------- -------- -------- -------- --------
Total operating costs and expenses.... 22,329 150 1,002 316 23,797
-------- -------- -------- -------- --------
Loss from operations.................. (10,997) (150) (701) (316) (12,164)
Other income.......................... 2,225 19 -- (23)(2) 2,221
-------- -------- -------- -------- --------
Net loss.............................. $ (8,772) $ (131) $ (701) $ (339) $ (9,943)
======== ======== ======== ======== ========
Basic and diluted net loss per share(3) $ (0.96) $ (1.00)
======== ========
Shares used in computing basic and
diluted net loss per share(3)....... 9,118 9,957
======== ========
</TABLE>
- --------------------------
(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 will be expensed for in-process research and development.
(c) Formerly Radiance Medical Systems, Inc., a development stage company, which
began operations in August of 1997.
(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 reflect amortization of developed technology and identified intangible
assets using lives of 3 to 7 years.
<PAGE> 2
(2) To reflect reduction of interest income from cash portion of acquisition
consideration of $692 and acquisition costs of $400 at an average rate of
5.5% per annum.
(3) To reflect an increase in the weighted average shares outstanding as 91% of
acquisition consideration will be 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:
<TABLE>
<CAPTION>
<S> <C>
9,118 Registrant shares used in computing basic and diluted net loss per share.
839 Shares to former (pre-acquisition) RMS shareholders, assuming an August, 1997 acquisition date.
-----
9,957 Pro forma shares used in computing pro forma basic and diluted net loss per share.
=====
</TABLE>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
RMS
REGISTRANT(a) ACQUISITION PRO FORMA
ACTUAL(b) ACTUAL(c) ADJUSTMENTS PRO FORMA
------------- ----------- ----------- ---------
(In thousands)
<S> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS
DATE:
Revenue:
Sales............................. $ 7,031 $ -- $ -- $ 7,031
License fee and other............. 1,605 -- -- 1,605
---------- -------- ------ -------
Total revenue....................... 8,636 -- -- 8,636
Costs and expenses:
Cost of sales..................... 4,339 -- -- 4,339
Research and development.......... 5,038 1,025 491 (1)(2) 6,554
Marketing and sales............... 3,801 -- -- 3,801
General and administrative........ 1,855 45 -- 1,900
Minority interest................. (68) -- 68 (2) --
---------- -------- ------ -------
Total operating costs and expenses.. 14,965 1,070 559 16,594
---------- -------- ------ -------
Loss from operations................ (6,329) (1,070) (559) (7,958)
Other income........................ 1,136 44 (45)(3) 1,135
---------- -------- ------ -------
Net loss............................ $ (5,193) $ (1,026) $ (604) $(6,823)
========== ======== ====== =======
Basic and diluted net loss per
share(4).......................... $ (0.59) $ (0.62)
========== =======
Shares used in computing basic and
diluted net loss per share(4)..... 8,857 11,075
========== =======
</TABLE>
- ---------------------
(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 will be expensed for in-process research and development.
(c) Formerly Radiance Medical Systems, Inc., a development stage company, which
began operations in August of 1997.
(1) To reflect amortization of developed technology and identified intangible
assets using lives of 3 to 7 years.
(2) To reverse entries to record to Registrant's share of RMS Acquisition
(former Radiance) operating results at September 10, 1998, which consisted
of $136 of research and development expenses and $68 in minority interests
share of losses.
(3) To reflect reduction of interest income from cash portion of acquisition
consideration of $692 and acquisition costs of $400 at an average rate of
5.5% per annum.
(4) To reflect an increase in the weighted average shares outstanding as 91% of
acquisition consideration will be 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:
<TABLE>
<CAPTION>
<S> <C>
8,857 Registrant shares used in computing basic and diluted net loss per share.
2,218 Shares to former (pre-acquisition) RMS shareholders, assuming an August, 1997 acquisition date.
------
11,075 Pro forma shares used in computing pro forma basic and diluted net loss per share.
======
</TABLE>
<PAGE> 3
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
REGISTRANT(a) PRO FORMA
ACTUAL(b) ADJUSTMENTS(1) PRO FORMA
------------- -------------- ---------
<S> <C> <C> <C>
ASSETS:
Cash and cash equivalents....................... $ 3,627 $ -- $ 3,627
Marketable securities available-for-sale........ 23,301 (1,092)(1) 22,209
Other current assets............................ 5,161 -- 5,161
---------- -------- ---------
Total current assets............................... 32,089 (1,092) 30,997
Property and equipment, net........................ 1,537 -- 1,537
Goodwill and other acquired intangibles, net....... 2,288 3,771 (1) 6,059
Other assets....................................... 378 -- 378
---------- -------- ---------
Total assets............................... $ 36,292 $ 2,679 $ 38,971
========== ======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities................................ $ 3,532 $ -- $ 3,532
Minority interest.................................. 910 (910)(1) --
Stockholders' equity
Common stock.................................... 10 2 (1) 12
Additional paid-in capital...................... 60,679 7,429 (1) 68,108
Accumulated deficit............................. (25,014) (3,842)(1) (28,856)
Other stockholders' equity...................... (3,825) -- (3,825)
---------- -------- ---------
Total stockholder's equity................. 31,850 3,589 35,439
---------- -------- ---------
Total liabilities and stockholder's equity. $ 36,292 $ 2,679 $ 38,971
========== ======== =========
</TABLE>
- --------------------
(a) Radiance Medical Systems, Inc. (formerly CardioVascular Dynamics, Inc.).
(b) The accounts of RMS Acquisition (formerly Radiance) are included in the
consolidated balance sheet of Registrant at September 30, 1998.
(1) To reflect the total purchase price of $8,523 which will be 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.
<TABLE>
<CAPTION>
<S> <C>
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...................................................... 1,192
Reclassify amounts assigned to goodwill for previous purchases of
Former (pre-acquisition) Radiance Preferred Stock............................ (493)
--------
Estimated total purchase price............................................... $ 8,523
========
</TABLE>
