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NU-TECH BIO-MED., INC.
PRO FORMA COMBINED BALANCE SHEET AND STATEMENT OF OPERATIONS
(UNAUDITED)
BACKGROUND INFORMATION
Acquisition of Medical Science Institute
On November 18, 1996, the United States Bankruptcy Court of the Central District
of California approved the First Amended Plan of Reorganization (the "MSI Plan")
of Medical Science Institute ("MSI") pursuant to which the Company acquired all
of the capital stock of MSI. MSI provides clinical laboratory testing services.
MSI is a California corporation with its principal executive offices located in
Burbank, California. Pursuant to the MSI Plan, the holders of all of the MSI
capital stock (including any and all options, warrants, and other convertible
securities) will receive 134,228 shares of Common Stock of Nu-Tech with an
aggregate value of $2 million. The number of shares of Common Stock to be issued
under the MSI Plan are based on the average closing price of a share of Common
Stock on the NASDAQ SmallCap Market for the 15 day period preceding November 18,
1996.
The confirmed plan requires Nu-Tech to make the following approximate cash
payments on the Confirmation date to satisfy the liabilities subject to
compromise of approximately $9.8 million. Additionally, certain capital leases
have been restructured in connection with the bankruptcy proceedings. Subsequent
to the Confirmation date, approximately $668,000 of capital lease obligations
were recorded by the Company. Payments required by Nu-Tech were approximately
as follows:
Borrowing and accrued interest under line of credit $2,600,000
Allowed general unsecured claims 750,000
Administrative claims one 750,000
Post-petition payroll taxes 572,000
False Claims Act 75,000
Other 103,000
==========
Total to be paid $4,850,000
==========
In addition, Nu-Tech is obligated to make post Confirmation date
payments of up to an additional $425,000 in administrative expenses and
$368,000 for payroll and property taxes. At the hearing confirming the MSI Plan
held on November 18, 1996, the Company tendered $2,250,000 to the Court. On
December 2, 1996, the Company tendered approximately $2,600,000 to the Court to
pay off the amount owed under the line of credit.
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Acquisition of assets of Prompt Medical Billing Services, Inc.
On October 21, 1996, Nu-Tech Bio-Med, Inc., a Delaware corporation (the
"Company" or "Nu-Tech") through a newly formed wholly owned subsidiary, NTBM
Billing Services, Inc. acquired substantially all of the operating assets of
Prompt Medical Billing Services, Inc. ("Prompt"), a medical billing service
business in Miami, Florida. The acquisition was in the form of a purchase. The
Company acquired the assets for a total consideration of $675,000 consisting of
$100,000 in cash and 37,404 shares of restricted common stock of the Company.
The number of shares may be subject to increase in the event the fair market
value of the shares at the termination of the two year period is less than
$500,000 or in the event the holders are unable to sell the shares.
Loan from Third Party Lendor
On December 2, 1996, Nu-Tech obtained a loan in the principal amount of
$2,500,000 from a third party lendor and utilized the loan proceeds to pay off
the line of credit, as required under the MSI Plan (see above).
BASIS OF ACCOMPANYING UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The Accompanying Unaudited Pro Forma Combined Financial Statements presents the
historical financial statements of Nu-Tech, Pro Forma Combined Financial
Statements, Nu-Tech and Prompt (which includes Nu-Tech and the acquisition of
Prompt taking into consideration pro forma adjustments), the historical
financial statements of MSI, the pro forma adjustments relating to the MSI
acquisition and Pro Forma Combined (which includes Nu-Tech and the acquisition
of Prompt and MSI taking into consideration pro forma adjustments).
The results of the acquired operations will be included in the Company's
operating results as of the closing dates of the acquisitions. The Unaudited Pro
Forma Combined Balance Sheet assumes that the acquisitions occurred on September
30, 1996. The Unaudited Pro Forma Combined Statements of Operations combines the
historical results of operations of the acquired companies for the year ended
December 31, 1995 and the nine months ended September 30, 1996 assuming the
acquisitions occurred on January 1, 1995 and January 1, 1996, respectively. The
unaudited pro forma combined statement of operations do not reflect cost savings
and synergies which might be achieved from the acquisitions. In addition, the
unaudited pro forma combined statement of operations do not consider
non-recurring charges, if any, which may result from the transaction and the
proposed integration of the acquired companies into the Company.
The Unaudited Pro Forma Combined Balance Sheet includes direct transaction costs
associated with the acquisitions. The actual allocation of the final purchase
price may be different from that reflected in the pro forma combined condensed
financial statements. For the purposes of these Pro Forma Financial Statements
the fair value of the fixed assets is assumed to approximate the book
value. The Company has not completed its evaluation of the carrying value of
fixed assets or intangible assets acquired. Such evaluation is expected to be
completed prior to the filing of the Company's Annual Report on Form 10-KSB
for the year ended December 31, 1996.
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Management believes that the assumptions used in preparing these unaudited pro
forma combined financial statements provide a reasonable basis for presenting
all of the significant effects of the acquisitions. These unaudited pro forma
combined financial statements do not purport to be indicative of the results
which actually would have been obtained had the acquisitions been effected on
the date indicated or of those results which may be achieved in the future. The
pro forma combined financial statements should be read in conjunction
with the consolidated financial statements included in the Nu-Tech's Annual
Report on Form 10-KSB for the year ended December 31, 1995 and on Form 10-QSB
for the nine month period ended September 30, 1996.
Pro Forma Adjustments
A summary of the Pro Forma Adjustments is set forth as follows:
(a) To record the cost of the acquired assets (cash and common shares
issued) and the excess of such costs over the fair value of assets
acquired (goodwill); and to reflect the elimination of liabilities not
assumed in the acquisition.
(b) To record direct costs of the acquisition including legal and
accounting services.
(c) To record the cash payment made by Nu-Tech to the bankruptcy court used
to pay down liabilities subject to compromise.
(d) To record proceeds received from a third party notes payable.
(e) To record the Nu-Tech payment to pay off the line of credit to Austin
Financial on MSI's books.
(f) To record goodwill amortization expense.
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Nu-Tech Bio-Med, Inc.
Unaudited Pro Forma Combined Balance Sheet
September 30, 1996
ProForma
Nu-Tech Combined MSI
Historical (Nu-Tech and Prompt) Historical
September 30, 1996 September 30, 1996 September 30, 1996
------------------ ------------------ ------------------
ASSETS
Current Assets:
Cash and cash equivalents $ 3,616,195 $ 3,516,155 $ 1,735
Accounts receivable, net 27,673 27,673 2,577,813
Inventory 132,017
Prepaid expenses 88,705 88,705 72,684
Other current assets 29,093 29,093
--------- --------- ---------
Total current assets 3,761,666 3,661,666 2,784,249
Equipment and leasehold improvements,
net 405,347 405,347 605,797
Deferred acquisition costs 170,878 170,878
Patents, net 140,450 140,450
Goodwill, net 252,566 967,566
Other assets 70,828
------------ ------------ ------------
Total Assets $ 4,730,907 $ 5,345,907 $ 3,460,874
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 117,838 $ 117,838 $ 199,287
Accrued expenses 731,305 771,305 1,343,317
Notes Payable
Liabilities subject to compromise 9,782,598
Other Current Liabilities 65,571 65,571
Current portion of long term debt 205,380 205,380
Current portion of capitalized
lease obligations 14,789 14,789
------------ ------------ ------------
Total current liabilities 1,134,883 1,174,883 11,325,202
Debt 164,452 164,452
Capitalized lease obligations 22,304 22,304
Deferred income 5,540 5,540
------------ ------------ ------------
Total liabilities 1,327,179 1,367,179 11,325,202
Stockholders' equity:
Preferred stock
Common stock 19,921 20,295 18,000
Capital in excess of par 20,171,241 20,745,867
Deferred consulting expense (110,000) (110,000)
Unvested common stock grant (243,303) (243,303)
Retained Earnings (Accumulated
Deficit) (16,434,131) (16,434,131) (7,882,328)
------------ ------------ ------------
Total stockholders' equity 3,403,728 3,978,728 (7,864,328)
============ ============ ============
Total Liabilities and Stockholders'
Equity $ 4,730,907 $ 5,345,907 $ 3,460,874
============ ============ ============
Pro Forma Pro Forma
Adjustments Combined
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ASSETS
Current Assets:
Cash and cash equivalents $(2,350,000) c,d,e $ 1,167,930
Accounts receivable, net 2,605,486
Inventory 132,017
Prepaid expenses 161,389
Other current assets 29,093
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Total current assets (2,350,000) 4,095,915
Equipment and leasehold improvements,
net 1,011,144
Deferred acquisition costs 170,878
Patents, net 140,450
Goodwill, net 6,496,086 a,b 7,463,652
Other assets 70,828
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Total Assets $ 4,146,086 $ 12,952,867
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 317,125
Accrued expenses 200,000 b 2,314,622
Notes Payable 2,500,000 d 2,500,000
Liabilities subject to compromise (8,418,242) a,c,e 1,364,356
Other Current Liabilities 65,571
Current portion of long term debt 205,380
Current portion of capitalized
lease obligations 14,789
------------ ------------
Total current liabilities (5,718,242) 6,781,843
Debt 164,452
Capitalized lease obligations 22,304
Deferred income 5,540
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Total liabilities (5,718,242) 6,974,139
Stockholders' equity:
Preferred stock
Common stock (16,658) a 21,637
Capital in excess of par 1,998,658A 22,744,525
Deferred consulting expense (110,000)
Unvested common stock grant (243,303)
Retained Earnings (Accumulated
Deficit) 7,882,328 a (16,434,131)
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Total stockholders' equity 9,864,328 5,978,728
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Total Liabilities and Stockholders'
Equity $ 4,146,086 $ 12,952,867
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Nu-Tech Bio-Med, Inc
Unaudited Pro Forma Combined Statement of Operations
Year Ended December 31, 1995
ProForma
Nu-Tech Combined MSI
Historical (Nu-Tech and Prompt) Historical
For the year ended For the year ended For the year ended Pro Forma Pro Forma
December 31, 1995 December 31, 1995 December 31, 1995 Adjustments Combined
----------------- ----------------- ----------------- ----------- --------
Revenues:
Assay sales $ 161,701 $ 161,701 $ 161,701
Laboratory revenues 19,055,559 19,055,559
Investment and
interest income 158,977 159,577 60 159,637
Fee income 202,185 202,185
Other 2,100 2,100 86,494 88,594
------------ ------------ ------------ ------------ ------------
Total revenues 322,778 525,563 19,142,113 -- 19,667,676
Expenses:
Selling, general and
administrative 1,430,354 1,590,391 6,568,379 8,158,770
Operating Costs 288,443 288,443 14,073,399 14,361,842
Interest 33,514 33,514 658,007 691,521
Reorganization Expense 157,456 157,456
Penalties 3,660 3,660
Loss (Gain) on sale
of asset 4,048 4,048
Depreciation and
amortization 659,424 725,924 349,074 649,609 1,724,607
------------ ------------ ------------ ------------ ------------
Total expenses 2,411,735 2,638,272 21,814,023 649,609(f) 25,101,904
------------ ------------ ------------ ------------ ------------
Net income (loss) $ (2,088,957) $ (2,112,709) $ (2,671,910) $ (649,609) $ (5,434,228)
============ ============ ============ ============ ============
Net loss per common share $ (1.33) $ (3.12)
Weighted average common
shares outstanding 1,570,498 1,742,130
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Nu-Tech Bio-Med
Unaudited Pro Forma Combined Statement of Operations
Nine Month Period Ended September 30, 1996
Pro Forma
Nu-Tech Combined MSI
Historical (Nu-Tech and Prompt) Historical
For the 9 months ended For the 9 months ended For the 9 months ended
September 30, 1996 September 30, 1996 September 30, 1996
------------------ ------------------ ------------------
Revenues:
Assay sales $ 74,508 $ 74,508
Revenues 10,731,990
Investment and interest income 129,347 129,736
Fee income 180,288
------------ ------------ ------------
Total revenues
203,855 384,532 10,731,990
Expenses:
Selling, general and administrative 1,366,283 1,489,711 2,921,159
Operating Costs 253,326 253,326 8,485,220
Deferred Acquisition Costs Charged Off 218,914 218,914
Interest 22,571 22,571 304,702
Reorganization Expenses 963,133
Penalties 123,285
Depreciation and amortization 900,370 950,245 228,728
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Total expenses 2,761,464 2,934,767 13,026,227
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Net income (loss) $ (2,557,609) $ (2,550,235) $ (2,294,237)
============ ============ ============
Net loss per common share $ (1.37)
Weighted average common shares outstanding 1,868,247
Pro Forma Pro Forma
Adjustments Combined
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Revenues:
Assay sales $ 74,508
Revenues 10,731,990
Investment and interest income 129,736
Fee income 180,288
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Total revenues 11,116,522
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Expenses:
Selling, general and administrative 4,410,870
Operating Costs 8,738,546
Deferred Acquisition Costs Charged Off 218,914
Interest 327,273
Reorganization Expenses 963,133
Penalties 123,285
Depreciation and amortization 487,206(f) 1,666,179
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Total expenses 487,206 16,448,200
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Net income (loss) $ (487,206) $ (5,331,678)
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Net loss per common share $ (2.61)
Weighted average common shares outstanding 2,039,879