Matinas BioPharma Holdings, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Acquisition of Aquarius Biotechnologies, Inc. (Tables)

Acquisition of Aquarius Biotechnologies, Inc. (Tables)

6 Months Ended

Jun. 30, 2016

Schedule of Business Acquisitions, by Acquisition [Table Text Block]

The acquisition-date fair value of the consideration transferred totaled $2,873,035 as of January 29, 2015 and consisted of the following items:

Fair value of 4,608,020 of common stock issued at a price per share of $0.46 as of January 29, 2015 the closing date of the merger.	$	2,119,689

Fair value of potential Matinas common stock as contingent consideration that will be issued upon achieving certain future clinical milestone-(a)		422,609

Fair value of potential Matinas common stock as contingent consideration that will be issued upon achieving certain future regulatory milestone-(a)		330,737

Total consideration	$	2,873,035

(a)-Reflects recognition of the estimated fair value of the contingent consideration payable with issuance of Matinas common stock upon achievement of certain future clinical and regulatory milestones, the achievement of which is uncertain. The fair value of the additional shares were established by assigning probabilities and projected dates of positive outcome for the milestones and valuing the future issuance of the shares by using the Black-Scholes options pricing model to account for the uncertainty in the future value of the shares. The value of the shares as derived using the options pricing model were then weighted based on the probability of achieving the milestones to determine the fair market value of the additional shares. The entire $753,346 of contingent consideration was recorded as additional paid-in capital at December 31, 2015.

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

The allocation of the total purchase price is described below based on the estimated fair value of the assets acquired and liabilities assumed on the date of the acquisition.

Cash	$	70,754
Contract/ Grant receivable		45,644
Prepaid expenses and other current assets		5,084
Equipment, net		5,051
Other assets		700
In-process research and development-(b)		3,017,377
Total identifiable assets		3,144,610

Accounts payable		300,413
Notes payable-(d)		10,000
Accrued expenses		92,509
Total liabilities assumed		402,922
Net identifiable assets acquired		2,741,688
Goodwill-(c)		1,336,488
Deferred income taxes arising from basis differences of tax aspects of in-process research and development		(1,205,141)
Net assets acquired	$	2,873,035

(b)-The fair value of the in-process research and development asset was estimated on the basis of its replacement cost as determined by a buildup of the costs incurred to develop the technology as it existed as of the acquisition date resulting in a fair value of $3,017,377. The fair value of other assets and liabilities approximate their book value.

(c)-The Company allocated the purchase price to the net tangible and intangible assets based upon their estimated fair values at the Merger date. The excess of the purchase price over the estimated fair values of the net tangible and intangible assets acquired has been recorded as goodwill including deferred tax liabilities resulting from the tax attributes of the in-process research and development (see Note C 14). In connection with the Aquarius acquisition, the Company made an adjustment as a result of the purchase accounting requirements to reflect a change in the value of the deferred tax liabilities resulting from an adjustment to the Company's effective tax rate, recording a $48,186 reduction to the deferred tax liabilities with an offsetting credit to Goodwill.

(d)- Aquarius issued a note for a loan that was made to a related party. Interest on the note is calculated using the applicable federal rate for midterm loans. Since the note has no specified repayment terms, it is considered a current liability. This note was subsequently paid in full in 2015.