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| ADMP.OB > SEC Filings for ADMP.OB > Form 8-K/A on 15-Jun-2009 | All Recent SEC Filings |
15-Jun-2009
Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
Adamis Pharmaceuticals Corporation and Subsidiaries Unaudited Consolidated
Financial Statements for Three and Nine Months Ended December 31, 2008 and 2007.
(b) Pro Forma Financial Information
Unaudited Proforma Combined Condensed Consolidated Balance Sheet. Unaudited
Proforma Combined Condensed Consolidated Statement of Operations.
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ADAMIS PHARMACEUTICALS CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
THREE AND NINE MONTHS ENDED DECEMBER 31, 2008 AND 2007
PAGE
----
FINANCIAL STATEMENTS (UNAUDITED):
Consolidated Balance Sheet 1
Consolidated Statements of Operations 2
Consolidated Statements of Cash Flows 3-4
Notes to the Consolidated Financial Statements 5-27
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ADAMIS PHARMACEUTICALS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, March 31,
2008 2008
------------- -------------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash $ 939 $ 541
Accounts Receivable, Net 108,791 76,270
Inventory, Net 520,489 24,263
Prepaid Expenses and Other Current Assets 18,399 144,221
Assets from Discontinued Operations 350,000 9,626,425
- ----------- - -----------
Total Current Assets 998,618 9,871,720
PROPERTY AND EQUIPMENT, Net 34,766 53,980
DEFERRED ACQUISITION COSTS 147,747 101,247
OTHER ASSETS 21,871 21,871
- ----------- - -----------
Total Assets $ 1,203,002 $ 10,048,818
- ----------- - -----------
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts Payable $ 845,461 $ 991,144
Accrued Expenses 266,133 379,982
Liabilities from Discontinued Operations - 6,246,161
Notes Payable to Related Parties 528,000 1,744,000
- ----------- - -----------
Total Current Liabilities 1,639,594 9,361,287
NOTE PAYABLE TO RELATED PARTY, Less Current Maturity - 500,000
LONG-TERM DEBT, Net of Financing Cost - 1,680,000
- ----------- - -----------
Total Liabilities 1,639,594 11,541,287
- ----------- - -----------
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COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIT
Preferred Stock - Par Value $.0001; 20,000,000 Shares
Authorized; Issued and Outstanding-None - -
Common Stock - Par Value $.0001; 100,000,000 Shares
Authorized; 35,576,761 and 34,721,110 Issued and
Outstanding, Respectively 3,589 3,471
Additional Paid-in Capital 9,587,107 8,788,485
Treasury Stock - 316,000 and 0 Shares, Respectively (316 ) -
Accumulated Deficit (10,026,972 ) (10,284,425 )
- ----------- - -----------
Total Stockholders' Deficit (436,592 ) (1,492,469 )
- ----------- - -----------
$ 1,203,002 $ 10,048,818
- ----------- - -----------
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The Accompanying Notes are an integral Part of these Consolidated Financial Statements.
ADAMIS PHARMACEUTICALS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Nine Months Ended
------------------------------ ------------------------------
December 31, December 31, December 31, December 31,
2008 2007 2008 2007
------------- ------------- ------------- -------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
REVENUE, NET $ 91,539 $ 278,176 $ 403,020 $ 481,556
COST OF GOODS SOLD 42,790 56,859 224,238 202,631
-- ---------- -- ---------- -- ---------- -- ----------
Gross Margin 48,749 221,317 178,782 278,925
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 554,618 1,346,856 2,890,378 3,082,284
RESEARCH AND DEVELOPMENT 26,603 - 362,741 153,089
-- ---------- -- ---------- -- ---------- -- ----------
Loss from Operations (532,472 ) (1,125,539 ) (3,074,337 ) (2,956,448 )
-- ---------- -- ---------- -- ---------- -- ----------
OTHER INCOME (EXPENSE)
Interest Income - 48,409 - 68,141
Interest Expense (28,672 ) (154,767 ) (420,378 ) (172,594 )
Other Income - - - 21,050
Gain (Loss) on Sale of Asset - - 1,329 (20,688 )
-- ---------- -- ---------- -- ---------- -- ----------
Total Other Income (Expense) (28,672 ) (106,358 ) (419,049 ) (104,091 )
-- ---------- -- ---------- -- ---------- -- ----------
Loss from Continuing
Operations (561,144 ) (1,231,897 ) (3,493,386 ) (3,060,539 )
Income (Loss) from
Discontinued Operations (150,000 ) - 3,750,839 -
-- ---------- -- ---------- -- ---------- -- ----------
Net Income (Loss) $ (711,144 ) $ (1,231,897 ) $ 257,453 $ (3,060,539 )
-- ---------- -- ---------- -- ---------- -- ----------
Basic and Diluted Income
(Loss) Per Share:
Continuing Operations $ (0.02 ) $ (0.06 ) $ (0.14 ) $ (0.19 )
Discontinued Operations (0.01 ) - 0.15 -
-- ---------- -- ---------- -- ---------- -- ----------
Basic and Diluted Income
(Loss) Per Share $ (0.03 ) $ (0.06 ) $ 0.01 $ (0.19 )
-- ---------- -- ---------- -- ---------- -- ----------
Basic and Diluted Weighted
Average Shares Outstanding 25,242,798 19,295,557 24,707,514 16,065,794
-- ---------- -- ---------- -- ---------- -- ----------
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The Accompanying Notes are an integral Part of these Consolidated Financial Statements.
ADAMIS PHARMACEUTICALS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended
------------------------------
December 31, December 31,
2008 2007
------------- -------------
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss) from Continuing Operations $ (3,493,386 ) $ (3,060,539 )
Adjustments to Reconcile Net (Loss) from Continuing
Operations to Net Cash (Used in) Operating
Activities:
Depreciation Expense 15,543 15,685
Gain on Sale of Asset (1,329 ) (20,668 )
Inventory Reserve Adjustment (25,592 ) -
Loan Discount Accretion 328,000 24,000
Beneficial Conversion Feature Interest (80,000 ) 80,000
Interest Expense Converted to Equity - 25,000
Sales Returns Reserve Adjustment (1,963 ) -
Change in Assets and Liabilities:
(Increase) Decrease in:
Accounts Receivable (32,521 ) 40,598
Interest Receivable - 29,699
Inventory (470,634 ) 13,763
Prepaid Expenses and Other Current Assets 125,822 13,249
Other Assets - 571
Increase (Decrease) in:
Accounts Payable (145,683 ) 195,728
Accrued Expenses (111,886 ) 127,991
-- ---------- -- ----------
Net Cash (Used in) Operating Activities from
Continuing Operations (3,893,629 ) (2,514,943 )
Net Cash (Used in) Operating Activities from
Discontinued Operations (812,603 ) -
-- ---------- -- ----------
Net Cash (Used in) Operating Activities (4,706,232 ) (2,514,943 )
-- ---------- -- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash Acquired in HealthCare Ventures Group, Inc.
Acquisition - 12,611
Cash Received from Sale of International
Laboratories, Inc. 2,304,000 -
Deferred Acquisiton Costs (46,500 ) -
International Laboratories, Inc. Obligation
Repayments 4,322,082 -
Sale of Property and Equipment 5,000 19,188
-- ---------- -- ----------
Net Cash Provided by Investing Activities from
Continuing Operations 6,584,582 31,799
Net Cash (Used in) Investing Activities from
Discontinued Operations (862,122 ) (3,393,913 )
-- ---------- -- ----------
Net Cash (Used in) Provided by Investing Activities 5,572,460 (3,362,114 )
-- ---------- -- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in Subscriptions Receivable - 126,000
Payments of Notes Payable to Related Parties (1,752,000 ) (100,000 )
Proceeds from Issuance of Common Stock 878,740 3,295,500
Purchase of Treasury Stock (316 ) -
Proceeds from Issuance of Loans Payable - 1,000,000
Proceeds from Issuance of Notes Payable to Related
Parties - 410,000
Proceeds from Issuance of Notes Payable to
Shareholders 28,000 1,242,000
Payments of Loans (2,000,000 ) -
-- ---------- -- ----------
Net Cash (Used in) Provided by Financing Activities
from Continuing Operations (2,845,576 ) 5,973,500
Net Cash Provided by Financing Activities from
Discontinued Operations 1,829,746 -
-- ---------- -- ----------
Net Cash (Used in) Provided by Financing Activities (1,015,830 ) 5,973,500
-- ---------- -- ----------
Increase in Cash 398 96,443
Cash:
Beginning 541 36,763
-- ---------- -- ----------
Ending $ 939 $ 133,206
-- ---------- -- ----------
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The Accompanying Notes are an integral Part of these Consolidated Financial Statements.
ADAMIS PHARMACEUTICALS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended
-----------------------------------
December 31,
December 31, 2008 2007
------------------- ------------
(Unaudited) (Unaudited)
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash Paid for Interest $ 228,407 $ 21,949
--- --------------- -- ---------
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SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND
INVESTING ACTIVITIES
Stock Issued to Acquire HealthCare Ventures Group,
Inc. (Note 2) $ - $ 2,579,904
--- --------------- -- ---------
Stock Issued to Acquire International Laboratories,
Inc. (Note 2) $ - $ 1,000,000
--- --------------- -- ---------
Stock Issued as Loan Acquisition Cost (Note 8) $ - $ 400,000
--- --------------- -- ---------
Stock Warrant Issued (Note 7) $ - $ 80,000
--- --------------- -- ---------
Capital from Beneficial Conversion Feature (Note 7) $ - $ 80,000
--- --------------- -- ---------
Stock Issued in Lieu of Interest (Note 11) $ - $ 25,000
--- --------------- -- ---------
Forgiveness of Debt to International Laboratories,
Inc. (Note 3) $ 570,618 $ -
--- --------------- -- ---------
Reduction of Capital from Unexcercised Beneficial
Conversion Feature
(Note 7) $ 80,000 $ -
--- --------------- -- ---------
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The Accompanying Notes are an integral Part of these Consolidated Financial Statements.
NOTE 1: NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
Adamis Pharmaceuticals Corporation and Subsidiaries is comprised of the following companies: Adamis Pharmaceuticals Corporation, Adamis Laboratories, Inc., and International Laboratories, Inc. (collectively "Adamis Pharmaceuticals", the "Company", "we", "our"). The Company's strategic objective is to build a publicly-held company that combines the financial stability and sales force of a specialty pharmaceutical company with the near-term development of biopharmaceutical products (Note 14).
Adamis Pharmaceuticals Corporation was established under the laws of the State of Delaware on June 6, 2006 and has devoted substantially all its efforts to establishing a new business. Adamis Viral Therapies, Inc. was established under the laws of the State of Delaware on March 23, 2007, and was merged into Adamis Pharmaceuticals Corporation, the surviving entity, on March 30, 2007. The merged company changed its name to Adamis Viral Therapies, Inc. ("Viral") on March 30, 2007. Viral had no activity during the periods ended December 31, 2008 and 2007 (Note 14).
Adamis Holding Corporation was established under the laws of the State of Delaware on March 23, 2007. Adamis Holding Corporation changed its name to Adamis Pharmaceuticals Corporation on March 30, 2007. Viral transferred all of its authorized and outstanding shares of stock to Adamis Pharmaceuticals Corporation on March 30, 2007.
Adamis Laboratories, Inc. (formally known as HealthCare Ventures Group, Inc.) was established under the laws of the State of Delaware on September 2, 2005, and was acquired by the Company on April 23, 2007 (Note 2). On April 24, 2007, Healthcare Ventures Group, Inc. changed its name to Adamis Laboratories, Inc. ("Adamis Labs"). Adamis Labs is a distributor of respiratory products.
International Laboratories, Inc. ("INL") was incorporated in the State of Florida in March 1981. INL's operations consist of the packaging of prescription and non-prescription pharmaceutical and nutraceutical goods mainly for a major retailer (Notes 2 and 3).
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying unaudited consolidated financial statements include Adamis Pharmaceuticals and its wholly-owned subsidiaries, Adamis Labs and INL. All significant intercompany balances and transactions have been eliminated in consolidation.
Accounting Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited consolidated financial statements. Actual results could differ from those estimates, and the differences could be material.
NOTE 1: NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Long-Lived Assets
The Company periodically assesses whether there has been permanent impairment of its long-lived assets held and used in accordance with Statement of Financial Standards ("SFAS") No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets ("SFAS No. 144"). SFAS No. 144 requires the Company to review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by comparison of the carrying amount of the asset to future net undiscounted cash flows expected to be generated from the use and eventual disposition of the asset.
Discontinued Operations
As discussed in Note 3, the results of operations for the three and nine months ended December 31, 2008, and the assets and liabilities at December 31, 2008 and March 31, 2008, related to INL have been accounted for as discontinued operations in accordance with SFAS No. 144. There were no operations or related assets and liabilities of INL in the accompanying unaudited consolidated financial statements of prior periods.
Cash and Cash Equivalents
For purposes of the unaudited consolidated statements of cash flows, the Company considers all highly liquid investments with original maturities at the date of purchase of three months or less to be cash equivalents.
Income Taxes
The Company accounts for income taxes in accordance with SFAS No. 109, Accounting for Income Taxes ("SFAS No. 109"). SFAS No. 109 requires an asset and liability approach for financial accounting and reporting for income taxes. Under the asset and liability approach, deferred taxes are provided for the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Valuation allowances are established where management determines that it is more likely than not that some portion or all of a deferred tax asset will not be realized.
On April 1, 2007, the Company adopted the provisions of Financial Accounting Standards Board ("FASB") Interpretation No. 48, Accounting for Uncertainty on Income Taxes, and Interpretation of SFAS No. 109, Accounting for Income Taxes, which clarifies the accounting for income taxes by prescribing the minimum recognition threshold a tax position is required to meet and the measurement attribute for financial statement disclosure of tax positions taken or expected to be taken on a tax return, and did not have a material impact on the Company's liability for unrecognized tax benefits.
NOTE 1: NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Revenue Recognition
Our primary customers are pharmaceutical wholesalers. In accordance with our revenue recognition policy, revenue is recognized when title and risk of loss are transferred to the customer, the sale price to the customer is fixed and determinable, and collectability of the sale price is reasonably assured. Reported revenue is net of estimated customer returns and other wholesaler fees. Our policy regarding sales to customers is that we do not recognize revenue from, or the cost of, such sales, where we believe the customer has more than a demonstrably reasonable level of inventory. We make this assessment based on historical demand, historical customer ordering patterns for purchases, business considerations for customer purchases and estimated inventory levels. If our actual experience proves to be different than our assumptions, we would then adjust such allowances accordingly.
We estimate allowances for revenue dilution items using a combination of information received from third parties, including market data, inventory reports from our major U.S. wholesaler customers, when available, historical information and analysis that we perform. The key assumptions used to arrive at our best estimate of revenue dilution reserves are estimated customer inventory levels and purchase forecasts provided.Our estimates of inventory at wholesaler customers and in the distribution channels are subject to the inherent limitations of estimates that rely on third-party data, as certain third-party information may itself rely on estimates, and reflect other limitations. We believe that such provisions are reasonably ascertainable due to the limited number of assumptions involved and the consistency of historical experience.
Fair Value of Financial Instruments
Effective April 1, 2008, the Company adopted Statement of Financial Accounting Standards No. 157, Fair Value Measurements ("SFAS No. 157"). In February 2008, the Financial Accounting Standards Board ("FASB") issued FASB Staff Position No. FAS 157-2, Effective Date of FASB Statement No. 157, which provides a one-year deferral of the effective date of SFAS No. 157 for non-financial assets and non-financial liabilities, except those that are recognized or disclosed in the financial statements at fair value at least annually. Accordingly, the Company adopted the provisions of SFAS No. 157 with respect to only its financial assets and financial liabilities. The adoption of SFAS No. 157 did not impact the Company's results of operations, but rather, provided the Company with a framework for measuring fair value and enhanced the Company's disclosures about fair value measurements.
Under SFAS No. 157, fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.
NOTE 1: NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Fair Value of Financial Instruments (Continued)
The carrying amounts of cash, accounts receivable, accounts payable and accrued liabilities and debt approximated fair value due to the short maturity of the instruments. Therefore, the adoption of SFAS No. 157 did not have a material impact on its financial position, results of operations and cash flows for the three and nine months ended December 31, 2008.
Inventory
Inventory, consisting of allergy products, respiratory products, and pre-launch epi inventory is recorded at the lower of cost or market, using the weighted average method. . . .
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