UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Exhibit 99.2
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Effective October 20, 2022, Sunshine Biopharma, Inc. (“Sunshine” or the “Company”) entered into a Share Purchase Agreement with Xxxx Pharma Inc. (the “Xxxx Purchase Agreement”), wherein the Company acquired all of the issued and outstanding shares (the “Shares”) of Xxxx Pharma Inc. (“Xxxx”) from Xx. Xxxxx Xxxxxxx. The purchase price for the Shares was $30,000,000 CAD (approximately $21,900,000 USD). The purchase price included a cash payment of $20,000,000 CAD (approximately $14,600,000 USD), plus issuance of 3,700,000 shares of the Company’s Common Stock valued at $5,000,000 CAD (approximately $3,650,000 USD), plus an earn-out amount of $5,000,000 CAD (approximately $3,650,000 USD) payable to Xx. Xxxxxxx, once earned, in a maximum of twenty (20) payments of $250,000 CAD for every $1,000,000 CAD increase in gross sales (as defined in the Xxxx Purchase Agreement) above Xxxx’s June 30, 2022 gross sales, provided that his employment with the Company is not terminated pursuant to the Company’s Employment Agreement with him. Liabilities assumed were $7,760,495 CAD (approximately $5,662,057 USD).
The following unaudited pro forma condensed combined financial statements are based on the Company’s historical consolidated financial statements as adjusted to give effect to the Company’s acquisition of Xxxx Pharma Inc. and the related financing transactions. The unaudited pro forma condensed combined balance sheet as of September 30, 2022 gives effect to these transactions as if they had occurred on September 30, 2022. The unaudited pro forma condensed statement of operations for the nine-month period ended September 30, 2022 and fiscal year ended December 31, 2021 give effect to these transactions as if they had occurred on September 30, 2022 and December 31, 2021.
The pro forma combined financial statements do not necessarily reflect what the combined Company’s financial condition or results of operations would have been had the acquisition occurred on the dates indicated. They also may not be useful in predicting the future financial condition and results of operations of the combined Company. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors. The assumptions and estimates underlying the unaudited adjustments to the pro forma condensed combined financial statements are described in the accompanying notes, which should be read together with the pro forma condensed combined financial statements.
The unaudited pro forma condensed combined financial statements should be read together with the Company’s historical financial statements, which are included in the Company’s latest annual report on Form 10-K.
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Unaudited Pro Forma Condensed Combined Balance Sheet
As of September 30, 2022
| Sunshine Biopharma, | Xxxx Pharma, | Pro Forma | Pro Forma | ||||||||||||||
| Inc. | Inc. | Adjustments | Notes | Combined | |||||||||||||
| ASSETS | |||||||||||||||||
| Cash | $ | 40,555,931 | $ | – | (14,600,000 | ) | (a) | $ | 25,955,931 | ||||||||
| Accounts receivable | 22 | 1,312,685 | – | 1,312,707 | |||||||||||||
| Inventory | 269,641 | 3,381,409 | – | 3,651,050 | |||||||||||||
| Prepaid expenses | 27,390 | 5,968 | – | 33,358 | |||||||||||||
| Deposits | 7,590 | – | – | 7,590 | |||||||||||||
| Total current assets | 40,860,574 | 4,700,062 | 30,960,636 | ||||||||||||||
| Property and equipment, net | 3,770 | 181,566 | 185,336 | ||||||||||||||
| – | |||||||||||||||||
| Intangible assets | – | 1,398,376 | 1,398,376 | ||||||||||||||
| Goodwill | – | – | 21,282,053 | 21,282,052 | |||||||||||||
| TOTAL ASSETS | $ | 40,864,344 | $ | 6,280,004 | $ | 6,682,053 | $ | 53,826,401 | |||||||||
| LIABILITIES | |||||||||||||||||
| Current Liabilities | |||||||||||||||||
| Accounts payable and accrued expenses | $ | 480,209 | $ | 4,482,685 | – | $ | 4,962,894 | ||||||||||
| Total current liabilities | 480,209 | 4,482,685 | – | 4,962,894 | |||||||||||||
| Long-term Liabilities | – | 1,179,372 | 1,179,372 | ||||||||||||||
| Note payable (purchase of Xxxx xxxxx) | – | – | 3,650,000 | (c) | 3,650,000 | ||||||||||||
| TOTAL LIABILITIES | 480,209 | 5,662,057 | 3,650,000 | 9,792,266 | |||||||||||||
| – | – | – | – | ||||||||||||||
| TOTAL SHAREHOLDERS' EQUITY (DEFICIT) | 40,384,135 | 617,947 | 3,650,000 | (b) | 44,034,135 | ||||||||||||
| – | (617,947 | ) | (d) | ||||||||||||||
| – | – | – | |||||||||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS'EQUITY | $ | 40,864,344 | $ | 6,280,004 | $ | 6,682,053 | $ | 53,826,401 | |||||||||
| 2 |
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Nine Months Ended September 30, 2022
| Sunshine Biopharma, | Xxxx Pharma, | Pro Forma | Pro Forma | ||||||||||||||
| Inc. | Inc. | Adjustments | Notes | Combined | |||||||||||||
| Revenue | $ | 405,760 | $ | 10,151,782 | $ | 10,557,542 | |||||||||||
| Cost of sales | 200,311 | 6,653,478 | 6,853,789 | ||||||||||||||
| Gross profit | 205,449 | 3,498,304 | 3,703,753 | ||||||||||||||
| General & administrative expenses | 3,842,589 | 2,685,353 | 6,527,942 | ||||||||||||||
| Income (loss) from operations | (3,637,140 | ) | 812,951 | (2,824,189 | ) | ||||||||||||
| Interest income and other income (expenses) | 405,015 | (96,964 | ) | 308,051 | |||||||||||||
| Net income (loss) before taxes | (3,232,125 | ) | 715,987 | (2,516,138 | ) | ||||||||||||
| Income tax expense | – | (124,193 | ) | (124,193 | ) | ||||||||||||
| Net income (loss) | (3,232,125 | ) | 591,794 | (2,640,331 | ) | ||||||||||||
| Gain (loss) from foreign exchange translation | (56,764 | ) | 43,077 | (13,687 | ) | ||||||||||||
| Comprehensive income (loss) | $ | (3,288,889 | ) | $ | 634,871 | $ | (2,654,018 | ) | |||||||||
| Basic gain (loss) per common share | $ | (0.26 | ) | $ | 63.49 | $ | (0.16 | ) | |||||||||
| Weighted average common shares outstanding (Basic) | 12,789,733 | 10,000 | 3,690,000 | (d)(e) | 16,479,733 | ||||||||||||
| 3 |
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended December 31, 2021
| Sunshine Biopharma, | Xxxx Pharma, | Pro Forma | Pro Forma | ||||||||||||||
| Inc. | Inc. | Adjustments | Notes | Combined | |||||||||||||
| Revenue | $ | 228,426 | $ | 7,698,739 | $ | 7,927,165 | |||||||||||
| Cost of sales | 117,830 | 5,383,130 | 5,500,960 | ||||||||||||||
| Gross profit | 110,596 | 2,315,609 | 2,426,205 | ||||||||||||||
| General & administrative expenses | 2,550,730 | 2,100,404 | 4,651,134 | ||||||||||||||
| Income (loss) from operations | (2,440,134 | ) | 215,205 | (2,224,929 | ) | ||||||||||||
| Interest income and other income (expenses) | (9,996,313 | ) | (47,197 | ) | (10,043,510 | ) | |||||||||||
| Net income (loss) before taxes | (12,436,447 | ) | 168,008 | (12,268,439 | ) | ||||||||||||
| Income tax expense | – | (21,841 | ) | (21,841 | ) | ||||||||||||
| Net income (loss) | (12,436,447 | ) | 146,167 | (12,290,280 | ) | ||||||||||||
| Gain (loss) from foreign exchange translation | 20,268 | (2,052 | ) | 18,216 | |||||||||||||
| Comprehensive Income (loss) | $ | (12,416,179 | ) | $ | 144,115 | $ | (12,272,064 | ) | |||||||||
| Basic gain (loss) per common share | $ | (4.76 | ) | $ | 14.41 | $ | (1.95 | ) | |||||||||
| Weighted average common shares outstanding (Basic) | 2,612,061 | 10,000 | 3,690,000 | (d)(e) | 6,302,061 | ||||||||||||
| 4 |
Notes to Unaudited Pro Forma Condensed Combined Financial Information
Note 1 — Basis of Presentation
The Company’s historical consolidated financial statements 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 combination.
The business combination was accounted for under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. As the acquirer for accounting purposes, the Company has estimated the fair value of Xxxx Pharma Inc.’s assets acquired and liabilities assumed and conformed to the accounting policies of the acquired company to its own accounting policies.
The pro forma combined financial statements do not necessarily reflect what the combined Company’s financial condition or results of operations would have been had the acquisition occurred on the dates indicated. They also may not be useful in predicting the future financial condition and results of operations of the combined Company. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors.
The combined pro forma financial information does not reflect the realization of any expected cost savings or other synergies from the acquisition of Xxxx Pharma Inc. as a result of restructuring activities and other planned cost savings initiatives following the completion of the business combination.
The Company has allocated the total consideration paid of $21,900,000 to assets (net of liabilities) of $617,947 as stated on Xxxx’s books and goodwill of $21,282,053. The value of goodwill represents Xxxx’s ability to generate profitable operations going forward. Management estimated the provisional fair values of goodwill at September 30, 2022. The Company’s accounting for the acquisition of Xxxx is incomplete.
Note 2 – Preliminary Purchase Price Allocation
The following table summarizes the allocation of the purchase price as of the acquisition date:
| Accounts receivable | $ | 1,312,685 | ||
| Inventory | 3,381,409 | |||
| Prepaid expenses | 5,968 | |||
| Property and equipment | 181,566 | |||
| Intangible assets | 1,398,376 | |||
| Liabilities assumed | (5,662,057 | ) | ||
| Goodwill | 21,282,053 | |||
| Total consideration | $ | 21,900,000 |
Note 3 – Pro Forma Adjustments
| (a) | Represents the cash payment of $20,000,000 CAD or approximately $14,600,000 USD |
| (b) | Represents the issuance of 3,700,000 shares of common stock valued at $0.99 or $3,650,000 in the acquisition of Xxxx. |
| (c) | Represents the earn-out payable to Xx. Xxxxxxx of $5,000,000 CAD approximately $3,650,000 USD | |
| (d) | Represents the elimination of Xxxx’s equity and the establishment of goodwill from the acquisition |
| (e) | Represents the increase in the weighted average shares in connection with the issuance of 3,700,000 shares of common stock as part of the consideration for the acquisition of all of the outstanding shares of Xxxx. |
| 5 |
