EX-99.2 3 pbsv_ex992.htm UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF PHARMA-BIO SERV, INC. Blueprint
 
 Exhibit 99.2
 
PHARMA-BIO SERV, INC.
Pro Forma Condensed Consolidated Financial Information
(Unaudited)
 
On September 17, 2018 (the “Closing Date”), Pharma-Bio Serv, Inc. (the “Company”) completed the sale of substantially all of the assets of its laboratory business (the “Laboratory Assets”) pursuant to the Asset Purchase Agreement, dated August 13, 2018, by and between Scienza Labs, Inc. and Romark Global Pharma, LLC (the “Purchase Agreement”) (the “Transaction”). The following unaudited pro forma consolidated financial information is based on the Company’s historical consolidated financial statements adjusted to give effect to the Transaction.
 
The Unaudited Pro Forma Consolidated Balance sheet as of July 31, 2018 is presented as if the Transaction occurred on July 31, 2018. The Unaudited Pro Forma Consolidated Statement of Operations for the nine months ended July 31, 2018 and for the year ended October 31, 2017 are presented as if the Transaction occurred on November 1, 2016.
 
The pro forma consolidated financial statements are based on information currently available including certain assumptions and adjustments that the Company believes are reasonable. They are presented for informational purposes only and do not necessarily represent what the Company’s financial position and results of operations would have been if the Transaction occurred on the dates above, or to project the Company’s financial performance for any future period. The unaudited pro forma consolidated financial information and the related notes should be read in conjunction with the Company’s audited financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended October 31, 2017 and the Company’s Quarterly Report on Form 10-Q for the nine months ended July 31, 2018.
 
 
 
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PHARMA-BIO SERV, INC.
Pro Forma Condensed Consolidated Balance Sheet
(Unaudited)
As of July 31, 2018
 
 
 
Pharma-Bio Serv, Inc.As Reported
 
 
Laboratory Assets
 
 
Pro Forma Adjustments
 
 
 
 
 
Pro Forma Pharma-Bio Serv, Inc.
 
ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 $15,188,876 
 $- 
 $1,750,000 
  [a] 
 $16,938,876 
Marketable securities
  38,713 
  - 
  - 
    
  38,713 
Accounts receivable
  5,179,579 
  - 
  - 
    
  5,179,579 
Promissory note (short term portion)
  - 
  - 
  500,000 
  [a] 
  500,000 
Other
  488,919 
  - 
  - 
    
  488,919 
Total current assets
  20,896,087 
  - 
  2,250,000 
    
  23,146,087 
 
    
    
    
    
    
Property and equipment, net
  1,991,967 
  (1,750,000)
  - 
    
  241,967 
Promissory note (long term portion)
  - 
  - 
  2,500,000 
  [a] 
  2,500,000 
Other assets
  418,737 
  - 
  - 
    
  418,737 
Total assets
 $23,306,791 
 $(1,750,000)
 $4,750,000 
    
 $26,306,791 
 
    
    
    
    
    
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
    
    
    
    
    
Current portion-obligations under capital leases
 $14,278 
 $- 
 $- 
    
 $14,278 
Accounts payable and accrued expenses
  1,787,178 
  - 
  25,000 
  [a] 
  1,812,178 
Current portion of US Tax Reform Transition Tax and income taxes payable
  252,903 
  - 
  119,000 
  [a] 
  371,903 
Total current liabilities
  2,054,359 
  - 
  144,000 
    
  2,198,359 
 
    
    
    
    
    
US Tax Reform Transition Tax payable
  2,485,000 
  - 
  - 
    
  2,485,000 
Obligations under capital leases
  49,506 
  - 
  - 
    
  49,506 
Total liabilities
  4,588,865 
  - 
  144,000 
    
  4,732,865 
 
    
    
    
    
    
Stockholders' equity:
    
    
    
    
    
Preferred Stock
  - 
  - 
  - 
    
  - 
Common Stock
  2,333 
  - 
  - 
    
  2,333 
Additional paid-in capital
  1,347,964 
  - 
  - 
    
  1,347,964 
Retained earnings
  17,498,402 
  (1,750,000)
  4,606,000 
    
  20,354,402 
Accumulated other comprehensive income
  131,049 
  - 
  - 
    
  131,049 
 
  18,979,748 
  (1,750,000)
  4,606,000 
    
  21,835,748 
Treasury stock, at cost
  (261,822)
  - 
  - 
    
  (261,822)
Total stockholders' equity
  18,717,926 
  (1,750,000)
  4,606,000 
    
  21,573,926 
Total liabilities and stockholders' equity
 $23,306,791 
 $(1,750,000)
 $4,750,000 
    
 $26,306,791 
 
    
    
    
    
    
 
See accompanying notes to the Unaudited Pro Forma Condensed Consolidated Financial Information
 
 
2
 
 
PHARMA-BIO SERV, INC.
Pro Forma Condensed Consolidated Statements of Operations
(Unaudited)
For the Nine Months Ended July 31, 2018
 
 
 
Pharma-Bio Serv, Inc.As Reported
 
 
Pro Forma Adjustments [b]
 
 
 
 
 
Pro Forma Pharma-Bio Serv, Inc.
 
Revenues
 $13,832,217 
 $(1,611,954)
 

 
 $12,220,263 
Cost of services
  10,133,666 
  (1,679,749)
 

 
  8,453,917 
 
    
    
 
 
 
    
Gross profit
  3,698,551 
  67,795 
 
 
 
  3,766,346 
 
    
    
 
 
 
    
Selling, general and administrative expenses
  3,460,304 
  (35,233)
 

 
  3,425,071 
Income from operations
  238,247 
  103,028 
 
 
 
  341,275 
Other income (expense), net
  436,599 
  (43,399) 
     
  393,200 
 
    
    
    
    
Income before income tax and US Tax Reform Transition Tax expense
  674,846 
  59,629 
    
  734,475 
Income tax and US Tax Reform Transition tax expense
  2,736,575 
  9,454 
  [c] 
  2,746,029 
 
    
    
    
    
Net income (loss)
 $(2,061,729)
 $50,175 
    
 $(2,011,554)
 
    
    
    
    
Basic and diluted losses per common share
 $(0.089)
    
    
 $(0.087)
 
    
    
    
    
Weighted-average common shares - basic
  23,076,306 
    
    
  23,076,306 
Weighted-average common shares - diluted
  23,080,758 
    
    
  23,080,758 
 
See accompanying notes to the Unaudited Pro Forma Condensed Consolidated Financial Information
 
 
3
 
 
PHARMA-BIO SERV, INC.
Pro Forma Consolidated Statements of Operations
(Unaudited)
For the Year Ended October 31, 2017
 
 
 
Pharma-Bio Serv, Inc.As Reported
 
 
Pro Forma Adjustments [b]
 
 
Pro Forma Pharma-Bio Serv, Inc.
 
Revenues
 $15,579,275 
 $(2,040,602)
 $13,538,673 
Cost of services
  11,968,145 
  (2,308,395)
  9,659,750 
 
    
    
    
Gross profit
  3,611,130 
  267,793 
  3,878,923 
 
    
    
    
Selling, general and administrative expenses
  5,036,272 
  (100,795)
  4,935,477 
Income (loss) from operations
  (1,425,142)
  368,588 
  (1,056,554)
Other income (expense), net of foreign exchange settlement
  14,099 
  (276)
  13,823 
 
    
    
    
Income (loss) before income taxes
  (1,411,043)
  368,312 
  (1,042,731)
Income taxes
  3,866 
  - 
  3,866 
 
    
    
    
Net income (loss)
 $(1,414,909)
 $368,312 
 $(1,046,597)
 
    
    
    
Basic and diluted losses per common share
 $(0.061)
    
 $(0.045)
 
    
    
    
Weighted-average common shares - basic
  23,096,547 
    
  23,096,547 
Weighted-average common shares - diluted
  23,099,376 
    
  23,099,376 
 
See accompanying notes to the Unaudited Pro Forma Condensed Consolidated Financial Information
 
 
4
 
 
Note 1. Basis of Presentation
 
The following notes relate to the pro forma adjustments included in the Unaudited Pro Forma Consolidated Balance Sheet for July 31, 2018, which is presented as if the Transaction occurred on July 31, 2018, and the Unaudited Pro Forma Consolidated Statement of Operations for the nine months ended July 31, 2018 and for the year ended October 31, 2017, which are presented as if the Transaction occurred on November 1, 2016.
 
 
(a)
This adjustment represents the aggregate consideration of $5,000,000 paid by the Buyer for the Laboratory Assets, as set forth in the Purchase Agreement as follows: (i) $1,750,000 in cash on the Closing Date, (ii) $3,000,000 in the form of a promissory note payable over two years, and (iii) the application on the Closing Date of $250,000 previously paid by the Buyer as a deposit.
 
 
i.
The Company did not announce plans for the use of the proceeds. Accordingly, no adjustments to reflect the use of the proceeds were included within the pro forma consolidated financial information.
 
 
ii.
An estimated gain on disposition of the Laboratory Assets of approximately $2.8 million has not been reflected in the Unaudited Pro forma Consolidated Statement of Operations as it is considered to be non-recurring in nature. No adjustment has been made to the sale proceeds to give effect to any potential post-closing adjustments.
 
 
iii.
The gain arising from the Transaction will be presented as a non-operating revenue event in the Company’s Consolidated Statements of Operations for the year ended October 31, 2018, net of income tax determined under preferential rates available to the Company. The amount of the actual gain will be calculated based on various factors, including the final net book value of the Laboratory Assets as of the Closing Date and Transaction related expenses, therefore the estimated gain may differ from the current estimate.
 
 
(b)
These adjustments represent the elimination of the historical results of the Laboratory Assets.
 
 
(c)
This adjustment reflects the tax effect of the pro forma adjustments.
 
 
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