Exhibit 99.03

 

Inspyr Therapeutics, Inc.

 

NOTES TO PRO FORMA UNAUDITED FINANCIAL STATEMENTS

 

Unaudited Pro Forma Condensed Financial Information.

 

The Pro forma Unaudited Financial Statements have been prepared in order to present condensed consolidated financial position and results of operations of Inspyr Therapeutics, Inc. and Lewis and Clark Pharmaceuticals, Inc. as if the acquisition had occurred as of June 30, 2017 for the pro forma condensed consolidated balance sheet and to give effect to the acquisition as if the transaction had taken place at January 1, 2016 for the pro forma condensed consolidated statement of operations for the year ended December 31, 2016 and the six months ended June 30, 2017, respectively.

 

The acquisition has been accounted for under the acquisition method of accounting. Under the acquisition method of accounting, the total acquisition consideration price is allocated to the assets acquired and liabilities assumed based on their preliminary estimated fair values. The fair value measurements utilize estimates based on key assumptions of the acquisition, and historical and current market data. The excess of the purchase price over the total of estimated fair values assigned to tangible and identifiable intangible assets acquired and liabilities assumed is recognized as goodwill. In order to ultimately determine the fair values of tangible and intangible assets acquired and liabilities assumed for Lewis and Clark Pharmaceuticals, Inc., we may engage a third party independent valuation specialist. During the measurement period (which is the period required to obtain all necessary information that existed at the acquisition date, or to conclude that such information is unavailable, not to exceed one year), additional assets or liabilities may be recognized, or there could be changes to the amounts of assets or liabilities previously recognized on a preliminary basis, if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in the recognition of those assets or liabilities as of that date. The Company expects the purchase price allocations for the acquisition of Lewis and Clark Pharmaceuticals, Inc. to be completed by March 31, 2018.

 

The pro forma adjustments do not reflect the amortization of intangible assets acquired, if any, in the acquisition.

 

The historical financial information has been adjusted to give effect to events that are directly attributable to the Acquisition, factually supportable and, with respect to the statements of operations, expected to have a continuing impact on the results of the combined company. These unaudited pro forma consolidated financial statements should be read in conjunction with the historical financial statements and accompanying notes of Lewis & Clark Pharmaceuticals Inc. (contained elsewhere in this Form 8-K/A) and the Company’s historical financial statements and accompanying notes appearing in its periodic SEC filings including the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 and the quarterly report on the Form 10-Q for the six months ended June 30, 2017. The adjustments that are included in the following unaudited pro forma combined financial statements are described in the numbered notes that are marked in those financial statements. 

 

 1

 

 

Inspyr Therapeutics, Inc.
Pro Forma Balance Sheet
June 30, 2017

 

                   Balance Sheet
Consolidated Pro Forma
June 30, 2017
 
   Balance Sheet
Inspyr Therapeutics, Inc.
June 30, 2017
   Balance Sheet
Lewis and Clark Pharmaceuticals, Inc.
June 30, 2017
   Pro Forma Adjustments to Reflect
The Acquisition of Lewis and Clark
As Of June 30, 2017
    
         Dr   Cr    
Assets                    
                     
Current assets:                         
Cash and cash equivalents  $6,000   $5,694           11,694 
Prepaid expenses   31,000    2,693             33,693 
                          
Total current assets   37,000    8,387             45,387 
                          

Property and equipment, net

   5,000    12,461(3)   340,539         358,000
                          
Goodwill       (3)   2,134,700         2,134,700 
                          
Other intangibles   60,000                 60,000 
Other assets   3,000                 3,000
                          
Total assets  $105,000   $20,848           $2,601,087 
                          
Liabilities and stockholders’ deficit                         
                          
Current liabilities:                         
Accounts payable and accrued expenses  $2,311,000   $3,327           2,314,327 
Derivative liabilities   2,227,000                 2,227,000 
Accrued interest       241,054(1)   241,054          
Convertible notes payable       2,067,040(1)   2,067,040          
Advances from stockholders       14,800(1)   14,800          
                          
Total current liabilities   4,538,000    2,326,221             4,541,327 
                          
Stockholders’ deficit                         
                          
Preferred stock                     
Common stock       1,058,000(2)   3,380,894(1)   2,322,894    712 
             (3)   712      
Additional paid in capital   45,597,000    386,274(2)   386,274(3)   2,492,048    48,089,048 
                          
Accumulated deficit   (50,030,000)   (3,749,647)   (2)   3,749,647    (50,030,000)
                          
Total stockholders’ deficit   (4,433,000)   (2,305,373)             (1,940,240)
                          
Total liabilities and stockholders’ deficit  $105,000   $20,848             $2,601,087 
              8,565,301    8,565,301      

 

(1)To record the conversion of Lewis and Clark Pharmaceuticals, Inc. (“Lewis and Clark”) debt into Lewis and Clark common stock prior to the acquisition on July 31, 2017.

 

(2)To eliminate the equity accounts of Lewis and Clark.

 

(3)To record the purchase of Lewis and Clark. As consideration, we issued 7,122,172 shares of common, par value $0.0001 per share.

The consideration issued has been valued at $2,492,760.

 

 2

 

 

Inspyr Therapeutics, Inc.
Pro Forma Statement of Operations
Six Months ended June 30, 2017



                     
                
       Lewis and Clark   Pro Forma Adjustments to Reflect      
   Inspyr Therapeutics, Inc.   Pharmaceuticals, Inc.   The Acquisition of Lewis and Clark   Consolidated Pro Forma 
   Six Months Ended   Six Months Ended   As Of January 1, 2016   Six Months Ended 
   June 30, 2017   June 30, 2017   Dr   Cr   June 30, 2017 
                          
Research and development   965,000             965,000 
Operating expense   781,000    332,447(1)  23,000        1,136,447 
                          
Total operating expenses   1,746,000    332,447              2,101,447 
                          
Loss from operations   (1,746,000)   (332,447)             (2,101,447)
                          
Other income (expense):                         

Miscellaneous income

       

1,993

              

1,993

 
Gain on change in fair value of derivative liability   1,998,000                 1,998,000 
Interest income (expense), net   (1,462,000)   (62,322)             (1,524,322)
                          
Loss before provision for income taxes   (1,210,000)   (392,776)             (1,625,776)
                          
Provision for income taxes                      
                          
Net loss   (1,210,000)   (392,776)             (1,625,776)
                          
Net loss per share, basic and diluted  $(0.79)              (0.19
                          
Weighted average shares outstanding   1,527,536         (2)   7,122,172    8,649,708 

 

(1)To record depreciation expense on assets acquired.

 

(2)To record shares issued in acquisition.

 

 3

 

 

Inspyr Therapeutics, Inc.
Pro Forma Statement of Operations
Year ended December 31, 2016

 

           Pro Forma Adjustments to Reflect     
   Inspyr Therapeutics, Inc.   Lewis and Clark
Pharmaceuticals, Inc.
   The Acquisition of Lewis and Clark   Consolidated Pro Forma 
   Year Ended   Year Ended   As Of January 1, 2016   Year Ended 
   December 31, 2016   December 31, 2016   Dr   Cr   December 31, 2016 
                     
Research and development   1,101,000             1,101,000 
Operating expense   2,089,000    916,186(1)   46,000         3,051,186 
                          
Total operating expenses   3,190,000    916,186              4,152,186 
                          
Loss from operations   (3,190,000)   (916,186)             (4,152,186)
                          
Other income (expense):                         
Miscellaneous income        4,906              4,906 
Gain on change in fair value of derivative liability   2,523,000                  2,523,000 
Interest income (expense), net   (2,888,000)   (91,063)             (2,979,063)
                          
Loss before provision for income taxes   (3,555,000)   (1,002,343)             (4,603,343)
                          
Provision for income taxes                      
                          
Net loss   (3,555,000)   (1,002,343)             (4,603,343)
                          
Net loss per share, basic and diluted  $(2.55)                 $(0.54)
                          
Weighted average shares outstanding   1,394,065          (2)   7,122,172    8,516,237 

 

(1)To record depreciation expense on assets acquired.

 

(2)To record shares issued in acquisition.

 

 4