RNS Number:6688E
Research Pharmaceutical SRV, Inc
28 September 2007
ReSearch Pharmaceutical Services, Inc.
Unaudited Statement of Results
for the six months ended 30 June 2007
ReSearch Pharmaceutical Services, Inc., (formerly Cross Shore Acquisition
Corporation) a leading provider of integrated clinical development outsourcing
solutions to the bio-pharmaceutical industry, is pleased to announce its
interim results for the six months ended 30 June 2007. This statement includes
separate results for the former ReSearch Pharmaceutical Services, Inc. (RPS)
and for the former Cross Shore Acquisition Corporation (Cross Shore) prior to
their merger.
A. Former RPS
Highlights of Results
Operating results for the first half of 2007 demonstrate strong growth in
revenues and profitability reflecting continued industry demand for the
innovative, integrated clinical development solutions and services that RPS
provides.
Financial Highlights
* Net revenues for the first half of 2007 of $54.9 million grew $16.4 million
or 42.7% as compared to the same period in 2006.
* EBITDA for the first half of 2007 of $3.5 million grew $1.8 million or 106%
as compared to the same period in 2006. As a percentage of net revenues,
EBITDA grew from 4.4% in 2006 to 6.4% in 2007.
* Net income before the provision for income taxes for the first half of 2007
of $2.3 million grew $1.6 million or 233% as compared to the same period in
2006.
* Net income for the first half of 2007 of $1.4 million grew $0.8 million or
110% as compared to the same period in 2006.
Operational Highlights
* The Company continues to exhibit strong organic growth fueled by new business
awards from existing and new customers and continued expansion of existing
customer business. On August 8, 2007 the Company announced the signing of a
new contract with a major pharmaceutical company that will generate
approximately $40 million in revenue over the next three years.
* As of June 30, 2007, the company's total staff count exceeded 1,000 employees,
a milestone that is reflective of the growing demand for the Company's unique
integrated outsourcing services.
* On August 30, 2007, Cross Shore Acquisition Corporation (Cross Shore)
completed its reverse takeover of ReSearch Pharmaceutical Services, Inc.
Effective with the completion of this transaction, Cross Shore Acquisition
Corporation changed its name to ReSearch Pharmaceutical Services, Inc. After
the completion of this transaction, the Company has approximately $20 million
in cash plus $15 million of unused bank line availability.
Commenting on the results, Daniel M. Perlman, Chairman and CEO of the new RPS
said:
"We are very pleased with our results for the first half of 2007. The bio/
pharmaceutical industry is under continued pressure to accelerate the
development and marketing of new drugs, while reducing operating costs and
improving financial performance. We believe that the RPS approach of providing
innovative, integrated clinical development solutions that leverage the existing
infrastructure and investments of bio/pharmaceutical companies addresses these
challenges and provide the opportunity to significantly reduce overall costs
while improving the quality and speed of drug development. Our strong financial
performance and continued growth reflect the expanding acceptance of our
business model by the bio/pharmaceutical industry."
"A key element of our continued growth is our strategy for expanding our
business model outside of the Americas to meet the expanding global needs of the
bio/pharmaceutical industry. Utilizing the funds generated from the reverse
merger with Cross Shore, we are now in a position to execute this strategy and
expand our service offering to a larger market."
B. Former Cross Shore Acquisition Corporation
* Cross Shore was incorporated in January 2006 as a development stage
enterprise with the objective of acquiring one or more operating companies
engaged in the delivery of business services.
* On 26 April 2007, Cross Shore announced that it had signed a merger
agreement with RPS. The merger was completed on 30 August 2007.
* On 31st August 2007 Cross Shore's listing on AIM was cancelled and the
new RPS was admitted to trading.
For further information please contact:
ReSearch Pharmaceutical Services, Inc. +1 215 540 0700
Dan Perlman, CEO
Steven Bell, Chief Financial Officer
Nominated Adviser and UK Broker:
Arbuthnot Securities Limited
James Steel/Guy Blakeney +44 20 7012 2100
ReSearch Pharmaceutical Services, Inc.
Unaudited Statement of Results
for the six months ended 30 June 2007
A. Former RPS
Background on RPS
Established in 1998 and headquartered in Ft. Washington, Pennsylvania, with
subsidiary offices across Latin America, RPS is a leading provider of integrated
clinical development outsourcing solutions to the bio-pharmaceutical industry.
RPS provides services in connection with the design, initiation and management
of clinical trials programs that are required to obtain regulatory approval to
market bio-pharmaceutical products. RPS introduced the Pharmaceutical Resource
Organization ("PRO") model to address the challenges facing the drug development
industry, which continues to grow rapidly but is facing increasing pressures to
control costs and improve effectiveness. The PRO model combines the capabilities
of a specialty staffing organization with the expertise of a clinical research
organization ("CRO"), enabling RPS to provide a unique service offering that
address the challenges and meets the needs of the expanding, global clinical
drug development market.
Chairman's Statement
Operating Review
During the first half of 2007, RPS continued to see strong organic growth
reflecting expanding acceptance of the PRO model. During this period, RPS has
witnessed a continued increase in requests for information and proposals that
have generated new business. Revenues reported for the first half of 2007
reflect how this activity has been converted into new contracts for services.
We expect the level of sales activity and interest from existing and new clients
to continue forward for the remainder of 2007. In addition, our revenue growth
has been fueled by continued expansion of business within our existing customer
base. Our staff count has grown dramatically and now exceeds 1,000 reflecting
our ability to acquire and retain experienced resources to meet the growing
demands of our customers.
Board Composition
Effective August 30, 2007, Harris Koffer, Pharm.D. (President and Chief
Operating Officer), Daniel Raynor, James Macdonald and I joined the Board of the
new parent company on its merger with the former RPS. Edward Yang, Dennis Smith
and Stephen Stonefield, each of whom are former Board members of Cross Shore,
remain on the Board. I look forward to the expertise that each of these talented
individuals bring to the direction and governance of the new RPS.
Professional Staff
Our exceptional performance is a reflection of the dedication of our management
team, the diligence of our corporate staff, and the professionalism and
experience of our field employees. We are over 1,000 strong and growing. I
would like to thank each of our employees for their contribution to our success
to date and to their continued efforts in the future.
Financial Overview
The market for the Company's integrated outsourcing solutions remains very
strong as reflected by the growth of net revenues from 2006 to 2007. Net
revenues of $54.9 million for the first half of 2007 reflect a $16.4 million or
42.7% increase over the prior year period. Strong growth in new business awards
from existing clients as well as new business generated from new clients
contributed to our growth. The announcement made by the Company in August 2007
regarding the signing of a new contract with a major pharmaceutical company
which will generate approximately $40 million in revenue over the next three
years, further validates the acceptance of our model. This contract, along with
others, will contribute toward the growth of our revenues into future periods.
As our revenues have grown, the Company's profitability has grown as well.
EBITDA for the first half of 2007 is 6.4% of net revenues, up from 4.4% for
2006. Net income before the provision for income taxes of $2.3 million for the
first half of 2007 is $1.6 million or 233% greater than the same period in 2006.
In comparing the two periods, cost of revenues as a percentage of net revenues
remained virtually unchanged. In contrast, however, although net revenues have
grown dramatically, operating expenses, while growing during the two periods
presented, have grown at a slower rate. Operating expenses for the first half
of 2007 were 22.1% of net revenues, a decrease from 24.4% for the same period
in 2006 bringing more of our revenue dollars to the bottom line.
Balance Sheet and Cash Flow
Our balance sheet remains strong and will reflect greater strength after
accounting for the merger with Cross Shore. As of June 30, 2007 working capital
was approximately $8.0 million. Additionally, the Company's line of credit
balance was $7.8 million with $7.2 million remaining available for borrowing.
Collections of accounts receivable remain strong with average days sales
outstanding during the period ranging from 65 to 70 days. Future reported
results will reflect the additional capital in the company provided by the
merger.
Cash flow provided by operating activities for the six months ended June 30,
2007 was $1.7 million, of which $1.4 million was provided by net income for the
period. Additionally, during the period the Company used $1.0 million for
capital expenditures. Of this amount, $750,000 was related to the move to the
Company's new corporate office in April 2007.
Global Expansion
A key strategic goal for RPS is to expand in selected overseas jurisdictions
that our clients have indicated are growth areas for their research activities.
Most major pharmaceutical companies and many CROs have recently begun increasing
their efforts to recruit physicians and patients in international markets
generally and in China, India, and Europe, in particular. The clients of RPS,
amongst other participants from the bio/pharmaceutical industry, are expanding
their operations in these markets. As our customers have expanded their
international capabilities to enable the development and marketing of their
products globally, they have begun to ask RPS to expand its operations into
these regions to meet their growing needs. In 2005 RPS initiated operations in
Latin America. We now operate across the Americas, performing clinical trial
outsourcing services in the U.S., Canada, Brazil, Argentina, Chile, Mexico and
Columbia.
Funds from the Merger
As a result of the merger between RPS and Cross Shore, the Company has
approximately $20 million in cash plus $15 million of unused bank line
availability to fund its globalization strategy along with other needs of the
Company. By growing its global footprint, RPS is seeking to expand its share of
the global drug research and development market and further meet the growing
needs of its current and future customer base. However, in view of its
comfortable funding position, the Board is currently reviewing the appropriate
balance between retaining financial flexibility to fund its globalization
strategy on the one hand and the optimization of its balance sheet efficiency
on the other.
Daniel M. Perlman, CEO
September 28, 2007
ReSearch Pharmaceutical Services, Inc.
Consolidated Statement of Operations
Audited
Unaudited Year ended
Six months ended June 30 December 31
2007 2006 2006
US$ US$ US$
Total service revenues 61,791,306 42,761,107 94,690,733
Less reimbursable expenses (6,937,874) (4,315,001) (10,273,380)
----------- ----------- -----------
Net revenues 54,853,432 38,446,106 84,417,353
Cost of revenues 39,657,330 27,778,602 61,364,988
----------- ----------- -----------
15,196,102 10,667,504 23,052,365
Operating expenses
Selling, general and
administrative expenses 11,692,514 8,968,117 19,069,809
Depreciation and amortisation 407,677 413,831 900,905
----------- ----------- -----------
3,095,911 1,285,556 3,081,651
Interest expense 751,920 581,139 1,244,541
----------- ----------- -----------
Net income before provision
for income taxes 2,343,991 704,417 1,837,110
Provision for income taxes 894,284 13,554 45,144
----------- ----------- -----------
Net Income 1,449,707 690,863 1,791,966
=========== =========== ===========
ReSearch Pharmaceutical Services, Inc.
Consolidated Balance Sheets
Unaudited Audited
June 30 December 31
2007 2006 2006
US$ US$ US$
ASSETS
Current Assets
Cash 319,975 217,097 197,024
Restricted cash 844,295 1,629,827 1,467,765
Accounts receivable, less
allowance for doubtful accounts 23,945,610 18,397,989 22,113,582
Prepaid expenses and other
current assets 1,475,831 859,094 641,512
----------- ----------- -----------
Total Current Assets 26,585,711 21,104,007 24,419,883
Intangible assets, net 443,620 779,788 611,704
Property and equipment, net 1,600,446 910,483 829,732
Other assets 227,215 143,781 262,991
----------- ----------- -----------
Total Assets 28,856,992 22,938,059 26,124,310
----------- ----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable 559,624 992,135 1,375,020
Accrued expenses 4,081,429 2,467,589 2,924,519
Customer deposits 2,095,692 2,304,371 1,467,765
Deferred revenue 4,089,113 3,858,723 3,037,165
Lines of credit 7,768,974 6,232,000 8,991,544
Current portion of capital lease
obligations 8,724 34,099 21,366
----------- ----------- -----------
Total Current Liabilities 18,603,556 15,888,917 17,817,379
Note payable 4,257,965 4,072,829 4,165,397
Put warrant liability 489,661 458,715 489,661
Other long-term liabilities 278,036 8,723 -
----------- ----------- -----------
Total Liabilities 23,629,218 20,429,184 22,472,437
----------- ----------- -----------
Stockholder's equity
Series A 8% convertible
preferred stock 5,648,902 5,328,726 5,489,688
Series B 8% convertible
preferred stock 2,593,298 2,429,567 2,512,345
Common stock - - -
Less: Treasury shares (1,187,650) (1,187,650) (1,187,650)
Additional paid in-capital (24,871) 332,463 118,628
Stockholder notes receivable - (5,693) -
Accumulated other comprehensive
income 35,819 - 6,297
Accumulated deficit (1,837,724) (4,388,538) (3,287,435)
----------- ----------- -----------
Total Stockholders' equity 5,227,774 2,508,875 3,651,873
----------- ----------- -----------
Total Liabilities and
Stockholders' Equity 28,856,992 22,938,059 26,124,310
=========== =========== ===========
ReSearch Pharmaceutical Services, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Audited
Unaudited Year ended
Six months ended June 30 December 31
2007 2006 2006
US$ US$ US$
Operating Activities:
Net Income 1,449,709 690,863 1,791,966
Adjustments to reconcile net(loss)
income to net cash used in
operating activities:
Depreciation and amortization 407,677 413,831 900,905
Amortization of debt discount 92,568 92,568 185,136
Currency translation 29,522 - 6,297
Interest charge related to put
warrant liability - - 30,946
Stock-based compensation 96,670 - 29,905
Changes in operating assets and
liabilities:
Accounts receivable (1,832,027) (4,618,524) (8,324,759)
Prepaid expenses and other
current assets (834,320) (377,386) (169,162)
Accounts payable (815,396) 141,040 523,928
Accrued expenses 1,156,912 501,638 958,566
Deferred revenue 1,051,946 1,117,373 295,815
Other Assets 35,776 - (119,206)
Other long-term liabilities 278,036 - -
Customer deposits 627,927 961,291 124,685
--------- --------- ---------
Net Cash (Used in) Provided by
Operating Activities 1,745,000 (1,077,306) (3,764,978)
--------- --------- ---------
Investing Activities:
Change in restricted cash 623,470 (286,747) (124,685)
Purchase of equipment (1,010,307) (409,011) (647,255)
--------- --------- ---------
Net Cash (Used in) Provided by
Investing Activities (386,837) (695,758) (771,940)
--------- --------- ---------
Financing Activities:
Principal payments on capital lease
obligations (12,642) (30,642) (52,098)
Proceeds from stockholder notes - 88,454 94,147
Net change in lines of credit
balances (1,222,570) 1,392,000 4,151,544
--------- --------- ---------
Net Cash (Used in) Provided by
Financing Activities (1,235,212) 1,449,812 4,193,593
--------- --------- ---------
Net Increase (Decrease) in Cash 122,951 (323,252) (343,325)
Cash, Beginning of Period 197,024 540,349 540,349
--------- --------- ---------
Cash, End of Period 319,975 217,097 197,024
========= ========= =========
NOTES
On August 30, 2007 Cross Shore Acquisition Corporation completed its reverse
takeover of ReSearch Pharmaceutical Services, Inc. The interim results contained
herein reflect the operations of ReSearch Pharmaceutical Services, Inc. only
and do not contain any operating results for Cross Shore Acquisition
Corporation.
The functional currency of the company is US dollars because that is the
currency of the primary economic environment in which the company operates.
These financial statements are presented in US dollars.
The financial statements are presented in conformity with accounting principles
generally accepted in the United States and have been prepared using the same
accounting policies as set forth in the financial statements for the year ended
December 31, 2006.
B. Former Cross Shore
During the six months to June 30 2007, the management team was actively seeking
suitable candidates for a Qualified Business Combination. It remained Cross
Shore's intention to invest in one or more companies engaged in the delivery of
business services in the U.S. and to focus on those companies which can benefit
from the ''productivity arbitrage'' associated with offshoring select
operations. While many industries were vetted, management believed that
outsourcing in the healthcare arena was particularly attractive given the
fragmented nature of the healthcare industry and the basic dynamics that
underlie the industry. As such, management paid particular attention to
companies engaged in providing services to the healthcare industry.
For the 6 month period ended 30 June 2007, Cross Shore generated no revenue as
it was still a shell company that had not yet entered into a business
combination. Expenses to 30 June 2007 consisted primarily of professional fees
and travel expenses.
Comparative financial statements to for the period to 30 June 2006 include only
5 months of figures, the period from inception of the company to the 30 June
2006.
On 26 April 2007, Cross Shore announced that it was had signed a merger
agreement with ReSearch Pharmaceutical Services Inc. The merger was finally
completed on 30 August 2007. On 31st August 2007 the Cross Shore's listing on
AIM was cancelled and the new RPS was admitted to trading.
Cross Shore Acquisition Corporation
(A Development Stage Enterprise)
STATEMENT OF OPERATIONS
Unaudited Audited Unaudited
Six months ended January 30, 2006 January 30, 2006
June 30, 2007 (inception) to (inception to)
June 30, 2006 December 31, 2006
US$ US$ US$
Costs and expenses
Formation and
Operating Costs 2,014,542 108,197 681,462
--------- ---------- ----------
Other Income
Income on investments
held in trust 2,568,694 - 3,376,048
Interest Income 4,383 - 14,047
--------- ---------- ----------
Total other income 2,573,077 - 3,390,095
--------- ---------- ----------
Income before
provision for
income taxes 588,535 (108,197) 2,708,633
Provision for income (887,719) - (1,200,000)
taxes
--------- ---------- ---------
Net Loss (329,184) (108,197) 1,508,633
========= ========== =========
Cross Shore Acquisition Corporation
(A Development Stage Enterprise)
BALANCE SHEETS
Unaudited Unaudited Audited
June 30, 2007 June 30, 2006 December 31,2006
US$ US$ US$
ASSETS
Current Assets
Cash and cash
equivalents 106,822 1,052,014 719,059
Investments held in
trust 106,444,799 103,393,585 106,042,582
Prepaid expenses 15,540 78,753 42,390
----------- ----------- -----------
Total Current Assets 106,567,161 104,524,352 106,804,031
=========== =========== ===========
Total Assets 106,567,161 104,524,352 106,804,031
=========== =========== ===========
LIABILITIES &
SHAREHOLDER EQUITY
Current Liabilities
Accounts payable and
accrued expenses 2,269,912 34,547 2,177,598
=========== ========== ===========
Total liabilities 2,269,912 34,547 2,177,598
=========== ========== ===========
Shareholders' Equity 104,297,249 104,489,805 104,626,433
=========== =========== ===========
Total liabilities and
shareholders' equity 106,567,161 104,524,352 106,804,031
=========== =========== ===========
Cross Shore Acquisition Corporation
(A Development Stage Enterprise)
STATEMENT OF CASH FLOWS
Unaudited Audited
January 30, January 30,
Unaudited 2006(inception) 006 (inception)
Six months ended to to
June 30, 2007 June 30, 2006 December 31, 2006
US$ US$ US$
Cash Flows from
Operating Activities
Net Income (Loss) (329,184) (108,197) 1,508,633
Adjustments to reconcile
net income to net cash
used in operating
activities
Income on investments
held in trust (2,568,694) - (3,376,048)
Prepaid expenses 26,850 (78,753) (42,390)
Accounts payable and
accrued expenses 92,314 34,547 221,598
Income tax payments,
accruals 2,166,477 - 1,200,000
--------- ----------- -----------
Net cash used in
operating activities (612,237) (152,403) (488,207)
Cash Flows from --------- ----------- -----------
investing activities
Purchase of investments
held in trust - (102,666,517) (102,666,534)
--------- ----------- -----------
Net Cash Provided by
Financing Activities - (102,666,517) (102,666,534)
--------- ----------- -----------
Cash Flows from
financing activities
Proceeds from issuance
of common shares - 112,025,008 112,025,008
Payment of offering
expenses - (8,154,074) (8,151,208)
--------- ----------- -----------
Net Cash provided by
financing activities - 103,870,934 103,873,800
--------- ----------- -----------
Net increase in cash (612,237) 1,052,014 719,059
--------- ----------- -----------
Cash, beginning of period 719,059 - -
--------- ----------- -----------
Cash, end of period 106,822 1,052,014 719,059
========= =========== ===========
NOTES
During the periods presented, Cross Shore generated no revenues as it had not
yet entered into a business combination. Expenses for the periods presented
consisted primarily of professional fees and travel expenses. On August 30 2007
Cross Shore completed its reverse takeover of RPS. The results contained herein
reflect the operations of Cross Shore only and do not contain any operating
results for RPS.
The functional currency of the Company is US dollars because that is the
currency of the primary economic environment in which the Company operates.
These financial statements are presented in US dollars.
The financial statements are presented in conformity with accounting principles
generally accepted in the United States.
END
This information is provided by RNS
The company news service from the London Stock Exchange
END
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