Rexahn
|
Ocuphire
|
Pro forma
Adjustments
|
Notes
|
Pro forma
Combined
|
||||||||||||||||
Assets
|
||||||||||||||||||||
Current assets:
|
||||||||||||||||||||
Cash and cash equivalents
|
$
|
8,079,511
|
$
|
722,160
|
$
|
19,101,250
|
I,L
|
|
$
|
27,902,921
|
||||||||||
Proceeds receivable from convertible notes
|
—
|
450,000
|
(450,000
|
)
|
H |
—
|
||||||||||||||
Prepaid expenses and other current assets
|
573,635
|
22,708
|
450,000
|
H |
1,046,343
|
|||||||||||||||
Deferred offering costs
|
—
|
1,467,649
|
(1,467,649
|
) |
K |
—
|
||||||||||||||
Total current assets
|
8,653,146
|
2,662,517
|
17,633,601
|
28,949,264
|
||||||||||||||||
Property and equipment, net
|
48,757
|
14,795
|
(25,648
|
)
|
J |
37,904
|
||||||||||||||
Right-of-use assets
|
106,126
|
—
|
(106,126
|
) |
J |
—
|
||||||||||||||
Deposits
|
25,681
|
—
|
—
|
25,681
|
||||||||||||||||
Total assets
|
$
|
8,833,710
|
$
|
2,677,312
|
$
|
17,501,827
|
$
|
29,012,849
|
||||||||||||
Liabilities and Stockholders’ Equity (Deficit)
|
||||||||||||||||||||
Current liabilities:
|
||||||||||||||||||||
Accounts payable and accrued expenses
|
$
|
2,258,481
|
$
|
2,486,572
|
$
|
4,278,485
|
F,G
|
$
|
9,023,538
|
|||||||||||
Deferred revenue
|
650,000
|
—
|
(650,000
|
)
|
J |
—
|
||||||||||||||
Convertible notes
|
—
|
9,299,876
|
(9,299,876
|
)
|
A,B
|
—
|
||||||||||||||
Premium conversion derivative
|
—
|
300,378
|
(300,378
|
)
|
A |
—
|
||||||||||||||
Operating lease liabilities
|
100,397
|
—
|
—
|
100,397
|
||||||||||||||||
Total current liabilities
|
3,008,878
|
12,086,826
|
(5,971,769
|
)
|
9,123,935
|
|||||||||||||||
Warrant liabilities
|
110,781
|
—
|
(107,123
|
) |
E |
3,658
|
||||||||||||||
Total liabilities
|
3,119,659
|
12,086,826
|
(6,078,892
|
)
|
9,127,593
|
|||||||||||||||
Stockholders’ Equity (Deficit):
|
||||||||||||||||||||
Preferred stock
|
—
|
—
|
—
|
—
|
||||||||||||||||
Common stock
|
448
|
354
|
(93
|
)
|
O |
709
|
||||||||||||||
Additional paid-in capital
|
173,537,703
|
4,584,852
|
(128,249,398
|
) |
M |
49,873,157
|
||||||||||||||
Accumulated deficit
|
(167,824,100
|
) |
(13,994,720
|
) |
151,830,210
|
N |
(29,988,610
|
) |
||||||||||||
Total stockholders’ equity (deficit)
|
5,714,051
|
(9,409,514
|
23,580,719
|
19,885,256
|
||||||||||||||||
Total liabilities and stockholders’ equity (deficit)
|
$ |
8,833,710
|
$ |
2,677,312
|
$ |
17,501,827
|
$ |
29,012,849
|
Rexahn
|
Ocuphire
|
Pro Forma
Adjustments
|
Notes
|
Pro Forma
Combined
|
||||||||||||||||
Revenues:
|
||||||||||||||||||||
Revenue
|
$
|
1,150,000
|
$
|
—
|
$
|
—
|
$
|
1,150,000
|
||||||||||||
Total revenues
|
1,150,000
|
—
|
—
|
1,150,000
|
||||||||||||||||
Operating expenses:
|
||||||||||||||||||||
General and administrative
|
4,729,211
|
1,507,781
|
(2,140,381
|
)
|
Q,S |
4,096,611
|
||||||||||||||
Research and development
|
837,991
|
2,311,175
|
—
|
3,149,166
|
||||||||||||||||
Acquired in-process research and development
|
—
|
2,126,253
|
—
|
2,126,253
|
||||||||||||||||
Total operating expenses
|
5,567,202
|
5,945,209
|
(2,140,381
|
)
|
9,372,030
|
|||||||||||||||
Loss from operations
|
(4,417,202
|
)
|
(5,945,209
|
)
|
2,140,381
|
(8,222,030
|
)
|
|||||||||||||
Interest expense
|
—
|
(1,421,672
|
)
|
1,421,672
|
R |
—
|
||||||||||||||
Fair value change in warrant liability and premium conversion derivative
|
(126,457
|
)
|
157,942
|
(157,942
|
)
|
R |
(126,457
|
)
|
||||||||||||
Gain on note extinguishment
|
—
|
1,260,350
|
(1,260,350
|
)
|
R |
—
|
||||||||||||||
Interest income
|
42,235
|
8,572
|
—
|
50,807
|
||||||||||||||||
Net loss
|
$
|
(4,501,424
|
)
|
$
|
(5,940,017
|
)
|
$
|
2,143,761
|
$
|
(8,297,680
|
)
|
|||||||||
Net loss per share, basic and diluted
|
$
|
(4.40
|
)
|
$
|
(1.71
|
)
|
$
|
(1.20
|
)
|
|||||||||||
Weighted average common shares outstanding, basic and diluted
|
1,023,304
|
(1
|
)
|
3,482,163
|
2,421,936
|
P |
6,927,403
|
(1)
|
Adjusted for 1-for-4 Rexahn Reverse Stock Split
|
Rexahn
|
Ocuphire
|
Pro Forma
Adjustments
|
Notes
|
Pro Forma
Combined
|
||||||||||||||||
Revenues:
|
||||||||||||||||||||
Revenue
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||||||||
Total revenues
|
—
|
—
|
—
|
—
|
||||||||||||||||
Operating expenses:
|
||||||||||||||||||||
General and administrative
|
5,738,227
|
1,820,477
|
(488,069
|
)
|
Q,S
|
7,070,635
|
||||||||||||||
Research and development
|
5,476,776
|
2,372,502
|
—
|
7,849,278
|
||||||||||||||||
Acquired in-process research and development
|
—
|
—
|
—
|
—
|
||||||||||||||||
Total operating expenses
|
11,215,003
|
4,192,979
|
(488,069
|
)
|
14,919,913
|
|||||||||||||||
Loss from operations
|
(11,215,003
|
) |
(4,192,979
|
)
|
488,069
|
(14,919,913
|
)
|
|||||||||||||
Interest expense
|
—
|
(1,409,096
|
)
|
1,409,096
|
R
|
—
|
||||||||||||||
Fair value change in warrant liability and premium conversion derivative
|
2,265,869
|
(499,414
|
)
|
499,414
|
R |
|
2,265,869
|
|||||||||||||
Interest income
|
313,700
|
510
|
—
|
314,210
|
||||||||||||||||
Other
|
—
|
(67,981
|
)
|
—
|
(67,981
|
)
|
||||||||||||||
Net loss
|
$
|
(8,635,434
|
) |
$
|
(6,168,960
|
)
|
$
|
2,396,579
|
$
|
(12,407,815
|
)
|
|||||||||
Net loss per share, basic and diluted
|
$
|
(8.72
|
) |
$
|
(2.29
|
)
|
$
|
(2.22
|
)
|
|||||||||||
Weighted average common shares outstanding, basic and diluted
|
990,041
|
(1 |
)
|
2,692,793
|
1,916,768
|
P
|
5,599,602
|
(1)
|
Adjusted for 1-for-4 Rexahn Reverse Stock Split
|
1.
|
Description of Transaction
|
2.
|
Estimated Purchase Price
|
Estimated number of shares of the combined company to be owned by Rexahn’s stockholders(i)
|
1,120,800
|
|||
Multiplied by the fair value per share of Rexahn’s common stock(ii)
|
$
|
8.32
|
||
Total
|
|
9,325,056
|
||
Rexahn warrants assumed in merger
|
191,332
|
|||
Rexahn stock options assumed in merger
|
27
|
|||
Estimated transaction costs
|
1,780,907
|
|||
Total estimated purchase price
|
$
|
11,297,322
|
Net assets as of September 30, 2020
|
$
|
6,343,058
|
||
In process research and development(iii)
|
4,954,264
|
|||
Total estimated purchase price
|
$
|
11,297,322
|
(i) |
The final purchase price is be determined based in part on the number of shares of Rexahn common stock and the value of Rexahn Warrants and Rexahn Options outstanding immediately prior to the merger. For purposes of this unaudited pro
forma condensed combined financial information, the estimated number of shares represents 1,120,800 shares of Rexahn common stock outstanding as adjusted for a 1-for-4 Rexahn Reverse Stock Split that is to be effected prior to consummation of
the merger.
|
(ii) |
The estimated purchase price was based on the Rexahn September 30, 2020 closing price as reported on the Nasdaq Capital Market as adjusted for a 1-for-4 Rexahn Reverse Stock Split that was effected prior to consummation of the merger. The final purchase price arising from the actual transaction costs, the number of shares and fair value of Rexahn common stock as well as the fair value of Rexahn Warrants and Rexahn Options outstanding
immediately prior to the Closing could result in a total purchase price different from that assumed in this unaudited pro forma condensed combined financial information, and that difference may be material. Therefore, the estimated
consideration expected to be transferred reflected in this unaudited pro forma condensed combined financial information does not purport to represent what the actual consideration transferred will be upon completion of the merger. The actual
purchase price will fluctuate until the Closing, and the final valuation of the purchase consideration could differ significantly from the current estimate.
|
(iii) |
IPR&D represents the research and development projects of Rexahn which were in-process, but not yet completed, and which Ocuphire plans to advance. This includes the development of RX-3117, RX-0301 and RX-0047. Current accounting
standards require that the fair value of IPR&D projects acquired in an asset acquisition with no alternative future use be allocated a portion of the consideration transferred and charged to expense at the acquisition date. The acquired
assets did not have outputs or employees. The actual purchase price allocated to IPR&D will fluctuate until the Closing, and the final valuation of the IPR&D consideration could differ significantly from the current estimate.
|
3.
|
Pro Forma Adjustments
|
A. |
To reflect the conversion of the Ocuphire convertible notes (principal and accrued interest) and the application of premium conversion derivatives into shares of Rexahn common stock prior to the merger, in accordance with the terms of the
Note Conversion Agreement.
|
B. |
To record the remaining debt discount amortization expense on the Ocuphire convertible notes. The accelerated debt discount amortization expense is not reflected in the pro forma statements of operations because it does not have a
continuing impact. Adjustments to convertible notes are as follows:
|
September 30,
2020
|
||||
Conversion of Ocuphire’s convertible notes principal and interest (A)
|
$
|
(9,299,876
|
)
|
|
Debt discount amortization expense on Ocuphire’s convertible notes payable (B)
|
—
|
|||
Total
|
$
|
(9,299,876
|
)
|
C. |
To reflect accounting treatment of Ocuphire convertible notes conversion into common stock as a loss on extinguishment in connection with the merger. The loss on extinguishment is not reflected in the pro forma statements of operations
because it does not have a continuing impact.
|
D. |
To record the estimated fully vested fair value of Rexahn Options assumed in connection with the merger.
|
E. |
To reflect the estimated fair value of Rexahn Warrants assumed in connection with the merger (including both liability and equity classified portions), and assuming holders of Rexahn Warrants do not exercise their right to exchange their
Rexahn Warrants for cash in an amount equal to the Black-Scholes value of such warrants calculated as set forth therein and in accordance with the terms of such Rexahn Warrants.
|
F. |
To record Rexahn’s estimated transaction costs, such as severance and benefits, advisory fees and transactional fees, that were not incurred as of September 30, 2020. The Rexahn transaction costs are not reflected in the pro forma
statements of operations because they do not have a continuing impact.
|
G. |
To record Ocuphire’s estimated transaction costs, such as legal, accounting, advisory and other transactional fees, that were not incurred as of September 30, 2020. The Ocuphire transaction costs are not reflected in the pro forma
statements of operations because they do not have a continuing impact.
|
September 30,
2020
|
||||
Rexahn’s estimated transaction costs (F)
|
$
|
3,965,228
|
||
Ocuphire’s estimated transaction costs (G)
|
313,257
|
|||
Total
|
$
|
4,278,485
|
H. |
To reclassify proceeds receivable from convertible notes to other current assets as a result of the note conversions into Ocuphire common stock in connection with the merger.
|
I. |
To reflect the Pre-Merger Financing upon Closing for a total of $21.15 million in gross proceeds, less issuance costs of approximately $1.6 million. The accounting treatment under Accounting Standards Codification (ASC) 480 – Distinguishing Liabilities from Equity and ASC 815 – Derivatives and Hedging is in process related to the Pre-Merger Financing, including the accounting
classification of the Investor Warrants and Converted Additional Shares. For purposes of these pro formas, the Pre-Merger Financing has been classified as equity. Upon close of the Pre-Merger Financing, certain cash settlement provisions,
registration requirements, or other adjustments not afforded to other stockholders, may result in the Investor Warrants and Converted Additional Shares being accounted for as a liability on the balance sheet until all of the settlement
contingencies are resolved for those instruments. The liability accounting impact would result in some of the Pre-Merger Financing, currently classified in the pro formas as equity, to be reclassified as a liability on the condensed combined
balance sheet. In addition, any liability recognized for the Pre-Merger Financing would be subject to remeasurement at fair value as of each reporting period with offsetting impacts of the fair value changes to the statement of operations.
|
J. |
To adjust Rexahn’s historical financial statements to give pro forma effect to events in connection with the merger that include: 1) the elimination of Rexahn’s historical common stock, paid-in-capital and accumulated deficit balances; 2)
the elimination of Rexahn’s deferred revenue liability given the non-assumption of the obligation post-merger; and 3) the write-down of Rexahn’s facility lease and property and equipment reported values to reflect their fair value based on
their anticipated non-usage post-merger.
|
K. |
To reflect the following impacts to the historical financial statements to give pro forma effect to events in connection with the merger that include: 1) the expensing of Rexahn’s IPR&D; 2) the capitalization of the fair value of the
estimated number of common shares, warrants and stock options of the combined company to be owned by Rexahn Stockholders as adjusted for the 1-for-4 Rexahn Reverse Stock Split; 3) the impact of transaction costs impacting the estimated
purchase price of the merger; and 4) to reflect the impact of the Exchange Ratio to the outstanding common shares of the combined company. The IPR&D expense is not reflected in the pro forma statements of operations because it does not
have a continuing impact.
|
L. |
To reflect milestone payments due to Apexian upon Closing.
|
M. |
Adjustments to additional-paid-in-capital are as follows:
|
September 30,
2020
|
||||
Conversion of Ocuphire’s convertible notes and accrued interest (A)
|
$
|
9,299,784
|
||
To reflect application of premium conversion derivatives (A)
|
300,378
|
|||
To reflect extinguishment loss on convertible notes (C)
|
6,674,399
|
|||
Eliminate Rexahn’s pre-merger additional paid-in-capital balance (J)
|
(173,537,703
|
)
|
||
To reflect the fair value of Rexahn’s remaining common stock post-merger (K)
|
9,324,944
|
|||
To reflect assumption of Rexahn warrants post-merger (E)
|
187,674
|
|||
To reflect assumption of Rexahn stock options post-merger (D)
|
27
|
|||
To reflect impact of Exchange Ratio to pre-merger Ocuphire shares (K)
|
(33
|
)
|
||
To reflect Ocuphire pre-merger financing in connection with the merger (I)
|
|
19,501,132
|
|
|
Total
|
$
|
(128,429,398
|
)
|
N.
|
Adjustments to accumulated deficit are as follows:
|
September 30,
2020
|
||||
To reflect extinguishment loss on convertible notes (C)
|
$
|
(6,674,399
|
)
|
|
Rexahn’s estimated transaction costs (F)
|
(3,965,228
|
)
|
||
Milestone payment to Apexian (L)
|
(400,000
|
)
|
||
Eliminate Rexahn’s pre-merger accumulated deficit balance (J)
|
167,824,100
|
|||
To reflect impact of non-equity related Rexahn acquisition cost (G) (K)
|
(4,954,263
|
)
|
||
Total
|
$
|
151,830,210
|
O.
|
Adjustments to common stock par value are as follows:
|
September 30,
2020
|
||||
Conversion of Ocuphire’s convertible notes into common stock (A)
|
$
|
92
|
||
To reflect Ocuphire pre-merger financing in connection with the merger (I)
|
118
|
|||
Eliminate Rexahn’s pre-merger common stock balance (J)
|
(448
|
)
|
||
To reflect impact of Exchange Ratio to pre-merger Ocuphire shares (K)
|
33
|
|||
To reflect Rexahn’s ownership in the combined company (K)
|
112
|
|||
Total
|
$
|
(93
|
)
|
P. |
The pro forma combined basic and diluted net loss per share calculations have been adjusted to reflect the pro forma net loss for the nine months ended September 30, 2020 and for the year ended December 31, 2019. In addition, the number of
shares used in calculating the pro forma combined basic and diluted net loss per share has been adjusted to reflect the estimated total number of shares of common stock of the combined company that would be outstanding on a weighted-average
basis as of the closing of the merger. The following table is a reconciliation of the Company’s historical basic and diluted loss per share to its pro forma basic and diluted loss per share for the nine months ended September 30, 2020 and for
the year ended December 31, 2019.
|
Nine Months
Ended
September 30,
2020
|
Year Ended
December 31,
2019
|
||||||||
Basic and Diluted Loss Per Share:
|
|||||||||
As reported (Rexahn) and as adjusted for Rexahn Reverse Stock Split
|
a/d
|
$
|
(4.40
|
)
|
$
|
(8.72
|
)
|
||
As reported (Ocuphire)
|
b/e
|
$
|
(1.71
|
)
|
$
|
(2.29
|
)
|
||
Pro forma
|
c/f
|
$
|
(1.20
|
)
|
$
|
(2.22
|
)
|
||
Net loss :
|
|||||||||
As reported (Rexahn)
|
a
|
$
|
(4,501,424
|
)
|
$
|
(8,635,434
|
)
|
||
As reported (Ocuphire)
|
b
|
(5,940,017
|
)
|
(6,168,960
|
)
|
||||
Add: Rexahn’s transaction costs expensed through the statement of operations (Q)
|
2,113,368
|
447,077
|
|||||||
Add: Depreciation and amortization expenses associated with Rexahn operations (S)
|
27,013
|
40,992
|
|||||||
Add: Interest expense associated with Ocuphire’s convertible notes (R)
|
1,421,672
|
1,409,096
|
|||||||
Add: Fair Value adjustment related to Ocuphire premium conversion derivatives (R)
|
(157,942
|
)
|
499,414
|
||||||
Subtract: Gain on note extinguishment (R)
|
(1,260,350
|
)
|
—
|
||||||
Pro forma
|
c
|
$
|
(8,297,680
|
)
|
$
|
(12,407,815
|
)
|
||
Basic and Diluted Weighted Average Shares:
|
|||||||||
As reported (Rexahn) and as adjusted for Rexahn Reverse Stock Split
|
d
|
1,023,304
|
990,041
|
||||||
As reported (Ocuphire)
|
e
|
3,482,163
|
2,692,793
|
||||||
Add: Application of the estimated Exchange Ratio of 1.0579 to Ocuphire’s weighted average common shares outstanding
|
201,617
|
155,913
|
|||||||
Add: Conversion of Ocuphire’s convertible notes and accrued interest upon closing of the merger as adjusted for the Exchange Ratio of 1.0579
|
970,347
|
510,883
|
|||||||
Add: Close of Ocuphire private placement common stock and warrant financing upon closing of the merger as adjusted for the Exchange Ratio of 1.0579
|
1,249,972
|
1,249,972
|
|||||||
Pro forma
|
f
|
6,927,403
|
5,599,602
|
Q. |
To reflect the elimination of Rexahn’s transaction costs expensed through the statement of operations for the year ended December 31, 2019 and for the nine month period ended September 30, 2020.
|
R. |
To reverse interest expense and fair value of changes in premium conversion derivatives and gain on note extinguishment associated with the Ocuphire convertible notes. The pro forma income statement assumes conversion of the notes at the
beginning of the period presented.
|
S. |
To reflect the elimination of the historical Rexahn depreciation and amortization expense in the historical period that will not have a continuing impact on the pro forma statement of operations.
|