Attached files
| file | filename |
|---|---|
| 8-K - CURRENT REPORT - Cinnabar Ventures Inc | f8k030210_cinnabar.htm |
| EX-2.1 - SHARE EXCHANGE AGREEMENT - Cinnabar Ventures Inc | f8k030210ex2i_cinnabar.htm |
| EX-99.1 - FINANCIAL STATEMENTS - Cinnabar Ventures Inc | f8k030210ex99i_cinnabar.htm |
Exhibit
99.2
CINNABAR
VENTURES, INC. AND SUBSIDIARIES
PRO
FORMA CONDENSED COMBINED FINANCIAL INFORMATION
(UNAUDITED)
Index to Pro Forma Condensed
Combined Financial Information
| Page(s) | |
| Pro Forma Condensed Combined Balance Sheets as of November 30, 2009 | 1 |
| Pro Forma Condensed Combined Statements of Operations as of November 30, 2009 | 2 |
| Pro Forma Condensed Combined Balance Sheets as of May 31, 2009 | 3 |
| Pro Forma Condensed Combined Statements of Operations as of May 31, 2009 | 4 |
| Notes to Pro Forma Condensed Combined Financial Statements as of November 30, 2009 and May 31, 2009 | 5-7 |
|
Cinnabar
Ventures, Inc. and Subsidiary
|
||||||||||||||||
|
(A
Development Stage Company)
|
||||||||||||||||
|
Pro Forma Condensed Combined Balance
Sheet
|
||||||||||||||||
|
November
30, 2009
|
||||||||||||||||
|
Advanced
Network Solutions, Inc.
|
Cinnabar
Ventures, Inc.
|
|||||||||||||||
|
(Acquiree)
|
(Acquiror)
|
Pro
Forma
|
Pro
Forma
|
|||||||||||||
|
(Unaudited)
|
(Unaudited)
|
Adjustments
|
Combined
|
|||||||||||||
|
Assets
|
||||||||||||||||
|
Current
Assets
|
||||||||||||||||
|
Cash
|
$ | 55,439 | $ | 1,238 | - | $ | 56,677 | |||||||||
|
Accounts
Receivable
|
45,986 | - | - | 45,986 | ||||||||||||
|
Total
Current Assets
|
101,425 | 1,238 | - | 102,663 | ||||||||||||
|
Property
and Equipment, net
|
22,541 | - | - | 22,541 | ||||||||||||
|
Deposits
and other assets
|
10,000 | - | - | 10,000 | ||||||||||||
|
Intangibles:
|
||||||||||||||||
|
Goodwill
|
- | - | 479,378 | 479,378 | ||||||||||||
|
Total
Intangible Assets
|
- | - | 479,378 | 479,378 | ||||||||||||
|
Total
Assets
|
$ | 133,966 | $ | 1,238 | 479,378 | 614,582 | ||||||||||
|
Liabilities and Stockholders'
Equity
|
||||||||||||||||
|
Current
Liabilities:
|
||||||||||||||||
|
Accounts
payable and accrued liabilities
|
$ | 51,613 | $ | - | - | $ | 51,613 | |||||||||
|
Total
Current Liabilities
|
51,613 | - | - | 51,613 | ||||||||||||
|
Long
Term Liabilities:
|
||||||||||||||||
|
Loan
Payable
|
11,731 | - | - | 11,731 | ||||||||||||
|
Total
Liabilities
|
63,344 | - | - | 63,344 | ||||||||||||
|
Stockholders'
Equity
|
||||||||||||||||
|
Common
stock, $0.001 par value; 75,000,000 shares
authorized,
|
||||||||||||||||
|
19,995,000
shares issued and outstanding
|
500 | 19,845 | 150 | 19,995 | ||||||||||||
| (500 | ) | |||||||||||||||
|
Additional
paid-in capital
|
2,794 | 170,551 | 479,728 | 653,073 | ||||||||||||
|
Retained
Earnings (Deficit) accumulated during the development
stage
|
67,328 | (189,158 | ) | - | (121,830 | ) | ||||||||||
|
Total
Stockholders' Equity
|
70,622 | 1,238 | 479,378 | 551,238 | ||||||||||||
|
Total
Liabilities and Stockholders' Equity
|
$ | 133,966 | $ | 1,238 | 479,378 | 614,582 | ||||||||||
See accompanying notes to unaudited pro forma
condensed combined financial statements.
-1-
|
Cinnabar
Ventures, Inc. and Subsidiaries
|
||||||||||||||||||||
|
(A
Development Stage Company)
|
||||||||||||||||||||
|
Pro Forma Condensed Combined Statement of
Operations
|
||||||||||||||||||||
|
November
30, 2009 Advanced Network
Solutions, Inc. |
Cinnabar
Ventures, Inc.
|
For
the Period from May 24, 2006
(inception) to |
||||||||||||||||||
|
(Acquiree)
|
(Acquiror)
|
Pro
Forma
|
Pro
Forma
|
Pro
Forma
|
||||||||||||||||
|
(Unaudited)
|
(Unaudited)
|
Adjustments
|
Combined
|
Combined
|
||||||||||||||||
|
Revenue
|
$ | 129,567 | $ | - | $ | - | $ | 129,567 | $ | 129,567 | ||||||||||
|
Cost
of revenue
|
39,979 | - | - | 39,979 | 39,979 | |||||||||||||||
|
Gross
profit
|
89,588 | - | - | 89,588 | 89,588 | |||||||||||||||
|
General
and administrative expense
|
114,379 | 85,019 | - | 199,398 | 303,537 | |||||||||||||||
|
Loss
from operations
|
(24,791 | ) | (85,019 | ) | - | (109,810 | ) | (213,949 | ) | |||||||||||
|
Other
income
|
47 | - | 47 | 47 | ||||||||||||||||
|
Net
loss
|
$ | (24,744 | ) | $ | (85,019 | ) | $ | - | $ | (109,763 | ) | $ | (213,902 | ) | ||||||
|
Net
loss per common share
|
$ | (0.01 | ) | $ | (0.01 | ) | ||||||||||||||
|
Weighted
average number of common shares outstanding
|
||||||||||||||||||||
|
during
the year / period - basic and diluted
|
19,276,233 | 18,783,254 | ||||||||||||||||||
See accompanying notes to unaudited pro forma
condensed combined financial statements.
-2-
|
Cinnabar
Ventures, Inc. and Subsidiaries
|
||||||||||||||||
|
(A
Development Stage Company)
|
||||||||||||||||
|
Pro Forma Condensed Combined Balance
Sheet
|
||||||||||||||||
|
May
31, 2009
|
|
|||||||||||||||
|
Advanced
Network Sulotions, Inc.
|
May
31, 2009 Cinnabar Ventures,
Inc. |
|||||||||||||||
|
(Acquiree)
|
(Acquiror)
|
Pro
Forma
|
Pro
Forma
|
|||||||||||||
|
(Unaudited)
|
(Unaudited)
|
Adjustments
|
Combined
|
|||||||||||||
|
Assets
|
||||||||||||||||
|
Current
Assets
|
||||||||||||||||
|
Cash
|
$ | 569 | $ | 45 | - | $ | 614 | |||||||||
|
Accounts
Receivable
|
43,787 | - | - | 43,787 | ||||||||||||
|
Total
Current Assets
|
44,356 | 45 | - | 44,401 | ||||||||||||
|
Property
and Equipment, net
|
21,449 | - | - | 21,449 | ||||||||||||
|
Intangibles:
|
||||||||||||||||
|
Goodwill
|
- | - | 544,714 | 544,714 | ||||||||||||
|
Total
Intangible Assets
|
- | - | 544,714 | 544,714 | ||||||||||||
|
Total
Assets
|
$ | 65,805 | $ | 45 | 544,714 | 610,564 | ||||||||||
|
Liabilities and Stockholders'
Equity
|
||||||||||||||||
|
Current
Liabilities:
|
||||||||||||||||
|
Accounts
payable and accrued liabilities
|
$ | 46,127 | $ | 315 | - | $ | 46,442 | |||||||||
|
Loan
Payable- related party
|
- | 22,469 | - | 22,469 | ||||||||||||
|
Total
Current Liabilities
|
46,127 | 22,784 | - | 68,911 | ||||||||||||
|
Long
Term Liabilities:
|
||||||||||||||||
|
Loan
Payable
|
14,392 | - | - | 14,392 | ||||||||||||
|
Total
Liabilities
|
60,519 | 22,784 | - | 83,303 | ||||||||||||
|
Stockholders'
Equity
|
||||||||||||||||
|
Common
stock, $0.001 par value; 75,000,000 shares
authorized,
|
||||||||||||||||
|
19,170,000
shares issued and outstanding
|
500 | 19,020 | 150 | 19,170 | ||||||||||||
| (500 | ) | |||||||||||||||
|
Additional
paid-in capital
|
2,794 | 62,380 | 545,064 | 610,238 | ||||||||||||
|
Retained
Earnings (Deficit) accumulated during the development
stage
|
1,992 | (104,139 | ) | - | (102,147 | ) | ||||||||||
|
Total
Stockholders' Equity
|
5,286 | (22,739 | ) | 544,714 | 527,261 | |||||||||||
|
Total
Liabilities and Stockholders' Equity
|
$ | 65,805 | $ | 45 | 544,714 | 610,564 | ||||||||||
See accompanying notes to unaudited pro forma
condensed combined financial statements.
-3-
|
Cinnabar
Ventures, Inc. and Subsidiaries
|
||||||||||||||||||||
|
(A
Development Stage Company)
|
||||||||||||||||||||
|
Pro Forma Condensed Combined Statement of
Operations
|
||||||||||||||||||||
|
|
|
|
||||||||||||||||||
|
May
31, 2009 Advanced Network
Sulotions, Inc. |
May
31, 2009 Cinnabar Ventures,
Inc. |
For
the Period from May 24, 2006
(inception) to |
||||||||||||||||||
|
(Acquiree)
|
(Acquiror)
|
Pro
Forma
|
Pro
Forma
|
Pro
Forma
|
||||||||||||||||
|
(Unaudited)
|
(Unaudited)
|
Adjustments
|
Combined
|
Combined
|
||||||||||||||||
|
Revenue
|
$ | 223,189 | $ | - | $ | - | $ | 223,189 | $ | 223,189 | ||||||||||
|
Cost
of revenue
|
125,373 | - | - | 125,373 | 125,373 | |||||||||||||||
|
Gross
profit
|
97,816 | - | - | 97,816 | 97,816 | |||||||||||||||
|
General
and administrative expense
|
125,704 | 38,383 | - | 164,087 | 268,226 | |||||||||||||||
|
Loss
from operations
|
(27,888 | ) | (38,383 | ) | - | (66,271 | ) | (170,410 | ) | |||||||||||
|
Other
income
|
2,669 | - | 2,669 | 2,669 | ||||||||||||||||
|
Net
loss
|
$ | (25,219 | ) | $ | (38,383 | ) | $ | - | $ | (63,602 | ) | $ | (167,741 | ) | ||||||
|
Net
loss per common share
|
$ | (0.00 | ) | $ | (0.01 | ) | ||||||||||||||
|
Weighted
average number of common shares outstanding
|
||||||||||||||||||||
|
during
the year / period - basic and diluted
|
19,170,000 | 18,708,821 | ||||||||||||||||||
See accompanying notes to unaudited pro forma
condensed combined financial statements.
-4-
Cinnabar
Ventures, Inc. and Subsidiaries
Notes
to Pro Forma Condensed Combined Financial Statements
(Unaudited)
Note 1 Background
Information
On March
2, 2010, Cinnabar Ventures, Inc. (“the Company”) acquired 100% of the stock of
Advanced Network Solutions, Inc. (“ANS”). The unaudited pro forma
condensed combined financial statements are based on the historical financial
statements of the Company and ANS after giving effect to the purchase price -
consisting of the issuance of 150,000 shares of common stock and cash of $25,000
by the Company in connection with the ANS acquisition, and the assumptions,
reclassifications and adjustments described in the accompanying notes to the
unaudited pro forma condensed combined financial statements.
The pro
forma condensed combined financial statements should be read in conjunction with
the historical financial statements and accompanying notes of ANS and the
historical consolidated financial statements and accompanying notes of Cinnabar
Ventures, Inc., included in our annual report in Form 10-K for the fiscal year
ended May 31, 2009, and the quarterly report on Form 10-Q for the quarter ended
November 30, 2009.
Note 2 Basis of Pro Forma
Presentation
The
unaudited pro forma condensed combined balance sheets and statements of
operations as of November 30, 2009 and May 31, 2009, are based on the historical
financial statements of the Company and ANS, after giving effect to the
Company’s acquisition of ANS on March 3, 2010.
The pro
forma financial statements give effect to the merger as if it had occurred
on:
● May
31, 2008 for presenting the May 31, 2009 pro forma financial statements, and
on
● November
30, 2008 for presenting the November 30, 2009 pro forma financial
statements
In
determining the valuation of goodwill, the Company is applying ASC 805, “Business Combinations” (“ASC
805”). The acquisition method of accounting is used for all business
combinations where the acquiror is identified for each business combination. ASC
805 defines the acquirer as the entity that obtains control of one or more
businesses in the business combination and establishes the acquisition date as
the date that the acquirer achieves control.
ASC 805
requires an entity:
|
|
●
|
to
record separately from the business combination the direct costs, where
previously these costs were included in the total allocated cost of the
acquisition.
|
|
|
●
|
to
recognize the assets acquired, liabilities assumed, and any
non-controlling interest in the acquired at the acquisition date, at their
fair values as of that
date.
|
|
|
●
|
to
recognize as an asset or liability at fair value for certain
contingencies, either contractual or non-contractual, if certain criteria
are met.
|
|
|
●
|
to
recognize contingent consideration at the date of acquisition, based on
the fair value at that
date.
|
-5-
Cinnabar
Ventures, Inc. and Subsidiaries
Notes
to Pro Forma Condensed Combined Financial Statements
(Unaudited)
The
Company has considered this transaction as a reverse
recapitalization. At the date of the transaction, the Company was
operating to execute its business plan. There was no change in control in
connection with the issuance of the 150,000 shares of common stock; therefore,
treatment as an acquisition is appropriate under these facts and
circumstances.
The
Company has made significant assumptions and estimates in determining the
preliminary estimated purchase price and the preliminary allocation of the
estimated purchase price in the unaudited pro forma condensed combined financial
statements. These preliminary estimates and assumptions are subject
to change as the Company finalizes the purchase price assessment and the
valuation of the intangible assets acquired. These changes could
result in material variances between future financial results and the amounts
presented in these unaudited pro forma condensed combined financial statements,
including variances in fair values recorded, as well as expenses and cash flows
associated with these items.
The
unaudited pro forma condensed combined financial statements are not intended to
represent or be indicative of our consolidated results of operations or
financial position that would have been reported had the ANS acquisition been
completed as of the dates presented, and should not be taken as a representation
of our future consolidated results of operations or financial
position.
Note 3 Acquisition of ANS
and Allocation of Purchase Price
ANS is a
Florida Corporation that was incorporated on June 8, 1998. ANS is currently
doing business as Rent A Genius, which is engaged in computer sales and
consulting for small-medium size businesses in the Fort Myers area.
Effective
March 2, 2010, the Company acquired ANS for $25,000 and 150,000 shares of the
Company’s common stock, having a fair value of approximately $525,000
($3.50/share), based upon the quoted closing trading price. There
were no contingent consideration arrangements. Also, there is no non-controlling
interest.
The
estimated purchase price for ANS, as presented below on November 30, 2009,
represents preliminary fair value estimates at the date of acquisition (all
amounts are approximate)
|
Consideration
transferred at fair value:
|
||||
|
Cash
|
$ | 25,000 | ||
|
Common
stock at fair value
|
525,000 | |||
|
Total
consideration
|
550,000 | |||
|
Net
assets acquired:
|
||||
|
Assets
|
133,966 | |||
|
Liabilities
|
63,644 | |||
|
Total
net assets acquired
|
70,622 | |||
|
Goodwill
– at fair value
|
$ | 479,378 | ||
-6-
Cinnabar
Ventures, Inc. and Subsidiaries
Notes
to Pro Forma Condensed Combined Financial Statements
(Unaudited)
Note 4 Pro Forma Financial
Statement Adjustment
This
proforma adjustment represents the elimination of the ANS’s retained earnings as
part of the acquisition, as well as to record the preliminary fair values of the
ANS goodwill in connection with assets acquired, liabilities assumed and the
common stock issued in connection with the acquisition.
The pro
forma basic and diluted earnings per share amounts presented in the unaudited
pro forma condensed combined statements of operations are based upon the
weighted average number of our common shares outstanding and are adjusted for
the 150,000 shares of common stock issued in connection with the
acquisition. The issuance of these shares is considered outstanding
as of May 31, 2009. Diluted earnings per share will not be presented
since the Company has a net loss, and the effect of the Company’s common stock
equivalents would be anti-dilutive.
|
Weighted Average Common Shares
Outstanding
|
||||||||
|
Six
Months Ended
November 30, 2009
|
Year
Ended
May 31, 2009
|
|||||||
|
Weighted
average common shares outstanding – basic and diluted
|
19,126,233 | 19,020,000 | ||||||
|
Effect
of common stock issued in merger
|
150,000 | 150,000 | ||||||
|
Weighted
average common shares outstanding – basic and diluted – pro
forma
|
19,276,233 | 19,170,000 | ||||||
|
Net
loss – pro forma
|
$ | (109,763 | ) | $ | (63,602 | ) | ||
|
Net
loss per common share – basic and diluted – pro forma
|
$ | (0.01 | ) | $ | (0.00 | ) | ||
-7-