Exhibit 99.3
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The table below sets forth the unaudited pro forma condensed consolidated balance sheet for Harrow Health, Inc. (the “Company”) as of December 31, 2020 giving effect to:
(i) the sale of a portion of the Company’s investment in the common stock of Eton Pharmaceuticals, Inc., net of costs, which sale closed on April 12, 2021;
(ii) the forgiveness of the Company’s Paycheck Protection Program Loan effective March 30, 2021;
(iii) the sale of $55.0 million aggregate principal amount of 8.625% Senior Notes due 2026, after deducting underwriting discounts and commissions, the structuring fee and estimated offering expenses payable by the Company;
(iv) repayment of borrowings under the Company’s Loan Agreement with SWK Funding LLC and the other lenders party thereto, effective April 30, 2021; and
(v) the sale of 440,000 shares of the Company’s Series B Cumulative Preferred Stock, which sale closed on May 5, 2021.
The unaudited pro forma condensed consolidated balance sheet reflects the transactions described above as if such events occurred on December 31, 2020.
The unaudited pro forma condensed consolidated balance sheet has been prepared under U.S. GAAP. The adjustments necessary to fairly present the unaudited pro forma condensed consolidated balance sheet have been made based on available information and in the opinion of management are reasonable. Assumptions underlying the pro forma adjustments are described in the accompanying notes, which should be read in conjunction with this unaudited pro forma condensed consolidated balance sheet.
The unaudited pro forma condensed consolidated balance sheet is for illustrative purposes only and does not purport to represent what our financial position would have been had the events noted above in fact occurred on the assumed date. Accordingly, the unaudited pro forma condensed consolidated balance sheet should not be used to project our financial position on any future date.
The unaudited pro forma condensed consolidated balance sheet should be read in conjunction with the accompanying notes and the consolidated financial statements and notes thereto of the Company included in our filings with the Securities and Exchange Commission.
| HARROW HEALTH, INC. |
| PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET |
| AS OF DECEMBER 31, 2020 |
| (IN THOUSANDS) |
| |
| | | Actual as of December 31, 2020 | | | Adjustments | | As Adjusted as of December 31, 2020 | |
| | | (UNAUDITED) | |
| ASSETS | | | | | | | | | | | | | | |
| Current Assets | | | | | | | | | | | | | | |
| Cash and cash equivalents, including restricted cash of $200 | | $ | 4,301 | | | $ | 56,858 | | | (a)(c)(d)(e) | | $ | 61,159 | |
| Investments in Eton Pharmaceuticals | | | 28,455 | | | | (12,341 | ) | | (a) | | | 16,114 | |
| Accounts receivable, net | | | 2,662 | | | | | | | | | | 2,662 | |
| Inventories | | | 3,962 | | | | | | | | | | 3,962 | |
| Prepaid expenses and other current assets | | | 751 | | | | | | | | | | 751 | |
| Total current assets | | | 40,131 | | | | 44,517 | | | | | | 84,648 | |
| Property, plant and equipment | | | 4,453 | | | | | | | | | | 4,453 | |
| Operating lease right-of-use assets | | | 6,799 | | | | | | | | | | 6,799 | |
| Intangible assets, net | | | 1,939 | | | | | | | | | | 1,939 | |
| Investment in Surface Ophthalmics | | | 1,314 | | | | | | | | | | 1,314 | |
| Investment in Melt Pharmaceuticals | | | 2,506 | | | | | | | | | | 2,506 | |
| Goodwill | | | 332 | | | | | | | | | | 332 | |
| TOTAL ASSETS | | | 57,474 | | | | 44,517 | | | | | | 101,991 | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | | |
| Current liabilities | | | | | | | | | | | | | | |
| Accounts payable and accrued expenses | | $ | 3,932 | | | | | | | | | $ | 3,932 | |
| Accrued payroll and related liabilities | | | 2,315 | | | | | | | | | | 2,315 | |
| Deferred revenue and customer deposits | | | 66 | | | | | | | | | | 66 | |
| Current portion of Paycheck Protection Program loan payable | | | 1,259 | | | | (1,259 | ) | | (b) | | | - | |
| Current portion of loan payable, net of unamortized debt discount | | | 2,639 | | | | (2,639 | ) | | (d) | | | - | |
| Current portion of operating lease liabilities | | | 580 | | | | | | | | | | 580 | |
| Current portion of finance lease obligations | | | 8 | | | | | | | | | | 8 | |
| Total current liabilities | | | 10,799 | | | | (3,898 | ) | | | | | 6,901 | |
| Operating lease liabilities, net of current portion | | | 6,652 | | | | | | | | | | 6,652 | |
| Finance lease obligations, net of current portion | | | 17 | | | | | | | | | | 17 | |
| Accrued expenses, net of current portion | | | 800 | | | | (800 | ) | | (d) | | | - | |
| Paycheck Protection Program loan payable, net of current portion | | | 708 | | | | (708 | ) | | (b) | | | - | |
| Loan payable, net of current portion and unamortized debt discount | | | 11,670 | | | | (11,670 | ) | | (d) | | | - | |
| 8.625% Senior Notes due 2026, net of debt discount | | | - | | | | 52,000 | | | (c) | | | 52,000 | |
| TOTAL LIABILITIES | | | 30,646 | | | | 34,924 | | | | | | 65,570 | |
| STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | | |
| Series B Cumulative Preferred Stock, $0.001 par value | | | - | | | | 440 | | | (e) | | | 440 | |
| Common stock, $0.001 par value | | | 26 | | | | | | | | | | 26 | |
| Additional paid-in capital | | | 104,557 | | | | 10,130 | | | (e) | | | 114,687 | |
| Accumulated deficit | | | (77,400 | ) | | | (977 | ) | | (a)(b)(d) | | | (78,377 | ) |
| TOTAL HARROW HEALTH STOCKHOLDERS’ EQUITY | | | 27,183 | | | | 9,593 | | | | | | 36,776 | |
| Noncontrolling interests | | | (355 | ) | | | | | | | | | (355 | ) |
| TOTAL EQUITY | | | 26,828 | | | | 9,593 | | | | | | 36,421 | |
| TOTAL LIABILITIES AND EQUITY | | $ | 57,474 | | | | 44,517 | | | | | $ | 101,991 | |
See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet.
HARROW HEALTH, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(dollar amounts in thousands)
NOTE 1. BASIS OF PRESENTATION
The unaudited pro forma condensed consolidated balance sheet as of December 31, 2020 is based on the historical consolidated balance sheet of Harrow Health, Inc. (the “Company”) as of December 31, 2020, after giving effect to: (i) the sale of a portion of the Company’s investment in the common stock of Eton Pharmaceuticals, Inc. (“Eton”) net of costs, which sale closed on April 12, 2021; (ii) the forgiveness of the Company’s Paycheck Protection Program (“PPP”) Loan effective March 30, 2021; (iii) the sale of $55,000 aggregate principal amount of 8.625% Senior Notes due 2026, after deducting underwriting discounts and commissions, the structuring fee and estimated offering expenses payable by the Company; (iv) repayment of borrowings under the Company’s Loan Agreement with SWK Funding LLC and the other lenders party thereto, effective April 30, 2021; and (v) the sale of 440,000 shares of the Company’s Series B Cumulative Preferred Stock, which sale closed on May 5, 2021 (collectively, the “Recent Transactions”), and the assumptions, reclassifications and adjustments described in these notes to the unaudited pro forma condensed consolidated balance sheet.
Significant assumptions and estimates have been made in determining the costs and net proceeds from the Recent Transactions in the unaudited pro forma condensed consolidated balance sheet. These preliminary estimates and assumptions are subject to change as the Company finalizes the calculations related to the Recent Transactions. These changes could result in material variances between the Company’s future consolidated financial position and the amounts presented in the unaudited pro forma condensed consolidated balance sheet, including variances in values recorded, as well as expenses and cash flows associated with these items.
Accounting Period Presented
The unaudited pro forma condensed consolidated balance sheet as of December 31, 2020 is presented as if the Recent Transactions occurred on December 31, 2020.
NOTE 2. PRO FORMA AND RECLASSIFICATION ADJUSTMENTS
Pro forma adjustments are made to reflect the estimated amounts related to the Recent Transactions. The following describes the pro forma adjustments related to the Recent Transactions made in the accompanying unaudited pro forma condensed consolidated balance sheet as of December 31, 2020, giving effect to the Recent Transactions as if they had occurred on December 31, 2020:
| (a) | To reflect the cash paid to the Company in connection with the sale of a portion of the Company’s investment in the common stock of Eton ($10,626) less underwriting discounts, commissions, and other transaction costs ($838) and realized loss on sale of the investment ($1,715). |
| | |
| (b) | To reflect the forgiveness of the Company’s PPP Loan ($1,967). |
| | |
| (c) | To reflect the sale of $55,000 aggregate principal amount of 8.625% Senior Notes due 2026, after deducting underwriting discounts and commissions, the structuring fee and estimated offering expenses payable by the Company ($3,000). |
| | |
| (d) | To reflect repayment of borrowings, including exit fee, under the Company’s Loan Agreement with SWK Funding LLC and the other lenders party thereto, effective April 30, 2021 ($15,500) and amortization of remaining debt discount ($391). |
| | |
| (e) | To reflect the net proceeds from the sale of 440,000 shares of the Company’s Series B Cumulative Preferred Stock ($10,570), which sale closed on May 5, 2021. |
