UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE TO
TENDER OFFER STATEMENT UNDER SECTION
14(d)(1) OR 13(e)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
Perseon Corporation
(Name of Subject Company)
GALIL MERGER SUB, INC.
(Offeror)
A wholly-owned subsidiary of
GALIL MEDICAL INC.
(Offeror)
A wholly-owned subsidiary of
GALIL MEDICAL LTD.
(Offeror)
COMMON STOCK, $0.001 PAR VALUE PER SHARE
PUBLIC WARRANTS TO PURCHASE COMMON STOCK
(Title of Classes of Securities)
715270 203 |
715270 112 |
(CUSIP Number of Common Stock) |
(CUSIP Number of Public Warrants) |
|
|
Marty Emerson |
Please send copies of all communications to: |
Galil Medical Inc. |
Robert K. Ranum, Esq. |
4364 Round Lake Road |
Fredrikson & Byron, P.A. |
Arden Hills, MN 55122 |
200 South Sixth Street, Suite 4000 |
Telephone: (877) 639-2796 |
Minneapolis, MN 55402 |
Fax: (877) 510-7757 |
Fax: (612) 492-7077 |
(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Filing Persons) |
|
CALCULATION OF FILING FEE
Transaction Valuation |
|
Amount of Filing Fee |
N/A |
|
N/A |
| ¨ | Check the box if any part
of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
|
Amount Previously Paid: N/A |
|
Filing Party: N/A |
|
Form or Registration No.: N/A |
|
Date Filed: N/A |
| x | Check the box if the filing
relates solely to preliminary communications made before the commencement of a tender offer. |
Check the appropriate boxes to designate any transactions to
which the statement relates:
|
x |
third-party tender offer subject to Rule 14d-1. |
|
¨ |
issuer tender offer subject to Rule 13e-4. |
|
¨ |
going-private transaction subject to Rule 13e-3. |
|
¨ |
amendment to Schedule 13D under Rule 13d-2. |
Check the following box if the filing is a final amendment reporting
the results of the tender offer: ¨
This filing relates solely to preliminary
communications made before the commencement of a planned tender offer by Galil Merger Sub, Inc., a Delaware corporation (the “Purchaser”),
a direct wholly-owned subsidiary of Galil Medical Inc., a Delaware corporation (the “Parent”), which is itself
a direct wholly-owned subsidiary of Galil Medical Ltd, an Israeli company (the “Israeli Parent”), for all the
outstanding common stock and publicly-traded warrants of Perseon Corporation, a Delaware corporation (the “Company”),
to be commenced pursuant to the Agreement and Plan of Merger, dated October 26, 2015, among Parent, Purchaser, and the Company.
The exhibits are neither an offer to purchase
nor solicitation of an offer to sell securities. The tender offer for the outstanding shares of the Company’s common stock
and the outstanding publicly-traded warrants described in this filing has not commenced. At the time the offer is commenced, the
Purchaser will file a tender offer statement on Schedule TO with the Securities and Exchange Commission, and the Company will file
a solicitation/ recommendation statement on Schedule 14D-9, with respect to the offer. The tender offer statement (including an
offer to purchase, a related letter of transmittal and other offer documents) and the solicitation/recommendation statement will
contain important information that should be read carefully before any decision is made with respect to the tender offer. Those
materials will be made available to the Company’s stockholders at no expense to them. In addition, all of those materials
(and all other offer documents filed with the SEC) will be available at no charge on the SEC’s website: www.sec.gov.
Exhibit Index
Exhibit |
|
Description |
99.1 |
|
Press Release dated October 27, 2015 |
99.2 |
|
Press Release dated October 27, 2015 |
Exhibit 99.1
Galil Medical
Enters into Agreement to Acquire Perseon Corporation to
Create Leader
in Ablation Treatment for Tumors
| · | Transaction brings scale and cost savings to create high growth,
high margin market opportunity capitalizing on increased global distribution |
| · | Hot and cold combination provides powerful tool kit for interventional
radiologists |
| · | Galil Medical to pay $1.00 per Perseon share plus consideration
for warrants, representing total transaction value of approximately $10.6 million |
| · | Perseon provides preliminary update for the third quarter of 2015 |
Arden
Hills, MN, and Salt Lake City, UT– October 27, 2015 – Galil Medical, a global leader in delivering innovative
cryotherapy ablation solutions, and Perseon Corporation (NASDAQ: PRSN; PRSNW) (“Perseon” or “The Company”),
a leading provider of medical systems that utilize energy to treat cancer, today announced the signing of a definitive agreement
in which Galil Medical will acquire Perseon to create a leader in ablation treatment for both cancerous and non-cancerous tumors.
Under the terms of the agreement, Galil Medical will pay $1.00 per share in cash, plus $0.02 per warrant for each of the publicly
traded warrants, for a total transaction value of approximately $10.6 million. The transaction has been approved by the boards
of directors of both companies.
“We believe this transaction propels us to a market leadership
position in minimally invasive treatment of cancerous and non-cancerous tumors, with a broadened product offering that delivers
both ‘hot and cold’ ablation solutions for our growing base of interventional radiologists,” said Martin J. Emerson,
President and CEO of Galil Medical. “We see tremendous opportunity to scale sales of both Perseon’s microwave and our
cryotherapy ablation solutions, both of which represent high growth, high margin opportunities attacking a large and growing global
market for tumor ablation.”
“We believe Galil Medical is the ideal partner to allow
Perseon to continue our efforts to build awareness and increase sales of MicroThermX®, which is a companion technology
to cryotherapy ablation and is used by the same interventional radiologists, streamlining our sales efforts. Our companies are
also closely aligned in our commitment to investing in robust product development pipelines and clinical research activities to
stay at the forefront of ablation technology,” said Clint E. Carnell, President and CEO of Perseon. “Marty and his
team have built a well-respected brand and reputation as pioneers in the interventional radiology market. We look forward to leveraging
their world-class distribution channel, which includes relationships with more than 300 hospital units in the U.S. alone, to accelerate
MicroThermX sales both in the U.S. and around the world.”
According to Millennium Research Group in US Markets for
Nonvascular Interventional Radiology Devices. 2013, as well as internal projections, the total addressable market for the combined
companies is expected to be $500 million to $700 million in the U.S. alone by 2025, representing a 16.6% to 20.6% compound annual
growth rate (“CAGR”). Both companies’ products are FDA and CE Marked approved and are expected to generate significant
growth, with cryotherapy expected to grow at a 22% CAGR from 2013-2020 and microwave ablation expected to grow at a 70% CAGR from
2015-2020. In addition, the combined company expects to achieve gross margins of approximately 70%.
Page
2 of 7
Emerson added, “In addition to
revenue synergies, we expect to realize an estimated reduction of at least $5 million in combined operating expenses from this
transaction. With strong revenue growth, attractive gross margins, and significant cost savings, we are targeting positive EBITDA
for the combined company by 2017.”
Carnell commented, “With this
agreement, our new management team at Perseon is executing the strategy we articulated earlier this year by partnering with an
industry leader who can help us achieve scale and maximize sales of MicroThermX. Given our liquidity needs, it will be challenging
for Perseon to continue to operate as a stand-alone entity. We believe this agreement offers the best value for our stockholders
and provides us with the capital and infrastructure needed to continue our cause to fight humanity’s worst disease.”
Martin J. Emerson will remain President
and CEO of Galil Medical and Clint E. Carnell, President and CEO of Perseon, will join Galil Medical’s board of directors.
Terms of the Agreement
Galil Medical will attempt to acquire
all of the outstanding shares of common stock of Perseon through a tender offer, followed by a second-step merger. In the tender
offer, Galil Medical will offer to purchase all of Perseon’s publicly held shares for $1.00 per share in cash. In addition,
Galil Medical will offer $0.02 per publicly traded warrant.
The transaction purchase price of approximately
$10.6 million will be funded through a combination of debt and equity that will be raised concurrent with the tender process. The
transaction is expected to close during the fourth quarter of 2015 or the first quarter of 2016, subject to a financing condition
and other customary closing conditions, including the tender of at least a majority of the outstanding shares and at least 65%
of the outstanding publicly traded warrants, and appropriate regulatory approvals.
If the tender offer is successful,
Galil Medical will acquire all remaining shares of Perseon common stock that are not tendered through a second-step merger under
Section 251(h) of the Delaware General Corporation Law, which will be completed shortly after the tender offer and will not require
a vote of Perseon’s stockholders.
Houlihan Lokey is acting as Galil Medical’s
financial advisor and Fredrikson & Byron is serving as Galil Medical’s legal advisor. SunTrust Robinson Humphrey is acting
as Perseon’s financial advisor and Dorsey & Whitney LLP is serving as Perseon’s legal advisor.
Page 3 of 7
Perseon Provides Update for the
Three Months Ended September 30, 2015
For the third quarter ended September
30, 2015, Perseon reported total revenues of $555,514, which were primarily derived from Perseon's MicroThermX product line. These
results represent an 11% increase of MicroThermX sales compared to the same quarter a year ago when MicroThermX sales totaled $501,350.
For the three months ended September 30, 2014, the Company reported total revenues of $1,080,447, which included $579,097 in hyperthermia
sales.
“The 11% year-over-year increase
in MicroThermX sales for the three-month period was comprised of a 30% increase in our U.S. business, somewhat offset by a 30%
decline in our international revenues, largely due to a one-time reduction in distributor-held inventory levels we agreed to with
our largest international distributor, Terumo. Our unique technology platform
is receiving very positive reception with existing and new customers,” said Carnell.
For the three months ended September
30, 2015, the Company reported total gross profit of $394,966, and corresponding gross margin of 71%, compared to $407,296, and
38% for the three months ended September 30, 2014. The increase in gross margin for Q3 2015 when compared to Q3 2014 was primarily
the result of the high gross margin of the MicroThermX product line unencumbered by the much lower profitability of the hyperthermia
product line, which was divested effective April 1, 2015.
For the third quarter of fiscal year
2015, the Company reported a net loss of $3,045,305, or $0.38 per share, compared to a net loss of $2,061,328, or $0.52 per share,
for the comparable period last year.
For the nine months
ended September 30, 2015, the Company reported cash flow used by operating activities of $7,543,427. As of September 30,
2015, Perseon reported a cash and cash equivalents balance of $3,026,606, total current assets of $4,728,975 and no
long-term debt.
Based on current projections
the cash resources will only be sufficient to sustain the Company’s operations for up to four months after September
30, 2015 without substantial cost cutting to a level that would include fewer sales resources and lower compliance levels
of staffing and activities across the Company. In addition, the Company’s financial advisors have advised that
prospects of raising additional equity on acceptable terms are not likely. Further, to become profitable revenues would need
to significantly increase from sales of MicroThermX products and the Company would have to substantially reduce
expenses. It is not expected that sales of MicroThermX products will increase sufficiently to cover the Company’s
total costs of operations before it runs out of cash. Substantially reducing costs may
impair its ability to increase revenue. Accordingly, the Company recommends this transaction as the best value for
shareholders.
About Galil Medical
Galil Medical is a global leader in delivering innovative cryotherapy
ablation solutions. The company’s products are utilized by interventional radiologists and surgeons to ablate cancerous
and non-cancerous tumors affecting the kidney, bone, lung, liver, and prostate. At the prestigious CIRSE conference recently
held in Lisbon, Portugal, the clinical experience with cryotherapy was discussed in over 30 scientific presentations. The
company has facilities located in Arden Hills, Minnesota and Yokneam, Israel. Shareholders include Thomas, McNerney &
Partners, The Vertical Group, and Investor Growth Capital.
Page 4 of 7
About Perseon
Perseon Corporation invests its resources in fighting humanity’s
worst disease: cancer. Perseon’s people are dedicated to finding innovative technologies and means to deliver energy solutions
to healthcare providers and patients around the world. MicroThermX treats soft tissue tumors with precision-focused energy, expanding
the options and broadening the opportunities for cancer treatment.
Additional Information
The tender offer for the outstanding Securities has not yet
commenced. This communication is not an offer to purchase or a solicitation of an offer to sell the Company’s securities.
The solicitation and the offer to purchase the Securities will only be made pursuant to an offer to purchase and related materials
that Galil intends to file with the Securities and Exchange Commission (the “SEC”). At the time the tender offer is
commenced, Galil will file a Tender Offer Statement on Schedule TO with the SEC, and the Company will file a Solicitation/Recommendation
Statement on Schedule 14D-9 with respect to the tender offer.
THE COMPANY’S STOCKHOLDERS AND WARRANTHOLDERS ARE ADVISED
TO READ THE SCHEDULE TO (INCLUDING AN OFFER TO PURCHASE, A RELATED LETTER OF TRANSMITTAL AND OTHER OFFER DOCUMENTS) AND THE SCHEDULE
14D-9, AS EACH MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME, AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY
BECOME AVAILABLE, BEFORE MAKING ANY DECISION WITH RESPECT TO THE TENDER OFFER BECAUSE THESE DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION
ABOUT THE PROPOSED TRANSACTION AND THE PARTIES THERETO.
Investors and stockholders may obtain free copies of the Schedule
TO and Schedule 14D-9, as each may be amended or supplemented from time to time, and other documents filed by the parties (when
available), at the SEC’s web site at www.sec.gov or by contacting the Company by mail at 460 West 50 North, Salt Lake City,
UT 84101, by telephone at (801) 972-5555 or the investor relations portion of the Company’s website at www.perseonmedical.com.
Forward-Looking Statements
Statements contained in this press
release that are not historical facts, including statements relating to the timing of and satisfaction of conditions of the merger,
whether any of the anticipated benefits of the merger will be realized, future market growth, future revenues, future positive
EBITDA, future operational cost savings, future cash flow and liquidity, future competitive positioning and business synergies,
future market demand, future benefits to stockholders, and future economic and industry conditions are forward-looking statements,
as defined in the Private Securities Litigation Reform Act of 1995. All forward-looking statements are subject to risks and uncertainties,
including the risk that for a variety of reasons we may not be able to consummate the merger or execute on our strategic plans,
the risk that the Perseon stockholders and warrantholders won’t tender, the risk that adequate financing to complete the
tender offer and merger will not be obtained, and other risks and uncertainties detailed in the Company's filings with the Securities
and Exchange Commission. These forward-looking statements speak only as of the date on which such statements are made, and the
Company undertakes no obligation to update such statements to reflect events or circumstances arising after such date, except as
required by law.
Contact
For Galil Medical
Martin J. Emerson
President and CEO
Galil Medical
+1 651 287 5050
Marty.emerson@galilmedical.com
Scott P. Youngstrom
Vice President, Chief
Financial Officer
Galil Medical
+1 651 287 5052
Scott.youngstrom@galilmedical.com
For Perseon
Tricia Ross
Financial Profiles
310-622-8226
tross@finprofiles.com
(Tables Follow)
Page 5 of 7
PERSEON CORPORATION |
(Formerly BSD Medical Corporation) |
Condensed Balance Sheets |
(Unaudited) |
ASSETS | |
September 30, 2015 | | |
December 31, 2014 | |
Current assets: | |
| | | |
| | |
Cash and cash equivalents | |
$ | 3,026,606 | | |
$ | 5,594,578 | |
Accounts receivable, net of allowance for doubtful accounts of $66,480 and $140,000, respectively | |
| 540,340 | | |
| 275,072 | |
Related party trade accounts receivable | |
| - | | |
| 13,471 | |
Inventories, net | |
| 991,565 | | |
| 1,775,648 | |
Other current assets | |
| 170,464 | | |
| 86,583 | |
Total current assets | |
| 4,728,975 | | |
| 7,745,352 | |
| |
| | | |
| | |
Property and equipment, net | |
| 356,234 | | |
| 1,140,871 | |
| |
| | | |
| | |
| |
$ | 5,085,209 | | |
$ | 8,886,223 | |
| |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | |
| | | |
| | |
| |
| | | |
| | |
Current liabilities: | |
| | | |
| | |
Accounts payable | |
$ | 747,695 | | |
$ | 598,466 | |
Accrued liabilities | |
| 1,106,079 | | |
| 1,105,152 | |
Notes payable, net of discount | |
| 55,709 | | |
| - | |
Customer deposits | |
| 19,777 | | |
| 41,667 | |
Deferred revenue | |
| - | | |
| 54,218 | |
Total current liabilities | |
| 1,929,260 | | |
| 1,799,503 | |
| |
| | | |
| | |
Commitments and contingencies | |
| | | |
| | |
| |
| | | |
| | |
Stockholders’ equity: | |
| | | |
| | |
Preferred stock, $.001 par value; 10,000,000 shares authorized, no shares issued and outstanding | |
| - | | |
| - | |
Common stock, $.001 par value, 80,000,000 shares authorized, 9,768,756 and 3,971,366 shares issued, respectively | |
| 9,769 | | |
| 3,971 | |
Additional paid-in capital | |
| 68,467,000 | | |
| 63,623,143 | |
Treasury stock, 2,433 shares at cost | |
| (234 | ) | |
| (234 | ) |
Accumulated deficit | |
| (65,320,586 | ) | |
| (56,540,160 | ) |
Total stockholders’ equity | |
| 3,155,949 | | |
| 7,086,720 | |
| |
| | | |
| | |
| |
$ | 5,085,209 | | |
$ | 8,886,223 | |
Page 6 of 7
PERSEON CORPORATION |
(Formerly BSD Medical Corporation) |
Condensed Statements of Comprehensive Loss |
(Unaudited) |
| |
| | |
| | |
| | |
| |
| |
Three Months Ended | | |
Nine Months Ended | |
| |
September 30, | | |
September 30, | |
| |
2015 | | |
2014 | | |
2015 | | |
2014 | |
Revenues: | |
| | | |
| | | |
| | | |
| | |
Sales | |
$ | 500,014 | | |
$ | 928,460 | | |
$ | 2,444,541 | | |
$ | 3,095,310 | |
Sales to related parties | |
| - | | |
| 27,087 | | |
| 11,232 | | |
| 408,127 | |
Equipment rental | |
| 55,500 | | |
| 124,900 | | |
| 208,800 | | |
| 317,200 | |
| |
| | | |
| | | |
| | | |
| | |
Total revenues | |
| 555,514 | | |
| 1,080,447 | | |
| 2,664,573 | | |
| 3,820,637 | |
| |
| | | |
| | | |
| | | |
| | |
Cost of revenues: | |
| | | |
| | | |
| | | |
| | |
Cost of sales | |
| 160,548 | | |
| 650,329 | | |
| 1,274,359 | | |
| 1,928,232 | |
Cost of related party sales | |
| - | | |
| 19,875 | | |
| 6,668 | | |
| 305,650 | |
Cost of equipment rental | |
| - | | |
| 2,947 | | |
| 1,965 | | |
| 8,841 | |
| |
| | | |
| | | |
| | | |
| | |
Total cost of revenues | |
| 160,548 | | |
| 673,151 | | |
| 1,282,992 | | |
| 2,242,723 | |
| |
| | | |
| | | |
| | | |
| | |
Gross margin | |
| 394,966 | | |
| 407,296 | | |
| 1,381,581 | | |
| 1,577,914 | |
| |
| | | |
| | | |
| | | |
| | |
Operating costs and expenses: | |
| | | |
| | | |
| | | |
| | |
Research and development | |
| 754,296 | | |
| 542,484 | | |
| 1,818,861 | | |
| 1,678,143 | |
Selling, general and administrative | |
| 2,668,551 | | |
| 1,924,887 | | |
| 8,280,210 | | |
| 5,667,301 | |
| |
| | | |
| | | |
| | | |
| | |
Total operating costs and expenses | |
| 3,422,847 | | |
| 2,467,371 | | |
| 10,099,071 | | |
| 7,345,444 | |
| |
| | | |
| | | |
| | | |
| | |
Loss from operations | |
| (3,027,881 | ) | |
| (2,060,075 | ) | |
| (8,717,490 | ) | |
| (5,767,530 | ) |
| |
| | | |
| | | |
| | | |
| | |
Other income (expense): | |
| | | |
| | | |
| | | |
| | |
Royalty income from related party | |
| 84,000 | | |
| - | | |
| 84,000 | | |
| - | |
Interest income (expense), net | |
| (26,592 | ) | |
| 8,095 | | |
| (55,084 | ) | |
| 15,813 | |
Other expense, net | |
| (72,182 | ) | |
| (7,348 | ) | |
| (89,202 | ) | |
| (14,295 | ) |
| |
| | | |
| | | |
| | | |
| | |
Total other income (expense) | |
| (14,774 | ) | |
| 747 | | |
| (60,286 | ) | |
| 1,518 | |
| |
| | | |
| | | |
| | | |
| | |
Loss before income taxes | |
| (3,042,655 | ) | |
| (2,059,328 | ) | |
| (8,777,776 | ) | |
| (5,766,012 | ) |
| |
| | | |
| | | |
| | | |
| | |
Provision for income taxes | |
| (2,650 | ) | |
| (2,000 | ) | |
| (2,650 | ) | |
| (2,000 | ) |
| |
| | | |
| | | |
| | | |
| | |
Net loss and comprehensive loss | |
$ | (3,045,305 | ) | |
$ | (2,061,328 | ) | |
$ | (8,780,426 | ) | |
$ | (5,768,012 | ) |
| |
| | | |
| | | |
| | | |
| | |
Net loss per common share: | |
| | | |
| | | |
| | | |
| | |
Basic | |
$ | (0.38 | ) | |
$ | (0.52 | ) | |
$ | (1.65 | ) | |
$ | (1.60 | ) |
Diluted | |
$ | (0.38 | ) | |
$ | (0.52 | ) | |
$ | (1.65 | ) | |
$ | (1.60 | ) |
| |
| | | |
| | | |
| | | |
| | |
Weighted average number of shares outstanding: | |
| | | |
| | | |
| | | |
| | |
Basic | |
| 7,954,000 | | |
| 3,971,000 | | |
| 5,320,000 | | |
| 3,604,000 | |
Diluted | |
| 7,954,000 | | |
| 3,971,000 | | |
| 5,320,000 | | |
| 3,604,000 | |
Page 7 of 7
PERSEON CORPORATION |
(Formerly BSD Medical Corporation) |
Condensed Statements of Cash Flows |
(Unaudited) |
| |
Nine Months Ended September 30, | |
| |
2015 | | |
2014 | |
Cash flows from operating activities: | |
| | | |
| | |
Net loss | |
$ | (8,780,426 | ) | |
$ | (5,768,012 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: | |
| | | |
| | |
Depreciation and amortization | |
| 74,373 | | |
| 96,305 | |
Stock issued for services | |
| 165,864 | | |
| 180,000 | |
Stock-based compensation | |
| 379,762 | | |
| 597,820 | |
(Gain) loss on disposition of property and equipment | |
| 68,035 | | |
| (30 | ) |
Amortization of debt discount | |
| 26,512 | | |
| - | |
Decrease (increase) in: | |
| | | |
| | |
Receivables | |
| (251,797 | ) | |
| 398,475 | |
Inventories | |
| 784,083 | | |
| 415,479 | |
Other current assets | |
| (83,881 | ) | |
| 21,153 | |
Increase (decrease) in: | |
| | | |
| | |
Accounts payable | |
| 149,229 | | |
| (193,389 | ) |
Accrued liabilities | |
| 927 | | |
| 478,204 | |
Customer deposits | |
| (21,890 | ) | |
| (371,046 | ) |
Deferred revenue | |
| (54,218 | ) | |
| (656,166 | ) |
| |
| | | |
| | |
Net cash used in operating activities | |
| (7,543,427 | ) | |
| (4,801,207 | ) |
| |
| | | |
| | |
Cash flows from investing activities: | |
| | | |
| | |
Net proceeds from disposition of property and equipment | |
| 949,330 | | |
| 2,025 | |
Purchase of property and equipment | |
| (307,101 | ) | |
| (55,318 | ) |
| |
| | | |
| | |
Net cash provided by (used in) investing activities | |
| 642,229 | | |
| (53,293 | ) |
| |
| | | |
| | |
Cash flows from financing activities: | |
| | | |
| | |
Proceeds from sale of common stock | |
| 5,192,250 | | |
| 5,275,067 | |
Payment of stock offering costs | |
| (888,221 | ) | |
| (638,488 | ) |
Proceeds from notes payable, net | |
| 844,581 | | |
| 82,465 | |
Payments on notes payable | |
| (815,384 | ) | |
| (57,451 | ) |
| |
| | | |
| | |
Net cash provided by financing activities | |
| 4,333,226 | | |
| 4,661,593 | |
| |
| | | |
| | |
Net decrease in cash and cash equivalents | |
| (2,567,972 | ) | |
| (192,907 | ) |
Cash and cash equivalents, beginning of period | |
| 5,594,578 | | |
| 7,423,091 | |
| |
| | | |
| | |
Cash and cash equivalents, end of period | |
$ | 3,026,606 | | |
$ | 7,230,184 | |
Exhibit 99.2
GALIL MEDICAL ANNOUNCES AGREEMENT TO
ACQUIRE PERSEON CORPORATION
100% cash tender will commence; closing
contingent on raising approximately $26M in new debt/equity
Arden Hills, MN—October 27, 2015
— Galil Medical, the global leader in interventional oncology cryoablation technology, announced today it has entered
into an agreement to acquire 100% of Perseon Corporation, a publicly-traded company and a leader in the field of microwave ablation,
in an all cash transaction valued at $10.6M. The resulting combined company will be privately owned.
The transaction is contingent upon, among
other things, Galil raising approximately $26 million concurrent with the deal’s closing and upon the tender of a majority
of Perseon’s outstanding common stock and 65% of Perseon’s publicly-traded warrants.
“The combination of Galil and Perseon
will allow the new company to further leverage the significant investments both Galil and Perseon have made in the field of interventional
oncology. The vast majority of interventional oncologists utilize both cryoablation and microwave ablation technologies to treat
their broad patient base, and we look forward to bringing even more value to the physician and patient base that both Galil and
Perseon are currently serving.” said Martin J. Emerson, Galil Medical President and CEO, who will serve in the same capacity
for the new company. “We believe there are significant operating synergies that we can derive by combining these two companies,
which will allow for significant investments in both clinical research and new product development. Galil has built a strong and
well-regarded reputation for its commitment to innovation and its investments in both meaningful clinical research and truly differentiated
new products, and the new company will hold itself to that same high standard.”
The resulting combination is expected to
generate strong double-digit percentage revenue growth and expanding gross margins, while achieving positive EBITDA in 2017 and
positive cash flow by year-end 2018.
The transaction is expected to close in
December 2015 or early 2016, subject to Galil obtaining sufficient funding to close the transaction. Galil’s board of directors
and its current private equity shareholder base are fully committed to this transaction, and will be investing approximately $5M
of the expected $26M in new capital that is required to fund this acquisition, pay the related transaction expenses and provide
growth capital for the combined company.
About Galil Medical Galil Medical
is a global leader in delivering innovative cryoablation solutions. The company is addressing patient conditions across multiple
physician specialties. Treatment areas and clinical research priorities include conditions affecting bone, kidney, liver, lung
and prostate, as well as targeted pain and nerve applications. Company offices are located in Arden Hills, Minnesota and Yokneam,
Israel. Shareholders include Thomas, McNerney & Partners, The Vertical Group, and Investor Growth Capital.
Forward-Looking Statements
This release
contains forward-looking statements that are subject to various risks and uncertainties. Such
statements include statements regarding closing of the acquisition of Perseon, the raising of additional funding in connection
with such acquisition, the commencement of the proposed tender offer relating to Perseon’s common stock and warrants, the
potential benefits and financial results of the combined company, and other statements that are not historical facts, including
statements which may be accompanied by the words “intends,” “may,” “will,” “plans,”
“expects,” “anticipates,” “projects,” “predicts,” “estimates,” “aims,”
“believes,” “hopes,” “potential” or similar words. Actual results could differ materially from
those described in these forward-looking statements due to certain factors, including delays in commencing the proposed tender
offer, delays or the inability to satisfy closing conditions for the acquisition, the inability to raise the required financing,
the difficulties inherent in integrating the businesses of Perseon and Galil and in projecting financial results of the combined
company, and delays and complications in such integration.
4364
Round Lake Road West │ Arden Hills, MN 55112 │ 877.639.2796 (CRYO) │ 877.510.7757 Fax
www.galilmedical.com |
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Important Additional Information
The tender offer described in this press
release for all of the outstanding shares of common stock and publicly-traded warrants of Perseon has not yet commenced. Galil
intends to file tender offer documents with the Securities and Exchange Commission (the “SEC”). This press release
is for informational purposes only and does not constitute an offer to purchase, or a solicitation of an offer to sell, shares
of common stock or warrants of Perseon, nor is it a substitute for the tender offer documents. Investors and Perseon stockholders
are strongly advised to read the tender offer documents and the related solicitation/recommendation statement on Schedule 14D-9
that will be filed by Perseon with the SEC, and other relevant materials when they become available, because they will contain
important information.
Investors and Perseon stockholders can
obtain copies of these materials (and all other related documents filed with the SEC) when available, at no charge on the SEC’s
website at www.sec.gov. Investors and Perseon stockholders may also read and copy any reports, statements and other information
filed by Galil or Perseon with the SEC, at the SEC public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please
call the SEC at 1-800-SEC-0330 or visit the SEC’s website for further information on its public reference room.
Contact information:
Martin J. Emerson
President and CEO
Tel: +1 651 287 5050
Email: marty.emerson@galilmedical.com |
Scott P. Youngstrom
Vice President, Chief Financial Officer
Tel: +1 651 287 5052
Email: scott.youngstrom@galilmedical.com |
4364
Round Lake Road West │ Arden Hills, MN 55112 │ 877.639.2796 (CRYO) │ 877.510.7757 Fax
www.galilmedical.com |
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