Full Press Release Details
CORPORATION UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL INFORMATION
February 16, 2023, Oncocyte Corporation ("Oncocyte" or the "Company") completed its sale of 3,188,181 shares
of common stock of its wholly-owned subsidiary Razor Genomics, Inc. ("Razor"), which constitutes approximately 70% of the
issued and outstanding equity interests of Razor on a fully-diluted basis, pursuant to a previously announced Stock Purchase Agreement
(as amended, the "Purchase Agreement") with Dragon Scientific, LLC, a Delaware limited liability company ("Buyer"),
and Razor, a Delaware corporation (the "Closing").
connection with the Closing, Oncocyte transferred to Razor all of the assets and liabilities related to DetermaRxTM, a test
used to predict a patient's risk of cancer recurrence following surgery and response to chemotherapy in early-stage lung cancer.
Following the Closing, Oncocyte continues to own 1,366,364 shares of common stock of Razor, which constitutes approximately 30% of the
issued and outstanding equity interests of Razor on a fully-diluted basis.
following sets forth the unaudited pro forma condensed consolidated financial statements of Oncocyte after giving effect to the Closing.
The Company's accounting and financial reporting in these unaudited pro forma financial statements is based on its preliminary
assessment of the appropriate application of Generally Accepted Accounting Principles ("GAAP"). The final application of
GAAP to the Purchase Agreement may differ from what is presented in these unaudited pro forma financial statements.
unaudited pro forma condensed consolidated financial statements of the Company presented in this Exhibit 99.1 were derived from the Company's
historical consolidated financial statements and are being presented to give effect to the Purchase Agreement. The presentation of the
unaudited pro forma financial information is prepared in conformity with Article 11 of Regulation S-X rules effective January 1, 2021.
unaudited pro forma condensed consolidated balance sheet assumes that the Purchase Agreement occurred on September 30, 2022. The unaudited
pro forma condensed consolidated statements of operations are presented as if the Purchase Agreement had occurred on February 24, 2021,
the date the Company fully acquired Razor Genomics. The unaudited combined consolidated pro forma financial statements presented in this
Form 8-K should be read in conjunction with the accompanying notes. The following unaudited pro forma condensed consolidated financial
statements were based on and should be read in conjunction with the Company's historical consolidated financial statements:
pro forma adjustments are based on the best information available and assumptions that management believes are (a) directly attributable
to the Purchase Agreement, and (b) are factually supportable. The pro forma adjustments are described in the accompanying notes to the
unaudited pro forma condensed consolidated financial information.
unaudited pro forma condensed consolidated financial information is provided herein for illustrative purposes only and is not necessarily
indicative of the results of operations that would have occurred had the Purchase Agreement occurred on February 24, 2021. The unaudited
pro forma condensed consolidated financial information does not reflect future events that may occur after the sale.
PROFORMA CONDENSED CONSOLIDATED BALANCE SHEETS
of September 30, 2022
thousands, except per share data)
| Consolidated | Transaction | |||||||||||
| Company, as | Accounting | Proforma | ||||||||||
| Reported (A) | Adjustments (B) | Consolidated | ||||||||||
| ASSETS | ||||||||||||
| CURRENT ASSETS | ||||||||||||
| Cash and cash equivalents | $ | 32,053 | $ | (1,588 | ) (1) | $ | 30,465 | |||||
| Accounts receivable | 1,990 | (1,896 | ) (2) | 94 | ||||||||
| Retained investment in Razor | - | 9,600 | (3) | 9,600 | ||||||||
| Marketable equity securities | 419 | - | 419 | |||||||||
| Prepaid expenses and other current assets | 2,174 | (368 | ) (2) | 1,806 | ||||||||
| Total current assets | 36,636 | 5,748 | 42,384 | |||||||||
| NONCURRENT ASSETS | ||||||||||||
| Right-of-use and financing lease assets, net | 2,337 | - | 2,337 | |||||||||
| Machinery and equipment, net, and construction in progress | 9,256 | (289 | ) (2) | 8,967 | ||||||||
| Goodwill | 18,684 | - | 18,684 | |||||||||
| Intangible assets, net | 88,365 | (26,710 | ) (2) | 61,655 | ||||||||
| Restricted cash | 1,700 | - | 1,700 | |||||||||
| Other noncurrent assets | 366 | (59 | ) (2) | 307 | ||||||||
| TOTAL ASSETS | $ | 157,344 | $ | (21,310 | ) | $ | 136,034 | |||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||
| CURRENT LIABILITIES | ||||||||||||
| Accounts payable | 1,826 | (109 | ) (2) | 1,717 | ||||||||
| Accrued compensation | 4,067 | (584 | ) (2) | 3,483 | ||||||||
| Accrued expenses and other current liabilities | 3,809 | (2,089 | ) (2) | 1,720 | ||||||||
| Accrued severance from acquisition | 2,314 | - | 2,314 | |||||||||
| Accrued liabilities from acquisition | 109 | - | 109 | |||||||||
| Loans payable, net of deferred financing costs | - | - | - | |||||||||
| Right-of-use and financing lease liabilities, current | 827 | - | 827 | |||||||||
| Total current liabilities | 12,952 | (2,782 | ) | 10,170 | ||||||||
| NONCURRENT LIABILITIES | ||||||||||||
| Right-of-use and financing lease liabilities, noncurrent | 2,935 | - | 2,935 | |||||||||
| Contingent consideration liabilities | 59,524 | - | 59,524 | |||||||||
| TOTAL LIABILITIES | 75,411 | (2,782 | ) | 72,629 | ||||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||||||
| Series A Redeemable Convertible Preferred Stock, no par value; stated value $1,000 per share; 12 shares authorized, 6 shares issued and outstanding at September 30, 2022; aggregate liquidation preference of $6,001 as of September 30, 2022 | 5,076 | - | 5,076 | |||||||||
| SHAREHOLDERS' EQUITY | ||||||||||||
| Preferred stock, no par value, 5,000 shares authorized; no shares issued and outstanding | - | - | - | |||||||||
| Common stock, no par value, 230,000 shares authorized; 118,619 and 92,232 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively | 292,536 | - | 292,536 | |||||||||
| Accumulated other comprehensive income | 19 | - | 19 | |||||||||
| Accumulated deficit | (215,698 | ) | (18,528 | ) | (234,226 | ) | ||||||
| Total shareholders' equity | 76,857 | (18,528 | ) | 58,329 | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 157,344 | $ | (21,310 | ) | $ | 136,034 |
PROFORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
the Nine Months Ended September 30, 2022
thousands, except per share data)
| Consolidated | Transaction | |||||||||||
| Company, as | Accounting | Proforma | ||||||||||
| Reported (A) | Adjustments (C) | Consolidated | ||||||||||
| Net revenue | $ | 4,508 | $ | (2,784 | )(4) | $ | 1,724 | |||||
| Cost of revenues | 3,641 | (3,280 | )(5) | 361 | ||||||||
| Cost of revenues - amortization of acquired intangibles | 2,888 | (2,815 | )(5) | 73 | ||||||||
| Gross profit | (2,021 | ) | 3,311 | 1,290 | ||||||||
| Operating expenses: | ||||||||||||
| Research and development | 15,123 | (9,709 | )(6) | 5,414 | ||||||||
| Sales and marketing | 10,764 | (9,966 | )(7) | 798 | ||||||||
| General and administrative | 16,927 | (122 | )(8) | 16,805 | ||||||||
| Change in fair value of contingent consideration | (17,157 | ) | - | (17,157 | ) | |||||||
| Total operating expenses | 25,657 | (19,797 | ) | 5,860 | ||||||||
| Loss from operations | (27,678 | ) | 23,108 | (4,570 | ) | |||||||
| OTHER INCOME (EXPENSES), NET | ||||||||||||
| Interest expense, net | (65 | ) | - | (65 | ) | |||||||
| Unrealized gain (loss) on marketable equity securities | (485 | ) | - | (485 | ) | |||||||
| Other income (expenses), net | 304 | - | 304 | |||||||||
| Total other income (expenses), net | (246 | ) | - | (246 | ) | |||||||
| LOSS BEFORE INCOME TAXES | (27,924 | ) | 23,108 | (4,816 | ) | |||||||
| Income tax benefit | - | - | - | |||||||||
| NET LOSS | $ | (27,924 | ) | $ | 23,108 | $ | (4,816 | ) | ||||
| Accretion of Series A redeemable convertible preferred stock | (294 | ) | - | (294 | ) | |||||||
| NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS: BASIC AND DILUTED | $ | (28,218 | ) | $ | 23,108 | $ | (5,110 | ) | ||||
| Net loss per share: basic and diluted | $ | (0.26 | ) | $ | (0.05 | ) | ||||||
| Weighted average shares outstanding: basic and diluted | 108,158 | 108,158 |
PROFORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
the year ended December 31, 2021
thousands, except per share data)
| Consolidated | Transaction | |||||||||||
| Company, as | Accounting | Proforma | ||||||||||
| Reported (A) | Adjustments (C) | Consolidated | ||||||||||
| Net revenue | $ | 7,727 | $ | (2,475 | )(4) | $ | 5,252 | |||||
| Cost of revenues | 4,185 | (3,273 | )(5) | 912 | ||||||||
| Cost of revenues - amortization of acquired intangibles | 3,354 | (3,124 | )(5) | 230 | ||||||||
| Gross profit (loss) | 188 | 3,922 | 4,110 | |||||||||
| Operating expenses: | ||||||||||||
| Research and development | 13,631 | (9,798 | )(6) | 3,833 | ||||||||
| Sales and marketing | 11,167 | (10,623 | )(7) | 544 | ||||||||
| General and administrative | 22,336 | (15 | )(8) | 22,321 | ||||||||
| Change in fair value of contingent consideration | 27,266 | - | 27,266 | |||||||||
| Total operating expenses | 74,400 | (20,436 | ) | 53,964 | ||||||||
| Loss from operations | (74,212 | ) | 24,358 | (49,854 | ) | |||||||
| OTHER INCOME (EXPENSES), NET | ||||||||||||
| Interest expense, net | (209 | ) | - | (209 | ) | |||||||
| Unrealized gain (loss) on marketable equity securities | 229 | - | 229 | |||||||||
| Pro rata loss from equity method investment in Razor | (270 | ) | - | (270 | ) | |||||||
| Gain on extinguishment of debt (PPP loan) | 1,141 | - | 1,141 | |||||||||
| Other income (expenses), net | (37 | ) | (23,198 | )(9) | (23,235 | ) | ||||||
| Total other income (expenses), net | 854 | (23,198 | ) | (22,344 | ) | |||||||
| LOSS BEFORE INCOME TAXES | (73,358 | ) | 1,160 | (72,198 | ) | |||||||
| Income tax benefit | 9,261 | - | 9,261 | |||||||||
| NET LOSS | $ | (64,097 | ) | $ | 1,160 | $ | (62,937 | ) | ||||
| NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS: BASIC AND DILUTED | $ | (64,097 | ) | $ | 1,160 | $ | (62,937 | ) | ||||
| Net loss per share: basic and diluted | $ | (0.72 | ) | $ | (0.71 | ) | ||||||
| Weighted average shares outstanding: basic and diluted | 88,920 | 88,920 |
proforma adjustments are based on preliminary estimates and assumptions by management that are subject to changes
Amounts as originally reported by Oncocyte Corporation in its Quarterly Report on Form 10-Q as of and for the period ended September
Adjustments to present the pro forma effects of the Razor Genomics disposition as if it had occurred on the balance sheet date. These
include the following:
| (1) | Proforma adjustment represents the estimated clinical trial cash reserve account associated with the sale of Razor. | ||||||||
| (2) | Pro Forma adjustments include the elimination of DetermaRx related accounts receivable $1.9 million, prepaid expenses and other current assets of $0.4 million, fixed assets of $0.3 million, net intangible assets of $26.7 million, other current assets of $0.1 million, accounts payable of $0.1 million, accrued compensation of $0.6 million, and accrued expenses and other current liabilities of $2.1 million. | ||||||||
| (3) | Pro Forma adjustment to record Oncocyte interest in Razor Genomics after disposition | $ | 9,600 |
(C) Adjustments to present the pro forma effects of the Razor Genomics disposition as if it had occurred on February 24, 2021. These
include the following:
| Statement of Operations | |||||||||
| Nine Months Ended 9/30/2022 | Year Ended 12/31/2021 | ||||||||
| (4) | Pro Forma adjustment to remove DetermaRx revenue | $ | 2,784 | $ | 2,475 | ||||
| (5) | Pro Forma adjustment to remove cost of revenues associated with Razor | $ | 6,095 | $ | 6,397 | ||||
| (6) | Pro Forma adjustment to remove research and development cost | $ | 9,709 | $ | 9,798 | ||||
| (7) | Pro Forma adjustment to remove sales and marketing cost | $ | 9,966 | $ | 10,623 | ||||
| (8) | Pro Forma adjustment to remove general and administrative cost | $ | 122 | $ | 15 | ||||
| (9) | Pro Forma adjustment to record loss from disposal of Razor Genomics | $ | 0 | $ | 23,198 |