Digital Brand Media & Marketing Group, Inc. - FORM 8-K/A - EX-10.1 - CONSOLIDATED FINANCIAL STATEMENTS

Attached files

file	filename
8-K/A - CURRENT REPORT - Digital Brand Media & Marketing Group, Inc.	rtg_8ka-032007.htm

EXHIBIT 10.1

RTG VENTURES, INC. AND SUBSIDIARY

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

STYLAR LTD.

Report of Independent Registered Public Accounting Firm	F-1

Consolidated Balance Sheets	F-2

Consolidated Statements of Operations	F-3

Consolidated Statement of Stockholders' Deficit	F-4

Consolidated Statements of Cash Flows	F-5

Notes to Consolidated Audited Financial Statements	F-6

BITEMARK MC LTD.

Report of Independent Registered Public Accounting Firm	F-9

Consolidated Balance Sheets	F-10

Consolidated Statements of Operations	F-11

Consolidated Statement of Stockholders' Deficit	F-12

Consolidated Statements of Cash Flows	F-13

Notes to Consolidated Audited Financial Statements	F-14

REPORT OF THE INDEPENDENT AUDITORS TO THE SHAREHOLDERS OF

STYLAR LTD

We have audited the financial statements of Stylar Ltd for the period ended 31 May 2010. The financial reporting framework that has been applied in their preparation is applicable law and the Financial Reporting Standard for Smaller Entities (effective April 2008) (United Kingdom Generally Accepted Accounting Practice applicable to Smaller Entities).

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in a Report of the Auditors and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of director and auditors

As explained more fully in the Statement of Director's Responsibilities set out on page two, the director is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the director; and the overall presentation of the financial statements.

Opinion on financial statements

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 31 May 2010 and of its profit for the period then ended;
-	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice applicable to Smaller Entities; and
-	have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matter prescribed by the Companies Act 2006

In our opinion the information given in the Report of the Director for the financial year for which the financial statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

-	adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
-	the financial statements are not in agreement with the accounting records and returns; or
-	certain disclosures of director's remuneration specified by law are not made; or
-	we have not received all the information and explanations we require for our audit; or
-	the director was not entitled to prepare the financial statements and the Report of the Director in accordance with the small companies regime.

/s/ Nicholas Kaye

Nicholas Kaye (Senior Statutory Auditor)

for and on behalf of AEL Partners LLP

Chartered Accountants &

Registered Auditor

201 Haverstock Hill

London

NW3 4QG

16 August 2010

F-1

STYLAR LTD

BALANCE SHEET

	May 31,
	2010
	(Audited)
ASSETS

CURRENT ASSETS
Cash	£	15,064
Accounts Receivable		50,611

TOTAL ASSETS	£	65,675

LIABILITIES AND STOCKHOLDER'S EQUITY

CURRENT LIABILITIES
Accounts payable and accrued expenses	£	32,634

TOTAL CURRENT LIABILITIES		32,634

STOCKHOLDER'S EQUITY
Called up share capital		100
Profit and loss account		32,941

TOTAL STOCKHOLDER'S EQUITY		33,041

TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY	£	65,675

The notes form part of these financial statements

F-2

STYLAR LTD

STATEMENT OF OPERATIONS

	For the period from September 4, 2009 (Inception) to

	May 31, 2010
	(Audited)

REVENUES	£	114,712
Cost of goods sold		39,032
Gross profit		75,680


OPERATING EXPENSES
General and administrative		30,818
Total operating expenses		30,818

Income before income taxes		44,862

Income taxes		9,421

NET INCOME	£	35,441

The notes form part of these financial statements

F-3

STYLAR LTD

STATEMENT OF STOCKHOLDER'S DEFICIT

(Unaudited)

					Additional					Total
	Common Stock				Paid in		Accumulated			Stockholder's
	Shares		Amount		Capital		Deficit			Deficit
Balance, September 4, 2009 (Inception)		1	£	100	£	-	£	-		£	(2,400	)

Net loss		-		-		-		35,441			35,441
Issuance of dividend								(2,500	)
Balance, May 31, 2010		1	£	100	£	-	£	35,441		£	33,041

The notes form part of these financial statements

F-4

STYLAR LTD

STATEMENT OF CASH FLOWS

	For the period from September 4, 2009 (Inception) to
	May 31, 2010
	(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	£	35,441
Adjustments to reconcile net loss to
net cash used in operating activities:
(Increase) decrease in assets and liabilities:
Accounts Receivable		(50,611	)
Accounts Payable		32,634
NET CASH PROVIDED BY OPERATING ACTIVITIES		17,464

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of shares of common stock		100
Dividend		(2,500	)
NET CASH USED IN INVESTING ACTIVITIES		(2,400	)

INCREASE IN CASH		15,064

CASH - BEGINNING OF PERIOD		-

CASH - END OF PERIOD	£	15,064

The notes form part of these financial statements

F-5

The financial statements have been prepared in accordance with the special provisions of Part 15 of the Companies Act 2006 relating to small companies and with the Financial Reporting Standard for Smaller Entities (effective April 2008).

The financial statements were approved by the director on 16 August 2010 and were signed by:

/s/ R. James

R James - Director

F-6

STYLAR LTD

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD 4 SEPTEMBER 2009 TO 31 MAY 2010

1. ACCOUNTING POLICIES

Accounting convention

The financial statements have been prepared under the historical cost convention and in accordance with the Financial Reporting Standard for Smaller Entities (effective April 2008). Such reporting being similar to US GAAP with respect to Styar, Ltd.

Turnover

Turnover represents net invoiced sales of goods, excluding value added tax.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date.

2. OPERATING PROFIT

The operating profit is stated after charging:

	£

Directors' remuneration and other benefits etc		10,000

3. TAXATION

Analysis of the tax charge

The tax charge on the profit on ordinary activities for the period was as follows:

	£
Current tax:
UK corporation tax		9,421

Tax on profit on ordinary activities		9,421

4. DIVIDENDS

	£
Ordinary shares of £1 each
Final		2,500

5. DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

	£
Trade debtors		49,769
Other debtors		842

Tax on profit on ordinary activities		50,611

6. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

	£
Tax creditors		911
Taxation and social security		31,701
Other creditors		22

		32,634

F-7

STYLAR LTD

NOTES TO THE FINANCIAL STATEMENTS - continued

FOR THE PERIOD 4 SEPTEMBER 2009 TO 31 MAY 2010

7. CALLED UP SHARE CAPITAL

Allotted, issued and fully paid:
Numnber:	Class:	Nominal
		value:	£
100	Ordinary	£1		100

8. RESERVES

	Profit and loss account
	£
Profit for the period		35,441
Dividends		(2,500	)

At 31 May 2010		32,941

F-8

REPORT OF THE INDEPENDENT AUDITORS TO THE SHAREHOLDERS OF

BITEMARK MC LTD

We have audited the financial statements of Bitemark MC Ltd for the period ended 31 July 2009. The financial reporting framework that has been applied in their preparation is applicable law and the Financial Reporting Standard for Smaller Entities (effective April 2008) (United Kingdom Generally Accepted Accounting Practice applicable to Smaller Entities).

Respective responsibilities of director and auditors

Scope of the audit of the financial statements

Opinion on financial statements

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 31 July 2009 and of its profit for the period then ended;
-	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice applicable to Smaller Entities; and
-	have been prepared in accordance with the requirements of the Companies Act 2006.

Emphasis of matter – going concern

In forming our opinion on the financial statements, which is not qualified, we have considered the adequacy of the disclosures made in Note 1 to the financial statements concerning the company’s ability to continue as a going concern. The company has incurred losses post year end, but for reasons outlined in note 1 to the financial statements, the directors believe that it is appropriate to prepare the financial statements on a going concern basis. The financial statements do not include any adjustments that would result if the company was unable to continue as a going concern.

Opinion on other matter prescribed by the Companies Act 2006

In our opinion the information given in the Report of the Director for the financial year for which the financial statements are prepared is consistent with the financial statements.

F-9

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

-	adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
-	the financial statements are not in agreement with the accounting records and returns; or
-	certain disclosures of directors’ remuneration specified by law are not made; or
-	we have not received all the information and explanations we require for our audit; or
-	the directors were not entitled to prepare the financial statements and the Report of the Director in accordance with the small companies regime.

/s/ Nicholas Kaye

Nicholas Kaye (Senior Statutory Auditor)

for and on behalf of AEL Partners LLP

Chartered Accountants &

Registered Auditor

201 Haverstock Hill

London

NW3 4QG

16 August 2010

F-10

BITEMARK MC LTD

BALANCE SHEETS

	May 31, 2010			July 31, 2009			July 31, 2008
	(Unaudited)			(Audited)			(Audited)
Assets
Current Assets
Cash and cash equivalents	£	22,003		£	7,422		£	36,625
Debtors		81,269			119,673			257,858
Stocks		170,700			232,483			304,397
Prepayments and accrued income		25,079			22,872			25,827
		299,051			382,450			624,707
Other Assets
Tangible assets		9,529			10,811			31,284
TOTAL ASSETS	£	308,580		£	393,261		£	655,991

LIABILITIES AND STOCKHOLDERS' EQUITY


Current Liabilities
Accounts payable	£	184,624		£	188,616		£	388,927
TOTAL CURRENT LIABILITIES		184,624			188,616			388,927

Stockholders' equity
Called up share capital		200			200			200
Share premium		250,000			250,000			250,000
Profit and loss account		(126,244	)		(45,555	)		16,864
TOTAL STOCKHOLDERS' EQUITY		123,956			204,645			267,064
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	£	308,580		£	393,261		£	655,991

The notes form part of these financial statements

F-11

BITEMARK MC LTD

STATEMENTS OF OPERATIONS

	Ten Month Period Ended May 31, 2010			Year Ended July 31, 2009			Year Ended July 31, 2008
	(Unaudited)			(Audited)			(Audited)

REVENUES	£	924,477		£	1,187,309		£	1,623,239

Cost of sales		568,421			621,511			920,805

Gross profit		356,056			565,798			702,434

OPERATING EXPENSES
General and administrative		421,223			594,911			761,936
		421,223			594,911			761,936

OTHER EXPENSES
Interest payable and similar charges		15,522			33,306			16,979
		15,522			33,306			16,979

Income before income taxes		-			(62,419	)		(76,481	)

Income taxes		-			-			(8,323	)

NET LOSS	£	(80,689	)	£	(62,419	)	£	(68,158	)

The notes form part of these financial statements

F-12

BITEMARK MC LTD

STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)

					Additional					Total
	Common Stock				Paid in		Accumulated			Stockholders'
	Shares		Amount		Capital		Deficit			Equity

Balance, July 31, 2008		2,000	£	200	£	250,000	£	16,864		£	267,064

Net loss		-		-		-		(62,419	)		(62,419	)

Balance, July 31, 2009		2,000		200		250,000		(45,555	)		204,645

Net loss		-		-		-		(80,689	)		(80,689	)

Balance, May 31, 2010		2,000	£	200	£	250,000	£	(126,244	)	£	123,956

The notes form part of these financial statements

F-13

BITEMARK MC LTD

STATEMENTS OF CASH FLOWS

	Ten Month
	Period ended			Year ended
	May 31, 2010			July 31, 2009
	(Unaudited)			(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	£	(80,689	)	£	(62,419	)
Adjustments to reconcile net loss to
net cash provided by (used in) operating activities:
Depreciation		1,282			8,799
Loss on disposal of assets		-			16,695
(Increase) decrease in assets and liabilities:
Accounts Receivable		38,404			138,185
Other Current Asset		(2,207	)		2,955
Accounts Payable		(3,992	)		(200,311	)
Stocks		61,783			71,914
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		14,581			(24,182	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Fixed Assets		-			(5,021	)
NET CASH USED IN INVESTING ACTIVITIES		-			(5,021	)

INCREASE(DECREASE) IN CASH		14,581			(29,203	)

CASH - BEGINNING OF PERIOD		7,422			36,625

CASH - END OF PERIOD	£	22,003		£	7,422

The notes form part of these financial statements

F-14

The financial statements were approved by the director on 16 August 2010 and were signed by:

/s/ D Hawes

D Hawes - Director

F-15

BITEMARK MC LTD

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 JULY 2009

1. ACCOUNTING POLICIES

Accounting convention

Turnover

Turnover represents net invoiced sales of goods, excluding value added tax.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.

Plant and machinery etc	- 33% on cost,
	25% on cost and
	20% on cost

Stocks

Stocks are valued at the lower of cost and net realizable value, after making due allowance for obsolete and slow moving items.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date.

Going concern

The company meets its day to day working capital requirements by utilizing an invoice discount financing facility.

For the ten month period ended 31 May 2010, the company has made further losses. In order to counteract the effect of these losses the directors have implemented a number of measures to significantly reduce costs and increase profitability and is arranging further funding.

The directors have reviewed the situation and on the basis of discussions with potential investors, expect that adequate facilities will be made available and accordingly the directors consider it appropriate to prepare the financial statements on a going concern basis.

2. OPERATING LOSS

The operating loss is stated after charging/(crediting):

	2009		2008
	£		£
Depreciation - owned assets	8,799		5,559
Foreign exchange differences	(4,178	)	(8,101	)

Directors' remuneration and other benefits etc	110,000		110,000

F-16

BITEMARK MC LTD

NOTES TO THE FINANCIAL STATEMENTS - continued

FOR THE YEAR ENDED 31 JULY 2009

3. TAXATION

Analysis of the tax credit

The tax credit on the loss on ordinary activities for the year was as follows:

	2009		2008
	£	£
Current tax:
UK corporation tax provision (benefit)	-		(8,323	)
Tax on loss on ordinary activities	-		(8,323	)

4. TANGIBLE FIXED ASSETS

	Plant and
	machinery
	etc
	£
COST
At 1 August 2008		43,161
Additions		5,021
Disposals		(18,380	)

At 31 July 2009		29,802

DEPRECIATION
At 1 August 2008		11,877
Charge for year		8,799
Eliminated on disposal		(1,685	)

At 31 July 2009		18,991

NET BOOK VALUE
At 31 July 2009		10,811

At 31 July 2008		31,284

5. DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

	2009	2008
	£	£
Trade debtors	99,099	248,579
Other debtors	20,574	9,279

	119,673	257,858

6. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

	2009		2008
	£	£
Trade creditors	92,534		239,821
Taxation and social security	25,577		23,261
Other creditors	70,505		125,845

	188,616		388,927

F-17

BITEMARK MC LTD

NOTES TO THE FINANCIAL STATEMENTS - continued

FOR THE YEAR ENDED 31 JULY 2009

7. CALLED UP SHARE CAPITAL

Allotted, issued and fully paid:
Number:	Class:	Nominal	2009	2008
		value:	£	£
200	Ordinary	£0.10	200		200

8. RESERVES

	Profit
	and loss			Share
	account			premium		Totals
	£			£		£

At 1 August 2008		16,864			250,000		266,864
Deficit for the year		(62,419	)				(62,419	)

At 31 July 2009		(45,555	)		250,000		204,445

F-18

RTG VENTURES, INC.

PRO FORMA UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

CONTENTS

Introduction to Unaudited Pro Forma Combined Financial		F-20

Pro Forma Consolidated Balance Sheet As of May 31, 2010		F-21

Pro Forma Consolidated Statements of Operations for the Nine Months Ended May 31, 2010		F-22

Pro Forma Consolidated Statements of Operations for the Year Ended August 31, 2009		F-23

Notes to Pro Forma Consolidated Financial Statements		F-24

F-19

RTG VENTURES, INC.

Introduction to Unaudited Pro Forma Combined Financial Statements

The unaudited pro forma combined financial statements are presented to illustrate the estimated effects of RTG Ventures, Inc. (“RTGV”) having entered into a Share Exchange Agreement (the “Exchange Agreement”), on March 31, 2010, with Cloud Channel Limited, which was subsequently re-named as RTG Ventures (Europe) Limited in July 2010 (“RTG Ventures Europe”), a private company registered in England and Wales with company number 07147702, limited by shares, whereby RTGV acquired 100% of the shares of RTG Ventures Europe, 10,000 (Ten Thousand) ordinary shares at £ .0001 per share par value. RTG shall issue and transfer 500,000 from an aggregate amount of 1,273,059 preferred shares which convert into of its common stock, .001 par value per share (the “RTG Common Stock”). The conversion rate is calculated in each individual contract and agreed by RTG. It is acknowledged and approved by both Boards that the majority of these shares are to be consideration for acquisitions and asset purchases to be completed by Cloud Channel. All shares held in escrow will be voted by management.

On March 31, 2010, the same date as the above Exchange Agreement, RTG Ventures Europe entered into share purchase agreements with Stylar Limited, a private limited company, registered in England and Wales, company number 07009951, whereby RTGV acquired 100% of its shares and with Bitemark MC Limited a private limited company, registered in England and Wales, company number 4258735, whereby RTGV acquired 100% of its shares.

Pursuant to the Exchange Agreement, RTGV acquired 100% of the outstanding capital stock of RTG Ventures Europe from its stockholders for consideration consisting of Convertible Preferred Shares of RTGV according to the valuation methodologies outlined in the share purchase agreements of Bitemark MC Limited and Stylar Limited. Although the acquisitions of Bitemark MC Limited and Stylar Limited are probable, RTGV as the sole shareholder of RTG Ventures Europe, has the option to withdraw from the transaction at any time prior to the issuance of the preferred shares. RTG Ventures Europe has been valued 12 months forward using forecasts submitted by them and agreed by RTGV. Based on the results after 12 months, shareholders will be able to convert the preferred shares into common stock using the average share price of the 30 days preceding the conversion. At conversion the valuations will be adjusted up to a maximum of 25% in either direction using performance against forecast. All preferred stock will be held by RTGV's transfer agent for the 12 month period.

The unaudited pro forma consolidated financial information for the year ended August 31, 2009 for RTGV and for the year ended July 31, 2009 for Bitemark MC Limited have been derived from the audited financial statements of the companies. The financial information for the year ended July 31, 2009 for Bitemark MC Limited was converted from British Pounds (“BP”) to US Dollars (“USD”) at the July 31, 2009 year ended average rate of $1.58523. The exchange rate used is based on the rates provided by oanda.com. The unaudited pro forma consolidated financial information as of and for the nine months ended May 31, 2010 have been derived from the unaudited financial statements of RTG Ventures, Inc., Bitemark MC Limited and Stylar Limited. The financial information for the nine months ended May 31, 2010 for Bitemark MC Limited and Stylar Limited were converted from British Pounds (“BP”) to US Dollars (“USD”) at the May 31, 2010 year ended average rate of $1.59514. The exchange rate used is based on the rates provided by oanda.com. The financial information as of the nine months ended May 31, 2010 for Bitemark MC Limited and Stylar Limited was converted from British Pounds (“BP”) to US Dollars (“USD”) at the May 31, 2010 spot rate of $1.44394. The exchange rate used is based on the rates provided by oanda.com.

The unaudited pro forma combined financial information should be read in conjunction with the unaudited and audited financial statements of the companies included elsewhere in this Form 8-K. The pro forma adjustments are based on the best information available and assumptions that management believes are reasonable given the information available. The unaudited pro forma financial information is for illustrative and informational purposes only and is not intended to represent or be indicative of what the Company’s financial position would have been had the transactions contemplated by the Share Exchange Agreement and related transactions occurred on June 30, 2010, August 31, 2009 or July 31, 2009.

F-20

RTG VENTURES, INC.

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEETS

AS OF MAY 31, 2010

	BiteMark MC LTD			Stylar Ltd.			RTG Ventures, Inc.			Pro Forma Adjustments				Pro Forma Combined Total
Assets		(	*)		(	*)
Current Assets
Cash and cash equivalents	$	31,771		$	21,752		$	-		$		-		$	53,523
Debtors		117,348			73,079			-				-			190,427
Stocks		246,481			-			-				-			246,481
Prepayments and accrued income		36,212			-			-				-			36,212
		431,812			94,831			-				-			526,643
Non-Current
Intangible asset		-			-			-			(a)	1,660,306			1,660,306
Tangible assets		13,759			-			-				-			13,759
Total Assets	$	445,571		$	94,831		$	-		$		1,660,306		$	2,200,708

Liabilities
Current Liabilities
Accounts payable	$	266,586		$	47,122		$	1,144,199		$		-		$	1,457,907
Notes Payable		-			-			300,000				-			300,000
Total Liabilities		266,586			47,122			1,444,199				-			1,757,907

Shareholders’ equity (deficit)
Preferred stock, US$0.001 par value, shares
authorized,2,000,000: issued and outstanding – 0 (actual); 500,000 (pro forma)		-			-			-			(a)	500			500
Called up share capital		289			144			-			(a)	(433	)		-
Common stock, US$0.001 par value, shares
authorized, 200,000,000: issued and outstanding 134,718,885		-			-			134,719				-			134,719
Share premium		360,985			-			-			(a)	(360,985	)		-
Profit and loss account		(182,289	)		47,565			-			(a)	134,724			-
Additional paid-in capital		-			-			5,497,050			(a)	1,886,500			7,383,550
Retained earnings		-			-			(7,075,968	)						(7,075,968	)
TOTAL SHAREHOLDERS' EQUITY (DEFICIT)		178,985			47,709			(1,444,199	)			1,660,306			442,801
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)	$	445,571		$	94,831		$	-		$		1,660,306		$	2,200,708

* The financials of Cloud Channel, Ltd. (“RTG Ventures Europe”) are not included as RTG Ventures Europe is essentially a non-operating shell, with no operations and no assets or liabilities.

The accompanying notes are integral parts of the unaudited pro forma consolidated financial statements.

F-21

RTG VENTURES, INC.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE NINE MONTHS ENDED MAY 31, 2010

	BiteMark MC LTD			Stylar Ltd.		RTG Ventures, Inc.				Pro Forma Adjustments	Pro Forma Combined Total
		(*)			(*)
REVENUES	$	1,379,461		$	182,982	$	-		$	-	$	1,657,652

Cost of sales		852,302			62,262		-			-		968,973

Gross profit		527,159			120,720		-			-		688,679

OPERATING EXPENSES
General and administrative		614,539			49,159		223,505	(b)		249,046		1,136,249

OTHER EXPENSES
Interest payable and similar charges		22,675			-		-			-		22,675

Income (loss) before income taxes		(110,055	)		71,561		(223,505	)		-		(511,045	)

Income taxes		-			15,028		-			-		15,028

NET INCOME (LOSS)	$	(110,055	)	$	56,533	$	(223,505	)	$	-	$	(526,073	)

NET LOSS PER SHARE:
Basic and Diluted		n/a			n/a	$	(0.00	)		-	$	(0.00)

WEIGHTED AVERAGE NUMBER OF SHARES:
Basic and Diluted		n/a			n/a		124,212,858	(c)		145,153,846		269,366,704

* The financials of Cloud Channel, Ltd. (“RTG Ventures Europe”) are not included as RTG Ventures Europe is essentially a non-operating shell, with no operations and no assets or liabilities.

The accompanying notes are integral parts of the unaudited pro forma consolidated financial statements.

F-22

RTG VENTURES, INC.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEAR ENDED AUGUST 31, 2010


	Bitemark MC LTD			RTG Ventures, Inc.					Pro Forma
	July 31, 2009			August 31, 2009			Pro Forma Adjustments		Combined Total
		() (*)
REVENUES	$	1,882,158		$	-		$	-		1,882,158

Cost of sales		985,238			-			-		985,238

Gross profit		896,920			-			-		896,920

OPERATING EXPENSES
General and administrative		943,071			495,410		(b)	332,061		1,770,542

OTHER EXPENSES
Interest payable and similar charges		52,798			19,500			-		72,298

NET LOSS	$	(1,915	)	$	(514,910	)	$	332,061	$	(945,919	)

NET LOSS PER SHARE:
Basic and Diluted		n/a		$	(0.00)			-		(0.00)

WEIGHTED AVERAGE NUMBER OF SHARES:
Basic and Diluted		n/a			124,212,858		(c)	145,153,846		269,366,704

* The financials of Cloud Channel, Ltd. (“RTG Ventures Europe”) are not included as RTG Ventures Europe is essentially a non-operating shell, with no operations and no assets or liabilities.

** For pro forma purposes, the year ended July 31, 2009 for Bitemark MC, Ltd., was deemed a similar period to the year ended August 31, 2009 for RTG Ventures, Inc.

The accompanying notes are integral parts of the unaudited pro forma consolidated financial statements.

F-23

FOOTNOTES TO PRO FORMA FINANCIAL STATEMENTS


Description of Pro Forma Adjustments

a - To reflect the acquisition of Bitemark MC Ltd. (“Bitemark”) and Skylar Ltd. (“Skylar”) through the issuance of 500,000 preferred shares. Pursuant to the Exchange Agreement, RTG Ventures, Inc. (“RTGV”) acquired 100% of the outstanding capital stock of RTG Ventures Europe from its stockholders for consideration consisting of Convertible Preferred Shares of RTGV valued according to the valuation methodologies outlined in the subsequent Share Purchase Agreements of Bitemark and Stylar by RTG Ventures Europe. Bitemark, Stylar and RTG Ventures Europe, will collectively be known as RTG Ventures Europe and Subsidiaries. RTG Ventures Europe has been valued 12 months forward using forecasts submitted by them and agreed by RTGV. The minimum valuation for Bitemark is 769,400BP (British Pounds) reduced by 25% or 192,350BP for a valuation of 577,050BP. For Skylar the minimum valuation is 644,334BP. The total minimum is 1,221,384BP. At a currency conversion rate of 1.545 (as of September 3, 2010) that translates into $1,887,000 – US dollars.	Dr		Cr
Assets in excess of cost		1,660,306
APIC/Share premium of Skylar Ltd and Bitemark MC Ltd		360,985
Called up share capital - Skylar Ltd and Bitemark MC Ltd		433
Profit and Loss – Skylar Ltd. and Bitemark MC Ltd				134,724
Preferred shares – Par Value				500
Additional paid in capital – RTG Ventures, Inc.				1,886,500

b - The resultant Intangible Asset from the acquisition of Bitemark and Stylar has been deemed a Non Contractual Customer Relationships that is being amortized over the estimated life of the asset of five years. This preliminary valuation and classification are subject to change pending an appraisal of the acquisitions of Bitemark and Stylar. The accompanying unaudited consolidated statements of operations for the nine months ended May 31, 2010 and the year ended August 31, 2009, reflect the amortization of this intangible asset as if the acquisition had occurred at the inception of each period, and the expense of the intangible asset had been in effect for the entire period. c – To reflect the issuance of 500,000 preferred shares valued at $1,887,000. To reflect the preferred shares as if they were converted into common shares, as of September 3, 2010 at a market price of $0.013 per share, the result would be the issuance of 145,143,846 shares of common stock. Such common stock is presented in the accompanying unaudited consolidated statements of operations for the nine months ended May 31, 2010 and the year ended year ended August 31, 2009, as if issued and outstanding for the entire periods with respect to earnings per share.

F-24

Attached files

Stock widget

Investing forum

Digital Brand Media & Marketing Group, Inc. Reports

Also read