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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No.__)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Soliciting Material Pursuant to
[_] Confidential, For Use of the SS.240.14a-11(c) or SS.240.14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
CAS MEDICAL SYSTEMS, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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SEC 1913 (3-99)
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CAS MEDICAL SYSTEMS, INC.
TECHNOLOGY APPLIED TO MEDICINE
44 East Industrial Road
Branford, Connecticut 06405
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 15, 2005
TO THE STOCKHOLDERS OF CAS MEDICAL SYSTEMS, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of CAS
MEDICAL SYSTEMS, INC., a Delaware corporation (the "Company"), will be held on
Wednesday, June 15, 2005, at 10:00 a.m., Eastern Daylight Time, at the offices
of the Company, 44 East Industrial Road, Branford, Connecticut 06405, for the
following purposes:
(1) To elect four directors of the Company, each for a term of one
year;
(2) To ratify the selection of UHY LLP as independent auditors for
the Company's fiscal year ending December 31, 2005;
(3) To transact such other business as may properly come before the
annual meeting.
Only stockholders of record at the close of business on April 22, 2005
are entitled to notice of and to vote at the annual meeting or any adjournments
thereof.
By Order of the Board of Directors
Jeffery A. Baird
SECRETARY
Branford, Connecticut
April 26, 2005
IF YOU DO NOT PLAN TO ATTEND THE ANNUAL MEETING TO VOTE YOUR SHARES, PLEASE
COMPLETE, DATE, SIGN AND PROMPTLY MAIL THE ENCLOSED PROXY CARD IN THE RETURN
ENVELOPE PROVIDED. NO POSTAGE IS NECESSARY IF MAILED IN THE UNITED STATES. ANY
PERSON GIVING A PROXY HAS THE POWER TO REVOKE IT AT ANY TIME, AND STOCKHOLDERS
WHO ARE PRESENT AT THE MEETING MAY WITHDRAW THEIR PROXIES AND VOTE IN PERSON.
CAS MEDICAL SYSTEMS, INC.
44 EAST INDUSTRIAL ROAD
BRANFORD, CONNECTICUT 06405
___________________
PROXY STATEMENT
___________________
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of CAS Medical Systems, Inc., a Delaware corporation
(the "Company"), of proxies for use at the Annual Meeting of Stockholders of the
Company (the "Meeting") to be held on Wednesday, June 15, 2005, at 10:00 a.m.
Eastern Daylight Time, at the offices of the Company, 44 East Industrial Road,
Branford, Connecticut 06405, and at any and all postponements or adjournments
thereof, for the purposes set forth in the accompanying Notice of Annual
Meeting.
This Proxy Statement, Notice of Annual Meeting and accompanying proxy
card are first being mailed to stockholders on or about May 4, 2005.
GENERAL
Proxies duly executed and received will be voted on all matters
presented at the Meeting in accordance with the instructions given by the person
executing such proxy or, in the absence of specific instructions, will be voted
in favor of election to the Board of Directors of the four (4) candidates
nominated by the board and in favor of the other proposals indicated on the
proxy. Management does not know of any other matter which may be brought before
the Meeting, but in the event that any other matter should properly come before
the Meeting or any nominee should not be available for election, the persons
named as proxies will have authority to vote all proxies not marked to the
contrary in their discretion as they deem advisable. Any stockholder may revoke
his or her proxy at any time before the Meeting by written notice to such effect
received by the Company at the address shown above, Attention: Corporate
Secretary, by delivery of a subsequently dated proxy, or by attending the
Meeting and voting in person.
The Common Stock is the only class of security entitled to vote at the
meeting, each share being entitled to one vote. The total number of shares of
Common Stock outstanding as of April 22, 2005, the record date established by
the Company's Board of Directors for stockholders entitled to notice of the
Meeting and to vote at the Meeting, were 9,891,494. A majority of the issued and
outstanding shares of Common Stock, or 4,945,748 shares, must be present at the
Meeting in person or by proxy in order to constitute a quorum for the
transaction of business. Assuming the presence of a quorum, the affirmative vote
of a majority of the shares present and entitled to vote on the matter at the
Meeting is required to approve each of the matters presented.
A list of stockholders entitled to vote at the Meeting will be
available for examination by any stockholder at the Company's offices, 44 East
Industrial Road, Branford, Connecticut 06405, for a period of ten days prior to
the Meeting and at the Meeting itself.
Proxies will be solicited chiefly by mail. The Company will make
arrangements with brokerage houses and other custodians, nominees and
fiduciaries to send proxies and proxy material to the beneficial owners of the
shares and will reimburse them for their expenses in so doing. Should it appear
desirable to do so in order to ensure adequate representation of shares at the
meeting, the Company's officers, agents and employees may communicate with
stockholders, banks, brokerage houses and others by telephone, e-mail,
facsimile, or in person to request that proxies be furnished. The Company will
pay all expenses incurred in connection with this solicitation.
STOCK OWNERSHIP
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as to the beneficial
ownership of each person who is not a director or executive officer, known to
the Company to own more than 5% of the outstanding Common Stock as of April 22,
2005:
Name and Address of Amount and Nature of Percentage
Beneficial Owner Beneficial Ownership (1) of Class
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Haulbowline, Ltd. 1,082,000 10.9%
c/o The Bank of Bermuda Limited
6 Front Street
P.O. Box HM 1020 Hamilton HMDX, Bermuda
J. Sanford Davis 1,015,500 10.3%
14 Longview Terrace
Madison, CT 06443
Estate of Myron L. Cohen, Ph.D. 695,453 7.0%
401 Three Corners Road
Guilford, CT 06437
BMI Capital Corporation 1,037,450 10.5%
570 Lexington Avenue
New York, NY 10022
Estate of Garry Evans 500,000 5.1%
Weybridge, Surrey
United Kingdom
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table reflects shares of Common Stock beneficially owned
(or deemed to be beneficially owned pursuant to the rules of the Securities and
Exchange Commission) as of April 22, 2005 by each director of the Company, each
of the executive officers named in the Summary Compensation Table included
elsewhere herein and the current directors and executive officers of the Company
as a group.
Amount and Nature of Percentage
Name Beneficial Ownership (1) of Class
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Louis P. Scheps 1,094,925 (2) 10.2%
Lawrence S. Burstein 259,375 (3) 2.6%
Jerome Baron 231,700 (4) 2.3%
Saul S. Milles, M.D. 67,500 (5) *
Andrew E. Kersey 70,967 (6) *
Jeffery A. Baird 27,983 (7) *
All officers and directors as a
group (6 persons) 1,752,450 (8) 15.5%
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* Under 1% of the outstanding shares of Common stock.
(1) Pursuant to the rules of the Securities and Exchange Commission, shares of
Common Stock which an individual or group has a right to acquire within 60
days pursuant to the exercise of options or warrants are deemed to be
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beneficially owned and outstanding for the purpose of computing the
percentage ownership of such individual or group, but are not deemed to be
outstanding for the purpose of computing the percentage ownership of any
other person shown in the table. Except as otherwise indicated, the persons
named herein have sole voting and dispositive power with respect to the
shares beneficially owned.
(2) Includes warrants to purchase 819,000 shares and options to purchase 50,000
shares.
(3) Includes warrants to purchase 157,500 shares. Also includes 92,500 shares
held in Mr. Burstein's IRA rollover account and 9,375 shares owned directly
and indirectly by a family member.
(4) Includes warrants to purchase 207,500 shares.
(5) Consists of Common Stock underlying warrants to purchase 67,500 shares.
(6) Includes options to purchase 70,000 shares.
(7) Includes options to purchase 25,000 shares.
(8) Includes warrants to purchase 1,251,500 shares and stock options to
purchase 145,000 shares.
ITEM 1 - ELECTION OF DIRECTORS
Four Directors are to be elected at the Meeting to serve for a term of
one year or until their respective successors are duly elected and qualify. The
shares represented by the proxies will be voted in favor of the election as
Directors of the persons named below unless authority to do so is withheld. If
any nominee is not a candidate for election at the Meeting, an event which the
Board of Directors does not anticipate, the proxies will be voted for a
substitute nominee and the others named below.
LOUIS P. SCHEPS - DIRECTOR SINCE 1990
Mr. Scheps, 73, was appointed President and CEO of the Company in
September 1990. He had held the position of Director of Manufacturing since
1986. Prior thereto, Mr. Scheps was employed by Posi-Seal International as Vice
President from 1969 to 1985. Mr. Scheps received his engineering degree from
Purdue University and his business education from the GE Management Program.
LAWRENCE S. BURSTEIN - DIRECTOR SINCE 1985
Mr. Burstein, 62, has been President and principal stockholder of
Unity Venture Capital Associates, Ltd. since March 1996. Prior thereto he was
President, a director and principal stockholder of Trinity Capital Corporation
since October 1982. Mr. Burstein is a director of five other public companies:
THQ, Inc., a manufacturer of video game cartridges, Medical Nutrition USA, Inc.,
a company that markets nutritional supplements, I.D. Systems, Inc., which
designs, develops and produces a wireless monitoring and tracking system and
Traffix, Inc., which is principally an internet direct marketing company. In
addition, Mr. Burstein is the President and a director of Trinity Partners
Acquisition Company, Inc., a publicly traded acquisition vehicle. Mr. Burstein
received an L.L.B. from Columbia Law School.
JEROME S. BARON - DIRECTOR SINCE 1986
Mr. Baron, 78, has been in the securities industry since 1944. He was
a Vice President in the International Department at Loeb Rhoades & Company, a
Partner at Andreson & Company, and Chairman and Chief Executive Officer of
Foster Securities, Inc., which he founded in 1974. In 1977, Foster Securities
merged with Brean Murray Securities Inc. Mr. Baron is Vice-Chairman of Brean
Murray and Company, Inc. He is a Director of Haulbowline Ltd., a private
offshore company. He attended Kings Point Merchant Marine Academy and Pace
University.
SAUL S. MILLES, M.D. - DIRECTOR SINCE 1991
Dr. Milles, 74, served as Medical Director of the General Electric
Company from 1984 to 1998. Prior to that, he was in active medical practice in
New Haven, Connecticut, as an internist and gastroenterologist from 1961 to
1984. He had served as Attending Physician at the Yale Medical Center and had
been appointed a Clinical Associate Professor of Medicine at the Yale Medical
School, as well as President of the Medical staff. He has been involved in
issues related to medical ethics, health screening and employment of the
handicapped. Dr. Milles was active in developing policies for smoking abatement
and substance abuse treatment. He has served as an advisor to the Office of
Technology Assessment
4
of the U.S. Congress. Dr. Milles attended Cornell University and received his
M.D. degree from the University of Rochester. He received post-graduate medical
education at Yale Medical Center.
MEETINGS OF THE BOARD OF DIRECTORS
During the Company's fiscal year ended December 31, 2004, the Board of
Directors held three meetings and acted three times by unanimous written
consent. Each director attended at least 75% of the meetings of the Board of
Directors held and of all committees of the Board of Directors on which he
served while he was director or a member of a committee of the Board of
Directors.
We have not established a formal policy regarding director attendance
at our annual meetings of stockholders, but our directors generally do attend
the annual meeting. The Board of Directors holds one of its regular meetings in
conjunction with the annual meeting of stockholders. Accordingly, unless one or
more members of the Board are unable to attend, all members of the Board are
present for the annual meeting. All of the four members of the Board at the time
of the Company's 2004 Annual Meeting of Stockholders attended that meeting.
COMMITTEES OF THE BOARD
The Board has standing Compensation and Audit Committees.
COMPENSATION COMMITTEE. The Compensation Committee, composed of
Messrs. Burstein, Baron and Dr. Milles, met twice during the year ended December
31, 2004. Its functions are to review the Company's general compensation
strategy; establish salaries and review benefit programs, and certain other
compensation plans; administer our equity compensation plans; and approve
certain employment contracts.
AUDIT COMMITTEE. The Audit Committee, composed of Messrs. Burstein,
Baron and Dr. Milles, met five times during the year ended December 31, 2004.
Its primary responsibilities are to insure directors, regulators and
shareholders that the Company's financial accounting and reporting practices and
its business controls are adequate and effective and that the Company is
complying with applicable related rules and regulations. The Audit Committee is
directly responsible for the appointment, compensation and oversight of the
audit and related work of our independent auditors. The Audit Committee reviews
the degree of their independence; approves the scope of the audit engagement,
including the cost of the audit; approves any non-audit services rendered by the
auditors and the fees for these services; reviews with the auditors and
management our policies and procedures with respect to internal accounting and
financial controls and, upon completion of an audit, the results of the audit
engagement; and reviews internal accounting and auditing procedures with our
financial staff and the extent to which recommendations made by the independent
auditors have been implemented.
The Audit Committee does not have a written charter. All members of
the Audit Committee are independent as defined in the listing standards of the
Nasdaq Stock Market. The Board of Directors has determined that Messrs Baron and
Burstein are each an "audit committee financial expert" as that term is defined
in Item 401(e) of Regulation S-B of the Securities and Exchange Commission.
NOMINATION OF DIRECTORS
Due to the small size of the Company's Board of Directors, the Board
of Directors determined that it is appropriate for the full Board to act with
respect to director nomination matters. Three of the four Board members are
independent as set forth in the rules of the Nasdaq Stock Market. The full Board
has adopted specifications applicable to members of the Board of Directors, and
nominees for the Board of Directors recommended by the Board of Directors must
meet these specifications. The specifications provide that a candidate for
director should:
o Have a reputation for industry, integrity, honesty, candor, fairness
and discretion;
o Be an acknowledged expert in his or her chosen field of endeavor,
which area of expertise should have some relevance to our businesses;
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o Be knowledgeable, or willing and able to become so quickly, in the
critical aspects of our businesses and operations; and
o Be experienced and skillful in serving as a competent overseer of, and
trusted advisor to, senior management of a publicly held corporation.
In addition, nominees for the Board of Directors should contribute to
the mix of skills, core competencies and qualifications of the Board through
expertise in one or more of the following areas: accounting and finance, the
healthcare industry, international business, mergers and acquisitions,
leadership, business and management, strategic planning, government relations,
investor relations, executive leadership development, and executive
compensation.
The Board of Directors will consider nominees recommended by
stockholders for election at the 2006 Annual Meeting of Stockholders that are
submitted prior to the end of 2005 to our Secretary at CAS Medical Systems'
offices, 44 East Industrial Road, Branford, Connecticut 06405. Any
recommendation must be in writing and must include a detailed description of the
business experience and other qualifications of the recommended nominee as well
as the signed consent of the nominee to serve if nominated and elected, so that
the candidate may be properly considered. All stockholder recommendations will
be reviewed in the same manner as other potential candidates for Board
membership.
The Board of Directors has not received any nominees for election to
the Board from any stockholder or group that has held more than 5% of our Common
Stock for a period of one year.
COMMUNICATIONS WITH DIRECTORS
In order to provide our security holders and other interested parties
with an open line of communication to the Board of Directors, the Board of
Directors has adopted the following procedures for communications to directors.
CAS Medical Systems, Inc security holders and other interested persons may
communicate with the chairmen of the Company's Board committees or with the
non-management directors of the Company as a group by written correspondence to
our Secretary. The correspondence should specify which of the foregoing is the
intended recipient.
All communications received in accordance with these procedures will
be reviewed initially by our Secretary. He shall relay all such communications
to the appropriate director or directors unless he determines that the
communication:
o does not relate to the business or affairs of CAS Medical Systems,
Inc. or the functioning or constitution of the Board of Directors or
any of its committees;
o relates to routine or insignificant matters that do not warrant the
attention of the Board of Directors;
o is an advertisement or other commercial solicitation or communication;
o is frivolous or offensive; or
o is otherwise not appropriate for delivery to directors.
The director or directors who receive any such communication will have
discretion to determine whether the subject matter of the communication should
be brought to the attention of the full Board of Directors or one or more of its
committees and whether any response to the person sending the communication is
appropriate. Any such response will be made only in accordance with applicable
law and regulations relating to the disclosure of information.
Our Secretary will retain copies of all communications received
pursuant to these procedures for a period of at least one year. The Board of
Directors will review the effectiveness of these procedures from time to time
and, if appropriate, recommend changes.
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CODE OF ETHICS
Our Board of Directors has approved a Code of Ethics in accordance with the
rules of the Securities and Exchange Commission that governs the conduct of each
of our senior executive officers, including our principal executive officer,
principal operating officer, principal financial officer, principal accounting
officer and controller, or persons performing such functions. Our Code of Ethics
is maintained on our website at www.casmed.com.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information concerning the compensation
during the last three fiscal years of the executive officers of the Company
(hereinafter referred to as the "named executive officers").
SUMMARY COMPENSATION TABLE
Annual Compensation
---------------------------- Number of
Warrants All Other
Position Year Salary Bonus Options/SARs Compensation
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Louis P. Scheps, 2004 $ 254,547 $ 100,000 0 $ 6,740
President, CEO 2003 219,855 0 0 5,090
2002 215,330 0 50,000 4,600
Andrew E. Kersey, 2004 150,101 20,000 20,000 2,373
COO 2003 125,386 0 20,000 -
2002 124,492 0 0 -
Jeffery A. Baird, 2004 130,025 20,000 50,000 3,263
CFO (1) 2003 - - - -
2002 - - - -
(1) Mr. Baird joined the Company in January 2004.
The following grants of stock options were made to executive officers
during the year ended December 31, 2004.
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable
Value at Assumed
Number of Percent of Annual Rates of Stock
Securities Total Options Price Appreciation
Underlying Granted to For Option Term
Options Employees in Exercise Expiration
Name Granted Fiscal Year Price Date 5% 10%
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Louis P. Scheps 0 -- -- -- -- --
Jeffery A. Baird 50,000 20.1% $ 1.40 1/06/14 $ 44,023 $111,562
Andrew E. Kersey 20,000 8.0% 1.50 6/02/14 18,867 47,812
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AGGREGATED WARRANTS/OPTIONS EXERCISED IN LAST FISCAL YEAR
AND FISCAL YEAR-END WARRANTS/OPTIONS VALUES
Number of Unexercised Value of Unexercised
Warrants/Options at In-the-Money Options at
December 31, 2004 December 31, 2004 (1)
Name Exercisable Unexercisable Exercisable Unexercisable
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Louis P. Scheps 869,000 100,000 $ 1,644,455 $ 125,000
Andrew E. Kersey 60,000 30,000 99,500 30,500
Jeffery A. Baird 0 50,000 -- 42,500
(1) Computation based upon the difference between the closing price of the
Company's Common Stock on December 31, 2004 ($2.25) and the exercise price.
No stock options or warrants were exercised by the named executive officers
during 2004.
EMPLOYMENT CONTRACTS AND TERMINATION BENEFITS
The Company and Mr. Scheps have entered into an employment agreement
pursuant to which Mr. Scheps serves as President and Chief Executive Officer of
the Company. As of September 1, 2004, the employment agreement was amended (as
amended, the "Employment Agreement") to extend its term through August 31, 2005
and provide for a base salary of $262,500 per year. The Employment Agreement
also provides that if a "Change of Control" (as defined below) occurs, and upon
such Change of Control occurring, the Employment Agreement is not extended for a
period of at least one year following the stated termination date of the
Employment Agreement, then Mr. Scheps shall be paid a lump sum of $250,000 on
such stated termination date. "Change of Control" is defined in the Employment
Agreement to mean (i) a sale of all or substantially all of the Company's
assets, (ii) a merger involving the Company in which the Company is not the
survivor and the Company's stockholders prior to the merger control less than
fifty percent of the voting stock of the surviving entity, (iii) a sale by the
Company's stockholders to an acquiror or acquirors acting in concert of more
than a majority of the then outstanding stock of the Company owned by the
Company's stockholders, or (iv) any event similar to any of the foregoing.
During October 1998, Mr. Scheps was granted a warrant to purchase 100,000 shares
of the Company Common Stock at an exercise price of $1.00 per share. This
warrant is exercisable solely in the event of a Change of Control.
COMPENSATION OF DIRECTORS
During 2004, the Company paid an annual fee of $10,000 to each of the
Directors, other than those also serving as officers, and paid no other fee for
attendance at Board or committee meetings. On March 29, 2004, each non-employee
director of the Company was awarded a warrant to purchase 7,500 shares of
Company common stock at an exercise price of $1.44 per share. The warrants have
no expiration date.
MANAGEMENT
EXECUTIVE OFFICERS
The following table sets forth the names and positions of the
executive officers of the Company:
Name Position
----------------------------------------------------------------------
Louis P. Scheps President, Chairman of the Board, and
Chief Executive Officer
Jeffery A. Baird Chief Financial Officer & Secretary
Andrew E. Kersey Chief Operating Officer
8
Louis P. Scheps, 73, was appointed President and CEO of the Company in
September 1990. He had held the position of Director of Manufacturing since
1986. Prior thereto, Mr. Scheps was employed by Posi-Seal International as Vice
President from 1969 to 1985. Mr. Scheps received his engineering degree from
Purdue University and his business education from the GE Management Program.
Jeffery A. Baird, 51, joined the Company during January 2004. From
April 2003 to December 2003, Mr. Baird was CFO of QDx, Inc., a startup venture
engaged in the development of novel medical diagnostic products. Mr. Baird was
employed by Novametrix Medical Systems, Inc. from 1988 to 2002 and held various
positions including Controller, Treasurer and CFO. Prior to joining Novametrix,
Mr. Baird was employed by Philips Medical Systems, Inc., a medical diagnostic
imaging company.
Andrew E. Kersey, 44, was named Chief Operating Officer during January
2004. Prior to that date, Mr. Kersey held the position of Director of
Engineering since joining the Company during October 2001. Mr. Kersey was
employed by Novametrix Medical Systems as OEM Engineering Manager between 1997
and 2001 and between 1985 and 1996 in various engineering capacities. From 1996
to 1997, Mr. Kersey was employed by Corometrics Medical Systems, a division of
GE Marquette Medical as Engineering Manager.
SECTION 16 (A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who beneficially own
more than ten percent of the Company's Common Stock, to file initial reports of
ownership and reports of changes in ownership with the SEC. Executive officers,
directors and greater than ten percent beneficial owners are required by the SEC
to furnish the Company with copies of all Section 16(a) forms they file.
Based upon a review of the copies of such forms furnished to the
Company and written representations from the Company's executive officers and
directors, the Company believes that during fiscal 2004 all Section 16(a) filing
requirements applicable to its executive officers, directors and greater than
ten percent beneficial owners were complied with, except that Messrs. Baird and
Kersey each failed to file Form 4 on a timely basis with respect to an option
grant.
ITEM 2 - RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
Unless otherwise instructed, the persons named in the enclosed proxy
intend to vote the same in favor of the ratification of the selection by the
Audit Committee of UHY LLP ("UHY") to serve as the Company's independent
auditors for the fiscal year ending December 31, 2005. That firm has reported to
the Company that none of its members has any direct financial interest or
material indirect financial interest in the Company or any of its subsidiaries,
nor has any member of such firm had any such connection during the past three
years.
UHY has a continuing relationship with UHY Advisors, Inc. ("Advisors")
from which it leases staff who are full time permanent employees of Advisors and
through which its partners provide non-audit services. There were no non-audit
services provided to the Company in 2004. As a result of UHY's arrangement with
Advisors, UHY has no full time employees and, therefore, all audit services
performed for the Company by UHY for 2004 were provided by permanent, full time
employees of Advisors leased to UHY. UHY manages and supervises the audit
engagement and the audit staff, and is exclusively responsible for the report
rendered in connection with its audit of the Company's 2004 consolidated
financial statements.
A representative from UHY is expected to attend the Meeting and will
be afforded the opportunity to make a statement or respond to appropriate
questions from stockholders or both.
Stockholder ratification of the selection of UHY as our independent
auditors is not required by our Bylaws or otherwise. However, the Audit
Committee is submitting the selection of UHY to the stockholders for
ratification as a matter of good corporate practice. If the stockholders fail to
ratify the selection, the Audit Committee will reconsider whether or not to
retain that firm. Even if the selection were ratified, the Audit Committee in
its discretion may direct the appointment of a different independent accounting
firm at any time during the year if the Audit Committee determines that such a
change would be in the best interests of the Company and its stockholders.
On October 7, 2004, the Board of Directors and the Audit Committee
dismissed PricewaterhouseCoopers LLP ("PWC"), as the Company's independent
public accountants and engaged UHY to serve as the Company's independent public
accountants for the remainder of fiscal year 2004.
9
PWC's reports on the Company's financial statements for the year ended
December 31, 2003 did not contain an adverse opinion or disclaimer of opinion,
nor were they qualified or modified as to uncertainty, audit scope or accounting
principles.
During the year ended December 31, 2003 and through the date of
dismissal of PWC, there were no disagreements with PWC on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure which, if not resolved to PWC satisfaction, would have caused
them to make reference to the subject matter in connection with their report on
the Company's consolidated financial statements for such years; and there were
no reportable events, as listed in Item 304(a)(1)(B) of Regulation S-B.
The Company provided PWC with a copy of the foregoing disclosures. PWC
provided a letter, dated October 12, 2004, stating its agreement with such
statements. During the year ended December 31, 2003 and through the date of the
Audit Committee's decision, the Company did not consult PricewaterhouseCoopers
LLP with respect to the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on the Company's consolidated financial statements, or any
other matters or reportable events listed in Items 304(a)(2)(i) and (ii) of
Regulation S-B.
The Board of Directors recommends that stockholders vote "FOR"
ratification of the appointment of UHY as the Company's independent auditors for
the year 2005.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee reviews the CAS Medical Systems financial
reporting process on behalf of the Board of Directors. Management has the
primary responsibility for the financial statements and the reporting process.
The Company's independent auditors are responsible for expressing an opinion on
the conformity of its audited financial statements to generally accepted
accounting principles.
In this context, the Audit Committee has reviewed and discussed with
management and the independent auditors the audited financial statements for the
fiscal year ended December 31, 2004. The Audit Committee has discussed with the
independent auditors the matters required to be discussed by Statement on
Auditing Standards No. 61 (Communication with Audit Committees). In addition,
the Audit Committee has received from the independent auditors the written
disclosures required by Independence Standards Board No. 1 (Independence
Discussions with Audit Committees) and discussed with them their independence
from CAS Medical Systems, Inc. and its management. The Audit Committee has also
considered whether the independent auditors provision of non-audit services to
CAS Medical Systems, Inc. is compatible with the auditor's independence.
In reliance on the reviews and discussions referred to above, the
Audit Committee recommended to the Board of Directors, and the Board has
approved, that the audited financial statements for the fiscal year ended
December 31, 2004 be included for filing in CAS Medical Systems, Inc.'s annual
report on SEC Form 10-KSB for the year ended December 31, 2004.
Audit Committee of the Board of Directors
- Jerome Baron
- Lawrence Burstein
- Saul S. Milles, M.D.
AUDIT FEES
Aggregate fees billed by UHY for the audit of our interim consolidated
financial statements included in a quarterly report on Form 10-QSB, for the
audit of our annual consolidated financial statements and the restatement of
prior year financial results included in the annual report on Form 10-KSB for
the year ended December 31, 2004 and for the review and audit of the application
of new accounting pronouncements and SEC releases were $81,500. Aggregate fees
billed by PWC for the review of our interim consolidated financial statements
included in quarterly reports on Form 10-QSB
10
filed during 2004 for the review of other SEC filings, and for the review of the
Company's restatement of its prior year financial statements included in the
annual report on Form 10-KSB for the year ended December 31, 2004 were $61,950.
TAX FEES
Aggregate fees billed by UHY for professional services rendered to the
Company for tax compliance, tax advice and tax planning were $14,000 for the
year ended December 31, 2004. Fees billed by PWC for such services for the year
ended December 31, 2003 was $17,600. The tax related services include primarily
federal and state income tax services.
AUDIT-RELATED FEES AND ALL OTHER FEES
The Company did not incur any audit-related fees or other fees
pertaining to services provided by UHY or PWC for the year ended December 31,
2004 and did not incur such similar fees pertaining to services provided by PWC
for the year-ended December 31, 2003.
PRE-APPROVAL POLICIES
The Audit Committee has adopted a policy under which certain audit,
non-audit and tax related services to be performed by the Company's independent
auditors are required to be pre-approved by the Audit Committee in order to
assure that they do not impair the auditor's independence from the Company.
Included in, but not limited to, those pre-approved services are, required
interim quarterly reviews; local, state and federal tax compliance, planning,
preparation and filing services; due diligence services pertaining to potential
business acquisitions and dispositions; accounting consultations related to
accounting, financial reporting or disclosure matters not classified as "Audit
Services"; assistance with understanding and implementing new accounting and
financial reporting guidance from rulemaking authorities; financial audits of
employee benefit plans; agreed-upon or expanded audit procedures related to
accounting and or billing records required to respond to or comply with
financial, accounting or regulatory reporting matters; and assistance with
internal control reporting requirements. All of the audit-related, tax and other
services and related fees provided by PricewaterhouseCoopers and UHY in fiscal
year 2004 were approved in advance by the Audit Committee.
OTHER MATTERS
As of the date of this proxy statement, the Company knows of no
business that will be presented for consideration at the Annual Meeting other
than the items referred to above. Proxies in the enclosed form will be voted in
respect of any other business that is properly brought before the Annual Meeting
in accordance with the judgment of the person or persons voting the proxies.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the Company's 2006
Annual Meeting of Stockholders pursuant to the provisions of Rule 14a-8,
promulgated under the Exchange Act, must be received at the Company's offices
not later than December 27, 2005, for inclusion in the Company's Proxy Statement
and form of proxy relating to that meeting. Stockholder proposals submitted
outside the process provided in Rule 14a-8 shall be considered untimely in
accordance with Rule 14a-5(e) if made after March 8, 2006.
11
A COPY OF THE COMPANY'S 2004 ANNUAL REPORT ACCOMPANIES THIS PROXY
STATEMENT. ADDITIONAL COPIES OF SUCH REPORT, AS WELL AS COPIES OF THE COMPANY'S
FORM 10-KSB, INCLUSIVE OF SCHEDULES THERETO, FOR THE YEAR ENDED DECEMBER 31,
2004, FILED WITH THE COMMISSION, WILL BE PROVIDED WITHOUT CHARGE TO ANY
STOCKHOLDER UPON WRITTEN REQUEST. REQUESTS SHOULD BE ADDRESSED TO JEFFERY A.
BAIRD, CAS MEDICAL SYSTEMS, INC., 44 EAST INDUSTRIAL ROAD, BRANFORD, CONNECTICUT
06405.
12
CAS MEDICAL SYSTEMS, INC.
44 East Industrial Road, Branford, Connecticut 06405
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Louis P. Scheps and Jeffery A. Baird
as Proxies, each with the power to appoint his substitute, and hereby authorizes
them, and each of them, to represent and vote, as designated on the reverse, all
the shares of Common Stock of CAS MEDICAL SYSTEMS, INC. (the "Company") held of
record by the undersigned on April 22, 2005, at the Annual Meeting of
Stockholders to be held on June 15, 2005, or any adjournment thereof.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE.)
ANNUAL MEETING OF STOCKHOLDERS OF
CAS MEDICAL SYSTEMS, INC.
JUNE 15, 2005
PLEASE DATE, SIGN AND MAIL
YOUR PROXY CARD IN THE
ENVELOPE PROVIDED AS SOON
AS POSSIBLE.
......Please detach along perforated line and mail in the envelope provided.....
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS AND
"FOR" PROPOSAL 2.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR
VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
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1. Election of Directors.
[_] FOR ALL NOMINEES NOMINEES:
[_] WITHOLD AUTHORITY FOR ALL NOMINEES [_] Louis P. Scheps
[_] Lawrence S. Burstein
[_] FOR ALL EXCEPT [_] Jerome Baron
(See Instructions Below) [_] Saul S. Milles, M.D.
INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark
"FOR ALL EXCEPT" and fill in the circle next to each nominee you wish to
withold, as shown here [X]
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2. To ratify the selection of UHY LLP as independent auditors for the Company's
fiscal year ending December 31, 2005.
FOR AGAINST ABSTAIN
[_] [_] [_]
To transact such other business as may properly come before the annual
meeting.
This proxy, when properly executed, will be voted in the manner directed by the
undersigned stockholder. If no direction is made, this proxy will be voted FOR
proposals 1 and 2. Please sign exactly as name appears on the left.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
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To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that [_]
changes to the registered name(s) on the account may not be submitted
via this method.
SIGNATURE OF STOCKHOLDER_________________________________ DATE_______________
SIGNATURE OF STOCKHOLDER_________________________________ DATE_______________
Note: Please sign exactly as your name or names appear on this proxy. When
shares are held jointly, each holder should sign. When signing as
executor, administrator, attorney, trustee or guardian, please give full
title as such. If the signer is a corporation, please sign full corporate
name by duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person.