CAS MEDICAL SYSTEMS, INC.
21 Business Park Drive
Branford, Connecticut 06405
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 11, 1997
To the Stockholders of
CAS MEDICAL SYSTEMS, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of CAS
MEDICAL SYSTEMS, INC., a Delaware corporation (the "Company"), will be held on
Wednesday, June 11, 1997, at 10:00 a.m., Eastern Daylight Time, at the offices
of the Company, 21 Business Park Drive, Branford, Connecticut 06405, for the
following purposes:
(1) To elect five directors of the Company, each for a term of one year;
(2)To ratify the selection of Arthur Andersen LLP as independent auditors
for the Company's fiscal year ending December 31, 1997;
(3)To transact such other business as may properly come before the
Meeting.
Only stockholders of record at the close of business on April 28, 1997 are
entitled to notice of and to vote at the Meeting or any adjournment thereof.
By Order of the Board of Directors,
Louis Celano
Secretary
Branford, Connecticut
April 28, 1997
If you do not plan to attend the Annual Meeting to vote your shares,
please complete, date, sign and promptly mail the enclosed proxy card in the
return envelope provided. No postage is necessary if mailed in the United
States. Any person giving a proxy has the power to revoke it at any time, and
shareowners who are present at the meeting may withdraw their proxies and vote
in person.
<PAGE>
CAS MEDICAL SYSTEMS, INC.
21 Business Park Drive
Branford, Connecticut 06405
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors and management of CAS Medical Systems, Inc., a Delaware
corporation (the "Company"), of proxies for use at the Annual Meeting of
Stockholders of the Company (the "Annual Meeting") to be held on Wednesday,
June 11, 1997, at 10:00 a.m. Eastern Daylight Time at the offices of the
Company, 21 Business Park Drive, Branford, Connecticut 06405, and at any and
all postponements or adjournments thereof, for the purposes set forth in the
accompanying Notice of Meeting.
This Proxy Statement, Notice of Meeting and accompanying proxy card are
first being mailed to stockholders on or about April 28, 1997.
GENERAL
All proxies duly executed and received by the persons designated as
proxies therein will be voted on all matters presented at the Meeting in
accordance with the instructions given therein by the person executing such
proxy or, in the absence of specific instructions, will be voted in favor of
election to the Board of Directors of the five (5) candidates nominated by the
board and in favor of the other proposal indicated on such proxy. Management
does not know of any other matter which may by brought before the Meeting, but
in the event that any other matter should properly come before the Meeting or
any nominee should not be available for election, the persons named as proxies
will have authority to vote all proxies not marked to the contrary in their
discretion as they deem advisable. Any stockholder may revoke his proxy at any
time before the Meeting by written notice to such effect received by the
Company at the address shown above, Attention: Corporate Secretary, by
delivery of a subsequently dated proxy, or by attending the Meeting and voting
in person.
The Common Stock is the only class of the Company's security entitled to
vote, each share being entitled to one vote. The total number of shares of
Common Stock outstanding as of April 28, 1997, the record date established by
the Company's Board of Directors for stockholders entitled to notice of the
Meeting and to vote thereat, were 9,329,277. A majority of the issued and
outstanding shares of Common Stock, collectively treated as a single class, or
4,664,639 shares, must be present at the Meeting in person or by proxy in
order to constitute a quorum for the transaction of business. Assuming the
presence of a quorum, the affirmative vote of a majority of the shares present
and voting at the Meeting is required to approve each of the matters
presented.
A list of stockholders entitled to vote at the Meeting will be available
for examination by any stockholder at the Company's offices, 21 Business Park
Drive, Branford, Connecticut 06405, for a period of ten days prior to the
Meeting and at the Meeting itself.
<PAGE>
STOCK OWNERSHIP
Stock Ownership of Certain Beneficial Owners
The following table sets forth information as to the beneficial
ownership of each person known to the Company to own more than 5% of the
outstanding Common Stock as of April 28, 1997:
Name and Address of
Beneficial Owner or Amount and Nature of Percentage
Identity of Group Beneficial Ownership (1) of Class
Estate of Garry Evans 500,000 5.3%
Weybridge, Surrey
United Kingdom
Venture Capital Associates, Ltd. 980,575 10.5%
c/o Jay M. Haft
529 Fifth Avenue
New York, NY 10022
Haulbowline Ltd. 1,832,000 19.6%
c/o The Bank of Bermuda Limited
6 Front Street
PO Box HM 1020
Hamilton HMDX, Bermuda
Stock Ownership of Directors and Executive Officers
The following table reflects shares of Common Stock beneficially owned
(or deemed to be beneficially owned pursuant to the rules of the Securities
and Exchange Commission) as of April 28, 1997 by each director of the Company,
each of the executive officers named in the Summary Compensation Table
included elsewhere herein and the current directors and executive officers of
the Company as a group:
Amount and Nature of Percentage
Name Beneficial Ownership (1) of Class
Louis P. Scheps 958,325 (2) 9.7%
Myron L. Cohen, Ph.D. 947,953 (3) 10.2%
Lawrence S. Burstein 371,063 (4) 3.9%
Jerome Baron 2,056,200 (5) 21.6%
Saul S. Milles, M.D. 60,000 (6) 0.6%
All officers and directors
as a group (5 persons) 4,393,541 42.8%
(1) Pursuant to the rules of the Securities and Exchange Commission, shares
of Common Stock which an individual or group has a right to acquire
within 60 days pursuant to the exercise of options or warrants are
deemed to be outstanding for the purpose of computing the percentage
ownership of such individual or group, but are not deemed to be
outstanding for the purpose of computing the percentage ownership of
any other person shown in the table. Except as otherwise indicated, the
persons named herein have sole voting and dispositive power with
respect to the shares beneficially owned.
<PAGE>
(2) Includes warrants to purchase 444,000 shares and options to purchase
81,000 shares, each exercisable within 60 days.
(3) Includes options to purchase 7,500 shares exercisable within 60 days.
(4) Includes warrants to purchase 150,000 shares exercisable within 60 days.
Also includes 92,500 shares held in Mr. Burstein's IRA rollover account
and 9,375 shares owned directly and indirectly by a family member.
(5) Includes warrants to purchase 200,000 shares exercisable within 60 days.
Also includes 1,832,000 shares owned by Haulbowline Ltd., as to which
shares Mr. Baron has voting and dispositive power.
(6) Consists of Common Stock underlying warrants to purchase 60,000 shares.
ITEM 1 ELECTION OF DIRECTORS
Five Directors are to be elected at the Meeting to serve for a term of
one year or until their respective successors are duly elected and qualify.
The shares represented by the proxies will be voted in favor of the election
as Directors of the persons named below unless authority to do so is withheld.
If any nominee is not a candidate for election at the Meeting, an event which
the Board of Directors does not anticipate, the proxies will be voted for a
substitute nominee and the others named below.
Louis P. Scheps - Director since 1990
Mr. Scheps, 65, was appointed President and CEO of the Company in
September of 1990. He had held the position of Director of Manufacturing since
1986. Prior thereto, Mr. Scheps was employed by Posi-Seal International as
Vice President from 1969 to 1985. Mr. Scheps received his engineering degree
from Purdue University and his business education from the GE Management
Program.
Myron L. Cohen, Ph.D. - Director since 1984
Dr. Cohen, 63, founder of the Company, has been involved in developing
and marketing medical products for over 26 years. Dr. Cohen was Director of
Research and Development for the Hospital Products Division of
Chesebrough-Pond's Inc. from 1978 to 1983. From 1966 through 1978, Dr. Cohen
was Professor of Mechanical Engineering at Stevens Institute of Technology and
was co-founder and director of the Institute's Medical Engineering Laboratory.
Dr. Cohen was awarded the Humboldt Prize by the Federal Republic of
Germany for his work in biomedical engineering. He has lectured throughout the
European Economic Community countries on problems in technology and medicine.
<PAGE>
Lawrence S. Burstein - Director since 1985
Mr. Burstein, 54, has been an officer, director and stockholder of
Unity Venture Capital Associates, Ltd. from March, 1996. Prior thereto
he was an officer, director and stockholder of Trinity Capital
Corporation since October 1982. Mr. Burstein is a director of five other
public companies, THQ, Inc., a manufacturer of video game cartridges and
toys, The MNI Group, Inc., a company that markets specially formulated
medical foods, U.S. Communications, Inc., a company engaged in the
activation of wireless products, Brazil Fast Food Corp., a company
operating approximately 125 fast food restaurants in Brazil and Unity
First Acquisition Corp. which is engaged in the acquisition of other
companies.
Jerome S. Baron - Director since 1986
Mr. Baron, 70, has been in the securities industry since 1944. He
was a Vice President in the International Department at Loeb Rhoades & Company,
a Partner at Andreson & Company, and Chairman and Chief Executive Officer of
Foster Securities, Inc., which he founded in 1974. In 1977, Foster
Securities merged with Brean Murray Securities Inc. Mr. Baron is
President of Brean Murray and Company, Inc. He is a Director of U.S.
Communications, Inc., a company engaged in the activation of wireless
products, and Haulbowline Ltd., a private offshore company. He attended
Kings Point Merchant Marine Academy and Pace University.
Saul S. Milles, M.D. - Director since 1991
Dr. Milles, 66, is a Medical Director for Corporate Medical
Operations of the General Electric Corporation headquartered in
Fairfield, Connecticut since 1984. He has been actively involved in
issues related to medical screening, employing the handicapped, employee
assistance program design and assessment, and the development of policies
related to smoking abatement and the control of substance abuse. He has
served as an advisor to the Congress of the United States, Office of
Technology Assessment on screening tests and their ethical and
socioeconomic implications. Dr. Milles attended Cornell University and
received his M.D. degree from the University of Rochester and received
specialty training in Internal medicine and Gastroenterology at Yale
Medical Center. He is also currently Clinical Associate Professor of
Medicine at Yale Medical School.
Meetings of the Board of Directors
During the Company's fiscal year ended December 31, 1996, the Board
of Directors held three meetings and acted two times by unanimous
consent. Each director attended at least 75% of the meetings of the
Board of Directors held and of all committess of the Board of Directors
on which he served while he was Director or a member of a committee of
the Board of Directors.
<PAGE>
Committees of the Board
The Board has standing Compensation and Audit Review Committees.
Compensation Committee. The Compensation Committee, composed of Messrs.
Burstein and Baron, met three times during Fiscal 1996. Its functions are to
review the Company's general compensation strategy; establish salaries and
review benefit programs, and certain other compensation plans; and approve
certain employment contracts.
Audit Review Committee. The Audit Review Committee, composed of Messrs.
Burstein and Baron, met twice during Fiscal 1996. Its functions are to
recommend the appointment of independent accountants; review the arrangements
for and scope of the audit by independent accountants; review the independence
of the independent accountants; consider the adequacy of the system of
internal accounting controls and review any proposed corrective actions;
review and monitor the Company's policies regarding business ethics and
conflicts of interest; and discuss with management and the independent
accountants the Company's draft annual financial statements and key accounting
and/or reporting matters.
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information concerning the compensation
during the last three fiscal years of the executive officers of the Company
(hereinafter referred to collectively as the named executive officers).
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long
All Rest- Term
All
Annual ricted Warrants Incen-
Other
Compen- Stock /Options tive
Compen-
Salary Bonus sation Awards SARs Payouts
sation
Principal Position Year ($) ($) ($) ($) (#) ($)
($)
<S> <C> <C> <C> <C> <C> <C> <C>
<C>
Louis P. Scheps 1996 178,333 50,000 0 0 34,000 0
2,276
President 1995 175,000 40,000 0 0 0 0
1,700
and CEO 1994 150,000 0 0 0 0 0
1,318
Myron L. Cohen 1996 85,000 21,000 0 0 15,000 0
3,037
Executive Vice 1995 165,862 10,000 5,000 0 0 0
2,695
President 1994 150,645 0 5,000 0 0 0
2,000
The following table sets forth the grant of stock options made during the
year
ended December 31, 1996 to the persons named in the Summary Compensation Table:
OPTION/WARRANT GRANTS IN LAST FISCAL YEAR
Number of % of
Securities Total Options/
Underlying Warrants Granted
Options/ to Employees in Exercise
Expiration
Name Warrants Granted Fiscal Period (1) Price
Date
Louis P. Scheps 34,000 30.5% $0.93
2/7/2006
Myron L. Cohen 15,000 13.4% $0.93
1/1/2006
(1)Computed based on an agregate of 111,500 shares issuable upon exercise of
options
and warrants granted to employees during the year ended December 31, 1996.
<PAGE>
Aggregated Warrants/Option/SARs Exercised in last Fiscal Year-End and
FY-End Warrants/Option/SARs Values
<CAPTION>
Number of
Unexercised Value of Unexercised
Warrants/Options/SARs in-the-Money Options
at FY-End (#) at FY-End (1)
Name Exercisable Unexercisable Exercisable
Unexercisable
<S> <C> <C> <C> <C>
Louis P. Scheps 525,000 375,000 $187,505 $116,250
President and CEO
Myron L. Cohen 0 15,000 0 $ 13,950
Executive Vice
President
(1) Computed based upon the difference between the closing price of the
Company's Common Stock on December 31, 1996 ($.75) and the exercise
price.
<FN>
No warrants/options were exercised by the named executive officers in 1996.
</FN>
</TABLE>
Long-Term Incentive Plan Awards in Fiscal Year Ended December 31, 1996
No long-term incentive Plan awards were made in 1996.
<PAGE>
Employment Contracts and Termination Benefits
The Company has an employment agreement with Mr. Scheps which provides
that he will serve as President and Chief Executive Officer of the Company
through August 31, 1998 at an annual base salary of $185,000. There are no
benefits payable to Mr. Scheps upon termination of the agreement. In
recognition of his outstanding service to the Company and the results he
obtained, in October, 1993, the Board of Directors awarded Mr. Scheps a
warrant to purchase 750,000 shares at a purchase price of $.31 per share.
During the term of his contract and continued employment thereunder, on
the first, second and third anniversary of Mr. Scheps' employment contract
(September 1, 1994, 1995 and 1996) the right to purchase 125,000 shares shall
vest. The right to purchase the remaining 375,000 shares shall vest on August
31, 1997. Provided, however, if the Company consolidates with or merges into
another corporation or other entity in a transaction in which the Company is
not the surviving corporation, or receives an offer to purchase thirty
percent (30 percent) or more of the issued and outstanding common stock of
the Company, or if all or substantially all of the assets of the Company are
sold or leased or thirty percent (30 percent) or more of the issued and
outstanding common stock of the Company is purchased by any person or group
of persons acting in concert, then in any of such events, the right to
purchase all of said 750,000 shares shall vest immediately. The vesting of
the remaining 375,000 shares is not contingent upon Mr. Scheps' employment by
the Company between September 1, 1996 and August 31, 1997.
The Company also has an employment agreement with Dr. Cohen under which
he now serves as Executive Vice President of the Company. The agreement
terminated on December 31, 1995. On January 1, 1996, the Company extended Dr.
Cohen's employment contract to December 31, 1997. There are no benefits
payable to Dr. Cohen upon termination of the agreement.
Compensation of Directors
During 1996, the Company paid $250 to the Directors, other than those
also serving as officers, for attendance at meetings of the Board of
Directors and paid no fee for serving as Directors. Also, certain directors,
Jerome Baron and Lawrence Burstein, were granted warrants to purchase 65,000
shares each at an exercise price of $0.93 per share. Messrs. Scheps and
Cohen also received warrants to purchase 34,000 shares and options to
purchase 15,000 shares, respectively, at an exercise price of $0.93 per
share.
MANAGEMENT
Executive Officers
The following table sets forth the names and positions of the executive
officers of the Company:
Name Position
Louis P. Scheps President and CEO
Myron L. Cohen Executive Vice President
<PAGE>
Louis P. Scheps, 65, was appointed President and CEO of the Company
in September of 1990. He had held the position of Director of
Manufacturing since 1986. Prior thereto, Mr. Scheps was employed by
Posi-Seal International as Vice President from 1969 to 1985. Mr. Scheps
received his engineering degree from Purdue University and his business
education from the GE Management Program.
Myron L. Cohen, Ph.D., 63, founder of the Company, has been involved
in developing and marketing medical products for over 26 years. Dr. Cohen
was Director of Research and Development for the Hospital Products
Division of Chesebrough-Pond's Inc. from 1978 to 1983. From 1966 through
1978, Dr. Cohen was Professor of Mechanical Engineering at Stevens
Institute of Technology and was co-founder and director of the
Institute's Medical Engineering Laboratory.
Dr. Cohen was awarded the Humboldt Prize by the Federal Republic of
Germany for his work in biomedical engineering. He has lectured
throughout the European Economic Community countries on problems in
technology and medicine.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who beneficially own
more than ten percent of the Company's Common Stock, to file initial reports
of ownership and reports of changes in ownership with the SEC and the
National Association of Securities Dealers. Executive officers, directors
and greater than ten percent beneficial owners are required by the SEC to
furnish the Company with copies of all Section 16(a) forms they file.
Based upon a review of the copies of such forms furnished to the Company
and written representations from the Company's executive officers and
directors, the Company believes that during fiscal 1996 all Section 16(a)
filing requirements applicable to its executive officers, directors and
greater than ten percent beneficial owners were complied with.
RELATED TRANSACTION
During 1996 and 1995 the Company retained Stanley D. Josephson, prior to
his death in July of 1996, as counsel to represent it in certain legal
matters. The Company paid Mr. Josephson a total of $59,058 and $43,041 for
his services and expenses during 1996 and 1995, respectively.
<PAGE>
ITEM 2 RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
Unless otherwise instructed, the persons named in the enclosed proxy
intend to vote the same in favor of the ratification of the selection by the
Company's Board of Directors of Arthur Andersen LLP to serve as the Company's
independent auditors for the fiscal year ending December 31, 1997. That firm
has reported to the Company that none of its members has any direct financial
interest or material indirect financial interest in the Company or any of its
subsidiaries, nor has any member of such firm had any such connection during
the past three years.
Arthur Andersen LLP has served as the Company's independent auditor since
1985. A representative from Arthur Andersen LLP is expected to attend the
Meeting and will be afforded the opportunity to make a statement or respond to
appropriate questions from stockholders or both.
The Board of Directors recommends that stockholders vote FOR ratification
of the appointment of Arthur Andersen LLP as the Company's independent
accountants for Fiscal 1997.
OTHER MATTERS
As of the date of this proxy statement, the Company knows of no business
that will be presented for consideration at the Annual Meeting other than the
items referred to above. Proxies in the enclosed form will be voted in respect
of any other business that is properly brought before the Annual Meeting in
accordance with the judgment of the person or persons voting the proxies.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the Company's 1998
Annual Meeting of Stockholders pursuant to the provisions of Rule 14a-8,
promulgated under the Exchange Act, must be received at the Company's offices
not later than February 15, 1998, for inclusion in the Company's Proxy
Statement and form of proxy relating to that meeting.
A COPY OF THE COMPANY'S 1996 ANNUAL REPORT ACCOMPANIES THIS PROXY
STATEMENT. ADDITIONAL COPIES OF SUCH REPORT, AS WELL AS COPIES OF THE
COMPANY'S ANNUAL REPORT OF FORM 10-KSB, INCLUSIVE OF SCHEDULES THERETO, FOR
THE YEAR ENDED DECEMBER 31, 1996, FILED WITH THE COMMISSION, WILL BE PROVIDED
WITHOUT CHARGE TO ANY STOCKHOLDER UPON WRITTEN REQUEST. REQUESTS SHOULD BE
ADDRESSED TO LOUIS CELANO, CAS MEDICAL SYSTEMS, INC., 21 BUSINESS PARK DRIVE,
BRANFORD, CONNECTICUT 06405.
<PAGE>
CAS MEDICAL SYSTEMS, INC.
21 Business Park Drive, Branford, Connecticut 06405
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Louis P. Scheps and Lawrence S. Burstein
as Proxies, each with the power to appoint his substitute, and hereby
authorizes them, and each of them, to represent and vote, as designated on the
reverse, all the shares of Common Stock of CAS MEDICAL SYSTEMS, INC. (the
"Company") held of record by the undersigned on May 2, 1997 at the Annual
Meeting of Stockholders to be held on June 11, 1997 or any adjournment
thereof.
(To Be Signed on Reverse Side.)
Please mark your
[X] votes as in this
example.
FOR
all nominees WITHHOLD
listed at right AUTHORITY
(except as to vote
marked to the for all
the contrary nominees
below) below
1. Election of [ ] [ ] Nominees: Louis P. Scheps
Directors Myron L. Cohen, Ph.D.
Lawrence S. Burstein
(INSTRUCTION: To withhold authority to Jerome Baron
vote for any individual nominee, strike Saul S. Milles, M.D.
out such nominee's name listed at right
and write name on the space provided below.)
FOR AGAINST ABSTAIN
2. To ratify the selection of Arthur [ ] [ ] [ ]
Andersen LLP as independent audi-
tors for the Company's fiscal year
ending December 31, 1997.
3. In their discretion, the Proxies are authorized to vote upon such
other matters as may properly come before the Meeting.
This proxy, when properly executed, will be voted in the manner directed by
the undersigned stockholder. If no direction is made, this proxy will be
voted FOR proposals 1 and 2. Please sign exactly as name appears on the left.
<PAGE>
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
SIGNATURE(S)________________________________DATE_______________________
Note: When shares are held by joint tenants, both should sign. When signing
as attorney, executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate name by the
President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
