SELECTED UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated statements of operations and related notes are presented to show the pro forma effects of the acquisition of Best Well Services, Inc. (“BWS”) and Bob Beeman Drilling Company (“BBD”). The pro forma condensed consolidated statements of operations for the year ended January 31, 2007 and for the nine months ended October 31, 2007 are presented to show income from continuing operations as if the BWS and BBD acquisitions occurred as of the beginning of each period. The pro forma condensed consolidated balance sheet as of October 31, 2007 is presented to show the financial position as if the BWS and BBD acquisitions occurred as of October 31, 2007.
Pro forma data are based on assumptions and include adjustments as explained in the notes to the unaudited pro forma condensed consolidated financial statements. The pro forma data are not necessarily indicative of the financial results that would have been attained had the acquisition of BWS and BBD occurred on the dates referenced above and should not be viewed as indicative of operations in future periods. The unaudited pro forma condensed consolidated statements of operations should be read in conjunction with notes thereto and the financial statements as of and for the year ended January 31, 2007 and as of and for the nine months ended October 31, 2007 for Hybrook, and the financial statements as of and for the year ended December 31, 2006 and as of and for the nine months ended September 30, 2007 for BWS and BBD included elsewhere in this Form 8-K.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
Hybrook | BWS | BBD | Pro Forma Adjustments | Pro Forma Consolidated | |||||||||||
Assets | |||||||||||||||
Cash | $ | 44,292 | $ | 2,004,562 | $ | 610,844 | $ | 1,243,194 | (a) | $ | 4,040,486 | ||||
8,300,000 | (c) | ||||||||||||||
17,313,000 | (e) | ||||||||||||||
2,850,000 | (g) | ||||||||||||||
(22,504,562) | (j) | ||||||||||||||
(5,160,844) | (k) | ||||||||||||||
(660,000) | (l) | ||||||||||||||
Certificate of deposit | - | - | - | 2,500,000 | (c) | 2,500,000 | |||||||||
Trading securities | - | 789,710 | 8,613,494 | (789,710) | (j) | - | |||||||||
(8,613,494) | (k) | ||||||||||||||
Accounts receivable and other current assets | 5,488 | 2,121,770 | 488,239 | (1,621,770) | (j) | 505,488 | |||||||||
(488,239) | (k) | ||||||||||||||
Total current assets | 49,780 | 4,916,042 | 9,712,577 | 7,045,974 | |||||||||||
Deferred financing cost | - | - | - | 205,000 | (a) | 250,000 | |||||||||
(205,000) | (b) | ||||||||||||||
250,000 | (e) | ||||||||||||||
Property and equipment, net | - | 5,585,405 | 1,025,653 | 14,514,595 | (j) | 24,850,000 | |||||||||
3,724,347 | (k) | ||||||||||||||
Goodwill | - | - | - | 660,000 | (l) | 660,000 | |||||||||
Due from American Rig Housing | - | - | - | 351,806 | (a) | 351,806 | |||||||||
Deposit | - | - | - | 200,000 | (a) | - | |||||||||
(200,000) | (k) | ||||||||||||||
Total assets | 49,780 | 10,501,447 | 10,738,230 | 11,868,323 | 33,157,780 | ||||||||||
Liabilities and stockholders' equity | |||||||||||||||
Accounts payable and accrued expenses | 7,803 | 71,918 | 10,206 | (71,918) | (j) | 7,803 | |||||||||
(10,206) | (k) | ||||||||||||||
Due to related party | 22 | - | 257,209 | (257,209) | (k) | 22 | |||||||||
Income taxes payable | - | 285,013 | 1,436,809 | (285,013) | (j) | - | |||||||||
(1,436,809) | (k) | ||||||||||||||
Deferred income taxes | - | - | 474,657 | (474,657) | (k) | - | |||||||||
Current portion of notes payable | - | 295,374 | 470,416 | 2,000,000 | (a) | - | |||||||||
(2,000,000) | (i) | ||||||||||||||
(295,374) | (j) | ||||||||||||||
(470,416) | (k) | ||||||||||||||
Total current liabilities | 7,825 | 652,305 | 2,649,297 | 7,825 | |||||||||||
Series A Preferred Stock | - | - | - | 10,800,000 | (c) | 12,600,000 | |||||||||
1,800,000 | (i) | ||||||||||||||
Revolving note payable | - | - | - | 17,563,000 | (e) | 17,563,000 | |||||||||
Term note payable | - | - | - | 2,850,000 | (g) | 2,850,000 | |||||||||
Notes payable | - | 226,300 | - | (226,300) | (j) | - | |||||||||
Deferred income taxes | - | 480,502 | - | (480,502) | (j) | - | |||||||||
Total liabilities | 7,825 | 1,359,107 | 2,649,297 | 33,020,825 | |||||||||||
Stockholders' equity | |||||||||||||||
Common stock | 9,685 | 30,000 | 100,000 | 5,625 | (c) | 18,435 | |||||||||
2,500 | (i) | ||||||||||||||
(29,375) | (j) | ||||||||||||||
(100,000) | (k) | ||||||||||||||
Additional paid-in capital | 98,109 | 41,540 | - | 640,644 | (c) | 1,035,628 | |||||||||
197,500 | (i) | ||||||||||||||
57,835 | (j) | ||||||||||||||
Retained earnings (deficit) | (65,839 | 9,070,800 | 7,988,933 | (205,000) | (b) | (270,839) | |||||||||
(9,070,800) | (j) | ||||||||||||||
(7,988,933) | (k) | ||||||||||||||
Total stockholders' equity | 41,955 | 9,142,340 | 8,088,933 | 783,224 | |||||||||||
Total liabilities and stockholders' equity | 49,780 | 10,501,447 | 10,738,230 | 12,514,592 | 33,804,049 |
See notes to unaudited condensed consolidated financial statements.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED OCTOBER 31, 2007
Pro Forma | Pro Forma | ||||||||||||||
Hybrook | BWS | BBD | Adjustments | Consolidated | |||||||||||
Revenues | $ | - | $ | 13,186,260 | $ | 2,581,534 | $ | 15,767,794 | |||||||
Operating expenses: | |||||||||||||||
Salaries and wages | - | 4,718,443 | - | (109,285) | (o) | 4,609,158 | |||||||||
Drilling service expenses | - | 1,843,083 | 1,010,793 | (81,700) | (o) | 2,772,176 | |||||||||
General and administrative | 45,713 | 1,764,133 | 1,317,724 | (2,006) | (o) | 3,125,564 | |||||||||
Depreciation | - | 799,453 | 178,687 | 950,967 | (m) | 1,929,107 | |||||||||
Total operating expenses | 45,713 | 9,125,112 | 2,507,204 | 12,436,005 | |||||||||||
Operating income (loss) | (45,713) | 4,061,148 | 74,330 | 3,331,789 | |||||||||||
Other income (expense): | |||||||||||||||
Investment income (loss) | - | 168,699 | 2,488,517 | (2,657,216) | (v) | - | |||||||||
Interest expense | - | (7,242) | (14,417) | (205,000) | (b) | (1,959,467) | |||||||||
(614,250) | (d) | ||||||||||||||
(968,933) | (f) | ||||||||||||||
(149,625) | (h) | ||||||||||||||
Total other income (expense) | - | 161,457 | 2,474,100 | (1,959,467) | |||||||||||
Income (loss) before income taxes | (45,713) | 4,222,605 | 2,548,430 | 1,372,322 | |||||||||||
Income tax (expense) recovery | - | (1,777,149) | (866,466) | 2,163,302 | (p) | (480,313) | |||||||||
Net income (loss) | (45,713) | 2,445,456 | 1,681,964 | 892,009 | |||||||||||
Net income per share: | |||||||||||||||
Basic and diluted | $ | (0.00) | $ | 0.05 | |||||||||||
Weighted average shares outstanding: | |||||||||||||||
Basic and diluted | 9,685,000 | 10,000,000 | 19,685,000 |
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See notes to unaudited condensed consolidated financial statements.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED OCTOBER 31, 2007
Actual | Pro Forma | Pro Forma | ||||||||||||||
Hybrook | BWS | BBD | Adjustments | Consolidated | ||||||||||||
Revenues | $ | - | $ | 17,182,055 | $ | 5,687,402 | $ | 22,869,457 | ||||||||
Operating expenses: | ||||||||||||||||
Salaries and wages | - | 6,860,915 | (697,233) | (o) | 6,163,682 | |||||||||||
Drilling service expenses | - | 3,712,918 | 2,370,589 | (1,132,485) | (o) | 4,951,022 | ||||||||||
General and administrative | 20,126 | 1,626,219 | 2,308,905 | (513,003) | (o) | 3,442,247 | ||||||||||
Depreciation | - | 811,131 | 358,174 | 1,372,418 | (m) | 2,541,723 | ||||||||||
Total operating expenses | 20,126 | 13,011,183 | 5,037,668 | 17,098,674 | ||||||||||||
Operating income (loss) | (20,126) | 4,170,872 | 649,734 | 5,770,783 | ||||||||||||
Other income (expense): | ||||||||||||||||
Investment income (loss) | - | 133,759 | (1,193,423) | 1,059,664 | (n) | - | ||||||||||
Interest expense | - | (15,202) | (76,043) | (205,000) | (b) | (2,669,655) | ||||||||||
(882,000) | (d) | |||||||||||||||
(1,291,910) | (f) | |||||||||||||||
(199,500) | (h) | |||||||||||||||
Total other income (expense) | - | 118,557 | (1,269,466) | (2,669,655) | ||||||||||||
Income (loss) before income taxes | (20,126) | 4,289,429 | (619,732) | 3,101,128 | ||||||||||||
Income tax (expense) recovery | - | (1,831,058) | 298,481 | 447,182 | (p) | (1,085,395) | ||||||||||
Net income (loss) | (20,126) | 2,458,371 | (321,251) | 2,015,733 | ||||||||||||
Net income per share: | ||||||||||||||||
Basic and diluted | $ | (0.00) | $ | 0.13 | ||||||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic and diluted | 5,012,742 | 10,000,000 | 15,012,742 |
See notes to unaudited condensed consolidated financial statements.
BEST ENERGY SERVICES, INC.
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
1. Basis of Presentation
The acquisition of BWS and BBD is described elsewhere in this current report on Form 8−K. The unaudited pro forma condensed consolidated balance sheet as of October 31, 2007 is based on the financial statements of Hybrook as of October 31, 2007 and the financial statements of BWS and BBD as of September 31, 2007 and the adjustments and assumptions described below. The unaudited pro forma condensed consolidated statements of operations for the year ended January 31, 2007 and the nine months ended October 31, 2007 are based on the financial statements of Hybrook for the year ended January 31, 2007 and the nine months ended October 31, 2007 and the financial statements of BWS and BBD for the year ended December 31, 2006 and the nine months ended September 30, 2007 and the adjustments and
assumptions described below.
2. Pro Forma Adjustments:
The unaudited pro forma condensed consolidated financial statements reflect the following adjustments:
(a) | Record the net proceeds from the $2,000,000 Bridge Loan including deferred financing costs of $205,000, payment of a deposit of $200,000 to BBD and repayment of a loan on behalf of American Rig Housing in the amount of $351,806. | |
(b) | Record interest expense on Bridge Loan and amortization of deferred financing costs. Deferred financing costs are amortized immediately, because the Bridge Loan was converted into Units as a result of the acquisition of BBD and BWS. | |
(c) | Record the net proceeds from the $12,000,000 private offering of units, net of cash placement agent fees of $1,200,000 and proceeds of $2,500,000 which will be used to purchase a certificate of deposit. | |
(d) | Record redemption of preferred stock interest on preferred stock. | |
(e) | Record borrowing $17,563,000 under Revolving Note Agreement to fund acquisitions and repayment of Bridge Loan. | |
(f) | Record interest expense on Revolving Note Agreement and amortization of deferred financing costs. | |
(g) | Record borrowing $2,850,000 under Term Note Agreement to fund acquisitions and provide for working capital. | |
(h) | Record interest expense on Term Note Agreement. | |
(i) | Record conversion of Bridge Loan into common stock and preferred stock. | |
(j) | Record acquistion of BWS and allocation of purchase price. | |
(k) | Record acquisition of BBD and allocation of purchase price. | |
(l) | Record transaction costs associated with acquisition and financing. | |
(m) | Record incremental depreciation on property and equipment as a result of the acquisition of BWS and BBD. | |
(n) | Reverse investment income (loss) as trading securities will not be included in acquisition of BWS and BBD. | |
(o) | Eliminate related party expenses incurred by BWS and BBD which will not be incurred acquisitions. | |
(p) | Adjust tax expense based on income statement adjustments. |