UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------------------
FORM 8-K/A
Amendment No. 2
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report - March 12, 2003
(March 11, 2003) (Date of
earliest event reported)
Hemispherx Biopharma, Inc.
(Exact name of registrant as specified in its charter)
Delaware 0-27072 52-0845822
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification
Number)
1617 JFK Boulevard 19103
(Address of principal executive offices) (Zip Code)
Area Code (215) 988-0080
(Registrant's telephone number)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
As noted in the previous Current Report on Form 8-K filed On March 13,
2003, Hemispherx Biopharma, Inc. (the "Company") executed two agreements with
Interferon Sciences, Inc. ("ISI") to purchase certain assets of ISI (the two
asset purchase transactions are hereinafter referred to as the "First Asset
Purchase" and the "Second Asset Purchase") and consummated the First Asset
Purchase.
In the second agreement with ISI (the "Second Asset Purchase
Agreement"), ISI agreed to sell to the Company all of its rights to ALFERON N
Injection(R), a pharmaceutical product used for the treatment of certain types
of genital warts in adults (the "Product") and other assets related to the
Product including, but not limited to, real estate and machinery. For these
assets, the Company agreed to:
(i) issue 424,528 shares of its Common Stock which has a Market Value (as
defined in the Second Asset Purchase Agreement) of $675,000 and a guaranteed
value of $675,000;
(ii) issue an additional 62,500 shares of Common Stock without a guaranteed
value;
(iii) continue to pay ISI 6 % of the net sales of the Product; and
(iv) satisfy certain obligations of ISI.
On March 17, 2004, the Company consummated the Second Asset Purchase.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements.
None.
(b) Unaudited Pro forma Financial Information.
The required Pro Forma Financial Information related to the Registrant's
acquisition of certain assets of Interferon Sciences, Inc. on March 17, 2004 are
attached hereto as Exhibit 99.1.
(c) Exhibits.
None.
SIGNATURE
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.
Hemispherx Biopharma, Inc.
By: /s/ William A. Carter
------------------------
March 26, 2004 William A. Carter, M.D., President
Exhibit 99.1
Unaudited Pro Forma Consolidated Financial Statements
On March 11, 2003 the Company executed two agreements with Interferon Sciences,
Inc. ("ISI") to purchase certain of its assets.
In the first agreement with ISI, the Company effectively acquired the operations
of ISI including its inventory of Alferon N Injection(R), and a limited license
for the production, manufacture use, marketing and sale of this product. This
transaction was completed on March 11, 2003. For these assets, the Company:
i) Issued 487,028 shares of its common stock, and
ii) Agreed to pay ISI 6% of the net sales of the Product
The Company also is required to pay ISI a service fee and pay certain of ISI's
obligation related to the product.
In the second agreement with ISI, effectively an asset acquisition, ISI agreed
to sell to the Company all of ISI's rights to the product and other assets
related to the product including, but not limited to, real estate and machinery.
This transaction was completed on March 17, 2004. For these assets, the Company:
i) Issued on March 17, 2004 an additional 487,028 shares of its common stock;
and will
ii) Continue to pay ISI 6% of the net sales of the product
Pro Forma Condensed Consolidated Statement of Operations (Unaudited) of
the Company
The following unaudited pro forma consolidated statement of operations of the
Company for the year ended December 31, 2003 presents the results of the Company
assuming the above-mentioned two agreements between the Company and ISI had
occurred on January 1, 2003.
The unaudited pro forma consolidated statement of operations should be read in
conjunction with the consolidated financial statements of the Company for the
year ended December 31, 2003, including the notes thereto, included in the
Company's Annual Report on Form 10-K/A. The pro forma data is for informational
purposes only and may not necessarily reflect the Company's results of
operations for the year ended December 31, 2003 had the Company consummated the
two agreements on January 1, 2003.
Hemispherx Biopharma, Inc. and Subsidiaries
Unaudited Pro Forma Consolidated Statement of Operations
Year Ended December 31, 2003
(in thousands, except per share data)
(4) Pro Forma
(3) Pro Forma As Further
Pro Forma Pro Forma Further Adjusted
(1) (2) Adjustments as Adjusted Adjustment For
Hemispherx Interferon For First For First For Second Second
Biopharma, Inc. Sciences, Inc. Asset Asset Asset
And Asset
Subsidiaries And Subsidiary Acquisition Acquisition Acquisition Acquisition
------------ -------------- ----------- ----------- ----------- ------------
2003 2003
------ ------
Revenues:
Sales of product
$509 $ 242 $ $ 751 $ $ 751
Clinical
treatment
programs 148 - - 148 - 148
-------------- --------------- --------------- ----------- ------- ---------------
Total Revenues
657 242 899 899
-------------- --------------- --------------- ----------- ------- ---------------
Costs and
expenses:
Production
costs/Cost of
Goods Sold 502 267 47 (a) 816 60 (d) 876
Research and
development 3,150 176 (7) (a) 3,319 8 (d) 3,327
General and
administrative 4,257 963 (675) (a) 4,545 8 (d) 4,553
Royalty Expense
45 (b) 45 45
-------------- --------------- --------------- ----------- ------- ---------------
Total cost and
expenses 7,909 1,406 (590) 8,725 76 8,801
-------------- --------------- --------------- ----------- ------- ---------------
Interest and
other income 80 13 (13) (a) 80 80
Interest
Expense and
Financing Costs (68) (c)
(7,598) (274) 274 (a) (7,666) (7,666)
Metacine
Settlement 1,550 (1,550) (a)
Service fee
income 451 (451) (a)
Other income 14 (14) (a)
Bulk sale of
Alferon
inventory 1,149 (1,149) (a)
-------------- --------------- --------------- ----------- ------- ---------------
Net loss $ (14,770) $ 1,739 $ (2,381) $ (15,412) $ (76) $ (15,488)
-------------- --------------- --------------- ----------- ------- ---------------
Basic and
diluted loss
per share $ (.42) $ (.43) $ (.43)
-------------- ----------- ---------------
Basic and
diluted weighted
Average common
shares
outstanding
35,235 35,327 36,056
-------------- ----------- ------- ---------------
See accompanying notes to consolidated statement of operations.
NOTES TO UNAUDITED PROFORMA
CONSOLIDATED STATEMENT OF OPERATIONS
The following notes describe the column headings in the unaudited pro forma
consolidated statement of operations and the pro forma adjustments that have
been made to this statement:
(1) Reflects the unaudited consolidated historical statement of operations
of Hemispherx Biopharma, Inc. and subsidiaries for the year ended December
31, 2003.
(2) Reflects the unaudited consolidated historical statement of operations
for ISI for the period ended September 30, 2003, which date represents its
most recent available financial statements.
(3) Reflects pro forma adjustments relating to the first acquisition on
March 11, 2003 of certain assets of ISI and the related funding as follows:
(a) Adjustments to reflect the following:
Production cost related to sales of product by ISI
are based on the Company's cost of inventory
purchased from ISI in the First Asset Acquisition. A
portion of the Company's total cost of the net assets
was allocated to inventory in accordance with FASB
141.
ISI debt was not assumed by the Company, interest on
the debt has been eliminated.
The ISI building was acquired in the Second Asset
Acquisition. Depreciation expense related to the
building has been included for the First Asset
Acquisition adjustments. The depreciation of the
building, based on the cost of the Second Asset
Acquisition, is recorded in entry 4(e) below.
Service fee income paid to ISI by the Company, the
gain on the bulk sale of the Alferon inventory to the
Company and the Metacine settlement have been
eliminated.
General and administrative expenses beyond March 11,
2003 have been eliminated because ISI's general and
administrative expenses subsequent to that date are
not related to the Alferon business. All expenses
related to the Alferon business subsequent to March
11, 2003 have been included in the Company's
historical results for the period from March 11, 2003
through December 31, 2003.
Production
Cost / Cost
of Sold Goods R&D G&A Other Total
---------------------------- ------------------- ------- --------- ------------ --------------
Inventory $(109) $(109)
---------------------------- ------------------- ------- --------- ------------ --------------
---------------------------- ------------------- ------- --------- ------------ --------------
Interest expense $274 274
---------------------------- ------------------- ------- --------- ------------ --------------
---------------------------- ------------------- ------- --------- ------------ --------------
Interest income (13) (13)
---------------------------- ------------------- ------- --------- ------------ --------------
---------------------------- ------------------- ------- --------- ------------ --------------
Depreciation 62 $7 $7 76
---------------------------- ------------------- ------- --------- ------------ --------------
---------------------------- ------------------- ------- --------- ------------ --------------
Service fee income (451) (451)
---------------------------- ------------------- ------- --------- ------------ --------------
---------------------------- ------------------- ------- --------- ------------ --------------
Other income (14) (14)
---------------------------- ------------------- ------- --------- ------------ --------------
---------------------------- ------------------- ------- --------- ------------ --------------
Bulk sale of Alferon
inventory (1,149) (1,149)
---------------------------- ------------------- ------- --------- ------------ --------------
---------------------------- ------------------- ------- --------- ------------ --------------
G&A after
March 11, 2003 668 668
---------------------------- ------------------- ------- --------- ------------ --------------
---------------------------- ------------------- ------- --------- ------------ --------------
Metacine Settlement - - - (1,550) (1,550)
---------------------------- ------------------- ------- --------- ------------ --------------
---------------------------- ------------------- ------- --------- ------------ --------------
Totals $(47) $7 $675 $(2,903) $(2,268)
---------------------------- ------------------- ------- --------- ------------ --------------
(b) Increase in general and administrative costs resulting from the
recognition of 6% royalty charges on the net sales of the acquired
ALFERON N injection product.
(c) Increase in interest for period from January 1, 2003 through March
11, 2003 for issuance of 6% Senior Convertible Debentures on March 12,
2003.
(4) Reflects pro forma adjustments relating to the second acquisition of
certain assets of ISI as follows:
(d) Adjustments reflect depreciation expense relating to the acquired
building as result of the second acquisition of certain assets of ISI.
Pro Forma Condensed Consolidated Balance Sheet (Unaudited) of the Company
The following unaudited pro forma condensed consolidated balance sheet of the
Company as of December 31, 2003 presents the financial position of the Company
assuming the asset sale had occurred on December 31, 2003. The unaudited pro
forma condensed consolidated balance sheet should be read in conjunction with
the consolidated financial statements of the Company, including the notes
thereto for the year ended December 31, 2003, included in the Company's Annual
Report on Form 10-K/A. The pro forma data is for informational purposes only and
may not necessarily reflect the Company's financial position or what the
Company's financial position would have been had the Company consummated the
asset sale on December 31, 2003.
Hemispherx Biopharma, Inc. and Subsidiaries
Unaudited Pro Forma Consolidated Balance Sheet
December 31, 2003
(in thousands)
PRO FORMA
(2) AS
(1) PRO FORMA ADJUSTED
HEMISPHERX ADJUSTMENTS FOR
BIOPHARMA, FOR SECOND SECOND
INC. AND ASSET ASSET
SUBSIDIARIES ACQUISITION ACQUISITION
------------ ----------- -----------
ASSETS
Current Assets:
Cash and cash equivalents $ 3,764 $ $3,764
-
Short term investments 1,495 - 1,495
Inventory 2,896 - 2,896
Accounts and other receivables 282 - 282
Prepaid and other current assets 170 - 170
-------------- --------------------- ---------------------
Total current assets 8,607 8,607
-------------- --------------------- ---------------------
Property, plant and equipment, 94 3,212(2) 3,306
net
Patent and trademark rights, net 1,027 1,027
Investments in unconsolidated
affiliates 408 408
Deferred financing costs 393 393
Deferred acquisition costs 1,546 (1,546)(2)
Advance receivable 1,300 1,300
Other assets 29 29
-------------- --------------------- ---------------------
Total assets $13,404 $1,666 $15,070
============== ===================== =====================
LIABILITIES
Current liabilities:
Accounts payable $488 $ - $488
Accrued expenses 1,119 - 1,119
-------------- --------------------- ---------------------
Total current liabilities 1,607 - 1,607
-------------- --------------------- ---------------------
Long term debt-net of
current portion 2,058 2,058
Redeemable common stock 491 1,452 (2) 1,943
Stockholders' equity :
Common stock 39 39
214 (2)
Additional paid-in capital 123,054 1,769 (3) 125,037
Accumulated deficit (113,843) (1,769)(3) (115,612)
Treasury stock (2) (2)
-------------- --------------------- ---------------------
Total stockholders' equity 9,248 214 9,462
-------------- --------------------- ---------------------
Total liabilities and $ 13,404 $ 1,666 $15,070
stockholders' equity
============== ===================== =====================
See accompanying notes to consolidated balance sheet
NOTES TO UNAUDITED PROFORMA
CONSOLIDATED BALANCE SHEET
The following notes describe the column headings in the unaudited pro-forma
consolidated balance sheet and the pro forma adjustments that have been made to
this balance sheet:
(1)Reflects the consolidated balance sheet of Hemispherx Biopharma Inc. and
subsidiaries as of December 31, 2003.
(2) Reflects pro forma adjustments for the second acquisition of certain
assets of ISI totaling $3.1 million and the assumption of certain
obligations, including those settled via the issuance of shares of the
Company's common stock. The value of the common shares issued to ISI
approximated $1.7 million, of which approximately $1.5 million is
redeemable and reflected as such.
As a result of the acquisition, the following table summarizes the estimated
fair values of the property acquired.
(AMOUNTS IN THOUSANDS)
Second Acquisition
Cost of Building and Equipment :
Issued 487,028 shares to ISI $1,666
Issued 581,761 shares to ISI Creditors $907
Assumed Liability for Tax Lien 639 1,546
---- ---------
Total Cost of Property Acquired $3,212
========
The shares issued to ISI were valued at $3.42 per share which was the closing
price of the Company's shares on the American Stock Exchange as of March 17,
2004. The shares issued to ISI creditors were values at $1.56 per share which
was the closing price of the Company's shares on the American Stock Exchange as
of March 12, 2003.
(3) Represents the estimated intrinsic value of 1,450,000 stock warrants
granted to the Company's Chief Executive Officer during October 2003, that
became vested upon the second acquisition of certain assets from ISI.