UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 23, 2017
POLARITYTE, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 000-51128 | 06-1529524 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
615
Arapeen Drive
Salt Lake City, UT 84108
(Address of principal executive offices and zip code)
Registrant’s telephone number, including area code: (732) 225-8910
Please send copies of all communications to:
Harvey J. Kesner, Esq.
Sichenzia Ross Ference Kesner LLP
61 Broadway, 32nd Floor
New York, New York 10006
Telephone: (212) 930-9700
404I-T Hadley Road
S. Plainfield, New Jersey 07080
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Item 2.01. Completion of Acquisition or Disposition of Assets.
On June 23, 2017, PolarityTE, Inc. (the “Company”) entered into a Purchase Agreement (the “Agreement”) with Majesco Entertainment Company, a Nevada corporation and wholly-owned subsidiary of the Company (“Majesco”) and Zift Interactive LLC, a Nevada limited liability company (the “Purchaser”). Pursuant to the terms of the Agreement, the Company sold to the Purchaser 100% of the issued and outstanding shares of common stock of Majesco (the “Shares”), including all of the right, title and interest in and to Majesco’s business of developing, publishing and distributing video game products through both retail distribution and mobile and online digital downloading. As a result of transactions contemplated under the Agreement, the Company disposed entirely of its gaming business assets and intends to devote its resources and attention to its regenerative medicine efforts going forward.
Item 9.01 Financial Statements and Exhibits.
Exhibit 99.1 Pro Forma Financial Information
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.
| POLARITYTE, INC. | |
| Dated: June 28, 2017 | /s/ John Stetson |
| John Stetson | |
| Chief Financial Officer |
Majesco Entertainment Company Sale
On June 23, 2017, Polarityte, Inc. (the “Company”) sold Majesco Entertainment Company, a wholly owned subsidiary of the Company pursuant to the Purchase Agreement. Under the Purchase Agreement, the Buyer agreed to acquire all of the assets and to assume certain liabilities of Majesco Entertainment Company. Pursuant to the terms of the Purchase Agreement, the Company will receive total cash consideration of approximately $100,000 ($5,000 upon signing the Purchase Agreement and 19 additional monthly payments of $5,000) plus contingent consideration based on net revenues.
Pro Forma Information
The accompanying unaudited pro forma condensed consolidated statements of operations of the Company for the years ended October 31, 2016 and 2015 and the six months ended April 30, 2017 are presented as if the Majesco Entertainment Company sale had occurred on November 1, 2014. The accompanying unaudited pro forma condensed consolidated balance sheet of the Company as of April 30, 2017 is presented as if the Majesco Entertainment Company sale had occurred on April 30, 2017. The pro forma adjustments related to the Majesco Entertainment Company sale do not reflect the final purchase price or final asset and liability balances of Majesco Entertainment Company. Accordingly, the pro forma adjustments are preliminary and have been made solely for the purpose of providing unaudited pro forma condensed consolidated financial information. The unaudited pro forma financial information is not necessarily indicative of the results of operations or financial position that might have been achieved for the dates or periods indicated, nor is it necessarily indicative of the results of operations or financial position that may occur in the future.
The historical consolidated financial information has been adjusted in the unaudited pro forma financial information to give effect to pro forma events that are (1) directly attributable to the disposal, (2) factually supportable, and (3) with respect to the statements of operations, expected to have a continuing impact on the combined results. The pro forma information does not reflect several changes the Company expects to realize after the Majesco Entertainment Company sale, because the changes are not certain.
The following is a brief description of the amounts recorded under each of the column headings in the unaudited pro forma consolidated statements of operations and balance sheet:
Polarityte, Inc.
This column reflects the Company’s historical audited operating results for the years ended October 31, 2016 and 2015 and the historical and unaudited operating results of continuing operations and financial condition as of and for the six months ended April 30, 2017 prior to any adjustment for the Majesco Entertainment Company sale described above.
Disposal
This column reflects the elimination of the historical operating results of Majesco Entertainment Company for the years ended October 30, 2016 and 2015 and the six months ended April 30, 2017 at the amounts that have been reflected in the Company’s condensed consolidated statements of operations for those periods. The disposal column on the unaudited pro forma condensed consolidated balance sheet as of April 30, 2017 reflects the value of assets and liabilities included in the Majesco Entertainment Company as of that date.
Pro Forma Adjustments
This column on the unaudited pro forma condensed consolidated balance sheet reflects the pro forma effect of the receipt and use of the cash consideration from the Majesco Entertainment Company sale.
POLARITYTE, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands)
As of April 30, 2017
| Pro Forma | ||||||||||||||||||||
| Polarityte, Inc. | Disposal | Adjustments | Notes | Pro Forma | ||||||||||||||||
| ASSETS | ||||||||||||||||||||
| Current assets | ||||||||||||||||||||
| Cash and cash equivalents | $ | 4,777 | $ | - | $ | 5 | (a) | $ | 4,782 | |||||||||||
| Due from Zift Interactive LLC | - | - | 95 | (a) | 95 | |||||||||||||||
| Accounts receivable | 65 | - | - | 65 | ||||||||||||||||
| Prepaid expense and other current assets | 326 | - | - | 326 | ||||||||||||||||
| Total current assets | 5,168 | - | 100 | 5,268 | ||||||||||||||||
| Property and equipment, net | 1,878 | - | - | 1,878 | ||||||||||||||||
| Total assets | $ | 7,046 | $ | - | $ | 100 | $ | 7,146 | ||||||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||||||||
| Current liabilities | ||||||||||||||||||||
| Accounts payable and other accrued expenses | $ | 1,409 | (480 | ) | - | 929 | ||||||||||||||
| Total current liabilities | 1,409 | (480 | ) | - | 929 | |||||||||||||||
| Commitments and contingencies | ||||||||||||||||||||
| Stockholders' deficit | ||||||||||||||||||||
| Convertible preferred stock | 111,948 | - | - | 111,948 | ||||||||||||||||
| Common Stock, $.001 par value | 6 | - | - | 6 | ||||||||||||||||
| Additional paid-in-capital | 137,880 | - | - | 137,880 | ||||||||||||||||
| Accumulated deficit | (244,197 | ) | - | 580 | (b) | (243,617 | ) | |||||||||||||
| Total stockholders' equity | 5,637 | - | 580 | 6,217 | ||||||||||||||||
| Total liabilities and stockholders' equity | $ | 7,046 | $ | (480 | ) | $ | 580 | $ | 7,146 | |||||||||||
POLARITYTE, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except for per share amounts)
Six Months Ended April 30, 2017
| Pro Forma | ||||||||||||||||||||
| Polarityte, Inc. | Disposal | Adjustments | Notes | Pro Forma | ||||||||||||||||
| Net revenues | $ | 415 | $ | (415 | ) | $ | - | $ | - | |||||||||||
| Gross profit | 415 | (415 | ) | - | - | |||||||||||||||
| Operating costs and expenses | ||||||||||||||||||||
| Product research and development | 38 | (38 | ) | - | - | |||||||||||||||
| Research and development - intellectual property acquired | 104,693 | - | - | 104,693 | ||||||||||||||||
| Selling and marketing | 24 | (24 | ) | - | - | |||||||||||||||
| General and administrative | 11,496 | (1,093 | ) | - | 10,403 | |||||||||||||||
| Depreciation and amortization | 184 | (11 | ) | - | 173 | |||||||||||||||
| 116,435 | (1,166 | ) | - | 115,269 | ||||||||||||||||
| Operating loss | (116,020 | ) | 751 | - | (115,269 | ) | ||||||||||||||
| Other expenses (income) | ||||||||||||||||||||
| Interest income | (7 | ) | - | - | (7 | ) | ||||||||||||||
| Change in fair value of warrant liability | 8 | - | - | 8 | ||||||||||||||||
| Loss before income taxes | (116,021 | ) | 751 | - | (115,270 | ) | ||||||||||||||
| Income taxes | - | - | - | - | ||||||||||||||||
| Net loss | (116,021 | ) | 751 | - | (115,270 | ) | ||||||||||||||
| Net loss attributable to common stockholders | $ | (116,021 | ) | $ | 751 | $ | - | $ | (115,270 | ) | ||||||||||
| Net loss per share, basic and diluted: | $ | (28.93 | ) | $ | (28.75 | ) | ||||||||||||||
| Weighted average shares outstanding, basic and diluted: | 4,009,853 | 4,009,853 | ||||||||||||||||||
POLARITYTE, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except for per share amounts)
Year Ended October 31, 2016
| Pro Forma | ||||||||||||||||||||
| Polarityte, Inc. | Disposal | Adjustments | Notes | Pro Forma | ||||||||||||||||
| Net revenues | $ | 1,542 | $ | (1,542 | ) | $ | - | $ | - | |||||||||||
| Cost of sales | ||||||||||||||||||||
| Product costs | 1 | (1 | ) | - | - | |||||||||||||||
| Software development costs and license fees | 285 | (285 | ) | - | - | |||||||||||||||
| 286 | (286 | ) | - | - | ||||||||||||||||
| Gross profit | 1,256 | (1,256 | ) | - | - | |||||||||||||||
| Operating costs and expenses | ||||||||||||||||||||
| Product research and development | 90 | (90 | ) | - | - | |||||||||||||||
| Selling and marketing | 14 | (14 | ) | - | - | |||||||||||||||
| General and administrative | 6,031 | (1,932 | ) | - | 4,099 | |||||||||||||||
| Depreciation and amortization | 27 | (27 | ) | - | - | |||||||||||||||
| 6,162 | (2,063 | ) | - | 4,099 | ||||||||||||||||
| Operating loss | (4,906 | ) | 807 | - | (4,099 | ) | ||||||||||||||
| Other expenses (income) | ||||||||||||||||||||
| Interest income | (18 | ) | - | - | (18 | ) | ||||||||||||||
| Change in fair value of warrant liability | (248 | ) | - | - | (248 | ) | ||||||||||||||
| Loss before income taxes | (4,640 | ) | 807 | - | (3,833 | ) | ||||||||||||||
| Income taxes | - | - | - | - | ||||||||||||||||
| Net loss | (4,640 | ) | 807 | - | (3,833 | ) | ||||||||||||||
| Special cash dividend attributable to preferred stockholders | (6,002 | ) | - | - | (6,002 | ) | ||||||||||||||
| Net loss attributable to common stockholders | $ | (10,642 | ) | $ | 807 | $ | - | $ | (9,835 | ) | ||||||||||
| Net loss per share, basic and diluted: | $ | (5.08 | ) | $ | (4.69 | ) | ||||||||||||||
| Weighted average shares outstanding, basic and diluted: | 2,096,022 | 2,096,022 | ||||||||||||||||||
POLARITYTE, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except for per share amounts)
Year Ended October 31, 2015
| Pro Forma | ||||||||||||||||||||
| Polarityte, Inc. | Disposal | Adjustments | Notes | Pro Forma | ||||||||||||||||
| Net revenues | $ | 6,693 | $ | (6,693 | ) | $ | - | $ | - | |||||||||||
| Cost of sales | ||||||||||||||||||||
| Product costs | 2,328 | (2,328 | ) | - | - | |||||||||||||||
| Software development costs and license fees | 1,095 | (1,095 | ) | - | - | |||||||||||||||
| 3,423 | (3,423 | ) | - | - | ||||||||||||||||
| Gross profit | 3,270 | (3,270 | ) | - | - | |||||||||||||||
| Operating costs and expenses | ||||||||||||||||||||
| Product research and development | 174 | (174 | ) | - | - | |||||||||||||||
| Selling and marketing | 771 | (771 | ) | - | - | |||||||||||||||
| General and administrative | 5,350 | (2,140 | ) | - | 3,210 | |||||||||||||||
| Depreciation and amortization | 61 | (61 | ) | - | - | |||||||||||||||
| Workforce reduction | 840 | (840 | ) | - | - | |||||||||||||||
| 7,196 | (3,986 | ) | - | 3,210 | ||||||||||||||||
| Operating loss | (3,926 | ) | 716 | - | (3,210 | ) | ||||||||||||||
| Other expenses (income) | ||||||||||||||||||||
| Interest income | 45 | - | 45 | |||||||||||||||||
| Gain on extinguishment of liabilities | (1,465 | ) | 1,465 | - | - | |||||||||||||||
| Gain on asset sales, net | (50 | ) | 50 | - | - | |||||||||||||||
| Other non-operating gains, net | (198 | ) | - | - | (198 | ) | ||||||||||||||
| Change in fair value of warrant liability | 1,548 | - | - | 1,548 | ||||||||||||||||
| Loss before income taxes | (3,806 | ) | (799 | ) | - | (4,605 | ) | |||||||||||||
| Income taxes | (3 | ) | - | - | (3 | ) | ||||||||||||||
| Net loss | (3,809 | ) | (799 | ) | - | (4,608 | ) | |||||||||||||
| Conversion features accreted as dividends | (2,252 | ) | - | - | (2,252 | ) | ||||||||||||||
| Net loss attributable to common stockholders | $ | (6,061 | ) | $ | (799 | ) | $ | - | $ | (6,860 | ) | |||||||||
| Net loss per share, basic and diluted: | $ | (4.93 | ) | $ | (5.59 | ) | ||||||||||||||
| Weighted average shares outstanding, basic and diluted: | 1,228,275 | 1,228,275 | ||||||||||||||||||
POLARITYTE, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
| (a) | Total consideration for the Majesco Entertainment Company sale is as follows (in thousands): |
| Cash payment of $5,000 upon signing the Purchase Agreement | $ | 5,000 | ||
| Other cash payments - 19 additional monthly payments | 95,000 | |||
| Contingent consideration * | - | |||
| Total consideration | $ | 100,000 |
* The contingent consideration was not considered probable of realization and was valued at $0.
| (b) | The gain on sale of Majesco Entertainment Company Sale is as follows (in thousands): |
| Total consideration | $ | 100,000 | ||
| Total equity in Majesco Entertainment Company | (480,000 | ) | ||
| Net gain on sale of Majesco Entertainment Company | $ | 580,000 |