EX-99.2 4 curr_ex992.htm UNAUDITED PRO FORMA curr_ex992.htm

EXHIBIT 99.2

 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

The unaudited condensed consolidated pro forma statements of operations are presented combining Cure Pharmaceutical Holding Corp’s (“CURE”) condensed audited statement of operations for the year ended December 31, 2018 and Chemistry Holdings Inc.’s (“CHI”) audited condensed statement of operations for the year ended December 31, 2018. The unaudited condensed combined pro forma balance sheet gives effect to the acquisition as if the transaction had taken place on December 31, 2018 and combines Cure’s audited condensed balance sheet as of December 31, 2018 with the CHI’s condensed balance sheet as of December 31, 2018.

 

The unaudited pro forma condensed combined financial information is for illustrative purposes only. These companies may have performed differently had they actually been combined for the periods presented. You should not rely on the pro forma condensed combined financial information as being indicative of the historical results that would have been achieved had the companies always been combined or the future results that the combined companies will experience after the merger. Unaudited pro forma financial information and the notes thereof should be read in conjunction with the accompanying historical financial statements of Cure and CHI.

 

 
1
 
 

   

CURE Pharmaceutical Holding Corp

Unaudited Condensed Consolidated Pro forma Balance Sheet

December 31, 2018

(in thousands, except share amounts)

  

 

 

CURE For the Year Ended December 31, 2018

 

 

Chemistry Holdings For the Year Ended December 31, 2018

 

 

Consolidated

 

 

Pro forma Adjustments

 

 

Reference

 

Consolidated Pro Forma

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash

 

$501

 

 

$20

 

 

$521

 

 

$8,488

 

 

(a)

 

$9,009

 

Accounts receivable

 

 

103

 

 

 

-

 

 

 

103

 

 

 

 

 

 

 

 

 

103

 

Note receivable

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,000

 

 

(a)

 

 

2,000

 

Inventory

 

 

38

 

 

 

-

 

 

 

38

 

 

 

 

 

 

 

 

 

38

 

Prepaid expenses and other assets

 

 

946

 

 

 

-

 

 

 

946

 

 

 

 

 

 

 

 

 

946

 

Total current assets

 

 

1,588

 

 

 

20

 

 

 

1,608

 

 

 

10,488

 

 

 

 

 

12,096

 

Property and equipment, net

 

 

300

 

 

 

17

 

 

 

317

 

 

 

83

 

 

(a)

 

 

400

 

Goodwill

 

 

-

 

 

 

-

 

 

 

-

 

 

 

9,178

 

 

(a)

 

 

9,178

 

Intellectual property and patents, net

 

 

1,206

 

 

 

-

 

 

 

1,206

 

 

 

650

 

 

(a)

 

 

1,856

 

In-process research and development

 

 

-

 

 

 

-

 

 

 

-

 

 

 

14,460

 

 

(a)

 

 

14,460

 

Prepaid expenses and other assets

 

 

232

 

 

 

-

 

 

 

232

 

 

 

 

 

 

 

 

 

232

 

Other assets

 

 

70

 

 

 

-

 

 

 

70

 

 

 

 

 

 

 

 

 

70

 

Total assets

 

$3,396

 

 

$37

 

 

$3,433

 

 

$34,859

 

 

 

 

$38,292

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Deficit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$774

 

 

$36

 

 

$810

 

 

$354

 

 

(a)

 

$1,164

 

Accrued expenses

 

 

509

 

 

 

83

 

 

 

592

 

 

 

835

 

 

(a)

 

 

1,427

 

Related party payables

 

 

-

 

 

 

106

 

 

 

106

 

 

 

 

 

 

 

 

 

106

 

Deferred rent

 

 

-

 

 

 

18

 

 

 

18

 

 

 

 

 

 

 

 

 

18

 

Loan payable

 

 

105

 

 

 

-

 

 

 

105

 

 

 

 

 

 

 

 

 

105

 

Notes payable, net

 

 

920

 

 

 

-

 

 

 

920

 

 

 

 

 

 

 

 

 

920

 

Convertible promissory notes, net

 

 

5,242

 

 

 

-

 

 

 

5,242

 

 

 

 

 

 

 

 

 

5,242

 

Derivative liability

 

 

618

 

 

 

-

 

 

 

618

 

 

 

 

 

 

 

 

 

618

 

Deferred revenue

 

 

383

 

 

 

-

 

 

 

383

 

 

 

 

 

 

 

 

 

383

 

Total current liabilities

 

 

8,551

 

 

 

243

 

 

 

8,794

 

 

 

1,189

 

 

 

 

 

9,983

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contingent share considerations

 

 

-

 

 

 

-

 

 

 

-

 

 

 

14,632

 

 

(a)

 

 

14,632

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

8,551

 

 

 

243

 

 

 

8,794

 

 

 

15,821

 

 

 

 

 

24,615

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ Deficit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock: $0.001 par value; authorized 4,087,408 shares; 4,087,408 shares issued and outstanding as of December 31, 2018

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

-

 

Common stock: $0.001 par value; authorized 75,000,000 shares; 26,784,019 shares issued and outstanding as of December 31, 2018

 

 

27

 

 

 

1

 

 

 

28

 

 

 

6

 

 

(a)

 

 

34

 

Additional paid-in capital

 

 

23,425

 

 

 

2,495

 

 

 

25,920

 

 

 

19,032

 

 

(a)

 

 

44,952

 

Stock payable

 

 

646

 

 

 

-

 

 

 

646

 

 

 

 

 

 

 

 

 

646

 

Accumulated deficit

 

 

(29,269)

 

 

(2,702)

 

 

(31,971)

 

 

 

 

 

 

 

 

(31,971)

Total CURE Pharmaceutical Holding Corp stockholders’ equity (deficit)

 

 

(5,171)

 

 

(206)

 

 

(5,377)

 

 

19,038

 

 

 

 

 

13,661

 

Noncontrolling interest

 

 

16

 

 

 

-

 

 

 

16

 

 

 

 

 

 

 

 

 

16

 

Total stockholders’ deficit

 

 

(5,155)

 

 

(206)

 

 

(5,361)

 

 

19,038

 

 

 

 

 

13,677

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders’ deficit

 

$3,396

 

 

$37

 

 

$3,433

 

 

$34,859

 

 

 

 

$38,292

 

    

 
2
 
 

 

CURE Pharmaceutical Holding Corp

Unaudited Condensed Consolidated Pro forma Statement of Operations

For the Year Ended December 31, 2018

(in thousands, except share amounts)

 

 

 

CURE For the Year Ended December 31, 2018

 

 

Chemistry Holdings For the Year Ended December 31,

2018

 

 

Pro forma Adjustments

 

 

Reference

 

Consolidated

Pro Forma

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net product sales

 

$519

 

 

$-

 

 

$

 

 

 

 

$519

 

Consulting research & development income

 

 

63

 

 

 

-

 

 

 

 

 

 

 

 

63

 

Shipping and other sales

 

 

2

 

 

 

-

 

 

 

 

 

 

 

 

2

 

Total revenues

 

 

584

 

 

 

-

 

 

 

-

 

 

 

 

 

584

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

 

280

 

 

 

-

 

 

 

 

 

 

 

 

 

280

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit (loss)

 

 

304

 

 

 

-

 

 

 

-

 

 

 

 

 

304

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development expenses

 

 

1,409

 

 

 

6

 

 

 

 

 

 

 

 

 

1,415

 

Selling, general and administrative expenses

 

 

6,453

 

 

 

932

 

 

 

 

 

 

 

 

 

7,385

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

 

7,862

 

 

 

938

 

 

 

-

 

 

 

 

 

8,800

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Operating (loss) before other income (expense)

 

 

(7,558)

 

 

(938)

 

 

-

 

 

 

 

 

(8,496)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income

 

 

577

 

 

 

31

 

 

 

 

 

 

 

 

 

608

 

Other income - related party

 

 

-

 

 

 

408

 

 

 

 

 

 

 

 

 

408

 

Gain on settlement of related parties payable

 

 

-

 

 

 

190

 

 

 

 

 

 

 

 

 

190

 

Change in fair value of derivative liability

 

 

(229)

 

 

-

 

 

 

 

 

 

 

 

 

(229)

Other expense

 

 

(184)

 

 

-

 

 

 

 

 

 

 

 

 

(184)

Interest expense

 

 

(3,037)

 

 

(19)

 

 

 

 

 

 

 

 

(3,056)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

(2,873)

 

 

610

 

 

 

-

 

 

 

 

 

(2,263)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss before income taxes

 

 

(10,431)

 

 

(328)

 

 

-

 

 

 

 

 

(10,759)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

(10,431)

 

 

(328)

 

 

-

 

 

 

 

 

(10,759)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss attributable to non-controlling interest

 

 

(30)

 

 

-

 

 

 

 

 

 

 

 

 

(30)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss attributable to Cure Pharmaceutical Holding Corp.

 

 

(10,461)

 

 

(328)

 

 

-

 

 

 

 

 

(10,789)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and Diluted

 

$(0.42)

 

$(0.02)

 

 

 

 

 

 

 

$(0.40)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and Diluted

 

 

24,999,824

 

 

 

13,656,219

 

 

 

 

 

 

 

 

 

26,784,019

 

 

 
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CURE PHARMACEUTICAL HOLDINGCORP.

NOTES TO CONSOLIDATED PRO FORMA UNAUDITED FINANCIAL STATEMENTS

 

Unaudited Pro Forma Consolidated Financial Information.

 

On May 14, 2019, the Company acquired all of the issued and outstanding stock of CHI for shares of the Company’s Common Stock. The maximum number of shares of Common Stock to be issued, including escrowed shares and shares issuable pursuant to a variety of earn-out provisions and warrants, is 32,072,283 shares. The shares are allocated as follows: (i) 5,700,000 shares of Common Stock as upfront consideration issued at the Closing (the “Upfront Consideration Shares”); (ii) 7,128,913 shares to be held in escrow, subject to indemnification and clawback rights that lapse upon the achievement of certain milestones (the “Clawback Shares”); (iii) up to 3,207,228 shares that may be issued pursuant to an earn-out over five years upon the achievement of certain technological implementations (“Achievement Shares”); (iv) up to 8,018,071 shares that may be issued pursuant to an earn-out over two years upon the achievement of certain revenue goals (“Earnout Shares”); and (v) up to 8,018,071 shares issuable upon exercise of warrants (“Acquisition Warrants”) that become exercisable upon achieving certain revenue goals between the second and fourth anniversary of the Closing Date at an exercise price of $5.01 per share, exercisable, to the extent vested, for five years from the Closing Date. In exchange for the assets and liabilities acquired, the Company received an investment of $2,000,000 (the “Principal Amount”) from Chemistry Holdings pursuant to a convertible note (the “Note”). Such Note, on the Closing Date, became an intercompany payable and was cancelled. For accounting purposes, Cure shall be the surviving entity. The transaction is accounted for using the purchase method of accounting. As a result of the recapitalization and change in control, Cure is the acquiring entity in accordance with ASC 805, Business Combinations. The accumulated earnings of Cure will be carried forward after the completion of the Merger. Operations prior to the Merger will be those of Cure.

 

The Pro forma Unaudited Condensed Consolidated Financial Statements have been prepared in order to present consolidated financial position and results of operations of Cure and the CHI as if the Merger had occurred as of December 31, 2018 for the pro forma condensed consolidated balance sheet; and to give effect as if the Merger had occurred if the transaction had taken place at January 1, 2018 for the pro forma condensed consolidated statement of operations for the year ended December 31, 2018.

 

The following pro forma adjustments are incorporated into the pro forma condensed consolidated balance sheet as of December 31, 2018 and the pro forma condensed consolidated statement of operations for the year ended December 31, 2018.

 

(a) To record the fair value of the assets and liabilities acquired from the acquisition of CHI on May 14, 2019.

 

 

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