CITY LANGUAGE EXCHANGE INC - FORM 8-K/A - EX-99.2 - March 10, 2010

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Pro Forma Condensed Combined Financial Statement

On February 25, 2010, we completed a “reverse acquisition” transaction, in which we entered into a securities exchange agreement (the “Exchange Agreement”) with Gamers Factory, Inc., a Maryland corporation (“Gamers” or the “Company”) and, for certain limited purposes, its stockholders. Pursuant to the Exchange Agreement, the shareholders of Gamers transferred all of the issued and outstanding shares of common stock of Gamers to us in exchange for 7,090,000 newly issued shares of our common stock (the “Transaction”). At the time of the Transaction, our corporate name was City Language Exchange, Inc. Following the merger, we changed our name to Game Trading Technologies, Inc. (“GTT”) and our trading symbol to “GMTD.OB.” As a result of the Transaction, Gamers became our wholly-owned subsidiary, with Gamers’ former shareholders acquiring a majority of the outstanding shares of our common stock. In connection with the Transaction, we completed the closing of a private placement for aggregate gross proceeds of $3,900,000 in units, each unit consisting of one share of our series A convertible preferred stock and a warrant to purchase one share of our common stock to accredited and institutional investors pursuant to the terms of a Securities Purchase Agreement, dated as of February 25, 2010.

The following presents our unaudited pro forma financial information as of December 31, 2009 and for the year ended December 31, 2009 and 2008. The unaudited pro forma financial information is for informational purposes only and does not purport to present what our results would actually have been had these transactions actually occurred on the dates presented or to project our results of operations or financial position for any future period.
 
 
Gamers Factory, Inc. and Subsidiaries
Unaudited Pro Forma Consolidated Balance Sheet
December 31, 2009

   
City Language Exchange, Incorporated
    
Gamers Factory, Inc.
    
Notes
    
Pro Forma Adjustments
    
Pro Forma Combined
  
Assets:
                              
                               
Cash and cash equivalents
   $ 2,101     $ 641,088    
b
     $ 2,277,834     $ 2,921,023  
Accounts receivable, gross
                                   -  
Less: Allowance for doubtful accounts
                                   -  
Accounts receivable - net
             2,383,688                     2,383,688  
Inventories
             2,897,432                     2,897,432  
Deferred Income Taxes
                                   -  
Loan Receivable
     242,500            
c
       (242,500 )     -  
Prepaid Expenses
                  
b
       300,000       300,000  
Assets of discontinued operation
                                   -  
Other
                                   -  
                                       
   Total Current Assets
     244,601       5,922,208             2,335,334       8,502,143  
                                       
Property and equipment, net
     164       109,984                     110,148  
                                       
Deferred financing costs
             258,325    
b
       (258,325 )     -  
                                       
  Total Assets
     244,765       6,290,517             2,077,009       8,612,291  
                                       
Liabilities and Stockholders' Equity
                                      
                                       
Current Liabilities:
                                      
Line of credit
                                   -  
Accounts payable
             4,253,396                     4,253,396  
Accounts payable--Related Party
     947                             947  
Accrued expenses and other
             60,534    
c
       7,500       68,034  
Advance from Officer
             -                     -  
Note payable-Vision Opportunity
     250,000            
b
       (250,000 )     -  
Note payable-Bridge City language
             250,000    
c
       (250,000 )     -  
Note Payable - St. Cloud
                                   -  
Note Payable Stockholder- current portion
                                   -  
Note Payable - Subordinated payable - current portion
       263,046    
b
       (263,046 )     -  
Note payable - TW development LLC - related party
       408,424                     408,424  
Liabilities of discontinued operation
             88,921                     88,921  
                                    0  
   Total Current Liabilities
     250,947       5,324,321             (755,546 )     4,819,722  
                                       
Long Term Liabilities
                                      
  Line of credit
             1,800,000                     1,800,000  
  Subordinated note payable
             700,000    
b
       (700,000 )     -  
  Warrant redemption liability
             281,935    
b
       (281,935 )     -  
  less: Current maturities of long term debt
             (263,046 )  
b
       263,046       -  
      Total Long-Term Liabilities
     -       2,518,889             (718,889 )     1,800,000  
                                       
                                       
   Total Liabilities
     250,947       7,843,210             (1,474,435 )     6,619,722  
                                       
Equity
                                      
                                       
                                       
Preferred Stock
     -       -    
b
       195       195  
Common stock
     3,595       31,450    
a
       (34,216 )     829  
                                    -  
    Additional paid-in capital
   $ 156,939       58,918  
 
a&b
       3,767,305       3,983,162  
    Accumulated earning/deficit
     (166,716 )     (1,643,061 )
 
a&b
       (181,840 )     (1,991,617 )
      Stockholders' Equity
     (6,182 )     (1,552,693 )           3,551,444       1,992,569  
                                       
   Total Liabilities and Stockholders' Equity
   $ 244,765     $ 6,290,517           $ 2,077,009     $ 8,612,291  

See Notes to Unauidted Pro Forma Consolidated Financial Statements
 
 
Unaudited Pro Forma Consolidated Statements of Operations
For the Year Ended December 31, 2009

   
City Language Exchange, Incorporated
    
Gamers Factory, Inc.
    
Notes
    
Pro Forma Adjustments
    
Pro Forma Combined
  
                               
Net sales
           $ 36,700,731                   $ 36,700,731  
Cost of Sales
             30,684,084                     30,684,084  
    Gross Profit
     -       6,016,647                     6,016,647  
                                       
Operating expense:
                                      
 Selling, general and administrative
     51,008       4,290,550    
b
       348,556       4,690,114  
Depreciation expense
     1,185                             1,185  
Operating income
     (52,193 )     1,726,097             (348,556 )     1,325,348  
                                       
Other income (expense):
                                      
  Other income
             14,401                     14,401  
  Interest expense
                                      
                                       
Total other income(expense)
     -       14,401                     14,401  
                                       
Income(loss) before income taxes
     (52,193 )     1,740,498             (348,556 )     1,339,749  
                                       
  Provision for income taxes
                                      
                                       
Income (loss) from continuing operations
     (52,193 )     1,740,498             (348,556 )     1,339,749  
                                       
Net income (loss)  per common share from Continuing Operations:
                                      
Basic & Diluted
   $ (0.00 )   $ 0.55                   $ 0.16  
Diluted
   $ (0.00 )   $ 0.55                   $ 0.16  
                                       
Weighted average common shares outstanding:
                                      
Basic & Diluted
     35,945,000       3,145,000             (30,800,000 )     8,290,000  

See Notes to Unauidted Pro Forma Consolidated Financial Statements
 
 
Unaudited Pro Forma Consolidated Statements of Operations
For the Year Ended December 31, 2008

   
City Language Exchange, Incorporated
    
Gamers Factory, Inc.
    
Pro Forma Adjustments
    
Pro Forma Combined
  
                         
Net sales
   $ 156     $ 17,122,540             $ 17,122,696  
Cost of Sales
             13,388,536               13,388,536  
    Gross Profit
     156       3,734,004               3,734,160  
                                 
Operating expense:
                                
 Selling, general and administrative
     53,209       3,253,423               3,306,632  
Depreciation expense
     336                       336  
Operating income
     (53,389 )     480,581               427,192  
                                 
Other income (expense):
                                
   Other income
     -       -                  
   Other expense
     -       -               0  
                                 
Total other income(expense)
     0       0               0  
                                 
Income(loss) before income taxes
     (53,389 )     480,581               427,192  
                                 
  Provision for income taxes
             10,254               10,254  
                                 
Income (loss) from continuing operations
     (53,389 )     470,327               416,938  
                                 
Net income (loss)  per common share from Continuing Operations:
                                
Basic & Diluted
   $ (0.00 )   $ 0.15             $ 0.05  
                                 
Weighted average common shares outstanding:
                                
Basic & Diluted
     35,945,000       3,145,000       (30,800,000 )     8,290,000  

See Notes to Unauidted Pro Forma Consolidated Financial Statements
 
 
Pro Forma Adjustments

The preceding unaudited condensed combined consolidated pro forma balance sheets have been prepared as if the share exchange Transaction was completed on December 31, 2009;  the preceduing unaudited condensed combined consolidated pro forma statements of operations have been prepared as if the share exchange transaction was completed, respectively, on January 1, 2009 and  January 1, 2008. The following pro forma adjustments:

(a)           This adjustment reflects  the share exchange  between our company and Gamers Factory, Inc. resulting total 8,290,000 shares of common stock outstanding after the merger.

(b)        The adjustment reflects the aggregate gross proceeds of $3,900,000, with net cash proceed of $2,277,834 after direct expenses, relating to the 1,950,000 shares of series A convertible preferred stock sold in the private placement.

(c)        This adjustment eliminates the intercompany debt and related accrued expense. 

Income (loss) Per Share from Continuing Opearations

Pro forma basic and diluted shares outstanding include the weighted average number of common shares outstanding for Gamers Factory, Inc. during the respective periods, in addition to the common stock issued as a result of the share exchange assuming they had been issued at the beginning of the period. The common stock issued in connection with the share exchange Transaction is assumed to be outstanding for the entire period presented.
 

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