Exhibit 99.2
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The accompany unaudited pro forma condensed consolidated balance sheet for Harrow Health, Inc. and subsidiaries (the “Company”) as of September 30, 2022 gives effect to the following transactions:
(i) the cash received by the Company in connection with the Company’s sale and divestment of its non-ophthalmology related compounding revenue line and related intangible assets, and the net gain on sale;
(ii) the proceeds from the sale of 2,376,426 shares of the Company’s common stock, at a price of $10.52 per share, after deducting underwriting discounts and commissions, the structuring and commitment fees, and estimated offering expenses payable by the Company, which sale closed on December 16, 2022;
(iii) the sale of $35,000,000 aggregate principal amount of 11.875% Senior Notes due 2027, after deducting underwriting discounts and commissions, the structuring and commitment fees, and estimated offering expenses payable by the Company; and
(iv) the proceeds of $65,000,000 from a Senior Secured Loan facility which is committed to be provided to the Company, after deducting underwriting discounts and commissions, the structuring and commitment fees, original issue discount and estimated offering expenses payable by the Company.
The accompanying unaudited pro forma condensed consolidated balance sheet reflects the transactions described above as if such events occurred on September 30, 2022.
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.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2022
| | | Historical | | | | | | | Pro Forma | |
| | | September 30, | | | Pro Forma | | | | September 30, | |
| | | 2022 | | | Adjustments | | Notes | | 2022 | |
| ASSETS | | | | | | | | | | |
| Current assets | | | | | | | | | | | | | |
| Cash and cash equivalents | | $ | 44,959,000 | | | $ | 119,700,000 | | (a) (b) (c) (d) | | $ | 164,659,000 | |
| Investment in Eton Pharmaceuticals | | | 4,162,000 | | | | | | | | | 4,162,000 | |
| Accounts receivable, net | | | 6,743,000 | | | | | | | | | 6,743,000 | |
| Inventories | | | 5,283,000 | | | | | | | | | 5,283,000 | |
| Prepaid expenses and other current assets | | | 2,927,000 | | | | | | | | | 2,927,000 | |
| Total current assets | | | 64,074,000 | | | | 119,700,000 | | | | | 183,774,000 | |
| Property, plant and equipment, net | | | 3,291,000 | | | | | | | | | 3,291,000 | |
| Capitalized software costs, net | | | 1,878,000 | | | | | | | | | 1,878,000 | |
| Operating lease right-of-use assets | | | 7,688,000 | | | | | | | | | 7,688,000 | |
| Intangible assets, net | | | 19,632,000 | | | | (686,000 | ) | (a) | | | 18,946,000 | |
| Investment in Melt Pharmaceuticals | | | 2,097,000 | | | | | | | | | 2,097,000 | |
| Goodwill | | | 332,000 | | | | | | | | | 332,000 | |
| TOTAL ASSETS | | | 98,992,000 | | | | 119,014,000 | | | | | 218,006,000 | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | |
| Current liabilities | | | | | | | | | | | | | |
| Accounts payable and accrued expenses | | $ | 14,112,000 | | | | | | | | $ | 14,112,000 | |
| Accrued payroll and related liabilities | | | 3,441,000 | | | | | | | | | 3,441,000 | |
| Deferred revenue and customer deposits | | | 115,000 | | | | | | | | | 115,000 | |
| Current portion of loans payable, net of unamortized discount | | | - | | | | 1,479,000 | | (d) | | | 1,479,000 | |
| Current portion of operating lease obligations | | | 703,000 | | | | | | | | | 703,000 | |
| Total current liabilities | | | 18,371,000 | | | | 1,479,000 | | | | | 19,850,000 | |
| Operating lease obligations, net of current portion | | | 7,520,000 | | | | | | | | | 7,520,000 | |
| Loans payable, net of current portion and unamortized debt discount | | | 72,239,000 | | | | 89,621,000 | | (c) (d) | | | 161,860,000 | |
| TOTAL LIABILITIES | | | 98,130,000 | | | | 91,100,000 | | | | | 189,230,000 | |
| Commitments and contingencies | | | | | | | | | | | | | |
| STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | |
| Common stock, $0.001 par value, 50,000,000 shares authorized, 27,074,307 issued and outstanding, actual; 29,450,733 shares issued and outstanding, pro forma | | | 27,000 | | | | 2,000 | | (b) | | | 29,000 | |
| Additional paid-in capital | | | 111,738,000 | | | | 22,598,000 | | (b) | | | 134,336,000 | |
| Accumulated deficit | | | (110,548,000 | ) | | | 5,314,000 | | (a) | | | (105,234,000 | ) |
| TOTAL HARROW HEALTH STOCKHOLDERS’ EQUITY | | | 1,217,000 | | | | 27,914,000 | | | | | 29,131,000 | |
| Noncontrolling interests | | | (355,000 | ) | | | | | | | | (355,000 | ) |
| TOTAL STOCKHOLDERS’ EQUITY | | | 862,000 | | | | 27,914,000 | | | | | 28,776,100 | |
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | $ | 98,992,000 | | | | 119,014,000 | | | | $ | 218,006,000 | |
See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet
HARROW HEALTH, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
NOTE 1. BASIS OF PRESENTATION
The unaudited pro forma condensed consolidated balance sheet as of September 30, 2022 is based on the historical consolidated balance sheet of Harrow Health, Inc. and subsidiaries (the “Company”) as of September 30, 2022, after giving effect to: (i) the cash received by the Company in connection with the Company’s sale and divestment of its non-ophthalmology related compounding revenue line and related intangible assets, and the net gain on sale; (ii) the net proceeds received from the sale of 2,376,426 shares of the Company’s common stock, at a price of $10.52 per share, after deducting underwriting discounts and commissions, the structuring and commitment fees, and estimated offering expenses payable by the Company, which sale closed on December 16, 2022; (iii) the sale of $35,000,000 aggregate principal amount of 11.875% Senior Notes due 2027, after deducting underwriting discounts and commissions, the structuring and commitment fees, and estimated offering expenses payable by the Company; and (iv) the proceeds of $65,000,000 from a Senior Secured Loan facility which is committed to be provided to the Company, after deducting underwriting discounts and commissions, the structuring and commitment fees, original issue discount, and estimated offering expenses payable by the Company (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 September 30, 2022 is presented as if the Recent Transactions occurred on September 30, 2022.
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 September 30, 2022, giving effect to the Recent Transactions as if they had occurred on September 30, 2022:
| (a) | To reflect the cash received ($6,000,000) by the Company in connection with the Company’s sale and divestment of its non-ophthalmology related compounding revenue line and the adjustment to remove the unamortized balance of the related intangible assets ($686,000) resulting in a net gain of $5,314,000; |
| | |
| (b) | To reflect the net cash proceeds ($22,600,000) from the sale of 2,376,426 shares of the Company’s common stock, at a price of $10.52 per share, after deducting underwriting discounts and commissions, the structuring and commitment fees, and estimated offering expenses payable by the Company ($2,400,000), which sale closed on December 16, 2022; |
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| (c) | To reflect the net cash proceeds ($31,950,000) from the sale of $35,000,000 aggregate principal amount of 11.875% Senior Notes due 2027, after deducting underwriting discounts and commissions, the structuring and commitment fees, and estimated offering expenses payable by the Company ($3,050,000). |
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| (d) | To reflect the net cash proceeds ($59,150,000) from a $65,000,000 Senior Secured Loan facility which is committed to be provided to the Company, after deducting underwriting discounts and commissions, the structuring and commitment fees, original issue discount and estimated offering expenses payable by the Company ($5,850,000), with a current portion, net of unamortized discounts, of $1,479,000. |
