Attached files
| file | filename |
|---|---|
| 8-K - Travere Therapeutics, Inc. | e610298_8k-desert.htm |
| EX-2.1 - Travere Therapeutics, Inc. | e610298_ex2-1.htm |
| EX-99.1 - Travere Therapeutics, Inc. | e610298_ex99-1.htm |
| EX-99.3 - Travere Therapeutics, Inc. | e610298_ex99-3.htm |
| EX-10.1 - Travere Therapeutics, Inc. | e610298_ex10-1.htm |
Desert Gateway, Inc
Introduction to Pro-forma Condensed
Combined Financial Statements
(Unaudited)
The following unaudited pro-forma condensed combined financial statements give effect to the merger between Desert Gateway, Inc (“Desert”) and Retrophin, Inc. (“Retrophin”) and certain other transactions that Desert and Retrophin completed as of December 12, 2012.
On December 12, 2012, Retrophin consummated a merger transaction (the “Merger”) with Desert whereby 100% of the issued and outstanding shares of common and preferred stock of Retrophin were exchanged for 5,434,122 shares of common stock of Desert, a publicly traded company with no operations. As a result of the Merger, the former stockholders of Retrophin became the controlling stockholders of Desert owning 68.9% of Desert’s outstanding common shares upon completion of the Merger. Accordingly, the Merger of Retrophin and Gateway is a reverse merger that has been accounted for as a recapitalization of Retrophin. The historical financial statements of Retrophin, which is the business that survived the merger, will be presented as the historical financial statements of the combined reporting entity. The unaudited pro-forma information is presented for illustration purposes only in accordance with the assumptions set forth below and in the notes to the unaudited pro-forma condensed combined financial statements.
The unaudited pro-forma condensed combined balance sheet of Desert as of August 31, 2012 and Retrophin as of September 30, 2012 gives pro-forma effect to (i) the reverse merger and recapitalization of Retrophin, (ii) the issuance of 2,500,000 shares of Desert common stock upon the conversion of Desert convertible notes with an aggregate principal balance of $25,000, (iii) the issuance of 319,149 shares of Desert common stock in settlement of a $1,500,000 contingent liability that was triggered when the Merger was consummated as stipulated under an agreement that licenses certain technology to Retrophin, and (iv) certain other transactions completed at the time of the Merger as if Desert and Retrophin completed such transactions as of September 30, 2012.
The unaudited pro-forma condensed combined statements of operations of Retrophin and Desert for their combined (i) fiscal reporting years, and (ii) most recent combined interim reporting period give, effect to the Merger as if it had occurred as of the beginning of the periods presented.
The unaudited pro-forma financial information is presented for illustrative purposes only in accordance with the assumptions set forth below and in the notes to the unaudited pro-forma condensed combined financial statements. The unaudited pro-forma condensed combined balance sheet and condensed combined statements of operations should be read in conjunction with the separate historical financial statements of Desert Gateway, as filed with the Securities and Exchange Commission and issued in the Form 10-K for the year ended February 29, 2012 and the historical financial statements of Retrophin, appearing elsewhere herein. These unaudited pro-forma condensed combined financial statements may not be indicative of what would have occurred had the Merger been consummated on the indicated dates and should not be relied upon as an indication of future results of operations.
Desert Gateway, Inc and Subsidiaries
Unaudited Pro Forma Condensed Combined Balance Sheet
|
Historical
|
Pro Forma Adjustments | |||||||||||||||||||
|
Desert Gateway, Inc August 31, 2012
|
Retrophin, Inc. September 30, 2012
|
Retrophin, Inc. |
Desert Gateway, Inc.
|
Pro Forma As Adjusted
|
||||||||||||||||
|
(a)
|
(b)
|
|||||||||||||||||||
|
Assets
|
||||||||||||||||||||
|
Current assets
|
||||||||||||||||||||
|
Cash
|
$
|
3,900
|
$
|
2,189
|
$
|
710,500
|
k
|
$
|
$
|
716,589
|
||||||||||
|
Due from related parties
|
3,300
|
3,300
|
||||||||||||||||||
|
Prepaid expenses
|
30,431
|
30,431
|
||||||||||||||||||
|
Other current assets
|
-
|
15,781
|
15,781
|
|||||||||||||||||
|
Total current assets
|
3,900
|
51,701
|
710,500
|
766,101
|
||||||||||||||||
|
Property and equipment, net
|
-
|
9,037
|
9,037
|
|||||||||||||||||
|
Technology license
|
2,386,952
|
2,386,952
|
||||||||||||||||||
|
Total assets
|
$
|
3,900
|
$
|
2,447,690
|
$
|
710,500
|
$
|
-
|
$
|
3,162,090
|
||||||||||
|
Liabilities and Stockholders' Deficit
|
||||||||||||||||||||
|
Liabilities
|
||||||||||||||||||||
|
Technology license liability
|
$
|
$
|
1,300,000
|
$
|
$
|
$
|
1,300,000
|
|||||||||||||
|
Account payable and accrued expenses
|
33,417
|
1,185,106
|
200,000
|
h
|
1,568,523
|
|||||||||||||||
|
150,000
|
g
|
|||||||||||||||||||
|
Due to related parties
|
9,572
|
16,500
|
(9,572)
|
j
|
16,500
|
|||||||||||||||
|
Notes payable - related parties
|
914,764
|
914,764
|
||||||||||||||||||
|
Convertible debt due within one year
|
25,000
|
-
|
(25,000)
|
e
|
-
|
|||||||||||||||
|
Total liabilities
|
67,989
|
3,416,370
|
350,000
|
(34,572)
|
3,799,787
|
|||||||||||||||
|
Stockholders' Deficit
|
||||||||||||||||||||
|
Preferred stock Series A, $0.001 par value
|
-
|
127
|
(127)
|
d
|
-
|
|||||||||||||||
|
28
|
k
|
|||||||||||||||||||
|
(28)
|
l
|
|||||||||||||||||||
|
Preferred stock $.001 par value
|
1
|
-
|
(1)
|
j
|
-
|
|||||||||||||||
|
Common stock, $0.001 par value
|
754
|
(754)
|
c
|
-
|
||||||||||||||||
|
Common stock, $0.0001 par value
|
11
|
-
|
31
|
i
|
377
|
c
|
833
|
|||||||||||||
|
89
|
d
|
|||||||||||||||||||
|
250
|
e
|
|||||||||||||||||||
|
20
|
l
|
|||||||||||||||||||
|
57
|
m
|
|||||||||||||||||||
|
(2)
|
n
|
|||||||||||||||||||
|
Additional paid-in capital
|
78,989
|
19,545,693
|
754
|
c
|
(377)
|
c
|
28,599,024
|
|||||||||||||
|
127
|
d
|
(89)
|
d
|
|||||||||||||||||
|
(3,900)
|
h
|
24,750
|
e
|
|||||||||||||||||
|
1,499,969
|
i
|
(143,090)
|
f
|
|||||||||||||||||
|
710,472
|
k
|
9,573
|
j
|
|||||||||||||||||
|
(20)
|
l
|
|||||||||||||||||||
|
28
|
l
|
6,876,143
|
m
|
|||||||||||||||||
|
2
|
n
|
|||||||||||||||||||
|
Receivables due from stockholder
|
-
|
(434,329)
|
(434,329)
|
|||||||||||||||||
|
Deficit accumulated during the development stage
|
(143,090)
|
(20,080,925)
|
(150,000)
|
g
|
143,090
|
f
|
(28,803,225)
|
|||||||||||||
|
(196,100)
|
h
|
(6,876,200)
|
m
|
|||||||||||||||||
|
(1,500,000)
|
i
|
|||||||||||||||||||
|
Total stockholders' deficit
|
(64,089)
|
(968,680)
|
360,500
|
34,572
|
(637,697)
|
|||||||||||||||
|
Total liabilities and stockholders' deficit
|
$
|
3,900
|
$
|
2,447,690
|
$
|
710,500
|
$
|
0
|
$
|
3,162,090
|
||||||||||
Notes to Unaudited Pro-forma Balance Sheet of Desert as of August 31, 2012 and for Retrophin as of September 30, 2012
|
a.
|
Derived from the unaudited balance sheet of Desert as of August 31, 2012.
|
|
b.
|
Derived from the unaudited balance sheet of Retrophin as of September 30, 2012.
|
|
c.
|
Reflects the issuance of 3,772,880 shares of Desert common stock in exchange for 754,576 shares of Retrophin common stock based upon a 1 for 5 exchange ratio.
|
|
d.
|
Reflects the issuance of 889,287 shares of Desert common stock in exchange for the conversion of 127,041 shares of Retrophin preferred stock based upon a 1 to 7 conversion ratio.
|
|
e.
|
Reflects the conversion of $25,000 in principal of Desert convertible debt into 2,500,000 shares of Desert common stock prior to the Merger.
|
|
f.
|
Reflects the elimination of Desert's accumulated deficit in connection with the recapitalization (reverse merger) of Retrophin.
|
|
g.
|
Reflects the accrual of $150,000 of professional and other transaction fees incurred by Retrophin in connection with the Merger.
|
|
h.
|
Reflects the accrual of a $200,000 fee incurred by Retrophin with respect to its identification of Desert as a merger candidate.
|
|
i.
|
Reflects Retrophin's a $1,500,000 contingent liability settled in 319,149 shares of Desert common stock. The liability was stipulated under an agreement providing for the licensure of certain technology to Retrophin and is being treated as a charge to operations. .
|
|
j.
|
Reflects the cancellation of (i) all 501 shares of Desert Preferred stock outstanding at the time of the Merger, (ii) a $9,572 obligation due to related parties per the Merger agreement
|
|
k.
|
Reflects the issuances of Retrophin’s preferred stock which occurred subsequent to September 30, 2012 through December 12, 2012 (the Merger Date) as if they occurred on September 30, 2012. Retrophin sold 28,420 shares of Preferred Stock, yielding aggregate proceeds of $710,500 subsequent to September 30, 2012 but prior to the Merger.
|
|
l.
|
Reflects the issuance of 198,940 shares of Desert common stock in exchange for the conversion of 28,420 shares of Retrophin preferred stock based upon a 1 to 7 conversion ratio for the subsequent issuances.
|
|
m.
|
Reflects the acceleration of the vesting of Retrophin’s CEO’s unvested incentive shares upon the merger with Desert. There were 114,603 Retrophin shares exchanged for 573,015 shares of Desert common stock based on a 1 for 5 exchange ratio that resulted in a charge to compensation expense of $6,876,200 based on the unvested incentive shares fair value.
|
|
n.
|
Reflects the cancellation of 21,112 shares of Desert common stock by a Desert shareholder as a contribution of capital in December 2012
|
Desert Gateway, Inc and Subsidiaries
Unaudited Pro Forma Condensed Combined Sheet of Operations
|
Historical
|
Pro Forma Adjustments
|
|||||||||||||||||||
|
Desert Gateway, Inc- year ending February 29, 2012
|
Retrophin, Inc-period ending December 31, 2011
|
Desert Gateway, Inc
|
Retrophin, Inc.
|
Pro Forma Combined
|
||||||||||||||||
|
(b)
|
(a)
|
|||||||||||||||||||
|
Operating expenses
|
||||||||||||||||||||
|
Compensation and related costs
|
$ | - | $ | 2,227,203 | $ | $ | $ | 2,227,203 | ||||||||||||
|
Professional fees
|
- | 909,681 | - | 909,681 | ||||||||||||||||
|
Rent expense
|
- | 63,813 | 63,813 | |||||||||||||||||
|
Selling, general and administrative
|
12,825 | 62,999 | (12,825 | ) | c | 62,999 | ||||||||||||||
|
Total operating expenses
|
12,825 | 3,263,696 | (12,825 | ) | - | 3,263,696 | ||||||||||||||
|
Other income (expense)
|
||||||||||||||||||||
|
Interest income
|
- | 75 | 75 | |||||||||||||||||
|
Loss on foreign exchange transactions
|
- | (4,635 | ) | (4,635 | ) | |||||||||||||||
|
Interest and amortization of debt discount
|
(2,000 | ) | - | 2,000 | c | - | ||||||||||||||
|
Total other expense
|
(2,000 | ) | (4,560 | ) | 2,000 | - | (4,560 | ) | ||||||||||||
|
Net loss
|
$ | (14,825 | ) | $ | (3,268,256 | ) | $ | 14,825 | $ | - | $ | (3,268,256 | ) | |||||||
|
Net loss per common shares - basic and diluted
|
$ | (0.14 | ) | $ | $ | (0.39 | ) | |||||||||||||
|
Weighted average number of common shares, outstanding during the period - basic and diluted
|
106,681 | 8,338,837 | ||||||||||||||||||
Notes to Unaudited Pro-forma Statement of Operations of Desert for the year ended February 29, 2012 and Retrophin for the period from March 11, 2011 (inception) through December 31, 2011
|
a.
|
Derived from unaudited statement of operation of Desert for the year ended February 29, 2012
|
|
b.
|
Derived from unaudited statement of operation of Retrophin for the period from March 11, 2011 (inception) through December 31, 2011
|
|
c.
|
Reflect elimination of operations of Desert. These operations were discontinued as of the effective date of the Merger.
|
|
d.
|
.The pro-forma combined weighted average number of common shares outstanding was calculated as follows:
|
|
Historical weighted average number of common shares, Retrophin effectuated for the merger
|
| 1. | Desert shares outstanding prior to the Merger | 106,680 | ||||
| 2. | Shares of Desert stock issued to stockholders of Retrophin in exchange for Desert common shares | 5,434,120 | ||||
| 3. | Shares of Desert issued for Retrophin contingent liability | 319,149 | ||||
| 4. | Shares issued for conversion of Desert debt | 2,500,000 | ||||
| 5. | Shares of Desert cancelled as a contribution from a shareholder | (21,112 | ) | |||
| Total weighted average number of common shares outstanding | 8,338,837 |
Desert Gateway, Inc and Subsidiaries
Unaudited Pro Forma Condensed Combined Sheet of Operations
|
Historical
|
Pro Forma Adjustments
|
|||||||||||||||||||
|
Desert Gateway, Inc
|
Retrophin, Inc
|
Desert Gateway, Inc
|
Retrophin, Inc.
|
Pro Forma Combined
|
||||||||||||||||
|
(a)
|
(b)
|
|||||||||||||||||||
|
Operating expenses
|
||||||||||||||||||||
|
Compensation and related costs
|
$ | - | $ | 8,371,481 | $ | $ | - | $ | 8,371,481 | |||||||||||
|
Professional fees
|
- | 8,048,788 | 8,048,788 | |||||||||||||||||
|
Selling, general and administrative
|
6,783 | 274,622 | (6,783 | ) | c | 274,622 | ||||||||||||||
|
Rent expense
|
- | 63,000 | 63,000 | |||||||||||||||||
|
Total operating expenses
|
6,783 | 16,757,891 | (6,783 | ) | - | 16,757,891 | ||||||||||||||
|
Other income (expense)
|
- | |||||||||||||||||||
|
Interest income
|
- | 15,781 | 15,781 | |||||||||||||||||
|
Interest expense
|
(70,559 | ) | (70,559 | ) | ||||||||||||||||
|
Interest and amortization of debt discount
|
(1,000 | ) | - | 1,000 | c | - | ||||||||||||||
|
Total other expense
|
(1,000 | ) | (54,778 | ) | 1,000 | - | $ | (54,778 | ) | |||||||||||
|
Net loss
|
$ | (7,783 | ) | $ | (16,812,669 | ) | 7,783 | - | $ | (16,812,669 | ) | |||||||||
|
Net loss per common shares - basic and diluted
|
(0.07 | ) | $ | - | $ | (2.02 | ) | |||||||||||||
|
Weighted average number of common shares, outstanding during the period - basic and diluted
|
106,695 | 8,338,837 | ||||||||||||||||||
Notes to Unaudited Pro-forma Statement of Operations of Desert for the nine months ended August 31, 2012 and Retrophin for the nine months ended September 30, 2012
|
a.
|
Derived from unaudited statement of operations of Desert for the nine months ended August 31, 2012.
|
|
b.
|
Derived from unaudited statement of operations of Retrophin for the nine months ended September 30, 2012.
|
|
c.
|
Reflect the elimination of Desert’s historical operating results as Retrophin is the business entity that survives the Merger.
|
|
d.
|
The pro-forma combined weighted average number of common shares outstanding was calculated as follows:
|
|
Historical weighted average number of common shares, Retrophin effectuated for the merger
|
| 1. | Desert shares outstanding prior to the Merger | 106,680 | ||||
| 2. | Shares of Desert stock issued to stockholders of Retrophin in exchange for Desert common shares | 5,434,120 | ||||
| 3. | Shares of Desert issued for Retrophin contingent liability | 319,149 | ||||
| 4. | Shares issued for conversion of Desert debt | 2,500,000 | ||||
| 5. | Shares of Desert cancelled as a contribution from a shareholder | (21,112 | ) | |||
| Total weighted average number of common shares outstanding | 8,338,837 | |||||