Quarterly report pursuant to Section 13 or 15(d)

Acquisitions

v3.4.0.3
Acquisitions
 3 Months Ended
Mar. 31, 2016
Business Combinations [Abstract]  
Business Combination Disclosure [Text Block]
12. Acquisitions
 
Jade Therapeutics, Inc. Acquisition
 
Effective March 7, 2016, the Company acquired all of the capital stock of Jade Therapeutics, Inc. (“Jade”), a privately-held company developing locally-administered, polymer-based products designed to treat poorly-served ophthalmic indications. With the Jade Acquisition, Jade became a wholly-owned subsidiary of EyeGate. Under the terms of the Jade Acquisition agreement, in consideration for 100% of the outstanding equity interests in Jade, we repaid Jade liabilities of up to $300,000 and agreed to issue 765,728 shares of our common stock, 90% of which were issued at the closing, and 10% of which will be held back for 18 months in order to satisfy post-closing adjustments or indemnification obligations. The Jade Acquisition also includes a cash earn-out provision calling for an additional cash payment of  $2,164,451, contingent upon a Jade product receiving FDA marketing approval. The fair value of the shares we agreed to issue in the Jade Acquisition was approximately $2.910 million based on the closing price per share of our Common Stock as reported by NASDAQ Stock Exchange on the closing date of the acquisition, $3.80 per share.
 
The following table summarizes the preliminary purchase price allocation and the estimated fair value of the net assets acquired and liabilities assumed in the Jade Acquisition at the date of acquisition. The purchase price allocation for Jade is preliminary pending completion of the fair value analysis of acquired assets and liabilities:
 
 
 
Jade
 
Current assets (1)
 
$
600,604
 
Intangible assets
 
 
2,702,314
 
Property, plant and equipment (net)
 
 
649
 
Accounts payable and other liabilities
 
 
(393,801)
 
Contingent consideration
 
 
1,210,000
 
Assumed liabilities
 
 
(300,000)
 
Total purchase price
 
$
3,819,766
 
 
(1)
Current assets include cash, grants receivable and prepaid expenses of $0.186 million , $0.046 million and $0.369 million, respectively, related to the Jade Acquisition.
 
Net loss in the Condensed Consolidated Statement of Operations for the three months ended March 31, 2016 includes net losses of Jade from the date of acquisition to March 31, 2016 of $0.118 million. Our Intangible assets, which consist solely of in-process research and development, will not be amortized until the underlying development programs are completed. Upon obtaining regulatory approval, the Intangible assets are then accounted for as finite-lived intangible assets and amortized on a straight-line basis over its estimated useful life. We expect to amortize intangible assets with definite lives on a straight-line basis over their estimated useful lives, currently 3 years.
 
We recognized $0.234 million of acquisition-related costs for the Jade Acquisition that were expensed in the current period as a component of Selling, general and administrative expense.
 
Pro forma disclosure for Jade acquisition
 
The following table includes the pro forma results for the three months ended March 31, 2016 and 2015 of the combined companies as though the Jade  Acquisition had been completed as of the beginning of the period presented.
 
 
 
For the three months ended March 31,
 
 
 
2016
 
2015
 
Revenues
 
$
282,924
 
$
151,051
 
Net income (loss)
 
 
(2,374,993)
 
 
(2,782,685)
 
Net loss attributable to common stockholders
 
 
(2,375,546)
 
 
(11,009,870)
 
 
The pro forma financial information is presented for information purposes only. The unaudited pro forma financial information may not necessarily reflect our future results of operations or what the results of operations would have been had we owned and operated Jade as of the beginning of the period presented.