PERNIX THERAPEUTICS HOLDINGS, INC. (Form: 8-K, Received: 09/17/2013 16:32:14)

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Pursuant to Section 13 or 15(d) of The

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 11, 2013

PERNIX THERAPEUTICS HOLDINGS, INC.

(Exact name of registrant as specified in its charter)


Maryland	001-14494	33-0724736
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

10863 Rockley Rd Houston, TX		77099
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (832) 934-1825

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

Effective September 11, 2013, Pernix Therapeutics Holdings, Inc., a Maryland corporation (the “Company), and its subsidiary, Cypress Pharmaceuticals, Inc., a Mississippi corporation (“Cypress”), entered into the Joinder Agreement and First Amendment to Asset Purchase Agreement (the “Purchase Agreement Amendment”) with Breckenridge Pharmaceutical, Inc., a Florida corporation (“Breckenridge”), to amend certain of the terms of the Asset Purchase Agreement (the “Purchase Agreement”) between the Company and Cypress, on the one hand, and Breckenridge, on the other hand, dated August 5, 2013. The Purchase Agreement Amendment amends the Purchase Agreement to, among other things, remove Arbinoxa, a currently marketed product, from the products being acquired by Breckenridge, add an additional product, Folic Acid 2.5 mg, a currently inactive product owned by the Company’s subsidiary, Macoven Pharmaceuticals, as a product to be acquired by Breckenridge, and provide for a reduction of the aggregate purchase price to $29,550,000 (which is net of a $150,000 prepayment by the Company of its share of expenses for the transfer of certain of the assets to Breckenridge), paid as described in Item 2.01 below.

The description set forth above is qualified in its entirety by reference to the Purchase Agreement Amendment, which is filed hereto as Exhibit 2.1 and is incorporated herein by reference.

Item 2.01 Completion of Acquisition of Disposition of Assets.

On September 11, 2013, the Company completed the sale (the “Closing”) of certain of its generic assets held by Cypress (the “Assets”) to Breckenridge pursuant to the Purchase Agreement, as amended.

The acquisition was consummated pursuant to the terms of the Purchase Agreement, as amended. Breckenridge paid to the Company $2,000,000 in cash upon execution of the Purchase Agreement and $17,850,000 in cash at Closing, and issued two promissory notes, each in an amount of $4,850,000, with one due on the first anniversary after Closing and the other due on the second anniversary after Closing, for an aggregate purchase price of up to $29,550,000.

The foregoing description of the acquisition, the Purchase Agreement, as amended, and the transactions contemplated thereby is a summary only, does not purport to be complete and is qualified in its entirety by reference to, and should be read in conjunction with, the complete text of the Purchase Agreement filed as Exhibit 2.1 to the Company’s Quarterly Report on Form 8-K for the quarter ended June 30, 2013 and the complete text of the Purchase Agreement Amendment filed as Exhibit 2.1 to this Form 8-K, both of which are incorporated in this Item 2.01 by reference.

Item 2.04 Triggering Events that Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement.

Pursuant to the terms of the Amended and Restated Credit Agreement (the “Credit Agreement”) dated as of May 8, 2013 among the Company and its subsidiaries and MidCap Financial, LLC (“MidCap”), the Closing described above triggered a requirement by the Company to repay the term loan included in the Credit Agreement. At the Closing, the Company paid approximately $7.7 million to MidCap in fulfillment of this requirement, and as a result, the term loan has been repaid in full.

Item 9.01 Financial Statements and Exhibits.

(a)

Not applicable.

(b)

Pro Forma Financial Information.

The unaudited pro forma condensed consolidated balance sheet as of June 30, 2013, pro forma condensed pro forma statement of comprehensive loss for the six months ended June 30, 2013, and the notes related thereto are filed as Exhibit 99.2 to this Form 8-K and incorporated herein by reference. Since the Company purchased the Cypress assets that were sold as part of this transaction on December 31, 2012, the unaudited condensed consolidated statement of comprehensive income for the year ended December 31, 2012 after giving effect to the transaction as if the disposition had occurred on January 1, 2012 is identical to the consolidated statement of comprehensive income included in the Company’s Form 10-K for the year ended December 31, 2012 for that same period.

(c)

Not applicable.

Exhibit Number		Description

2.1		Joinder Agreement and First Amendment to Asset Purchase Agreement dated September 11, 2013 among the Company and Cypress Pharmaceuticals, Inc., a Mississippi corporation (“Cypress”), on the one hand, and Breckenridge Pharmaceutical, Inc., a Florida corporation, on the other hand

99.1		Press release by the Company dated September 12, 2013.

99.2		Unaudited pro forma condensed consolidated financial statements and accompanying notes of Pernix Therapeutics Holdings, Inc. as of and for the six months ended June 30, 2013.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	PERNIX THERAPEUTICS HOLDINGS, INC.

Dated: September 17, 2013	By:	/s/ Tracy S. Clifford
		Tracy S. Clifford
		Principal Financial and Accounting Officer

Exhibit Number		Description

2.1		Joinder Agreement and First Amendment to Asset Purchase Agreement dated September 11, 2013 among the Company and Cypress Pharmaceuticals, Inc., a Mississippi corporation (“Cypress”), on the one hand, and Breckenridge Pharmaceutical, Inc., a Florida corporation, on the other hand

99.1		Press release by the Company dated September 12, 2013.

99.2		Unaudited pro forma condensed consolidated financial statements and accompanying notes of Pernix Therapeutics Holdings, Inc. as of and for the six months ended June 30, 2013.

JOINDER AGREEMENT AND FIRST AMENDMENT TO

ASSET PURCHASE AGREEMENT

This JOINDER AGREEMENT AND FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT (this “ Amendment ”) is made and entered into as of September 11, 2013, (the “ Amendment Date ”), by and among Breckenridge Pharmaceutical, Inc., a Florida corporation (“ Purchaser ”), and Pernix Therapeutics Holding, Inc., a Maryland company (“ Pernix ”), Cypress Pharmaceuticals, Inc., a Mississippi company (“ Cypress ”) (Pernix and Cypress being referred to collectively as “ Seller ”) and Macoven Pharmaceuticals, LLC, a Louisiana limited liability company (“ Macoven ”). Purchaser, Seller and Macoven are each referred to individually as a “ Party ” and together as the “ Parties .”

WHEREAS, Pernix, Cypress and Purchaser entered into that certain Asset Purchase Agreement, dated as of August 5, 2013 (the “ Purchase Agreement ”), which provides for the purchase of certain assets of the Seller by Purchaser; and

WHEREAS, Purchaser, Seller and Macoven desire to enter into this Amendment to (i) have Macoven join the Purchase Agreement as a party thereto and to be a Seller for all purposes thereunder and (ii) amend the Purchase Agreement to reflect certain changes in the terms of the transactions contemplated by the Purchase Agreement, as further described herein;

NOW, THEREFORE, in consideration of the foregoing premises and the mutual promises and covenants contained herein and in the Purchase Agreement, the Parties agree as follows:

1. Joinder to Purchase Agreement . Macoven hereby (i) acknowledges that it has received and reviewed the Purchase Agreement, (ii) joins the Purchase Agreement as a party thereto comprising “Seller” thereunder, jointly and severally, with each other party comprising “Seller” thereunder, (iii) assumes all obligations, and acquires all of the rights of a “Seller” thereunder, including, without limitation, for purposes of making each of the representations and warranties of Seller to Purchaser in Article 3 thereof, which representations and warranties with respect to Macoven and Macoven’s operations are hereby made and reaffirmed as correct and complete as of the Amendment Date, and (iv) agrees to comply with the Purchase Agreement and to be bound thereby as if it had been originally included in the definition of Seller thereunder. Each of Purchaser, Pernix and Cypress hereby acknowledges and agrees to the foregoing and that Macoven shall for all purposes of the Purchase Agreement, as hereby amended, be part of Seller pursuant to the terms and conditions of the Purchase Agreement, as hereby amended, notwithstanding the later date hereof.

2. Amendment of the definition of “Excluded Assets” in Section 1.1 of the Purchase Agreement. The definition of “Excluded Assets” in Section 1.1 of the Purchase Agreement is hereby amended and restated to read in its entirety as follows:

“ Excluded Assets ” shall mean (i) all assets and properties other than the Purchased Assets of Seller and its Affiliates, (ii) all cash and accounts receivable for sales of Products sold by Seller prior to the Closing, (iii) Contracts identified on item 2 of Schedule 1.1(a) to the extent that such Contracts do not directly relate to the Purchased Assets, (iv) the assets described on Schedule 1.1(l) and (v) the Contracts listed in Section 3.7(a) of the Seller Disclosure Schedule .

3. Amendment of the definition of “Products” in Section 1.1 of the Purchase Agreement. The definition of “Products” in Section 1.1 of the Purchase Agreement is hereby amended and restated to read in its entirety as follows:

“ Products ” shall mean those products (and related labeling and packaging) that as of the Closing Date (i) are marketed and sold by Seller or by a Third Party on behalf of Seller in the Territory under the Product Trademarks and/or the Regulatory Approvals, (ii) are or were anticipated to be marketed and sold as part of a pending or future Regulatory Approval by Seller or by a Third Party in the Territory, (iii) are under development by Seller or by a Third Party on behalf of Seller and are listed on Schedule 1.1(d) ; in each case (i) to (iii) including any new formulation, dosage form or dosage strength related thereto and (iv) the vitamin supplement product under the Macoven label and name “Folic Acid 2.5” (comprising of 2 mg. of vitamin B 12 , 25 mg. of vitamin B 6, and 2.5 mg. of folic acid), Product Code 44183-330-90.

4. Amendment to the definition of “Purchased Assets” in Section 1.1 of the Purchase Agreement . The reference in the first line of the definition of “Purchased Assets” to “Cypress and/or Pernix” shall be deleted and replaced with “Seller.”

5. Amendment of Section 2.1(b) of the Purchase Agreement . Section 2.1(b) of the Purchase is hereby amended and restated to read in its entirety as follows:

(b) As consideration for the transactions contemplated hereby, Purchaser shall pay to Seller an aggregate purchase price of Twenty-Nine Million Five Hundred Fifty Thousand Dollars ($29,550,000), as adjusted in accordance with Section 2.1(e) (the “ Purchase Price ”) by making the following payments to Seller:

(i) Earnest Money Payment. On the Agreement Date, Purchaser shall make a cash payment of Two Million Dollars ($2,000,000) (the “ Earnest Money Payment ”) to a bank account in the United States identified by Seller to Purchaser in writing at least two (2) Business Days prior to the Agreement Date (the “ Seller Bank Account ”);

(ii) Closing Cash Payment. At Closing, Purchaser shall make a cash payment of Seventeen Million Eight Hundred Fifty Thousand Dollars ($17,850,000) (the “ Closing Cash Payment ”) by wire transfer of immediately available funds to the Seller Bank Account, as adjusted in accordance with Section 2.1(e) .

(iii) Deferred Payment. Purchaser shall pay deferred payments (each a “ Deferred Payment ” and together, the “ Deferred Payments ”) totaling Nine Million Seven Hundred Thousand Dollars ($9,700,000) comprising of the following.

(A) Issuance at the Closing of an unsecured promissory note, substantially in the form attached hereto as Exhibit H (the “ First Anniversary Note ”), in the principal amount of Four Million Eight Hundred Fifty Thousand Dollars ($4,850,000) due on the first anniversary of the Closing; and

(B) Issuance at the Closing of an unsecured promissory note, substantially in the form attached hereto as Exhibit I (such promissory note together with the First Anniversary Note, the “ Notes ”), in the principal amount of Four Million Eight Hundred Fifty Thousand Dollars ($4,850,000) due on the second anniversary of the Closing.

6. Amendment of Section 8.13(b) of the Purchase Agreement . Section 8.13(b) of the Purchase is hereby amended and restated to read in its entirety as follows:

(b) Notwithstanding the provisions of Section 8.13(a) , none of Seller, its Affiliates or Seller’s Key Employees shall be restricted from doing any of the following: (i) acquiring any legal entity, division or business that derives less than 5% of its revenues from sales of a Competing Product within the Territory (or any legal entity, division or business that derives an amount equal to or in excess of 5% of its revenues from sales of a Competing Product within the Territory so long as Seller causes such legal entity to cease selling such Competing Product in the Territory (for the duration of the Restricted Period) within six (6) months from the date of acquisition), and thereafter owning, managing, operating or controlling such Person; (ii) owning up to 5% of the voting equity securities or any non-voting equity or debt securities of any legal entity whose securities are publicly traded on a national securities exchange or in the over-the-counter market and that derives more than 5% of its revenues from sales of a Competing Product within the Territory, (iii) owning any equity or debt securities through any employee benefit or pension plan, (iv) operating their business in substantially the same manner as operated prior to the Closing Date (other than with respect to the Product Business) or (v) with respect to any Products subject to NDA or ANDA approval, after three (3) years from the Closing Date, developing any Competing Products or filing any applications for regulatory approval, including new drug applications, abbreviated new drug applications, new drug submissions, and any comparable applications and submissions, with any Governmental Authority, with respect to any Competing Product, for any use, purpose, indication or treatment of any disease or disorder. Notwithstanding the provisions of Section 8.13(a) , none of the Key-Employees shall be restricted from being employed by a third party that manufactures a Competing Product as long as such Key-Employees owns, directly or indirectly, less than 5% of the voting equity securities or any non-voting equity or debt securities of such third party.

7. Amendment of Exhibit D, Exhibit E and Exhibit G to the Purchase Agreement . Exhibit D, Exhibit E and Exhibit G to the Purchase Agreement are hereby deleted in their entirety, and in lieu thereof, Exhibit D, Exhibit E and Exhibit G attached to this Amendment shall be added to and incorporated into the Purchase Agreement for all purposes.

8. Amendment of Exhibit H and Exhibit I to the Purchase Agreement . Exhibit H and Exhibit I to the Purchase Agreement are hereby deleted in their entirety, and in lieu thereof, Exhibit H and Exhibit I attached to this Amendment shall be added to and incorporated into the Purchase Agreement for all purposes.

9. Amendment of Schedules 1.1(a), 1.1(c), 1.1(i), 1.1(j), 1.1(k) and 2.4(a) . Schedules 1.1(c), 1.1(i), 1.1(j), 1.1(k) and 2.4(a) to the Purchase Agreement are hereby deleted in their entirety, and in lieu thereof, Schedules 1.1(a), 1.1(c) , 1.1(i) , 1.1(j) , 1.1(k) and 2.4(a) attached to this Amendment shall be added to and incorporated into the Purchase Agreement for all purposes.

10. Schedule 1.1(l) attached to this Amendment shall be added to the Purchase Agreement as new Schedule 1.1(l) .

11. Amendment of Sections 3.7(a), 3.8(c) and 3.8(d) of the Seller Disclosure Schedule . Section 3.7(a), 3.8(c) and 3.8(d) of the Seller Disclosure Schedule to the Purchase Agreement are hereby deleted in their entirety, and in lieu thereof, Section 3.7(a) , 3.8(c) and 3.8(d) of the Seller Disclosure Schedule attached to this Amendment shall be added to and incorporated into the Purchase Agreement for all purposes.

12. Ratification; Conflicts . As amended by this Amendment, the parties hereby ratify and confirm the Purchase Agreement in all respects, except that if any provision of this Amendment conflicts either expressly or by necessary implication with any provision of the Purchase Agreement, this Amendment shall take precedence.

13. General Provisions .

(a) Definitions . Capitalized terms used in this Amendment that are not expressly defined herein shall have the meanings assigned to such terms in the Purchase Agreement.

(b) Reference to Purchase Agreement . Each reference in the Purchase Agreement to “this Agreement,” “hereunder,” or words of like or similar import shall mean and be a reference to the Purchase Agreement, as modified and amended by this Amendment

(c) Entire Agreement . This Amendment together with the Purchase Agreement and all other agreements, exhibits and schedules referred to herein or therein, constitute the final, complete and exclusive statement of the terms of the agreement between the parties pertaining to the purchase and sale of the Purchased Assets and supersedes all prior and contemporaneous understandings or agreements of the parties relating to the subject matter hereof. Except as amended by this Amendment, the Purchase Agreement remains in full force and effect in accordance with its terms.

(d) Amendments, Waivers and Modifications . No further amendment, waivers or modification of the Purchase Agreement, as hereby amended, shall be valid or binding unless in writing, and signed by each party hereto.

(e) Notices . Any notice or other communication required or permitted to be given shall be in writing and shall be given or made as set forth in the Purchase Agreement.

(f) Headings . The headings of this Amendment are solely for convenience of reference and shall be given no effect in the construction or interpretation of this Amendment.

(g) Counterparts . This Amendment may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Amendment shall become effective when each Party shall have received a counterpart hereof signed by the other Party. Until and unless each Party has received a counterpart hereof signed by the other Party hereto, this Amendment shall have no effect, and no Party shall have any right or obligation hereunder (whether by virtue of any other oral or written agreement or other communication). The exchange of a fully executed Amendment (in counterparts or otherwise) by electronic transmission in .PDF format or by facsimile shall be sufficient to bind the Parties to the terms and conditions hereof and thereof.

(h) Successors and Assigns . This Amendment shall be binding upon and, to the extent expressly permitted by the provisions of the Purchase Agreement, shall inure to the benefit of Purchaser, Pernix, Macoven, Cypress and their respective legal representatives, successors and assigns

(i) Governing Law . This Amendment shall be governed by and construed and enforced in accordance with the laws of the State of New York, without giving effect to principles of conflicts of laws that would require the application of the laws of any other jurisdiction. Any dispute, controversy or claim arising from or related to this Amendment or the Purchase Agreement as amended hereby, or the validity, enforceability, breach, or termination of either shall be solved in accordance with Section 10.10 of the Purchase Agreement.

(j) Exhibits and Schedule s. All exhibits and schedules to this Amendment shall constitute part of the Purchase Agreement, as hereby amended, and this Amendment and shall be deemed to be incorporated therein and herein by reference and made part of the Purchase Agreement, as hereby amended, and this Amendment as if set out in full within the body thereof and hereof. Any disclosure in any schedule shall be deemed adequate to disclose an exception to any representation or warranty in the Purchase Agreement, as hereby amended.

(Remainder of Page Intentionally Left Blank)

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed and delivered as of the date first written above.

PURCHASER:

BRECKENRIDGE PHARMACEUTICAL, INC.

By: /s/ Albert Esteve

Name: Albert Esteve

Title: Chairman

By: /s/ Laurence D. Runsdorf

Name: Laurence D. Runsdorf

Title: President

By: /s/ Larry J. Lapila

Name: Larry J. Lapila

Title: Executive Vice President

SELLER:

CYPRESS PHARMACEUTICALS, INC.

By: /s/ Michael C. Pearce

Name: Michael C. Pearce

Title: President and Chief Executive Officer

PERNIX THERAPEUTICS HOLDINGS, INC.

By: /s/ Michael C. Pearce

Name: Michael C. Pearce

Title: President and Chief Executive Officer

MACOVEN PHARMACEUTICALS, LLC

By: /s/ Michael C. Pearce

Name: Michael C. Pearce

Title: President and Chief Executive Officer

Company Contact:

Michael C. Pearce

President and Chief Executive Officer

(800) 793-2145 ext. 1501

mpearce@pernixtx.com

PERNIX THERAPEUTICS COMPLETES DIVESTURE OF NON-CORE ASSETS TO BRECKENRIDGE

HOUSTON, Texas, September 11, 2013 – Pernix Therapeutics Holdings, Inc. (NASDAQ MKT: PTX), a specialty pharmaceutical company, today announced that it had completed the previously disclosed sale of certain non-core assets to Breckenridge Pharmaceutical, Inc.

The divested assets are from the Cypress Pharmaceutical, Inc. subsidiary of Pernix and include 11 Abbreviated New Drug Applications (ANDAs) filed with the FDA, certain ANDAs in various stages of development, as well as 6 already-approved and marketed products.

Total purchase price consideration was $30.0 million, adjusted to $29.7 million in order to permit Pernix to retain the currently marketed product, Arbinoxa.

Michael Pearce, Chairman, President and CEO, said, "This transaction represents a significant milestone for Pernix, fortifying our balance sheet and tightening our focus as we position for accelerating sales in our seasonally strong Q4 and Q1 periods."

About Pernix Therapeutics Holdings, Inc.

Pernix Therapeutics is a specialty pharmaceutical company primarily focused on the sales, marketing, manufacturing and development of branded, generic and OTC pharmaceutical products. The Company manages a portfolio of branded products, including the recently acquired Hawthorn Pharmaceuticals’ product line. The Company’s branded products for the pediatrics market include CEDAX®, an antibiotic for middle ear infections, NATROBA™, a topical treatment for head lice marketed under an exclusive co-promotion agreement with ParaPRO, LLC, and ZUTRIPRO® for the treatment of cough and cold. The Company’s branded products for gastroenterology include OMECLAMOX-PAK®, a 10-day treatment for H. pylori infection and duodenal ulcer disease, and REZYST™, a probiotic blend to promote dietary management. The Company also markets the branded product, SILENOR, for the treatment of insomnia. The Company promotes its branded pediatric and gastroenterology products through its sales force. Pernix markets its generic products through its wholly-owned subsidiaries, Cypress Pharmaceutical and Macoven Pharmaceuticals. The Company’s wholly-owned subsidiary, Great Southern Laboratories, manufactures and packages products for the pharmaceutical industry in a wide range of dosage forms. Founded in 1996, the Company is based in The Woodlands, TX.

Additional information about Pernix is available on the Company’s website located at www.pernixtx.com.

Cautionary Notice Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements including words such as “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “target” or similar expressions are forward-looking statements. Because these statements reflect the Company’s current views, expectations and beliefs concerning future events, these forward-looking statements involve risks and uncertainties. Investors should note that many factors, as more fully described under the caption "Risk Factors" in our Form 10-K, Form 10-Q and Form 8-K filings with the Securities and Exchange Commission and as otherwise enumerated herein or therein, could affect the Company’s future financial results and could cause actual results to differ materially from those expressed in forward-looking statements contained in the Company’s Annual Report on Form 10-K. The forward-looking statements in this press release are qualified by these risk factors. These are factors that, individually or in the aggregate, could cause our actual results to differ materially from expected and historical results. The Company assumes no obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise.

PERNIX THERAPEUTICS HOLDINGS, INC

UNAUDITED PRO FORM CONDENSED CONSOLIDATED BALANCE SHEET

	As Reported			Pro Forma Adjustments			Pro Forma
ASSETS
Current assets:
Cash and cash equivalents	$	9,048,119		$	11,564,938		$	20,613,057
Accounts receivable, net		26,689,761			(33,231	)		26,656,530
Inventory, net		18,968,319			(1,671,074	)		17,297,245
Prepaid expenses and other current assets		4,655,948			4,850,000			9,505,948
Prepaid income taxes		5,506,105		─				5,506,105
Deferred income taxes		6,942,000		─				6,942,000
Total current assets		71,810,252			14,710,633			86,520,885
Property and equipment, net		7,200,041						7,200,041
Other assets:
Investments	─			─			─
Goodwill		52,645,405		─				52,645,405
Intangible assets, net		102,414,440			300,000			102,714,440
Assets held for sale		29,000,000			(29,000,000	)	─
Other long-term assets		1,384,055			4,850,000			6,234,055
Total assets	$	264,454,193		$	(9,139,367	)	$	255,314,826
LIABILITIES
Current liabilities:
Accounts payable		12,643,133		─				12,643,133
Accrued personnel expenses		2,595,489		─				2,595,489
Accrued allowances		31,423,549			(534,482	)		30,889,067
Other accrued expenses		5,117,497		─				5,117,497
Other liabilities		15,180,329		─				15,180,329
Debt		18,471,787			(2,666,865	)		15,804,922
Total current liabilities		85,431,784			(3,201,347	)		82,230,437
Long-term liabilities
Other liabilities		7,808,640		─				7,808,640
Debt		6,414,307			(5,033,333	)		1,380,974
Deferred income taxes		43,844,000		─				43,844,000
Total liabilities		143,498,731			(8,234,680	)		135,264,051

Commitments and contingencies

Temporary Equity
Common stock subject to repurchase (3,773,079 and 4,427,084 shares as of June 30, 2013)		29,241,362		─				29,241,362

STOCKHOLDERS’ EQUITY
Common stock, $.01 par value, 90,000,000 shares authorized, 39,240,781 issued and 37,120,890 outstanding at June 30, 2013)		333,478		─				333,478
Treasury stock, at cost (2,119,891 and 2,072,810 shares held at June 30, 2013 and December 31, 2012, respectively)		(3,980,629	)	─				(3,980,629
Additional paid-in capital		88,943,737		─				88,943,737
Retained earnings		6,417,514			(904,687	)		5,512,827
Total equity		91,714,100			(904,687	)		90,809,413

Total liabilities and stockholders’ equity	$	264,454,193		$	(9,139,367	)	$	255,314,826

The accompanying notes are an integral part of these consolidated financial statements.

PERNIX THERAPEUTICS HOLDINGS, INC

UNAUDITED PRO FORM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS

	For the Six Months Ended June 30, 2013
	Historical			Pro Forma Adjustments				Pro Forma
Net revenues	$	42,651,274			$	(3,768,330	)	$	38,882,944
Costs and operating expenses:
Cost of product sales		24,239,797				(1,652,505	)		22,587,292
Selling, general and administrative expenses		27,220,635				827,275			28,047,910
Research and development expense		2,999,300			─				2,999,300
Loss from the operations of the joint venture with SEEK	─			─				─
Depreciation and amortization expense		4,794,700				(116,668	)		4,678,032
Loss on sale of assets		4,880				─			4,880
Total costs and operating expenses		59,259,312				(941,898	)		58,317,414

Income (loss) from operations		(16,608,038	)			(2,826,432	)		(19,434,470

Other income (expense):
Change in fair value of put right		(3,970,789	)	─					(3,970,789
Change in fair value of contingent consideration		283,000		─					283,000
Interest expense, net		(2,709,184	)			346,509			(2,362,675
Gain on sale of investment		3,605,263				─			3,605,263
Total other (loss) income, net		(2,791,710				346,509			(2,445,201

Income (loss) before income taxes		(19,399,748	)			(2,479,923	)		(21,879,671

Income tax (benefit) provision		(5,384,000	)			(521,000	)		(5,905,000

Net income (loss)	$	(14,015,748	)		$	(1,958,923	)	$	(15,974,671

Reclassification adjustment for net realized gain included in net income (loss), net of income tax		(2,975,118	)		─				(2,975,118

Comprehensive income (loss)	$	(16,990,866	)		$	(1,958,923	)	$	(18,949,789

Net income (loss) per share, basic	$	(.39	)		$	(.05	)	$	(.44
Net income (loss) per share, diluted	$	(.39	)		$	(.05	)	$	(.44
Weighted-average common shares, basic		35,738,469				35,738,469			35,738,469
Weighted-average common shares, diluted		35,738,469				35,738,469			35,738,469

The accompanying notes are an integral part of these pro forma condensed consolidated financial statements.

PERNIX THERAPEUTICS HOLDINGS, INC

NOTES TO UNAUDITED PRO FORM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1— BASIS OF PRESENTATION

The unaudited pro forma condensed consolidated financial statements are presented to illustrate the effect of the Company’s disposition of these properties on its historical financial position and operating results. The unaudited pro forma condensed consolidated balance sheet as of June 30, 2013 is based on the historical statements of the Company as of June 30, 2013 after giving effect to the transaction as if the disposition had occurred on June 30, 2013. The unaudited pro forma condensed consolidated statements of comprehensive loss for the six months ended June 30, 2013 are based on the historical financial statements of the Company after giving effect to the transaction as if the disposition had occurred on January 1, 2012.

Due to the fact that the Company purchased the Cypress assets on December 31, 2012, the unaudited condensed consolidated statement of operations for the year ended December 31, 2012 after giving effect to the transaction as if the disposition had occurred on January 1, 2012 is identical to the consolidated statement of comprehensive income included in the Company’s Form 10-K for the year ended December 31, 2012 for that same period. The unaudited pro forma financial information should be read in conjunction with the Company’s historical consolidated financial statements and notes thereto contained in the Company’s Quarterly Report on Form 10-Q, filed August 9, 2013, and its Annual Report on Form 10-K, filed March 18, 2013.

The preparation of the unaudited pro forma condensed consolidated financial information is based on financial statements prepared in accordance with accounting principles generally accepted in the United States of America. These principles require the use of estimates that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results could differ from those estimates.

The unaudited pro forma condensed consolidated financial information is provided for illustrative purposes only and does not purport to represent what the actual results of operations would have been had the transaction occurred on the respective date assumed, nor is it necessarily indicative of the Company’s future operating results. However, the pro forma adjustments reflected in the accompanying unaudited pro forma condensed consolidated financial information reflect estimates and assumptions that the Company’s management believes to be reasonable.

Pro forma adjustments related to the unaudited pro forma condensed consolidated balance sheet as of June 30, 2013 were computed assuming the transaction was consummated on June 30, 2013 and include adjustments which give effect to events that are directly attributable to the transaction and factually supportable regardless of whether they have a continuing impact or are nonrecurring.

Pro forma adjustments related to the unaudited pro forma condensed consolidated statements of operations for the six months ended June 30, 2013 were computed assuming the transaction was consummated on January 1, 2012 and include adjustments which give effect to events that are (i) directly attributable to the transaction, (ii) expected to have a continuing impact on the registrant, and (iii) factually supportable.

NOTE 2— UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

The unaudited pro forma condensed consolidated balance sheet at June 30, 2013 reflects the following pro forma adjustments:

(1)	Reflects the use of a portion of the net proceeds to repay part of the amounts outstanding under the Company’s Credit Agreement with the remaining proceeds retained in Cash and cash equivalents.

(2)	Reflects the disposition of assets sold as of June 30, 2013 from intangible assets, net.

The adjustment to retained earnings includes the write-off of inventory and other prepaid expenses related to inventory not transferred to the buyer of approximately $550K. in addition to interest expense, broker fees, and a credit to the buyer for product transition expenses.

NOTE 3— UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

The unaudited pro forma condensed consolidated statements of operations for the six months ended June 30, 2013 reflect the following pro forma adjustments:

(1)	Eliminates the revenues and cost of goods sold as if the transaction occurred on January 1, 2012.

(2)	Reflects the reduction in amortization resulting from excluding the assets that were sold from intangible assets, net as if the transaction occurred on January 1, 2012.

(3)	Reduces interest expense resulting from applying a portion of the net proceeds as the repayment of the term loan balance outstanding at September 11, 2013 under the Company’s Credit Agreement.

(4)	Reflects an adjustment to income tax expense as a result of the adjustments described above.