Attached files
| file | filename |
|---|---|
| 8-K/A - 8-K/A - ecoTECH Energy Group Inc. | v210651_8ka.htm |
| EX-99.1 - EX-99.1 - ecoTECH Energy Group Inc. | v210651_ex99-1.htm |
NOTES
TO UNAUDITED PRO FORMA COMBINED CONDENSED
FINANCIAL
STATEMENTS
Basis
of presentation
On
November 9, 2010, ecoTECH Energy Group Inc. f/k/a Sea 2 Sky Corporation (the
“Company” or “ecoTECH US Parent”) entered into Business Combination Agreement
(“Agreement”) with ecoTECH Energy Group (Canada) Inc. (‘ecoTECH”)
and 7697112 Canada Corp., a wholly owned subsidiary of the Company
(“Subco”), pursuant to which ecoTECH will amalgamate and merge with Subco and
the Company will acquire 100% of the outstanding equity interests of ecoTECH
through the issuance of 110,606,239 shares of the Company’s common stock. Upon
completion of the amalgamation on November 12, 2010, ecoTECH became a
wholly-owned subsidiary of the Company; however, due to the exchange of common
stock shares, ecoTECH assumed control of the Company. The transaction
closed on November 12, 2010.
The
acquisition of ecoTECH by the Company is being accounted for as a reverse
acquisition, whereby the assets and liabilities of ecoTECH are reported at their
historical cost since ecoTECH was issued common stock equal to approximately 58%
of the total outstanding shares immediately after the transaction. In
addition, ecoTECH has the right to appoint four of the five initial members to
the board of directors. The Company is accounting for the transaction in
accordance with Accounting Standards Codification No 805 "Business
Combinations." The assets and liabilities of ecoTECH are recorded at their
historical cost basis on the date immediately preceding the transaction. The
Company’s assets and liabilities will be recorded at fair value in connection
with the reverse acquisition; however, we believe the estimated fair value of
assets and liabilities as of the date of acquisition will approximate their
carrying values. Accordingly no pro forma adjustment is made herein
to adjust the carrying values of the Company’s assets and
liabilities.
The
unaudited pro forma combined condensed balance sheet was prepared assuming the
transaction closed on September 30, 2010. The unaudited pro forma
combined condensed statements of operations and comprehensive loss were prepared
as if the transaction had taken place (i) at the beginning of ecoTECH’s
year ended December 31, 2009 and (ii) for the nine months ended September 30,
2010. Additionally, since the Company’s year end is August 31, the
pro forma statement of operations and comprehensive loss for the Company were
prepared as if the transaction had taken place at the beginning of the Company’s
(i) year ended August 31, 2010 and (ii) nine months ended May 31,
2010.
These
statements should be read in conjunction with the historical financial
statements and related notes in the Company’s Annual Report on Form 10-K for the
years ended August 31, 2010 and 2009, and the Quarterly Report on Form 10-Q for
the nine-month period ended May 31, 2010. The unaudited pro forma combined
condensed statements of operations and comprehensive loss are not necessarily
indicative of what the actual results of operations would have been had such
transactions taken place at the beginning of the respective
periods.
We are
providing this information to aid you in your analysis of the financial aspects
of the transaction. The unaudited pro forma condensed combined financial
statements described above should be read in conjunction with the historical
financial statements of The Company and ecoTECH and the related notes
thereto.
The
columns captioned “ecoTECH (US Parent)” represent the balance sheet of The
Company as of August 31, 2010 and the statements of operations and comprehensive
loss for the twelve month period ended August 31, 2010 and for the nine months
ended May 31, 2010. The columns captioned “ecoTECH Energy Corporation (Canada),
Inc.” represent the balance sheet of ecoTECH as of September 30, 2010 and the
related statements of operations and comprehensive loss for the year ended
December 31, 2009 and for the nine months ended September 30,
2010.
The
unaudited pro forma combined condensed balance sheet and statements of
operations and comprehensive loss have been prepared to give effect to the
following pro forma adjustments which are deemed to be directly attributable to
the transaction:
|
1.
|
To
reflect the issuance of 110,606,239 shares ($110,606 at par value) and to
adjust the common stock account to par value of
$191,109.
|
|
|
2.
|
Elimination
of the Company’s accumulated deficit and additional paid-in
capital, net of deemed distribution for net liabilities
assumed.
|
|
ecoTECH
Energy Group
|
||||||||||||||||||||
|
Pro Forma Balance Sheet
|
ecoTECH
(US
Parent)
|
(Canada), Inc.
|
Pro Forma
|
Pro Forma
|
||||||||||||||||
|
August
31, 2010
|
September
30, 2010
|
Adjustments
|
Combined
|
|||||||||||||||||
|
(Unaudited)
|
(Unaudited)
|
|||||||||||||||||||
|
Assets:
|
||||||||||||||||||||
|
Current
assets:
|
||||||||||||||||||||
|
Cash
and cash equivalents
|
$ | 5,538 | $ | 34,870 | $ | 40,408 | ||||||||||||||
|
Prepaids
|
- | 10,384 | 10,384 | |||||||||||||||||
|
Due
from related parties
|
- | 2,965 | 2,965 | |||||||||||||||||
|
Total
current assets
|
5,538 | 48,219 | 53,757 | |||||||||||||||||
|
Property,
plant and equipment, net
|
- | 175,531 | 175,531 | |||||||||||||||||
|
Deposits
|
- | 68,426 | 68,426 | |||||||||||||||||
|
Total
assets
|
$ | 5,538 | $ | 292,176 | $ | 297,714 | ||||||||||||||
|
Liabilities
and Shareholders’ Deficit:
|
||||||||||||||||||||
|
Current
liabilities:
|
||||||||||||||||||||
|
Accounts
payable
|
$ | 851 | $ | 515,489 | $ | 516,340 | ||||||||||||||
|
Accrued
payroll
|
130,000 | 883,326 | 1,013,326 | |||||||||||||||||
|
Accrued
liabilities – related party
|
- | 32,038 | 32,038 | |||||||||||||||||
|
Other
accrued liabilities
|
10,379 | 92,909 | 103,288 | |||||||||||||||||
|
Notes
payable to related parties
|
- | 130,332 | 130,332 | |||||||||||||||||
|
Convertible
debentures – current
|
- | - | - | |||||||||||||||||
|
Total liabilities
|
141,230 | 1,654,094 | 1,795,324 | |||||||||||||||||
|
Commitments
and contingencies
|
- | - | - | |||||||||||||||||
|
Shareholders’
deficit:
|
||||||||||||||||||||
|
Common
Stock, $0.001 par value; 191,109,478 shares issued and outstanding on a
pro forma basis.
|
80,503 | 104,277 | 6,329 | 1 | 191,109 | |||||||||||||||
|
Additional
paid-in capital
|
1,623,457 | 26,330,833 | (1,623,457 | ) | 2 | 26,330,833 | ||||||||||||||
|
Accumulated
other comprehensive income
|
2,499 | - | 2,499 | |||||||||||||||||
|
Cumulative
foreign currency translation adjustment
|
- | (67,670 | ) | (67,670 | ) | |||||||||||||||
|
Deficit
accumulated during the development stage
|
(1,842,151 | ) | (27,729,358 | ) | 1,617,128 | 2 | (27,954,381 | ) | ||||||||||||
|
Total
shareholders’ deficit
|
(135,692 | ) | (1,361,918 | ) | (1,497,610 | ) | ||||||||||||||
|
Total
liabilities and shareholders' deficit
|
$ | 5,538 | $ | 292,176 | $ | 297,714 | ||||||||||||||
|
Pro Forma Statements of Operations
|
ecoTECH
|
ecoTECH
Energy
Group
(Canada),
Inc.
|
|||||||||||
|
and Comprehensive Loss
|
(US
Parent)
|
Year ended
|
|||||||||||
|
Year ended
August 31, 2010
|
December 31,
2009
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
||||||||||
|
(Unaudited)
|
|||||||||||||
|
Revenues
|
-
|
-
|
-
|
||||||||||
|
Operating
expenses:
|
|||||||||||||
|
Selling
|
-
|
-
|
-
|
||||||||||
|
General
and administrative
|
$
|
883,448
|
$
|
7,770,411
|
$
|
8,653,859
|
|||||||
|
Total
operating expenses
|
883,448
|
7,770,411
|
8,653,859
|
||||||||||
|
Operating
loss
|
(883,448
|
)
|
(7,770,411
|
)
|
(8,653,859
|
)
|
|||||||
|
Other
(income) and expense:
|
|||||||||||||
|
Loss
on disposal of fixed assets
|
-
|
5,704
|
5,704
|
||||||||||
|
Interest
expense
|
-
|
125,539
|
125,539
|
||||||||||
|
Extinguishment
of convertible debt
|
37,198
|
37,198
|
|||||||||||
|
Loss
from continuing operations
|
(883,448
|
)
|
(7,938,852
|
)
|
(8,822,300
|
)
|
|||||||
|
Net
loss from continuing operations before income tax benefit
|
$
|
(883,448
|
)
|
$
|
(7,938,852)
|
$
|
|||||||
|
Income
tax benefit
|
-
|
(20,599)
|
(20,599)
|
||||||||||
|
Net
loss
|
$
|
(883,448)
|
$
|
(7,918,253
|
)
|
$
|
(8,801,701
|
)
|
|||||
|
Change
in cumulative foreign currency translation adjustment
|
-
|
146,435
|
146,435
|
||||||||||
|
Comprehensive
loss from continuing operations
|
$
|
(883,448)
|
$
|
(8,064,688)
|
$
|
(8,948,136
|
)
|
||||||
|
Basic
and diluted loss per common share
|
$
|
(0.01
|
)
|
$
|
(0.05
|
)
|
|||||||
|
Weighted
average common shares outstanding, basic and diluted
|
76,495,039
|
110,606,239
|
(1)
|
187,101,278
|
|||||||||
|
Pro Forma Statements of
Operations and Comprehensive
Loss
|
ecoTECH
|
ecoTECH
Energy Group
(Canada), Inc.
|
||||||||||||||
|
(US
Parent)
Nine Months
|
Nine Months
Ended
|
Pro Forma
|
Pro Forma
|
|||||||||||||
|
Ended
May 31, 2010
|
September
30, 2010
|
Adjustments
|
Combined
|
|||||||||||||
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
||||||||||||||
|
Revenues
|
-
|
-
|
-
|
|||||||||||||
|
Operating
expenses:
|
||||||||||||||||
|
Selling
|
-
|
-
|
-
|
|||||||||||||
|
General
and administrative
|
$
|
829,328
|
$
|
15,675,710
|
$
|
16,505,038
|
||||||||||
|
Total
operating expenses
|
829,328
|
15,675,710
|
16,505,038
|
|||||||||||||
|
Operating
loss
|
(829,328
|
)
|
(15,675,710
|
)
|
(16,505,038
|
)
|
||||||||||
|
Other
(income) and expense:
|
||||||||||||||||
|
Loss
on disposal of fixed assets
|
-
|
-
|
-
|
|||||||||||||
|
Interest
expense
|
-
|
23,788
|
23,788
|
|||||||||||||
|
Extinguishment
of convertible debt
|
-
|
-
|
-
|
|||||||||||||
|
Loss
from continuing operations
|
(829,328
|
)
|
(15,699,498
|
)
|
(16,528,826
|
)
|
||||||||||
|
Net
loss before income tax benefit
|
$
|
(829,328
|
)
|
$
|
(15,699,498
|
)
|
$
|
(16,528,826
|
)
|
|||||||
|
Income
tax benefit
|
-
|
(17,320
|
)
|
(17,320
|
)
|
|||||||||||
|
-
|
||||||||||||||||
|
Net
loss
|
$
|
(829,328
|
)
|
$
|
(15,682,178
|
)
|
$
|
(16,511,506
|
)
|
|||||||
|
Change
in cumulative foreign currency translation adjustment
|
-
|
28,223
|
28,223
|
|||||||||||||
|
Comprehensive
loss
|
$
|
(829,328)
|
$
|
(15,710,401)
|
$
|
(16,539,729)
|
||||||||||
|
Basic
and diluted loss per common share
|
$
|
(0.01
|
)
|
$
|
(0.08
|
)
|
||||||||||
|
Weighted
average common shares outstanding, basic and
diluted
|
101,510,869
|
110,606,239
|
(1)
|
212,117,108
|
||||||||||||