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| ILI > SEC Filings for ILI > Form 8-K on 8-Jul-2009 | All Recent SEC Filings |
8-Jul-2009
Entry into a Material Definitive Agreement, Completion of Acquisition or
Prior to the opening of business on July 1, 2009, Interleukin Genetics, Inc. ("Interleukin", "we", "our", "us") and our wholly-owned subsidiary, AJG Brands, Inc. entered into an asset purchase agreement with Nutraceutical Corporation and Pep Products, Inc., a wholly owned subsidiary of Nutraceutical Corporation, pursuant to which we sold substantially all of the Alan James Group business and assets of AJG Brands, Inc. to Pep Products, Inc. for an aggregate sale price of approximately $4.6 million in cash. The business we sold primarily develops, markets and sells nutritional supplements and related products into retail consumer channels. The asset purchase agreement contains representations, warranties, covenants and indemnification obligations that are customary for a transaction of this nature.
The foregoing summary does not purport to be complete and is qualified in its entirety by reference to the asset purchase agreement, which is attached as Exhibit 2.1 to this Current Report on Form 8-K.
The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated into this Item 2.01 by reference. The sale was completed prior to the opening of business on July 1, 2009.
(b)(1) Pro Forma Financial Information
The following unaudited pro forma condensed consolidated financial information gives effect on a pro forma basis to the disposition of substantially all of the Alan James Group business and assets of AJG Brands, Inc., a subsidiary of Interleukin Genetics, Inc., as disclosed in Item 1.01 and 2.01 of this Current Report on Form 8-K, principally by subtracting from the historical consolidated financial position and results of operations of Interleukin amounts attributable to the assets disposed of, and adding to the historical consolidated financial position of Interleukin an amount equal to the cash proceeds from the disposition of such assets. The unaudited pro forma condensed consolidated balance sheet gives effect to the disposition as if it had occurred on March 31, 2009. The unaudited pro forma condensed consolidated statements of operations for the three months ended March 31, 2009 and twelve months ended December 31, 2008 give effect to the disposition as if it had occurred at the beginning of each such period. You should not assume that this unaudited pro forma financial information is indicative of future results or the results we would have achieved had the transaction occurred at the dates presented.
This unaudited pro forma condensed consolidated financial information should be read in conjunction with our condensed consolidated financial statements and notes thereto included in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2009 and our Annual Report on Form 10-K for the year ended December 31, 2008. We have prepared the unaudited pro forma condensed consolidated financial information based upon estimates and assumptions we have deemed appropriate based upon currently available information, and such estimates and assumptions are discussed in the accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Information. We believe that our estimates and assumptions are reasonable, and the significant effects of this sale have been properly reflected in our unaudited pro forma financial statements. However, actual results will differ from the estimates and assumptions used. The unaudited condensed consolidated pro forma financial information is presented for illustrative purposes and is not designed to represent, and does not represent, what the financial position or operating results would have been had the sale of substantially all of the Alan James Group business and assets of AJG Brands, Inc. been completed as of the dates assumed, nor is it intended to project Interleukin's future financial position or results of operations.
Pro Forma
Historical Adjustments (3) Pro Forma
ASSETS
Current assets:
Cash and cash equivalents $ 1,747 $ 3,857 (1) $ 5,604
Accounts receivable from related party 36 36
Trade Accounts receivable 945 (808 )(2) 137
Inventory 1,037 (935 )(2) 102
Deferred tax asset 58 58
Prepaid expenses and other current assets 375 (56 )(2) 319
Total current assets 4,198 2,058 6,256
Fixed assets, net 930 (24 )(2) 906
Intangibles 4,393 (3,561 ) 832
Other assets 54 183 (2) 237
Total Assets $ 9,575 $ (1,344 ) $ 8,231
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 855 $ 855
Accrued expenses 2,150 2,150
Deferred receipts 430 430
Accrued expenses related to funded research
and development projects 22 22
Total current liabilities 3,457 0 3,457
Long Term Debt 4,000 4,000
Net deferred tax liability 10 10
Total liabilities 7,467 0 7,467
Stockholders' equity:
Convertible preferred stock,$.001 par value
- 6,000,000 shares authorized; 5,000,000
shares of Series A issued and outstanding
at March 31, 2009; aggregate liquidation
preference of $18,000,000 at March 31, 2009 5 5
Common stock, $.001 par value - 100,000,000
shares authorized; 31,799,381 shares issued
and outstanding at March 31, 2009 32 32
Additional paid-in capital 85,540 85,540
Accumulated deficit (83,469 ) (1,344 )(4) (84,813 )
Total stockholders' equity 2,108 (1,344 ) 764
Total liabilities and stockholders' equity $ 9,575 $ (1,344 ) $ 8,231
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Interleukin Genetics, Inc.
Unaudited Pro Forma Condensed Consolidated Statements of Operations
For the Three Months Ended March 31, 2009
(In thousands, except per share amounts)
Pro Forma
Historical Adjustments (3) Pro Forma
Revenues $ 1,895 $ (1,548 ) $ 347
Cost of Revenues 1,043 (728 ) 315
Research and development 882 0 882
Selling, general and administrative 2,035 (41 ) 1,994
Amortization of Intangibles 337 (308 ) 29
Total Operating Expenses 4,297 (1,077 ) 3,220
Loss from operations (2,402 ) (471 ) (2,873 )
Interest income 8 0 8
Interest expense (32 ) 0 (32 )
Loss on Sale of fixed assset (12 ) 12 0
Net loss before income taxes (2,438 ) (459 ) (2,897 )
Provision for income taxes (18 ) 8 (10 )
Net loss (2,456 ) (451 ) (2,907 )
Basic and diluted net loss per common share $ (0.08 ) $ (0.01 ) $ (0.09 )
Weighted average common shares outstanding 31,856 31,856 31,856
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Interleukin Genetics, Inc.
Unaudited Pro Forma Condensed Consolidated Statements of Operations
For the Twelve Months Ended December 31, 2008
(In thousands, except per share amounts)
Pro Forma
Historical Adjustments (3) Pro Forma
Revenues $ 10,015 $ (7,394 ) $ 2,621
Cost of Revenues 4,738 (3,765 ) 973
Research and development 3,560 0 3,560
Selling, general and administrative 7,034 (1,507 ) 5,527
Amortization of Intangibles 1,336 (1,235 ) 101
Total Operating Expenses 16,668 (6,507 ) 10,161
Loss from operations (6,653 ) (887 ) (7,540 )
Interest income 159 0 159
Interest expense (131 ) 1 (130 )
Net loss before income taxes (6,625 ) (886 ) (7,511 )
Provision for income taxes (26 ) 57 31
Net loss (6,651 ) (829 ) (7,480 )
Basic and diluted net loss per common share $ (0.21 ) $ (0.03 ) $ (0.24 )
Weighted average common shares outstanding 31,354 31,354 31,354
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Pro Forma Adjustments
(1) Assumes proceeds from the sale of substantially all of The Alan James Group business and assets of $4.6 million, net of transaction costs of $515,000 and a holdback of $200,000 which is reflected in other assets on the balance sheet.
(2) Reflects the value of the assets purchased as of March 31, 2009.
(3) The unaudited pro forma financial statements presented do not include the impact of the accelerated vesting of options resulting from the "change in control" agreements of certain employees in connection with the sale. Income tax effects are assumed to be offset by net operating loss carryforwards. The impact of these adjustments were determined to be non-material for purposes of the unaudited pro forma financial statements.
(4) Adjustment to accumulated deficit consists of the following (in thousands):
Net assets of The Alan James Group sold (1,840 ) Proceeds net of transaction costs 3,181 Intangible assets not acquired (3,561 ) Estimated loss as if transaction occurred on March 31, 2009 $ (1,344 ) |
Exhibit No. Description
2.1 Asset Purchase Agreement by and among AJG Brands, Inc., Interleukin
Genetics, Inc., Pep Products, Inc. and Nutraceutical Corporation dated
July 1, 2009.
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