Attached files
| file | filename |
|---|---|
| 8-K/A - FORM 8-K/A - CORETEC GROUP INC. | v462442_8ka.htm |
| EX-99.3 - EXHIBIT 99.3 - CORETEC GROUP INC. | v462442_ex99-3.htm |
| EX-99.2 - EXHIBIT 99.2 - CORETEC GROUP INC. | v462442_ex99-2.htm |
Exhibit 99.4
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
On September 30, 2016, the Members of Coretec Industries, LLC (“Coretec”) sold all of their membership interests in Coretec to 3DIcon Corporation (“3DIcon” or the “Company”) in exchange for the Company’s issuance of an aggregate 4,760,872 shares of the Company’s Series B Convertible Preferred Stock to the Members, pursuant to a Share Exchange Agreement dated May 31, 2016.
The unaudited pro forma condensed combined balance sheet as of June 30, 2016 assumes that the Share Exchange Agreement closing date took place on June 30, 2016, and combines the historical balance sheets of 3DIcon and Coretec as of June 30, 2016. The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2015 and six months ended June 30, 2016 assumes that the Share Exchange Agreement closing date took place on January 1, 2015, and combines the historical results of 3DIcon and Coretec for the year ended December 31, 2015 and the six months ended June 30, 2016.
The following unaudited pro forma condensed combined financial statements give effect to the reverse acquisition between 3DIcon and Coretec pursuant to the Share Exchange Agreement, and are presented herein for illustrative purposes and are not necessarily indicative of the financial position or results of operations in future periods or the results that actually would have been realized had 3DIcon and Coretec been a combined company during the specified periods. The unaudited pro forma condensed combined financial statements do not give effect to the potential impact of any cost savings or operating efficiencies that may result from the transaction or the costs to achieve such cost savings or operating efficiencies.
These unaudited pro forma condensed combined financial statements were prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and are based on assumptions and adjustments described in the accompanying notes. Assets and liabilities of 3DIcon will be measured at fair value and added to the assets and liabilities of Coretec, and the historical results of operations of Coretec will be reflected in the results of operations of the Company following the Share Exchange closing date.
Coretec was determined to be the accounting acquirer based upon the terms of the Share Exchange Agreement and other factors including:
(i) The Coretec Members beneficially own approximately 65% of 3DIcon’s common stock on a fully-diluted basis following the Share Exchange.
(ii) In connection with the closing of the Share Exchange Agreement, Victor F. Keen, CEO of 3DIcon, became Co-Chairman of the Company and Simon Calton, Chairman of Coretec’s Board of Directors, became Co-Chairman of the Company. Doug Freitag, a former consultant to Coretec, became CEO and a director of the Company at closing. The rest of the Board consists of Ron Dombrowski and Dennis Anderson (both originally affiliated with Coretec). Accordingly, the Board is controlled by persons formerly affiliated with Coretec.
3DIcon’s historical financial information was derived from, and should be read in conjunction with, its audited financial statements for the year ended December 31, 2015 (as filed in its Annual Report on Form 10-K with the Securities and Exchange Commission (the “SEC”) on March 30, 2016) and its unaudited consolidated financial statements for the three and six months ended June 30, 2016 (as filed in its Quarterly Report on Form 10-Q with the SEC on August 15, 2016). Coretec’s financial information for the period from June 2, 2015 (inception) to December 31, 2015 was derived from, and should be read in conjunction with, its audited financial statements for the period from June 2, 2015 (inception) to December 31, 2015, as filed as exhibit 99.2 to this filing. Coretec’s financial information for the six months ended June 30, 2016 was derived from, and should be read in conjunction with, its unaudited financial statements for the three and six months ended June 30, 2016, filed as exhibit 99.3 to this filing. The foregoing financial information should be read in conjunction with 3DIcon’s previously filed Current Report on Form 8-K, dated October 6, 2016 as filed with the SEC.
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3DIcon CORPORATION
Unaudited Pro Forma Condensed Combined Balance Sheet
June 30, 2016
| Pro Forma | Pro Forma | |||||||||||||||||||
| Coretec | 3DIcon | Combined | Adjustments | Combined | ||||||||||||||||
| Assets | ||||||||||||||||||||
| Current assets: | ||||||||||||||||||||
| Cash | $ | 500 | $ | 14,083 | $ | 14,583 | $ | - | $ | 14,583 | ||||||||||
| Prepaid expenses | 23,958 | 7,847 | 31,805 | - | 31,805 | |||||||||||||||
| Total current assets | 24,458 | 21,930 | 46,388 | - | 46,388 | |||||||||||||||
| Property and equipment, net | 6,689 | - | 6,689 | - | 6,689 | |||||||||||||||
| Other assets: | ||||||||||||||||||||
| Goodwill | - | - | - | 428,074 | (A) | 428,074 | ||||||||||||||
| Intangible assets, net | 19,444 | - | 19,444 | 1,400,000 | (A) | 1,419,444 | ||||||||||||||
| Deposits-other | - | 2,315 | 2,315 | - | 2,315 | |||||||||||||||
| Total other assets | 19,444 | 2,315 | 21,759 | 1,828,074 | 1,849,833 | |||||||||||||||
| Total Assets | $ | 50,591 | $ | 24,245 | $ | 74,836 | $ | 1,828,074 | $ | 1,902,910 | ||||||||||
| Liabilities and Stockholders' Equity (Deficiency) | ||||||||||||||||||||
| Current liabilities: | ||||||||||||||||||||
| Notes and debentures payable | $ | - | $ | 89,466 | $ | 89,466 | $ | - | $ | 89,466 | ||||||||||
| Accounts payable | 43,284 | 368,936 | 412,220 | - | 412,220 | |||||||||||||||
| Accrued salaries | - | 89,299 | 89,299 | - | 89,299 | |||||||||||||||
| Accrued interest - related parties | 14,355 | - | 14,355 | - | 14,355 | |||||||||||||||
| Accrued interest | - | 16,058 | 16,058 | - | 16,058 | |||||||||||||||
| Total current liabilities | 57,639 | 563,759 | 621,398 | - | 621,398 | |||||||||||||||
| Notes payable - related parties | 286,092 | 75,000 | 361,092 | - | 361,092 | |||||||||||||||
| Total Liabilities | 343,731 | 638,759 | 982,490 | - | 982,490 | |||||||||||||||
| Stockholders' equity (deficiency): | ||||||||||||||||||||
| Preferred stock, Series A convertible, $0.0002 par value | - | 69 | 69 | - | 69 | |||||||||||||||
| Preferred stock, Series B convertible, $0.0002 par value | - | 322 | 322 | 952 | (A) | 1,274 | ||||||||||||||
| Common stock $0.0002 par value | - | 296,351 | 296,351 | - | 296,351 | |||||||||||||||
| Additional paid-in capital | - | 21,694,060 | 21,694,060 | (20,778,194 | )(A) | 915,866 | ||||||||||||||
| Accumulated deficit | - | (22,605,316 | ) | (22,605,316 | ) | 22,312,176 | (A) | (293,140 | ) | |||||||||||
| Members' deficit | (293,140 | ) | - | (293,140 | ) | 293,140 | (A) | - | ||||||||||||
| Total Stockholders' Equity (Deficiency) | (293,140 | ) | (614,514 | ) | (907,654 | ) | 1,828,074 | 920,420 | ||||||||||||
| Total Liabilities and Stockholders' Equity (Deficiency) | $ | 50,591 | $ | 24,245 | $ | 74,836 | $ | 1,828,074 | $ | 1,902,910 | ||||||||||
See notes to unaudited pro forma condensed combined financial statements
| 2 |
3DIcon CORPORATION
Unaudited Pro Forma Condensed Combined Statement of Operations
Six Months Ended June 30, 2016
| Pro Forma | Pro Forma | |||||||||||||||
| Coretec | 3DIcon | Adjustments | Combined | |||||||||||||
| Income: | ||||||||||||||||
| Grant income | $ | - | $ | - | $ | - | $ | - | ||||||||
| Total income | - | - | - | - | ||||||||||||
| Expenses: | ||||||||||||||||
| Research and development | 81,644 | 4,930 | 40,115 | (B) | 126,689 | |||||||||||
| General and administrative | 64,936 | 438,327 | - | 503,263 | ||||||||||||
| Interest | 11,307 | 3,069 | - | 14,376 | ||||||||||||
| Total expenses | 157,887 | 446,326 | 40,115 | 644,328 | ||||||||||||
| Net loss | $ | (157,887 | ) | $ | (446,326 | ) | $ | (40,115 | ) | $ | (644,328 | ) | ||||
| Loss per share: | ||||||||||||||||
| Basic and diluted | $ | (0.000 | ) | $ | (0.000 | ) | ||||||||||
| Weighted average shares outstanding, basic and diluted | 1,390,428,810 | 1,390,428,810 | ||||||||||||||
See notes to unaudited pro forma condensed combined financial statements
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3DIcon CORPORATION
Unaudited Pro Forma Condensed Combined Statement of Operations
Year Ended December 31, 2015
| Pro Forma | Pro Forma | |||||||||||||||
| Coretec (1) | 3DIcon | Adjustments | Combined | |||||||||||||
| Income: | ||||||||||||||||
| Grant income | $ | - | $ | 5,122 | $ | - | $ | 5,122 | ||||||||
| Total income | - | 5,122 | - | 5,122 | ||||||||||||
| Expenses: | ||||||||||||||||
| Research and development | - | 47,738 | 80,229 | (B) | 127,967 | |||||||||||
| General and administrative | 123,453 | 800,012 | - | 923,465 | ||||||||||||
| Interest | 11,800 | 57,787 | - | 69,587 | ||||||||||||
| Total expenses | 135,253 | 905,537 | 80,229 | 1,121,019 | ||||||||||||
| Net loss | $ | (135,253 | ) | $ | (900,415 | ) | $ | (80,229 | ) | $ | (1,115,897 | ) | ||||
| Loss per share: | ||||||||||||||||
| Basic and diluted | $ | (0.001 | ) | $ | (0.001 | ) | ||||||||||
| Weighted average shares outstanding, basic and diluted | 885,586,389 | 885,586,389 | ||||||||||||||
(1) The results of operations of Coretec are included for the period from June 2, 2015 (inception) to December 31, 2015.
See notes to unaudited pro forma condensed combined financial statements
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NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
1. Description of Transaction and Basis of Presentation
Basis of Presentation
The unaudited pro forma condensed combined financial statements were prepared in accordance with the regulations of the SEC. The unaudited pro forma condensed combined balance sheet as of June 30, 2016 is presented as if the merger had been completed on June 30, 2016.
The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2015 combines the unaudited historical statements of operations of 3DIcon and Coretec for their respective periods ended December 31, 2015 and gives pro forma effect to the acquisition as if it had been completed on January 1, 2015.
The unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2016 combines the unaudited historical statements of operations of 3DIcon and Coretec for their respective six month periods ended June 30, 2016, and gives pro forma effect to the acquisition as if it had been completed on January 1, 2015.
Based on the terms of the merger, Coretec is deemed to be the acquiring company for accounting purposes and the transaction.
Description of Transaction
On May 31, 2016, the Company entered into a Share Exchange Agreement with Coretec and the Members, which Members held all outstanding membership interests in Coretec. On September 30, 2016 (the “Closing Date”), the Company closed the transaction contemplated by the Share Exchange Agreement. Pursuant to the Share Exchange Agreement, the Members agreed to sell all their membership interests in Coretec to the Company in exchange for the Company’s issuance of an aggregate 4,760,872 shares of the Company’s Series B Convertible Preferred Stock to the Members (the “Exchange”). Coretec became a wholly-owned subsidiary of 3DIcon and the Members beneficially own approximately 65% of 3DIcon’s common stock on a fully-diluted basis. Upon the closing of the Share Exchange Agreement, two of the current Company’s directors resigned and three new directors associated with Coretec were nominated and elected, giving control of the board of directors to former Coretec Members. Accordingly, the acquisition was accounted for as a reverse acquisition under the provisions of ASC 805-40 Business Combinations – Reverse Acquisitions, with Coretec being the acquirer for accounting purposes and 3DIcon being the accounting acquiree. It was determined that Coretec was the accounting acquirer as a result of the former Coretec Members (a) beneficially owning approximately 65% of 3DIcon’s common stock on a fully-diluted basis; and (b) controlling the Board of Directors of the combined company.
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2. Reverse Acquisition
The effective consideration transferred is determined based upon the amount of membership units that Coretec would have had to issue to 3DIcon shareholders in order to provide the same ownership ratios as previously discussed. The fair value of the consideration effectively transferred by Coretec should be based on the most reliable measure. In this case, the fair value of the 3DIcon equity provided a more reliable basis for measuring the consideration effectively transferred than the estimated fair value of the membership units of Coretec.
The effective consideration transferred was $1,213,560 as follows:
| 3DIcon business enterprise value | $ | 1,378,026 | ||
| Less: Interest bearing debt | (164,466 | ) | ||
| 3DIcon equity value | $ | 1,213,560 |
The following summarizes the preliminary allocation of the purchase price:
| Consideration effectively transferred | $ | 1,213,560 | ||||||
| Net recognized value of 3DIcon tangible assets and liabilities assumed: | ||||||||
| Cash | 14,083 | |||||||
| Prepaid expenses and other assets | 7,847 | |||||||
| Deposits | 2,315 | |||||||
| Accounts payable and accrued expenses | (474,293 | ) | ||||||
| Debentures and notes payable | (164,466 | ) | ||||||
| Total net liabilities assumed | 614,514 | |||||||
| Less: Estimated fair value of identified intangibles | (1,400,000 | ) | ||||||
| Goodwill | $ | 428,074 |
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3. Pro Forma Adjustments
The unaudited pro forma combined financial statements include pro forma adjustments to give effect to certain significant transactions as a direct result of the acquisition. The pro forma adjustments are as follows:
(A) Record Reverse Acquisition
| Assets | Goodwill | Intangibles | ||||||||||||||
| Estimated fair value of patents | $ | - | $ | 1,400,000 | ||||||||||||
| Estimated value of goodwill | 428,074 | - | ||||||||||||||
| $ | 428,074 | $ | 1,400,000 | |||||||||||||
| Prefrred Stock | Additional | |||||||||||||||
| Stockholders' Equity | Series B Convertible | Paid-in- Capital | Accumulated Deficit | Members' Deficit | ||||||||||||
| Transfer Coretec’s members’ deficit | $ | - | $ | - | $ | (293,140 | ) | $ | 293,140 | |||||||
| Eliminate 3DIcon’s accumulated deficit | - | (22,605,316 | ) | 22,605,316 | - | |||||||||||
| Record reverse acquisition | 952 | 1,827,122 | - | - | ||||||||||||
| $ | 952 | $ | (20,778,194 | ) | $ | 22,312,176 | $ | 293,140 | ||||||||
(B) Pro Forma Amortization
The following table summarizes the estimated fair values of the 3DIcon intangible assets and their estimated useful lives:
| Estimated Fair Value | Estimated Useful Lives | Amortization Six Months Ended June 30, 2016 | Amortization Year Ended December 31, 2015 | |||||||||||
| Patents | $ | 1,400,000 | 17.45 years | $ | 40,115 | $ | 80,229 | |||||||
| Goodwill | 428,074 | N/A | - | - | ||||||||||
| $ | 1,828,074 | $ | 40,115 | $ | 80,229 | |||||||||
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