Exhibit 99.3
Unaudited Pro Forma Condensed
Combined Financial Information
The following unaudited pro forma condensed combined financial information for the year ended December 31, 2006 reflects the historical results of ClearPoint Business Resources, Inc. (“ClearPoint”), adjusted to give effect to the merger with Terra Nova Acquisition Corporation (“Terra Nova”) consummated on February 12, 2007 (“Merger”) and the February 23, 2007 acquisition of certain assets of ALS, LLC and its subsidiaries (“Acquisition”), doing business as Advantage Services Group (“ASG”).
The Merger has been accounted for as a reverse acquisition under the purchase method of accounting. ClearPoint has been treated as the continuing reporting entity for accounting purposes. The assets and liabilities of Terra Nova have been recorded, as of the completion of the merger, at fair value, which is considered to approximate historical cost and added to those of ClearPoint. Since Terra Nova had no operations, the Merger has been accounted for as a recapitalization of ClearPoint. The Acquisition has been accounted for under the purchase method of accounting and the purchase price of $24.3 million has been allocated to fixed assets, contract rights, goodwill and selected current liabilities acquired on a fair value basis as determined by management and based upon a purchase price allocation study conducted by an independent valuation firm.
Presented below is the unaudited pro forma combined financial information that reflects the Merger as a recapitalization of ClearPoint and the Acquisition. This information has been derived from the audited financial statements of ClearPoint, Terra Nova and ASG as of December 31, 2006. Neither ClearPoint, nor Terra Nova nor ASG assumes any responsibility for the accuracy or completeness of the information provided by the other parties. This information should be read together with the audited financial statements of ClearPoint and Terra Nova filed previously with the SEC and the audited financial statements of ASG included elsewhere in this Form 8-K/A.
The pro forma condensed combined statement of operations for the year ended December 31, 2006 reflects the historical results of operations of each of ClearPoint, Terra Nova and ASG, as adjusted to give pro forma effect to the Merger and the Acquisition, as if all had occurred on January 1, 2006. The unaudited pro forma condensed combined balance sheet at December 31, 2006 reflects the historical financial positions of ClearPoint, Terra Nova and ASG, as of such date, as adjusted to give pro forma effect to the Merger and the Acquisition as if such transactions had occurred on December 31, 2006. The unaudited pro forma condensed combined statement of operations does not purport to represent the results of operations which would have occurred had such transactions been consummated on the dates indicated or results of operations for any future date or period. The assets and liabilities of Terra Nova have been presented at their historical cost (which is considered to be the equivalent of estimated fair value) with no goodwill or other intangible assets recorded and no increment in stockholders’ equity. The Acquisition has been accounted for under the purchase method of accounting and the purchase price of $24.3 million has been allocated to fixed assets, contract rights, goodwill and selected current liabilities acquired on a fair value basis as determined by management and based upon a purchase price allocation study conducted by an independent valuation firm.
The pro forma adjustments are based upon available information and assumptions that ClearPoint believes are reasonable. The pro forma condensed combined statements of operations and the pro forma condensed combined balance sheet do not purport to represent the results of operations which would have occurred had such transactions been consummated on the dates indicated or the financial position for any future date or period.
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The following information should be read in conjunction with the pro forma condensed combined financial information:
| • | accompanying notes to the unaudited pro forma condensed combined information; |
| • | separate historical audited consolidated financial statements of ClearPoint for the year ended December 31, 2006 included in its Form 8-K filed with the SEC on April 5, 2007; |
| • | separate historical audited financial statements of Terra Nova for the year ended December 31, 2006 included in its Form 10-KSB filed with the SEC on February 9, 2007; and |
| • | separate historical audited financial statements of ASG for the year ended December 31, 2006 included elsewhere in this Form 8-K/A. |
F-2
Unaudited Pro Forma Condensed Combined Statement of Operations
Year Ended December 31, 2006
(in thousands, except per share amounts)
| ClearPoint | Terra Nova | ASG | Adjustments | Pro Forma | ||||||||||||||||
| Sales |
$ | 113,942 | $ | — | $ | 102,851 | $ | — | $ | 216,793 | ||||||||||
| Cost of sales |
93,337 | — | 86,455 | — | 179,792 | |||||||||||||||
| Gross profit |
20,605 | — | 16,396 | — | 37,001 | |||||||||||||||
| Selling, general and administration expense |
13,550 | 815 | 13,343 | 110 | (1) | 27,818 | ||||||||||||||
| Depreciation and amortization |
2,489 | — | 1,143 | 2,589 | (2) | 6,221 | ||||||||||||||
| Income (loss) from operations |
4,566 | (815 | ) | 1,910 | (2,699 | ) | 2,962 | |||||||||||||
| Interest (expense) income |
(3,349 | ) | 1,180 | (855 | ) | 1,210 | (3) | (1,814 | ) | |||||||||||
| Interest (expense) on warranty liability |
(1,723 | ) | — | — | 1,723 | (4) | — | |||||||||||||
| Other income (expense) |
26 | — | — | — | 26 | |||||||||||||||
| Net income (loss) before taxes |
(480 | ) | 365 | 1,055 | 234 | 1,174 | ||||||||||||||
| Income taxes |
945 | 129 | — | (630 | )(5) | 1,704 | ||||||||||||||
| Net income (loss) |
(1,425 | ) | 236 | 1,055 | (396 | ) | (530 | ) | ||||||||||||
| Pro forma weighted average number of common shares outstanding – basic | 13,209 | |||||||||||||||||||
| Pro forma weighted average number of common shares outstanding – diluted | 14,176 | |||||||||||||||||||
| Pro forma net loss per common share – basic |
$ | (0.04 | ) | |||||||||||||||||
| Pro forma net loss per common share – diluted |
$ | (0.04 | ) | |||||||||||||||||
Notes to Unaudited Pro Forma Condensed Combined Statement of Operations
| (1) | 110 | Incremental fees paid to TerraNova Management Corp. | |||
| (2) | 3,595 | Amortization of contract rights acquired in the Acquisition | |||
| (1,006 | ) | Elimination of original ASG amortization of contract rights | |||
| 2,589 | Total adjustments to depreciation and amortization | ||||
| (3) | 3,130 | Reduction in interest expense due to repayment of debt with Bridge Healthcare Finance | |||
| (515 | ) | Interest expense on short-term debt incurred as a result of the Acquisition | |||
| (225 | ) | Interest expense on long-term debt incurred as a result of the Acquisition | |||
| (1,180 | ) | Reduction in interest income earned in Trust Fund | |||
| 1,210 | Total adjustments to interest (expense) income | ||||
| (4) | 1,723 | Elimination of interest expense on warrant liability | |||
| (5) | 630 | Adjustment to provision for income taxes on a pro forma consolidated basis | |||
F-3
Unaudited Pro Forma Condensed Combined Balance Sheet
At December 31, 2006
(in thousands)
| ClearPoint | Terra Nova | Adjustments | ASG | Adjustments | Pro Forma | |||||||||||||||||
| Assets |
||||||||||||||||||||||
| Cash and cash equivalents |
$ | 500 | $ | 42 | $ | 9,452 | (1) | $ | — | $ | (8,900 | )(4) | $ | 1,094 | ||||||||
| Securities, held in Trust Fund |
— | 30,481 | (30,481 | )(1) | — | — | — | |||||||||||||||
| Other current assets |
14,996 | 26 | — | 9,358 | (9,358 | )(5) | 15,022 | |||||||||||||||
| Total current assets |
15,496 | 30,549 | (21,029 | ) | 9,358 | (18,258 | ) | 16,116 | ||||||||||||||
| Other assets |
6,501 | — | — | 5,080 | 2,740 | (6) | 14,321 | |||||||||||||||
| Goodwill |
256 | — | — | 7,305 | 9,225 | (7) | 16,786 | |||||||||||||||
| Total assets |
$ | 22,253 | $ | 30,549 | $ | (21,029 | ) | $ | 21,743 | $ | (6,293 | ) | $ | 47,223 | ||||||||
| Liabilities and stockholders’ equity |
||||||||||||||||||||||
| Total current liabilities |
$ | 6,426 | $ | 488 | $ | (258 | )(1) | $ | 15,280 | $ | (14,930 | )(8) | $ | 7,006 | ||||||||
| Short-term debt |
— | — | — | — | 7,100 | (9) | 7,100 | |||||||||||||||
| Long-term debt |
13,755 | — | (12,465 | )(1) | — | 3,000 | (9) | 4,290 | ||||||||||||||
| Other long-term liabilities |
4,786 | — | (3,292 | )(1) | 513 | 1,987 | (10) | 3,994 | ||||||||||||||
| Common stock subject to possible conversion |
— | 6,093 | (6,093 | )(2) | — | — | — | |||||||||||||||
| Common stock |
6 | 1 | (6 | )(3) | — | — | 1 | |||||||||||||||
| Additional paid-in capital, net of treasury stock |
594 | 23,487 | (2,813 | )(1) | — | 2,500 | (11) | 23,768 | ||||||||||||||
| — | — | 6,093 | (2) | — | — | 6,093 | ||||||||||||||||
| — | — | (11 | )(1) | — | — | (11 | ) | |||||||||||||||
| — | — | 486 | (3) | — | — | 486 | ||||||||||||||||
| — | — | 124 | (3) | — | — | 124 | ||||||||||||||||
| Retained earnings accumulated during development stage |
— | 480 | (480 | )(3) | — | — | — | |||||||||||||||
| (Deficit) / Members’ Equity |
(3,314 | ) | — | (1,950 | )(1) | 5,950 | (5,950 | )(12) | (5,264 | ) | ||||||||||||
| — | — | (130 | )(1) | (130 | ) | |||||||||||||||||
| — | — | (110 | )(1) | — | — | (110 | ) | |||||||||||||||
| — | — | (124 | )(3) | (124 | ) | |||||||||||||||||
| Stockholders’ equity |
(2,714 | ) | 23,968 | 1,079 | 5,950 | (3,450 | ) | 24,833 | ||||||||||||||
| Total liabilities and stockholders’ equity |
$ | 22,253 | $ | 30,549 | $ | (21,029 | ) | $ | 21,743 | $ | (6,293 | ) | $ | 47,223 | ||||||||
Notes to Unaudited Pro Forma Condensed Combined Balance Sheet
| (1) | 30,481 | Conversion of securities held in Trust Fund into unrestricted cash | |||
| (2,813 | ) | Payment of fees to investment advisors, attorneys, and accountants | |||
| (130 | ) | Payment of compensation expenses | |||
| (258 | ) | Payment of other expenses related to the Merger | |||
| (12,465 | ) | Repayment of ClearPoint debt facilities with Bridge Healthcare Finance (“Bridge”) | |||
| (3,292 | ) | Redemption of ClearPoint warrants | |||
| (110 | ) | Incremental fees paid to TerraNova Management Corp. | |||
| (1,950 | ) | Premium on early extinguishment of Bridge debt | |||
| (11 | ) | Conversion of 2,000 shares from cash in trust | |||
| 9,452 | Total adjustments to cash | ||||
| (30,481 | ) | Conversion of securities held in Trust Fund into unrestricted cash | |||
| (258 | ) | Payment of other expenses related to the Merger | |||
| (12,465 | ) | Repayment of ClearPoint debt facilities with Bridge | |||
| (3,292 | ) | Redemption of ClearPoint warrants | |||
| (2,813 | ) | Reduction of paid-in capital for payment of fees to investment advisors, attorneys and accountants | |||
| (11 | ) | Conversion of 2,000 shares from cash in trust | |||
| (1,950 | ) | Premium on early extinguishment of Bridge debt | |||
| (130 | ) | Compensation expense | |||
| (110 | ) | Incremental fees paid to TerraNova Management Corp. | |||
F-4
Notes to Unaudited Pro Forma Condensed Combined Balance Sheet (continued)
| (2) | (6,093 | ) | Reclassification of common stock subject to possible conversion to paid-in capital | ||
| 6,093 | Reclassification of common stock subject to possible conversion to paid-in capital | ||||
| (3) | (6 | ) | Common stock of ClearPoint | ||
| (480 | ) | Transfer from earnings accumulated during development stage | |||
| 486 | Additional paid-in capital | ||||
| 124 | Stock based compensation adjustment to paid-in capital | ||||
| (124 | ) | Stock based compensation expense | |||
| (4) | (19,000 | ) | Cash portion of ASG purchase price | ||
| 7,100 | Short-term debt incurred as a result of the Acquisition | ||||
| 3,000 | Long-term debt incurred as a result of the Acquisition | ||||
| (8,900 | ) | ||||
| (5) | (9,358 | ) | Elimination of current assets not acquired in the Acquisition | ||
| (6) | (4,450 | ) | Elimination of other assets not acquired in the Acquisition | ||
| 7,190 | Value of contract rights purchased in the Acquisition | ||||
| 2,740 | |||||
| (7) | (7,305 | ) | Elimination of goodwill not acquired in the Acquisition | ||
| 16,530 | Value of goodwill purchased in the Acquisition | ||||
| 9,225 | |||||
| (8) | (14,930 | ) | Elimination of current liabilities not acquired in the Acquisition | ||
| (9) | 7,100 | Short-term debt incurred as a result of the Acquisition | |||
| 3,000 | Long-term debt incurred as a result of the Acquisition | ||||
| (10) | (513 | ) | Elimination of other long-term liabilities not acquired in the Acquisition | ||
| 2,500 | Note payable issued by ClearPoint in the Acquisition | ||||
| 1,987 | |||||
| (11) | 2,500 | Common stock issued by ClearPoint in the Acquisition | |||
| (12) | (5,950 | ) | Elimination of ASG members equity | ||
F-5
Comparative Per Share Data
The following table sets forth unaudited pro forma combined per share ownership information of ClearPoint, Terra Nova and ASG and its subsidiaries after giving effect to the Merger and Acquisition.
The unaudited pro forma combined earnings per share information below does not purport to represent the earnings per share which would have occurred had the companies been combined, nor earnings per share for any future date or period. The unaudited pro forma combined book value per share information below does not purport to represent what the value of ClearPoint, Terra Nova and ASG would have been had the companies been combined.
| In thousands, except per share data | ||||||||||||||
| Clear Point | Terra Nova | ASG | Combined Company |
|||||||||||
| Number of shares of common stock outstanding upon consummation of the Merger and Acquisition |
6,491 | 6,718 | — | 13,209 | ||||||||||
| Book Value - historical at December 31, 2006 |
$ | (2,714 | ) | $ | 23,968 | $ | 5,950 | $ | 24,833 | |||||
| Book Value - per share - historical December 31, 2006 |
$ | 1.88 | ||||||||||||
| Loss per share - basic pro forma year ended December 31, 2006 |
$ | (0.04 | ) | |||||||||||
| Loss per share - diluted pro forma year ended December 31, 2006 |
$ | (0.04 | ) | |||||||||||
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