Full Press Release Details
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
following unaudited pro forma condensed combined financial information is presented to illustrate the estimated effects of the
unaudited pro forma condensed combined balance sheets at September 30, 2019 and the unaudited pro forma condensed combined
statements of operations for the fiscal year ended June 30, 2019 and three months ended September 30, 2019 (the "Pro
Forma Financials") have been derived from the following sources:
Product Portfolio of Cerecor, Inc. (a/k/a "Cerecor Transaction")
Pharmaceuticals, Inc.
| Unaudited condensed combined statement of operations for the nine months ended September 30, 2019. | ||
| Unaudited condensed combined statement of operations for the six months ended June 30, 2019. | ||
| Audited consolidated statements of net revenues and direct expenses for the Innovus for the year ended December 31, 2018 | ||
| Unaudited condensed combined statements of operations for Innovus for the six months ended June 30, 2018 |
preliminary unaudited pro forma condensed combined statements of operations for the three months ended September 30, 2019 and
year ended June 30, 2019 give effect to these transactions as if they had occurred as of July 1, 2018. The preliminary unaudited
pro forma condensed combined balance sheet as of September 30, 2019 give effect to these transactions as if they had occurred
on September 30, 2019.
Pro Forma Condensed Combined Balance Sheet (In thousands)
| As of September 30, 2019 (In thousands, except share amounts) | ||||||||||||||||||||||||||||||||
| Aytu BioScience, Inc. | Cerecor Transaction | Pro Forma Adj. (Cerecor) | Combined Aytu BioScience & Cerecor Transaction | Innovus Pharma, Inc. | Pro Forma Adj. (Innovus) | Pro Forma Combined | ||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||
| Current assets | ||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 7,014 | - | $ | (4,500 | ) | (a) | $ | 2,514 | $ | 955 | $ | (500 | ) | (i) | $ | 2,969 | |||||||||||||||
| Restricted cash | 250 | - | - | 250 | - | - | 250 | |||||||||||||||||||||||||
| Other current assets | 4,718 | 1,788 | 2,962 | (b) | 9,648 | 3,398 | (1,000 | ) | (j) | 11,866 | ||||||||||||||||||||||
| Total current assets | 11,982 | 1,788 | (1,538 | ) | 12,232 | 4,353 | (1,500 | ) | 15,085 | |||||||||||||||||||||||
| Intangible asset, net | 18,293 | 23,834 | (1,134 | ) | (c) | 40,993 | 3,378 | - | 44,371 | |||||||||||||||||||||||
| Goodwill | - | - | 15,388 | (d) | 15,388 | 953 | 21,489 | (k) | 37,830 | |||||||||||||||||||||||
| Other non-current assets | 749 | - | - | 749 | 830 | - | 1,579 | |||||||||||||||||||||||||
| Total long-term assets | 19,042 | 23,834 | 14,254 | 57,130 | 5,161 | 21,489 | 83,780 | |||||||||||||||||||||||||
| Total assets | $ | 31,024 | $ | 25,622 | $ | 12,716 | $ | 69,362 | $ | 9,514 | $ | 19,989 | $ | 98,865 | ||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||||||
| Current liabilities | ||||||||||||||||||||||||||||||||
| Accounts payable and accrued liabilities | $ | 3,863 | 6,373 | (52 | ) | (b) | 10,184 | $ | 4,080 | - | $ | 14,264 | ||||||||||||||||||||
| Accrued compensation | 1,002 | - | - | 1,002 | 1,341 | - | 2,343 | |||||||||||||||||||||||||
| Notes, loans payable, current portion of fixed payment obligations | - | 1,050 | 1,840 | (e) | 2,890 | 3,315 | (1,000 | ) | (l) | 5,205 | ||||||||||||||||||||||
| Current contingent consideration | 1,237 | 1,237 | (1,237 | ) | (c) | 1,237 | - | 2 ,000 | (m) | 3,237 | ||||||||||||||||||||||
| Total current liabilities | 6,102 | 8,660 | 551 | 15,313 | 8,736 | 1,000 | 25,049 | |||||||||||||||||||||||||
| Long-term contingent consideration | 22,272 | 6,236 | (6,236 | ) | (f) | 22,272 | 1,248 | - | 23,520 | |||||||||||||||||||||||
| Long-term fixed payment obligations | - | 14,255 | (14,255 | ) | (e) | - | - | - | - | |||||||||||||||||||||||
| Other long-term liabilities | 326 | - | 23,567 | (e) | 23,893 | 1,526 | - | 25,419 | ||||||||||||||||||||||||
| Total liabilities | 28,700 | 29,151 | 3,627 | 61,478 | 11,510 | 1,000 | 73,988 | |||||||||||||||||||||||||
| Commitments and contingencies | ||||||||||||||||||||||||||||||||
| Total stockholders' equity | 2,324 | (3,529 | ) | 9,089 | 7,884 | (1,996 | ) | 18,989 | 24,877 | |||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 31,024 | $ | 25,622 | $ | 12,716 | $ | 69,362 | $ | 9,514 | $ | 19,989 | $ | 98,865 |
accompanying Notes to the Pro Forma Condensed Combined Financial Statements
Pro Forma Condensed Combined Statement of Operations
Months Ended September 30, 2019
thousands, except per share data)
| Three Months Ended September 30, 2019 | |||||||||||||||||||||||||||||||
| Aytu BioScience, Inc. | Cerecor Transaction | Pro Forma Adjustments | Combined Aytu BioScience & Cerecor Transaction | Innovus Pharma, Inc. | Pro Forma Adjustments | Pro Forma Combined | |||||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||||
| Product revenue, net | $ | 1,440 | 3,412 | - | $ | 4,852 | $ | 5,648 | $ | - | $ | 10,500 | |||||||||||||||||||
| Service revenue, net | - | - | - | - | 107 | - | 107 | ||||||||||||||||||||||||
| Total product revenue | 1,440 | 3,412 | - | 4,852 | 5,755 | - | 10,607 | ||||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||||||||||
| Cost of sales | 376 | 1,303 | - | 1,679 | 2,215 | - | 3,894 | ||||||||||||||||||||||||
| Research and development | 78 | - | - | 78 | 86 | - | 164 | ||||||||||||||||||||||||
| Selling, general and administrative | 5,146 | 2,458 | - | 7,604 | 5,152 | (400 | ) | (n) | 12,356 | ||||||||||||||||||||||
| Amortization of intangible assets | 575 | 703 | (135 | ) | (g) | 1,143 | - | - | 1,143 | ||||||||||||||||||||||
| Total operating expenses | 6,175 | 4,464 | (135 | ) | 10,504 | 7,453 | (400 | ) | 17,557 | ||||||||||||||||||||||
| Loss from operations | (4,735 | ) | (1,052 | ) | (135 | ) | (5,652 | ) | (1,698 | ) | 400 | (6,950 | ) | ||||||||||||||||||
| Other (expense) income | |||||||||||||||||||||||||||||||
| Other (expense), net | (195 | ) | - | (394 | ) | (g) | (589 | ) | (538 | ) | - | (1,127 | ) | ||||||||||||||||||
| Gain from warrant derivative liability | 2 | - | - | 2 | - | - | 2 | ||||||||||||||||||||||||
| Total other (expense) income | (193 | ) | - | (394 | ) | (587 | ) | (538 | ) | - | (1,125 | ) | |||||||||||||||||||
| Net loss | $ | (4,928 | ) | (1,052 | ) | (529 | ) | $ | (6,239 | ) | $ | (2,236 | ) | $ | 400 | $ | (8,075 | ) | |||||||||||||
| Weighted average number of common shares outstanding | 15,325,921 | - | - | 15,325,921 | 2,759,771 | 1,051,344 | (o) | 19,136,382 | |||||||||||||||||||||||
| Basic and diluted net loss per common share | $ | (0.32 | ) | $ | (0.41 | ) | $ | (0.81 | ) | $ | (0.42 | ) |
accompanying Notes to the Pro Forma Condensed Combined Financial Statements
Pro Forma Condensed COMBINED Statement of Operations
thousands, except per share data)
| Year Ended June 30, 2019 | ||||||||||||||||||||||||||||||
| Aytu BioScience, Inc. | Cerecor Transaction | Pro Forma Adjustments | Combined Aytu BioScience & Cerecor Transaction | Innovus Pharma, Inc. | Pro Forma Adjustments | Pro Forma Combined | ||||||||||||||||||||||||
| Revenues | ||||||||||||||||||||||||||||||
| Product revenue, net | $ | 7,315 | 12,434 | - | $ | 19,749 | $ | 23,150 | - | $ | 42,899 | |||||||||||||||||||
| Cooperative marketing revenue, net | - | - | - | 519 | - | 519 | ||||||||||||||||||||||||
| Service revenue, net | 6 | - | - | 6 | 675 | - | 681 | |||||||||||||||||||||||
| Total product revenue | 7,321 | 12,434 | - | 19,755 | 24,344 | - | 44,099 | |||||||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||||||||
| Cost of sales | 2,202 | 4,899 | - | 7,101 | 6,256 | - | 13,357 | |||||||||||||||||||||||
| Research and development | 589 | - | - | 589 | 274 | - | 863 | |||||||||||||||||||||||
| Selling, general and administrative | 18,888 | 10,034 | - | 28,922 | 23,362 | (2,000 | ) | (n) | 50,284 | |||||||||||||||||||||
| Selling, general and administrative - related party | 352 | - | 352 | - | - | 352 | ||||||||||||||||||||||||
| Amortization of intangible assets | 2,136 | 3,126 | (856 | ) | (g) | 4,406 | - | - | 4,406 | |||||||||||||||||||||
| Impairment of intangible assets | - | 1,449 | (1,449 | ) | (h) | - | - | - | - | |||||||||||||||||||||
| Total operating expenses | 24,167 | 19,508 | (2,305 | ) | 41,370 | 29,892 | (2,000 | ) | 69,262 | |||||||||||||||||||||
| Loss from operations | (16,846 | ) | (7,074 | ) | 2,305 | (21,615 | ) | (5,548 | ) | 2,000 | (25,163 | ) | ||||||||||||||||||
| Other (expense) income | ||||||||||||||||||||||||||||||
| Other (expense), net | (536 | ) | - | (1,482 | ) | (2,018 | ) | (1,838 | ) | - | (3,856 | ) | ||||||||||||||||||
| (Loss) / gain from change in fair value of contingent consideration | (9,831 | ) | (494 | ) | - | (10,325 | ) | 191 | - | (10,134 | ) | |||||||||||||||||||
| (Loss) on extinguishment of debt | - | - | - | - | (1,163 | ) | - | (1,163 | ) | |||||||||||||||||||||
| Gain from warrant derivative liability | 81 | - | - | 81 | - | - | 81 | |||||||||||||||||||||||
| Total other (expense) income | (10,286 | ) | (494 | ) | (1,482 | ) | $ | (12,262 | ) | (2,810 | ) | - | (13,590 | ) | ||||||||||||||||
| Net loss | $ | (27,132 | ) | $ | (7,568 | ) | $ | 823 | $ | (33,877 | ) | $ | (8,358 | ) | $ | 2,000 | $ | (40,235 | ) | |||||||||||
| Weighted average number of common shares outstanding | 7,794,489 | - | - | 7,794,489 | 2,700,000 | 1,110,461 | (o) | 11,604,950 | ||||||||||||||||||||||
| Basic and diluted net loss per common share | $ | (3.48 | ) | $ | (4.35 | ) | $ | (3.10 | ) | $ | (3.43 | ) |
accompanying Notes to the Pro Forma Condensed Combined Financial Statements
TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
thousands, except per share information)
1. Basis of Presentation
historical consolidated financial statements of Aytu BioScience, Inc. (the "Company") have been adjusted in the pro
forma condensed combined financial statements to give effect to pro forma events that are (i) directly attributable to the business
combination, (ii) factually supportable and (iii) with respect to the pro forma condensed combined statements of operations, expected
to have a continuing impact on the combined results following the business combinations.
Aytu will account for the business combinations under the acquisition method of accounting in accordance with ASC Topic 805 Business
Combinations ("Topic 805"), Aytu has not completed the estimation of the fair value of assets acquired or liabilities
assumed (the "Cerecor Transaction") and the merger with Innovus (the "Innovus Merger") subject to shareholder
approval. Accordingly, the preliminary pro forma condensed combined balance sheet as presented currently has not been fully adjusted
in accordance with Topic 805. Any adjustments reflect information currently available to Aytu today, such as certain loans between
Aytu and Innovus, estimates of certain fixed minimum future payments or the estimated modifications to goodwill, which exclude
the current estimated and expected adjustments upon applying purchase accounting in accordance with Topic 805.
combined preliminary pro forma condensed combined financial information does not reflect the realization of any expected cost
savings or other synergies from the acquisition of both the (i) Cerecor Transaction and the (ii) Innovus Merger as a result of
restructuring activities and other planned cost savings initiatives following the completion and integration of the business combinations.
Portfolio Date Compilation for Pro Forma Financial Information
the Pediatrics Product Portfolio of Cerecor, Inc. (the "Pediatric Portfolio") reported on a December 31 year end,
in preparing the Unaudited Pro Forma Condensed Combined Statement of Operations for the year ended June 30, 2019, the Company
updated the annual income statement of the Pediatric Portfolio to reflect a twelve-month period ended June 30, 2019.
were obtained by taking the (i) audited abbreviated statements of net revenues and direct expenses for the acquired Pediatric
Portfolio for the nine months ended September 30, 2019, less the net revenues and direct expenses for Pediatric Portfolio for
the three month period ended September 30, 2019, and adding these amounts to the (ii) audited abbreviated statements of net revenues
and direct expenses for the acquired Pediatric Portfolio for the year ended December 31, 2018, less the net revenues and direct
expenses for the acquired Pediatric Portfolio for the abbreviated period prior to July 1, 2018.
Financial Data Compilation for Pro Forma Financial Information
Innovus reported on a December 31 year end, in preparing the Unaudited Pro Forma Condensed Combined Statement of Operations for
the year ended June 30, 2019, the Company updated the annual income statement of the Innovus to reflect a twelve-month period
ended June 30, 2019.
These were obtained by taking the (i) unaudited condensed
combined statement of operations for Innovus for the six months ended June 30, 2019, and adding these amounts to the (ii) audited
consolidated statements of net revenues and direct expenses for the Innovus for the year ended December 31, 2018, less the unaudited
condensed combined statements of operations for Innovus for the six months ended June 30, 2018.
2. Financing Transactions
November 1, 2019, the Company completed the Cerecor Transaction, acquiring a portfolio of pediatric products from Cerecor, Inc.
for (i) $4.5 million in cash and (ii) $12.5 million in Series G Preferred Stock.
On September 12, 2019, the Company entered
into an Agreement and Plan of Merger with Innovus Pharmaceuticals, Inc. ("Innovus) (the "Innovus Merger"). On
February 13, 2020, the shareholders of both companies approved the Innovus Merger, which formally closed on February 14, 2020.
The Merger consideration constituted (i) approximately 3.8 million shares of Aytu common stock at close, (ii) up to $16 million
of contingent value rights ("CVRs") with the potential settlement from the issuance of up to a maximum of 4.0 million
shares of Aytu common stock underlying the CVRs or cash at the option of the Company, and an estimated 2.3 million shares underlying
the issuance of the Series H convertible preferred stock or other underlying stock warrants contemplated by the transaction.).
3. Estimated Purchase Price Consideration
accepted accounting principles in the United States ("GAAP") requires that Company's assess whether the Company's
common stock, even if traded on a nationally listed exchange, is indicative of fair value. After careful analysis, due relatively
thin daily trading volumes, the Company determined that the best indicator of fair value is the most recent offering price. The
fair value of the Company's common stock is determined based upon the estimated transaction price as a result of the Company's
most recently completed private placement offering on October 11, 2019, which was valued at $0.567 per share.
following table provides the value of consideration transferred upon the November 1, 2019 closing of the Cerecor transaction:
| Estimated Consideration at Close | ||||
| Closing Shares Estimated Value | ||||
| Total shares of Aytu Series G Preferred Stock issued on November 1, 2019 | 9,805,845 | |||
| Estimated fair value per share of Aytu Series G Preferred Stock (see Note 3) | $ | 0.567 | ||
| Estimated value of Aytu Series G Preferred Stock issued at November 1, 2019 | $ | 5,559,914 | ||
| Cash Consideration | ||||
| Total cash consideration transferred at November 1, 2019 | 4,500,000 | |||
| Estimated Value of Consideration Transferred | $ | 10,059,914 |
preliminary estimated purchase price is estimated as if the transaction had closed on February 14, 2020 and includes estimates
as to the final total number of shares of Aytu common stock expected to either be issued at close, or registered to satisfy future
potential issuances post-close. Accordingly, the amounts presented in the table below are likely to change upon the closing of
| Estimated Consideration at Close | ||||
| Closing Shares Estimated Value | ||||
| Estimated shares to be issued at Close | 3,810,463 | |||
| Estimated fair value of Aytu common stock (see Note 3) | $ | 0.567 | ||
| Estimated value of Aytu common stock issued at close | $ | 2,160,533 | ||
| Value of CVRs (Assuming 100% Milestone Achievement) (f) | ||||
| Minimum CVR Value (Assuming 100% Milestone Achievement) | $ | 16,000,000 | ||
| Other Shares of Aytu Common Stock Related to the Merger ( ) | ||||
| Estimated potential number of shares of Aytu Common stock | 2,266,619 | |||
| Estimated fair value of Aytu common stock | $ | 0.567 | ||
| Estimated value of other shares issued at close related to the merger | $ | 1,285,173 | ||
| Estimated Value of Consideration Transferred | $ | 19,445,706 |
- Assumes 100% achievement for all Contingent Value Rights ("CVRs") pursuant to the Contingent Value Rights
Agreement (Exhibit B to the "Agreement and Plan of Merger" dated September 12, 2019). There is no guarantee that such
CVRs will be achieved.
- Such estimate is subject to change due to the multiple variables involved in ultimately calculating the number of shares
to be issued, including (a) the Company's stock price; (b) the fair value of CVRs and their impact on valuations which determine
certain shares to be issued to satisfy certain outstanding warrants, and (c) other inputs to certain warrant valuations that will
not be determined until the date the Innovus Merger closes.
4. Preliminary purchase price allocation
Transaction. The following table provides the initial estimated purchase price allocation as of November 1, 2019 closing date.
The Company has obtained and completed the initial third-party valuation of the assets acquired and liabilities assumed from the
Cerecor Transaction. However, all amounts are subject to a twelve-month measurement period from the November 1, 2019 close date
to October 31, 2020 as new information arises, resulting in potential adjustments to amounts reflected below.
| Purchase Price Allocation | Estimated Purchase Price Allocation (in thousands) | |||
| Estimated consideration to be transferred | 10,060 | |||
| Total Assets Acquired | ||||
| Cash and cash equivalents | - | |||
| Other current assets | 4,750 | |||
| Intangible assets | 22,700 | |||
| Other non-current assets | - | |||
| Total identifiable assets | 27,450 | |||
| Total liabilities assumed | ||||
| Accrued liabilities | 6,320 | |||
| Current portion of fixed payment obligations | 2,890 | |||
| Other long-term liabilities | 23,567 | |||
| Total identifiable liabilities | 32,778 | |||
| Total pro forma goodwill | 15,388 |
Innovus Merger. The Innovus Merger was
approved by the shareholders of both the Company and Innovus on February 13, 2020, prior to the furnishing of this Form 8-K. Accordingly,
the Company has not yet started the process of identifying and valuing the assets acquired and liabilities assumed. However, the
Company has included those net assets as reported by Innovus on its September 30, 2019 Form 10-Q, furnished November 14, 2019,
the most recent balance sheet that Innovus furnished with the Securities and Exchange Commission.
| Purchase Price Allocation | Estimated Purchase Price Allocation (in thousands) | Notes | ||||
| Estimated consideration to be transferred | 19,446 | (1) | ||||
| Total Assets Acquired | ||||||
| Cash and cash equivalents | 955 | |||||
| Other current assets | 3,398 | |||||
| Intangible assets | 3,378 | |||||
| Other non-current assets | 1,783 | |||||
| Total identifiable assets | 9,514 | |||||
| Total liabilities assumed | ||||||
| Accounts payable and accrued liabilities | 4,080 | |||||
| Accrued compensation | 1,341 | |||||
| Notes payable | 2,315 | |||||
| Long-term contingent consideration | 3,248 | |||||
| Other long-term liabilities | 1,526 | |||||
| Total identifiable liabilities | 12,510 | |||||
| Total pro forma goodwill | 22,442 |
5. Pro Forma Adjustments