EX-99.1 2 ex99-1.htm STATEMENT OF OPERATIONS
 

ADAMIS PHARMACEUTICALS CORPORATION 8-K

 

Exhibit 99.1

 

UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

 

The following combined condensed consolidated pro forma statement of operations is intended to comply with applicable provisions of Article 11 of Regulation S-X. The historical financial information has been adjusted in the pro forma statement of operations 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 transaction between Adamis Pharmaceuticals Corporation (the “Company” or “Adamis”) and U.S. Compounding, Inc. (“USC”) is accounted for as an acquisition of 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 information are preliminary and have been made solely for purposes of developing such pro forma financial information. Differences between the preliminary and final purchase price allocations could have a material impact on the accompanying unaudited pro forma combined condensed consolidated financial information and Adamis’s future results of operations and financial position. The pro forma statement of operations as of June 30, 2016, does not include any adjustments to income tax benefit provisions relating to the merger. The pro forma financial information is presented for illustrative purposes only, does not purport to present Adamis’s financial position or the results of operations had the merger transaction actually been completed as of the date indicated, and does not project the Company’s financial position or results of operations for any future date or period. Further, the pro forma financial information does not reflect the effects of any related restructuring or integration costs, is based on assumptions that Adamis believes are reasonable under the circumstances, and is intended for informational purposes only.

 

The unaudited pro forma combined condensed consolidated statement of operations presented below is 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 statement of operations for the six months ended June 30, 2016, assumes that the merger was completed as of January 1, 2016. The unaudited pro forma combined condensed consolidated statement of operations 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 the Company’s Reports on Form 8-K filed with the Commission on June 27, 2016, and July 29, 2016, and with respect to Adamis, in Adamis’s annual report on Form 10-K for the year ended December 31, 2015 and Adamis’s quarterly report on Form 10-Q for the period ended June 30, 2016.

 

 
 

 

Unaudited Pro Forma Combined Condensed Consolidated Statement of Operations

 

   Adamis
for the six
months ended
June 30, 2016   (Unaudited)
  USC
for the three months and 11 days ended
April 11, 2016   (Unaudited)
  Pro Forma
Adjustments
      Pro Forma
Combined
Revenue, net  $1,928,103   $1,495,777   $      $3,423,880 
                        
Cost of Goods Sold   1,346,030    1,435,661           2,781,691 
Gross Profit   582,073    60,116            642,189 
                        
Operating Expenses   14,030,200    2,307,456    509,679   (A)   16,847,335 
Loss from Operations   (13,448,127)   (2,247,340)   (509,679)      (16,205,146)
                        
Other Income (Expense)                       
Interest Expense   (72,391)   (91,085)   (17,091)  (B)   (130,766)
              49,801   (C)     
Loss on Sale of Assets       (71,631)   66,315   (D)   (5,316)
Other Income   1,397,638    4,963,222    (4,963,222)  (C)   1,397,638 
Net Loss  $(12,122,880)  $2,553,166   $(5,373,876)     $(14,943,590)
Basic and Diluted Loss Per Share:                       
Basic (Loss) Per Share  $(0.84)  $19,489.82   $      $(1.04)
Basic Weighted Average Shares Outstanding   14,408,971    131          14,408,971 
Diluted (Loss) Per Share  $(0.84)  $19,489.82   $      $(1.04)
Diluted Weighted Average Shares Outstanding    14,408,971    131          14,408,971 

 

See accompanying notes.

 

 
 

 

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 1,618,539 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 $5,722,000 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   5,722,558 
Total Estimated Purchase Price  $15,967,942 

 

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:

 

Assets Acquired:   
Cash  $381,883 
Accounts Receivable and Prepaid Expenses   527,034 
Inventory   943,958 
Property, Plant & Equipment   5,202,356 
Intangible Assets   12,419,000 
Goodwill   2,225,101 
Total assets   21,699,332 
      
Liabilities Assumed:     
Accounts Payable and Accrued Expenses   5,731,390 
Total Liabilities   5,731,390 
      
Total Estimated Purchase Price  $15,967,942 

 

3. Pro forma adjustments

 

(A)        To record amortization and depreciation of intangibles and property, plant and equipment, resulting from the merger, over its useful life.

 

(B)        To record interest expense on the additional bank debt that was assumed in connection with the merger transaction. 

 

(C)        To eliminate the interest expense and gain on forgiveness of debt recorded for the liabilities to former stockholders that were converted to equity.

 

(D)        Eliminate the difference between the fair value of certain laboratory equipment acquired and the amount of related loan assumed.