NOTE 4 — REORGANIZATION AND RECAPITALIZATION

On July 16, 2019, 180 and each of 180 LP, Katexco and CBR Pharma completed a corporate restructuring, pursuant to which 180 LP, Katexco and CBR Pharma became wholly-owned subsidiaries of 180 (the “Reorganization”). It was determined that Katexco was the accounting acquirer in the Reorganization and the remaining companies were the accounting acquirees.

In connection with the Reorganization, the Company issued an aggregate of 9,881,785 shares of common stock, and 1 share of preferred stock which is exchangeable into an aggregate of 1,664,083 shares of common stock at the option of the holders, to the former shareholders of CBR Pharma and 180 LP, in exchange for 100% of the outstanding equity and equity equivalents of CBR Pharma and 180 LP. Of the 9,881,785 shares of common stock issued in connection with the Reorganization, 2,694,053 shares were issued to a consultant were subject to redemption by 180 LP (the “Contingently Redeemable Shares”) for an aggregate redemption price of $4.00 if (i) the closing of the Business Combination did not occur on or prior to October 31, 2019; or (iii) the consultant terminated its service with 180 LP prior to October 31, 2019. On November 11, 2019, the Board of Directors authorized its management to enter into an agreement to waive its right of redemption in connection with the Contingently Redeemable Shares. Note 15 - Stockholders’ Equity (Deficiency), Contingently Redeemable Shares.

The Reorganization was accounted for as a reverse acquisition using the acquisition method of accounting, with Katexco being the accounting acquirer for financial reporting purposes.

The following table summarizes the purchase price consideration paid to the accounting acquirees:

The following table represents the preliminary allocation of the assets acquired and liabilities assumed, based on their fair values on the acquisition date:

Management, with the assistance of an independent valuation firm, valued the technology licenses and the in-process research and development utilizing the cost approach. The goodwill is attributed to (a) synergies arising from the overlap of clinical research among the entities; (b) the benefit of future market, drug and product development; and (c) the benefit of revenue growth from both areas. The deferred tax liability relates to the book-tax basis difference associated with the intangible assets at an estimated tax rate of 26%, which is an estimate of the blended United States and Canadian federal and state/province effective income tax rates.

Pro Forma Results

The following table sets forth the unaudited pro forma results of the Company as if the Reorganization were effective on January 1, 2019. These combined results are not necessarily indicative of the results that may have been achieved had the companies always been combined.