Attached files
file | filename |
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8-K/A - 8-K/A - American Standard Energy Corp. | v211466_8ka.htm |
EX-99.3 - EX-99.3 - American Standard Energy Corp. | v211466_ex99-3.htm |
EX-99.1 - EX-99.1 - American Standard Energy Corp. | v211466_ex99-1.htm |
Exhibit 99.2
American
Standard Energy Corp.
Unaudited Pro Forma Combined Financial
Statements
On December 1, 2010, American
Standard Energy Corp. (“ASEC” or the “Company”), formerly known as Uncle
Al’s Famous Hot Dogs & Grille, Inc., entered into a
Purchase of Partial Leaseholds Agreement (the “Agreement”) with Geronimo Holding
Corporation (“Geronimo”). Pursuant to the Agreement, the Company purchased
certain non-operated mineral rights leaseholds held on properties located in
North Dakota (the “Properties”). In consideration for the mineral rights the
Company paid Geronimo $500,000 cash and issued 1,200,000 shares of the Company’s
common stock. The acquisition of the Properties from Geronimo was a
transaction under common control and accordingly, the Company recorded the
assets and liabilities acquired from Geronimo at their historical carrying
values and no goodwill or other intangible assets were recognized. The
accompanying unaudited pro forma combined financial statements have been
prepared to assist investors in their analysis of the financial effects of the
acquisition of the Properties by ASEC on December 1, 2010.
This
information is based on the historical financial statements of the Properties
and ASEC and should be read in conjunction with the Company’s
(a) historical audited financial statements and related notes filed in
ASEC’s Form 8-K for the year ended December 31, 2009, filed with the United
States Securities and Exchange Commission (“SEC”) on October 4, 2010, and (b)
historical unaudited financial statements of ASEC as of September 30, 2010, and
for the three and nine months ended September 30, 2010 and 2009, and related
notes in ASEC’s Current Report on Form 8-K filed with the SEC on
November 15, 2010, and the Properties’ historical financial statements and
related notes which are included in this filing.
ASEC and
Geronimo are entities under common control. As a result, the
acquisition of the Properties by ASEC from Geronimo will not be accounted for as
a purchase, but as a reorganization of entities under common
control. Accordingly, the accompanying unaudited pro forma balance
sheet of ASEC as of September 30, 2010, and the unaudited pro forma
statements of operations of ASEC for the nine months ended September 30,
2010 and the year ended December 31, 2009, have been prepared to give
effect to the Properties acquisition as if the Properties had been historically
combined with ASEC for all periods presented.
The
unaudited pro forma combined financial statements included herein are not
necessarily indicative of the results that might have occurred had the
transaction taken place on September 30, 2010 or January 1, 2009 and are
not intended to be a projection of future results. In addition, future results
may vary significantly from the results reflected in the accompanying unaudited
pro forma combined financial statements because of normal production declines,
changes in commodity prices, future acquisitions and divestitures, future
development and exploration activities and other factors.
1
Unaudited
Pro Forma Combined Balance Sheet
September 30,
2010
ASEC
Historical
|
The
Properties
Historical
|
Pro
Forma
Adjustments
|
Pro
Forma
Combined
|
|||||||||||||
(Notes
A
and
B)
|
||||||||||||||||
Assets
|
||||||||||||||||
Current
assets:
|
||||||||||||||||
Cash
and cash equivalents
|
$ | 159,172 | $ | - | $ | (159,172 | ) | $ | - | |||||||
Oil
and gas sales receivable
|
155,310 | 182,258 | - | 337,568 | ||||||||||||
Total
current assets
|
314,482 | 182,258 | (159,172 | ) | 337,568 | |||||||||||
Oil
and natural gas properties, at cost,successful efforts
method
|
||||||||||||||||
Proved
oil and natural gas properties
|
3,513,772 | 1,760,121 | - | 5,273,893 | ||||||||||||
Drilling
in progress
|
3,009,566 | 542,739 | - | 3,552,305 | ||||||||||||
Unproved
properties
|
4,306,197 | - | - | 4,306,197 | ||||||||||||
Accumulated
depreciation, depletion and amortization
|
(1,205,550 | ) | (617,904 | ) | - | (1,823,454 | ) | |||||||||
Total
oil and natural gas properties, net
|
9,623,985 | 1,684,956 | - | 11,308,941 | ||||||||||||
Total
assets
|
$ | 9,938,467 | $ | 1,867,214 | $ | (159,172 | ) | $ | 11,646,509 | |||||||
Liabilities
and Stockholders’ Equity
|
||||||||||||||||
Current
liabilities:
|
||||||||||||||||
Accounts
payable
|
$ | 373,306 | $ | 9,870 | $ | - | $ | 383,176 | ||||||||
Accounts
payable – related parties
|
761,795 | - | 340,828 | 1,102,623 | ||||||||||||
Accrued
capital expenditures
|
187,466 | 335,156 | - | 522,622 | ||||||||||||
Accrued
capital expenditures–related party
|
343,665 | - | - | 343,665 | ||||||||||||
Total
current liabilities
|
1,666,232 | 345,026 | 340,828 | 2,352,086 | ||||||||||||
Asset
retirement obligations
|
65,207 | 9,061 | - | 74,268 | ||||||||||||
Total
liabilities
|
1,731,439 | 354,087 | 340,828 | 2,426,354 | ||||||||||||
Stockholders’
equity:
|
||||||||||||||||
Common
stock, $0.001 par value
|
21,560 | - | 1,200 | 22,760 | ||||||||||||
Additional
paid-in capital
|
13,241,949 | - | 1,246,503 | 14,488,452 | ||||||||||||
Geronimo
net investment
|
- | 1,747,703 | (1,747,703 | ) | - | |||||||||||
Deficit
|
(5,056,481 | ) | (234,576 | ) | - | (5,291,057 | ) | |||||||||
Total
stockholders’ equity
|
8,207,028 | 1,513,127 | (500,000 | ) | 9,220,155 | |||||||||||
Total
liabilities and stockholders’ equity
|
$ | 9,938,467 | $ | 1,867,214 | $ | (159,172 | ) | $ | 11,646,509 |
The
accompanying notes are an integral part of these unaudited pro forma combined
financial statements.
2
American
Standard Energy Corp.
Unaudited
Pro Forma Combined Statement of Operations
Nine
Months Ended September 30, 2010
(Note
A)
ASEC
Historical
|
The
Properties
Historical
|
Pro
Forma
Combined
|
||||||||||
Oil
and natural gas revenues
|
$ | 481,301 | $ | 444,977 | $ | 926,278 | ||||||
Operating
costs and expenses:
|
||||||||||||
Oil
and natural gas production
|
324,350 | 86,924 | 411,274 | |||||||||
Exploration
expenses
|
247,463 | - | 247,463 | |||||||||
Impairment
of oil and gas properties
|
- | 46,553 | 46,553 | |||||||||
Depreciation,
depletion and amortization
|
143,046 | 190,800 | 333,846 | |||||||||
Accretion
of asset retirement obligations
|
4,372 | 188 | 4,560 | |||||||||
General
and administrative
|
4,228,010 | 49,060 | 4,277,070 | |||||||||
Total
operating costs and expenses
|
4,947,241 | 373,525 | 5,320,766 | |||||||||
(Loss)
income from operations before income taxes
|
(4,465,940 | ) | 71,452 | (4,394,488 | ) | |||||||
Income
taxes
|
- | - | - | |||||||||
Net
(loss) income
|
$ | (4,465,940 | ) | $ | 71,452 | $ | (4,394,488 | ) | ||||
Basic
and diluted loss per share:
|
||||||||||||
Net
loss per share
|
$ | (.21 | ) | $ | (.19 | ) | ||||||
Weighted
average shares used in basic and diluted loss per share
|
21,560,006 | 1,200,000 | 22,760,006 |
The
accompanying notes are an integral part of these unaudited pro forma combined
financial statements.
3
Unaudited
Pro Forma Combined Statement of Operations
Year
ended December 31, 2009
(Note
A)
ASEC
Historical
|
The
Properties
Historical
|
Pro
Forma
Combined
|
||||||||||
Oil
and natural gas revenues
|
$ | 651,384 | $ | 120,662 | $ | 772,046 | ||||||
Operating
costs and expenses:
|
||||||||||||
Oil
and natural gas production
|
333,499 | 24,371 | 357,870 | |||||||||
Exploration
expenses
|
240,382 | - | 240,382 | |||||||||
Impairment
of oil and natural gas properties
|
- | 253,258 | 253,258 | |||||||||
Depreciation,
depletion and amortization
|
234,710 | 127,293 | 362,003 | |||||||||
Accretion
of asset retirement obligations
|
3,027 | - | 3,027 | |||||||||
General
and administrative
|
105,061 | 21,768 | 126,829 | |||||||||
Total
operating costs and expenses
|
916,679 | 426,690 | 1,343,369 | |||||||||
Loss
from operations before income taxes
|
(265,295 | ) | (306,028 | ) | (571,323 | ) | ||||||
Income
taxes
|
- | - | - | |||||||||
Net
loss
|
$ | (265,295 | ) | $ | (306,028 | ) | $ | (571,323 | ) | |||
Basic
and diluted loss per share:
|
||||||||||||
Net
loss per share
|
$ | (.01 | ) | $ | (.03 | ) | ||||||
Weighted
average shares used in basic and dilutedloss per share
|
21,560,006 | 1,200,000 | 22,760,006 | |||||||||
Pro
forma for change for tax status (unaudited):
|
||||||||||||
Loss
before income taxes
|
$ | (265,295 | ) | $ | (306,028 | ) | $ | (571,323 | ) | |||
Pro
forma income taxes
|
92,000 | - | 92,000 | |||||||||
Pro
forma net loss
|
$ | (173,295 | ) | $ | (306,028 | ) | $ | (479,323 | ) |
The
accompanying notes are an integral part of these unaudited pro forma combined
financial statements.
4
Notes
to Unaudited Pro Forma Combined Financial Statements
September
30, 2010 and December 31, 2009
Note
A. Basis of Presentation
ASEC and
Geronimo are entities under common control. As a result, the
acquisition of the Properties by ASEC from Geronimo will not be accounted for as
a purchase, but as a reorganization of entities under common
control. Accordingly, the accompanying unaudited pro forma combined
balance sheet of ASEC as of September 30, 2010, and the unaudited pro forma
combined statements of operations of ASEC for the nine months ended
September 30, 2010 and the year ended December 31, 2009, have been
prepared to give effect to the acquisition of the Properties as if the
Properties had been historically combined with ASEC for all periods
presented.
Following
are descriptions of the individual columns included in the accompanying
unaudited pro forma combined financial statements and notes to unaudited pro
forma combined financial statements:
ASEC
Historical
-
|
Represents
the historical consolidated balance sheet of ASEC as of September 30,
2010, and the historical consolidated results of operations of ASEC for
the nine months ended September 30, 2010 and the year ended
December 31, 2009. ASEC applies the successful efforts method for
accounting for its oil and natural gas properties.
The
number of shares outstanding has been adjusted to reflect the effective 2
for 1 stock split which occurred on October 1, 2010 as part of the stock
exchange agreement between American Standard Energy Corp. and Uncle Al’s
Famous Hot Dogs & Grille, Inc.
|
|
The
Properties
Historical
-
|
Represents
the historical statement of assets and liabilities of the Properties as of
September 30, 2010, and the historical statements of revenues and
expenses of the Properties for the nine months ended September 30, 2010
and the year ended December 31, 2009. These financial statements
utilize the successful efforts method of accounting for oil and natural
gas
properties.
|
Note
B. Pro Forma Adjustments
To record
the acquisition of the Properties as a reorganization of entities under common
control and per the terms of the Purchase of Partial Leaseholds Agreement, under
which ASEC paid $500,000 cash and issued 1,200,000 shares of the Company’s
common stock and recorded the financial position of the Properties at their net
historical cost basis. The acquisition of the Properties was funded
partially with cash on hand and partially with the $1,200,000 of cash raised on
the October 20, 2010 private placement offering. The 1,200,000 shares
of common stock issued to acquire the Properties was recorded at its fair market
value and the difference between the cash and fair market value of the stock and
the historical costs of the net assets acquired was recorded as a deemed
dividend to additional paid-in capital.
5
Notes
to Unaudited Pro Forma Combined Financial Statements
September
30, 2010 and December 31, 2009
Note
C. Supplementary Pro Forma Information for Oil and Natural Gas Producing
Activities
The
following tables present supplementary pro forma information for oil and natural
gas producing activities.
Pro
Forma Combined Reserve Quantity Information
The
following table provides a rollfoward of total net proved reserves for the year
ended December 31, 2009, as well as disclosure of total proved developed and
undeveloped reserves of ASEC and the Properties on a pro forma combined
basis:
ASEC
Historical
|
The
Properties Historical
|
Pro
Forma Combined
|
||||||||||||||||||||||||||||||||||
Oil
|
Natural
Gas
|
Total
|
Oil
|
Natural
Gas
|
Total
|
Oil
|
Natural
Gas
|
Total
|
||||||||||||||||||||||||||||
(Bbls)
|
(Mcf)
|
(Boe)
|
(Bbls)
|
(Mcf)
|
(Boe)
|
(Bbls)
|
(Mcf)
|
(Boe)
|
||||||||||||||||||||||||||||
Total
Proved Reserves:
|
||||||||||||||||||||||||||||||||||||
Balance,
January 1, 2009
|
110,879 | 388,595 | 175,645 | - | - | - | 110,879 | 388,595 | 175,645 | |||||||||||||||||||||||||||
Discoveries
and extensions
|
415,547 | 1,363,810 | 642,849 | 12,166 | 4,016 | 12,835 | 427,713 | 1,367,826 | 655,684 | |||||||||||||||||||||||||||
Production
|
(7,905 | ) | (39,192 | ) | (14,437 | ) | (1,871 | ) | (485 | ) | (1,951 | ) | (9,776 | ) | (39,677 | ) | (16,388 | ) | ||||||||||||||||||
Balance,
December 31, 2009
|
518,521 | 1,713,213 | 804,057 | 10,295 | 3,531 | 10,884 | 528,816 | 1,716,744 | 814,941 | |||||||||||||||||||||||||||
Proved
Developed Reserves:
|
||||||||||||||||||||||||||||||||||||
January 1,
2009
|
46,249 | 194,704 | 78,700 | - | - | - | 46,249 | 194,704 | 78,700 | |||||||||||||||||||||||||||
December 31,
2009
|
57,975 | 331,576 | 113,238 | 10,295 | 3,531 | 10,884 | 68,270 | 335,107 | 124,122 | |||||||||||||||||||||||||||
Proved
Undeveloped Reserves:
|
||||||||||||||||||||||||||||||||||||
January 1,
2009
|
64,630 | 193,891 | 96,945 | - | - | - | 64,630 | 193,891 | 96,945 | |||||||||||||||||||||||||||
December 31,
2009
|
460,546 | 1,381,637 | 690,819 | - | - | - | 460,546 | 1,381,637 | 690,819 |
6
Notes
to Unaudited Pro Forma Combined Financial Statements
September
30, 2010 and December 31, 2009
Pro Forma Combined Standardized
Measure of Discounted Future Net Cash Flows
The
following table sets forth the standardized measure of discounted future net
cash flows relating to the proved oil and natural gas reserves of ASEC and the
Properties on a pro forma combined basis as of December 31,
2009:
ASEC
Historical
|
The
Properties
Historical
|
Pro
Forma
Combined
|
||||||||||
Future
production revenues
|
$ | 39,597,762 | $ | 538,176 | $ | 40,135,938 | ||||||
Future
production costs
|
(18,576,078 | ) | (134,405 | ) | (18,710,483 | ) | ||||||
Future
development and abandonment costs
|
(11,890,000 | ) | - | (11,890,000 | ) | |||||||
Future
income tax expense
|
(3,048,345 | ) | (33,605 | ) | (3,081,950 | ) | ||||||
10%
annual discount factor
|
(4,238,964 | ) | (148,021 | ) | (4,386,985 | ) | ||||||
Standardized
measure of discounted future cash flows
|
$ | 1,844,375 | $ | 222,145 | $ | 2,066,520 |
Pro
Forma Combined Changes in the Standardized Measure of Discounted Future Net Cash
Flows
The
following table sets forth the changes in the standardized measure of discounted
future net cash flows relating to the proved oil and natural gas reserves of
ASEC and the Properties on a pro forma combined basis for the year ended
December 31, 2009:
ASEC
Historical
|
The
Properties
Historical
|
Pro
Forma
Combined
|
||||||||||
Oil
and gas producing activities:
|
||||||||||||
Extensions
and discoveries
|
$ | - | $ | 352,041 | $ | 352,041 | ||||||
Net
changes in prices and production costs
|
(4,888,092 | ) | - | (4,888,092 | ) | |||||||
Oil
and gas sales, net of production costs
|
(317,885 | ) | (96,291 | ) | (414,176 | ) | ||||||
Changes
in future development costs
|
(8,889,048 | ) | - | (8,889,048 | ) | |||||||
Previously
projected development costs incurred
|
1,546 | - | 1,546 | |||||||||
Revisions
of previous quantity estimates
|
15,803,564 | - | 15,803,564 | |||||||||
Accretion
of discount
|
71,180 | - | 71,180 | |||||||||
Changes
in production rates, timing and other
|
295,931 | - | 295,931 | |||||||||
Net
change in present value of future income taxes
|
(944,622 | ) | (33,605 | ) | (978,227 | ) | ||||||
Net increase
|
1,132,574 | 222,145 | 1,354,719 | |||||||||
Balance,
beginning of year
|
711,801 | - | 711,801 | |||||||||
Balance,
end of year
|
$ | 1,844,375 | $ | 222,145 | $ | 2,066,520 |
7