Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - FINJAN HOLDINGS, INC. | b83030e8vk.htm |
| EX-3.1 - EX-3.1 - FINJAN HOLDINGS, INC. | b83030exv3w1.htm |
| EX-10.3 - EX-10.3 - FINJAN HOLDINGS, INC. | b83030exv10w3.htm |
| EX-10.1 - EX-10.1 - FINJAN HOLDINGS, INC. | b83030exv10w1.htm |
| EX-10.2 - EX-10.2 - FINJAN HOLDINGS, INC. | b83030exv10w2.htm |
Exhibit
99.1
INDEX
CONVERTED ORGANICS INC.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
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Introduction |
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Unaudited Pro Forma Consolidated Balance Sheet as of June 30, 2010 |
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Unaudited Pro Forma Consolidated Statements of Operations for the six month period ended June 30, 2010 |
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Unaudited Pro Forma Consolidated Statements of Operations for the year ended December 31, 2009 |
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Unaudited Pro Forma Consolidated Statements of Operations for the year ended December 31, 2008 |
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Notes to Unaudited Pro Forma Consolidated Financial Statements |
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Introduction
The following unaudited pro forma consolidated financial information gives effect to the
Company executing the Exchange Agreement, Termination Agreement and Order as defined herein and
should be read in conjunction with the historical financial statements and the related notes of
Converted Organics Inc., which are included in our Annual Report on Form 10-K for the years ended
December 31, 2009 and 2008 and the quarterly financial statements and the related notes of
Converted Organics, Inc., which are included in our Form 10-Q as of June 30, 2010.
The unaudited pro forma consolidated balance sheet as of June 30, 2010 gives effect to the
execution of the Exchange Agreement, Termination Agreement and Order as defined herein had they
occurred on June 30, 2010, and the unaudited pro forma consolidated statements of operations for
the years ended December 31, 2009 and 2008 and for the six month period ended June 30, 2010 give
effect to the execution of the Exchange Agreement, Termination Agreement and Order as defined
herein had they occurred on January 1, 2008.
The unaudited pro forma consolidated financial statements include all material pro forma
adjustments necessary for their preparation, as required by Article 11 of Regulation S-X and,
accordingly, do not assume any benefits from cost savings or synergies of operations.
The pro forma adjustments are based upon available information and certain assumptions that
the Company believes are reasonable. The unaudited pro forma consolidated financial statements do
not purport to represent what the Company’s financial condition or results of operations would
actually have been had these transactions in fact occurred as of the dates indicated above or to
project the Company’s results of operations for the period indicated or for any other period.
CONVERTED ORGANICS INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2010
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2010
| Historical | ||||||||||||||
| Converted Organics | Pro Forma | Pro Forma | ||||||||||||
| Inc. and subsidiaries | Adjustments | Reference | Consolidated | |||||||||||
| ASSETS |
||||||||||||||
CURRENT ASSETS |
||||||||||||||
Cash and cash equivalents |
$ | 2,053,028 | $ | 613,162 | (1) | $ | 2,666,190 | |||||||
Restricted cash |
583,393 | (583,393 | ) | (1) | — | |||||||||
Accounts receivable, net |
1,071,195 | — | 1,071,195 | |||||||||||
Inventories |
213,519 | (165,489 | ) | (7) | 48,030 | |||||||||
Prepaid rent |
692,928 | (725,155 | ) | (4) | (32,227 | ) | ||||||||
Other prepaid expenses |
669,809 | — | 669,809 | |||||||||||
Total current assets |
5,283,872 | (860,875 | ) | 4,422,997 | ||||||||||
Deposits |
815,390 | (415,000 | ) | (3) | 400,390 | |||||||||
Restricted cash |
29,769 | (29,769 | ) | (1) | — | |||||||||
Other assets |
500,000 | — | 500,000 | |||||||||||
Property and equipment, net |
18,068,637 | (17,377,595 | ) | (3) | 691,042 | |||||||||
Construction-in-progress |
354,521 | — | 354,521 | |||||||||||
Capitalized bond costs, net |
790,507 | (790,507 | ) | (2) | — | |||||||||
Intangible assets, net |
1,851,615 | — | 1,851,615 | |||||||||||
Total assets |
$ | 27,694,311 | $ | (19,473,746 | ) | $ | 8,220,565 | |||||||
| LIABILITIES AND OWNERS’ EQUITY (DEFICIT) |
||||||||||||||
CURRENT LIABILITIES |
||||||||||||||
Term notes payable — current |
$ | 1,777,468 | $ | (1,777,468 | ) | (5) | $ | — | ||||||
Accounts payable |
1,980,104 | (989,000 | ) | (3) | 991,104 | |||||||||
Accrued compensation, officers, directors and consultants |
652,696 | — | 652,696 | |||||||||||
Accrued legal and other expenses |
601,492 | (250,000 | ) | (3) | 351,492 | |||||||||
Accrued interest |
598,588 | (598,588 | ) | (1) | — | |||||||||
Deferred revenue |
— | — | — | |||||||||||
Convertible notes payable, net of unamortized discount |
198,447 | — | 198,447 | |||||||||||
Capital lease obligations — current |
12,342 | — | 12,342 | |||||||||||
Total current liabilities |
5,821,137 | (3,615,056 | ) | 2,206,081 | ||||||||||
Capital lease obligation, net of current portion |
22,464 | — | 22,464 | |||||||||||
Term notes payable, net of current portion |
102,151 | (102,151 | ) | (5) | — | |||||||||
Derivative liabilities |
2,096,109 | — | 2,096,109 | |||||||||||
Bonds payable |
17,500,000 | (17,500,000 | ) | (1) | — | |||||||||
Total liabilities |
25,541,861 | (21,217,207 | ) | 4,324,654 | ||||||||||
COMMITMENTS AND CONTINGENCIES |
— | — | — | |||||||||||
OWNERS’ EQUITY (DEFICIT) |
||||||||||||||
Preferred stock, $.0001 par value, authorized
10,000,000 shares; no shares issued and outstanding |
— | — | — | |||||||||||
Preferred stock Series A, $1,000 par value, authorized
17,500 shares; issued and outstanding |
— | 17,500,000 | (1) | 17,500,000 | ||||||||||
Common stock, $.0001 par value, authorized 250,000,000 shares |
4,057 | 2,173 | (3), (5) | 6,230 | ||||||||||
Additional paid-in capital |
61,745,571 | 11,802,446 | (3), (5) | 73,548,017 | ||||||||||
Accumulated deficit |
(59,597,178 | ) | (27,561,158 | ) | (1), (2), (4), (6), (9) | (87,158,336 | ) | |||||||
Total owners’ equity |
2,152,450 | 1,743,461 | 3,895,911 | |||||||||||
Total liabilities and owners’ equity |
$ | 27,694,311 | $ | (19,473,746 | ) | $ | 8,220,565 | |||||||
The accompanying notes are an integral part of these unaudited pro forma consolidated financial statements.
CONVERTED ORGANICS INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2010
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2010
| Historical | ||||||||||||||
| Converted Organics | Pro Forma | Pro Forma | ||||||||||||
| Inc. and subsidiaries | Adjustments | Reference | Consolidated | |||||||||||
Revenues |
$ | 2,685,433 | $ | (728,375 | ) | (6) | $ | 1,957,058 | ||||||
Cost of good sold |
5,205,417 | (3,609,855 | ) | (6) | 1,595,562 | |||||||||
Gross loss |
(2,519,984 | ) | 2,881,480 | 361,496 | ||||||||||
Operating expenses |
||||||||||||||
General and administrative expenses |
6,578,717 | (183,643 | ) | (6) | 6,395,074 | |||||||||
Research and development |
143,859 | (2,209 | ) | (6) | 141,650 | |||||||||
Depreciation expense |
5,730 | — | 5,730 | |||||||||||
Amortization of capitalized costs |
150,741 | (23,834 | ) | (6) | 126,907 | |||||||||
Amortization of license |
17,097 | — | 17,097 | |||||||||||
Loss from operations |
(9,416,128 | ) | 3,091,166 | (6,324,962 | ) | |||||||||
Other income/(expenses) |
||||||||||||||
Interest income |
534 | (70 | ) | (6) | 464 | |||||||||
Derivative gain/(loss) |
498,729 | — | 498,729 | |||||||||||
Other income |
69 | — | 69 | |||||||||||
Interest expense |
(788,317 | ) | 776,789 | (6) | (11,528 | ) | ||||||||
| (288,985 | ) | 776,719 | 487,734 | |||||||||||
Loss before provision for income taxes |
(9,705,113 | ) | 3,867,885 | (5,837,228 | ) | |||||||||
Provision for income taxes |
— | — | — | |||||||||||
Net loss |
(9,705,113 | ) | 3,867,885 | (5,837,228 | ) | |||||||||
Net loss per share, basic and diluted |
$ | (0.25 | ) | (11) | $ | (0.15 | ) | |||||||
Weighted average common shares outstanding |
38,902,816 | 38,902,816 | ||||||||||||
The accompanying notes are an integral part of these unaudited pro forma consolidated financial statements.
CONVERTED ORGANICS INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2009
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2009
| Historical | ||||||||||||||
| Converted Organics | Pro Forma | Pro Forma | ||||||||||||
| Inc. and subsidiaries | Adjustments | Reference | Consolidated | |||||||||||
Revenues |
$ | 2,633,782 | $ | (497,062 | ) | (8) | $ | 2,136,720 | ||||||
Cost of good sold |
6,914,857 | (4,835,118 | ) | (8) | 2,079,739 | |||||||||
Gross loss |
(4,281,075 | ) | 4,338,056 | 56,981 | ||||||||||
Operating expenses |
||||||||||||||
General and administrative expenses |
10,049,830 | (2,948,268 | ) | (8) | 7,101,562 | |||||||||
Research and development |
637,142 | (15,000 | ) | (8) | 622,142 | |||||||||
Depreciation expense |
723,846 | (719,335 | ) | (8) | 4,511 | |||||||||
Amortization of capitalized costs |
357,718 | (47,669 | ) | (8) | 310,049 | |||||||||
Amortization of license |
16,500 | (16,500 | ) | (8) | — | |||||||||
Loss from operations |
(16,066,111 | ) | 8,084,828 | (7,981,283 | ) | |||||||||
Other income/(expenses) |
||||||||||||||
Interest income |
24,097 | (572 | ) | (8) | 23,525 | |||||||||
Loss on impairment of long-term assets |
(3,928,129 | ) | 3,928,129 | (8) | — | |||||||||
Derivative gain/(loss) |
5,766,035 | — | 5,766,035 | |||||||||||
Other income |
68,995 | (68,995 | ) | (8) | — | |||||||||
Interest expense |
(6,970,675 | ) | 1,520,093 | (8) | (5,450,582 | ) | ||||||||
| (5,039,677 | ) | 5,378,655 | 338,978 | |||||||||||
Loss before provision for income taxes |
(21,105,788 | ) | 13,463,483 | (7,642,305 | ) | |||||||||
Provision for income taxes |
— | — | — | |||||||||||
Net loss |
(21,105,788 | ) | 13,463,483 | (7,642,305 | ) | |||||||||
Net loss per share, basic and diluted |
$ | (1.08 | ) | (11) | $ | (0.39 | ) | |||||||
Weighted average common shares outstanding |
19,569,853 | 19,569,853 | ||||||||||||
The accompanying notes are an integral part of these unaudited pro forma consolidated financial statements.
CONVERTED ORGANICS INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2008
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2008
| Historical | ||||||||||||||
| Converted Organics | Pro Forma | Pro Forma | ||||||||||||
| Inc. and subsidiaries | Adjustments | Reference | Consolidated | |||||||||||
Revenues |
$ | 1,547,981 | $ | (9,326 | ) | (10) | $ | 1,538,655 | ||||||
Cost of good sold |
1,981,084 | (167,509 | ) | (10) | 1,813,575 | |||||||||
Gross loss |
(433,103 | ) | 158,183 | (274,920 | ) | |||||||||
Operating expenses |
||||||||||||||
General and administrative expenses |
9,309,976 | (1,448,494 | ) | (10) | 7,861,482 | |||||||||
Research and development |
375,267 | — | 375,267 | |||||||||||
Depreciation expense |
— | — | — | |||||||||||
Amortization of license |
263,387 | (16,500 | ) | (10) | 246,887 | |||||||||
Loss from operations |
(10,381,733 | ) | 1,623,177 | (8,758,556 | ) | |||||||||
Other income/(expenses) |
||||||||||||||
Interest income |
290,125 | (227,530 | ) | (10) | 62,595 | |||||||||
Other income |
146,677 | — | 146,677 | |||||||||||
Amortization of capitalized costs |
(399,269 | ) | 47,669 | (10) | (351,600 | ) | ||||||||
Interest expense |
(5,834,898 | ) | 877,896 | (10) | (4,957,002 | ) | ||||||||
| (5,797,365 | ) | 698,035 | (5,099,330 | ) | ||||||||||
Loss before provision for income taxes |
(16,179,098 | ) | 2,321,212 | (13,857,886 | ) | |||||||||
Provision for income taxes |
— | — | — | |||||||||||
Net loss |
(16,179,098 | ) | 2,321,212 | (13,857,886 | ) | |||||||||
Net loss per share, basic and diluted |
$ | (2.70 | ) | (11) | $ | (2.32 | ) | |||||||
Weighted average common shares outstanding |
5,985,017 | 5,985,017 | ||||||||||||
The accompanying notes are an integral part of these unaudited pro forma consolidated financial statements.
CONVERTED ORGANICS INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following numbered notes are referenced on the Unaudited Pro Forma Consolidated Balance Sheet and Statements of Operations
| (1) | The Company entered into an Exchange Agreement with the Bond Holder in which it agreed to exchange 100% of all Bonds and Class B Warrants for 17,500 shares of the Company’s Series A Preferred Stock. In addition, the Bond Holder agreed to waive all interest accrued and to transfer to the Company previously deposited funds into reserve accounts in connection with the Bonds. | ||
| (2) | Reflects the expensing of the remaining unamortized capitalized bond costs upon execution of the Exchange Agreement. | ||
| (3) | The Company and the Lessor entered into a Termination Agreement related to the termination of the Woodbridge Facility lease. Under the lease, there is approximately $9.4 million of future rental payments and the Lessor has asserted claims for Immediate Damages. Pursuant to the Termination Agreement, the Lessor and the Company agreed to terminate the lease surrendering the premises and transferring all equipment, tools and fixtures owned by the Company and presently located at the premises. In satisfaction of the Immediate Damages which includes sewer bills ($989,000) and expenses incurred ($250,000), the Company agreed to issue the Lessor $500,000 payable in the Company’s common stock. In addition, the Company has deposits totaling $415,000 with the Lessor which will not be returned to the Company. | ||
| (4) | Reflects the recognition of the remaining prepaid rent as an expense which arose by accounting for the Woodbridge Facility lease on a straight-line basis. | ||
| (5) | The Superior Court of the State of California for the County of Los Angeles entered the Order in the matter entitled American Capital Management, LLC v. Converted Organics Inc. and Converted Organics of Woodbridge, LLC and Does 1-10 Inclusive. The Order provides for the full and final settlement of $11.3 million of Claims against the Company held by ACM. The Claims include the Future Rent discussed above that was acquired by ACM from the Lessor, as well as the acquisition of approximately $1.8 million of promissory notes issued by the Company to four contractors that had provided services to the Woodbridge Facility. ACM purchased the Claims from these parties pursuant to separate claims purchase agreements. Pursuant to the terms of the Order, the Company agreed to issue to ACM a total of $11.3 million payable in the Company’s common stock valued at $0.543 per share in full and final settlement of the Claims. | ||
| (6) | Reflects the elimination of the operations of Converted Organics of Woodbridge, LLC for the six month period ended June 30, 2010. | ||
| (7) | Reflects the Woodbridge inventory which was disposed as a result of the Termination Agreement. | ||
| (8) | Reflects the elimination of the operations of Converted Organics of Woodbridge, LLC for the year ended December 31, 2009. | ||
| (9) | Includes losses directly attributable to the above agreements: Lease termination penalty totaling $9,425,000 and loss on disposition of long-term assets totaling $17,377,595. | ||
| (10) | Reflects the elimination of the operations of Converted Organics of Woodbridge, LLC for the year ended December 31, 2008. | ||
| (11) | Earnings per share has been recalculated to reflect the elimination of the operations of Converted Organics of Woodbridge, LLC. |