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EXHIBIT 99.3
EPOCH BIOSCIENCES, INC.
Unaudited Pro Forma Combined Financial Statements
December 31, 1999 and September 30, 2000
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Financial Statements give effect to the
business combination between Epoch Biosciences, Inc. and Synthetic Genetics, a
division of Immune Complex Corporation, as if the it had been consummated, with
respect to the statements of operations, at the beginning of each of the periods
presented, or, with respect to the balance sheet, as of September 30, 2000. The
business combination will be accounted for as a purchase business combination.
The Unaudited Pro Forma Financial Statements do not purport to present the
financial position or results of operations of the Company had the business
combination taken place on the dates specified, nor are they necessarily
indicative of the results of operations that may be achieved in the future.
The Unaudited Pro Forma Financial Statements should be read in conjunction with
the separate historical financial statements and notes thereto of Synthetic
Genetics appearing elsewhere in this form 8-K/A and the historical financial
statements of Epoch Biosciences, Inc. incorporated in this form 8-K/A by
reference.
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EXHIBIT 99.3
EPOCH BIOSCIENCES, INC.
Unaudited Pro Forma Combined Balance Sheet
AS OF SEPTEMBER 30, 2000
-----------------------------------------
EPOCH PRO FORMA PRO FORMA
BIOSCIENCES ADJUSTMENTS(a) COMBINED
------------ -------------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 16,453,915 (3,100,000) 13,353,915
Receivables 67,056 142,363 209,419
Inventory -- 39,654 39,654
Prepaid expenses and other current assets 107,894 22,890 130,784
------------ ---------- -----------
Total current assets 16,628,865 (2,895,093) 13,733,772
Equipment, net 2,010,147 116,417 2,126,564
Restricted cash 618,397 -- 618,397
License rights 544,025 -- 544,025
Intangible assets -- 3,119,500 3,119,500
Other assets 36,561 4,455 41,016
------------ ---------- -----------
Total assets $ 19,837,995 345,279 20,183,274
============ ========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable $ -- 63,000 63,000
Accounts payable 239,661 205,000 444,661
Accrued liabilities 521,531 21,588 543,119
Deferred revenue - current portion 277,742 -- 277,742
------------ ---------- -----------
Total current liabilities 1,038,934 289,588 1,328,522
------------ ---------- -----------
Capital lease obligations -- 55,691 55,691
Deferred revenue 1,771,496 -- 1,774,496
Stockholders' equity (deficit):
Preferred stock -- -- --
Common stock 249,171 -- 249,171
Additional paid-in capital 81,902,455 -- 81,902,455
Deferred stock compensation (75,910) -- (75,910)
Accumulated deficit (65,048,151) -- (65,048,151)
------------ ---------- -----------
Total stockholders' equity 17,027,565 -- 17,027,565
------------ ---------- -----------
Total liabilities and stockholders' equity $ 19,837,995 345,279 20,183,274
============ ========== ===========
See notes to unaudited pro forma financial statements.
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EXHIBIT 99.3
EPOCH BIOSCIENCES, INC.
Unaudited Pro Forma Combined Statements of Operations
YEAR ENDED DECEMBER 31, 1999
--------------------------------------------------------
EPOCH SYNTHETIC PRO FORMA PRO FORMA
BIOSCIENCES GENETICS(c) ADJUSTMENTS COMBINED
----------- ----------- ----------- ----------
Revenue:
Product sales $ -- 1,336,700 -- 1,336,700
License fees 71,942 -- -- 71,942
Research contract revenue 109,152 -- -- 109,152
----------- ---------- ---------- ----------
181,094 1,336,700 -- 1,517,794
Cost of product sales -- 865,311 -- 865,311
----------- ---------- ---------- ----------
181,094 471,359 -- 652,453
Operating expenses:
Research and development 2,545,583 63,185 -- 2,608,768
General and administrative 1,414,587 426,641 280,405(d) 2,121,633
----------- ---------- ---------- ----------
Total operating expenses 3,960,170 489,826 280,405 4,730,401
----------- ---------- ---------- ----------
Operating loss (3,779,076) (18,467) (280,405) (4,077,948)
Other income (expense):
Interest income 52,069 -- -- 52,069
Interest and financing expense (1,042,947) (31,379) 16,158(e) (1,058,168)
----------- ---------- ---------- ----------
Loss from continuing operations(b) $(4,769,954) (49,846) (264,247) (5,084,047)
=========== ========== ========== ==========
See notes to unaudited pro forma financial statements.
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EXHIBIT 99.3
EPOCH BIOSCIENCES, INC.
Unaudited Pro Forma Combined Statements of Operations
NINE MONTHS ENDED SEPTEMBER 30, 2000
--------------------------------------------------------
EPOCH SYNTHETIC PRO FORMA PRO FORMA
BIOSCIENCES GENETICS(c) ADJUSTMENTS COMBINED
----------- ----------- ----------- ----------
Revenue:
Product sales $ 257,280 1,142,287 -- 1,399,567
License fees 44,631 -- -- 44,631
Research contract revenue 120,000 -- -- 120,000
----------- ---------- ---------- ----------
421,911 1,142,287 -- 1,564,198
Cost of product sales -- 811,407 -- 811,407
----------- ---------- ---------- ----------
421,911 330,880 -- 752,791
----------- ---------- ---------- ----------
Operating expenses:
Research and development 2,181,842 112,668 -- 2,294,510
General and administrative 2,426,309 364,195 216,164(f) 3,006,668
----------- ---------- ---------- ----------
Total operating expenses 4,608,151 476,863 216,164 5,301,178
----------- ---------- ---------- ----------
Operating loss (4,186,240) (145,983) (216,164) (4,548,387)
Other income (expense):
Interest income 671,013 -- -- 671,013
Interest and financing expense (153) (31,709) 20,293(g) (11,569)
----------- ---------- ---------- ----------
Loss from continuing operations(b) $(3,515,380) (177,692) (195,871) (3,888,683)
=========== ========== ========== ==========
See notes to unaudited pro forma financial statements.
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EXHIBIT 99.3
EPOCH BIOSCIENCES, INC.
Notes to Unaudited Pro Forma Combined Financial Statements
December 31, 1999 and September 30, 2000
The pro forma results do not purport to present the financial position or
results of operations of the Company had the business combination taken place on
the dates specified, nor are they necessarily indicative of the financial
position or the results of operations that may be achieved in the future. The
Unaudited Pro Forma Combined Financial Statements have been prepared under the
assumptions set forth in the following notes.
The following adjustments have been made to give pro forma effect to the
purchase:
(a) To record the purchase of the assets of Synthetic Genetics for $3.1
million in cash, plus the assumption of certain liabilities, at fair
value in accordance with the requirements of a purchase business
combination including approximately $119,000 for trademarks and patents,
$1.0 million for a five year non-compete and $2.0 million of goodwill.
(b) Does not reflect discontinued operations of Epoch Biosciences.
(c) To record the operations of Synthetic Genetics for the respective
periods.
(d) To reverse depreciation and amortization of $88,122 previously recorded
and record depreciation and amortization of $368,527 as if the purchase
transaction had occurred at the beginning of the period presented.
Trademarks and patents are amortized over 10 years, the non-compete
agreement over five years and goodwill over 15 years.
(e) To reverse interest expense related to indebtedness not acquired of
$16,158 at the contractual rate of 8.25% for notes payable and a
weighted average rate of 18% for capital lease obligations. As Epoch
Biosciences paid cash for the acquisition previously raised in equity
financings and did not incur any additional debt, no proforma adjustment
has been made to the combined pro forma financial statements to increase
interest expense or decrease interest income.
(f) To reverse depreciation and amortization of $60,231 previously recorded
and record depreciation and amortization of $276,395 as if the purchase
transaction had occurred at the beginning of the period presented.
Trademarks and patents are amortized over 10 years, the non-compete
agreement over five years and goodwill over 15 years.
(g) To reverse interest expense related to indebtedness not acquired of
$20,293 at the contractual rate of 8.25% for notes payable and a
weighted average rate of 18% for capital lease obligations. As Epoch
Biosciences paid cash for the acquisition previously raised in equity
financings and did not incur any additional debt, no proforma adjustment
has been made to the combined pro forma financial statements to increase
interest expense or decrease interest income.
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