Aditxt, Inc 8-K/A, filed Mar 25, 2025
Aditxt, Inc. (ADTX)
About this 8-K/A
Aditxt, Inc filed this 8-K/A on March 25, 2025, reporting on events of April 1, 2024.
Items reported
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Amendment No. 4)
CURRENT REPORT
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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Explanatory Note:
On August 1, 2024, the Company filed the first amendment to the Original Current Report (“Amendment No. 1”), which amended the Current Reports to include the required historical condensed consolidated financial statements as of and for March 31, 2024 and 2023 of Appili and the pro forma consolidated financial information as of and for the three months ended March 31, 2024 and as of and for December 31, 2023, required by Items 9.01(a) and 9.01(b) of Form 8-K and should be read in conjunction with the Current Reports.
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On September 5, 2024, the Company filed the second amendment to the Original Current report on Form 8-K/A (“Amendment No. 2”), which amended the Current Reports to include the required historical condensed consolidated financial statements as of and for June 30, 2024 and 2023 of Appili and the pro forma consolidated financial information as of and for the six months ended June 30, 2024 and as of and for December 31, 2023, required by Items 9.01(a) and 9.01(b) of Form 8-K and should be read in conjunction with the Current Reports.
On November 21, 2024, the Company filed the third amendment to the Original Current Report (“Amendment No. 3”), which amended the Current Reports to include the required condensed consolidated historical financial statements as of and for September 30, 2024 and 2023 of Appili and the pro forma consolidated financial information as of and for the nine months ended September 30, 2024 and as of and for March 31, 2024, required by Items 9.01(a) and 9.01(b) of Form 8-K and should be read in conjunction with the Current Reports.
On December 15, 2024, the Company, Adivir and Appili entered into a further mutual waiver, pursuant to which the parties agreed to waive certain termination rights each party may have under the Arrangement Agreement solely as a result of the Arrangement not being completed on or before December 15, 2024 until January 31, 2025; in consideration for a payment by Adivir to Appili in the amount of US$250,000 no later than 5:00 p.m. (ET) on December 20, 2024 (the “December 2024 Waiver Fee”). In addition, if the Arrangement has not been completed by 5:00 p.m. (ET) on January 15, 2025, Adivir was to required to pay Appili an additional fee of US$250,000 (the “January 2025 Waiver Fee”). Adivir completed payment of the December 2024 Waiver Fee as of January 9, 2025 and the January 2025 Waiver Fee as of January 27, 2025.
On January 31, 2025, the Company, Adivir and Appili entered into another mutual waiver, pursuant to which the parties agreed to waive certain termination rights it may have under the Arrangement Agreement solely as a result of the Arrangement not occurring on or before January 31, 2025 until February 28, 2025 in consideration of a payment by Adivir to Appili in the amount of $250,000 no later than 5:00 p.m. (ET) on February 14, 2025 (the “February 2025 Waiver Fee”). Adivir completed payment of the February 2025 Waiver Fee as of February 20, 2025.
On February 28, 2025, the Company, Adivir and Appili entered into a further mutual waiver, pursuant to which the parties agreed to waive certain termination rights each party may have under the Arrangement Agreement solely as a result of the Arrangement not being completed on or before February 28, 2025 until March 31, 2025 in consideration for (i) a payment by Adivir to Appili in the amount of $125,000 on or before February 14, 2025, and (ii) a payment by Adivir to Appili in the amount of $125,000 not later than 5:00 pm (ET) on March 14, 2025 (to the extent the Arrangement has not been completed prior to such time) (collectively, the “March Waiver Fees”), provided that in the event a Termination Fee (as defined in the Arrangement Agreement) becomes payable by Aditxt or Adivir to Appili, the amount payable shall be reduced by the amount actual paid on account of the March Waiver Fees. Adivir completed payment of $125,000 of the March Waiver Fees on March 3, 2025.
This fourth amendment to the Original Current Report (“Amendment No. 4”), amends the Current Reports to include the required condensed consolidated historical financial statements as of and for December 31, 2024 and 2023 of Appili and the pro forma consolidated financial information as of and for the twelve months ended December 31, 2024 and as of and for March 31, 2024, required by Items 9.01(a) and 9.01(b) of Form 8-K and should be read in conjunction with the Current Reports.
The pro forma financial information included as Exhibit 99.2 to this Current Report on Form 8-K/A has been presented for informational purposes only, as required by Form 8-K, and does not purport to represent the actual results of operations that the Company and Appili would have achieved had the entities been combined at and during the period presented in the pro forma financial information, and is not intended to project the future results of operations that the combined company may achieve following the transactions.
This Amendment No. 4 does not amend any other item of the Original Report or purport to provide an update or a discussion of any developments at the Company or its subsidiaries subsequent to the filing date of the Original Report.
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Item 9.01. Financial Statements and Exhibits.
(a) Financial statements of business or funds acquired.
The (i) unaudited condensed consolidated statements of financial position of Appili as of December 31, 2024 and March 31, 2023, and the related unaudited condensed consolidated statements of changes in shareholders’ equity, loss and comprehensive loss and cash flows, for the nine months ended December 31, 2024 and 2023 are filed as Exhibit 99.1 hereto and are incorporated herein by reference.
(b) Pro forma financial information.
The unaudited pro forma consolidated financial information of the Company giving pro forma effect to the acquisitions of Evofem and Appili Therapeutics Inc., (for more information about the Evofem, Inc. acquisition, please see our separate 8K filed with the SEC on March 24, 2025) consisting of the unaudited pro forma consolidated statement of financial position as of December 31, 2024, and the unaudited pro forma consolidated statement of earnings for the twelve months ended December 31, 2024, is filed as Exhibit 99.2 hereto and are incorporated herein by reference.
(d) Exhibits.
| Exhibit No. | Exhibit | |
| 99.1 | Unaudited condensed consolidated financial statements of Appili Therapeutics, Inc. as of and for the nine months ended December 31, 2024 and 2023 | |
| 99.2 | Unaudited pro forma consolidated financial information as of and for the twelve months ended December 31, 2024 | |
| 104 | Cover Page Interactive Data File (embedded within the XBRL document) |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ADITXT, INC. | ||
| Date: March 25, 2025 | By: | /s/ Amro Albanna |
| Amro Albanna | ||
| Chief Executive Officer | ||
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Exhibit 99.1
Appili Therapeutics Inc.
Interim Condensed Consolidated Financial Statements
(Unaudited)
December 31, 2024
February 14, 2025
Management’s Responsibility for Financial Reporting
The accompanying unaudited interim condensed consolidated financial statements of Appili Therapeutics Inc. (the “Company”) are the responsibility of management and have been approved by the Board of Directors. The unaudited interim condensed consolidated financial statements have been prepared by management in accordance with IFRS Accounting Standards and Part I of the Chartered Professional Accountants of Canada Handbook – Accounting. The unaudited interim condensed consolidated financial statements include some amounts and assumptions based on management’s best estimates, which have been derived with careful judgment.
In fulfilling its responsibilities, management has developed and maintained a system of internal accounting controls. These controls are designed to ensure that the financial records are reliable for preparation of the unaudited interim condensed consolidated financial statements. The Board of Directors reviewed and approved the Company’s unaudited interim condensed consolidated financial statements.
| (Signed) “Don Cilla” | (Signed) “Kenneth Howling” | |
| President & Chief Executive Officer | Acting Chief Financial Officer |
Appili Therapeutics Inc.
Interim Condensed Consolidated Statements of Financial Position
(Unaudited)
As at December 31, 2024 and March 31, 2024
| December 31, | March 31, | |||||||
| 2024 | 2024 | |||||||
| $ | $ | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash | 186,166 | 94,493 | ||||||
| Accounts receivable (note 5) | 1,750,276 | 1,158,035 | ||||||
| Investment tax credit receivable | 9,200 | 15,300 | ||||||
| Prepaid expenses and deposits | 125,772 | 192,433 | ||||||
| 2,071,414 | 1,460,261 | |||||||
| Non-Current Assets | ||||||||
| Property and equipment | 22,250 | 30,142 | ||||||
| Total Assets | 2,093,664 | 1,490,403 | ||||||
| Liabilities | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued liabilities (note 6) | 4,434,443 | 4,183,176 | ||||||
| Current portion of long-term debt (note 7) | 10,472,854 | 7,309,657 | ||||||
| Corporate taxes payable | 1,846 | 47,149 | ||||||
| 14,909,143 | 11,539,982 | |||||||
| Non-Current liabilities | ||||||||
| Long-term debt (note 7) | 811,400 | 875,200 | ||||||
| Total Liabilities | 15,720,543 | 12,415,182 | ||||||
| Shareholders’ equity | (13,626,879 | ) | (10,924,779 | ) | ||||
| Total Liabilities and Shareholder’s Equity | 2,093,664 | 1,490,403 | ||||||
Going concern (note 1)
Contingencies (note 12)
Subsequent event (note 13)
| Signed “Prakash Gowd” | Signed “Theresa Matkovits” | |
| Director | Director |
1
Appili Therapeutics Inc.
Interim Condensed Consolidated Statements of Changes in Shareholders’ Equity
(Unaudited)
For the nine months ended December 31, 2024 and 2023
| Share Capital | Contributed Surplus | Warrants | Deficit | Total | ||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
| (note 8) | (note 9) | (note 10) | ||||||||||||||||||
| Balance- March 31, 2023 | 42,323,359 | 6,412,963 | 9,178,905 | (65,312,206 | ) | (7,396,979 | ) | |||||||||||||
| Expired Warrants | - | 6,203,902 | (6,203,902 | ) | - | - | ||||||||||||||
| Employee share options: | ||||||||||||||||||||
| Value of services recognized | - | 181,296 | - | - | 181,296 | |||||||||||||||
| Fair value of related party loan | - | 61,764 | - | - | 61,764 | |||||||||||||||
| Net loss and comprehensive loss for the period | - | - | - | (2,677,449 | ) | (2,677,449 | ) | |||||||||||||
| Balance- December 31, 2023 | 42,323,359 | 12,859,925 | 2,975,003 | (67,989,655 | ) | (9,831,368 | ) | |||||||||||||
| Employee share options: | ||||||||||||||||||||
| Value of services recognized | - | 10,050 | - | - | 10,050 | |||||||||||||||
| Net loss and comprehensive loss for the period | - | - | - | (1,103,461 | ) | (1,103,461 | ) | |||||||||||||
| Balance- March 31, 2024 | 42,323,359 | 12,869,975 | 2,975,003 | (69,093,116 | ) | (10,924,779 | ) | |||||||||||||
| Expired Warrants | - | 1,795,965 | (1,795,965 | ) | - | - | ||||||||||||||
| Employee share options: | ||||||||||||||||||||
| Value of services recognized | - | 107,114 | - | - | 107,114 | |||||||||||||||
| Fair value of related party loan | - | 43,528 | - | - | 43,528 | |||||||||||||||
| Net loss and comprehensive loss for the period | - | - | - | (2,852,742 | ) | (2,852,742 | ) | |||||||||||||
| Balance- December 31, 2024 | 42,323,359 | 14,816,582 | 1,179,038 | (71,945,858 | ) | (13,626,879 | ) | |||||||||||||
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
2
Appili Therapeutics Inc.
Interim Condensed Consolidated Statements of Loss and Comprehensive Loss
(Unaudited)
For the nine months ended December 31, 2024 and 2023
| Three months ended | Nine months ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Income | ||||||||||||||||
| Revenue (note 4) | 108,359 | 478,397 | 113,049 | 815,710 | ||||||||||||
| Interest income | 36 | 5,578 | 36 | 16,250 | ||||||||||||
| 108,395 | 483,975 | 113,085 | 831,960 | |||||||||||||
| Expenses | ||||||||||||||||
| Research and development | 1,721,529 | 1,773,316 | 5,796,256 | 4,031,371 | ||||||||||||
| General and administrative | 443,261 | 564,705 | 1,861,447 | 2,229,650 | ||||||||||||
| Business development | 6,422 | 60,000 | 6,448 | 188,189 | ||||||||||||
| Financing costs | 522,022 | 438,623 | 2,283,416 | 1,248,087 | ||||||||||||
| Government assistance | (2,559,925 | ) | (2,069,116 | ) | (7,422,066 | ) | (4,056,473 | ) | ||||||||
| Exchange loss/(gain) | 509,388 | (137,306 | ) | 449,131 | (192,041 | ) | ||||||||||
| 642,697 | 630,222 | 2,974,632 | 3,448,783 | |||||||||||||
| Loss before income taxes | (534,302 | ) | (146,247 | ) | (2,861,547 | ) | (2,616,823 | ) | ||||||||
| Provision for income taxes | (9,965 | ) | 6,089 | (8,805 | ) | 60,626 | ||||||||||
| Net loss and comprehensive loss for the period | (524,337 | ) | (152,336 | ) | (2,852,742 | ) | (2,677,449 | ) | ||||||||
| Basic and diluted loss per share | (0.00 | ) | (0.00 | ) | (0.02 | ) | (0.02 | ) | ||||||||
| Weighted-average shares outstanding | 121,266,120 | 121,266,120 | 121,266,120 | 121,266,120 | ||||||||||||
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
3
Appili Therapeutics Inc.
Interim Condensed Consolidated Statements of Cash Flows
(Unaudited)
For the nine months ended December 31, 2024 and 2023
| December 31 | December 31 | |||||||
| 2024 | 2023 | |||||||
| $ | $ | |||||||
| Cash provided by (used in) | ||||||||
| Operating activities | ||||||||
| Net loss and comprehensive loss for the period | (2,852,742 | ) | (2,677,449 | ) | ||||
| Changes to operations not involving cash: | ||||||||
| Amortization of property and equipment | 10,252 | 10,277 | ||||||
| Non-cash finance costs | 2,248,196 | 401,410 | ||||||
| Share-based compensation | 107,114 | 181,296 | ||||||
| Unrealized gain from changes in foreign currency | (4,560 | ) | (1,042 | ) | ||||
| Unrealized foreign exchange translation (LZH) | 351,682 | (148,365 | ) | |||||
| (140,058 | ) | (2,233,873 | ) | |||||
| Net changes in non-cash operating working capital | ||||||||
| Increase in amounts receivable | (592,241 | ) | (938,179 | ) | ||||
| Decrease in investment tax credits receivable | 6,100 | 257,300 | ||||||
| Decrease in prepaids expenses and deposits | 66,661 | 1,260 | ||||||
| Increase in accounts payable and accrued liabilities | 494,119 | 905,754 | ||||||
| (165,419 | ) | (2,007,738 | ) | |||||
| Financing activities | ||||||||
| Proceeds from long-term debt | 400,000 | 300,000 | ||||||
| Repayment of long-term debt | (96,960 | ) | (71,104 | ) | ||||
| Accreted interest involving cash | (48,148 | ) | (55,481 | ) | ||||
| 254,892 | 173,415 | |||||||
| Investing activities | ||||||||
| Additions to property and equipment | (2,360 | ) | (29,717 | ) | ||||
| (2,360 | ) | (29,717 | ) | |||||
| Net change in cash during the period | 87,113 | (1,864,040 | ) | |||||
| Cash - Beginning of period | 94,493 | 2,465,882 | ||||||
| Changes due to foreign exchange | 4,560 | 1,042 | ||||||
| Cash - End of period | 186,166 | 602,884 | ||||||
| Supplementary cash flow | ||||||||
| Interest paid | 48,148 | 798,160 | ||||||
4
Appili Therapeutics Inc.
Notes to Interim Condensed Consolidated Financial Statements
(Unaudited)
For the nine months ended December 31, 2024 and 2023
| 1. | Nature of operations and going concern risk |
Appili Therapeutics Inc. (the “Company” or “Appili”) is a biopharmaceutical company dedicated to advancing the global fight against infectious diseases by matching clearly defined patient needs with drug development programs that provide solutions to existing challenges patients, doctors and society face. Appili has one wholly owned subsidiary, Appili Therapeutics Inc. USA. The Company is domiciled in Halifax, Nova Scotia. The Company exists under the Ontario Business Corporations Act, and its Class A common shares (“common shares”) are listed for trading on the Toronto Stock Exchange (“TSX”) under the symbol “APLI”. The Company also trades in the United States on the OTCPink Exchange. The address of its principal place of business is #21-1344 Summer Street, Halifax, Nova Scotia, Canada.
Aditxt Transaction
On April 1, 2024 (as amended on July 1, 2024 and further amended on July 17, 2024, August 21, 2024, December 15, 2024 and January 31, 2025 as per Note 13, Subsequent Events), the Company entered into a definitive arrangement agreement (the “Arrangement Agreement”) pursuant to which Aditxt, through its wholly-owned subsidiary, Adivir, Inc. (“Adivir” or the “Buyer”), agreed to acquire all of the issued and outstanding Class A common shares (the “Appili Shares”) of the Company by way of a court-approved plan of arrangement under the Ontario Business Corporations Act (the “Transaction”).
Under the terms of the Arrangement Agreement, shareholders of the Company (the “Appili Shareholders”) will receive (i) 0.0000686251 of a share of common stock (each whole share, an “Aditxt Share”) of Aditxt (the “Share Consideration”) and (ii) US$0.0467 (or approximately CAD$0.0672 with reference to the Bank of Canada closing exchange rate on December 31, 2024) for each Appili Share held (the “Cash Consideration” and together with the Share Consideration collectively, the “Transaction Consideration”) representing implied total consideration per Appili Share of approximately US$0.0467 (or approximately CAD$0.066 with reference to the Bank of Canada closing exchange rate on December 31, 2024) based on the closing price of the Aditxt shares on February 13, 2025.
The Transaction will be effected by way of a court-approved plan of arrangement pursuant to the Ontario Business Corporations Act. Under the terms of the Arrangement Agreement, Adivir will acquire all of the issued and outstanding Appili Shares, with each Appili Shareholder receiving the Transaction Consideration. In connection with the Transaction, each outstanding option and warrant of the Company will be cashed-out based on the implied in-the-money value of the Transaction Consideration.
In connection with the Transaction Aditxt will: (i) agree to repay no less than 50% in outstanding senior secured debt at the closing of the Transaction (the “Closing”) and to repay the remaining outstanding senior secured debt by no later than February 28, 2025; (ii) assume all of the Company’s remaining outstanding liabilities and indebtedness, and (iii) agree to satisfy certain payables of the Company at Closing as further detailed in the Arrangement Agreement. In connection with this arrangement Aditxt has financed certain amounts that were owed by the Company with respect to the Transaction and its on-going operations.
The Transaction was approved by the requisite majority of Company shareholders in a vote held on November 6, 2024. Amongst other customary closing conditions, the Transaction is conditional upon Aditxt raising at least US$20 million in financing (the “Aditxt Financing”) prior to Closing.
5
Appili Therapeutics Inc.
Notes to Interim Condensed Consolidated Financial Statements
(Unaudited)
For the nine months ended December 31, 2024 and 2023
| 1. | Nature of operations and going concern risk (continued) |
Aditxt Transaction (continued)
Subject to the satisfaction (or waiver, if applicable) of all closing conditions, closing is currently expected to occur the first quarter of calendar 2025. The Arrangement Agreement contains customary terms and conditions, including non-solicitation provisions which are subject to Appili’s right to consider and accept a superior proposal subject to a matching right in favour of Aditxt. The Arrangement Agreement also provides for the payment of a termination fee of $1.25 million in certain circumstances.
As part of a waiver provided by the Company on December 15, 2024, to extend the outside date of the Transaction (the “Outside Date”), Aditxt agreed to pay the Company US$250,000 as partial compensation for additional expenses incurred due to the delay. The Company has recorded this amount as a reduction to General and Administrative expenses.
Going concern
These unaudited interim condensed consolidated financial statements have been prepared using International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS Accounting Standards”) applicable to a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business as they come due.
For the nine months ended December 31, 2024, the Company reported a loss of $2,852,742 (December 31, 2023 - $2,677,449) and an accumulated deficit of $71,945,858 (December 31, 2023 - $67,989,655). In addition to repaying or refinancing the Company’s debt facilities that mature in the next twelve months and funding its ongoing working capital requirements, the Company must secure sufficient funding through financing activities to cover research and development expenditures to advance the programs in its pipeline that are planned for the next twelve months. These circumstances lend significant doubt as to the ability of the Company to fund planned expenditures and, accordingly, the appropriateness of the use of accounting principles applicable to a going concern.
The ability of the Company to repay or refinance its debt facilities and fund working capital requirements to advance its programs in its pipeline is dependent on successfully closing the proposed transaction with Aditxt or raising additional financing through equity and/or non-dilutive funding and/or partnerships. There can be no assurance that additional financing will be available on acceptable terms or at all. If the Company is unable to obtain additional financing when required, Appili may have to substantially reduce or eliminate planned expenditures. Management is evaluating alternatives to secure additional financing so that the Company can continue to operate as a going concern. Nevertheless, there is no assurance that these initiatives will be successful.
These interim condensed consolidated financial statements do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and balance sheet classifications that would be necessary if the Company were unable to realize its
6
Appili Therapeutics Inc.
Notes to Interim Condensed Consolidated Financial Statements
(Unaudited)
For the nine months ended December 31, 2024 and 2023
| 1 | Nature of operations and going concern risk (continued) |
These interim condensed consolidated financial statements do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and balance sheet classifications that would be necessary if the Company were unable to realize its assets and settle its liabilities as a going concern in the normal course of operations. Such adjustments could be material.
| 2 | Basis of preparation |
The Company prepares its unaudited interim condensed consolidated financial statements in accordance with IFRS Accounting Standards and Part I of the Chartered Professional Accountants of Canada Handbook – Accounting.
These unaudited interim condensed consolidated financial statements have been prepared in accordance with IFRS Accounting Standards applicable to the preparation of interim condensed consolidated financial statements, including IAS 34, International Accounting Standards 34 “Interim Financial Reporting”. Accordingly, certain information normally included in annual consolidated financial statements prepared in accordance with IFRS Accounting Standards have been omitted or condensed. The unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s annual audited financial statements for the year ended March 31, 2024. The accounting policies used are consistent with those used in the audited financial statements.
The policies applied in these unaudited interim condensed consolidated financial statements are based on IFRS Accounting Standards issued and outstanding as of February 14, 2025, the date the Board of Directors approved the unaudited interim condensed consolidated financial statements.
| 3 | Critical accounting estimates and judgments |
These unaudited interim condensed consolidated financial statements for the nine months ended December 31, 2024 have been prepared using the same policies and methods as the annual audited consolidated financial statements of the Company. Refer to note 3 of the Company’s annual audited consolidated financial statements for the year ended March 31, 2024 for more information on accounting estimates and judgements applied.
| 4 | Revenue |
During the three months ended December 31, 2024, the Company earned $108,359 (December 31, 2023 - $nil) in royalty revenue and $113,049 (December 31, 2023 - $nil) for the nine months ended December 31, 2024, related to LIKMEZ™. No milestone revenue was earned during these periods (December 31, 2023 - $815,710).
7
Appili Therapeutics Inc.
Notes to Interim Condensed Consolidated Financial Statements
(Unaudited)
For the nine months ended December 31, 2024 and 2023
| 5 | Amounts receivable |
| December 31, | March 31, | |||||||
| 2024 | 2024 | |||||||
| $ | $ | |||||||
| Sales tax receivable | 81,572 | 71,310 | ||||||
| Amounts due from USAFA | 1,369,503 | 1,075,028 | ||||||
| Other receivable | 299,201 | 11,697 | ||||||
| 1,750,276 | 1,158,035 | |||||||
During the prior year, the Company entered into a contract with US Air Force Academy (“USAFA”) to fund the early-stage development and regulatory activities for ATI-1701 amounting to US$13,966,218 (CAD$18,752,441). Of this amount, US$11,640,578 (CAD$15,629,804) is allotted and currently available. If additional funds are not made available by USAFA, then the agreement may be terminated, and the Company is not obligated to continue with the related research activities or incur costs in excess of the amount allotted.
Under the terms of its contract with USAFA, the Company will be reimbursed for direct costs and labour costs associated with budgeted program activities, and a portion of its overhead costs. The contract period of performance is May 5, 2023 to September 30, 2025. In the event of a termination, USAFA will retain the USAFA purpose licence for the invention, copyright work, and data made or developed under the contract.
For the nine months ended December 31, 2024, the Company recognized the reimbursement of costs of $6,712,245 (December 31, 2023 - $3,123,634) and for the three months ended December 31, 2024, the Company recognized the reimbursement of costs of $1,859,203 (December 31, 2023 - $2,059,311), as government assistance.
Additionally, in accordance with the USAFA contract, the Company underwent an audit conducted by Defense Contract Audit Agency (“DCAA”) to assess the accuracy of its billings, compliance with the contract, and to assess the G&A rate applied. The audit determined that the G&A rate previously used (56.53%) should have been 80.05%. As a result, the Company is billing USAFA for a true-up reimbursement of US$484,735, recognized as government assistance.
| 6 | Due to related party and related transactions |
The Company’s Chair of the Board of Directors (formerly Chief Executive Officer) is a partner of Bloom Burton & Co. (“Bloom Burton’’), which is a principal shareholder of the Company. For the nine months ended December 31, 2024, the Company accrued $39,000 (December 31, 2023 - $nil) in directors fees for services performed as the Chair. As at December 31, 2024, $39,000 (December 31, 2023 - $nil) is included in accounts payable and accrued liabilities owing to the Chair. The Company granted 200,000 options (December 31, 2023 – 975,000) to the former Chief Executive Officer during the nine months ended December 31, 2024.
For the nine months ended December 31, 2024, the Company was charged $nil (December 31, 2023 - $188,189) for consulting services in relation to business development activities performed by Bloom Burton Securities Inc., an affiliate of Bloom Burton. For the three months ended December 31, 2024, the Company was charged $nil (December 31, 2023 - $60,000) for consulting services in relation to business development activities by Bloom Burton Securities Inc.
For the nine months ended December 31, 2024, the Company obtained an additional unsecured bridge loan from Bloom Burton amounting to $400,000 (see note 7). As at December 31, 2024, the principal and interest outstanding under the original bridge loan and the secured bridge loan was $734,284 (March 31, 2024 - $300,000) and the fair value of the bridge loans were determined to be $682,383 (March 31, 2024- $281,687), included in long-term debt.
8
Appili Therapeutics Inc.
Notes to Interim Condensed Consolidated Financial Statements
(Unaudited)
For the nine months ended December 31, 2024 and 2023
| 7 | Long-term debt |
| December 31, | March 31, | |||||||
| 2024 | 2024 | |||||||
| $ | $ | |||||||
| ACOA Business Development Program interest-free loan with a maximum contribution of $500,000 repayable in 120 equal monthly payments of $4,167 beginning April 1, 2018. As at December 31, 2024, the principal outstanding was $200,000 (March 31, 2024- $237,500) and has been recorded at an effective interest rate of 12%. | 158,200 | 180,400 | ||||||
| ACOA Business Development Program interest-free loan with a maximum contribution of $500,000 repayable in 84 equal monthly payments of $5,952 beginning January 1, 2019. As at December 31, 2024, the principal outstanding was $125,024 (March 31, 2024- $178,592) and has been recorded at an effective interest rate of 12%. | 112,200 | 153,600 | ||||||
| ACOA Business Development Program interest-free loan with a maximum contribution of $474,839 repayable in 120 equal monthly payments of $3,960 beginning March 1, 2020. As at December 31, 2024, the principal outstanding was $280,800 (March 31, 2024- $316,440) and has been recorded at an effective interest rate of 12%. | 200,400 | 217,200 | ||||||
| ACOA Atlantic Innovation Fund (‘AIF’) interest-free loan with a maximum contribution of $2,803,148. Annual repayments, commencing December 1, 2021 are calculated as 5% of gross revenue from resulting products for the preceding fiscal year. As at December 31, 2024, the amount drawn down on the loan is $2,796,139 (March 31, 2024- $2,796,139) and has been recorded at an effective interest rate of 26.8%. | 477,500 | 466,400 | ||||||
| Long Zone Holdings Inc. (LZH) secured loan bearing an interest rate of the higher of 11% or the US prime lending rate plus 3.25% per year plus 4% per year fixed maintenance fee compounded quarterly, with a maturity date of March 15, 2025. As at December 31, 2024, the principal outstanding was $nil (March 31, 2024- US$3,600,000) | - | 4,751,898 | ||||||
| LZH revised first tranche secured loan of US$4,582,458 (CAD$6,593,699), outstanding as at December 31, 2024 (March 31, 2024- $nil). See details of the loan disclosed below. | 6,543,014 | - | ||||||
| LZH secured loan bearing an interest rate of the higher of 11% or the Canadian prime lending rate plus 4.3% per year, plus 4% per year fixed maintenance fee, compounded quarterly, with a maturity date of March 15, 2025. As at December 31, 2024, the principal outstanding was $3,146,401 (March 31, 2024- $2,500,000) | - | 2,133,672 | ||||||
| LZH revised second tranche secured loan of $3,146,401 outstanding as at December 31, 2024 (March 31, 2024- $nil). See details of loan disclosed below. | 3,110,557 | - | ||||||
| Bloom Burton unsecured second bridge loan bearing an interest rate of 10% per annum and matures the earlier of April 26, 2025 or the occurrence of the change in control of the company. As at December 31, 2024, the principal outstanding was $400,000 (March 31, 2024- $nil) | 382,383 | - | ||||||
| Bloom Burton unsecured original bridge loan bearing an interest rate of 1% per annum for the first month increasing to 2% thereafter (average rate during the period was 2% (December 31, 2023 - 2%) and matures the earlier of February 28, 2025or closing of the transaction. As at December 31, 2024, the principal outstanding was $300,000 (March 31, 2024- $300,000) | 300,000 | 281,687 | ||||||
| 11,284,254 | 8,184,857 | |||||||
| Less: Current Portion | (10,472,854 | ) | (7,309,657 | ) | ||||
| 811,400 | 875,200 | |||||||
9
Appili Therapeutics Inc.
Notes to Interim Condensed Consolidated Financial Statements
(Unaudited)
For the nine months ended December 31, 2024 and 2023
| 7 | Long-term debt (continued) |
ACOA Loans
Total contributions received, less amounts that have been repaid as at December 31, 2024 for ACOA loans, were $3,401,963 (March 31, 2024 - $3,528,671). Certain ACOA loans require approval by ACOA before the Company can pay dividends or other distributions, or before there is any change in ownership of the Company.
Bloom Burton unsecured bridge loans
On June 28, 2023 (as amended July 17, 2024 and as further amended on September 30, 2024, December 15, 2024), the Company obtained an unsecured bridge loan (the “Bridge Loan”) from Bloom Burton, a related party (see note 6) amounting to $300,000. The Bridge Loan bears interest at 1% per annum for the first month increasing to 2% thereafter and matures the earlier of the closing of the Transaction or February 28, 2025. Prior to the maturity date, interest accrued under the Bridge Loan is added to the principal amount.
On April 26, 2024, the Company obtained a second bridge loan from Bloom Burton amounting to $300,000 (the “Additional Bridge Loan”). The bears an interest at 10% per annum and is due the earlier of April 26, 2025, or the occurrence of a change in control of the Company. On June 28, 2024, the Company and Bloom Burton agreed to advance an additional $100,000 and increase the principal outstanding on the Additional Bridge Loan to $400,000.
The Additional Bridge Loan was recorded at fair value at inception. The fair value was calculated using the discounted cashflow method using a discount rate of 24% based on the estimated market interest rate of comparable debt. The fair value for the Additional Bridge Loan was determined to be $356,472 and the discount of $43,528 has been accounted for as a transaction with a shareholder and credited to equity as contributed surplus.
Interest on the second bridge loan is accrued monthly commencing May 31, 2024. Prior to the maturity date, interest accrued under the loan is added to the principal amount.
LZH Secured Loans
On April 1, 2024, the Company and the lender, LZH, entered into a consent and waiver agreement (as amended July 17, 2024, and as further amended on September 30, 2024, December 15, 2024) which restructured the terms of the two loan arrangements:
| ● | The first tranche of the loan, including all fees and accrued interest thereon, will be repayable in two lump sum payments: |
| o | A payment of US$2,100,132 was due on the closing of the Transaction with Aditxt if the transaction is closed by June 30, 2024. In the event the transaction closes after that date the payment will increase by a late payment fee of US$1,553 per day until the payment is made. Subject to satisfaction (or waiver, as applicable) of the requisite closing conditions, the Company currently expects the transaction to close in February 2025. |
10
Appili Therapeutics Inc.
Notes to Interim Condensed Consolidated Financial Statements
(Unaudited)
For the nine months ended December 31, 2024 and 2023
| 7 | Long-term debt (continued) |
| o | A payment of US$2,047,216 due on February 28, 2025. |
| ● | The second tranche of the loan, including all fees and accrued interest thereon, will be repayable in two lump sum payments: |
| o | A payment of $1,454,121 was due on the closing of the Transaction with Aditxt if the transaction is closed by June 30, 2024. In the event the transaction closes after that date, the payment will increase by a late payment fee of $1,062 per day until the payment is made. Subject to satisfaction (or waiver, as applicable) of the requisite closing conditions, the Company currently expects the transaction to close in February 2025. |
| o | A payment of $1,383,116 due on February 28, 2025. |
| ● | The consent and waiver agreement provided the requisite consent to the Transaction (see note 1) and agreed to waive the requirement to secure additional funding and maintain a minimum cash balance of US$360,000 until February 28, 2025, or in the event that the Transaction does not close. |
| ● | With respect to the interest payment due on March 31, 2024, of $191,545 relating to the first tranche and $96,610 relating to the second tranche, LZH agreed to capitalize the interest and add it to the principal of the loans. |
| ● | The Company agreed to pay LZH legal costs associated with the amendment amounting to $54,000, which has been recorded as an expense in the interim condensed consolidated statements of loss and comprehensive loss for the period. |
The Company has accounted for this arrangement as an extinguishment of the initial two tranches. The Company has elected to account for the new tranches at fair-value through profit and loss (“FVTPL”) at inception and has valued the instruments based on the new terms under the consent and waiver agreement. The instruments will subsequently be measured at fair value at each balance sheet date, with changes in value being recognized in net income (loss). A loss on extinguishment of $727,884 was recognized as a result of this arrangement. A discount rate of 24% was applied to the estimated cashflows in determining the fair value.
As at December 31, 2024, the fair value of the loans was determined using a discount rate of 24% applied to the estimated cash flows resulting in a loss of $789,747. If the discount rate used by management was 5% higher or 5% lower in the December 31, 2024 valuation the fair value of the loans would decrease by $27,117 or increase by $27,344, respectively.
In the determination of their fair value as at December 31, 2024, management assumed that the Transaction with Aditxt would close on February 28, 2025 (the currently agreed upon outside date for the Transaction), and has included late payment fees of US$141,036 (CAD$197,375) and $97,704 for the first and second tranche respectively, as the transaction had not closed by December 31, 2024.
11
Appili Therapeutics Inc.
Notes to Interim Condensed Consolidated Financial Statements
(Unaudited)
For the nine months ended December 31, 2024 and 2023
| 7 | Long-term debt (continued) |
The fair value of the LZH secured loan is as follows:
| $ | ||||
| LZH secured loan - March 31, 2024 | 6,885,570 | |||
| Interest added to principal | 898,688 | |||
| Loss on extinguishment of loans | 727,884 | |||
| Change in fair value of loans | 789,747 | |||
| Unrealized foreign exchange loss | 351,682 | |||
| LZH secured loan - December 31, 2024 | 9,653,571 | |||
Minimum annual repayments of long-term debt over the next five years (listed below), do not include potential ACOA Atlantic Innovation Fund repayments beyond 2024, since these are not determinable at this time:
| $ | ||||
| Year ending March 31, 2025 | 10,472,854 | |||
| March 31, 2026 | 118,381 | |||
| March 31, 2027 | 101,342 | |||
| March 31, 2028 | 75,325 | |||
| March 31, 2029 | 72,250 | |||
| 10,840,152 | ||||
Net debt reconciliation
| December 31, | March 31, | |||||||
| 2024 | 2024 | |||||||
| $ | $ | |||||||
| Balance - Beginning of period | 8,184,857 | 7,665,345 | ||||||
| Accreted interest, cash | (48,148 | ) | (72,521 | ) | ||||
| Accreted interest | 120,032 | 485,576 | ||||||
| Unrealized foreign exchange translation (LZH) | 351,682 | (35,356 | ) | |||||
| Net proceeds from Bridge Loan | 400,000 | 300,000 | ||||||
| Interest added to principal (LZH) | 898,688 | - | ||||||
| Loss on extinguishment of loans (LZH) | 727,884 | - | ||||||
| Fair value adjustment recorded of LZH loans | 789,747 | - | ||||||
| Fair value adjustment recorded of bridge loans | (43,528 | ) | (61,764 | ) | ||||
| Repayment of debt | (96,960 | ) | (96,423 | ) | ||||
| Balance - End of period | 11,284,254 | 8,184,857 | ||||||
| Less: Current Portion | (10,472,854 | ) | (7,309,657 | ) | ||||
| Non-current portion | 811,400 | 875,200 | ||||||
12
Appili Therapeutics Inc.
Notes to Interim Condensed Consolidated Financial Statements
(Unaudited)
For the nine months ended December 31, 2024 and 2023
| 8 | Share Capital |
Authorized
Unlimited number of Class A common shares
Unlimited number of Class B non-voting common shares (nil outstanding)
Unlimited number of preferred shares (nil outstanding)
Issued
Class A common shares
| Number of | ||||||||
| Shares | Amount | |||||||
| # | $ | |||||||
| Balance - March 31, 2024 and December 31, 2024 | 121,266,120 | 42,323,359 | ||||||
| 9 | Contributed surplus |
The change in contributed surplus as presented in the consolidated statements of changes in shareholders’ equity is as follows:
| Amount | ||||
| $ | ||||
| Balance- March 31, 2023 | 6,412,963 | |||
| Vesting of stock options | 181,296 | |||
| Fair value adjustment of Bridge Loan | 61,764 | |||
| Warrants expired | 6,203,902 | |||
| Balance- December 31, 2023 | 12,859,925 | |||
| Vesting of stock options | 10,050 | |||
| Balance- March 31, 2024 | 12,869,975 | |||
| Vesting of stock options | 107,114 | |||
| Warrants expired | 1,795,965 | |||
| Fair value of related party loan (see note 6) | 43,528 | |||
| Balance- December 31, 2024 | 14,816,582 | |||
The Board of Directors of the Company has established a stock option plan (the “Plan”) under which options to acquire common shares of the Company are granted to directors, employees and other advisors of the Company. The maximum number of common shares issuable under the Plan shall not exceed 10% of the issued and outstanding common shares at the date of the grant. If any option expires or otherwise terminates for any reason without having been exercised in full, or if any option is exercised in whole or in part, the number of shares in respect of which option is expired, terminated or was exercised shall again be available for the purposes of the Plan.
Stock options are granted with an exercise price determined by the Board of Directors, which is the market price of the shares on the day preceding the award. The term of the option is determined by the Board of Directors, not to exceed ten years from the date of grant. The vesting of the options is determined by the Board and is typically 33 1/3% every year after the date of grant.
13
Appili Therapeutics Inc.
Notes to Interim Condensed Consolidated Financial Statements
(Unaudited)
For the nine months ended December 31, 2024 and 2023
| 9 | Contributed surplus (continued) |
In the event that the option holder should die while he or she is still a director, employee or other advisor of the Company, the expiry date shall be one (1) year from the date of death of the option holder, not to exceed the original expiry date of the option. In the event that the option holder ceases to be a director, employee or other advisor of the Company other than by reason of death or termination, the expiry date of the option shall be three (3) months following the date the option holder ceases to be a director, employee or other advisor of the Company, not to exceed the original expiry date of the option.
On May 15, 2023, the Company granted 4,673,250 stock options under Appili’s Stock Option Plan. The stock options will be exercisable at $0.04 per share and will have a term of ten years. 3,487,500 options vest immediately and 1,185,750 will vest over a period of three years.
On November 15, 2023, the Company granted 140,000 stock options under Appili’s Stock Option Plan. The stock options will be exercisable at $0.04 per share and will have a term of ten years and will vest immediately.
On April 29, 2024, the Company granted 3,563,281 stock options under Appili’s Stock Option Plan. The stock options will be exercisable at $0.04 per share and will have a term of ten years. 1,779,000 options vest immediately and 1,784,281 will vest over a period of three years.
The fair value of stock options is estimated using the Black-Scholes valuation model. Due to the absence of company specific volatility rates, the Company determined the expected volatility of these stock options using the average volatility of biotechnology companies traded on the Toronto Stock Exchange and the TSX Venture Exchange.
Option activity for the three months ended December 31, 2024 and December 31, 2023 were as follows:
| December 31, 2024 | December 31, 2023 | |||||||||||||||
| Weighted | Weighted | |||||||||||||||
| average | average | |||||||||||||||
| Number | exercise price | Number | exercise price | |||||||||||||
| # | $ | # | $ | |||||||||||||
| Outstanding - Beginning of period | 7,957,000 | 0.06 | 3,168,750 | 0.10 | ||||||||||||
| Granted | 3,563,281 | 0.04 | 4,813,250 | 0.04 | ||||||||||||
| Forfeited | - | - | (25,000 | ) | 0.04 | |||||||||||
| Expired | (610,000 | ) | 0.08 | - | 0.00 | |||||||||||
| Outstanding - End of period | 10,910,281 | 0.06 | 7,957,000 | 0.06 | ||||||||||||
14
Appili Therapeutics Inc.
Notes to Interim Condensed Consolidated Financial Statements
(Unaudited)
For the nine months ended December 31, 2024 and 2023
| 9 | Contributed surplus (continued) |
During the nine months ended December 31, 2024, 3,563,281 stock options
(December 31, 2023– 4,813,250) with a weighted average exercise price of $0.04 (December 31, 2023 - $0.04) and a term of 10 years (December 31, 2023 – 10 years) were granted to the employees. The value of these stock options was estimated at $142,531 (December 31, 2023 - $191,830) which is a weighted average grant date value per option of $0.04 (December 31, 2023 - $0.04) using the Black -Scholes valuation model and the following weighted average assumptions:
| December 31, 2024 | December 31, 2023 | |||||||
| Risk-free interest rate | 3.75 | % | 3.80 | % | ||||
| Expected volatility | 120 | % | 120 | % | ||||
| Expected life (years) | 10 | 10 | ||||||
| Dividend yield | - | - | ||||||
| 10 | Warrants |
Warrant activity for the nine months ended December 31, 2024 and December 31, 2023 were as follows:
| Weighted | ||||||||
| average | ||||||||
| Number | exercise price | |||||||
| # | $ | |||||||
| Outstanding - March 31, 2023 | 58,247,879 | 0.49 | ||||||
| Expired | (13,391,005 | ) | 1.29 | |||||
| Outstanding - December 31, 2023 and March 31, 2024 | 44,856,874 | 0.25 | ||||||
| Expired | (7,717,000 | ) | 0.64 | |||||
| Outstanding - December 31, 2024 | 37,139,874 | 0.17 | ||||||
15
Appili Therapeutics Inc.
Notes to Interim Condensed Consolidated Financial Statements
(Unaudited)
For the nine months ended December 31, 2024 and 2023
| 11 | Financial instruments |
Financial instruments are defined as a contractual right or obligation to receive or deliver cash on another financial asset. The following table sets out the approximate fair values of financial instruments as at the consolidated statements of financial position dates with relevant comparatives:
| December 31, 2024 | March 31, 2024 | |||||||||||||||
| Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Cash | 186,166 | 186,166 | 94,493 | 94,493 | ||||||||||||
| Amounts Receivable | 1,668,704 | 1,668,704 | 1,086,725 | 1,086,725 | ||||||||||||
| Accounts Payable and accrued liabilities | 4,434,443 | 4,434,443 | 4,183,176 | 4,183,176 | ||||||||||||
| Long-term debt | 11,284,254 | 11,284,254 | 8,184,857 | 8,184,857 | ||||||||||||
Assets and liabilities, such as commodity taxes, that are not contractual and arise as a result of statutory requirements imposed by governments, do not meet the definition of financial assets or financial liabilities and are, therefore, excluded from amounts receivable and accounts payable and accrued liabilities in this table.
Fair value of items, which are short-term in nature, has been deemed to approximate their carrying value. The above-noted fair values, presented for information only, reflect conditions that existed only at December 31, 2024, and do not necessarily reflect future value or amounts, which the Company might receive if it were to sell some or all of its assets to a willing buyer in a free and open market.
The fair value of the long-term debt is estimated based on the expected interest rates for similar borrowings by the Company at the unaudited interim condensed consolidated statements of financial position dates. At December 31, 2024, the fair value is estimated to be equal to the carrying amount. The inputs into the determination of the fair value of the long-term debt, including the discount rate, are classified as Level 3 in the fair value hierarchy.
The following table outlines the contractual repayments for long-term debt, which includes loans with a set repayment schedule, as well as loans that are repayable based on a percentage of revenues, for the Company’s financial liabilities. The long-term debt is comprised of the contributions received described in note 7 as at December 31, 2024:
| Total | Year 1 | Years 2 to 3 | Years 4 to 5 | After 5 Years | ||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
| Accounts payable and accrued liabilities | 4,434,443 | 4,434,443 | - | - | - | |||||||||||||||
| Long-term debt | 13,876,347 | 10,678,468 | 329,316 | 320,537 | 2,548,026 | |||||||||||||||
| 18,310,790 | 15,112,911 | 329,316 | 320,537 | 2,548,026 | ||||||||||||||||
| 12 | Contingencies |
The Company received a demand letter May 2024 from a former employee for wrongful termination with a demand amount of US$360,000. The Company’s management believes the claim is frivolous and does not consider the exposure to such claim to be material, although this cannot be predicted with certainty.
| 13 | Subsequent Events |
On January 31, 2025, the Company, Aditxt, and Adivir agreed to waive the Outside Date for the Arrangement from January 31, 2025 to February 28, 2025, to allow Aditxt additional time to secure the required financing. As part of this extension, Aditxt committed to paying the Company US$250,000 in February 2025 as partial compensation for the additional expenses incurred due to the delay.
In connection with this extension, the Company entered into a consent and waiver agreement with its lender, LZH, under which LZH agreed to continue consenting to the Transaction and waived compliance requirements related to the Company’s failure to repay the Outstanding Loan by January 31, 2025. As a result, the loan repayment deadline has been extended to February 28, 2025.
Additionally, the Company entered into a separate consent and waiver agreement with Bloom Burton, extending the repayment date for the Bridge Loan to February 28, 2025.
16
Exhibit 99.2
Aditxt Inc.
Unaudited Pro Forma Consolidated
Financial Statements
(In U.S. dollars)
December 31, 2024
Aditxt Inc.
Pro Forma Consolidated Statement of Financial Position
(Unaudited)
(In thousands of U.S. dollars)
As of December 31, 2024
| Aditxt | Evofem | Appili (Note 3) | Pro Forma adjustments | Notes | Pro Forma consolidated | |||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||||
| ASSETS | ||||||||||||||||||||||
| CURRENT ASSETS: | ||||||||||||||||||||||
| Cash | 833 | - | 129 | 17,888 | 5(a) | 18,850 | ||||||||||||||||
| Restricted cash | - | 741 | - | (716 | ) | 5(a) | 25 | |||||||||||||||
| Accounts receivable, net | 43 | 9,832 | 1,216 | - | 11,091 | |||||||||||||||||
| Inventory | 11 | 1,577 | - | - | 1,588 | |||||||||||||||||
| Prepaid expenses | 3 | 1,459 | 88 | - | 1,550 | |||||||||||||||||
| Subscription receivable | 1,109 | - | - | - | 1,109 | |||||||||||||||||
| Other receivable | - | - | 6 | - | 6 | |||||||||||||||||
| TOTAL CURRENT ASSETS | 1,999 | 13,609 | 1,439 | 17,172 | 34,219 | |||||||||||||||||
| Fixed assets, net | 1,548 | 458 | 14 | - | 2,020 | |||||||||||||||||
| Intangible assets, net | 6 | 9,597 | - | 5,963 | 5(b) | 15,566 | ||||||||||||||||
| Deposits | 88 | - | - | - | 88 | |||||||||||||||||
| Right of use assets | 1,226 | 89 | - | - | 1,315 | |||||||||||||||||
| Other assets | - | 36 | - | - | 36 | |||||||||||||||||
| Goodwill | - | - | - | 143,571 | 5(c) | 143,571 | ||||||||||||||||
| Investment in Evofem / Appili | 27,277 | - | - | (27,277 | ) | 5(d) | - | |||||||||||||||
| TOTAL ASSETS | 32,144 | 23,789 | 1,453 | 139,429 | 196,815 | |||||||||||||||||
The accompanying notes are an integral part to these unaudited pro forma consolidated financial statements.
1
Aditxt Inc.
Pro Forma Consolidated Statement of Financial Position
(Unaudited)
(In thousands of U.S. dollars)
As of December 31, 2024
| Aditxt | Evofem | Appili (Note 3) | Pro Forma Adjustments | Notes | Pro Forma Consolidated | |||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||||||||||||||||
| CURRENT LIABILITIES: | ||||||||||||||||||||||
| Accounts payable and accrued expenses | 13,186 | 25,175 | 3,082 | 2,000 | 5(e) | 43,443 | ||||||||||||||||
| Stock Redemption Payable | 1,355 | - | - | - | 1,355 | |||||||||||||||||
| Stock Payable | 2,250 | - | - | - | 2,250 | |||||||||||||||||
| Notes payable and other current liabilities - related party | 115 | - | - | - | 115 | |||||||||||||||||
| Notes payable, and other short term debt, net of discount | 5,538 | 135 | - | - | 5,673 | |||||||||||||||||
| Financing on fixed assets | 148 | - | - | - | 148 | |||||||||||||||||
| Deferred rent | 106 | - | - | - | 106 | |||||||||||||||||
| Convertible notes payable carried at fair value | - | 14,974 | - | (14,974 | ) | 5(e) | - | |||||||||||||||
| Convertible notes payable - Adjuvant | - | 30,769 | - | (30,769 | ) | 5(e) | - | |||||||||||||||
| Derivative liabilities | - | 1,359 | - | (1,359 | ) | 5(e) | - | |||||||||||||||
| Other current liabilities | - | 7,362 | - | - | 7,362 | |||||||||||||||||
| Corporate taxes payable | - | - | 1 | - | 1 | |||||||||||||||||
| Long-term debt - current | - | - | 7,277 | - | 7,277 | |||||||||||||||||
| Lease liabilities - current | 683 | 82 | - | - | 765 | |||||||||||||||||
| Contingent liabilities- current | - | 592 | - | - | 592 | |||||||||||||||||
| TOTAL CURRENT LIABILITIES | 23,381 | 80,448 | 10,360 | (45,102 | ) | 69,087 | ||||||||||||||||
| Derivative liability | 15 | - | - | - | 15 | |||||||||||||||||
| Long-term debt – non-current | - | - | 564 | - | 564 | |||||||||||||||||
| Lease liabilities - long term | 436 | 7 | - | - | 443 | |||||||||||||||||
| Contingent liabilities- non-current | - | 9,809 | - | - | 9,809 | |||||||||||||||||
| TOTAL LIABILITIES | 23,832 | 90,264 | 10,924 | (45,102 | ) | 79,918 | ||||||||||||||||
| Convertible and redeemable preferred stock | 8,373 | 4,782 | - | 80,816 | 5(f) | 93,971 | ||||||||||||||||
| STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||||||||||||||||
| Common stock | - | 11 | - | (11 | ) | 5(g) | - | |||||||||||||||
| Treasury stock | (202 | ) | - | - | - | (202 | ) | |||||||||||||||
| Additional paid-in capital | 168,793 | 829,026 | 44,739 | (848,753 | ) | 5(g) | 193,805 | |||||||||||||||
| Accumulated other comprehensive income (loss) | - | (2,630 | ) | 738 | 1,892 | 5(g) | - | |||||||||||||||
| Accumulated equity (deficit) | (168,068 | ) | (897,664 | ) | (54,948 | ) | 950,587 | 5(g) | (170,093 | ) | ||||||||||||
| 523 | (71,257 | ) | (9,471 | ) | 103,715 | 23,510 | ||||||||||||||||
| NON-CONTROLLING INTEREST | (583 | ) | - | - | - | (583 | ) | |||||||||||||||
| TOTAL STOCKHOLDERS’ EQUITY (DEFICIT) | (60 | ) | (71,257 | ) | (9,471 | ) | 103,715 | 22,927 | ||||||||||||||
| TOTAL LIABILITIES, CONVERTIBLE AND REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) | 32,144 | 23,789 | 1,453 | 139,429 | 196,815 | |||||||||||||||||
The accompanying notes are an integral part to these unaudited pro forma consolidated financial statements.
2
Aditxt Inc.
Pro Forma Consolidated Statement of Earnings
(Unaudited)
(In thousands of U.S. dollars, except share and earnings per share)
For the twelve months ended December 31, 2024
| Aditxt | Evofem | Appili (Note 3) | Pro Forma Adjustments | Notes | Pro Forma Consolidated | |||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||||
| REVENUE | ||||||||||||||||||||||
| Sales, net | 134 | 19,363 | 91 | - | 19,588 | |||||||||||||||||
| Cost of goods sold | 627 | 3,834 | - | - | 4,461 | |||||||||||||||||
| Amortization of intangible asset | - | 619 | - | - | 619 | |||||||||||||||||
| Gross profit (loss) | (493 | ) | 14,910 | 91 | - | 14,508 | ||||||||||||||||
| OPERATING EXPENSES | ||||||||||||||||||||||
| Research and development | 10,886 | 1,845 | 5,406 | - | 18,137 | |||||||||||||||||
| Sales and marketing | 198 | 9,176 | 19 | - | 9,393 | |||||||||||||||||
| General and administrative expenses | 16,286 | 11,565 | 1,956 | 2,000 | 5(h) | 31,807 | ||||||||||||||||
| Total operating expenses | 27,370 | 22,586 | 7,381 | 2,000 | 59,337 | |||||||||||||||||
| NET LOSS FROM OPERATIONS | (27,863 | ) | (7,676 | ) | (7,290 | ) | (2,000 | ) | (44,829 | ) | ||||||||||||
| OTHER INCOME/(EXPENSE) | ||||||||||||||||||||||
| Interest expense | (4,162 | ) | - | - | - | (4,162 | ) | |||||||||||||||
| Interest income | 1 | 16 | 1 | - | 18 | |||||||||||||||||
| Other income (expense), net | - | (2,575 | ) | (421 | ) | 2,321 | 5(h) | (675 | ) | |||||||||||||
| Amortization of debt discount | (3,175 | ) | - | - | - | (3,175 | ) | |||||||||||||||
| Amortization of intangible assets | - | - | - | (459 | ) | 5(h) | (459 | ) | ||||||||||||||
| Loss on issuance of financial instruments | - | (3,300 | ) | - | 3,300 | 5(h) | - | |||||||||||||||
| Gain on debt extinguishment, net | - | 977 | - | (977 | ) | 5(h) | - | |||||||||||||||
| Change in fair value of financial instruments | - | 3,698 | - | (3,698 | ) | 5(h) | - | |||||||||||||||
| Change in fair value of derivative liability | 415 | - | - | - | 415 | |||||||||||||||||
| Financing costs | - | - | (1,947 | ) | - | (1,947 | ) | |||||||||||||||
| Government assistance | - | - | 6,768 | - | 6,768 | |||||||||||||||||
| Gain (loss) on note exchange agreement | (209 | ) | - | - | - | (209 | ) | |||||||||||||||
| Total other income/(expense), net | (7,130 | ) | (1,184 | ) | 4,401 | 487 | (3,426 | ) | ||||||||||||||
| Net earnings/loss before income taxes | (34,993 | ) | (8,860 | ) | (2,889 | ) | (1,513 | ) | (48,255 | ) | ||||||||||||
| Income tax expense | - | - | - | - | - | |||||||||||||||||
| NET EARNINGS/LOSS | (34,993 | ) | (8,860 | ) | (2,889 | ) | (1,513 | ) | (48,255 | ) | ||||||||||||
| NON-CONTROLLING INTEREST LOSS | (574 | ) | - | - | - | (574 | ) | |||||||||||||||
| NET LOSS ATTRIBUTABLE TO ADITXT, INC. & SUBSIDIARIES | (34,419 | ) | (8,860 | ) | (2,889 | ) | (1,513 | ) | (47,681 | ) | ||||||||||||
| Deemed Dividend | (5,907 | ) | (105 | ) | - | 105 | 5(h) | (5,907 | ) | |||||||||||||
| NET EARNINGS/LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | (40,326 | ) | (8,965 | ) | (2,889 | ) | (1,408 | ) | (53,588 | ) | ||||||||||||
| NET LOSS per share: | ||||||||||||||||||||||
| Basic | $ | (3,060.49 | ) | $ | (155.00 | ) | ||||||||||||||||
| Diluted | $ | (3,060.49 | ) | $ | (155.00 | ) | ||||||||||||||||
| Weighted average number of shares: | ||||||||||||||||||||||
| Basic | 13,177 | 346.05 | ||||||||||||||||||||
| Diluted | 13,177 | 5(1) | 346.05 | |||||||||||||||||||
The accompanying notes are an integral part to these unaudited pro forma consolidated financial statements.
3
Aditxt Inc.
Notes to Pro Forma Consolidated Financial Statements
(Unaudited)
(In thousands of U.S. dollars)
For the twelve months ended December 31, 2024
| 1 | Description of Transactions |
Acquisition of Appili Therapeutics Inc. by Aditxt Inc.:
On December 12, 2023, Aditxt Inc. (“Aditxt”), through its wholly owned subsidiary, Adivir, Inc. (“Adivir”), entered into an agreement, as amended and restated, to acquire all of the outstanding Class A common shares of Appili Therapeutics Inc. (“Appili”) by way of a court approved plan of arrangement under the Canada Business Corporations Act and a definitive arrangement agreement entered between Appili and Adivir (the “Appili Transaction”). Upon closing of the Appili Transaction, Appili will become an indirect, wholly owned subsidiary of Aditxt. As part of the acquisition terms, Appili shareholders will receive 0.002745004 of a share of Aditxt common stock (the “Share Consideration”) and US$0.0467 in cash for each Appili share held (the “Cash Consideration” and together with Share Consideration collectively, the “Appili Transaction Consideration”), representing total consideration of approximately $6,040 based on closing price of the Aditxt shares on November 12, 2024. The consideration for acquiring Appili also included the assumption of Appili’s existing liabilities.
Acquisition of Evofem Biosciences by Aditxt:
On December 11, 2023, Aditxt, through a definitive agreement, entered into an Agreement and Plan of Merger, as amended and restated, with Evofem Biosciences, Inc. (“Evofem”) whereby Evofem will merge with a merger sub (‘Adifem”,the Merger Sub”), with Evofem surviving as as a wholly owned subsidiary of Aditxt (the “Evofem Transaction” and together with the Appili Transaction collectively, (“the Transactions”)). The consideration for acquiring Evofem includes the issuance or exchange of convertible preferred stock of $91,601, and cash consideration of $1,800 to Evofem’s common stockholders, along with paying off Evofem’s senior secured notes amounting to $15,669, investment of $6,500, including $1,000 transaction fee paid in May 2024, to Evofem and the assumption of Evofem’s existing liabilities.
In May 2024, Aditxt paid Evofem $1,000 to reinstate the Agreement and Plan of Merger that was previously terminated by Evofem in April 2024. On July 12, 2024 (the “Closing Date” of the Amended and Restated Merger Agreement, as amended), Aditxt completed the Initial Parent Equity Investment (as defined under the Amended and Restated Merger Agreement) and entered into a Securities Purchase (the “Series F-1 Securities Purchase Agreement”) with Evofem, pursuant to which Aditxt agreed and completed the purchase for a total of 4,000 shares of Evofem’s Series F-1 Convertible Preferred Stock par value $0.0001 per share (“Evofem F-1 Preferred Stock”) for an aggregate purchase price of $4,000 in 2024. On March 22, 2025, Evofem, Aditxt and Merger Sub entered into the Fifth Amendment to the Amended and Restated Merger Agreement (the “Fifth Amendment”) to (i) change the required consummation date to September 30, 2025; (ii) add a Parent Investment of $1,500 to be completed by April 7, 2025; and (iii) add a special meeting consummation date being on or prior to September 26, 2025.
| 2 | Basis of preparation |
The accompanying unaudited Pro Forma Consolidated Financial Statements of Aditxt have been prepared to give effect to the acquisition of Evofem and Appili under the acquisition method of accounting in accordance with Accounting Standards Codification Topic 805 – Business Combinations (“ASC 805”). The unaudited Pro Forma Consolidated Statement of Financial Position gives effect to the transactions as if they had occurred on December 31, 2024. The unaudited Pro Forma Consolidated Statement of Earnings for the twelve months ended December 31, 2024, gives effect to the transactions as if they had occurred on January 1, 2024. The unaudited Pro Forma Consolidated Statement of Financial Position combines the unaudited consolidated statement of financial position of Aditxt as of December 31, 2024, the audited consolidated statement of financial position of Evofem as of December 31, 2024, and the adjusted unaudited interim condensed consolidated statement of financial position of Appili as of December 31, 2024 (see Note 3). Certain amounts may not foot due to rounding.
The unaudited Pro Forma Consolidated Financial Statements are based on, and should be read in conjunction with:
| ● | the audited consolidated financial statements of Aditxt as of and for the year ended December 31, 2023 (“Aditxt’s 2023 Annual Consolidated Financial Statements”) prepared in U.S. dollars and in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”); |
| ● | the unaudited consolidated financial statements of Aditxt as of and for the twelve months ended December 31, 2024 (“Aditxt’s 2024 Consolidated Financial Statements”) prepared in U.S. dollars and in accordance with U.S. GAAP; |
4
Aditxt Inc.
Notes to Pro Forma Consolidated Financial Statements
(Unaudited)
(In thousands of U.S. dollars)
For the twelve months ended December 31, 2024
| 2 | Basis of preparation (continued) |
| ● | the audited consolidated financial statements of Evofem as of and for the years ended December 31, 2024 and 2023 (“Evofem’s 2024 and 2023 Annual Consolidated Financial Statements”) prepared in U.S. dollars and in accordance with U.S. GAAP; |
| ● | the audited consolidated financial statements of Appili as of and for the year ended March 31, 2024 (Appili’s 2024 Annual Consolidated Financial Statements”) prepared in Canadian Dollars (“CAD”) and in accordance with Internation Financial Reporting Standards (“IFRS”); and |
| ● | the unaudited interim condensed consolidated financial statements for the nine months ended December 31, 2024 (“Appili 2024 Interim Condensed Consolidated Financial Statements”) prepared in CAD and in accordance with IFRS. |
For the purposes of preparing the unaudited Pro Forma Consolidated Financial Statements, adjustments have been made to align the financial information to U.S. GAAP and convert to U.S. dollars (see Note 3).
The unaudited Pro Forma Consolidated Financial Statements have been presented for illustrative purposes only. The pro forma information is not necessarily indicative of what the combined company financial position or financial performance would have been had the transactions been completed as at the dates indicated above, nor does it purport to project the future financial position or operating results of the combined company. The unaudited Pro Forma Consolidated Financial Statements do not reflect potential cost savings, operating synergies, and revenue enhancements that may be realized from the transactions. The actual financial position and results of operations of Aditxt for any period following the closing of the transactions may vary from the amounts set forth in the unaudited Pro Forma Consolidated Financial Statements, and such variations could be material.
The pro forma adjustments are based upon available information and certain assumptions believed to be reasonable under the circumstances. The purchase price allocation and the corresponding fair value adjustments are provisional and subject to refinement as more detailed analyses are completed and additional information about the fair value of assets acquired and liabilities assumed becomes available. Aditxt will finalize all amounts as it obtains the necessary information to complete the measurement process, which will be no later than one year from the closing of the transactions. Accordingly, the pro forma adjustments are preliminary and have been made solely for the purpose of providing the unaudited Pro Forma Consolidated Financial Statements. Differences between these preliminary estimates and the final acquisition accounting may occur, and these differences could be material to the accompanying unaudited Pro Forma Consolidated Financial Statements and Aditxt’s future financial performance and financial position.
5
Aditxt Inc.
Notes to Pro Forma Consolidated Financial Statements
(Unaudited)
(In thousands of U.S. dollars)
For the twelve months ended December 31, 2024
| 3 | IFRS to U.S. GAAP Reconciliation |
For the purposes of preparing the unaudited Pro Forma Consolidated Financial Statements, adjustments have been made to align the financial information of Appili to U.S. GAAP and convert to U.S. dollars as detailed below.
As the ending date of the fiscal period for Appili differs from that of Aditxt, adjustments were made to combine the historical results of Appili for the year ended March 31, 2024, with the nine months period ended December 31, 2024, resulting in a recreated statement of earnings for the twelve months ended December 31, 2024, as summarized below:
| Appili Therapeutics Inc | As reported on December 31, 2024 | U.S. GAAP Adjustments | Notes | As of December 31, 2024 | Currency Translation Adjustments | Notes | As of December 31, 2024 | |||||||||||||||||||
| Consolidated Balance Sheet | (IFRS) | (U.S. GAAP) | (U.S. GAAP) | |||||||||||||||||||||||
| (CAD) | (CAD) | (U.S. Dollars) | ||||||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||
| Current Assets | ||||||||||||||||||||||||||
| Cash | 186 | - | 186 | (57 | ) | (b) | 129 | |||||||||||||||||||
| Accounts receivable | 1,750 | - | 1,750 | (534 | ) | (b) | 1,216 | |||||||||||||||||||
| Other receivable | 9 | - | 9 | (3 | ) | (b) | 6 | |||||||||||||||||||
| Prepaid expenses | 126 | - | 126 | (38 | ) | (b) | 88 | |||||||||||||||||||
| 2,071 | - | 2,071 | (632 | ) | 1,439 | |||||||||||||||||||||
| Non-Current Assets | ||||||||||||||||||||||||||
| Fixed assets, net | 22 | - | 22 | (7 | ) | (b) | 15 | |||||||||||||||||||
| Total Assets | 2,093 | - | 2,093 | (639 | ) | 1,454 | ||||||||||||||||||||
6
Aditxt Inc.
Notes to Pro Forma Consolidated Financial Statements
(Unaudited)
(In thousands of U.S. dollars)
For the twelve months ended December 31, 2024
| 3 | IFRS to U.S. GAAP Reconciliation (continued) |
| Appili Therapeutics Inc | As reported on December 31, 2024 | U.S. GAAP Adjustments | Notes | As of December 31, 2024 | Currency Translation Adjustments | Notes | As of December 31, 2024 | |||||||||||||||||||
| Consolidated Balance Sheet | (IFRS) | (U.S. GAAP) | (U.S. GAAP) | |||||||||||||||||||||||
| (CAD) | (CAD) | (U.S. Dollars) | ||||||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||
| Current Liabilities | ||||||||||||||||||||||||||
| Accounts payable and accrued expenses | 4,434 | - | 4,434 | (1,352 | ) | (b) | 3,082 | |||||||||||||||||||
| Long-term debt - current | 10,473 | - | 10,473 | (3,195 | ) | (b) | 7,278 | |||||||||||||||||||
| Corporate taxes payable | 2 | - | 2 | (1 | ) | (b) | 1 | |||||||||||||||||||
| 14,909 | - | 14,909 | (4,548 | ) | 10,361 | |||||||||||||||||||||
| Non-Current liabilities | ||||||||||||||||||||||||||
| Long-term debt - non-current | 811 | - | 811 | (247 | ) | (b) | 564 | |||||||||||||||||||
| Total Liabilities | 15,720 | - | 15,720 | (4,795 | ) | 10,925 | ||||||||||||||||||||
| Shareholder’s Equity | ||||||||||||||||||||||||||
| Additional paid-in capital | 58,319 | - | 58,319 | (13,580 | ) | (c) | 44,739 | |||||||||||||||||||
| Accumulated deficit | (71,946 | ) | - | (71,946 | ) | 16,998 | (c) | (54,948 | ) | |||||||||||||||||
| Currency translation adjustments | - | - | - | 738 | (d) | 738 | ||||||||||||||||||||
| Total Shareholder’s Equity | (13,627 | ) | - | (13,627 | ) | 4,156 | (9,471 | ) | ||||||||||||||||||
| Total Liabilities and Shareholder’s Equity | 2,093 | - | 2,093 | (639 | ) | 1,454 | ||||||||||||||||||||
7
Aditxt Inc.
Notes to Pro Forma Consolidated Financial Statements
(Unaudited)
(In thousands of U.S. dollars)
For the twelve months ended December 31, 2024
| 3 | IFRS to U.S. GAAP Reconciliation (continued) |
| Appili Therapeutics Inc | 12 months ended December 31, 2024 (Recreated) | U.S. GAAP Adjustments | Notes | 12 months ended December 31, 2024 | Currency translation adjustments | Notes | 12 months ended December 31, 2024 | |||||||||||||||||
| (IFRS) | (U.S. GAAP) | (U.S. GAAP) | ||||||||||||||||||||||
| (CAD) | (CAD) | (U.S. Dollars) | ||||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||||
| Income | ||||||||||||||||||||||||
| Sales | 125 | - | 125 | (34 | ) | (e) | 91 | |||||||||||||||||
| Interest income | 1 | - | 1 | - | (e) | 1 | ||||||||||||||||||
| 126 | - | 126 | (34 | ) | 92 | |||||||||||||||||||
| Expenses | ||||||||||||||||||||||||
| Research and development | 7,387 | 17 | (a) | 7,404 | (1,998 | ) | (e) | 5,406 | ||||||||||||||||
| Sales and marketing | 26 | - | 26 | (7 | ) | (e) | 19 | |||||||||||||||||
| General and administrative expenses | 2,679 | - | 2,679 | (723 | ) | (e) | 1,956 | |||||||||||||||||
| Financing costs | 2,666 | - | 2,666 | (719 | ) | (e) | 1,947 | |||||||||||||||||
| Government assistance | (9,253 | ) | (17 | ) | (a) | (9,270 | ) | 2,502 | (e) | (6,768 | ) | |||||||||||||
| Other income (expense) | 576 | - | 576 | (155 | ) | (e) | 421 | |||||||||||||||||
| 4,081 | - | 4,081 | (1,100 | ) | 2,981 | |||||||||||||||||||
| Loss before income taxes | (3,955 | ) | - | (3,955 | ) | 1,066 | (2,889 | ) | ||||||||||||||||
| Income tax expense | - | - | - | - | (e) | - | ||||||||||||||||||
| Net loss | (3,955 | ) | - | (3,955 | ) | 1,066 | (2,889 | ) | ||||||||||||||||
| (a) | Reflects a presentation conforming adjustment to reclassify recognition of government grant funding relating to research and development activities on conversion from IFRS to U.S. GAAP. |
| (b) | Reflects a currency translation adjustment from CAD to U.S. dollars using the closing exchange rate on December 31, 2024, of 0.6950. |
| (c) | Reflects a currency translation adjustment from CAD to U.S. dollars using the closing historical exchange rate for equity transactions and subsequently carried at historic values. |
| (d) | Reflects a presentation currency translation difference adjustment arising on translation of CAD to U.S. dollars using historical rates. |
| (e) | Reflects a currency translation adjustment from CAD to U.S. dollars using the average exchange rate for the 12 months ended December 31, 2024, of 0.7301. |
8
Aditxt Inc.
Notes to Pro Forma Consolidated Financial Statements
(Unaudited)
(In thousands of U.S. dollars)
For the twelve months ended December 31, 2024
| 4 | Preliminary Purchase Price Allocation |
The following is a preliminary fair value estimate of the assets acquired, and liabilities assumed by Aditxt in connection with the Appili and Evofem Transactions, reconciled to the purchase price. For any items without a corresponding reference below, book value is assumed to reasonably approximate fair value based on currently available information.
| Notes | Evofem | Appili | ||||||||
| Assets acquired | $ | $ | ||||||||
| Cash | - | 129 | ||||||||
| Restricted cash | 741 | - | ||||||||
| Accounts receivable | 9,832 | 1,216 | ||||||||
| Inventory | 1,577 | - | ||||||||
| Prepaid expenses | 1,459 | 88 | ||||||||
| Other receivable | - | 6 | ||||||||
| Intangible assets | (a) | 9,597 | 6,880 | |||||||
| Fixed assets | 458 | 18 | ||||||||
| Right-of-use assets | 89 | - | ||||||||
| Other assets | 36 | - | ||||||||
| Total Assets | 23,789 | 8,337 | ||||||||
| Liabilities assumed | ||||||||||
| Accounts payable and accrued expenses | 25,175 | 3,082 | ||||||||
| Other current liabilities | 7,362 | 2 | ||||||||
| Notes payable and other short-term debt | 135 | - | ||||||||
| Corporate taxes payable | - | 1 | ||||||||
| Long-term debt | - | 7,842 | ||||||||
| Contingent liabilities | 10,401 | - | ||||||||
| Lease liabilities | 89 | - | ||||||||
| 43,162 | 10,927 | |||||||||
| Fair value of identifiable net liabilities acquired | (19,373 | ) | (2,590 | ) | ||||||
| Goodwill arising on acquisition: | ||||||||||
| Cash consideration | 1,800 | 6,028 | ||||||||
| Shares issued | - | 12 | ||||||||
| Convertible preferred stock issued | 98,101 | - | ||||||||
| Notes assumed | 15,668 | - | ||||||||
| Consideration paid | 115,569 | 6,040 | ||||||||
| Add: fair value of identifiable net liabilities acquired | 19,373 | 2,590 | ||||||||
| Goodwill arising from transaction | (b) | 134,941 | 8,630 | |||||||
9
Aditxt Inc.
Notes to Pro Forma Consolidated Financial Statements
(Unaudited)
(In thousands of U.S. dollars)
For the twelve months ended December 31, 2024
| 4 | Preliminary Purchase Price Allocation (continued) |
| (a) | A preliminary fair value estimate of $6,880 has been allocated to identifiable intangible assets acquired for the Appili Transaction. Intangibles assets acquired include licenses and intellectual property rights to the research and development activities of Appili, with a useful life of 15 years. Intangible assets acquired from Evofem relate to the SOLOSEC intangible, which has an estimated fair value of $9,597 and a useful life of 11 years. There is no fair value adjustment in this proforma to the SOLOSEC intangible as recorded on Evofem’s books. |
| (b) | A preliminary estimate of $134,941 and $8,630 has been allocated to the goodwill for the Evofem Transaction and the Appili Transaction, respectively. Goodwill is calculated as the excess of the preliminary estimate of the acquisition date fair value of the consideration transferred, over the preliminary estimate of the fair values assigned to the identifiable assets acquired and liabilities assumed. At this time, all amounts related to the Evofem Transaction have been included in goodwill; however, once the final transaction closes and the purchase price allocation is completed, some amounts currently included in goodwill may be moved to intangible assets. |
| 5 | Pro Forma Adjustments in Connection with the Transactions |
The following summarizes the pro forma adjustments in connection with the Appili Transaction and the Evofem Transaction to give effect to the transactions as if they had occurred on January 1, 2024, for the purposes of the unaudited Pro Forma Consolidated Statement of Earnings and on December 31, 2024, for the purposes of the unaudited Pro Forma Consolidated Statement of Financial Position. The pro forma adjustments were based on preliminary estimates and assumptions that are subject to change. For purposes of the pro-forma adjustments, all amounts related to separately identifiable intangible assets acquired in the Evofem Transaction, excluding the current carrying value of the SOLOSEC intangibles, have been included in goodwill; however, once the final transaction closes and the purchase price allocation is completed, some amounts currently included in goodwill may be reclassified to intangible assets.
| (a) | Cash |
Reflects the pro forma adjustment to cash representing the sources and uses of cash to close the Transactions as if the Transactions had occurred on December 31, 2024. Sources and uses of cash include an increase of $25,000 in proceeds from the issuance of common stock of Aditxt, net of issuance costs, in satisfaction of remaining obligations under the August 2024 Letter Agreement, as disclosed in Form 8-K filed on August 28, 2024, partially offset by the $6,028 decrease for the preliminary purchase price paid for the Appili Transaction, and an $1,800 decrease for the preliminary purchase price paid for the Evofem Transaction. Additionally, there is a reclass of $716 to cash from restricted cash due to cash that will be released from restrictions upon the closing of the Evofem Transaction.
| (b) | Intangible Assets |
An increase of $6,880 to the carrying value of Appili intangible assets to adjust it to its preliminary estimated fair value and an increase of $917 to the accumulated amortization. Intangibles assets acquired include licenses and intellectual property rights to research and development activities of Appili. There is no fair value adjustment in this proforma to the SOLOSEC intangible as recorded on Evofem’s books.
| (c) | Goodwill |
Reflects an increase of $134,941 of goodwill as a result of the preliminary purchase price allocation of the Evofem Transaction and of $8,630 for the Appili Transaction. Goodwill is not amortized and is not currently assumed to be deductible for tax purposes. Goodwill could materially change based on changes in estimates in the fair value of the assets acquired, and liabilities assumed.
| (d) | Investment in Evofem / Appili: |
Reflects a decrease of $27,277 in Investment in Evofem for the elimination of the cost of investment in Evofem on consolidation. The investment in Evofem represents the total contribution to Evofem for the investment in Evofem F-1 Preferred Stock.
| (e) | Current Liabilities |
Accounts payable and accrued expenses: Reflects an increase of $2,000 for transaction costs associated with the Appili Transaction and the Evofem Transaction. The convertible noteholders will be issued convertible preferred stock of Aditxt upon closing of the Evofem Transaction.
10
Aditxt Inc.
Notes to Pro Forma Consolidated Financial Statements
(Unaudited)
(In thousands of U.S. dollars)
For the twelve months ended December 31, 2024
| 5 | Pro Forma Adjustments in Connection with the Transactions (continued) |
Convertible notes payable carried at fair value: Reflects a decrease of $14,974 to reflect the settlement of the notes in conjunction with the close of the transaction. Adjuvant will be issued convertible preferred stock of Aditxt upon closing of the Evofem Transaction.
Convertible notes payable – Adjuvant: Reflects a decrease of $30,769 to reflect the settlement of the notes in conjunction with the close of the transaction.
Derivative liabilities: Reflects a decrease of $1,359 to reflect the settlement of the liabilities in conjunction with the close of the transaction.
| (f) | Mezzanine Equity |
Convertible and redeemable preferred stock: Reflects an increase of $85,598 for the issuance of convertible preferred stock for the Evofem Transaction and $4,782 decrease on elimination of convertible and redeemable preferred stock of Evofem on consolidation.
| (g) | Total Equity |
Common Stock: Reflects the elimination of $11 for the common stock of Evofem.
Additional paid-in capital: Includes a $44,739 decrease on elimination of Appili and a $829,026 decrease on elimination of Evofem paid-in-capital on consolidation and an increase to Aditxt for $25,000 capital, net of issuance costs to be raised in conjunction with the transaction. It also reflects an increase of $12 for the issuance of common stock in connection with the Appili Transaction.
Accumulated other comprehensive income (loss): Reflects an increase of $2,630 upon elimination of accumulated other comprehensive income (loss) of Evofem partially offset by a decrease of $738 on elimination of currency translation adjustment on consolidation of Appili.
Accumulated equity (deficit): Reflects a $897,559 and $54,948 decrease in accumulated deficit to eliminate historical retained loss of Evofem (including deemed dividend) and Appili, respectively, $1,000 paid to Evofem by Aditxt to reinstate the Agreement and Plan of Merger, $917 increase in cumulative amortization expense for intangible assets relating to Appili, and $2,000 increase for transaction costs associated with the Appili Transaction and Evofem Transaction, and immaterial decrease to Aditxt.
| (h) | The unaudited Pro Forma Consolidated Statement of Earnings is also adjusted as follows: |
| ● | Increase general and administrative expense by $2,000 for transaction costs associated with the Appili Transaction and the Evofem Transaction. |
| ● | Increase amortization expense by $459 for amortization of the intangible assets related to Appili, recorded at fair value for the twelve months ended December 31, 2024. |
| ● | Decrease other income (expense), net by $2,321 for the twelve months ended December 31, 2024, to remove the interest related to notes that would have been extinguished as a requirement of the Evofem closing. |
| ● | Decrease to loss on issuance of financial instruments of $3,300 for the twelve months ended December 31, 2024, to remove the impact of issuances of purchase rights due to a down-round related to instruments that would have been extinguished as a requirement of the Evofem closing. |
| ● | Decrease to gain on debt extinguishment, net of $977 for the twelve months ended December 31, 2024, to remove the impact of the debt extinguishment related to instruments that would have been extinguished as a requirement of the Evofem closing. |
| ● | Decrease to change in fair value of financial instruments of $3,698 for the twelve months ended December 31, 2024, to remove the impact of fair value adjustments related to instruments that would have been extinguished as a requirement of the Evofem closing. |
| ● | Decrease to deemed dividend of $105 for the months ended December 31, 2024, to remove the impact of deemed dividends on instruments that would have been extinguished as a requirement of the Evofem closing. |
| (i) | The unaudited Pro Forma Consolidated Weighted Average Number of Shares also reflects: |
| ● | The additional 332,876 of Aditxt Common Shares issued to Appili Shareholders at closing. |
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