Document And Entity Information
v4.1.212.0
Document And Entity Information
6 Months Ended
Jun. 30, 2011
Aug. 08, 2011
Document And Entity Information    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Jun. 30, 2011
Document Fiscal Year Focus 2011  
Document Fiscal Period Focus Q2  
Entity Registrant Name CAS MEDICAL SYSTEMS INC  
Entity Central Index Key 0000764579  
Current Fiscal Year End Date --12-31  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   13,604,284

Condensed Consolidated Balance Sheets
v4.1.212.0
Condensed Consolidated Balance Sheets (USD $)
Jun. 30, 2011
Dec. 31, 2010
Current assets:    
Cash and cash equivalents $ 15,388,288 $ 4,492,690
Accounts receivable, net of allowance 3,333,467 2,606,616
Recoverable income taxes   13,655
Inventories 4,450,817 4,812,965
Other current assets 431,252 310,187
Total current assets 23,603,824 12,236,113
Property and equipment:    
Leasehold improvements 257,764 252,517
Equipment at customers 1,868,550 1,686,919
Machinery and equipment 4,796,280 5,114,460
Property and equipment, gross 6,922,594 7,053,896
Accumulated depreciation and amortization (5,210,421) (5,244,819)
Property and equipment, net 1,712,173 1,809,077
Intangible and other assets, net 693,993 651,626
Total assets 26,009,990 14,696,816
Liabilities and Stockholders' Equity    
Accounts payable 1,492,798 2,283,906
Accrued expenses 1,157,362 909,331
Note payable 134,335  
Total current liabilities 2,784,495 3,193,237
Deferred gain on sale and leaseback of property 832,108 899,426
Income taxes payable 211,159 211,159
Total liabilities 3,827,762 4,303,822
Commitments and Contingencies    
Series A exchangeable preferred stock $.001 par value per share, 54,500 shares issued and outstanding and subject to redemption requirements. Liquidation value of $5,483,306 at June 30, 2011 5,075,123  
Stockholders' equity:    
Preferred stock, $.001 par value per share, 1,000,000 shares authorized - Series A convertible preferred stock, 95,500 shares issued and outstanding. Liquidation value of $9,590,853 at June 30, 2011 8,834,745  
Common stock, $.004 par value per share, 40,000,000 shares authorized, 13,696,851 and 13,575,401 shares issued at June 30, 2011 and December 31, 2010, respectively, including shares held in treasury 54,787 54,302
Common stock held in treasury, at cost - 86,000 shares (101,480) (101,480)
Additional paid-in capital 10,427,418 10,002,600
(Accumulated deficit) retained earnings (2,108,365) 437,572
Total stockholders' equity 17,107,105 10,392,994
Total liabilities and stockholders' equity $ 26,009,990 $ 14,696,816

Condensed Consolidated Balance Sheets (Parenthetical)
v4.1.212.0
Condensed Consolidated Balance Sheets (Parenthetical) (USD $)
6 Months Ended
Jun. 30, 2011
Dec. 31, 2010
Condensed Consolidated Balance Sheets    
Series A exchangeable preferred stock, par value per share $ 0.001  
Series A exchangeable preferred stock, shares issued 54,500  
Series A exchangeable preferred stock, shares outstanding 54,500  
Series A exchangeable preferred stock, liquidation value $ 5,483,306  
Preferred stock, par value $ 0.001 $ 0.001
Preferred stock, shares authorized 1,000,000 1,000,000
Series A convertible preferred stock, shares issued 95,500  
Series A convertible preferred stock, shares outstanding 95,500  
Series A convertible preferred stock, liquidation value $ 9,590,853  
Common stock, par value $ 0.004 $ 0.004
Common stock, shares authorized 40,000,000 40,000,000
Common stock, shares issued 13,696,851 13,575,401
Treasury stock, shares 86,000 86,000

Condensed Consolidated Statements Of Operations
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Condensed Consolidated Statements Of Operations (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2011
Jun. 30, 2010
Jun. 30, 2011
Jun. 30, 2010
Condensed Consolidated Statements Of Operations        
Net sales $ 5,717,179 $ 6,318,343 $ 11,360,303 $ 12,426,787
Cost of sales 3,591,538 3,585,318 7,100,107 7,039,496
Gross profit 2,125,641 2,733,025 4,260,196 5,387,291
Operating expenses:        
Research and development 805,229 465,088 1,517,573 928,765
Selling, general and administrative 2,977,904 2,583,842 5,668,747 4,703,602
Total operating expenses 3,783,133 3,048,930 7,186,320 5,632,367
Operating loss (1,657,492) (315,905) (2,926,124) (245,076)
Other (income) expense, net (2,493) 22,966 (5,055) 47,969
Loss from continuing operations before income taxes (1,654,999) (338,871) (2,921,069) (293,045)
Income tax benefits (107,097) (146,775) (127,544) (139,829)
Loss from continuing operations (1,547,902) (192,096) (2,793,525) (153,216)
Income from discontinued operations, net of income taxes 207,896 199,768 247,588 368,410
Net (loss) income (1,340,006) 7,672 (2,545,937) 215,194
Preferred Stock Dividends 74,158   74,158  
Net (loss) income applicable to common stockholders $ (1,414,164) $ 7,672 $ (2,620,095) $ 215,194
Per share basic and diluted income (loss) applicable to common stockholders:        
Continuing operations $ (0.12) $ (0.02) $ (0.22) $ (0.01)
Discontinued operations $ 0.01 $ 0.02 $ 0.02 $ 0.03
Net (loss) income $ (0.11) $ 0.00 $ (0.20) $ 0.02
Weighted average number of common shares outstanding:        
Basic and diluted 13,086,493 11,617,719 13,048,845 11,480,541

Condensed Consolidated Statement Of Changes In Shareholders' Equity
v4.1.212.0
Condensed Consolidated Statement Of Changes In Shareholders' Equity (USD $)
Preferred Stock [Member]
Common Stock [Member]
Held In Treasury [Member]
Additional Paid-In Capital [Member]
(Accumulated Deficit) Retained Earnings [Member]
Total
Balance at Dec. 31, 2010   $ 54,302 $ (101,480) $ 10,002,600 $ 437,572 $ 10,392,994
Balance, shares at Dec. 31, 2010   13,575,401 86,000      
Net loss         (2,545,937) (2,545,937)
Common stock issued upon exercise of stock options and warrants   162   33,463   33,625
Common stock issued upon exercise of stock options and warrants, shares   40,550        
Common stock issued under stock purchase plan   6   4,481   4,487
Common stock issued under stock purchase plan, shares   1,516        
Restricted stock issued, net of cancellations   317   (317)    
Restricted stock issued, net of cancellations, shares   79,384        
Sale of preferred stock, net of expenses 8,834,745         8,834,745
Sale of preferred stock, net of expenses, shares 95,500          
Accretion of Series A Exchangeable Preferred Stock       (33,306)   (33,306)
Stock compensation       420,497   420,497
Balance at Jun. 30, 2011 $ 8,834,745 $ 54,787 $ (101,480) $ 10,427,418 $ (2,108,365) $ 17,107,105
Balance, shares at Jun. 30, 2011 95,500 13,696,851 86,000      

Condensed Consolidated Statements Of Cash Flows
v4.1.212.0
Condensed Consolidated Statements Of Cash Flows (USD $)
6 Months Ended
Jun. 30, 2011
Jun. 30, 2010
OPERATING ACTIVITIES:    
Net (loss) income $ (2,545,937) $ 215,194
Less income from discontinued operations 247,588 368,410
Loss from continuing operations (2,793,525) (153,216)
Adjustments to reconcile net loss from continuing operations to net cash (used in) provided by operating activities:    
Depreciation and amortization 454,569 459,899
Stock compensation 420,497 83,033
Amortization of gain on sale and leaseback (67,319) (67,319)
Deferred income taxes (127,545)  
Changes in operating assets and liabilities:    
Accounts receivable (726,851) (995,681)
Inventories 362,148 1,286,233
Other current assets (121,066) (436,769)
Accounts payable and accrued expenses (543,077) 288,598
Income taxes payable 13,655 690,196
Net cash (used in) provided by operating activities of continuing operations (3,128,514) 1,154,974
INVESTING ACTIVITIES:    
Expenditures for property and equipment (294,142) (216,859)
Purchase of intangible assets (105,889) (24,515)
Net cash used in investing activities of continuing operations (400,031) (241,374)
FINANCING ACTIVITIES:    
Proceeds from note payable 154,150 183,656
Repayments of note payable (19,815) (100,519)
Repayments under line-of-credit   (1,194,657)
Repayments of long-term debt   (321,359)
Deferred financing costs   (123,219)
Proceeds from sale of preferred stock, net 13,876,562  
Proceeds from issuance of common stock 38,113 1,936,778
Net cash provided by financing activities of continuing operations 14,049,010 380,680
Net cash provided by continuing operations 10,520,465 1,294,280
Cash flows from discontinued operations    
Cash provided by operating activities of discontinued operations 375,133 836,944
Net cash provided by discontinued operations 375,133 836,944
Net change in cash and cash equivalents 10,895,598 2,131,224
Cash and cash equivalents, beginning of period 4,492,690 1,186,779
CASH AND CASH EQUIVALENTS, END OF PERIOD 15,388,288 3,318,003
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION    
Cash paid during the period for interest (5,051) 99,136
Cash paid during the period for income taxes, net $ (42,383) $ (750,777)

The Company
v4.1.212.0
The Company
6 Months Ended
Jun. 30, 2011
The Company  
The Company

(1) The Company

 

CAS Medical Systems, Inc. (the "Company" or "CASMED") is a medical technology company that develops, manufactures and distributes non-invasive patient monitoring products that are vital to patient care. Our products include the FORE-SIGHT® Absolute Tissue Oximeter and sensors, and our Traditional Monitoring products which include MAXNIBP® blood pressure measurement technology, bedside monitoring products and supplies for neonatal intensive care. These products are designed to provide accurate, non-invasive, biologic measurements that guide healthcare providers to deliver improved patient care. The products are sold by CASMED through its own sales force, via distributors, manufacturers' representatives and pursuant to original equipment manufacturer ("OEM") agreements both internationally and in the United States.


Basis Of Presentation
v4.1.212.0
Basis Of Presentation
6 Months Ended
Jun. 30, 2011
Basis Of Presentation  
Basis Of Presentation

(2) Basis of Presentation

 

The condensed consolidated financial statements included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission.  Certain information and disclosures included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations.  These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report filed on Form 10‑K for the year ended December 31, 2010.  The condensed consolidated balance sheet as of December 31, 2010 was derived from the audited financial statements.

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales and expenses during the reporting period. Estimates that are particularly sensitive to change in the near-term are inventory valuation allowances, deferred income tax asset valuation allowances and allowances for doubtful accounts. Actual results could differ from those estimates. In the opinion of the Company, all adjustments (consisting of normal recurring accruals) necessary to present fairly the consolidated financial position of the Company and its consolidated results of operations and cash flows have been included in the accompanying financial statements.  The results of operations for interim periods are not necessarily indicative of the expected results for the full year.

Private Placement Of Preferred Stock
v4.1.212.0
Private Placement Of Preferred Stock
6 Months Ended
Jun. 30, 2011
Private Placement Of Preferred Stock  
Private Placement Of Preferred Stock

(3) Private Placement of Preferred Stock

 

   On June 8, 2011, the Company entered into an investment agreement with a private investor pursuant to which the Company issued on June 9, 2011 (i) 95,500 shares of a newly created series of preferred stock, designated "Series A Convertible Preferred Stock," par value $0.001 per share which are convertible into authorized but unissued shares of common stock, par value $0.004 per share, of the Company and (ii) 54,500 shares of a newly created series of preferred stock, designated "Series A Exchangeable Preferred Stock," par value $0.001 per share which are convertible, following stockholder approval, into authorized but unissued shares of common stock, par value $0.004 per share, of the Company. A Special Meeting of the Company's Stockholders will take place at the Company's offices on August 22, 2011 for the purposes described above.

 

   The Company received an aggregate cash purchase price of $15,000,000 representing a per-share purchase price of $100 for the Series A Convertible Preferred Stock and $100 for the Series A Exchangeable Preferred Stock. The Company utilized a placement agent to assist in the transaction which was paid a fee of $900,000 plus certain expenses. The Company received net proceeds, after expenses, of $13,876,562.


 

Series A Convertible Preferred Stock

 

            The shares of Series A Convertible Preferred Stock (the "Series A Preferred Stock") issued upon closing are convertible at the option of the holder into common stock at a conversion price of $2.82 (the "Conversion Price").  The Conversion Price is subject to standard weighted average anti-dilution adjustments subject to limitations under NASDAQ listing rules.

 

             Following the date of issuance, the stated value ($100.00 per share) of the Series A Preferred Stock will accrete at an annual rate of 7% compounded quarterly.  On an annual basis prior to the third anniversary of the original date of issuance, the holders may elect, pursuant to certain requirements, to receive the following twelve months of accretion in the form of a dividend of 7% per annum, payable quarterly in cash at the holder's option. After the third anniversary of the closing, such accretion may be made in cash at the Company's option.  The Series A Preferred Stock is subject to certain default provisions whereby the dividend rate shall be increased by an additional 5% per annum.

 

             After the third anniversary of the original date of issuance, the Company can force conversion of all, and not less than all, of the outstanding Series A Preferred Stock into Company common stock as long as the closing price of our common stock is at least 250% of the Conversion Price,or $7.05 per common share, for at least 20 of the 30 consecutive trading days immediately prior to the conversion and the average daily trading volume is greater than 50,000 shares per day over the 30 consecutive trading days immediately prior to such conversion.  The Company's ability to cause a conversion is subject to certain other conditions as provided pursuant to the terms of the Series A Preferred Stock.

 

              The Series A Preferred Stock is entitled to a liquidation preference equal to the greater of 100% of the accreted value for each share of Series A Preferred Stock outstanding on the date of a liquidation plus all accrued and unpaid dividends or the amount a holder would have been entitled to had the holder converted the shares of Series A Preferred Stock into common stock immediately prior to the liquidation.  The Series A Preferred Stock will vote together with the common stock as-if-converted on the original date of issuance.  Holders of Series A Preferred Stock are entitled to purchase their pro rata share of additional stock issuances in certain future financings.

 

Series A Exchangeable Preferred Stock

 

Prior to approval by the stockholders of the Company, holders of the Series A Exchangeable Preferred Stock will not have any voting rights and the stated value of the Series A Exchangeable Preferred Stock of $100.00 per share will accrete at an annual rate of 10%, compounded quarterly.  Upon approval by the stockholders of the Company, the Series A Exchangeable Preferred Stock will have substantially identical terms to the Series A Preferred Stock. In the event stockholder approval is not obtained by October 1, 2011, the rate will increase by 2% per fiscal quarter up to a maximum of 20% per annum.  Prior to the third anniversary of the original date of issuance, the holders may elect, pursuant to certain requirements, to receive the accretion in the form of a dividend of 10% per annum (subject to increase as described above), payable quarterly in cash at the holder's option through the third anniversary of the closing and thereafter at the Company's option. 

 

Pursuant to the terms of the Series A Preferred Stock and Series A Exchangeable Preferred Stock, a holder must issue a written request to the Company by June 15th 2011, 2012, or 2013 to receive cash dividends for the applicable succeeding four fiscal quarters ended June 30th, September 30th, December 31st, and March 31st and for any period prior to the date of such letter and the original issue date of June 9, 2011. The Company did not receive such a request by June 15, 2011 for the fiscal quarters through March 31, 2012. The Company has accrued $40,852 related to the accretion of the Series A Preferred Stock and $33,306 related to the accretion of the Series A Exchangeable Preferred Stock.

 

In the event stockholder approval is not obtained and the Series A Exchangeable Preferred Stock is outstanding five years from the date of issuance, the holders shall have the right to require the Company to redeem all or part of the outstanding shares of Series A Exchangeable Preferred Stock for a per share amount in cash as defined by the investment agreement.


Inventories; Property And Equipment; Intangible And Other Assets
v4.1.212.0
Inventories; Property And Equipment; Intangible And Other Assets
6 Months Ended
Jun. 30, 2011
Inventories; Property And Equipment; Intangible And Other Assets  
Inventories; Property And Equipment; Intangible And Other Assets

(4) Inventories; Property and Equipment; Intangible and Other Assets

 

            Inventories consist of:

 

 

June 30,

          2011

   December 31,                                                                                                                                       2010

 

 

 

            Raw materials

    $ 3,503,708

    $ 3,733,550

            Work in process

            24,318

              2,950

            Finished goods

          922,791

       1,076,465

 

    $ 4,450,817

     $ 4,812,965

 

 

Property and equipment are stated at cost and include FORE-SIGHT cerebral oximetry monitors primarily located at customer sites within the United States. Such equipment is held under a no-cost program whereby customers purchase disposable sensors for use with the Company's equipment.  The Company retains title to the monitors shipped to its customers under this program. Property and equipment is depreciated using the straight-line method over the estimated useful lives of the assets.

 

Intangible assets consist of patents issued, patents pending, trademarks, purchased technology and other deferred charges which are recorded at cost. Patents are amortized on a straight-line basis over 20 years. Capitalized costs are amortized over their estimated useful lives. Deferred financing costs are amortized over the term of the related debt. Other deferred charges are amortized over their estimated useful lives.

 

Intangible and other assets consist of the following:

 

 

              June 30,

       December 31,

 

                 2011

              2010

 

 

 

Patents and other assets

              $ 682,321

      $ 593,166

Patents pending

                 271,711

         254,975

Purchased technology

                  46,026

          46,026

Deferred finance charges

                            -

        170,205

 

            1,000,058

     1,064,372

Accumulated amortization

 (306,065)

       (412,746)

 

              $ 693,993

          $  651,626

 

Amortization expense of intangible and other assets for the six months ended June 30, 2011 was $63,523. Estimated amortization expense for the calendar year 2011 is $97,092. Expected amortization expense of intangible and other assets for the next five calendar years follows:

 

2012

$    65,000

2013

51,000

2014

23,000

2015

14,000

2016

      14,000

 

$  167,000

 

The Company reviews its intangibles and other assets for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company believes that the carrying amounts of its long-lived assets are fully recoverable.


Principal Products And Services
v4.1.212.0
Principal Products And Services
6 Months Ended
Jun. 30, 2011
Principal Products And Services  
Principal Products And Services

(5) Principal Products and Services

 

            The Company has categorized its sales of products and services into the following categories:

 

  • Tissue oximetry monitoring products – includes sales of the FORE-SIGHT cerebral monitors, sensors and accessories.

 

  • Traditional monitoring products  - includes:

 

1)Vital signs bedside monitors and accessories incorporating various combinations of measurement parameters for both human and veterinary use. Parameters found in these monitors include the Company's proprietary MAXNIBP non-invasive blood pressure, pulse oximetry, electro-cardiography, temperature, and capnography.

 

2)Blood pressure measurement technology – includes sales to OEM manufacturers of the Company's proprietary MAXNIBP non-invasive blood pressure technology, sold as a discrete module to be included in the OEM customers own multi-parameter monitors, and related license fees.

 

3)Supplies and service – includes sales of neonatal intensive care supplies including electrodes and skin temperature probes, and service repair.


Discontinued Operations
v4.1.212.0
Discontinued Operations
6 Months Ended
Jun. 30, 2011
Discontinued Operations  
Discontinued Operations

(6) Discontinued Operations

 

On November 5, 2010, the Company sold certain assets and liabilities related to its Statcorp business unit, which included its blood pressure and infusor cuff product lines, in exchange for $3,200,000 in cash at closing. As provided in the purchase agreement, the aggregate consideration paid to the Company at closing was subject to an adjustment based upon changes in the net working capital of the business as of the closing date relative to a net working capital target. The adjustment resulted in $78,964 of additional consideration paid to the Company. Further, the Company has accrued an earn-out payment from the buyer of $250,000 as of June 30, 2011 as a result of the buyer reaching certain net revenue thresholds in the six-month period following the closing.

 

            The following table represents the financial results of the discontinued operations for the three and six months ended June 30, 2011 and 2010:

 

 

             Three Months Ended

              Six Months Ended

 

June 30

June 30

 

2011

2010

2011

2010

 

 

 

 

 

Revenues

         $           0

  $ 1,906,099

          $           0

  $ 4,292,687

Cost of products sold

                      0

     1,481,353

                       0

     3,566,227

Gross profit

                      0

        424,746

                       0

        726,460

Operating expenses

                      0

          95,530

                       0

        174,404

Interest expense

                      0

          21,880

                       0

          45,947

Other income

           314,993

                   0

            375,133

                   0

Income from discontinued operations before income taxes

 

           314,993

 

        307,336

 

            375,133

 

        506,109

Income tax expense

           107,097

        107,568

            127,545

        137,699

Income from discontinued operations

        $ 207,896

     $ 199,768

         $ 247,588

     $ 368,410

 

Interest expense allocated to discontinued operations in 2010 relates to the Company's bank term note which was originated to finance the acquisition of the Statcorp business unit in May 2005. The term note was repaid in full commensurate with the sale of the business unit in November 2010.

 

Income from discontinued operations of $207,896 and $247,588 for the three and six-month periods ended June 30, 2011, respectively, primarily includes a $250,000 earn-out accrued by the Company and fees paid by the buyer for transitional support services provided by the Company. Transitional support services were concluded during the second quarter of 2011.

Income (Loss) Per Common Share Applicable To Common Stockholders
v4.1.212.0
Income (Loss) Per Common Share Applicable To Common Stockholders
6 Months Ended
Jun. 30, 2011
Income (Loss) Per Common Share Applicable To Common Stockholders  
Income (Loss) Per Common Share Applicable To Common Stockholders

(7) Income (Loss) per Common Share Applicable to Common Stockholders

           

Basic earnings (loss) per common share is computed by dividing net loss applicable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share reflects the potential dilution that could occur if common stock equivalents such as unvested restricted common shares, outstanding warrants and options or convertible preferred stock were exercised or converted into common stock.  For all periods reported, the Company incurred net losses from continuing operations.  Therefore, for each period reported, diluted loss per share is equal to basic loss per share because the effect of including such common stock equivalents or other securities would have been anti-dilutive.

 

At June 30, 2011, stock options and warrants to purchase 463,000 and 889, 401, shares of common stock, respectively, were excluded from the diluted earnings per share calculation as they would have been anti-dilutive. On an as-converted basis, 3,546,099 shares of common stock pertaining to the private placement of 95,500 shares of Series A convertible preferred stock issued on June 9, 2011 were also excluded as they would have been anti-dilutive.

 

            The following table presents a reconciliation of the numerators and denominators of basic and diluted loss per share:

 

Three Months Ended

Six Months Ended

 

June 30,

June 30

 

    2011

 

        2010

2011

 

2010

 

 

 

 

 

 

 

Loss from continuing operations

$ (1,547,902)

 

 $ (192,096)

$ (2,793.525)

 

$ (153,216)

Preferred dividends

         74,158

 

                 -

        74,158

 

                -

Loss from continuing operations applicable to common stockholders

 

   (1,622,060)

 

 

  (192,096)

 

   (2,867,683)

 

 

(153,216)

Income from discontinued operations

       207,896

 

    199,768

       247,588

 

    368.410

Net (loss) income applicable to common stockholders

 

$ (1,414,164)

 

 

$      7,672

 

$ (2,620,095)

 

 

$  215,194

 

 

 

 

 

 

 

Weighted average shares outstanding, net  

    of unvested restricted common shares –    

    used  to compute basic and diluted

    income (loss) per share applicable to

    common stockholders

 

 

 

 

  13,086,493

 

 

 

 

 

11,617,719

 

 

 

 

  13,048,845

 

 

 

 

 

11,480,541


Stock Compensation Expense And Share-Based Payment Plans
v4.1.212.0
Stock Compensation Expense And Share-Based Payment Plans
6 Months Ended
Jun. 30, 2011
Stock Compensation Expense And Share-Based Payment Plans  
Stock Compensation Expense And Share-Based Payment Plans

(8) Stock Compensation Expense and Share-based Payment Plans

 

            Stock compensation expense was $210,308 and $63,766, and $420,497 and $83,033 for the three and six-month periods ended June 30, 2011 and 2010, respectively.  Stock compensation for the six months ended June 30, 2010 includes a forfeiture adjustment of ($48,619).

 

            As of June 30, 2011, the unrecognized stock-based compensation cost related to stock option awards and unvested restricted common stock was $1,915,452.  Such amount, net of estimated forfeitures, will be recognized in operations through the first quarter of 2015.

 

            The following table summarizes the Company's stock option information as of and for the six-month period ended June 30, 2011:


 

 

 

Option

Weighted-Average

Aggregate

Intrinsic

   Weighted-Average

Contractual Life

 

Shares

Exercise Price

Value (1)

Remaining in Years

 

 

 

 

 

Outstanding at December 31, 2010

935,875

      $  2.29

$ 877,788

7.0

Granted

  240,000

          3.05

 

 

Cancelled

   (20,000)

          2.30

 

 

Exercised

    (40,550)

          0.83

 

 

Outstanding at June 30, 2011

1,115,325

      $  2.51

  $ 559,255

 7.4

Exercisable at June 30, 2011

   410,243

      $  2.38

$ 270,856

 4.2

Vested and expected to vest at June 30, 2011

   991,088

       $  2.51

$ 540,590

 7.4

 

(1) The intrinsic value of a stock option is the amount by which the market value, as of the applicable date, of the underlying stock exceeds the option exercise price.

 

            The exercise period for all outstanding stock options may not exceed ten years from the date of grant. Stock options granted to employees and members of the board of directors vest typically not less than three years from the grant date. The Company attributes stock-based compensation cost to operations using the straight-line method over the applicable vesting period.

 

            On June 8, 2011, at the Company's annual meeting of stockholders, the CAS Medical Systems, Inc. 2011 Equity Incentive Plan (the "2011 Plan") was approved by its stockholders. The 2011 Plan provides for the availability of a maximum of 1,000,000 shares of the Company's common stock, with a maximum of 500,000 shares available for issuance with respect to awards of restricted stock and restricted stock units. As of June 30, 2011, 77,168 shares of common stock remained available for issuance under the Company's 2003 Equity Incentive Plan.

 

            During the six months ended June 30, 2011, stock options for 200,000 shares of common stock were granted to our employees including an inducement stock option grant of 150,000 shares issued to our Vice President of Sales and Marketing commensurate with the start of his employment with our Company on January 7, 2011 and a stock option grant for 50,000 shares issued to our Chief Financial Officer. Stock options for 20,000 shares each were issued to two new members of the board of directors who were appointed on June 9, 2011 in connection with the private placement of shares of our Series A Preferred Stock and Series A Exchangeable Preferred Stock. The fair value of each option granted was estimated on the date of grant using the Black-Scholes option-pricing model assuming a weighted average expected stock price volatility of 93%, a weighted average expected option life of 4.5 years, an average risk-free interest rate of 3.3% and a 0.0% average dividend yield. The weighted average fair value of the stock options granted during the six months ended June 30, 2011 was $2.13 per share. The stock options contain various vesting formulas however they generally vest over a three to four year period.

 

            Restricted stock granted to employees vests typically over a period of not less than three years while restricted stock granted to members of the board of directors vests ratably over twelve months from date of grant. During the six months ended June 30, 2011, 83,718 shares of restricted common stock were granted including 50,000 shares  to executive officers of the Company and 23,718 shares to outside members of the board of directors. Those awards included an inducement restricted stock grant of 25,000 shares issued to our Vice President of Global Sales and Marketing commensurate with the start of his employment and a restricted stock grant for 25,000 shares issued to our Chief Financial Officer. As of June 30, 2011, 489,256 restricted shares issued to employees and members of the board of directors remain issued and non-vested.

 

             A summary of the restricted shares outstanding and changes for the relevant periods follow:

 

 

 

Six Months

Ended

June 30, 2011

Weighted

Average

Grant Date

Fair-Value

 

Twelve Months

Ended

December 31, 2010

Weighted

Average

Grant Date

Fair-Value

 

 

 

 

 

Outstanding at beginning of period

           484,070

         $ 1.87

190,265

 $ 2.56

Granted

             83,718

            2.95

451,222

         2.04

Cancelled

             (4,334)

            2.04

(18,501)

  1.85

Vested

           (74,198)

           2.00

      (138,916)

         2.56

Outstanding at end of period

            489,256

         $ 2.22

    484,070

$ 1.87


Financing Arrangements And Liquidity
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Financing Arrangements And Liquidity
6 Months Ended
Jun. 30, 2011
Financing Arrangements And Liquidity  
Financing Arrangements And Liquidity

(9) Financing Arrangements and Liquidity

 

The Company's line-of-credit agreement, as amended, with its bank lender expired on April 1, 2011. The Company elected not to renew the line-of credit.


Income Taxes
v4.1.212.0
Income Taxes
6 Months Ended
Jun. 30, 2011
Income Taxes  
Income Taxes

(10) Income Taxes

 

            The Company does not expect to record taxable income during its 2011 fiscal year. Further, income tax benefits that may be generated during 2011 would be offset by a deferred income tax asset valuation allowance. Management established the valuation allowance at December 31, 2009 as a result of then recent cumulative pre-tax losses and its estimates of future taxable income. Management has continued to perform the required analysis regarding the realization of our deferred income tax assets concluding that a full valuation allowance is warranted. As of June 30, 2011, the deferred income tax asset valuation allowance balance was $2,422,407.