Attached files
| file | filename |
|---|---|
| EX-23.1 - CONSENT OF PUBLIC ACCOUNTING FIRM - Adamis Pharmaceuticals Corp | ex23-1.htm |
| EX-99.1 - FINANCIAL STATEMENTS LISTED IN ITEM 9.01(A) - Adamis Pharmaceuticals Corp | ex99-1.htm |
| 8-K/A - AMENDED CURRENT REPORT - Adamis Pharmaceuticals Corp | admp-8k_041116.htm |
Adamis Pharmaceuticals Corporation 8-K/A
Exhibit 99.2
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following combined condensed consolidated pro forma financial statements are presented to comply with Article 11 of Regulation S-X. The historical financial statements have been adjusted in the pro forma financial statements to give effect to events that are (1) directly attributable to the merger, (2) factually supportable, and (3) with respect to the statement of operations, expected to have a continuing impact on the combined company.
The merger will be accounted for as an acquisition by Adamis Pharmaceuticals Corporation (the “Company” or “Adamis”) of U.S. Compounding, Inc. ("USC") under the purchase method of accounting in accordance with FASB Accounting Standard Codification Subtopic 805—Business Combinations. The assets and liabilities of USC will be reflected at fair value on the balance sheet of the Company. The pro forma adjustments related to the acquisition are based on a preliminary purchase price allocation whereby the estimated purchase price to acquire USC was allocated to the assets acquired and the liabilities assumed, based upon their estimated fair values. The fair value of the assets and liabilities is based on the estimated value of USC as of April 11, 2016 (the date on which Adamis acquired USC). A final determination of the purchase accounting adjustments, including the allocation of fair value to the USC assets and liabilities, has not been made. Actual adjustments and allocations will be based on the final purchase price and analyses of fair values of identifiable tangible and intangible assets, and estimates of the useful lives of tangible and intangible assets, which will be completed after Adamis completes its valuation and assessment process, which Adamis believes will be finalized not later than one year from the acquisition date. Accordingly, the purchase accounting adjustments made in connection with the development of the pro forma financial statements are preliminary and have been made solely for purposes of developing such pro forma financial statements. Differences between the preliminary and final purchase price allocations could have a material impact on the accompanying unaudited pro forma combined condensed consolidated financial statements and Adamis’s future results of operations and financial position. The pro forma financial statements do not purport to present Adamis’s financial position or the results of operations had the merger transactions actually been completed as of the dates indicated. Further, these pro forma financial statements do not reflect the effects of any potential cost savings that may be achieved as a result of the merger or any related restructuring or integration costs, are based on assumptions that Adamis believes are reasonable under the circumstances, and are intended for informational purposes only. Moreover, the statements do not project Adamis’s financial position or results of operations for any future date or period.
The unaudited pro forma combined condensed consolidated financial statements do not include any adjustments for income taxes because the combined company is anticipated to incur taxable losses for the foreseeable future.
The unaudited pro forma combined condensed consolidated financial statements presented below are based on the historical financial statements of Adamis and USC, adjusted to give effect to the acquisition of USC by Adamis for accounting purposes. The pro forma adjustments are described in the accompanying notes presented on the following pages.
The unaudited pro forma combined condensed consolidated balance sheet assumes that the merger was completed as of December 31, 2015. The unaudited pro forma combined condensed consolidated statement of operations for the year ended December 31, 2015 assume that the merger was completed as of January 1, 2015.
The unaudited pro forma combined condensed consolidated financial information is presented for illustrative purposes only and is not necessarily indicative of the financial position or results of operations that would have actually been reported had the merger occurred at the dates stated above, nor is it necessarily indicative of future financial position or results of operations. The pro forma combined condensed consolidated financial information does not purport to present the Company’s financial position or the results of operations had the transaction actually been completed as of the dates indicated, and do not project the Company’s financial position or results of operations for any future date or period. The unaudited pro forma combined condensed consolidated financial information has been derived from and should be read in conjunction with the historical consolidated financial statements and related notes of Adamis and USC which are included, with respect to USC, in this Form 8-K/A and with respect to Adamis, in Adamis’s annual report on Form 10-K for the year ended December 31, 2015.
| F-14 |
Unaudited Pro Forma Combined Condensed Consolidated Balance Sheet
| Historical (1) | Pro Forma | Pro Forma | ||||||||||||||||||
| Adamis December 31, 2015 |
USC December 31, 2015 |
Adjustments | Combined | |||||||||||||||||
| ASSETS | ||||||||||||||||||||
| Current Assets: | ||||||||||||||||||||
| Cash | $ | 4,080,648 | $ | 214,986 | $ | — | $ | 4,295,634 | ||||||||||||
| Accounts Receivable, Prepaid Expenses and Other | 70,985 | 951,963 | (376,060 | ) | (3) | 646,888 | ||||||||||||||
| Inventories | — | 766,247 | — | 766,247 | ||||||||||||||||
| Total Current Assets | 4,151,633 | 1,933,196 | (376,060 | ) | 5,708,769 | |||||||||||||||
| Property, Plant & Equipment, net | 58,260 | 1,467,734 | 3,996,074 | (3) | 5,522,068 | |||||||||||||||
| Intangible Assets, net | 7,766,960 | — | 12,118,000 | (3) | 19,884,960 | |||||||||||||||
| Goodwill | — | — | 2,250,715 | (3) | 2,250,715 | |||||||||||||||
| Other Assets | 85,000 | — | — | 85,000 | ||||||||||||||||
| Total Assets | $ | 12,061,853 | $ | 3,400,930 | $ | 17,988,729 | $ | 33,451,512 | ||||||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||||||||
| Current Liabilities: | ||||||||||||||||||||
| Accounts Payable and Accrued Expenses | $ | 1,190,104 | $ | 4,179,926 | $ | — | $ | 5,370,030 | ||||||||||||
| Line of Credit - Equipment & Working Capital | — | 2,339,449 | 410,988 | (3) | 2,750,437 | |||||||||||||||
| Current Maturities of Long Term Debt | — | 6,268,902 | (6,268,902 | ) | (3) | 167,875 | ||||||||||||||
| — | — | 167,875 | (3) | |||||||||||||||||
| Other Liabilities | 1,557,716 | — | — | 1,557,716 | ||||||||||||||||
| Total Current Liabilities | 2,747,820 | 12,788,277 | (5,690,039 | ) | 9,846,058 | |||||||||||||||
| Long-Term Liabilities, less Current Portion | — | 327,664 | (327,664 | ) | (3) | 2,804,188 | ||||||||||||||
| — | — | 2,804,188 | (3) | |||||||||||||||||
| Total Liabilities | 2,747,820 | 13,115,941 | (3,213,515 | ) | 12,650,246 | |||||||||||||||
| Stockholders' Equity | 9,314,033 | (9,715,011 | ) | (48,396 | ) | (3) | 20,801266 | |||||||||||||
| — | — | 6,268,902 | (3) | |||||||||||||||||
| — | — | 14,981,738 | (3) | |||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 12,061,853 | $ | 3,400,930 | $ | 17,988,729 | $ | 33,451,512 | ||||||||||||
See accompanying notes.
| F-15 |
Unaudited Pro Forma Combined Condensed Consolidated Statement of Operations
| Historical (1) | ||||||||||||||||||||
| Adamis | USC | |||||||||||||||||||
| for the twelve months ended | for the twelve months ended | |||||||||||||||||||
| December 31, 2015 |
December 31, 2015 |
Pro Forma Adjustments |
Pro Forma Combined |
|||||||||||||||||
| Revenue, net | — | 19,354,988 | — | 19,354,988 | ||||||||||||||||
| Cost of Goods Sold | — | 6,708,190 | — | 6,708,190 | ||||||||||||||||
| Gross Profit | — | 12,646,798 | 12,646,798 | |||||||||||||||||
| Operating Expenses | 13,850,428 | 16,418,471 | 1,744,858 | (3) | 32,013,757 | |||||||||||||||
| Loss from Operations | (13,850,428 | ) | (3,771,673 | ) | (1,744,858 | ) | (19,366,959 | ) | ||||||||||||
| Other Income (Expense) | ||||||||||||||||||||
| Interest Expense | — | (266,404 | ) | 199,880 | (3) | (208,890 | ) | |||||||||||||
| (142,366 | ) | (3) | ||||||||||||||||||
| Loss on Sale of Assets | — | (14,927 | ) | — | (14,927 | ) | ||||||||||||||
| Other Income | 278,431 | 280 | — | 278,711 | ||||||||||||||||
| Net Loss | $ | (13,571,997 | ) | $ | (4,052,724 | ) | $ | (1,687,344 | ) | $ | (19,312,065 | ) | ||||||||
| Basic and Diluted Loss Per Share: | ||||||||||||||||||||
| Basic (Loss) Per Share | (1.02 | ) | (38,597.37 | ) | — | (1.30) | ||||||||||||||
| Basic Weighted Average Shares Outstanding | 13,275,847 | 105 | — | 14,894,386 | ||||||||||||||||
| Diluted (Loss) Per Share | (1.03 | ) | (38,597.37 | ) | — | (1.30 | ) | |||||||||||||
| Diluted Weighted Average Shares Outstanding | 13,436,683 | 105 | — | 15,055,222 | ||||||||||||||||
See accompanying notes.
| F-16 |
Notes to the Unaudited Pro Forma Combined Condensed Consolidated Financial Statements
1. Basis of Presentation
On April 12, 2016, Adamis Pharmaceuticals Corporation (the "Company" or "Adamis") filed a report on Form 8-K announcing the completion of its acquisition of U.S. Compounding, Inc., an Arkansas corporation ("USC"), pursuant to the terms of the Agreement and Plan of Merger, dated March 28, 2016 (the "Merger Agreement"), with USC and Ursula MergerSub Corp., an Arkansas corporation and a wholly owned subsidiary of the Company ("Merger Sub"), which was previously disclosed in the Company's Report on Form 8-K filed with the Securities and Exchange Commission on March 29, 2016. Pursuant to the terms of the Merger Agreement, Merger Sub merged with and into USC (the "Merger"), with USC surviving as a wholly owned subsidiary of the Company.
Pursuant to the Merger and the Merger Agreement, all of the outstanding shares of common stock of USC were converted into the right to receive a total of approximately 1,618,544 shares of Adamis common stock; and as described further below, in connection with the Merger and the transactions contemplated by the Merger Agreement, the Company assumed approximately $5,722,500 principal amount of debt obligations and related loan agreements of USC and certain related entities.
2. Purchase Price
Total estimated purchase price is summarized as follows:
| Stock to Seller at Close | $ | 3,598,884 | ||
| Stock to Escrow | 1,899,000 | |||
| Incentive Stock to Seller | 4,747,500 | |||
| Plus: Assumed Liabilities | 5,722,500 | |||
| Total Estimated Purchase Price | $ | 15,967,884 |
For purposes of this pro forma analysis, the above estimated purchase price has been allocated based on an estimate of the fair value of assets acquired and liabilities assumed as of April 11, 2016:
| Assets Acquired: | ||||
| Cash | $ | 214,986 | ||
| Accounts Receivable, net | 575,903 | |||
| Inventory | 766,247 | |||
| Property, Plant & Equipment | 5,463,808 | |||
| Intangible Assets | 12,118,000 | |||
| Goodwill | 2,250,715 | |||
| Total assets | 21,389,659 | |||
| Liabilities Assumed: | ||||
| Accounts Payable and Accrued Expenses | 5,421,775 | |||
| Total Liabilities | 5,421,775 | |||
| Total Estimated Purchase Price | $ | 15,967,884 |
3. Pro forma adjustments
(A) To record the resolution of receivables and payables to/from USC stockholders and related parties in connection with the closing of the merger transaction.
(B) To record the exchange of debt and liabilities for shares of USC common stock before the transaction.
(C) To record the purchase price allocation from the issuance of 1,618,544 shares of common stock and assumption of debts totaling $5,722,500 as detailed in Note 2 above.
(D) To record amortization and depreciation of intangibles and property, plant and equipment, resulting from the merger, over its useful life.
(E) To eliminate the interest expense recorded for the liabilities to former stockholders that were converted to equity.
(F) To record interest expense on the additional bank debt that was assumed in connection with the merger transaction.
| F-17 |