Exhibit 99.1

 

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS



On December 8, 2020, the Company entered into an Asset Purchase Agreement (the "Purchase Agreement") with Roman Health Ventures Inc. (the "Purchaser"). Pursuant to, and subject to the terms and conditions of, the Purchase Agreement, the Purchaser purchased substantially all of the assets related to the Company's PREBOOST® business. The transaction closed on December 8, 2020. The purchase price for the transaction was $20.0 million, consisting of $15.0 million paid at closing, $2.5 million payable 12 months after closing and $2.5 million payable 18 months after closing.



The following unaudited pro forma consolidated financial statements are based on our historical consolidated financial statements as adjusted to give effect to the sale of the PREBOOST® business. The unaudited pro forma consolidated statement of operations for the year ended September 30, 2020 gives effect to the sale of the PREBOOST® business as if it had occurred on October 1, 2019. The unaudited pro forma consolidated balance sheet as of September 30, 2020 gives effect to the sale of the PREBOOST® business as if it had occurred on September 30, 2020. The unaudited pro forma consolidated financial statements do not purport to represent what the actual results of operations or financial position would have been had the sale of the PREBOOST® business occurred on the dates assumed, nor are they indicative of future results of operations or financial positions.



The pro forma adjustments are based on currently available information and certain estimates and assumptions, which are described in the accompanying notes and which management believes are reasonable. Actual adjustments may differ from the pro forma adjustments.



The unaudited consolidated pro forma financial statements and accompanying notes have been prepared in conformity with generally accepted accounting principles in the United States, which is consistent with those principles used in the historical consolidated financial statements and the related notes included in the Company’s annual report on Form 10-K filed with the U.S. Securities and Exchange Commission on December 9, 2020. The unaudited pro forma consolidated financial statements should be read in conjunction with the notes to the unaudited consolidated pro forma financial statements.

 

 

VERU INC.

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET

AS OF SEPTEMBER 30, 2020

 



 

 

 

 

 

 

 

 

 

 



 

Historical

 

Adjustments

 

 

Pro Forma

Assets

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

 13,588,778 

 

$

 15,000,000 

(a)

 

$

 28,588,778 

Accounts receivable, net

 

 5,227,237 

 

 

 

 

 

 

 5,227,237 

Inventory, net

 

 6,704,134 

 

 

 

 

 

 

 6,704,134 

Prepaid expenses and other current assets

 

 1,494,541 

 

 

 

 

 

 

 1,494,541 

Total current assets

 

 27,014,690 

 

 

 15,000,000 

 

 

 

 42,014,690 

Property and equipment, net

 

 312,691 

 

 

 

 

 

 

 312,691 

Operating lease right-of-use asset

 

 1,352,315 

 

 

 

 

 

 

 1,352,315 

Deferred income taxes

 

 9,466,800 

 

 

 

 

 

 

 9,466,800 

Intangible assets, net

 

 5,752,127 

 

 

 (1,631,889)

(a)

 

 

 4,120,238 

Goodwill

 

 6,878,932 

 

 

 

 

 

 

 6,878,932 

Notes receivable

 

 —

 

 

 5,000,000 

(a)

 

 

 5,000,000 

Other assets

 

 766,120 

 

 

 

 

 

 

 766,120 

Total assets

$

 51,543,675 

 

$

 18,368,111 

 

 

$

 69,911,786 



 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

Accounts payable

$

 2,812,673 

 

$

 

 

 

$

 2,812,673 

Accrued research and development costs

 

 934,110 

 

 

 

 

 

 

 934,110 

Accrued compensation

 

 2,274,396 

 

 

 

 

 

 

 2,274,396 

Accrued expenses and other current liabilities

 

 1,177,126 

 

 

 108,063 

(b)

 

 

 1,285,189 

Credit agreement, short-term portion

 

 5,841,874 

 

 

 

 

 

 

 5,841,874 

Residual royalty agreement, short-term portion

 

 1,100,193 

 

 

 

 

 

 

 1,100,193 

Operating lease liability, short-term portion

 

 586,769 

 

 

 

 

 

 

 586,769 

Total current liabilities

 

 14,727,141 

 

 

 108,063 

 

 

 

 14,835,204 

Credit agreement, long-term portion

 

 —

 

 

 

 

 

 

 —

Residual royalty agreement, long-term portion

 

 5,617,494 

 

 

 

 

 

 

 5,617,494 

Operating lease liability, long-term portion

 

 990,020 

 

 

 

 

 

 

 990,020 

Deferred income taxes

 

 74,724 

 

 

 

 

 

 

 74,724 

Other liabilities

 

 22,980 

 

 

 

 

 

 

 22,980 

Total liabilities

 

 21,432,359 

 

 

 108,063 

 

 

 

 21,540,422 



 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

 

Preferred stock, no shares issued and outstanding at September 30, 2020 and 2019, respectively

 

 —

 

 

 

 

 

 

 —

Common stock, par value $0.01 per share; 154,000,000 shares authorized, 72,047,385 and 67,221,951 shares issued and 69,863,681 and 65,038,247 shares outstanding at September 30, 2020 and 2019, respectively

 

 720,474 

 

 

 

 

 

 

 720,474 

Additional paid-in-capital

 

 126,971,518 

 

 

 

 

 

 

 126,971,518 

Accumulated other comprehensive loss

 

 (581,519)

 

 

 

 

 

 

 (581,519)

Accumulated deficit

 

 (89,192,552)

 

 

 18,368,111 

(a)

 

 

 (70,932,504)



 

 

 

 

 

 (108,063)

(b)

 

 

 

Treasury stock, 2,183,704 shares, at cost

 

 (7,806,605)

 

 

 

 

 

 

 (7,806,605)

Total stockholders' equity

 

 30,111,316 

 

 

 18,260,048 

 

 

 

 48,371,364 

Total liabilities and stockholders' equity

$

 51,543,675 

 

$

 18,368,111 

 

 

$

 69,911,786 



 

 

 

 

 

 

 

 

 

See notes to unaudited pro forma consolidated financial statements.



 

 

 



VERU INC.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED SEPTEMBER 30, 2020





 

 

 

 

 

 

 

 

 

 



 

Historical

 

Adjustments

 

 

Pro Forma



 

 

 

 

 

 

 

 

 

 

Net revenues

$

 42,592,060 

 

$

 (2,035,242)

(c)

 

$

 40,556,818 

   

 

 

 

 

 

 

 

 

 

Cost of sales

 

 11,805,202 

 

 

 (556,504)

(c)

 

 

 11,248,698 

   

 

 

 

 

 

 

 

 

 

Gross profit

 

 30,786,858 

 

 

 (1,478,738)

 

 

 

 29,308,120 

   

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Research and development

 

 16,935,222 

 

 

 

 

 

 

 16,935,222 

Selling, general and administrative

 

 14,498,330 

 

 

 (254,771)

(c)

 

 

 14,243,559 

Impairment of intangible assets

 

 14,100,000 

 

 

 

 

 

 

 14,100,000 

Total operating expenses

 

 45,533,552 

 

 

 (254,771)

 

 

 

 45,278,781 

   

 

 

 

 

 

 

 

 

 

Operating loss

 

 (14,746,694)

 

 

 (1,223,967)

 

 

 

 (15,970,661)

   

 

 

 

 

 

 

 

 

 

Non-operating (expenses) income:

 

 

 

 

 

 

 

 

 

Interest expense

 

 (4,621,422)

 

 

 

 

 

 

 (4,621,422)

Change in fair value of derivative liabilities

 

 (557,000)

 

 

 

 

 

 

 (557,000)

Other (expense) income, net

 

 (126,860)

 

 

 

 

 

 

 (126,860)

Total non-operating expenses

 

 (5,305,282)

 

 

 —

 

 

 

 (5,305,282)



 

 

 

 

 

 

 

 

 

Loss before income taxes

 

 (20,051,976)

 

 

 (1,223,967)

 

 

 

 (21,275,943)

   

 

 

 

 

 

 

 

 

 

Income tax benefit

 

 (1,078,441)

 

 

 

 

 

 

 (1,078,441)



 

 

 

 

 

 

 

 

 

Net loss

$

 (18,973,535)

 

$

 (1,223,967)

 

 

$

 (20,197,502)



 

 

 

 

 

 

 

 

 

Net loss per basic and diluted common share outstanding

$

 (0.28)

 

$

 (0.02)

(d)

 

$

 (0.30)

   

 

 

 

 

 

 

 

 

 

Basic and diluted weighted average common shares outstanding

 

 66,753,450 

 

 

 66,753,450 

 

 

 

 66,753,450 

   

 

 

 

 

 

 

 

 

 

See notes to unaudited pro forma consolidated financial statements.



 

 

VERU INC.

NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS



The unaudited pro forma consolidated financial statements include the following adjustments:



(a)

This adjustment reflects the sale of the PREBOOST® business for consideration of $20.0 million, consisting of $15.0 million in cash and $5.0 million in notes receivable. As of September 30, 2020, the net book value of the assets related to the Company’s PREBOOST® business was $1.6 million, included in intangible assets. The sale of the PREBOOST® business results in a pro forma net gain on sale of $18.4 million, which is included in the accumulated deficit.



(b)

Represents a state tax payable of $0.1 million resulting from the estimated taxable gain on the sale of the PREBOOST® business, using an estimated state tax apportionment rate.



(c)

Reflects the elimination of revenues and expenses representing the historical operating results of the PREBOOST® business for the year ended September 30, 2020.



(d)

Pro forma net loss per common share is determined by dividing the pro forma net loss that has been adjusted for the reduction in net revenues and expenses as a result of the sale of the PREBOOST® business by the weighted average common shares outstanding. The pro forma adjustments do not impact the weighted average common shares outstanding.