Exhibit 99.3 - SpectRx, Inc. unaudited pro forma condensed combined
statements of operations for the year ended December 31, 2000,
unaudited pro forma condensed combined statements of operations and the
unaudited pro forma condensed combined balance sheet as of and for the
nine months ended September 30, 2001.
THE UNAUDITED PRO FORMA FINANCIAL INFORMATION HAS BEEN PREPARED BY THE
MANAGEMENT OF SPECTRX BASED ON THE HISTORICAL FINANCIAL STATEMENTS OF
SPECTRX AND STERLING. THE UNAUDITED PRO FORMA COMBINED CONDENSED
FINANCIAL INFORMATION IS PREPARED FOR INFORMATIONAL PURPOSES ONLY AND
IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS OR OF ACTUAL RESULTS
THAT WOULD HAVE BEEN ACHIEVED HAD THE MERGER BEEN CONSUMMATED AT THE
BEGINNING OF THE PERIODS PRESENTED, NOR IS IT INDICATIVE OF FUTURE
FINANCIAL POSITION OR RESULTS OF OPERATIONS.
THE UNAUDITED PRO FORMA FINANCIAL INFORMATION SHOULD BE READ IN
CONJUNCTION WITH SPECTRX'S HISTORICAL FINANCIAL STATEMENTS AND RELATED
NOTES CONTAINED IN IT'S ANNUAL REPORT ON FORM 10-K AND SUBSEQUENT
QUARTERLY REPORTS ON FORM 10-Q, OTHER INFORMATION FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION AS WELL AS HISTORICAL FINANCIAL
STATEMENTS AND NOTES ON STERLING CONTAINED IN THIS 8-K/A.
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2000
(IN THOUSANDS, EXCEPT PER SHARE DATA)
STERLING
FOR THE
PERIOD FROM
INCEPTION
(JANUARY 13,
2000)
THROUGH PRO FORMA
DECEMBER 31, PRO FORMA COMBINED
SPECTRX 2000 ADJUSTMENTS CONDENSED
--------- ------- ------- ---------
REVENUES ........................................... $ 4,968 $ -- $ 4,968
--------- ------- ------- ---------
COST AND EXPENSES:
Cost of product sales ............................ 1,732 -- 1,732
Research and development ......................... 957 -- 957
Sales and marketing .............................. 5,804 202 6,006
General and administrative ....................... 3,177 101 7(5) 3,285
Amortization of acquired intangibles ............. -- 337(3) 337
--------- ------- ------- ---------
11,670 303 344 12,317
--------- ------- ------- ---------
Operating loss ............................... (6,702) (303) (344) (7,349)
OTHER INCOME, NET .................................. 355 26 381
--------- ------- ------- ---------
NET LOSS ........................................... $ (6,347) $ (277) $ (344) $ (6,968)
--------- ------- ------- ---------
PREFERRED STOCK DIVIDENDS .......................... (315) (315)
--------- ------- ------- ---------
NET LOSS AVAILABLE TO COMMON STOCKHOLDERS .......... (6,662) (277) (344) (7,283)
========= ======= ======= =========
BASIC AND DILUTED LOSS PER SHARE ................... $ (0.79) $ (0.81)
========= =========
WEIGHTED AVERAGE SHARES OUTSTANDING
(BASIC AND DILUTED) ................................. 8,429 610(6) 9,039
========= ======= =========
See accompanying notes to the unaudited pro forma combined condensed
financial statements.
22
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001
(IN THOUSANDS, EXCEPT PER SHARE DATA)
HISTORICAL HISTORICAL PRO FORMA SPECTRX
SPECTRX STERLING ADJUSTMENTS PRO FORMA
---------- ---------- ----------- ---------
REVENUES ..................................... $ 1,826 $ -- $ $ 1,826
--------- ------- ------ ---------
COST AND EXPENSES:
Cost of product sales ....................... 1,417 -- 1,417
Research and development .................... 711 163 874
Sales and marketing ......................... 2,989 -- 2,989
General and administrative .................. 2,090 320 5(5) 2,415
Amortization ................................ -- -- 250(3) 250
--------- ------- ------ ---------
7,207 483 255 7,945
--------- ------- ------ ---------
Operating loss ......................... (5,381) (483) (255) (6,119)
OTHER INCOME (EXPENSE), NET .................. 184 (51) 70(4) 203
--------- ------- ------ ---------
NET LOSS ..................................... (5,197) (534) (185) (5,916)
PREFERRED STOCK DIVIDENDS .................... (236) -- (236)
--------- ------- ------ ---------
NET LOSS AVAILABLE TO COMMON
STOCKHOLDERS ................................. $ (5,433) $ (534) (185) $ (6,152)
========= ======= ====== =========
BASIC AND DILUTED EARNINGS PER SHARE ......... $ (0.58) $ (0.62)
========= =========
WEIGHTED AVERAGE SHARES OUTSTANDING
(BASIC AND DILUTED) (1) ...................... 9,336 610(6) 9,947
========= ====== =========
See accompanying notes to the unaudited pro forma combined condensed
financial statements.
23
PRO FORMA COMBINED CONDENSED BALANCE SHEET
AS OF SEPTEMBER 30, 2001
(IN THOUSANDS)
HISTORICAL HISTORICAL PRO FORMA SPECTRX
SPECTRX STERLING ADJUSTMENTS PRO FORMA
---------- ---------- ----------- ---------
ASSETS
CURRENT ASSETS:
Cash .......................................... $ 9,519 $ 615 $ (385)(2) $ 9,749
Receivables, net .............................. 845 845
Inventories ................................... 625 625
Prepaids and other current assets ............. 496 3 499
---------- -------- --------- ----------
Total current assets ........................ 11,485 618 (385) 11,718
---------- -------- --------- ----------
NONCURRENT ASSETS:
Property and equipment, net ................... 681 4 685
Goodwill ...................................... -- -- 1,513 (2) 1,513
Intangibles, net and other noncurrent assets... 550 165 (165)(8)
4,132 (2) 4,682
---------- -------- --------- ----------
Total noncurrent assets ..................... 1,231 169 5,480 6,880
---------- -------- --------- ----------
Total assets ................................ $ 12,716 $ 787 $ 5,095 $ 18,598
========== ======== ========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities....... $ 1,790 $ 37 $ 1,827
---------- -------- --------- ----------
Total current liabilities ................... 1,790 37 -- 1,827
---------- -------- --------- ----------
NONCURRENT LIABILITIES:
Deferred tax liability ........................ -- -- 1,591 (7) 1,591
Collaborative partner advance ................. 381 -- -- 381
Convertible debt, net ......................... -- 63 (63)(4) --
Accrued interest .............................. -- 8 (8)(4) --
---------- -------- --------- ----------
Total noncurrent liabilities ................ 381 71 1,520 1,972
---------- -------- --------- ----------
REDEEMABLE CONVERTIBLE PREFERRED STOCK ........... 5,815 -- 5,815
---------- -------- --------- ----------
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock ............................... -- 1 (1)(1) 11
Common stock .................................. 10 2 (2)(1)
1 (1)
Additional paid-in capital .................... 42,183 1,487 4,272 (1) 46,455
(1,487)(1)
Deferred compensation ......................... -- -- (19)(2) (19)
Notes receivable from officers ................ (31) -- (31)
Accumulated deficit ........................... (37,432) (811) 811 (1) (37,432)
========== ======== ========= ==========
Total stockholders' equity .................. 4,730 679 3,575 8,984
========== ======== ========= ==========
Total liabilities and stockholders'
equity .................................... $ 12,716 $ 787 $ 5,095 $ 18,598
========== ======== ========= ==========
See accompanying notes to the unaudited pro forma combined condensed
financial statements.
24
PRO FORMA ADJUSTMENTS
(1) Reflects: (i) the issuance of 548,056 shares of SpectRx common
stock in exchange for all of the outstanding Sterling common stock and preferred
stock; plus (ii) 22,024 vested and unvested replacement stock options with an
estimated fair market value of $61,895; and (iii) the issuance of an additional
estimated 62,282 shares to compensate the Sterling stockholders for estimated
cash balances net of any accrued transaction costs. The adjustment does not
reflect an aggregate of 1,234,567 additional contingent shares of SpectRx common
stock, as the additional shares will only be issued if the Sterling product line
achieves specified financial goals. Shares issued to Sterling stockholders in
the merger, including estimated shares in (iii) above, represent approximately
$4,211,332, at an estimated fair value of $6.90 per share, plus stock options
with an estimated fair value of $61,895.
(2) Reflects SpectRx's estimate of the purchase price allocation
arising from the merger of a subsidiary of SpectRx into Sterling as if it
occurred on September 30, 2001 (the inception date of Sterling). A summary of
the computation is as follows:
(IN THOUSANDS)
Purchase Price $ 4,273
Less: Net tangible assets acquired (585)
Less: Identifiable intangible assets (4,132)
Less: Deferred Compensation (19)
Plus: Deferred tax liability 1,591
Plus: Transaction costs of purchase acquisition 385
--------
Excess purchase price over the fair value of Sterling's net
assets acquired (i.e., goodwill) $ 1,513
========
(3) Represents additional amortization related to identifiable
intangible assets as noted in footnote (2) above over an average estimated
useful life of 13 years. The preliminary purchase price allocation and estimate
of underlying useful lives is subject to adjustment once a final purchase price
allocation is completed.
(4) Reflects the elimination of the Sterling bridge loans and related
interest expense. Sterling's bridge loan was not part of the liabilities assumed
in the merger because it was satisfied, in whole, by the conversion of the loan
into Sterling preferred stock.
(5) Reflects stock compensation expense because of amortization of
deferred compensation related to the $18,759 estimated intrinsic value of 6,958
unvested replacement stock options issued by SpectRx in connection with the
acquisition.
(6) Reflects the issuance of 610,338 shares of SpectRx common stock
issued to the Sterling stockholders as a result of the merger as if these shares
were outstanding since the beginning of the period. These shares exclude the
effect of stock options for purposes of the diluted earnings per share
calculation as the effect for pro forma purposes is antidilutive.
(7) Reflects the income tax effect differences between the assigned
value and the tax basis of certain assets and liabilities recognized in the
acquisition of Sterling.
(8) Reflects elimination of historical assets of Sterling.
25