4.	Acquisition

Reverse Merger with RestorGenex

January 8, 2016,

the Company completed a reverse merger transaction with RestorGenex. The Company entered into the Merger transaction in an effort to provide improved access to the capital markets in order to obtain the resources necessary to accelerate development of TSC in multiple clinical programs and continue to build an oncology-focused company.

The purchase price was calculated as follows:

Fair value of RestorGenex shares outstanding	$	19,546,000
Estimated fair value of RestorGenex stock options outstanding		1,321,000
Estimated fair value of RestorGenex warrants outstanding		384,000
CVRs – RES-440 product candidate		10,000
Total purchase price	$	21,261,000

The Merger transaction has been accounted for using the acquisition method of accounting, which requires that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. The valuation technique utilized to value the IPR&D was the cost approach.

The following table summarizes the allocation of the purchase price to the assets acquired and liabilities assumed as of the acquisition date:

Cash and cash equivalents	$	8,500,602
Prepaid expenses and other assets		195,200
Property and equipment		57,531
Intangible assets		9,600,000
Goodwill		6,929,258
Accrued liabilities		(377,432	)
Deferred tax liability		(3,644,159	)
Net assets acquired	$	21,261,000

Qualitative factors supporting the recognition of goodwill due to the Merger transaction include the Company’s anticipated enhanced ability to secure additional capital and gain access to capital market opportunities as a public company and the potential value created by having a more well-rounded clinical development portfolio by adding the earlier stage products acquired in the reverse merger transaction to the Company’s later stage product portfolio. The goodwill is

not

deductible for income tax purposes.

Pro Forma Financial Information (Unaudited)

The following pro forma financial information reflects the condensed consolidated results of operations of the Company as if the acquisition of RestorGenex had taken place on

January 1, 2016.

The pro forma financial information is

not

necessarily indicative of the results of operations as they would have been had the transactions been effected on the assumed date.

	Nine Months Ended September 30, 2016

Net revenues	$	—
Net loss		(13,900,691	)
Basic and diluted loss per share	$	(1.36	)

Non-recurring pro forma transaction costs directly attributable to the Merger were

$1.6

million for the

nine

months ended

September 30, 2016

and have been deducted from the net loss presented above. The costs deducted from the

nine

months ended

September 30, 2016

period includes a success fee of

$1.1

million and approximately

46,000

shares of common stock with a fair market value of

$0.5

million paid to a financial adviser upon the closing of the Merger on

January 8, 2016.

Additionally, RestorGenex incurred approximately

$3.0

million in severance costs as a result of resignations of executive officers immediately prior to the Merger and approximately

$2.7

million in share based compensation expense as a result of the acceleration of vesting of stock options at the time of the Merger. These costs are excluded from the pro forma financial information for the

nine

months ended

September 30, 2016.

such costs were recorded in the

three

and

nine

months ended

September 30, 2017

or in the

three

months ended

September 30, 2016.