Attached files
| file | filename |
|---|---|
| 8-K/A - 8-K/A - root9B Holdings, Inc. | pag100609_8ka.htm |
| EX-99.1 - PSI FINANCIAL STATEMENTS - root9B Holdings, Inc. | psiaudit.htm |
EXHIBIT
99.2
|
PREMIER
ALLIANCE GROUP, INC.
INTRODUCTION
TO PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS
AS
OF
SEPTEMBER
30 2009, AND THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND THE YEAR ENDED
DECEMBER 31, 2008
The
following unaudited pro-forma consolidated balance sheet, pro-forma income
statements and the explanatory notes give effect to the asset purchase of
PeopleSource Inc. by Premier Alliance Group, Inc.
The
pro-forma consolidated balance sheet, pro-forma consolidated income
statements and explanatory notes are based on the estimates and
assumptions set forth in the explanatory notes. These pro-forma
consolidated balance sheet and pro-forma consolidated income statements
have been prepared utilizing the historical financial statements of
Premier Alliance Group, Inc., and. PeopleSource Inc. and should be read in
conjunction with the historical financial statements and notes thereto
included elsewhere in this filing.
The
pro-forma consolidated income statements have been prepared as if the
asset purchase had been consummated on January 1, 2008 under the purchase
method of
accounting and carried through to September 30, 2009. The pro-forma
consolidated balance sheet has been prepared under the acquisition method
of accounting as if the acquisition was consummated on September 30,
2009. The acquisition accounting is dependent on certain valuations
and other studies that may not have progressed to a stage where there is
sufficient evidence for a definitive measurement. Accordingly, the
pro forma adjustments are preliminary and have been made solely for the
purpose of providing pro forma financial information.
Differences between these preliminary estimates, including the estimates
of the purchase consideration and the allocation of the purchase price may
occur and these differences may be material.
This
pro-forma consolidated financial data is provided for comparative purposes
only, and does not purport to be indicative of the actual financial
position or results of operations had the acquisition occurred at the
beginning of the periods presented, nor are they necessarily indicative of
the results of future operations.
PREMIER ALLIANCE GROUP, INC. |
||||||||||||||||
|
PRO FORMA BALANCE SHEET
|
||||||||||||||||
|
September 30, 2009
|
||||||||||||||||
|
ASSETS
|
Historical | |||||||||||||||
|
unaudited
Premier Alliance
|
unaudited
PeopleSource
|
adjustments
|
unaudited
combined pro forma
|
|||||||||||||
|
CURRENT
ASSETS:
|
||||||||||||||||
|
Cash
|
$ | - | - | 0 | ||||||||||||
|
Accounts
receivable
|
1,004,474 | 278,846 | (278,846 | ) | 1,004,474 | |||||||||||
|
Marketable
securities
|
30,328 | 0 | 0 | 30,328 | ||||||||||||
|
Deferred
tax asset - current portion
|
24,000 | 0 | 0 | 24,000 | ||||||||||||
|
Prepaid
expenses and
|
||||||||||||||||
|
other
current assets
|
46,466 | 8,170 | (8,170 | ) | 46,466 | |||||||||||
|
Total
current assets
|
1,105,268 | 287,016 | (287,016 | ) | 1,105,268 | |||||||||||
|
PROPERTY AND EQUIPMENT -
at
|
||||||||||||||||
|
cost
less accumulated depreciation
|
7,995 | 3,440 | 1,560 | 12,995 | ||||||||||||
|
OTHER
ASSETS:
|
||||||||||||||||
|
Goodwill(net)
|
1,051,820 | 0 | 398,758 | 1,450,578 | ||||||||||||
|
Intangibles(net)
|
84,000 | 84,000 | ||||||||||||||
|
Investment
in equity-method investee
|
200,385 | 0 | 0 | 200,385 | ||||||||||||
|
Investment
in cost-method investee
|
100,000 | 0 | 0 | 100,000 | ||||||||||||
|
Cash
surrender value of officers'
|
||||||||||||||||
|
life
insurance
|
359,748 | 0 | 0 | 359,748 | ||||||||||||
|
Deferred
tax asset
|
46,000 | 0 | 0 | 46,000 | ||||||||||||
|
Deposits
and other assets
|
4,000 | 3,138 | (3,138 | ) | 4,000 | |||||||||||
| 1,761,953 | 3,138 | 479,620 | 2,244,711 | |||||||||||||
| $ | 2,875,216 | $ | 293,594 | $ | 194,164 | $ | 3,362,974 | |||||||||
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
||||||||||||||||
|
CURRENT
LIABILITIES:
|
||||||||||||||||
|
Note
payable
|
$ | 179,000 | $ | - | 140,000 | 319,000 | ||||||||||
|
Accounts
payable
|
221,676 | 98,051 | (98,051 | ) | 221,676 | |||||||||||
|
Accrued
expenses
|
358,180 | 49,906 | (49,906 | ) | 358,180 | |||||||||||
|
Income
taxes payable
|
4,613 | - | 0 | 4,613 | ||||||||||||
|
Total
current liabilities
|
763,469 | 147,957 | (7,957 | ) | 903,469 | |||||||||||
|
LONG
TERM LIABILITIES:
|
- | - | 247,758 | 247,758 | ||||||||||||
|
STOCKHOLDERS'
EQUITY:
|
||||||||||||||||
|
Class A
convertible preferred stock,
|
||||||||||||||||
|
liquidation
preference of $0.05 per share,
|
||||||||||||||||
|
$.001
par value, 5,000,000 shares authorized,
|
||||||||||||||||
|
560,746
shares issued and outstanding
|
561 | 561 | ||||||||||||||
|
Common
stock, $.001 par value, 45,000,000
|
||||||||||||||||
|
shares
authorized, 5,917,945 shares
|
||||||||||||||||
|
issued
and outstanding
|
5,918 | 1,000 | (846 | ) | 6,072 | |||||||||||
|
Additional
paid-in capital
|
3,314,789 | 0 | 99,846 | 3,414,635 | ||||||||||||
|
Accumulated
deficit
|
(1,209,521 | ) | 144,637 | (144,637 | ) | (1,209,521 | ) | |||||||||
| 2,111,747 | 145,637 | (45,637 | ) | 2,211,747 | ||||||||||||
| $ | 2,875,216 | $ | 293,594 | $ | 194,164 | $ | 3,362,974 | |||||||||
|
PREMIER ALLIANCE GROUP,
INC.
|
|||||||||||||
|
PRO FORMA STATEMENT OF
OPERATIONS
|
|||||||||||||
|
FOR THE PERIOD ENDED SEPTEMBER 30,
2009
|
|||||||||||||
|
Historical
|
|||||||||||||
| unaudited | unaudited | unaudited | |||||||||||
|
Premier
Alliance
|
PeopleSource
|
adjustments
|
Combined
Pro forma
|
||||||||||
|
NET
REVENUES
|
$ | 6,620,738 | $ | 1,627,166 | $ | 8,247,904 | |||||||
|
OPERATING
EXPENSES:
|
|||||||||||||
|
Cost
of revenues
|
4,850,285 | 1,271,037 | 6,121,322 | ||||||||||
|
Selling,
general and administrative
|
1,550,749 | 311,996 | 1,862,745 | ||||||||||
|
Depreciation
and amortization
|
4,232 | 1,633 | 11,717 | 17,582 | |||||||||
| 6,405,266 | 1,584,666 | 11,717 | 8,001,649 | ||||||||||
|
INCOME
FROM OPERATIONS
|
215,472 | 42,500 | (11,717 | ) | 246,255 | ||||||||
|
OTHER
INCOME (EXPENSE):
|
|||||||||||||
|
Interest
expense, net
|
(7,232 | ) | (533 | ) | (5,619 | ) | (13,384 | ) | |||||
|
Goodwill
impairment loss
|
- | - | - | ||||||||||
|
Gain
(Loss) on marketable securities
|
11,932 | - | 11,932 | ||||||||||
|
Officers'
life insurance income
|
65,990 | - | 65,990 | ||||||||||
|
Equity
in net loss of equity-method investee
|
346 | - | 346 | ||||||||||
|
Other
income
|
2,400 | - | 2,400 | ||||||||||
| 73,436 | (533 | ) | (5,619 | ) | 67,284 | ||||||||
|
NET
INCOME BEFORE INCOME TAXES
|
288,908 | 41,967 | (17,336 | ) | 313,539 | ||||||||
| - | |||||||||||||
|
INCOME
TAX BENEFIT (EXPENSE)
|
(87,702 | ) | - | (9,606 | ) | (97,308 | ) | ||||||
|
NET
INCOME (LOSS)
|
201,206 | 41,967 | (26,942 | ) | 216,231 | ||||||||
|
PREFERRED
STOCK DIVIDEND
|
- | - | - | ||||||||||
|
NET
INCOME AVAILABLE FOR
|
|||||||||||||
|
COMMON
STOCKHOLDERS
|
$ | 201,206 | $ | 41,967 | (26,942 | ) | $ | 216,231 | |||||
|
Net
Income (loss) per share
|
|||||||||||||
|
basic
|
$ | 0.03 | $ | 0.04 | |||||||||
|
diluted
|
$ | 0.03 | $ | 0.03 | |||||||||
|
Weighted
average number of shares,
|
|||||||||||||
|
basic
|
5,897,836 | 153,846 | 6,051,682 | ||||||||||
|
diluted
|
6,458,582 | 153,846 | 6,612,428 | ||||||||||
|
PREMIER ALLIANCE GROUP,
INC.
|
|||||||||||||
|
PRO FORMA STATEMENT OF
OPERATIONS
|
|||||||||||||
|
FOR THE YEAR ENDED DECEMBER 31,
2008
|
|||||||||||||
|
Historical
|
|||||||||||||
|
Premier
Alliance
|
PeopleSource
|
adjustments
|
Combined
Pro forma
|
||||||||||
|
NET
REVENUES
|
$ | 9,038,197 | $ | 3,272,323 | $ | 12,310,520 | |||||||
|
OPERATING
EXPENSES:
|
|||||||||||||
|
Cost
of revenues
|
6,501,996 | 2,719,742 | 9,221,738 | ||||||||||
|
Selling,
general and administrative
|
2,299,790 | 480,580 | 2,780,370 | ||||||||||
|
Depreciation
and amortization
|
12,749 | 2,945 | 14,855 | 30,549 | |||||||||
| 8,814,535 | 3,203,267 | 14,855 | 12,032,657 | ||||||||||
|
INCOME
FROM OPERATIONS
|
223,662 | 69,056 | (14,855 | ) | 277,863 | ||||||||
|
OTHER
INCOME (EXPENSE):
|
|||||||||||||
|
Interest
expense, net
|
(35,411 | ) | (4,871 | ) | (3,331 | ) | (43,613 | ) | |||||
|
Goodwill
impairment loss
|
(1,179,464 | ) | - | (1,179,464 | ) | ||||||||
|
Loss
on marketable securities
|
6,015 | - | 6,015 | ||||||||||
|
Officers'
life insurance income
|
(276,787 | ) | - | (276,787 | ) | ||||||||
|
Equity
in net loss of equity-method investee
|
(11,071 | ) | - | (11,071 | ) | ||||||||
|
Other
income
|
5,897 | - | 5,897 | ||||||||||
| (1,490,821 | ) | (4,871 | ) | (3,331 | ) | (1,499,023 | ) | ||||||
|
NET
INCOME BEFORE INCOME TAXES
|
(1,267,159 | ) | 64,185 | (18,186 | ) | (1,221,160 | ) | ||||||
| - | |||||||||||||
|
INCOME
TAX BENEFIT (EXPENSE)
|
(74,494 | ) | - | (17,940 | ) | (92,434 | ) | ||||||
|
NET
INCOME (LOSS)
|
(1,341,653 | ) | - | (36,126 | ) | (1,313,594 | ) | ||||||
|
PREFERRED
STOCK DIVIDEND
|
- | - | - | ||||||||||
|
NET
INCOME AVAILABLE FOR
|
|||||||||||||
|
COMMON
STOCKHOLDERS
|
$ | (1,341,653 | ) | $ | 64,185 | (36,126 | ) | $ | (1,313,594 | ) | |||
|
Net
Income (loss) per share
|
|||||||||||||
|
basic
|
$ | (0.23 | ) | $ | (0.22 | ) | |||||||
|
diluted
|
$ | (0.23 | ) | $ | (0.22 | ) | |||||||
|
Weighted
average number of shares,
|
|||||||||||||
|
basic
|
5,867,945 | 153,846 | 6,021,791 | ||||||||||
|
diluted
|
5,867,945 | 153,846 | 6,021,791 | ||||||||||
Notes
and assumptions to Pro-Forma Consolidated Financial Statements
Organization
and basis of presentation:
The
unaudited pro-forma consolidated balance sheet and consolidated income
statements have been based on historical financial information, using accounting
principles
generally accepted in the United States of America, of Premier Alliance Group,
Inc. and PeopleSource, Inc. for the nine months ended September 30, 2009 and the
year ended December 31, 2008, considering the effects of the asset purchase of
PeopleSource Inc. by Premier Alliance Group, Inc. was completed effective
January 1, 2008 in the case of the pro-forma consolidated income statements, and
effective September 30, 2009 in the case of the pro-forma consolidated balance
sheet.
On
October 1, 2009 Premier Alliance Group, Inc. purchased the specific assets of
Peoplesource, Inc. The assets purchased included fixed assets in the amount of
$5,000, goodwill in the amount of $398,758, and intangibles in the amount of
$84,000. All other assets and liabilities remained with the seller and have been
backed out in the adjustment section.
Pro-Forma
adjustments:
The
intangibles acquired from the purchase of Peoplesource, Inc. are being amortized
for book purposes over a period of five years. Fixed assets purchased are being
depreciated over five years. No impairment of Goodwill has
occurred.
Intangibles consisted of Peoplesource, Inc's customer list and was
valued using the Discounted Cash Flow method, the value was determined to be
$84,000. Fixed assets were valued based on Fair Market Value and were
valued at $5,000.
Provision
for income taxes has been provided for Peoplesource, Inc. which assumes a
corporate tax rate for year ended December 31, 2008 and nine months ended
September 30, 2009 respectively.
Stock
Issuance: In consideration of the Purchased Assets, the Registrant will pay to
PeopleSource (a) the sum of $400,000 in cash, subject to adjustment; and (b)
issue to PeopleSource 153,846 shares of Registrant's common stock, equal to
$100,000 based on the closing price of the common stock of $0.65 on the Closing
Date.
Cash will
be paid as follows:
1.
$140,000 in cash, and delivery of the Shares within 10 days after
Closing.
2.
Deferred cash payments totaling $260,000 are estimated and are to be paid as
follows:
|
·
|
$140,000,
subject to adjustments, thirteen months from the Closing
Date
|
|
·
|
$120,000,
subject to adjustments, two years from the Closing
Date.
|
The net
present value of deferred cash payments has been determined to be
$247,758. $12,242 of interest expense will be recognized over the term of
the deferred cash payments.