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