VIPER POWERSPORTS INC - FORM 8-K/A - EX-99.2 - EXHIBIT 99.2 - August 14, 2012

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EXHIBIT 99.2

 

 

 

INTRODUCTION TO UNAUDITED PRO FORMA
FINANCIAL STATEMENTS

 

 

The Unaudited Pro Forma Consolidated Balance Sheet combines the historical consolidated balance sheet of Viper Powersports Inc. (Viper) as of March 31, 2012 and the historical balance sheet of Precision Metal Fab Racing (PMFR) as of March 31, 2012, giving effect to the acquisition as if it had occurred January 1, 2012.  The Unaudited Pro Forma Statement of Operations for year ended December 31, 2011 combines the historical statement of operations of Viper and PMFR for the year ended December 31, 2011 as if the merger had occurred on January 1, 2011.  No pro forma effects have been given to any operational or other synergies that may be realized from the acquisitions.

 

The unaudited pro forma financial information is based on the estimates and assumptions described in the notes to the unaudited pro forma consolidated financial statements.  The unaudited pro forma financial information has been prepared using the purchase method of accounting in which the total cost of the PMFR acquisition are allocated to the tangible and intangible assets acquired based on their estimated fair values at the date of the acquisition.  This allocation has been done on a preliminary basis and is subject to change pending final determination of fair values for the acquired assets and assumed liabilities and a final analysis of the total purchase price paid, including direct costs of the acquisition. The adjustments included in the unaudited pro forma consolidated financial information represent the preliminary determination of such adjustments based upon currently available information.  Accordingly, the actual fair value of the assets acquired and the related adjustments may differ from those reflected in this filing.  Viper expects to finalize the purchase price allocations within one year of the date of the PMFR acquisition.

 

The unaudited pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that might have been achieved had the transaction occurred as of an earlier date, and they are not necessarily indicative of future operating results or financial position.  These pro forma amounts do not, therefore, project Viper’s financial position or results of operations for any future date or period.  The accompanying unaudited pro forma financial information should be read in conjunction with the historical financial statements and the related notes thereto of Viper,  which are included in its Annual Report on Form 10-K, as well as other financial information included elsewhere in this filing.

 

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. VIPER POWERSPORTS INC.

UNAUDITED PRO FORMA BALANCE SHEET

MARCH 31, 2012

 

 

   Viper
Powersports
Inc.		   Precision
Metal Fab
Racing		   Pro Forma
Adjustments		     Viper
Powersports Inc.
Pro Forma		 
    (Historical)    (Historical)              
ASSETS                       
Current Assets:                       
Cash and cash equivalents  $9,281   $95,840   $1,484,160   A,B  $1,589,281 
Accounts receivable   6,553    7,610    (7,610)  B   6,553 
Inventory and supplies   476,709    149,380    65,620   B   691,709 
Prepaid and other current assets   74,043    0    0       74,043 
Total current assets   566,586    252,830    1,542,170       2,361,586 
Property and Equipment, net   483,294    44,435    255,565   B   783,294 
Long-Term Assets:                       
Intangible assets   0    0    85,000   B   85,000 
Other   13,400    0    2,617,415   A   2,630,815 
Total long-term assets   13,400    0    2,702,415       2,715,815 
Total Assets  $1,063,280   $297,265   $4,500,150      $5,860,695 
                        
liabilities and Stockholders’ equity (Deficit)                       
Current Liabilities:                       
Accounts payable  $209,744   $2,654   $(2,654)  B  $209,744 
Accrued liabilities   167,946    121    (121)  B   167,946 
Notes payable, short-term net of discount   225,000    0    (200,000)  A   25,000 
Notes payable – related party, net of discount   454,933    0    (80,000)  A   374,933 
Current portion of long-term liabilities   100,000    0    0       100,000 
Total current liabilities   1,157,623    2,775    (282,775)      877,623 
Long-Term Liabilities:                       
Note payable   170,000    0    2,500,000   A   2,670,000 
Total Liabilities   1,327,623    2,775    2,217,225       3,547,623 
                        
Stockholders’ quity(deficit)                       
Preferred stock, $0.001 par value, 20,000,000 authorized,366,668 issued and outstanding   367    0    0       367 
Common stock, $0.001 par value, 100,000,000 shares authorized 33,368,174 shares issued and outstanding   33,683    0    9,694   A   43,377 
Additional paid-in capital   41,261,113    0    2,607,721   A   43,868,834 
Accumulated earnings(deficit)   (41,559,506)   294,490    (334,490)  B   (41,599,506)
Total Stockholders’ Equity(deficit)   (264,343)   294,490    2,282,925       2,313,072 
                        
Total Liabilities and Stockholders’ Equity  $1,063,280   $297,265   $4,500,150      $5,860,695 

 

See accompanying notes to these unaudited pro forma financial statements.

 

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VIPER POWERSPORTS INC

 

UNAUDITED PRO FORMA STATEMENT OF OPERATIONS

FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2011

 

 

   Viper
Powersports
Inc		   Precision
Metal Fab
Racing		   Pro Forma Adjustments    Viper
Powersports
Inc.
Pro forma		 
    (Historical)    (Historical)             
                       
Revenue  $165,209   $667,098   $0     $832,307 
Cost of Revenue   165,538    569,580    0      735,118 
Gross Profit   (329)   97,518    0      97,189 
Operating Expense:                      
Research and development costs    69,585    0    0      69,585 
Selling, general and administrative   3,136,316    72,030    (40,000)  B  3,248,346 
Loss on impairment and charge-off of assets and inventory   75,802    0    0      75,802 
Income (Loss) from Operations   (3,282,032)   25,488    (40,000)     (3,296,544)
                       
Other Income (Expense):                      
Interest expense   (59,444)   0    0      (59,444)
Financing costs related to debt discount   (83,304)   0    0      (83,304)
Accretion of debt discount   (227,419)   0    0      (227,419)
Beneficial conversion features   (183,566)   0    0      (183,566)
Other income   2,905    0    0      2,905 
Total other income (expense)   550,828)   0    0      (1,108)
Net Income (Loss)   (3,832,860)   25,488    (40,000)  B  (3,847,372)
Deemed dividend of preferred stock   (338,508)   0    0      (338,508)
Net Income (Loss) attributed to common sharesholders  $(4,171,368)  $25,488   $(40,000)    $(4,185,880)
Net Income (Loss) per Common Share from Continuing Operations:                      
Basic and diluted  $(0.19)  $0.00   $0.00     $(0.12)
Diluted  $(0.19)  $0.00   $0.00     $(0.12)
Weighted Average Common Shares Outstanding:                      
Basic and diluted   20,493,779    –    9,694,128      30,187,907 

 

See accompanying notes to these unaudited pro forma financial statements.

 

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UNAUDITED PRO FORMA STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2012

 

 

  Viper
Powersports
Inc		   Precision
Metal Fab Racing		   Pro Forma Adjustments     Viper
Powersports
Inc.
Pro forma		 
   (Historical)    (Historical)              
                       
Revenue $74,172   $195,978   $0      $270,150 
Cost of Revenue  83,412    138,650    0       222,062 
Gross Profit  (9,240)   57,328    0       48,088 
Operating Expense:                      
Research and development costs  30,247    0    0       30,247 
Selling, general and administrative  605,875    14,613    40,000   B   660,488 
Income (Loss) from Operations  (645,362)   42,715    (40,000)      (642,647)
Other Income (Expense):                      
Interest expense  (101,426)   0    0       (101,426)
Accretion of debt discount  (80,488)                         0    0       (80,488)
Other income  30,356                          0    0       30,356 
Total other income (expense)  (151,558)                         0    0       (151,558)
Net Income (Loss) attributed to common sharesholders $(796,920)  $42,715   $(40,000)     $(794,205)
Net Income (Loss) per Common Share from Continuing Operations:                      
Basic and diluted $(0.03)  $0.00   $(0.00)     $(0.02)
Diluted $(0.03)  $0.00   $(0.00)     $(0.02)
Weighted Average Common Shares Outstanding:                      
Basic and diluted  30,765,090    –    9,694,128       40,459,218 

 

See accompanying notes to these unaudited pro forma financial statements.

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1.Basis of Presentation:

 

On April 24, Viper Powersports Inc (VIPER) entered into definitive purchase and sale agreement to acquire assets and some of the business lines of Precision Metal Fab Racing (PMFR). The PMFR purchase price is approximately $640,000, to be paid with cash. The effective date is the same as the purchase date with no final purchase price adjustments to be calculated.

 

The Unaudited Pro Forma Balance Sheet combines the historical consolidated balance sheets of Viper and PMFR as of March 31, 2012, giving effect to the acquisition as if it had occurred January 1, 2011.  The Unaudited Pro Forma Statement of Operations for the year ended December 31, 2011 combines the historical consolidated statements of operations of Viper and PMFR for the year ended December 31, 2011, as if the merger had occurred on January 1, 2011.  No pro forma effects have been given to any operational or other synergies that may be realized from the acquisitions.

 

The unaudited pro forma financial information is based on the estimates and assumptions described in the notes to the unaudited pro forma financial statements.  The unaudited pro forma financial information has been prepared using the purchase method of accounting in which the total cost of the PMR acquisition are allocated to the tangible and intangible assets acquired based on their estimated fair values at the date of the acquisition.  This allocation has been done on a preliminary basis and is subject to change pending final determination of fair values for the acquired assets and a final analysis of the total purchase price paid, including direct costs of the acquisition. The adjustments included in the unaudited pro forma financial information represent the preliminary determination of such adjustments based upon currently available information.  Accordingly, the actual fair value of the assets acquired and the related adjustments may differ from those reflected in this statement.  Viper expects to finalize the purchase price allocations within one year of the date of the PMFR acquisition.

 

2.Pro Forma Adjustments to the Balance Sheet and Statement of Operations:

 

ATo account for new Loan and Security Agreement; $2,500,000 initial loan advance on the agreement. The proceeds of the loan are to be used to pay existing debt of $280,000, purchase PMFR and other future operating costs. Included in the agreement is the issuance of 9,694,128 unregistered shares as a fee for the transaction (at $0.27 per share), of which the value of $2,617,415 is reflected as deferred financing costs.

 

BTo record the assets purchased for cash, for the acquisition of PMFR:

 

Purchase price  $640,000 
      
Less fair value of assets acquired:     
Inventories   215,000 
Property and equipment   300,000 
Identifiable intangible (customer list)   85,000 
Finder’s fee expense   40,000 
Total  $640,000 

 

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Total change in cash is reflected as such;     
Borrowing under new Loan agreement:  $2,500,000 
Payment for acquisition of PMFR:   (640,000)
Payoff of existing debt   (280,000)
Cash not acquired from PMFR:   (95,840)
Net increase in cash  $1,484,160 

 

 

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