Acquisition of Fabrus, Inc.

12 Months Ended

Jun. 30, 2016

Business Combinations [Abstract]

Acquisition of Fabrus, Inc

3. Acquisition of Fabrus, Inc.

On May 16, 2014, the Company completed a merger pursuant to a Plan of Merger and Reorganization (the “Merger Agreement”), whereby the Company acquired all of the outstanding ownership interests of Fabrus, Inc., a privately-owned biotechnology company which has developed an advanced platform for therapeutic antibody discovery and development. Pursuant to the terms of the Merger Agreement, the Company issued 6,905,201 shares of its common stock with a fair value of $18,298,782, 3,578,481 warrants to purchase common stock with exercise prices ranging from $2.00 to $4.00 with a fair value of $2,349,853 and options to purchase common stock with an exercise price of $2.65 with a fair value of $285,224 totaling $20,933,859. The primary purpose for the acquisition was to acquire additional cutting edge technologies in development in order to increase the Company’s portfolio.

In accordance with the acquisition method of accounting, the issuance of replacement stock options to the employees of Fabrus at the date of the merger must be accounted for as a modification of the original award by Fabrus. As a result, $60,412 represented the fair value of pre-acquisition services to the Company and was accounted for as additional purchase price in the merger. In addition, $224,812, will be amortized as post combination services from the merger date through the end of the vesting period.

The Company’s consolidated financial statements reflect the operating results of Fabrus since May 16, 2014. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date:

Purchase price per valuation	20,933,859
Less: Options to be recognized in the future	(224,812)
Purchase price for goodwill calculation	20,709,047
Assets acquired:
Cash	1,274,662
Accounts receivable	43,133
Prepaid expenses	19,542
Equipment	234,000
Acquired research and development	9,800,000
Goodwill	13,902,917
	25,274,254
Liabilities assumed:
Accounts payable	(409,117)
Accrued payroll	(74,525)
Accrued expenses	(161,565)
Deferred tax liability	(3,920,000)
	(4,565,207)
Net assets of Fabrus, Inc. acquired	20,709,047

Goodwill, which is comprised of synergies from combining operations, and acquired research and development is accounted for as an indefinite lived intangible asset and is subject to annual impairment testing. Goodwill is not expected to be deducted for income tax purposes.

The following represents the Company’s pro-forma Consolidated Statements of Income as if Fabrus had been included in the Company’s consolidated results on July 1, 2014:

	Fiscal Year Ended
	June 30, 2014
	(unaudited)
Total revenue	$	182,229
Net loss	$	(11,017,792)
Loss applicable to common shares	$	(5,646,989)
Basis and diluted net loss per common share	$	(1.36)