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UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
The following unaudited condensed pro forma balance sheet as of June 30, 2014 was prepared as if the acquisition was effective as of such date. The unaudited condensed pro forma statements of operations for the year ended September 30, 2013 and the nine months ended June 30, 2014 were prepared as if the acquisition was effective on October 1, 2012.
The unaudited condensed pro forma financial statements should be read in conjunction with the financial statements of Citius Pharmaceuticals, LLC included herein and the financial statements of Trail One, Inc. included in its annual report on Form 10-K for the year ended September 30, 2013 and its unaudited financial statements included in its quarterly report on Form 10-Q for the nine months ended June 30, 2014.
The pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the future financial position or future results of operation of the combined business after the acquisition of Citius Pharmaceuticals, LLC by Trail One, Inc. or of the financial position or results of operations of the combined business that would have actually occurred had the acquisition been effected as of the dates described above. The acquisition will be accounted for as a reverse acquisition wherein Citius will be treated as the acquirer for accounting purposes since it will control the combined business.
| TRAIL ONE, INC. |
| CONDENSED PRO FORMA BALANCE SHEET JUNE 30, 2014 (Unaudited) |
| Trail One, Inc. | Citius Pharmaceuticals, LLC | Pro Forma Adjustments | Notes | Pro Forma Balance Sheet | |||||||||||||
| ASSETS | |||||||||||||||||
| Current Assets | |||||||||||||||||
| Cash and cash equivalents | $ | - | $ | 23,443 | $ | 1,630,835 | (D) | $ | 1,654,278 | ||||||||
| Deferred offering costs | - | 25,000 | (25,000 | ) | (E) | - | |||||||||||
| Total Current Assets | - | 48,443 | 1,605,835 | 1,654,278 | |||||||||||||
| Other Assets | |||||||||||||||||
| Trademarks | - | 5,401 | - | 5,401 | |||||||||||||
| Total Assets | $ | - | $ | 53,844 | $ | 1,605,835 | $ | 1,659,679 | |||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||||||||
| Current Liabilities | |||||||||||||||||
| Accounts payable | $ | 1,481 | $ | 136,774 | $ | (1,481 | ) | (G) | $ | 136,774 | |||||||
| Accrued interest | 674 | 202,849 | (188,595 | ) | (A) | ||||||||||||
| (674 | ) | (G) | 14,254 | ||||||||||||||
| Notes payable | 29,196 | 600,000 | (29,196 | ) | (G) | 600,000 | |||||||||||
| Subordinated convertible promissory note | - | 350,000 | (350,000 | ) | (A) | - | |||||||||||
| Due to related party | - | 56,134 | - | 56,134 | |||||||||||||
| Total Current Liabilities | 31,351 | 1,345,757 | (569,946 | ) | 807,162 | ||||||||||||
| Convertible promissory notes | - | 1,685,000 | (1,685,000 | ) | (A) | - | |||||||||||
| Derivative warrant liability | - | - | 1,531,896 | (H) | 1,531,896 | ||||||||||||
| Total Liabilities | 31,351 | 3,030,757 | (723,050 | ) | 2,339,058 | ||||||||||||
| Stockholders' Equity | |||||||||||||||||
| Preferred stock - $0.001 par value per share; 10,000,000 shares authorized; | |||||||||||||||||
| no shares issued and outstanding | - | - | - | - | |||||||||||||
| Common stock - $0.001 par value per share; 90,000,000 shares authorized; | |||||||||||||||||
| 90,000,000 shares authorized pro forma; | |||||||||||||||||
| 18,000,000 shares issued and outstanding at June 30, 2014, | |||||||||||||||||
| 30,025,286 shares issued and outstanding pro forma | 18,000 | - | (13,000 | ) | (B) | ||||||||||||
| 21,625 | (C) | ||||||||||||||||
| 3,400 | (D) | 30,025 | |||||||||||||||
| Additional paid-in capital | 62,532 | - | 13,000 | (B) | |||||||||||||
| 4,750,770 | (C) | ||||||||||||||||
| 1,627,435 | (D) | ||||||||||||||||
| (25,000 | ) | (E) | |||||||||||||||
| (111,883 | ) | (F) | |||||||||||||||
| 31,351 | (G) | ||||||||||||||||
| (1,531,896 | ) | (H) | 4,816,309 | ||||||||||||||
| Members' contributions | - | 2,548,800 | 2,223,595 | (A) | |||||||||||||
| (4,772,395 | ) | (C) | - | ||||||||||||||
| Accumulated deficit | (111,883 | ) | (5,525,713 | ) | 111,883 | (F) | |||||||||||
| - | (5,525,713 | ) | |||||||||||||||
| Total Stockholders' Equity (Deficit) | (31,351 | ) | (2,976,913 | ) | 2,328,885 | (679,379 | ) | ||||||||||
| Total Liabilities and Stockholders' Equity (Deficit) | $ | - | $ | 53,844 | $ | 1,605,835 | $ | 1,659,679 |
| TRAIL ONE, INC. |
| CONDENSED PRO FORMA STATEMENT OF OPERATIONS FOR TRAIL ONE, INC.'s YEAR ENDED SEPTEMBER 30, 2013 |
| AND CITIUS PHARMACEUTICALS, LLC's YEAR ENDED DECEMBER 31, 2013 (Unaudited) |
| Trail One, Inc. | Citius Pharmaceuticals, LLC | Pro Forma Adjustments | Notes | Pro Forma Statement of Operations | |||||||||||||
| Revenues | $ | - | $ | - | $ | - | $ | - | |||||||||
| Operating Expenses | |||||||||||||||||
| General and administrative | 28,118 | 690,396 | - | 718,514 | |||||||||||||
| Research and development | - | 492,136 | - | 492,136 | |||||||||||||
| Total Operating Expenses | 28,118 | 1,182,532 | - | 1,210,650 | |||||||||||||
| Operating Loss | (28,118 | ) | (1,182,532 | ) | - | (1,210,650 | ) | ||||||||||
| Other Expense | |||||||||||||||||
| Interest expense | (3,251 | ) | (105,471 | ) | (108,722 | ) | |||||||||||
| Total OtherExpense | (3,251 | ) | (105,471 | ) | - | (108,722 | ) | ||||||||||
| Loss before Income Taxes | (31,369 | ) | (1,288,003 | ) | - | (1,319,372 | ) | ||||||||||
| Income tax benefit | - | - | - | - | |||||||||||||
| Net Loss | $ | (31,369 | ) | $ | (1,288,003 | ) | $ | - | $ | (1,319,372 | ) | ||||||
| Basic and Diluted Net Loss Per Common Share | $ | (0.04 | ) | ||||||||||||||
| Weighted Average Number of Common Shares Outstanding | |||||||||||||||||
| Trail One, Inc. - Historical as adjusted for the reverse acquisition | 5,000,000 | ||||||||||||||||
| Shares issued to Citius Pharmaceuticals, LLC members | (C) | 21,625,219 | |||||||||||||||
| Shares issued in Citius Pharmaceuticals' private placement | (D) | 3,400,067 | |||||||||||||||
| Pro Forma basic and diluted | 30,025,286 |
| TRAIL ONE, INC. |
| CONDENSED PRO FORMA STATEMENT OF OPERATIONS FOR TRAIL ONE, INC.'s NINE MONTHS ENDED JUNE 30, 2014 |
| AND CITIUS PHARMACEUTICALS, LLC's NINE MONTHS ENDED JUNE 30, 2014 (Unaudited) |
| Trail One, Inc. | Citius Pharmaceuticals, LLC | Pro Forma Adjustments | Notes | Pro Forma Statement of Operations | |||||||||||||
| Revenues | $ | - | $ | - | $ | - | $ | - | |||||||||
| Operating Expenses | |||||||||||||||||
| General and administrative | 16,004 | 105,624 | - | 121,628 | |||||||||||||
| Research and development | - | 437,397 | - | 437,397 | |||||||||||||
| Total Operating Expenses | 16,004 | 543,021 | - | 559,025 | |||||||||||||
| Operating Loss | (16,004 | ) | (543,021 | ) | - | (559,025 | ) | ||||||||||
| Other Expense | |||||||||||||||||
| Interest expense | (663 | ) | (109,246 | ) | - | (109,909 | ) | ||||||||||
| Total Other Expense | (663 | ) | (109,246 | ) | - | (109,909 | ) | ||||||||||
| Loss before Income Taxes | (16,667 | ) | (652,267 | ) | - | (668,934 | ) | ||||||||||
| Income tax benefit | - | - | - | - | |||||||||||||
| Net Loss | $ | (16,667 | ) | $ | (652,267 | ) | $ | - | $ | (668,934 | ) | ||||||
| Basic and Diluted Net Loss Per Common Share | $ | (0.02 | ) | ||||||||||||||
| Weighted Average Number of Common Shares Outstanding | |||||||||||||||||
| Trail One, Inc. - Historical as adjusted for the reverse acquisition | 5,000,000 | ||||||||||||||||
| Shares issued to Citius Pharmaceutical, LLC members | (C) | 21,625,219 | |||||||||||||||
| Shares issued in Citius Pharmaceuticals private placement | (D) | 3,400,067 | |||||||||||||||
| Pro Forma basic and diluted | 30,025,286 |
Notes to the Unaudited Condensed Pro Forma Financial Statements
On September 12, 2014, Trail One, Inc. acquired all of the outstanding membership interests of Citius Pharmaceuticals, LLC and Citius Pharmaceuticals, LLC became a wholly-owned subsidiary of Trail One, Inc. As a result of the acquisition, the former members of Citius Pharmaceuticals, LLC received an aggregate of 21,625,219 shares of Trail One, Inc. common stock in connection with the acquisition of the 21,625,219 outstanding membership interests of Citius Pharmaceuticals, LLC., the private placement investors received 3,400,067 shares of Trail One, Inc., and together they held approximately 83.3% of the issued and outstanding common stock of Trail One, Inc. immediately after the acquisition. Accounting principles generally accepted in the United States generally require that a company whose security holders retain the majority voting interest in the combined business be treated as the acquirer for financial reporting purposes. The acquisition was accounted for as a reverse acquisition whereby Citius Pharmaceuticals, LLC was deemed to be the accounting acquirer.