UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark one)
[X] Quarterly Report under Section 13 or 15 (d) of the
Securities Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1999
[ ] Transition Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Commission File Number: 0-11914
CAPRIUS, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-2457487
-------- -----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Parker Plaza, Fort Lee, NJ 07024
------------------------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (201) 592-8838
--------------
Securities to be registered under Section 12 (b) of the Exchange Act:
None
Indicate by check mark whether the registrant (1) filed all reports
required to be filed under Section 13 or 15 (d) of the Exchange Act during the
past 12 months (or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes X No
----- -----
Indicate the number of shares outstanding of issuer's classes of
common equity, as of the latest practicable date.
Class Outstanding at December 31, 1999
Common Stock. Par value $0.01 13,525,517 shares
<PAGE>
CAPRIUS, INC. AND SUBSIDIARIES
INDEX
Page No.
--------
PART I - FINANCIAL INFORMATION
ITEM 1. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets - December 31, 1999 3
and September 30, 1999
Consolidated Statements of Operations - for the 4
three months ended December 31, 1999 and
December 31, 1998
Consolidated Statement of Stockholders' Equity 5
Consolidated Statements of Cash Flows - for the three 6
months ended December 31, 1999 and December 31, 1998
Notes to Consolidated Financial Statements 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 10
PART II - OTHER INFORMATION 11
ITEM 1. LEGAL PROCEEDINGS 11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 12
SIGNATURES 13
EXHIBIT INDEX
27 Financial data Schedule 14
2
<PAGE>
CAPRIUS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
December 31, September 30,
1999 1999
------------------ -------------------
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 107,078 $ 116,068
Accounts receivable, net of reserve for bad debts of $25,669 at
December 31, 1999 and $25,669 at September 30, 1999 582,711 537,510
Inventories 287,097 210,983
Other current assets 31,058 91,723
------------------ -------------------
Total current assets 1,007,944 956,284
------------------ -------------------
Property and Equipment:
Medical equipment 314,318 314,320
Office furniture and equipment 188,617 188,001
Other equipment - -
Leasehold improvements 950 950
------------------ -------------------
503,886 503,271
Less: accumulated depreciation and amortization 183,156 151,348
------------------ -------------------
Net property and equipment 320,730 351,923
------------------ -------------------
Other Assets:
Goodwill, net of accumulated amortization of $53,991 at
December 31, 1999 and $45,006 at September 30, 1999 666,191 675,176
Other intangibles, net of accumulated amortization of $59,759 at
December 31, 1999 and $29,880 at September 30, 1999 2,330,614 2,360,493
Other 13,048 9,314
------------------ -------------------
Total other assets 3,009,853 3,044,983
------------------ -------------------
Total Assets $ 4,338,527 $ 4,353,190
================== ===================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 558,424 $ 342,204
Accrued expenses 433,079 465,941
Accrued compensation 718,434 652,153
Other current liabilities - -
Current maturities of long-term debt and capital lease obligations 697,203 703,100
------------------ -------------------
Total current liabilities 2,407,139 2,163,398
Long-term Debt and Capital Lease Obligations, Net of Current Maturities 169,751 180,623
------------------ -------------------
Total Liabilities 2,576,891 2,344,021
------------------ -------------------
Commitments and contingencies - -
Stockholders' Equity:
Preferred stock, $.01 par value
Authorized - 1,000,000 shares
Issued and outstanding - Series A, none; Series B, convertible,
27,000 shares at December 31, 1999 and September 30, 1999.
Liquidation preference $2,700,000 2,700,000 2,700,000
Common stock, $.01 par value
Authorized - 50,000,000 shares
Issued - 13,548,017 shares at December 31, 1999
and 13,548,017 shares at September 30, 1999 135,480 135,480
Additional paid-in capital 64,778,855 64,778,855
Accumulated deficit (65,850,449) (65,602,916)
Treasury stock (22,500 common shares, at cost) (2,250) (2,250)
------------------ -------------------
Total stockholders' equity 1,761,636 2,009,169
------------------ -------------------
$ 4,338,527 $ 4,353,190
================== ===================
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
3
<PAGE>
CAPRIUS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended December 31,
1999 1998
------------------------ -------------------------
Revenues:
<S> <C> <C>
Net patient service revenues $ 433,247 $ 1,144,529
Net product sales 473,812 -
------------------------ -------------------------
Total revenues 907,059 1,144,529
------------------------ -------------------------
Operating Expenses:
Cost of operations 475,338 970,675
Selling, general and administrative 665,172 869,398
Research and development - 425,002
Provision for bad debt and collection costs 1,376 123,020
Loss on sale of imaging business - 12,670
------------------------ -------------------------
Total operating expenses 1,141,885 2,400,765
------------------------ -------------------------
Operating loss from continuing operations (234,826) (1,256,236)
Interest income - 16,158
Interest expense (12,706) (58,922)
------------------------ -------------------------
Loss from continuing operations before provision
for income taxes (247,532) (1,299,000)
Provision for income taxes - -
------------------------ -------------------------
Loss from continuing operations (247,532) (1,299,000)
Income on disposal of discontinued operation - 1,100,000
------------------------ -------------------------
Net Loss $ (247,532) $ (199,000)
======================== =========================
Income (loss) per basic and diluted common share:
Loss from continuing operations $(0.02) $(0.18)
Income on disposal of discontinued operation - 0.15
------------------------ -------------------------
Net loss per share $(0.02) $(0.03)
======================== =========================
Weighted average number of common shares outstanding,
basic and diluted 13,525,517 7,369,040
======================== =========================
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
4
<PAGE>
CAPRIUS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOKHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Preferred Stock Common Stock
---------------------------------------------------------- Additional
Number Number $0.01 Paid-in
of Shares Amount of Shares Par Value Capital
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, September 30, 1998 27,000 $ 2,700,000 7,369,040 $ 73,690 $ 63,561,672
Issuance of common stock
related to Opus merger -- -- 6,178,977 61,790 1,217,183
Net loss -- -- -- -- --
----------------------------------------------------------------------
Balance, September 30, 1999 27,000 2,700,000 13,548,017 135,480 64,778,855
Net Loss
----------------------------------------------------------------------
Balance, December 31, 1999 27,000 $ 2,700,000 13,548,017 $ 135,480 $ 64,778,855
</TABLE>
<TABLE>
<CAPTION>
Treasury Stock
------------------------ Total
Accumulated Number $0.01 Stockholders'
Deficit of Shares Par Value Equity
------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, September 30, 1998 $(59,107,288) 22,500 $ (2,250) $ 7,225,824
Issuance of common stock
related to Opus merger -- -- -- 1,278,973
Net loss (6,495,628) -- -- (6,495,628)
------------------------------------------------------------
Balance, September 30, 1999 (65,602,916) 22,500 (2,250) 2,009,169
Net Loss (247,532)
------------------------------------------------------------
Balance, December 31, 1999 $(65,850,448) 22,500 $ (2,250) $ 1,761,636
============================================================
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
5
<PAGE>
CAPRIUS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended December 31,
1999 1998
------------------ -------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Loss $ (247,532) $ (199,000)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 70,672 333,203
Equity in net loss of unconsolidated subsidiary - -
Gain on disposal of discontinued business - (1,100,000)
Changes in operating assets and liabilities:
Accounts receivable, net 4,799 110,365
Inventories (76,114) (70)
Other current assets 10,665 (55,333)
Accounts payable and accrued expenses 245,905 (393,614)
------------------ -------------------
Net cash used in operating activities 8,395 (1,304,449)
------------------ -------------------
Cash Flows from Investing Activities:
Proceeds from disposal of discontinued operations - 1,100,000
Purchase of equipment, furniture and leasehold improvements (616) (159,186)
------------------ -------------------
Net cash provided by (used in) investing activities (616) 940,814
------------------ -------------------
Cash Flows from Financing Activities:
Proceeds from issuance of long-term debt - 297,484
Repayment of long-term debt and capital lease obligations (16,769) (203,281)
------------------ -------------------
Net cash provided by (used in) financing activities (16,769) 94,203
------------------ -------------------
Net decrease in cash and cash equivalents (8,990) (269,432)
Cash and cash equivalents, beginning of year 116,068 1,791,476
------------------ -------------------
Cash and cash equivalents, end of year $ 107,078 $ 1,522,044
================== ===================
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest during the period $ 12,706 $ 79,228
================== ===================
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
6
<PAGE>
CAPRIUS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATMENTS
(unaudited)
NOTE 1 - BASIS OF PRESENTATION
- ------------------------------
The results of operations of Caprius, Inc. ("Caprius" or the
"Company") for the interim periods shown in this report are not necessarily
indicative of results to be expected for the fiscal year. In the opinion of
management, the information contained herein reflects all adjustments necessary
to make the results of operations for the interim periods a fair statement of
such operations. All such adjustments are of a normal recurring nature.
The accompanying financial statements do not contain all of the
disclosures required by generally accepted accounting principles and should be
read in conjunction with the financial statements and related notes included in
the Company's annual report on form 10KSB for the fiscal year ended September
30, 1999.
NOTE 2 - THE COMPANY
- --------------------
Caprius, Inc. ("Caprius" or the "Company") was founded in 1983 and
through June 1999 essentially operated in the business of medical imaging
systems as well as healthcare imaging and rehabilitation services. On June 28,
1999, the Company acquired Opus Diagnostics Inc. ("Opus") and began
manufacturing and selling medical diagnostic assays. The Company continues to
own and operate a comprehensive imaging center located in Lauderhill, Florida.
Upon the merger (the "Opus Merger") between Opus and Caprius'
newly-formed wholly-owned subsidiary Caprius Merger Sub Inc., the Opus
stockholders received an aggregate of 6,178,977 shares of Caprius Common Stock,
par value $.01 per share, which constituted approximately 45.6% of the
outstanding shares after the Merger.
The Opus Merger was consummated coincident with the closing of an
Asset Purchase Agreement (the "Oxis Purchase Agreement") between Opus and Oxis
Health Products Inc., a Delaware corporation ("Oxis"). The purchase price
consisted of $500,000 in cash, a secured promissory note (the "Oxis Note") in
the principal amount of $586,389 (as adjusted) payable on November 30, 1999, and
a warrant granting Oxis the right to acquire up to 10% equity interest in Opus
(on a pre-Merger basis) (the "Warrant"), exercisable after six months for a
period of five years. This note is secured by substantially all assets of Opus.
Upon the Opus Merger, the Warrant became exercisable for 617,898 shares of
Caprius Common Stock at an exercise price equal to 80% of the average bid and
asked prices for the Common Stock for the five trading days immediately
preceding December 28, 1999. As of December 8, 1999, the principal sum due under
the Oxis Note was paid in full and under an Amended and Restated Warrant, a
warrant for 617,898 shares of Caprius Common Stock was issued, exercisable at
$.0875 per share in replacement of the Warrant.
George Aaron and Jonathan Joels formed Opus in 1999 for the purpose of
effecting the Opus Merger and the Oxis Purchase Agreement.
Opus produces and sells 14 diagnostic assays, calibrators and controls
for therapeutic drug monitoring which are used on the Abbott TDx(R) and
TDxFLx(R) instruments. Pursuant to the Oxis Purchase Agreement, Opus acquired
the assets relating to the Oxis reagent patent and trademark and distribution
network for the therapeutic drug monitoring assay business (the "TDM Business").
Additionally, pursuant to a Services Agreement, Oxis is manufacturing the
products of the TDM Business of Opus through September 30, 2000.
7
<PAGE>
On April 27, 1999, pursuant to an Asset Purchase Agreement among
Caprius, Caprius Systems, Inc., a wholly owned subsidiary of Caprius ("Systems"
and, together with Caprius, the "Sellers") and Pacific Republic Capital Corp.
("Pacific" the Buyer), the Sellers consummated the sale of their Aurora breast
scanner technology ("Aurora Technology") and related assets to Pacific for
$854,490 in cash and the assumption by Pacific of certain obligations associated
with the transferred assets. The assets and obligations transferred included all
the shares of Caprius' wholly owned subsidiary, Caprius Imaging Corp., various
patents relating to the Aurora technology and assets of Systems, including
hospital equipment contracts and equipment leases. Caprius was relieved of an
equipment debt that exceeded $1.1 million.
In March 1999, the Company transferred its interest in its
rehabilitation center to an unrelated limited liability company in exchange for
$900,000, of which $850,000 was paid as of September 30, 1999. In addition, the
acquiring group assumed certain liabilities totaling approximately $400,000. The
cash received of $900,000 was used in part to pay a balance of approximately
$372,000 to the former owner of the center, which was the remaining amount due
from the Company's acquisition of its interest in the center.
In July 1998, the Company acquired The Strax Institute ("Strax"), a
comprehensive breast imaging center, located in Lauderhill, Florida. Strax is a
multi-modality breast care center that treats approximately 15,000 patients per
year offering x-ray mammography, ultrasound, stereotactic biopsy and bone
densitometry.
Effective November 10, 1997, the Company completed a merger (the "AMS
Merger") with Advanced Mammography Systems, Inc. ("AMS"), whereby AMS merged
into AMS Merger Corp., a wholly owned subsidiary of the Company, and became a
wholly owned subsidiary. Upon the AMS Merger, the Company changed its name to
Caprius, Inc. AMS was originally formed on July 2, 1992 as a wholly owned
subsidiary of Caprius to develop a dedicated breast MRI system and at the time
of the AMS Merger, the Company owned approximately 14% of the outstanding AMS
stock.
NOTE 3 - PREFERRED STOCK - SERIES B
- ------------------------------------
On August 18, 1997, the Company entered into various agreements with
General Electric Company ("GE") including an agreement whereby GE purchased
27,000 shares of newly issued Series B Convertible Redeemable Preferred Stock
(the "Series B Preferred Stock") for $2,700,000.
The Series B Preferred Stock consists of 27,000 shares, ranks senior
to any other shares of preferred stock which may be created and the Common
Stock. It has a liquidation value of $100.00 per share, plus accrued and unpaid
dividends, is non-voting except if the Company proposes an amendment to its
Certificate of Incorporation which would adversely affect the rights of the
holders of the Series B Preferred Stock, and is initially convertible into
1,597,930 shares of Common Stock, subject to customary anti-dilution provisions.
No fixed dividends are payable on the Series B Preferred Stock, except that if a
dividend is paid on the Common Stock, dividends are paid on the shares of Series
B Preferred Stock as if they were converted into shares of Common Stock.
NOTE 4 - PATENT INFRINGEMENT SETTLEMENT
- ---------------------------------------
During the three months ended December 31, 1998 the Company received
$1,100,000 from a major MRI manufacturer to resolve outstanding patent issues
unrelated to the patents protecting its Aurora technology.
8
<PAGE>
NOTE 5 - RELATED PARTY TRANSACTION
- -----------------------------------
The Company had an employment agreement with Jack Nelson (the "Nelson
Employment Agreement"), employing him as Chairman of the Board, Chief Executive
Officer and Treasurer. The Agreement was originally entered into on December 20,
1995, whereby Mr. Nelson was employed by both the Company and AMS. Effective
with the AMS Merger, Mr. Nelson became employed full-time by the Company. The
Nelson Employment Agreement included an aggregate base salary of $258,500, with
any additional increases in base salary thereafter being instituted by the Board
of Directors. Upon the Opus Merger, effective June 28, 1999, Caprius entered
into a Severance Agreement with Mr. Nelson terminating the Nelson Employment
Agreement, terminating all options and he ceased serving as the Chairman and
Chief Executive Officer. Pursuant to the Severance Agreement, Mr. Nelson is
serving as a consultant to Caprius for a period of one year. Mr. Nelson received
$45,734 in cash as payment of deferred compensation, will get 125,000 shares of
Caprius Common Stock in 2000, and was to have received a $258,500 payment upon
the earlier of December 28, 1999 or the consummation of a Business Transaction
(as defined therein). As of December 28, 1999, this severance obligation was
converted into a Note repayable on September 1, 2000 subject to mandatory
repayment from the proceeds of the sale of The Strax Institute, and if not
repaid by March 1, 2000, becomes secured by the assets of The Strax Institute.
Any prepayments on the Notes to Mr. Nelson would be prorated with prepayments on
the Note to Mr. Levy.
The Company had an employment agreement with Enrique Levy (the "Levy
Employment Agreement") employing him as President and Chief Operating Officer.
The Levy Employment Agreement included an aggregate base salary of $247,500 with
any additional increases in base salary thereafter being instituted by the Board
of Directors. Upon the Merger with Opus, effective June 28, 1999, Caprius
entered into a Severance Agreement with Mr. Levy terminating the Levy Employment
Agreement, terminating all options and he ceased serving as the President and
Chief Operating Officer. Pursuant to the Severance Agreement, Mr. Levy is
serving as a consultant to Caprius for a period of one year. Mr. Levy received
$43,789 as cash plus payment of deferred compensation, will get 100,000 shares
of Caprius Common Stock in 2000 and was to have received a $247,500 payment upon
the earlier of December 28, 1999 or the consummation of a Business Transaction
(as defined therein). As of December 28, 1999, this severance obligation was
converted into a Note repayable on September 1, 2000 subject to mandatory
repayment from the proceeds of the sale of the Strax Institute, and if not
repaid by March 1, 2000, becomes secured by the assets of The Strax Institute.
Any prepayments on the note to Mr. Levy would be prorated with prepayments on
the Note to Mr. Nelson.
9
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 1999 COMPARED TO THREE MONTHS ENDED DECEMBER 31,
1998
Due to significant changes in the nature of operations of the Company
during the past two years, comparisons of results of operations between years
may not be meaningful.
RESULTS OF OPERATIONS
The results of operations for the three months ended December 31, 1999
and 1998 are not necessarily indicative of results for future periods. The
following discussion should be read in conjunction with the attached notes
thereto, and with the audited financial statements and notes thereto for the
fiscal year ended September 30, 1999.
Net patient service revenues totaled $433,247 for the three months
ended December 31, 1999 versus $ 1,144,529 for the three months ended December
31, 1998. Cost of patient service operations totaled $273,371 for the three
months ended December 31,1999 versus $970,675 for the three months ended
December 31, 1998. The decreases from 1998 to 1999 are primarily due to the sale
of the Aurora Technology and the rehabilitation business, partially offset by
the additional net patient revenues and operating expenses for the Strax
Institute.
Net product sales revenues for the three months ended December 31,
1999 totaled $473,812. The cost of goods for the Opus business for this period
was $201,967 and is included in cost of operations. The Company acquired Opus'
therapeutic drug monitoring products in June 1999.
Selling, general and administrative expenses totaled $665,172 for the
three months ended December 31, 1999 versus $869,398 for the three months ended
December 31, 1998. This decrease reflects the sale of Aurora Technology and the
rehabilitation business as well as a shift in business focus to the Opus
Diagnostics product line of therapeutic drug monitoring assays (TDM).
In 1998, research and development reflects the change in the
accounting treatment of AMS from equity to consolidation accounting.
LIQUIDITY AND CAPITAL RESOURCES
The Company had available cash and cash equivalents of $ 107,078 at
December 31, 1999. The Company intends to utilize the funds for working capital
purposes to continue developing the business of Opus by adding new distributors
in territories currently not covered by existing distributors and for the
development of new diagnostic kits. The Company is currently pursuing efforts to
identify additional funds through various funding options, including bridge
loans, banking facilities and equity offerings. The ability to secure commercial
or other borrowings could be more difficult due to the Company's delisting from
NASDAQ. There can be no assurance that such funding initiatives will be
successful and any equity placement could result in substantial dilution to
current stockholders. Consequently, the Company's viability could be threatened.
Accordingly, the auditors' report on the September 30, 1999 financial statements
contains an explanatory paragraph expressing substantial doubt about the
Company's ability to continue as a going concern.
There was no significant cash flows used in investing activities for
the three months ended December 31, 1999 nor were there any cash flows from
financing activities. Net cash used in operations amounted to $8,395.
10
<PAGE>
During the year ended September 30, 1999, the Company funded its
operations principally through the cash obtained from the sale of the Aurora
technology business. Since the fiscal year end, the Company completed a
short-term bridge loan of $600,000 through the issuance of loan notes due on
February 29, 2000 and warrants, which was used principally to pay the Oxis Note,
retained an investment banker, has concluded agreements with Mr. Nelson and Mr.
Levy to extend the payment date for their severance payments through the
issuance of notes to them, and is reviewing the possible disposition of The
Strax Institute.
INFLATION
To date, inflation has not had a material effect on the Company's
business. The Company believes that the effects of future inflation may be
minimized by controlling costs and increasing efficiency through product sales
volume of the diagnostic kit business.
YEAR 2000 SYSTEMS
The Company had undertaken a review concerning the ability of its
internal information systems to handle date information and to function
appropriately from and after January 1, 2000. The total cost to address any
changes required as a result of the so-called "Year 2000 Problem" was not
material. In addition, the Company evaluated the impact of possible Year 2000
problems encountered by its suppliers and customers upon the Company and to date
there have not been any problems.
FORWARD LOOKING STATEMENTS
The Company is including the following cautionary statement in this
Form 10-QSB to make applicable and take advantage of the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995 for any forward-looking
statements made by, or on behalf of, the Company. Forward-looking statements
include statements concerning plans, objectives, goals, strategies, future
events or performance and underlying assumptions and other statements which are
other than statements of historical facts. Certain statements contained herein
are forward-looking statements and accordingly involve risks and uncertainties
which could cause actual results or outcomes to differ materially from those
expressed in the forward-looking statements. The Company's expectations, beliefs
and projections are expressed in good faith and are believed by the Company to
have a reasonable basis, including without limitation, management's examination
of historical operating trends, data contained in the Company's records and
other data available from third parties, but there can be no assurance that
management's expectation, beliefs or projections will result or be achieved or
accomplished. In addition to other factors and matters discussed elsewhere
herein, the following are important factors that, in the view of the Company,
could cause actual results to differ materially from those discussed in the
forward-looking statements: technological advances by the Company's competitors,
changes in health care reform, including reimbursement programs, capital needs
to fund any delays or extensions of research programs, delays in new product
development, lack of market acceptance of new technology based products, changes
in governmental regulations, and the availability of capital on terms
satisfactory to the Company. The Company disclaims any obligation to update any
forward-looking statements to reflect events or circumstances after the date
hereof.
PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
-----------------
On October 19, 1998, the Company filed a complaint against Eric T.
Shebar, M.D. ("Shebar"), the former Chief Operating Officer and Medical Director
for the Company's motor vehicle accident rehabilitation ("MVA") business, and
MVA Center for Rehabilitation, Inc. ("MVA, Inc.") whereby the Company alleged
breach of contract and certain misrepresentations and sought damages in an
amount to be determined at trial. The Company filed a preliminary injunction to
reach and apply a secured promissory note to MVA, Inc. against damages sought
11
<PAGE>
from Shebar and to enjoin him against any remedies upon default of the Note. The
injunction was denied. Consequently, the final Note payment of approximately
$372,000 was paid as part of the sale of the MVA. A Settlement Agreement between
the Company and Eric T. Shebar, M.D. was entered into on December 27, 1999,
wherein the Company paid $60,000 immediately with a further $20,000 to be paid
over the next two years. Upon the initial payment, the Company was released from
all claims and actions relating to this matter.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
(a) Exhibits
27 Financial Data Schedule
Settlement Agreement, General Release and Covenant Not to Sue
("Agreement") between MVA Rehabilitation Associates, MDI Rehab
Inc. Middlesex MRI Center and Eric T. Shebar, M.D., dated
December 27, 1999 (incorporated by reference to Exhibit 10.14
to Registrant's September 30, 1999 Form 10-KSB).
Promissory Notes issued for bridge loan in the aggregate
amount of $600,000 (November 1999 and December 1999)
(incorporated by reference to Exhibit 10.15 to Registrant's
September 30, 1999 Form 10-KSB).
Form of Secured Promissory Note, dated as of December 28,
1999, from Registrant to Jack Nelson (incorporated by
reference to Exhibit 10.16.1 to Registrant's September 30,
1999 Form 10-KSB.
Form of Secured Promissory Note, dated as of December 28,
1999, from Registrant to Enrique Levy (incorporated by
reference to Exhibit 10.16.2 to Registrants September 30, 1999
Form 10-KSB.
Form of Security Agreement, dated as of December 28, 1999, by
Registrant to Enrique Levy as Agent (incorporated by reference
to Exhibit 10.16.3 to Registrant's September 30, 1999 Form
10-KSB.
(b) Reports of Form 8-K
None
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Caprius, Inc.
-------------
(Registrant)
Date: February 11, 2000 /s/George Aaron
-------------------------
George Aaron
President & Chief Executive Officer
Date: February 11, 2000 /s/Jonathan Joels
-------------------------
Jonathan Joels
Chief Financial Officer
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Caprius, Inc. Form 10-QSB for the period ended December 31, 1999, and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000722567
<NAME> CAPRIUS, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> DEC-31-1999
<CASH> 107
<SECURITIES> 0
<RECEIVABLES> 609
<ALLOWANCES> (26)
<INVENTORY> 287
<CURRENT-ASSETS> 1,008
<PP&E> 504
<DEPRECIATION> (183)
<TOTAL-ASSETS> 4,339
<CURRENT-LIABILITIES> 2,407
<BONDS> 0
0
2,700
<COMMON> 135
<OTHER-SE> 1,762
<TOTAL-LIABILITY-AND-EQUITY> 4,339
<SALES> 1,109
<TOTAL-REVENUES> 1,109
<CGS> 202
<TOTAL-COSTS> 202
<OTHER-EXPENSES> 1,142
<LOSS-PROVISION> (235)
<INTEREST-EXPENSE> 13
<INCOME-PRETAX> (248)
<INCOME-TAX> 0
<INCOME-CONTINUING> (248)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (248)
<EPS-BASIC> (.03)
<EPS-DILUTED> (.03)
</TABLE>
