Exhibit 99.3
UNAUDITED PRO FORMA COMBINED
STATEMENT OF OPERATIONS AND UNAUDITED PRO FORMA
COMBINED BALANCE SHEET
The following unaudited pro forma combined balance sheet as of March 31, 2006 and the unaudited pro forma combined statements of operations for the year ended March 31, 2006 give effect to Mesa Laboratories, Inc.’s (“Mesa”) purchase of all the issued and outstanding shares of common stock of Raven Biological Laboratories, Inc. (“Raven”) effective May 4, 2006, including the related pro forma adjustments described in the notes thereto.
The unaudited pro forma balance sheet has been prepared as if the transaction was recorded on Mesa’s books as of March 31, 2006. The unaudited pro forma combined statement of operation has been prepared as if the proposed transaction occurred on the first day of the fiscal year presented. These pro forma statements are not necessarily indicative of the results of operations or the financial position as they may be in the future or as they might have been had the transaction become effective on the above mentioned date.
The historical data for Mesa as of and for the fiscal year ended March 31, 2006 has been derived from the audited financial statements of Mesa. The historical data for Raven as of March 31, 2006 has been derived from unaudited financial statements for Raven. The historical data for the twelve months ended March 31, 2006 was derived by subtracting the five months ended March 31, 2005 from the twelve months ended October 31, 2005 and then adding the five months ended March 31, 2006 to the result.
The unaudited pro forma combined statements of operations and the unaudited pro forma combined balance sheets should be read in conjunction with the separate historical financial statements and notes thereto of Mesa Laboratories, Inc. and Raven Biological Laboratories, Inc.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
March 31, 2006
| Mesa Laboratories, Inc. | Raven Biological, Inc. | Subtotal Pro Forma Combined | Pro Forma Adjustments | Pro Forma Combined | ||||||||||||||
| Assets | ||||||||||||||||||
Current assets | ||||||||||||||||||
Cash and cash equivalents | $ | 4,466,000 | $ | 410,845 | $ | 4,876,845 | $ | 499,870 | (2) | $ | 1,837,509 | |||||||
| (3,539,206 | )(1) | |||||||||||||||||
Short-term investments | 1,245,000 | 29,028 | 1,274,028 | (29,028 | )(2) | 1,245,000 | ||||||||||||
Accounts receivable, net | 2,425,000 | 900,102 | 3,325,102 | 3,325,102 | ||||||||||||||
Other current receivables | 19,000 | 58,581 | 77,581 | 77,581 | ||||||||||||||
Notes receivable – stockholders | — | 820,341 | 820,341 | (820,341 | )(2) | — | ||||||||||||
Inventories, net | 2,374,000 | 494,313 | 2,868,313 | 2,868,313 | ||||||||||||||
Prepaid expenses and other current assets | 245,000 | 35,401 | 280,401 | 280,401 | ||||||||||||||
Deferred income taxes | 181,000 | — | 181,000 | 181,000 | ||||||||||||||
Total current assets | 10,955,000 | 2,748,611 | 13,703,611 | (3,888,705 | ) | 9,814,906 | ||||||||||||
Non-current assets | ||||||||||||||||||
Cash surrender value life insurance | — | 85,377 | 85,377 | (85,377 | )(2) | — | ||||||||||||
Long-term investments | — | 40,600 | 40,600 | (40,600 | )(2) | — | ||||||||||||
Property, plant and equipment | 1,287,000 | 613,098 | 1,900,098 | 54,979 | (1) | 1,955,077 | ||||||||||||
Deposits | — | 37,619 | 37,619 | 37,619 | ||||||||||||||
Goodwill, intangibles and other | 4,208,000 | — | 4,208,000 | 3,799,018 | (4) | 8,007,018 | ||||||||||||
Total non-current assets | 5,495,000 | 776,694 | 6,271,694 | 3,728,020 | 9,999,714 | |||||||||||||
Total assets | $ | 16,450,000 | $ | 3,525,305 | $ | 19,975,305 | $ | (160,685 | ) | $ | 19,814,620 | |||||||
| Liabilities and Stockholders’ (Deficit) Equity | ||||||||||||||||||
Current liabilities | ||||||||||||||||||
Accounts payable | $ | 290,000 | $ | 114,620 | $ | 404,620 | $ | $ | 404,620 | |||||||||
Accrued expenses | 861,000 | — | 861,000 | 861,000 | ||||||||||||||
Bank line-of-credit | — | 100,000 | 100,000 | (100,000 | )(2) | — | ||||||||||||
Current portion of long-term debt | — | 166,509 | 166,509 | (166,509 | )(2) | — | ||||||||||||
Taxes payable | 51,000 | — | 51,000 | 51,000 | ||||||||||||||
Total current liabilities | 1,202,000 | 381,129 | 1,583,129 | (266,509 | ) | 1,316,620 | ||||||||||||
Long-term debt, less current portion | — | 208,967 | — | (208,967 | )(2) | — | ||||||||||||
Deferred income taxes | 329,000 | — | 329,000 | — | 329,000 | |||||||||||||
Total liabilities | 1,531,000 | 590,096 | 2,121,096 | (475,476 | ) | 1,645,620 | ||||||||||||
Stockholders’ equity | ||||||||||||||||||
Common stock | 1,313,000 | 15,222 | 1,328,222 | (15,222 | )(1) | 4,563,000 | ||||||||||||
| 3,250,000 | (1) | |||||||||||||||||
Additional paid-in capital | — | 367,260 | 367,260 | (367,260 | )(1) | — | ||||||||||||
Treasury stock | — | (38,830 | ) | (38,830 | ) | 38,830 | (1) | — | ||||||||||
Retained earnings | 13,606,000 | 2,591,557 | 16,197,557 | (2,591,557 | )(1) | 13,606,000 | ||||||||||||
Total stockholders’ equity | 14,919,000 | 2,935,209 | 17,854,209 | 314,791 | 18,169,000 | |||||||||||||
Total liabilities and stockholders’ equity | $ | 16,450,000 | $ | 3,525,305 | $ | 19,975,305 | $ | (160,685 | ) | $ | 19,814,620 | |||||||
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
Year Ended March 31, 2006
| Mesa Laboratories, Inc. | Raven Biological, Inc. | Subtotal Pro Forma Combined | Pro Forma Adjustments | Pro Forma Combined | |||||||||||||||
Net sales | $ | 11,583,000 | $ | 4,655,870 | $ | 16,238,870 | $ | $ | 16,238,870 | ||||||||||
Cost of goods sold | 4,146,000 | 2,549,184 | 6,695,184 | 6,695,184 | |||||||||||||||
Gross margin | 7,437,000 | 2,106,686 | 9,543,686 | 9,543,686 | |||||||||||||||
Operating expenses | 3,327,000 | 1,024,480 | 4,351,480 | 516,923 | (3) | 4,868,403 | |||||||||||||
Income (loss) from operations | 4,110,000 | 1,082,206 | 5,192,206 | 516,923 | 4,675,283 | ||||||||||||||
Other income (expense) | |||||||||||||||||||
Interest expense | — | (30,888 | ) | (30,888 | ) | (30,888 | ) | ||||||||||||
Loss on disposal of assets | — | 6,300 | 6,300 | 6,300 | |||||||||||||||
Interest income | 193,000 | 47,279 | 240,279 | (140,000 | )(5) | 100,279 | |||||||||||||
Other income | — | 9,037 | 9,037 | 9,037 | |||||||||||||||
Total other income (expense) | 193,000 | 31,728 | 224,728 | (140,000 | ) | 84,728 | |||||||||||||
Net income (loss) before income taxes | 4,303,000 | 1,113,934 | 5,416,934 | (656,923 | ) | 4,760,011 | |||||||||||||
Income tax expense | 1,498,000 | 423,000 | 1,921,000 | (249,630 | )(6) | 1,671,370 | |||||||||||||
Net income | $ | 2,805,000 | $ | 690,934 | $ | 3,495,934 | $ | 407,293 | $ | 3,088,641 | |||||||||
Net income per share (basic) | $ | 0.94 | $ | 0.92 | $ | 0.96 | |||||||||||||
Net income per share (diluted) | $ | 0.92 | $ | 0.92 | $ | 0.94 | |||||||||||||
Shares outstanding – basic | 2,989,000 | 748,627 | (525,384 | ) | 3,212,243 | ||||||||||||||
Shares outstanding – diluted | 3,053,000 | 748,627 | (525,384 | ) | 3,276,243 | ||||||||||||||
Notes to Unaudited Pro Forma Combined Financial Statements
The following notes and adjustments are related to Mesa Laboratories, Inc.’s purchase of certain assets of Raven Biological Laboratories, Inc.
| (1) | The purchase price of $6,750,000 was comprised of $3,500,000 in cash and $3,250,000 of Mesa common stock. The purchase price has been preliminarily allocated to the assets and liabilities based on management’s estimates as follows: |
Furniture and equipment | $ | 54,579 | |
Intangible assets | $ | 2,545,342 | |
Goodwill | $ | 1,253,676 |
The Company is in the process of obtaining a valuation from a third party to be used to allocate the purchase price. The Company will adjust its allocation estimate when the valuation is completed.
| (2) | To record the effect of assets and liabilities purchased or paid off prior to closing. |
| (3) | To record depreciation of furniture and equipment and intangible assets acquired in the purchase, furniture and equipment over 7 years and intangible assets over 5 years. |
| (4) | To reflect shares outstanding based upon Mesa shares of 2,989,000 basic and 2,901,000 fully diluted combined with the 223,243 shares issued to Raven for the acquisition. |
| (5) | To eliminate interest income earned in the year ended March 31, 2006 on $3,500,000 cash paid at closing. |
| (6) | Pro forma income tax adjustment at a 38% effective tax rate. |