SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A AMENDMENT NO. 1 TO CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (date of earliest event reported): May 31, 2001 HARVARD BIOSCIENCE, INC. (Exact Name of Registrant as specified in its charter) Delaware 0-31923 04-3306140 (State or other jurisdiction (Commission File (I.R.S. Employer of incorporation) Number) Identification No.) 84 October Hill Road, Holliston, MA 01746-1371 (Address of principal executive offices and zip code) (508) 893-8999 (Registrant's telephone number, including area code)
Harvard Bioscience, Inc. (the "Company") hereby amends its Current Report on Form 8-K, dated May 31, 2001, in order to file the financial statements and pro forma financial information required by Item 7 of Form 8-K. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED. Audited financial statements of Union Biometrica, Inc. as of and for the years ended December 31, 1999 and 2000 and unaudited financial statements of Union Biometrica, Inc. as of March 31, 2001 and for the three months ended March 31, 2000 and 2001 are contained in Exhibit 99.2 attached hereto and are incorporated herein by reference. (b) PRO FORMA FINANCIAL INFORMATION. Unaudited pro forma financial information of Harvard Bioscience, Inc. as of and for the year ended December 31, 2000 and the three months ended March 31, 2001 giving pro forma effect to Harvard Bioscience, Inc.'s acquisition of Union Biometrica, Inc. is contained in Exhibit 99.3 attached hereto and is incorporated herein by reference. (c) EXHIBITS EXHIBIT NO. DESCRIPTION *2.1 Agreement and Plan of Merger, dated as of May 31, 2001, by and among Harvard Bioscience, Inc., Union Biometrica, Inc. and Union Biometrica, Inc.** 23.1 Consent of Arthur Andersen LLP 23.2 Consent of KPMG LLP *99.1 Press release dated May 31, 2001 99.2 Audited financial statements of Union Biometrica, Inc. as of and for the years ended December 31, 1999 and 2000 and unaudited financial statements of Union Biometrica, Inc. as of March 31, 2001 and the three months ended March 31, 2000 and 2001 99.3 Unaudited pro forma financial information of Harvard Bioscience, Inc. as of and for the year ended December 31, 2000 and the three months ended March 31, 2001, relating to the acquisition of Union Biometrica, Inc. *Previously filed. **The Company agrees to furnish supplementally to the Commission a copy of any omitted schedule or exhibit to this agreement upon request by the Commission. 2
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: August 14, 2001 HARVARD BIOSCIENCE, INC. By: /s/ James L. Warren --------------------------------- James L. Warren Chief Financial Officer 3
EXHIBIT INDEX EXHIBIT NO. DESCRIPTION *2.1 Agreement and Plan of Merger, dated as of May 31, 2001, by and among Harvard Bioscience, Inc., Union Biometrica, Inc. and Union Biometrica, Inc.** 23.1 Consent of Arthur Andersen LLP 23.2 Consent of KPMG LLP *99.1 Press Release dated May 31, 2001 99.2 Audited financial statements of Union Biometrica, Inc. as of and for the years ended December 31, 1999 and 2000 and unaudited financial statements of Union Biometrica, Inc. as of March 31, 2001 and the three months ended March 31, 2000 and 2001 99.3 Unaudited pro forma financial information of Harvard Bioscience, Inc. as of and for the year ended December 31, 2000 and the three months ended March 31, 2001, relating to the acquisition of Union Biometrica, Inc. *Previously filed. **The Company agrees to furnish supplementally to the Commission a copy of any omitted schedule or exhibit to this agreement upon request by the Commission. 4
Exhibit 23.1 CONSENT OF INDEPENDENT AUDITORS As independent public accountants, we hereby consent to the incorporation by reference of our report in this Form 8-K/A into Harvard Bioscience's previously filed Registration Statement on Form S-8 File No. 333-53848. Boston, Massachusetts /s/ Arthur Andersen LLP August 14, 2001 ARTHUR ANDERSEN LLP
EXHIBIT 23.2 Consent of Independent Auditors We consent to the incorporation by reference in the Registration Statement No. 333-53848 of Harvard Bioscience, Inc. on Form S-8 of our report dated February 23, 2001, relating to the consolidated balance sheets of Harvard Bioscience, Inc. and subsidiaries as of December 31, 2000 and 1999, and the related consolidated statements of operations, stockholders' equity (deficit) and comprehensivie income (loss), and cash flows for each of the years in the three-year period ended December 31, 2000, which report is incorporated by reference on Form 8-K of Harvard Bioscience, Inc. /s/ KPMG LLP Boston, Massachusetts August 14, 2001
UNION BIOMETRICA, INC. AND SUBSIDIARY Consolidated Financial Statements as of December 31, 1999 and 2000 Together with Auditors' Report
INDEX Page Report of Independent Accountants F-2 Consolidated Balance Sheets F-3 Consolidated Statements of Operations F-4 Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit) F-5 Consolidated Statements of Cash Flows F-7 Notes to Consolidated Financial Statements F-8 F-1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Stockholders and Board of Directors of Union Biometrica, Inc. and Subsidiary: We have audited the accompanying consolidated balance sheets of Union Biometrica, Inc. (a Massachusetts corporation) as of December 31, 1999 and 2000 and the related consolidated statements of operations, redeemable convertible preferred stock and stockholders' equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Union Biometrica, Inc. as of December 31, 1999 and 2000 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States. /s/ Arthur Andersen LLP Boston, Massachusetts May 2, 2001 (except with respect to the matter discussed in Note 10, as to which the date is May 31, 2001) F-2
UNION BIOMETRICA, INC. AND SUBSIDIARY Consolidated Balance Sheets DECEMBER 31, MARCH 31, ASSETS 1999 2000 2001 (UNAUDITED) Current Assets: Cash and cash equivalents $282,814 $ 422,336 $ 488,589 Accounts receivable, net of allowance of approximately $45,000, $380,000 and $380,000 at December 31, 1999 and 2000 and March 31, 2001, respectively 55,351 29,826 210,196 Inventories 76,875 474,943 314,499 Receivable from affiliates - 29,064 8,151 Other current assets 5,716 44,212 102,612 -------- ---------- ---------- Total current assets 420,756 1,000,381 1,124,047 Property and Equipment, net 90,796 206,139 200,658 Other Assets 18,184 61,393 104,821 -------- ---------- ---------- $529,736 $1,267,913 $1,429,526 ======== ========== ========== LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT Current Liabilities: Accounts payable and accrued expenses $ 267,686 $ 456,528 $ 550,781 Deferred revenue 425,000 58,657 969,704 Payable to affiliate 51,762 - 14,390 --------- --------- ----------- Total current liabilities 744,448 515,185 1,534,875 --------- --------- ----------- Commitments and Contingencies (Note 8) Series A Redeemable Convertible Preferred Stock (Note 4): Authorized--110,000 shares Issued and outstanding--94,856 shares - 1,838,626 1,884,116 Stockholders' Deficit: Common stock, no par value- Authorized--890,000 shares Issued and outstanding--392,860, 412,481 and 414,981 shares at December 31, 1999 and 2000 and March 31, 2001, respectively 3,929 4,125 4,150 Additional paid-in capital 32,814 79,193 91,163 Warrants - 20,004 20,004 Deferred compensation (20,580) (40,347) (50,775) Treasury Stock - 2,501 shares, at cost - - (8,253) Accumulated deficit (230,875) (1,148,873) (2,045,754) --------- --------- ------------ Total stockholders' deficit (214,712) (1,085,898) (1,989,465) --------- --------- ------------ $ 529,736 $1,267,913 $ 1,429,526 ========= ========= =========== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. F-3
UNION BIOMETRICA, INC. AND SUBSIDIARY Consolidated Statements of Operations for the Years Ended December 31, 1999 and 2000 YEARS ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31, 1999 2000 2000 2001 (UNAUDITED) Revenues $ 1,530,927 $ 2,397,780 $ 1,018,868 $ 787,844 Operating Expenses: Direct costs of revenues 393,873 473,732 232,269 534,119 Research and development 611,002 1,458,549 276,105 469,151 Selling and marketing 216,084 363,770 37,562 320,416 General and administrative 541,034 894,301 177,849 330,114 --------------- --------------- --------------- --------------- Total operating expenses 1,761,993 3,190,352 723,785 1,653,800 --------------- --------------- --------------- --------------- Income (loss) from operations (231,066) (792,572) 295,083 (865,956) Interest Income and Other, net 13,905 27,471 6,854 14,565 --------------- --------------- --------------- --------------- Net income (loss) (217,161) (765,101) 301,937 (851,391) Accretion of Offering Costs and Dividends on Preferred Stock - (112,665) - (45,490) --------------- --------------- --------------- ---------------- Net income (loss) attributable to common stockholders $ (217,161) $ (877,766) $ 301,937 $ (896,881) =============== =============== =============== ================ Net Earnings (Loss) per Share--Basic $ (0.56) $ (2.17) $ 0.77 $ (2.17) =============== =============== =============== ================ Weighted Average Common Shares Outstanding - Basic 384,564 404,498 392,860 413,731 =============== =============== =============== =============== Net Earnings (Loss) per Share--Diluted $ (0.56) $ (2.17) $ 0.53 $ (2.17) =============== =============== =============== =============== Weighted Average Common Shares Outstanding--Diluted 384,564 404,498 569,221 413,731 =============== =============== =============== =============== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. F-4
UNION BIOMETRICA, INC. AND SUBSIDIARY Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit) for the Years Ended December 31, 1999 and 2000 and Three Months Ended March 31, 2001 SERIES A REDEEMABLE CONVERTIBLE PREFERRED STOCK COMMON STOCK ADDITIONAL PAID-IN SHARES VALUE | SHARES VALUE CAPITAL WARRANTS | Balance, January 1, 1999 - $ - | 378,600 $ 3,786 $ 10,764 $ - Issuance of common stock | to employees - - | 14,260 143 - - Deferred compensation | related to stock | options grants - - | - - 22,050 - Amortization of deferred | compensation - - | - - - - Distributions to | stockholders - - | - - - - Net loss - - | - - - - ------------- ------------- |------------ ------------ ------------- ------------- Balance, December 31, 1999 - - | 392,860 3,929 32,814 - Issuance of Series A | redeemable convertible | preferred stock and | warrants to purchase | common stock, net of | issuance costs of | $284,039 94,856 1,725,961 | - - - 20,004 Beneficial conversion | feature of Series A | redeemable convertible | preferred stock - - | - - 20,004 - Issuance of common stock | to employees - - | 19,621 196 - - Deferred compensation | related to stock option | grants - - | - - 26,375 - Amortization of deferred | compensation - - | - - - - Accretion of offering | costs and preferred | stock dividends - 112,665 | - - - - Distributions to | stockholders - - | - - - - Net loss - - | - - - - ------------- ------------- |------------ ------------ ------------- ------------- Balance, December 31, 2000 94,856 1,838,626 | 412,481 4,125 79,193 20,004 Accretion of offering | costs and preferred | stock dividends | (unaudited) - 45,490 | - - - - Issuance of common stock | to employees (unaudited) - - | 2,500 25 - - Deferred compensation | related to stock option | grants (unaudited) - - | - - 11,970 - Amortization of deferred | compensation (unaudited) - - | - - - - Repurchase of common | stock (unaudited) - - | - - - - Net loss (unaudited) - - | - - - - ------------- ------------- |------------ ------------ ------------- ------------- Balance, March 31, 2001 94,856 $ 1,884,116 | 414,981 $ 4,150 $ 91,163 $ 20,004 ============= ============= |============ ============ ============= ============= TOTAL TREASURY STOCK STOCKHOLDERS' DEFERRED ACCUMULATED EQUITY COMPENSATION DEFICIT SHARES COST (DEFICIT) Balance, January 1, 1999 $ - $ 44,421 - $ - $ 58,971 Issuance of common stock to employees - - - - 143 Deferred compensation related to stock options grants (22,050) - - - - Amortization of deferred compensation 1,470 - - - 1,470 Distributions to stockholders - (58,135) - - (58,135) Net loss - (217,161) - - (217,161) ------------- ------------- --------- -------- ------------- Balance, December 31, 1999 (20,580) (230,875) - - (214,712) Issuance of Series A redeemable convertible preferred stock and warrants to purchase common stock, net of issuance costs of $284,039 - - - - 20,004 Beneficial conversion feature of Series A redeemable convertible preferred stock - (20,004) - - - Issuance of common stock to employees - - - - 196 Deferred compensation related to stock option grants (26,375) - - - - Amortization of deferred compensation 6,608 - - - 6,608 Accretion of offering costs and preferred stock dividends - (112,665) - - (112,665) Distributions to stockholders - (20,228) - - (20,228) Net loss - (765,101) - - (765,101) ------------- ------------- --------- -------- ------------- Balance, December 31, 2000 (40,347) (1,148,873) - - (1,085,898) Accretion of offering costs and preferred stock dividends (unaudited) - (45,490) - - (45,490) Issuance of common stock to employees (unaudited) - - - - 25 Deferred compensation related to stock option grants (unaudited) (11,970) - - - - Amortization of deferred compensation (unaudited) 1,542 - - - 1,542 Repurchase of common stock (unaudited) - - 2,501 (8,253) (8,253) Net loss (unaudited) - (851,391) - - (851,391) ------------- -------------- --------- --------- -------------- Balance, March 31, 2001 (unaudited) $ (50,775) $ (2,045,754) 2,501 $ (8,253) $ (1,989,465) ============== ============== ========= ========== ============== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. F-5
UNION BIOMETRICA, INC. AND SUBSIDIARY Consolidated Statements of Cash Flows YEARS ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31, 1999 2000 2000 2001 (UNAUDITED) Cash Flows from Operating Activities: Net income (loss) $ (217,161) $ (765,101) $ 301,937 $ (851,391) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities- Depreciation and amortization 32,709 58,454 10,522 18,341 Stock-based compensation expense 1,470 6,608 1,652 1,542 Changes in operating assets and liabilities- Accounts receivable 41,327 25,525 (276,958) (180,370) Inventories (30,845) (398,068) (70,540) 160,444 Receivable from affiliates - (29,064) - 20,913 Other current assets (5,716) (38,496) - (58,400) Other assets (13,182) (43,209) (3,400) (43,428) Accounts payable and accrued expenses 199,890 188,842 139,218 94,253 Deferred revenue 425,000 (366,343) (300,000) 911,047 Payable to affiliates (54,443) (51,762) 177 14,390 --------------- --------------- --------------- --------------- Net cash provided by (used in) operating activities 379,049 (1,412,614) (197,392) 87,341 --------------- --------------- ---------------- --------------- Cash Flows from Investing Activity: Purchases of property and equipment (40,188) (173,797) (35,721) (12,860) --------------- --------------- ---------------- ---------------- Cash Flows from Financing Activities: Proceeds from issuance of preferred stock and warrants, net of offering costs - 1,745,965 - - Proceeds from note payable - - 60,000 - Proceeds from exercise of stock options 143 196 - 25 Purchase of treasury shares - - - (8,253) Distributions paid to stockholders (58,135) (20,228) - - --------------- --------------- --------------- --------------- Net cash (used in) provided by financing activities (57,992) 1,725,933 60,000 (8,228) --------------- --------------- --------------- ---------------- Net Increase in Cash and Cash Equivalents 280,869 139,522 (173,113) 66,253 Cash and Cash Equivalents, beginning of period 1,945 282,814 282,814 422,336 --------------- --------------- --------------- --------------- Cash and Cash Equivalents, end of period $ 282,814 $ 422,336 $ 109,701 $ 488,589 =============== =============== =============== =============== Supplemental Disclosure of Noncash Financing Activities: Accretion of Series A redeemable convertible preferred stock offering costs and dividends $ - $ 112,665 $ - $ 45,490 =============== =============== =============== =============== Deferred compensation related to stock option grants $ 22,050 $ 26,375 $ - $ 11,970 =============== =============== =============== =============== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. F-6
UNION BIOMETRICA, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements (INFORMATION RELATED TO MARCH 31, 2000 AND 2001 IS UNAUDITED) (1) BUSINESS AND ORGANIZATION Union Biometrica, Inc. (Union Biometrica) was incorporated on June 19, 1998 as a Massachusetts corporation engaged in combining expertise in biology with unique technology capabilities to deliver solutions in functional genomics and drug discovery research. It manufactures machines that have been designed to enable and accelerate research with multicellular organisms and bead combinatorial chemistry. Union Biometrica is subject to certain risks common to companies in similar stages of development. Principal risks include the need to obtain adequate financing to fund future operations, dependence on key individuals, competition from substitute services and from larger companies and the need to successfully market and develop new products and services to achieve profitable future operations. (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying consolidated financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying consolidated financial statements and notes. PRINCIPLES OF CONSOLIDATION The accompanying consolidated financial statements include the accounts of Union Biometrica, Inc. and its wholly owned subsidiary, Union Biometrica GmbH. All material intercompany transactions and balances have been eliminated. UNAUDITED INTERIM FINANCIAL INFORMATION The consolidated financial statements for the three months ended March 31, 2000 and 2001 and related footnote information are unaudited and have been prepared on the same basis as the audited financial statements. In the opinion of management, the interim unaudited consolidated financial statements include all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the results of these interim periods. The results for the three months ended March 31, 2001 are not necessarily indicative of the operating results to be expected for the entire year. CASH AND CASH EQUIVALENTS Union Biometrica considers all cash and cash equivalents with an original maturity date of 90 days or less to be cash equivalents. USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. F-7
UNION BIOMETRICA, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements (INFORMATION RELATED TO MARCH 31, 2000 AND 2001 IS UNAUDITED) REVENUE RECOGNITION Revenue is generally recognized upon shipment of goods. If post-sale obligations exist, such as installation or customer acceptance, revenue is deferred until all such obligations have been completed. In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin (SAB) No. 101, REVENUE RECOGNITION IN FINANCIAL STATEMENTS. Union Biometrica's revenue recognition policy complies with SAB No. 101. Union Biometrica recognizes service revenues as the related services are performed. Amounts collected prior to meeting the revenue recognition criteria are recorded as deferred revenue. Revenues from certain development and production contracts are recognized using the percentage of completion method, measured by the percentage of costs (primarily labor and materials) incurred to date as compared to the estimated total costs for each contract. INVENTORIES Inventories are stated at the lower of cost or market. Cost is determined by the first in, first out (FIFO) method. The components of inventories are as follows: DECEMBER 31, MARCH 31 1999 2000 2001 Raw materials $ 76,875 $ 137,442 $ 129,101 Work in process - 41,197 91,686 Finished goods - 296,304 93,712 --------------- --------------- --------------- Total $ 76,875 $ 474,943 $ 314,499 =============== =============== =============== PROPERTY AND EQUIPMENT Property and equipment are stated at cost. Union Biometrica provides for depreciation using the straight-line method over the estimated useful lives of the property and equipment. Expenditures for maintenance and repairs are charged to expense as incurred. Property and equipment consists of the following: F-8
UNION BIOMETRICA, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements (INFORMATION RELATED TO MARCH 31, 2000 AND 2001 IS UNAUDITED) ESTIMATED USEFUL DECEMBER 31, MARCH 31, LIFE 1999 2000 2001 Office equipment 5 years $ 76,925 $ 156,631 $ 185,861 Laboratory equipment 5 years 35,862 112,200 112,200 Furniture and fixtures 5-7 years 29,769 40,596 40,596 Leasehold improvements Life of lease 23,381 30,307 30,307 --------------- --------------- --------------- 165,937 339,734 368,964 Less--Accumulated depreciation and amortization 75,141 133,595 168,306 --------------- --------------- --------------- $ 90,796 $ 206,139 $ 200,658 =============== =============== =============== OTHER ASSETS Included in other assets as of December 31, 1999 and 2000is approximately $13,182 and $49,547, respectively, of capitalized patent costs. These costs are amortized over the relative lives of the patents. Also included in other assets are security deposits on Union Biometrica's leased facilities. LONG-LIVED ASSETS Management assesses the realizability of its long-lived assets whenever changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. Long-lived assets include property, equipment and patent costs. As a result of its reviews at December 31, 2000 and March 31, 2001, management does not believe that any impairment to its long-lived assets has occurred. FAIR VALUE OF FINANCIAL INSTRUMENTS Union Biometrica's consolidated financial instruments consist primarily of cash and cash equivalents, accounts receivable and accounts payable. The carrying amounts of the financial instruments approximate fair value due to their short-term nature. STOCK-BASED COMPENSATION Union Biometrica applies the intrinsic-value-based method of Accounting Principles Board (APB) Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, and related interpretations in accounting for its employee stock-based compensation plan and uses the fair value method to account for all nonemployee stock-based compensation. FOREIGN CURRENCY TRANSLATION The financial statements of Union Biometrica's foreign subsidiary are translated in accordance with SFAS No. 52, FOREIGN CURRENCY TRANSLATIONS. The determination of functional currency is based on the subsidiary's relative financial and operational independence from the Company. Foreign currency exchange and translation gains F-9
UNION BIOMETRICA, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements (INFORMATION RELATED TO MARCH 31, 2000 AND 2001 IS UNAUDITED) and losses are credited or charged to the accompanying consolidated statements of operations since the functional currency of the subsidiary is the U.S. dollar. INCOME TAXES Union Biometrica operated as a Subchapter S corporation until May 1, 2000, when it changed its tax status to a Subchapter C corporation. Union Biometrica now provides for income taxes using the liability method, which requires the recognition of deferred tax assets and liabilities at the date of the financial statements based on differences between the financial statement and tax bases of assets and liabilities using enacted tax rates. CONCENTRATION OF CREDIT RISK Union Biometrica has no significant off-balance-sheet concentration of credit risk such as foreign currency exchange contracts or other hedging arrangements. Financial instruments that subject Union Biometrica to credit risk consist primarily of accounts receivable. To reduce risk, Union Biometrica routinely assesses the financial strength of its customers and, as a consequence, believes that its accounts receivable credit risk exposure is limited. Union Biometrica maintains an allowance for potential credit losses and has recorded losses for uncollectable accounts amounting to approximately $45,000, $20,000 and $0 in 1999 and 2000 and for the three months ended March 31, 2001. As of December 31, 1999 and 2000 and March 31, 2001, three customers accounted for 97%, one customer accounted for 92% and two customers accounted for 100% of accounts receivable, respectively. The following table represents customers that account for more than 10% of net revenue: YEAR ENDED DECEMBER 31, MARCH 31, 1999 2000 2001 Customer A 40% 73% - Customer B - 19% 50% Customer C 17% - - Customer D 15% - - Customer E 14% - - Customer F - - 21% Customer G - - 12% Customer A is no longer an active customer of Union Biometrica. RESEARCH AND DEVELOPMENT COSTS Research and development costs are charged to operations as incurred. COMPREHENSIVE LOSS Comprehensive loss includes all changes in equity during a period, except those resulting from investments by owners and distributions to owners. Union Biometrica's comprehensive loss is equal to its net loss for all periods presented. F-10
UNION BIOMETRICA, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements (INFORMATION RELATED TO MARCH 31, 2000 AND 2001 IS UNAUDITED) EARNINGS (LOSS) PER SHARE Basic net earnings (loss) per share is computed by dividing the net earnings (loss) attributable to common stockholders for the period by the weighted average number of common shares outstanding during the period. Diluted net earnings (loss) per share is computed by dividing the net earnings (loss) attributable to common stockholders for the period by the weighted average number of common shares and the potential common stock outstanding during the period. Potential common stock is comprised of the incremental common shares issuable upon the conversion of redeemable convertible preferred stock, stock options and stock warrants. The following potentially issuable shares were excluded from the calculation of dilutive weighted average shares outstanding, as their effect would be antidilutive (in thousands): THREE MONTHS ENDED YEAR ENDED DECEMBER 31, MARCH 31, 1999 2000 2001 Convertible preferred stock - 94,856 94,856 Common stock options 179,960 180,109 138,359 Common stock warrants - 9,439 9,439 --------------- --------------- --------------- Total 179,960 284,404 242,654 =============== =============== =============== DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE Statement of Financial Accounting Standards (SFAS) No. 131, DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION, establishes standards for reporting information regarding operating segments and establishes standards for related disclosures about products and services and geographic areas. Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision making group, in making decisions regarding resource allocation and assessing performance. To date, Union Biometrica has viewed its operations and manages its business as principally one operating segment. (3) INCOME TAXES As of December 31, 2000, Union Biometrica had federal and state net operating loss and tax credit carryforwards available of approximately $316,000 to offset future taxable income, if any. The tax effects of temporary differences that give rise to the net deferred tax assets primarily relate to net operating loss carryforwards, accrual to cash basis differences and reserves and expenses not currently deductible for tax purposes of approximately $320,000. A full valuation allowance has been recorded in the accompanying financial statements to offset this deferred tax asset because the future realizability of such asset is uncertain. These carryforwards expire through 2020 and are subject to review and possible adjustment by the Internal Revenue Service. In addition, the occurrence of certain events, including significant changes in ownership interests, may limit the amount of the net operating loss carryforwards available to be used in any given year. F-11
UNION BIOMETRICA, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements (INFORMATION RELATED TO MARCH 31, 2000 AND 2001 IS UNAUDITED) (4) STOCKHOLDERS' EQUITY REDEEMABLE CONVERTIBLE PREFERRED STOCK In May and July 2000, Union Biometrica issued an aggregate of 94,856 shares of Series A redeemable convertible preferred stock (Preferred Stock) for $21.19 per share. The rights, preferences and privileges of the Preferred Stock are as follows: DIVIDENDS Dividends are cumulative and accrue daily from the date of original issuance at the rate of $1.27 per share per annum and are payable when and if declared by the Board of Directors. LIQUIDATION In the event of any liquidation or dissolution of Union Biometrica, the holders of the Preferred Stock are entitled, before distribution to any common stockholders, to $21.19 per share plus any accrued dividends. VOTING RIGHTS Each holder of outstanding shares of Preferred Stock shall be entitled to the number of votes equal to the number of common shares into which the preferred shares are then convertible. CONVERSION Each share of Preferred Stock shall be convertible, at the option of the holder, into an equivalent number of common shares based upon the then effective conversion rate (currently one share of preferred stock for one share of common stock). Upon the closing of the sale of common shares in an initial public offering resulting in gross proceeds to Union Biometrica of at least $15,000,000 and a price of at least $5 per share, all preferred shares would then automatically be converted into common shares at the then effective conversion rate. REDEMPTION On December 31, 2005 and on each of the next two anniversaries thereafter, Union Biometrica is required to redeem each share of Preferred Stock for an amount equal to the greater of its fair market value or the liquidation preference amount computed to such redemption date. The preferred stockholders may not redeem the Preferred Stock prior to this date. Union Biometrica has reserved the appropriate number of authorized but unissued common shares for the potential conversion of these preferred shares. F-12
UNION BIOMETRICA, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements (INFORMATION RELATED TO MARCH 31, 2000 AND 2001 IS UNAUDITED) STOCK WARRANTS In connection with the issuance of the Preferred Stock, Union Biometrica issued warrants to purchase 9,439 shares of common stock at $1.00 per share to the Preferred Stock investors. The warrants may be exercised at any time through July 27, 2007. Using the Black-Scholes option pricing model, Union Biometrica has allocated a portion of the proceeds from the preferred stock to these warrants in the amount of $20,004. As a result of this allocation, the conversion option of the preferred stock was deemed to have a beneficial conversion feature in the amount of $20,004, which is recorded as a charge to accumulated deficit in the accompanying consolidated statement of stockholders' deficit. (5) STOCK-BASED COMPENSATION PLANS 1998 STOCK OPTION PLAN In June 1998, Union Biometrica adopted the Union Biometrica, Inc. 1998 Stock Option Plan (the 1998 Plan), which permits the grant of stock options to employees, officers, directors, consultants and advisors. Union Biometria is authorized to issue up to 250,000 shares of common stock under the 1998 Plan. As of December 31, 2000 and March 31, 2001, there were 46,410 and 91,660 shares, respectively, available for grant under the 1998 Plan. Options granted under the 1998 Plan may be either nonstatutory stock options or options intended to constitute inventive stock options under the Internal Revenue Code (IRC). Options become vested over periods determined by the Board of Directors and expire 10 years from the date of grant. 2000 STOCK INCENTIVE PLAN In November 2000, Union Biometrica adopted the Union Biometrica, Inc. 2000 Stock Incentive Plan (the 2000 Plan), which permits the grant of stock options to employees, officers, directors, consultants and advisors. Union Biometrica is authorized to issue up to 78,200 shares of common stock under the 2000 Plan. As of December 31, 2000 and March 31, 2001, there were 64,200 and 58,200 shares, respectively, available for grant under the 2000 Plan. Options granted under the 2000 Plan may be either nonstatutory stock options or options intended to constitute incentive stock options under the IRC. Options become vested over periods determined by the Board of Directors and expire 10 years from the date of grant. F-13
UNION BIOMETRICA, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements (INFORMATION RELATED TO MARCH 31, 2000 AND 2001 IS UNAUDITED) A summary of stock option activity under the 1998 Plan and the 2000 Plan is as follows: NUMBER OF SHARES EXERCISE PRICE Outstanding, December 31, 1998 134,220 $ 0.01 Granted 60,000 0.01 Exercised (14,260) 0.01 --------------- --------------- Outstanding, December 31, 1999 179,960 0.01 Granted 36,500 0.01-4.00 Exercised (19,621) 0.01 Cancelled (16,730) 0.01 --------------- --------------- Outstanding, December 31, 2000 180,109 0.01-4.00 Granted 9,000 0.01-4.00 Exercised (8,025) 0.01 Cancelled (48,250) 0.01 ---------------- --------------- Outstanding, March 31, 2001 138,359 $ 0.01-4.00 =============== =============== Exercisable, March 31, 2001 90,705 $ 0.01-4.00 =============== =============== Exercisable, December 31, 2000 81,707 $ 0.01-4.00 =============== =============== Exercisable, December 31, 1999 31,542 $ 0.01 =============== =============== In connection with certain stock option and restricted stock grants during the years ended December 31, 1999 and 2000 and the three months ended March 31, 2001, Union Biometrica recorded deferred compensation of $22,050, $26,375 and $11,970, respectively. The deferred compensation represents the aggregate difference between the option exercise price and the deemed fair value of the common stock for accounting purposes. All stock options granted and stock sold prior to 1999 were at fair market value, and, therefore, did not result in deferred compensation. The deferred compensation will be recognized as an expense over the vesting period of the underlying stock options. Union Biometrica recorded compensation expense of $1,470, $6,608, $1,652 and $1,542 in the years ended December 31, 1999 and 2000 and the three months ended March 31, 2000 and 2001, respectively. F-14
UNION BIOMETRICA, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements (INFORMATION RELATED TO MARCH 31, 2000 AND 2001 IS UNAUDITED) PRO FORMA STOCK-BASED COMPENSATION EXPENSE SFAS No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION, sets forth a fair-value-based method of recognizing stock-based compensation expense. As permitted by SFAS No. 123, Union Biometrica has elected to continue to apply APB Opinion No. 25 to account for stock-based compensation plans. Had compensation cost for awards granted under stock-based compensation plans been determined based on the fair value at the grant dates consistent with the method set forth under SFAS No. 123, the effect on Union Biometrica's net income (loss) and earnings (loss) per share would have been as follows: YEARS ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31, 1999 2000 2000 2001 Net income (loss)- As reported $(217,161) $(765,101) $301,937 $(851,391) Pro forma (217,724) (767,533) 301,829 (853,110) Net earnings (loss) per share-Basic As reported $ (0.56) $ (2.17) $ 0.77 $ (2.17) Pro forma (0.57) (2.18) 0.77 (2.17) Pro forma compensation expense for options granted is reflected over the vesting period; therefore, future pro forma compensation expense may increase as additional options are granted. The weighted average fair value per share of options granted was $0.16 in 1999, $0.99 in 2000 and $1.39 in 2001. The fair value of each option grant was estimated on the grant date using the Black-Scholes option pricing model with the following weighted average assumptions: YEARS ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31, 1999 2000 2000 2001 Volatility 60% 60% 60% 60% Risk-free interest rate 5.94% 5.83% 5.75% 4.94% Expected life of options 5 years 5 years 5 years 5 years Dividend yield - - - - The Black-Scholes option pricing model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option pricing models require the input of highly subjective assumptions, including expected stock price volatility. Because employee stock options have characteristics significantly different from those of traded options and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options. F-15
UNION BIOMETRICA, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements (INFORMATION RELATED TO MARCH 31, 2000 AND 2001 IS UNAUDITED) (6) RELATED PARTY TRANSACTIONS PAYABLE TO AFFILIATE During 1998, Union Biometrica borrowed $107,799 from an entity owned by its then sole stockholder. This borrowing was unsecured and bore interest at a rate of 6% per annum. Union Biometrica repaid all outstanding principal and accrued interest thereon from 1998 through 2000. RECEIVABLE FROM AFFILIATE During 2000, Union Biometrica advanced $29,064 to two entities owned by a stockholder of Union Biometrica. This advance is unsecured and is not interest-bearing. The amounts advanced are due upon demand. (7) COLLABORATION AGREEMENTS Union Biometrica has entered into several collaboration agreements with pharmaceutical companies and a university. The main purpose of the agreements is to develop and test new instruments and applications related to the particle and cell separation systems of Union Biometrica. (8) LEASES Future minimum lease payments under operating leases at December 31, 2000 are as follows: 2001 $ 136,511 2002 89,380 2003 66,615 2004 5,566 --------------- Total minimum lease payments $ 298,072 For the years ended December 31, 1999 and 2000 and the three months ended March 31, 2000 and 2001, Union Biometrica recorded rent expense of approximately $51,646, $99,281, $26,853 and $37,182, respectively, which is included in the accompanying consolidated statements of operations. (9) 401(K) PLAN Effective July 1998, Union Biometrica adopted a 401(k) plan (the Plan) for all employees. Employees are eligible to participate in the Plan at the time of employment. During 2000, Union Biometrica matched 30% of employee contributions to the Plan. Union Biometrica contributed $11,412, $19,736, $3,043 and $5,737 to the Plan during the years ended December 31, 1999 and 2000 and the three months ended March 31, 2000 and 2001, respectively. (10) SUBSEQUENT EVENT On May 31, 2001, Harvard Bioscience, Inc. (Harvard Bioscience) acquired all of the outstanding shares and stock options of Union Biometrica for a purchase price of approximately $17.4 million. The purchase price consists of $7.5 million in cash and the issuance of 659,282 shares of Harvard Bioscience's common stock and stock options to purchase 263,202 shares of common stock. F-16
Exhibit 99.3 HARVARD BIOSCIENCE, INC. AND SUBSIDIARIES NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS The following unaudited pro forma condensed combined financial statements are presented for illustrative purposes only and do not purport to be indicative of the consolidated financial position and the results of operations for future periods or the results that actually would have been realized had the Company and Union Biometrica, Inc (Union Biometrica) been a consolidated company during the specified periods. The following unaudited pro forma condensed combined financial statements are based on the respective audited and unaudited historical consolidated financial statements and the notes thereto of the Company and Union Biometrica after giving effect to the acquisition of Union Biometrica using the purchase method of accounting and the assumptions and adjustments described below. The purchase price was allocated to the estimated fair value of the assets acquired and liabilities assumed. The purchase price allocation is based on an independent appraisal and management estimates. The following unaudited pro forma condensed combined statements of operations for the year ended December 31, 2000 and three months ended March 31, 2001 assumes the merger occurred on January 1, 2000. The unaudited pro forma condensed combined balance sheet at March 31, 2001 assumes the merger occurred on March 31, 2001. The pro forma adjustments were based upon available information and upon certain assumptions as described in the notes to the unaudited pro forma condensed combined financial statements that Harvard Bioscience's management believes are reasonable in the circumstances. In accordance with generally accepted accounting principals, the amount allocated to in-process technology will be expensed in the quarter in which the merger was consummated. The in-process research and development ("IPR&D") adjustment has been excluded from the unaudited pro forma condensed combined statements of operations because it is a material, non-recurring charge. The effects of the IPR&D expense have been included in retained earnings in the March 31, 2001 unaudited pro forma condensed combined balance sheet. The unaudited pro forma condensed combined financial statements and accompanying notes should be read in conjunction with the consolidated financial statements and accompanying notes thereto of Harvard Bioscience, Inc. included in its Annual Report on Form 10-K for the year ended December 31, 2000.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET AT MARCH 31, 2001 (in thousands except per share data) HARVARD UNION PRO FORMA PRO FORMA BIOSCIENCE BIOMETRICA ADJUSTMENTS COMBINED Current assets: Cash and cash equivalents $ 42,388 $ 489 $(7,500) (B) $ 35,377 Trade accounts receivable, net 4,204 210 4,414 Other receivables and other assets 1,253 111 1,364 Inventories 3,780 314 4,094 Catalog costs 422 422 Prepaid Expenses 467 467 Income tax receivable 513 513 --------- --------- --------- --------- Total current assets 53,027 1,124 (7,500) 46,651 --------- --------- --------- --------- Property, plant and equipment, net 1,891 200 2,091 --------- --------- --------- Other assets: Catalog costs, less current portion 69 69 Deferred tax asset 58 58 Goodwill and other intangibles 9,149 12,696 (B) 21,845 Other assets 425 105 530 --------- --------- --------- --------- Total other assets 9,701 105 12,696 22,502 --------- --------- --------- --------- $ 64,619 $ 1,429 $ 5,196 $ 71,244 ========= ========= ========= ========= Current liabilities: Current installment of long-term debt $ 6 $ 6 Trade accounts payable 2,388 $ 551 2,939 Accrued income taxes payable 1,140 1,140 Accrued expenses 862 $ 450 (B) 1,312 Other liabilities 202 14 216 Deferred revenue 970 970 --------- --------- --------- --------- Total current liabilities 4,598 1,535 450 6,583 --------- --------- --------- --------- Deferred income tax liability 105 105 --------- --------- Total long-term liabilities 105 105 --------- --------- Series A Convertible Redeemable Preferred Stock 1,884 (1,884) (B) -- Stockholders' equity: Common stock 304 4 2 (B) 310 Accumulated other comprehensive loss (983) -- -- (B) (983) Additional paid-in capital 140,998 40 9,882 (B) 150,920 Warrants 20 (20) (B) -- Accumulated deficit (78,108) (2,046) (3,242) (B) (83,396) Notes receivable (1,627) (1,627) Treasury stock (668) (8) 8 (B) (668) --------- --------- --------- --------- Total stockholders equity 59,916 (1,990) 6,630 64,556 --------- --------- --------- --------- $ 64,619 $ 1,429 $ 5,196 $ 71,244 ========= ========= ========= ========= THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2000 (in thousands except per share data) HARVARD UNION PRO FORMA BIOSCIENCE BIOMETRICA ADJUSTMENTS COMBINED Revenue $ 30,575 $2,398 $32,973 Costs and expenses Cost of revenue 16,097 473 16,570 Research and development 1,533 1,459 2,992 Marketing, general and administrative 8,367 1,251 9,618 Stock compensation expense 14,411 7 14,418 Amortization of goodwill and other intangibles 604 -- $ 1,183 (A) 1,787 -------- -------- -------- ------- Total costs and expenses 41,012 3,190 1,183 45,385 -------- -------- -------- ------- Operating loss (10,437) (792) (1,183) (12,412) -------- -------- -------- -------- Other (expense) income: Common stock warrant interest expense (36,885) -- (36,885) Other, net (1,188) 27 (1,161) -------- -------- -------- --------- Total other (expense) income: (38,073) 27 -- (38,046) -------- -------- -------- --------- Loss before income taxes (48,510) (765) (1,183) (50,458) Income taxes 1,360 -- -- 1,360 Accretion of offering costs and dividends on preferred stock (136) (113) 113 (D) (136) -------- -------- -------- --------- Net loss available to common shareholders $(50,006) $ (878) $ (1,070) $ (51,954) ======== ======== ======== ========= Loss per share Basic $ (6.25) (6.00) ======== ======== Weighted average shares Basic 8,005 8,664 ======== ======== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2001 (in thousands except per share data) HARVARD UNION PRO FORMA PRO FORMA BIOSCIENCE BIOMETRICA ADJUSTMENTS COMBINED Revenue $ 8,607 $ 788 $ -- $ 9,395 Costs and expenses Cost of revenue 4,354 534 -- 4,888 Research and development 430 469 899 Marketing, general and administrative 2,360 650 3,010 Stock compensation expense 761 -- 761 Amortization of goodwill and other intangibles 184 -- 296 (A) 480 -------- -------- -------- -------- Total costs and expenses 8,089 1,653 296 10,038 -------- -------- -------- -------- Operating income (loss) 518 (865) (296) (643) Other income, net 344 14 -- 358 -------- -------- -------- -------- Income (Loss) before income taxes 862 (851) (296) (285) Income taxes 590 -- -- 590 -------- -------- -------- -------- Net income (loss) $ 272 (851) (296) (875) Accretion of offering costs and dividends on preferred stock -- (45) 45 (D) -- -------- -------- -------- -------- Net income (loss) available to common shareholders $ 272 $ (896) $ (251) $ (875) ======== ======== ======== ======== (Loss) per share Basic $ 0.01 $ (0.03) ======== ======== Diluted $ 0.01 $ (0.03) ======== ======== Weighted average shares Basic 25,214 25,873 ======== ======== Diluted 25,633 25,873 ======== ======== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION NOTE 1. BASIS OF PRESENTATION On May 31, 2001, Harvard Bioscience, Inc. and Subsidiaries, (the "Company") acquired all of the outstanding common and preferred shares of Union Biometrica. Union Biometrica develops, manufactures and markets instruments that enable high throughput analysis and sorting of model organisms used in drug discovery research. The transaction was accounted for using the purchase method of accounting. The total purchase price of approximately $17.4 million, net of cash acquired of $562,000, included 659,282 common shares and 263,202 options with an estimated fair value of $10 million. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2000 and the three months ended March 31, 2001 give effect to the acquisition as if the transaction had occurred as of January 1, 2000. The unaudited pro forma condensed combined balance sheet give effect to the acquisition as if the transaction had occurred on March 31, 2001. The allocation of purchase price is based on an independent appraisal and management estimates. Below is a table of the purchase price allocation net of cash acquired of $562,000, in millions: Current Assets........................................... $ 0.5 Property, Plant & Equipment.............................. 0.2 Purchased Intangibles.................................... 10.1 In Process Research & Development........................ 5.3 Goodwill................................................. 3.7 Other Assets............................................. 0.1 Current Liabilities...................................... (2.5) ------ $ 17.4 ====== NOTE 2. PRO FORMA ADJUSTMENTS The proforma adjustments are based on an allocation of purchase price to the assets acquired and liabilities assumed. (A) Adjustments have been included to record amortization of purchased intangibles and goodwill in the unaudited pro forma condensed combined statements of operations for the year ended December 31, 2000 and the three months ended March 31, 2001 in the amounts of $1,183,000 and $296,000 respectively. The fair value amounts and amortization periods for the acquired intangible assets are as follows in thousands: AMOUNT (IN THOUSANDS) PERIOD Goodwill $ 3,671 15 years Workforce in Place 1,370 15 years Acquired Technologies 7,967 10 years Trademark 760 15 years --------- $13,768 =========
(B) Adjustment to reflect the common stock issued in connection with the acquisition of Union Biometrica and the allocation of the purchase price to the net assets acquired and liabilities assumed. In addition, it reflects the accrual of acquisition costs of $450,000 and the effects of IPR&D expense of $5,288,000 included in accumulated deficit, see (C). (C) As required by Article 11 of Regulation S-X, the unaudited pro forma condensed combined statement of operations excludes material non-recurring charges that result directly from the merger and that will be recorded within twelve months of the merger. In process research and development expense of $5,288,000 related directly to the merger was not included in the unaudited pro forma combined condensed statements of operations. (D) Adjustment to eliminate accretion of offering costs and dividends on Union Biometrica's preferred stock. NOTE 3. PRO FORMA NET LOSS PER SHARE The unaudited basic and diluted net loss per share is based on the weighted average number of Harvard Bioscience common shares outstanding prior to the merger plus the number of shares of Harvard Bioscience common stock issued upon the closing of the merger to existing security holders. Shares issuable under the Harvard Bioscience and Union Biometrica option incentive plan are not included in the determination of weighted average shares as they are antidilutive.