Attached files
| file | filename |
|---|---|
| 8-K/A - Lightyear Network Solutions, Inc. | v179183_8ka.htm |
| EX-99.1 - Lightyear Network Solutions, Inc. | v179183_ex99-1.htm |
| EX-16.1 - Lightyear Network Solutions, Inc. | v179183_ex16-1.htm |
Exhibit
99.2
LIBRA
ALLIANCE CORPORATION
Notes
to Unaudited Pro Forma Condensed Combined Financial Statements
Introduction
to the Unaudited Pro Forma Condensed Combined Financial Statements
On
February 12, 2010, Libra Alliance Corporation, (“Libra”) a Nevada corporation,
entered into a master transaction agreement (the “Master Transaction Agreement”)
with LY Holdings, LLC (“LYH”), a Kentucky limited liability company, and holders
of LYH notes having a face value of $5,149,980 (the “LYH Debtholders”) under
which LYH will transfer 100% of its interest in its wholly-owned subsidiary,
Lightyear Network Solutions, LLC (“Lightyear”), a Kentucky limited liability
company, including its wholly-owned subsidiary, Lightyear Alliance of Puerto
Rico, LLC (which has limited activity), in exchange for common and preferred
stock of Libra (the “Exchange Transaction”).
Commencing
in May 2009 and continuing through February 8, 2010, LYH issued convertible
promissory notes to the LYH debt holders under a capital campaign (the “LYH Note
and Warrant Offering”). All of the net cash proceeds under the LYH Note and
Warrant Offering were transferred to Lightyear. As Lightyear was the beneficiary
of the net proceeds raised under the LYH Note and Warrant Offering, the full
costs incurred (interest, change in the fair value of derivative liabilities,
amortization of debt discount and deferred financing costs) by LYH in connection
with the financing, were charged to Lightyear as a cost of the
offering.
Immediately
before, and as a contingency to, the closing of the Exchange Transaction, LYH
and the LYH Debtholders entered into agreements for the modification, rescission
and/or exchange of certain securities held by the LYH Debtholders (the
“Securities Modification Agreements”). The modified LYH Notes were then
contributed to Libra in exchange for Libra common stock (the “Contribution
Agreements”). Pursuant to the Securities Modification Agreements, the LYH Notes
now have a maturity date of December 31, 2011 and an interest rate of five
percent (5%) per annum. The effect of the modifications and rescissions of the
LYH Notes was to eliminate the previously existing conversion and guaranty
features, as well as to cancel the warrants issued in connection with these
securities. The modifications and rescissions under the Securities Modification
Agreements became effective upon the contribution of the LYH notes to
Libra.
On
February 12, 2010, Libra and the LYH Debtholders entered into the Contribution
Agreements, which provided for the contribution by the LYH Debtholders of the
LYH Notes to Libra. In exchange for the LYH Notes, Libra issued an aggregate of
3,242,533 shares of Libra common stock to the LYH Debtholders. Since the LYH
Notes represent a receivable from an entity which is now a stockholder, the LYH
Notes were recorded as contra-equity.
The
transactions under the Master Transaction Agreement are deemed to be a merger
intended to qualify as a tax-free unified exchange of property for stock under
Section 351 of the Internal Revenue Code of 1986.
Based on the fact that
after the exchange: (i) the former member of Lightyear controls Libra, (ii) the
officers of Lightyear have become Libra’s officers and the directors of
Lightyear have become Libra’s directors, (iii) Libra’s only business is the
business that had been previously conducted by Lightyear, for accounting
purposes, Lightyear is treated as the acquirer. The acquisition will be
accounted for as a “reverse merger” and recapitalization since the sellers of
Lightyear will control the combined company immediately following the completion
of the transaction. Accordingly, the assets and liabilities and the historical
operations that are reflected in the financial statements in this report filed
on Form 8-K/A are those of Lightyear and are recorded at the historical cost
basis of Lightyear. Libra’s assets, liabilities and results of operations will
be consolidated with the assets, liabilities and results of operations of
Lightyear after consummation of the acquisition.
The
following unaudited pro forma condensed combined balance sheet as of December
31, 2009 combines the audited balance sheet of Libra as of December 31, 2009
with the audited consolidated balance sheet of Lightyear, giving effect to the
transactions described in the Master Transaction Agreement as if they had
occurred on December 31, 2009.
LIBRA
ALLIANCE CORPORATION
Notes
to Unaudited Pro Forma Condensed Combined Financial Statements
Introduction to the Unaudited Pro
Forma Condensed Combined Financial Statements, continued
The
following unaudited pro forma condensed combined statement of operations for the
year ended December 31, 2009 combines the audited statement of operations of
Libra for the year ended December 31, 2009 with the audited consolidated results
of operations of Lightyear for the year ended December 31, 2009, giving effect
to the transactions described in the Master Transaction Agreement as if they had
occurred on January 1, 2009.
The pro
forma adjustments give effect to events that are directly attributable to the
transactions discussed below, that have a continuing impact on the operations of
Libra, and are based on available data and certain assumptions that management
believes are factually supportable.
The
Company is providing this information to aid you in your analysis of the
financial aspects of the acquisition. The unaudited pro forma condensed combined
financial statements described above should be read in conjunction with Libra’s
historical financial statements and those of Lightyear and the related notes
thereto contained elsewhere in this Form 8-K/A. The pro forma adjustments and
the unaudited pro forma information are not necessarily indicative of the
financial position or results of operations that may have actually occurred had
the merger taken place on the dates noted, or of Libra’s future financial
position or operating results.
Libra
Alliance Corporation
UNAUDITED
PRO FORMA CONDENSED COMBINED BALANCE SHEET
As of
December 31, 2009
|
Libra Alliance Corp.
|
Lightyear
Network
Solutions, LLC
|
Pro Forma Adjustments
|
Notes
|
Pro Forma Adjustments
|
Notes
|
Pro Forma
Balance
|
||||||||||||||||||||||
|
Note
1
|
Note
2
|
Dr.
|
Cr.
|
|||||||||||||||||||||||||
|
CURRENT
ASSETS
|
||||||||||||||||||||||||||||
|
Cash
|
$ | 770 | $ | 440 | $ | 1,229,180 | 3 | $ | 770 | 6 | $ | 1,229,620 | ||||||||||||||||
|
Accounts
receivable, net
|
- | 4,096,884 | - | - | 4,096,884 | |||||||||||||||||||||||
|
Vendor
deposits
|
- | 916,211 | - | - | 916,211 | |||||||||||||||||||||||
|
Inventories,
net
|
- | 214,257 | - | - | 214,257 | |||||||||||||||||||||||
|
Deferred
financing costs, net
|
- | 435,520 | - | 435,520 | 4 | - | ||||||||||||||||||||||
|
Prepaid
expenses and other current assets
|
- | 801,952 | - | - | 801,952 | |||||||||||||||||||||||
|
Total
current assets
|
770 | 6,465,264 | 1,229,180 | 436,290 | 7,258,924 | |||||||||||||||||||||||
|
PROPERTY
AND EQUIPMENT, NET
|
- | 306,080 | - | - | 306,080 | |||||||||||||||||||||||
|
DEFERRED
FINANCING COSTS, NET
|
77,235 | 370,800 | 3 | 448,035 | 4 | - | ||||||||||||||||||||||
|
INTANGIBLE
ASSETS, NET
|
- | 1,164,583 | - | - | 1,164,583 | |||||||||||||||||||||||
|
OTHER
ASSETS
|
- | 282,725 | - | - | 282,725 | |||||||||||||||||||||||
|
TOTAL ASSETS
|
$ | 770 | $ | 8,295,887 | $ | 1,599,980 | $ | 884,325 | $ | 9,012,312 | ||||||||||||||||||
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
||||||||||||||||||||||||||||
|
CURRENT
LIABILITIES
|
||||||||||||||||||||||||||||
|
Accounts
payable
|
$ | 35,500 | $ | 7,441,828 | $ | 35,500 | 6 | $ | - | $ | 7,441,828 | |||||||||||||||||
|
Accounts
payable - related party
|
9,850 | - | 9,850 | 6 | - | - | ||||||||||||||||||||||
|
Interest
payable to Parent
|
- | 4,546,766 | 4,546,766 | 5 | - | - | ||||||||||||||||||||||
|
Accrued
agent commissions
|
- | 627,738 | - | - | 627,738 | |||||||||||||||||||||||
|
Deferred
revenue
|
- | 412,901 | - | - | 412,901 | |||||||||||||||||||||||
|
Other
liabilities
|
- | 1,332,686 | - | - | 1,332,686 | |||||||||||||||||||||||
|
Short
term borrowings
|
- | 500,000 | 500,000 | 3 | - | - | ||||||||||||||||||||||
|
Due
to Parent
|
- | 137,707 | 883,555 | 4 | 745,848 | 5 | - | |||||||||||||||||||||
|
Current
portion of capital lease obligations
|
- | 34,028 | - | - | 34,028 | |||||||||||||||||||||||
|
Current
portion of loans payable to Parent
|
- | 16,016,262 | 16,016,262 | 5 | - | - | ||||||||||||||||||||||
|
Total current liabilities
|
45,350 | 31,049,916 | 21,991,933 | 745,848 | 9,849,181 | |||||||||||||||||||||||
|
CAPITAL
LEASE OBLIGATIONS,
NON-CURRENT
PORTION
|
- | - | - | - | - | |||||||||||||||||||||||
| - | ||||||||||||||||||||||||||||
|
LOANS
PAYABLE TO PARENT,
NON-CURRENT
PORTION
|
- | 3,000,000 | 5,099,980 | 5 | 2,099,980 | 3 | - | |||||||||||||||||||||
| - | ||||||||||||||||||||||||||||
|
INTEREST
PAYABLE TO PARENT,
NON-CURRENT
PORTION
|
- | 126,233 | 126,233 | 5 | - | - | ||||||||||||||||||||||
|
TOTAL
LIABILITIES
|
45,350 | 34,176,149 | 27,218,146 | 2,845,828 | 9,849,181 | |||||||||||||||||||||||
|
COMMITMENTS
AND CONTINGENCIES
|
- | - | - | - | - | |||||||||||||||||||||||
|
STOCKHOLDERS'
EQUITY
|
||||||||||||||||||||||||||||
|
Common
stock - $.001 par value; 70,000,000 shares authorized;
|
3,243 | 9 | ||||||||||||||||||||||||||
|
18,747,533 issued
and outstanding
|
6,400 | - | 895 | 7 | 10,000 | 8 | 18,748 | |||||||||||||||||||||
|
Preferred
stock - $.001 par value; 9,500,000
shares authorized;
9,500,000 issued and outstanding
|
- | - | 9,500 | 8 | 9,500 | |||||||||||||||||||||||
|
Note
receivable issued for common stock
|
5,149,980 | 9 | - | (5,149,980 | ) | |||||||||||||||||||||||
| 836,869 | 10 | |||||||||||||||||||||||||||
| 58,200 | 6 | 5,146,737 | 9 | |||||||||||||||||||||||||
|
Additional
paid-in capital
|
51,800 | - | 19,500 | 8 | 895 | 7 | 4,284,863 | |||||||||||||||||||||
|
Retained
earnings (deficit)
|
(102,780 | ) | - | - | 102,780 | 6 | - | |||||||||||||||||||||
| 836,869 | 10 | |||||||||||||||||||||||||||
|
Member's
deficit
|
- | (25,880,262 | ) | - | 25,043,393 | 5 | - | |||||||||||||||||||||
|
TOTAL STOCKHOLDERS'
EQUITY
|
(44,580 | ) | (25,880,262 | ) | 6,065,444 | 31,153,417 | (836,869 | ) | ||||||||||||||||||||
|
TOTAL
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
$ | 770 | $ | 8,295,887 | $ | 33,283,590 | $ | 33,999,245 | $ | 9,012,312 | ||||||||||||||||||
See
notes to these unaudited pro forma condensed combined financial
statements
Libra
Alliance Corporation
UNAUDITED
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the
Year Ended December 31, 2009
|
Libra Alliance Corp.
|
Lightyear
Network
Solutions, LLC
|
Pro Forma Adjustments
|
Notes
|
Pro Forma Adjustments
|
Notes
|
Pro Forma
Balance
|
||||||||||||||||||||||
|
Note
A
|
Note
B
|
Dr.
|
Cr.
|
|||||||||||||||||||||||||
|
REVENUES
|
$ | - | $ | 55,428,836 | $ | - | $ | - | $ | 55,428,836 | ||||||||||||||||||
|
COST OF
REVENUES
|
- | 36,854,436 | - | - | 36,854,436 | |||||||||||||||||||||||
|
GROSS
PROFIT
|
- | 18,574,400 | - | - | 18,574,400 | |||||||||||||||||||||||
|
OPERATING
EXPENSES
|
||||||||||||||||||||||||||||
|
Commission
expense
|
- | 5,116,442 | - | - | 5,116,442 | |||||||||||||||||||||||
|
Commission
expense - related parties
|
- | 154,875 | - | - | 154,875 | |||||||||||||||||||||||
|
Depreciation
and amortization
|
- | 464,507 | - | - | 464,507 | |||||||||||||||||||||||
|
Bad
debt expense
|
- | 3,769,504 | - | - | 3,769,504 | |||||||||||||||||||||||
|
Selling,
general and administrative expenses
|
4,845 | 12,736,744 | - | - | 12,741,589 | |||||||||||||||||||||||
|
TOTAL
OPERATING EXPENSES
|
4,845 | 22,242,072 | - | - | 22,246,917 | |||||||||||||||||||||||
|
LOSS
FROM OPERATIONS
|
(4,845 | ) | (3,667,672 | ) | - | - | (3,672,517 | ) | ||||||||||||||||||||
|
OTHER
INCOME (EXPENSE):
|
||||||||||||||||||||||||||||
|
Interest
income
|
- | 83,151 | - | 257,499 |
C
|
340,650 | ||||||||||||||||||||||
|
Interest
(expense)
|
- | (10,591 | ) | - | - | (10,591 | ) | |||||||||||||||||||||
|
Interest
(expense) - Parent
|
- | (1,936,227 | ) | - | 1,936,227 |
G
|
- | |||||||||||||||||||||
|
Amortization
of deferred financing costs
|
- | (142,100 | ) | - | 142,100 |
D
|
- | |||||||||||||||||||||
|
Amortization
of deferred financing costs - Parent
|
- | (49,064 | ) | - | 49,064 |
D
|
- | |||||||||||||||||||||
|
Amortization
of debt discount - Parent
|
- | (348,087 | ) | - | 348,087 |
E
|
- | |||||||||||||||||||||
|
Change
in fair value of derivative liabilities -Parent
|
- | 259,445 | 259,445 |
F
|
- | - | ||||||||||||||||||||||
|
Other
income
|
- | 13,487 | - | - | 13,487 | |||||||||||||||||||||||
|
OTHER
EXPENSE
|
- | (2,129,986 | ) | 259,445 | 2,732,977 | 343,546 | ||||||||||||||||||||||
|
NET
LOSS
|
(4,845 | ) | (5,797,658 | ) | 259,445 | 2,732,977 | (3,328,971 | ) | ||||||||||||||||||||
|
Preferred
stock dividends
|
- | - | 950,000 |
K
|
- | (950,000 | ) | |||||||||||||||||||||
|
NET
LOSS APPLICABLE TO COMMON
STOCKHOLDERS
|
$ | (4,845 | ) | $ | (5,797,658 | ) | $ | 1,209,445 | $ | 2,732,977 | $ | (4,278,971 | ) | |||||||||||||||
|
Basic
and Diluted Loss Per
|
||||||||||||||||||||||||||||
|
Common
Share
|
$ | (0.00 | ) | $ | (0.23 | ) | ||||||||||||||||||||||
|
Weighted
Average Common Shares
|
||||||||||||||||||||||||||||
| 10,000,000 |
H
|
|||||||||||||||||||||||||||
| 3,242,533 |
I
|
|||||||||||||||||||||||||||
| (895,000 | ) |
J
|
||||||||||||||||||||||||||
|
Basic
and Diluted
|
6,400,000 | - |
K
|
18,747,533 | ||||||||||||||||||||||||
See notes
to these unaudited pro forma condensed combined financial
statements
LIBRA
ALLIANCE CORPORATION
Notes
to Unaudited Pro Forma Condensed Combined Financial Statements
|
I.
|
Merger
Agreement
|
On February 12, 2010, pursuant to the Exchange
Transaction entered into on February 12, 2010, LYH transferred its 100%
membership interest in Lightyear and Subsidiary to Libra in exchange for
10,000,000 shares of Libra’s common stock issued at closing and the right to
receive, shortly after the consummation of the merger, 9,500,000 shares of
Libra’s convertible preferred stock. In addition, the LYH Debtholders have
exchanged $5,149,980 of LYH Notes for 3,242,533 shares of Libra common stock.
Libra and LYH have agreed to issue the preferred stock to LYH after the merger
and upon Libra receiving the approval for its stockholders to increase its
authorized shares to 70,000,000 shares of common stock and 9,500,000 shares of a
new class of preferred stock. The LYH Notes contributed by the LYH Debtholders
are due from LYH, the sellers of Lightyear in this exchange
transaction.
|
II.
|
Pro
Forma Adjustments
|
The
following pro forma adjustments give effect to the reverse merger
Condensed
Combined Balance Sheet – as of December 31, 2009
|
Note
1
|
Derived
from the audited financial statements of Libra as of December 31,
2009.
|
|
Note
2
|
Derived
from the audited consolidated financial statements of Lightyear as of
December 31, 2009.
|
|
|
LYH Notes – Impact
After December 31, 2009
|
|
Note
3
|
To
record the net proceeds received by Lightyear, and related deferred
financing costs, in connection with the LYH Notes issued after December
31, 2009, after paying down its short term
borrowings.
|
|
Debit
|
Credit
|
|||||||
|
Deferred
financing costs, non-current portion
|
$ | 370,800 | ||||||
|
Short
term borrowings
|
500,000 | |||||||
|
Cash
|
1,229,180 | |||||||
|
Loans
payable to Parent, non-current portion
|
$ | 2,099,980 | ||||||
|
|
Securities
Modification and Rescission and Exchange
Transaction
|
|
Note
4
|
To
transfer deferred financing costs to LYH as a result of Lightyear being
relieved of its obligations under the related loans payable to
LYH.
|
|
Debit
|
Credit
|
|||||||
|
Deferred
financing costs, current portion
|
$ | 435,520 | ||||||
|
Deferred
financing costs, non-current portion
|
448,035 | |||||||
|
Due
from Parent
|
$ | 883,555 | ||||||
LIBRA
ALLIANCE CORPORATION
Notes
to Unaudited Pro Forma Condensed Combined Financial Statements
|
II.
|
Pro
Forma Adjustments, continued
|
Condensed
Combined Balance Sheet – as of December 31, 2009, continued
|
|
Securities
Modification and Rescission and Exchange Transaction,
continued
|
|
Note
5
|
Adjustments
to reflect the recapitalization of the net amount of all intercompany
obligations to LYH as a contribution to
capital.
|
|
Debit
|
Credit
|
|||||||
|
Due
from Parent
|
$ | 745,848 | ||||||
|
Interest
payable to Parent, current portion
|
$ | 4,546,766 | ||||||
|
Interest
payable to Parent, non-current portion
|
126,233 | |||||||
|
Loans
payable to Parent, current portion
|
16,016,262 | |||||||
|
Loans
payable to Parent, non-current portion
|
5,099,980 | |||||||
|
Member’s
deficit
|
25,043,393 | |||||||
|
Note
6
|
Adjustments
to record Libra’s assets and liabilities which were settled prior to the
merger.
|
|
Debit
|
Credit
|
|||||||
|
Cash
|
$ | 770 | ||||||
|
Additional
paid in capital
|
$ | 58,200 | ||||||
|
Accounts
payable
|
35,500 | |||||||
|
Accounts
payable – related party
|
9,850 | |||||||
|
Retained
earnings (deficit)
|
102,780 | |||||||
|
Note
7
|
Adjustments
to record Libra’s cancellation of 895,000 shares of common stock in
connection with the Exchange
Agreement.
|
|
Debit
|
Credit
|
|||||||
|
Common
stock
|
$ | 895 | ||||||
|
Additional
paid-in capital
|
$ | 895 | ||||||
LIBRA
ALLIANCE CORPORATION
Notes
to Unaudited Pro Forma Condensed Combined Financial Statements
|
II.
|
Pro
Forma Adjustments, continued
|
Condensed
Combined Balance Sheet – as of December 31, 2009, continued
|
Securities
Modification and Rescission and Exchange Transaction,
continued
|
||
|
Note
8
|
To
record the issuance of shares of Libra in exchange for 100% of the
membership interest of Lightyear. Libra issued 10,000,000 shares of common
stock at a par value of $0.001 and covenanted to issue 9,500,000 shares of
convertible preferred stock at a par value of
$0.001.
|
|
Debit
|
Credit
|
|||||||
|
Common
stock
|
$ | 10,000 | ||||||
|
Convertible
preferred stock
|
|
9,500 | ||||||
|
Additional
paid-in capital
|
$ | 19,500 | ||||||
|
Note
9
|
To
record the note receivable with an aggregate face and fair value of
$5,149,980 contributed by the LYH Debtholders in exchange for the issuance
of 3,242,533 shares of common stock of
Libra.
|
|
Debit
|
Credit
|
|||||||
|
Note
receivable (contra-equity)
|
$ | 5,149,980 | ||||||
|
Common
stock
|
$ | 3,243 | ||||||
|
Additional
paid-in capital
|
5,146,737 | |||||||
|
Note 10
|
To
capitalize member’s deficit to additional paid-in capital in conjunction
with the recapitalization.
|
|
Debit
|
Credit
|
|||||||
|
Member’s
deficit
|
$ | 836,869 | ||||||
|
Additional
paid-in capital
|
$ | 836,869 | ||||||
LIBRA
ALLIANCE CORPORATION
Notes
to Unaudited Pro Forma Condensed Combined Financial Statements
|
II.
|
Pro
Forma Adjustments, continued
|
Condensed
Combined Statement of Operations - For The Year Ended December 31,
2009
|
Note A
|
Derived
from the audited financial statements of Libra for the year ended
December 31, 2009.
|
|
Note B
|
Derived
from the audited consolidated financial statements of Lightyear
for
the year ended December 31, 2009.
|
Pro
Forma Adjustments:
|
|
Note
C
|
To
record the accrual of interest income for the year ended December 31, 2009
of $257,499 on the note receivable with an aggregate face and fair value
of $5,149,980 contributed by the LYH
Debtholders.
|
|
|
Note
D
|
To
reverse the amortization of deferred financing costs of $142,100 and
deferred financing costs - Parent of $49,064 as a result of Lightyear
being relieved of its obligations to LYH as of the closing date of the
Exchange Transaction.
|
|
|
Note
E
|
To
reverse the amortization of debt discount of $348,087 as a result of
Lightyear being relieved of its obligations to LYH as of the closing date
of the Exchange Transaction.
|
|
|
Note
F
|
To
reverse the change in the fair value of derivative liabilities of $259,445
as a result of Lightyear being relieved of its obligations to LYH as of
the closing date of the Exchange
Transaction.
|
|
|
Note
G
|
To
record the elimination of interest expense – Parent, of $1,936,227 as this
interest obligation was forgiven in connection with the execution of the
Exchange Transaction.
|
|
|
Note
H
|
To
record the issuance of 10,000,000 shares of Libra common stock issued to
LYH in exchange for the contribution of Lightyear to
Libra.
|
|
|
Note
I
|
To
record the issuance of 3,242,533 shares of Libra common stock to the LYH
Debtholders in exchange for the modified LYH
Notes.
|
|
|
Note
J
|
To
record the cancellation of 895,000 shares of Libra common stock by the
existing Libra common stockholders pursuant to the Exchange
Transaction.
|
|
|
Note
K
|
To
record the impact of the accruable 5% dividend ($950,000 for twelve
months) on the $2.00 per share stated value of the covenanted 9,500,000
shares of Libra preferred stock being issued to LYH in exchange for LYH’s
contribution of Lightyear to Libra. We have excluded the impact of the
issuance of the 9,500,000 shares of Libra preferred stock from the
denominator of the loss per share calculation, because the impact would be
anti-dilutive.
|