Exhibit 99.16
PRO FORMA CONSOLIDATED UNAUDITED FINANCIAL INFORMATION
The unaudited pro forma consolidated financial statements as of and for the six months ended June 30, 2006, have been prepared from the June 30, 2006 unaudited financial statements of the Company and the unaudited financial statements of Teragenix Corporation for the six months ended June 30, 2006. The unaudited pro forma consolidated statement of income for the year ended December 31, 2005 has been prepared from the December 31, 2005 financial statements of the Company and the statement of income of Teragenix Corporation for the year ended December 31, 2005.
The unaudited pro forma consolidated financial statements have been prepared on a basis to reflect the acquisition of Teragenix Corporation as if such acquisition occurred as of January 1, 2005 for the statements of income and as of June 30, 2006 for the balance sheet.
The unaudited pro forma consolidated financial statement should not be considered indicative of actual results that would have been achieved had the acquisition and the other transactions and events described been completed as of the dates or as of the beginning of the period indicated and do not purport to project the financial condition or results of operations and cash flows for any future date or period.
The reader should read these unaudited pro forma consolidated financial statements in conjunction with the Company’s financial statements as of and for the year ended December 31, 2005 and the interim unaudited consolidated financial statements as of and for the six months ended June 30, 2006.
The pro forma adjustments are based on preliminary estimates, available information and certain assumptions, and may be revised as additional information becomes available. The pro forma adjustments are more fully described in the notes to the unaudited pro forma consolidated financial statements.
HemaCare Corporation
Unaudited Pro Forma Consolidated Balance Sheet
As of June 30, 2006
|
|
|
|
|
| Pro Forma |
|
|
| |||||
|
| HemaCare |
| Teragenix |
| Adjustments |
| Pro Forma |
| |||||
|
| Corporation |
| Corporation |
| Debit |
| Credit |
| Combined |
| |||
Assets |
|
|
|
|
|
|
|
|
|
|
| |||
Current assets: |
|
|
|
|
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
| 273,000 | (e) |
|
| |||
Cash and cash equivalents |
| $ | 1,732,000 |
| $ | 300,000 |
| 1,275,000 | (c) | 2,223,000 | (d) | $ | 811,000 |
|
Accounts receivable, net |
| 3,992,000 |
| 480,000 |
|
|
|
|
| 4,472,000 |
| |||
Inventories and supplies, net |
| 1,214,000 |
| 766,000 |
|
|
| 422,000 | (a) | 1,558,000 |
| |||
Prepaid expenses and other current assets |
| 749,000 |
| 24,000 |
|
|
|
|
| 773,000 |
| |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Total current assets |
| 7,687,000 |
| 1,570,000 |
|
|
|
|
| 7,614,000 |
| |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Property and equipment, net |
| 3,012,000 |
| 161,000 |
|
|
|
|
| 3,173,000 |
| |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Other assets |
| 285,000 |
| 16,000 |
|
|
|
|
| 301,000 |
| |||
Goodwill |
| — |
| — |
| 2,834,000 | (d) |
|
| 2,834,000 |
| |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Total assets |
| $ | 10,984,000 |
| $ | 1,747,000 |
|
|
|
|
| $ | 13,922,000 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Shareholders’ Equity |
|
|
|
|
|
|
|
|
|
|
| |||
Current liabilites: |
|
|
|
|
|
|
|
|
|
|
| |||
Accounts payable |
| $ | 1,734,000 |
| $ | 400,000 |
|
|
|
|
| $ | 2,134,000 |
|
Accrued payroll and payroll taxes |
| 1,201,000 |
| — |
|
|
|
|
| 1,201,000 |
| |||
Other accrued expenses |
| 195,000 |
| — |
|
|
| 12,000 | (b) | 207,000 |
| |||
Deferred revenue |
|
|
| 8,000 |
|
|
|
|
| 8,000 |
| |||
Current obligations under capital leases |
| 47,000 |
| — |
|
|
|
|
| 47,000 |
| |||
Current obligations under notes payable |
| — |
| 182,000 |
| 182,000 | (e) | 1,275,000 | (c) | 1,275,000 |
| |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Total current liabilities |
| 3,177,000 |
| 590,000 |
|
|
|
|
| 4,872,000 |
| |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Other long-term liabilities |
|
|
|
|
|
|
|
|
|
|
| |||
Obligations under capital leases, net of current portion |
| — |
| — |
|
|
|
|
| — |
| |||
|
|
|
|
|
| 91,000 | (e) |
|
|
|
| |||
Obligaitions under notes payable, net of current portion |
| — |
| 991,000 |
| 400,000 | (f) | 200,000 | (d) | 700,000 |
| |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Total liabilities |
| 3,177,000 |
| 1,581,000 |
|
|
|
|
| 5,572,000 |
| |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Commitments and contingencies |
| — |
| — |
|
|
|
|
| — |
| |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Shareholders’ equity: |
|
|
|
|
|
|
|
|
|
|
| |||
Common Stock |
| 13,708,000 |
| — |
|
|
| 543,000 | (d) | 14,251,000 |
| |||
Unearned compensation |
| 362,000 |
| — |
|
|
|
|
| 362,000 |
| |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Accumulated (deficit) earnings |
| (6,263,000 | ) | 166,000 |
| 166,000 | (d) |
|
| (6,263,000 | ) | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Total shareholders’ equity |
| 7,807,000 |
| 166,000 |
|
|
|
|
| 8,350,000 |
| |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Total liabilities and shareholders’ equity |
| $ | 10,984,000 |
| $ | 1,747,000 |
|
|
|
|
| $ | 13,922,000 |
|
HemaCare Corporation
Unaudited Pro Forma Consolidated Income Statement
For the Year Ended December 31, 2005
|
|
|
|
|
| Pro Forma |
|
|
| |||||
|
| HemaCare |
| Teragenix |
| Adjustments |
| Pro Forma |
| |||||
|
| Corporation |
| Corporation |
| Debit |
| Credit |
| Combined |
| |||
Revenues |
| $ | 31,227,000 |
| $ | 5,185,000 |
|
|
|
|
| $ | 36,412,000 |
|
Operating costs and expenses |
| 24,651,000 |
| 1,702,000 |
| 141,000 | (a) |
|
| 26,494,000 |
| |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Gross profit |
| 6,576,000 |
| 3,483,000 |
|
|
|
|
| 9,918,000 |
| |||
|
|
|
|
|
|
|
|
|
|
|
| |||
General and administrative expenses |
| 4,890,000 |
| 2,278,000 |
| 126,000 | (h) | 14,000 | (i) | 7,280,000 |
| |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Income before income taxes |
| 1,686,000 |
| 1,205,000 |
|
|
|
|
| 2,638,000 |
| |||
Provision for income taxes |
| 31,000 |
| — |
| 78,000 | (b) |
|
| 109,000 |
| |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Net income |
| $ | 1,655,000 |
| $ | 1,205,000 |
|
|
|
|
| $ | 2,529,000 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Net income per basic share |
| $ | 0.20 |
|
|
|
|
|
|
| $ | 0.30 |
| |
|
|
|
|
|
|
|
|
|
|
|
| |||
Net income per diluted share |
| $ | 0.19 |
|
|
|
|
|
|
| $ | 0.28 |
| |
|
|
|
|
|
|
|
|
|
|
|
| |||
Based shares outstanding |
| 8,121,000 |
|
|
| 286,000 | (g) |
|
| 8,407,000 |
| |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Diluted share outstanding |
| 8,847,000 |
|
|
| 286,000 | (g) |
|
| 9,133,000 |
|
HemaCare Corporation
Unaudited Pro Forma Consolidated Income Statement
For the Period Ended June 30, 2006
| Hemacare |
| Teragenix |
| Pro Forma |
| Pro Forma |
| ||||||
|
| Corporation |
| Corporation |
| Debit |
| Credit |
| Combined |
| |||
Revenues |
| $ | 16,620,000 |
| $ | 2,037,000 |
|
|
|
|
| $ | 18,657,000 |
|
Operating costs and expenses |
| 13,482,000 |
| 653,000 |
| 76,000 | (a) |
|
| 14,211,000 |
| |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Gross profit |
| 3,138,000 |
| 1,384,000 |
|
|
|
|
| 4,446,000 |
| |||
|
|
|
|
|
|
|
|
|
|
|
| |||
General and administrative expenses |
| 2,667,000 |
| 1,228,000 |
| 51,000 | (h) |
|
| 3,946,000 |
| |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Income before income taxes |
| 471,000 |
| 156,000 |
|
|
|
|
| 500,000 |
| |||
Provision for income taxes |
| 26,000 |
| — |
| 12,000 | (b) |
|
| 38,000 |
| |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Net income |
| $ | 445,000 |
| $ | 156,000 |
|
|
|
|
| $ | 462,000 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Net income per basic share |
| $ | 0.05 |
|
|
|
|
|
|
| $ | 0.05 |
| |
|
|
|
|
|
|
|
|
|
|
|
| |||
Net income per diluted share |
| $ | 0.05 |
|
|
|
|
|
|
| $ | 0.05 |
| |
|
|
|
|
|
|
|
|
|
|
|
| |||
Based shares outstanding |
| 8,122,000 |
|
|
| 286,000 | (g) |
|
| 8,408,000 |
| |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Diluted share outstanding |
| 9,140,000 |
|
|
| 286,000 | (g) |
|
| 9,426,000 |
|
Notes to the Unaudited Pro Forma Consolidated Financial Statements
The notes to the unaudited pro forma consolidated financial statements that follow are intended to provide additional information regarding the effect of the pro forma adjustments on the consolidated financial statements.
(a) Adjustment to record inventory valuation reserve for Teragenix Corporation (“Teragenix”) utilizing HemaCare Corporation’s (“HemaCare”) inventory valuation methodology during the pro forma period. HemaCare’s methodology utilizes historical sales volume of individual inventory items as an indication of future sales for purposes of determining a potential reserve for obsolete inventory. Methodology would result in a reduction in the value of Teragenix’s inventory of $422,000 as of June 30, 2006, with a corresponding increase in cost of goods sold of $141,000 and $76,000 for the year ended December 31, 2005, and the six month period ended June 30, 2006, respectively.
(b) Reflects increase in provision for income taxes to reflect change in Teragenix’s tax status to HemaCare’s tax status. Previously Teragenix’s income was reported as taxable income of the owner’s of Teragenix. As a result, Teragenix did not record a provision for income taxes. Under HemaCare’s tax status, Teragenix’s income would have been reported on HemaCare’s consolidated tax return and therefore subject to Florida’s income tax estimated at 7.5%.
(c) Reflects debt incurred by HemaCare to fund cash portion of Teragenix acquisition.
(d) Reflects the acquisition of 100% of the outstanding stock of Teragenix by HemaCare for a purchase price of $2,967,000, including $1,622,000 in cash, $543,000 in HemaCare stock to the sellers, $200,000 in notes to sellers, and $602,000 in acquisition costs. The purchase price was allocated to the fair value of the assets acquired, net of liabilities assumed, resulting in goodwill of $2,834,000.
(e) Payoff of Teragenix debt paid upon acquisition by HemaCare.
(f) Reflects payoff portion of Teragenix debt prior to acquisition by HemaCare.
(g) Reflects HemaCare common stock issued as part of Teragenix acquisition.
(h) Adjustment to increase interest expense as a result of debt incurred to fund cash portion of Teragenix acquisition.
(i) Adjustment to reduce interest expense accrual as a result of the reduction of Teragenix’s notes payable as part of the acquisition by HemaCare.