Ads in Motion, Inc. - FORM 8-K - EX-99.3 - UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION OF ADS IN MOTION, INC. AND ITS SUBSIDIARIES - February 14, 2011

Attached files

file filename
EX-2.1 - SHARE EXCHANGE AGREEMENT - Ads in Motion, Inc.f8k0211ex2i_adsinmotion.htm
EX-10.10 - FORM OF LOCKUP AGREEMENT - Ads in Motion, Inc.f8k0211ex10x_adsinmotion.htm
EX-10.1 - CONTRIBUTION AND ASSUMPTION AGREEMENT - Ads in Motion, Inc.f8k0211ex10i_adsinmotion.htm
EX-10.5 - FORM OF B WARRANT - Ads in Motion, Inc.f8k0211ex10v_adsinmotion.htm
EX-10.6 - FORM OF REGISTRATION RIGHTS AGREEMENT - Ads in Motion, Inc.f8k0211ex10vi_adsinmotion.htm
EX-10.4 - FORM OF A WARRANT - Ads in Motion, Inc.f8k0211ex10iv_adsinmotion.htm
EX-10.9 - FORM OF SECURITIES ESCROW AGREEMENT - Ads in Motion, Inc.f8k0211ex10ix_adsinmotion.htm
EX-10.2 - FORM OF SECURITIES PURCHASE AGREEMENT - Ads in Motion, Inc.f8k0211ex10ii_adsinmotion.htm
EX-10.3 - FORM OF 8% ORIGINAL ISSUE DISCOUNT SENIOR SUBORDINATED SECURED CONVERTIBLE DEBENTURE - Ads in Motion, Inc.f8k0211ex10iii_adsinmotion.htm
EX-10.7 - SECURITY AGREEMENT - Ads in Motion, Inc.f8k0211ex10vii_adsinmotion.htm
EX-10.8 - PERSONAL GUARANTY - Ads in Motion, Inc.f8k0211ex10viii_adsinmotion.htm
EX-99.2 - UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF MAGLA PRODUCTS, LLC FOR THE NINE MONTHS ENDED AUGUST 28, 2010 AND AUGUST 29, 2009 - Ads in Motion, Inc.f8k0211ex99ii_adsinmotion.htm
EX-10.11 - SALE OF ACCOUNTS AND SECURITY AGREEMENT - Ads in Motion, Inc.f8k0211ex10xi_adsinmotion.htm
EX-10.12 - FGI GUARANTY - Ads in Motion, Inc.f8k0211ex10xii_adsinmotion.htm
EX-10.19 - MAGLA PRODUCTS, LLC AMENDED AND RESTATED NONQUALIFIED DEFERRED COMPENSATION PLAN - Ads in Motion, Inc.f8k0211ex10xix_adsinmotion.htm
EX-10.13 - FGI GUARANTY - Ads in Motion, Inc.f8k0211ex10xiii_adsinmotion.htm
EX-10.17 - EMPLOYMENT AGREEMENT DATED FEBRUARY 8, 2011 BY AND BETWEEN MAGLA INTERNATIONAL, LLC AND JORDAN GLATT - Ads in Motion, Inc.f8k0211ex10xvii_adsinmotion.htm
EX-10.18 (B) - AMENDMENT TO EMPLOYMENT AGREEMENT - Ads in Motion, Inc.f8k0211ex10xviiib_adsinmoton.htm
EX-10.18 (A) - EMPLOYMENT AGREEMENT DATED JUNE 2009 BY AND BETWEEN MAGLA PRODUCTS, LLC AND ALISON CARPINELLO - Ads in Motion, Inc.f8k0211ex10xviiia_adsinmoton.htm
8-K - CURRENT REPORT - Ads in Motion, Inc.f8k0211_adsinmotion.htm
EX-99.1 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF MAGLA PRODUCTS, LLC FOR THE FISCAL YEARS ENDED NOVEMBER 28, 2009 AND NOVEMBER 29, 2008 - Ads in Motion, Inc.f8k0211ex99i_adsinmotion.htm
Exhibit 99.3

UNAUDITED PRO FORMA
 CONDENSED FINANCIAL STATEMENTS
 
     The following unaudited condensed pro forma balance sheet as of August 28, 2010 was prepared as if the merger was effective as of such date. The unaudited condensed pro forma statement of operations for the nine months ended August 28, 2010 was prepared as if the merger was effective on November 29, 2009. The consolidated balance sheet as of February 28, 2010 and the statement of operations for the nine months then ended of Ads in Motion, Inc. (“ADSO”) was used for pro forma purposes, as that is ADSO’s fiscal third quarter.
 
     The unaudited condensed pro forma financial statements should be read in conjunction with the notes included herein for Magla Products, LLC and Subsidiary (“Magla,” the “Company,” “we,” “us” or “our”) and the unaudited financial statements of ADSO. The pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the future financial position or future results of operations of the combined enterprise after the merger of ADSO with Magla, or of the financial position or results of operations of the combined enterprise that would have actually occurred had the merger been effected as of the dates described above. The merger will be accounted for as a reverse acquisition wherein Magla will be treated as the acquirer for accounting purposes since it will control the combined enterprise.
 
Condensed Pro Forma Balance Sheet as of August 28, 2010 (Unaudited)
                                   
   
Accounting
    
Legal Survivor
    
Pro Forma
      
Pro Forma
  
ASSETS
  
Acquirer Magla
    
ADSO
    
Adjustments
  
Notes
  
Balance Sheet
  
Current Assets
                                  
Cash
  
$
32,049
    
$ 
-
    
$
1,458,200
  
(B)
  
$
1,490,249
  
 Accounts receivable, net
    
 5,685,477
      
            -
      
-
        
 5,685,477
  
 Inventories
    
 6,869,606
      
            -
      
-
        
 6,869,606
  
Current portion of notes receivable – related entities
    
475,000
      
-
      
-
        
475,000
  
Prepaid expense and other receivables
    
1,048,450
      
-
      
(974,701)
  
(F)
    
73,749
  
                           
Total Current Assets
    
14,110,582
      
-
      
483,499
        
14,594,081
  
Property, equipment and improvements, net
    
296,833
      
577
      
-
        
297,410
  
Deferred financing costs
    
-
      
-
      
 291,500
  
 (C)
        
                     
(145,750)
  
 (C)
    
145,750
  
Notes receivable – related entities
    
6,454,306
      
-
      
(6,454,306)
  
 (F)
    
-
  
Mortgage receivable – member
    
253,650
      
-
      
(253,650)
  
 (F)
    
-
  
Other assets
    
877,350
      
-
      
(454,041)
  
 (F)
    
423,309
  
                           
 Total Assets
  
$
21,992,721
    
$
577
    
$
(6,532,748)
      
$
15,460,550
  
                           

 
1
 
 
                                     
LIABILITIES AND
  
Accounting
    
Legal Survivor
  
Pro Forma
            
Pro Forma
  
STOCKHOLDERS’ EQUITY
  
Acquirer Magla
    
ADSO
  
Adjustments
    
Notes
    
Balance Sheet
  
Current Liabilities
                                    
Short-term borrowings
  
 $
8,262,755
   $ 
                 -
   $
-
            
$ 
8,262,755
  
Current portion of long-term debt
    
898,294
    
-
    
- 
              
898,294 
  
Current portion of note payable – former member
    
4,316,128
    
-
    
(4,316,128
 )     
 (F)
      
-
  
Advance from officer
    
-
    
2,630
    
- 
              
2,630 
  
Accounts payable
    
9,553,730
    
-
    
(2,076,240
 )    
 (F)
      
7,477,490
  
Accrued expenses and other current liabilities
    
848,744
    
-
    
- 
              
848,744
  
                               
Total Current Liabilities
    
  23,879,651
    
2,630
    
(6,392,368
 )            
17,489,913
  
Convertible debentures
    
-
    
-
    
1,458,200
      
(B)
          
                 
63,400
      
(M)
      
1,521,600
  
Long-term debt, net of current portion
    
34,051
    
-
    
-
              
34,051
  
Notes payable – related  entities
    
5,193,011
    
-
    
(5,193,011
 )     
 (F)
      
-
  
Note payable – former member, net of current portion
    
2,750,000
    
-
    
(2,750,000
 )    
 (F)
      
-
  
                               
 Total Liabilities
    
31,856,713
    
2,630
    
(12,813,779
)
            
19,045,564
  
                               
Stockholders’ Deficit
                                    
Preferred stock
    
-
    
-
    
-
              
-
  
Common stock
    
-
    
953
    
1,500
      
(A)
          
                 
50 
      
(C)
          
                 
(909
 )    
(D)
      
1,594
  
 Additional paid-in capital
    
-
    
9,166
    
(1,500
 )     
(A)
          
                               
                 
291,450 
      
(C)
          
                 
909 
      
(D)
          
                 
(12,172
 )     
(E)
      
287,353
  
Members’ deficiency / Deficit accumulated during development stage
    
 (9,863,992
 )   
(12,172
 )   
(145,750
 )    
(C)
          
                 
12,172
      
(E)
          
                 
6,198,681
      
(F)
          
                 
(63,400
 )     
(M)
      
(3,874,461
 ) 
 Total Stockholders’ Deficit
    
 (9,863,992
 )  
(2,053
 )  
6,281,031
              
(3,585,014
 )
                               
 Total Liabilities and Stockholders’ Deficit
  
$
21,992,721
   $
               577
  
$
(6,532,748
 )          
$
15,460,550
  
                               

 
2
 
 
Condensed Pro Forma Statements of Operations for the nine months ended August 28, 2010 (Unaudited)
                                         
                                   
Pro Forma
  
   
Accounting
    
Legal Survivor
    
Pro Forma
            
Statement of
  
   
Acquirer Magla
    
ADSO
    
Adjustments
    
Notes
    
Operations
  
Net sales
  
$
30,498,424
    
$
-
    
$
-
            
$
30,498,424
  
                                 
                                         
Cost of sales
    
24,658,572
      
-
      
-
              
24,658,572
  
Gross profit
    
5,839,852
      
-
      
-
              
5,839,852
  
                                         
Operating expenses
                                        
Selling
    
4,604,016
      
-
      
-
              
4,604,016
  
General and administrative
    
2,265,556
      
10,329
      
(856,000
 )     
(G)
          
     
 -
      
 -
      
(248,000
 )    
(H)
          
     
 -
      
 -
      
90,000
      
(I)
          
     
 -
      
 -
      
60,750
      
(J)
      
1,322,635
  
                                 
     
6,869,572
      
10,329
      
(953,250
 )            
5,926,651
  
                                 
                                         
 Loss from operations
    
(1,029,720
 )    
(10,329)
      
953,250
              
(86,799
 )
                                         
Other income (expense)
Interest income
    
254,364
      
-
      
(254,364
 )     
(K)
      
-
  
Interest expense
    
(743,049
 )    
(891)
      
(145,750
 )     
(C)
          
                     
231,496
      
(L)
          
                     
(63,400
 )     
(M)
      
(721,594
 ) 
Other, net
    
5,830
      
-
      
-
              
5,830
  
Forgiveness
    
-
      
34,565
      
-
              
34,565
  
                                 
     
(482,855
 )    
33,674
      
(232,018
 )            
(681,199
 )
                                         
Income (loss) before income tax benefit
    
(1,512,575
 )    
23,345
      
721,232
              
(767,998
)
Income tax benefit
    
-
      
-
      
307,199
      
(N)
      
307,199
  
                                 
                                         
Net income (loss)
  
$
(1,512,575
 )   
$
23,345
    
$
1,028,431
            
$
(460,799
)
                                 
                                         
Net loss per common share, basic and diluted
                                  
$
(0.03
 ) 
                                       
Weighted average number of common shares outstanding, basic and diluted
                                    
15,943,000
  
                                       

 
3
 
 
NOTES TO THE CONDENSED PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
 
     As a result of the merger, Magla became ADSO’s wholly-owned subsidiary and the security holders of Magla received an aggregate of 15,000,000 shares of common stock. As a result of the merger and the issuance of stock to the security holders of Magla, the former security holders of Magla held approximately 69% of ADSO’s outstanding common stock immediately after the merger and after the issuance of 500,000 shares of common stock to settle debt issuance costs. Accounting principles generally accepted in the United States generally require that a company whose security holders retain the majority voting interest in the combined business be treated as the acquirer for financial reporting purposes. The acquisition was accounted for as a reverse acquisition whereby Magla was deemed to be the “accounting acquirer.”
 
(A) To record the issuance of 15,000,000 shares of common stock in the reverse acquisition.
 
(B)  To record the issuance of $1,585,000 8% original issue discount (“OID”) convertible debentures. The warrants were not valued for pro forma purposes.
 
(C)  To record the issuance of 500,000 shares of common stock to settle debt issuance costs and to record the related amortization.
 
(D) To record the recapitalization of ADSO’s common stock to additional paid-in-capital.
 
(E) To record the recapitalization of ADSO’s accumulated deficit to additional paid-in-capital.
 
(F)  To record the pro forma adjustment for all the related party assets and liabilities and the former member’s note payable not transferred in the merger.
 
(G)  This pro forma adjustment reflects the removal of miscellaneous, non-business expenses incurred by related parties who will not be involved in or employed by the Company subsequent to the merger as of the beginning of the period.
 
(H)  This pro forma adjustment reflects the removal of professional fees incurred by related parties who will not be involved in or employed by the Company subsequent to the merger as of the beginning of the period.
 
(I)  This pro forma adjustment reflects the increase in professional fees the Company expects to incur from being a public company, including quarterly and annual Securities and Exchange Commission (“SEC”) filings.
 
(J)  This pro forma adjustment reflects the director’ fees the Company expects to incur to the members of its board of directors as a result of being a public company.
 
(K)  This pro forma adjustment reflects the decrease in interest income associated with related party note receivables, which were not transferred in the merger as of the beginning of the period.
 
(L)  This pro forma adjustment reflects the decrease in interest expense associated with the related party and former member’s notes payable not transferred in the merger as of the beginning of the period.
 
(M)  To record the accretion of the OID on the 8% convertible debentures.
 
(N)  The benefit for income tax “Pro Forma Adjustment” outlined above reflects the estimated net historical tax impact of the pro forma assuming a 40% effective tax rate.

 
4
 

 Unaudited Condensed Pro Forma Statement of Operations
 
     The following unaudited condensed pro forma statement of operations for the year ended November 28, 2009 was prepared as if the merger was effective as of November 30, 2008. The statement of operations for the year ended May 31, 2009 of Ads in Motion, Inc. (“ADSO”) was used for pro forma purposes, as that is ADSO’s year-end.
 
     The unaudited condensed pro forma financial statements should be read in conjunction with the audited consolidated historical financial statements and notes thereto included herein for Magla Products, LLC and Subsidiary (“Magla,” the “Company,” “we,” “us” or “our”) and the audited financial statements of ADSO. The pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the future results of operations of the combined enterprise after the merger of ADSO with Magla, or of the results of operations of the combined enterprise that would have actually occurred had the merger been effected as of the dates described above. The merger will be accounted for as a reverse acquisition wherein Magla will be treated as the acquirer for accounting purposes since it will control the combined enterprise.
 
Condensed Pro Forma Statements of Operations for the year ended November 28, 2009 (Unaudited)
                             
Pro Forma
  
   
Accounting
    
Legal Survivor
    
Pro Forma
            
Statement of
  
   
Acquirer Magla
    
ADSO
    
Adjustments
    
Notes
    
Operations
  
 Net sales
  
$
43,568,257
    
$
-
    
$
-
            
$
43,568,257
  
                                 
                                         
Cost of sales
    
33,591,438
      
-
      
-
              
33,591,438
  
Gross profit
    
9,976,819
      
-
      
-
              
9,976,819
  
                                         
Operating expenses
                                        
Selling
    
6,764,064
      
-
      
-
              
6, 764,064
  
General and administrative
    
3,359,811
      
18,733
      
(853,000)
      
(A)
          
                     
(250,000)
      
(B)
          
                     
(34,000)
      
(C)
          
                     
(369,000)
      
(D)
          
                     
120,000
      
(E)
          
                     
81,000
      
(F)
      
2,073,544
  
                                 
     
10,123,875
      
18,733
      
(1,305,000)
              
8,837,608
  
                                 
                                         
Income (loss) from operations
    
(147,056)
      
(18,733)
      
1,305,000
              
1,139,211
  
                                         
Other income (expense)
                                        
Interest income
    
338,843
              
(338,843)
      
(G)
      
-
  
Interest expense
    
(1,034,065)
      
(1,089)
      
311,399
      
(H)
          
                     
(84,533)
      
(I)
          
                     
(194,333)
      
(J)
      
(1,002,621)
  
Gain on disposal of assets
    
800
      
-
      
-
              
800
  
Other, net
    
-
      
100
      
-
              
100
  
                                 
     
(694,422)
      
(989)
      
(306,310)
              
(1,001,721)
  
                                         
Income (loss) before income taxes
    
(841,478)
      
(19,722)
      
998,690
              
137,490
  
Income taxes
    
-
      
-
      
54,966
      
(K)
      
54,966
  
                                 
Net income (loss)
  
$
(841,478)
    
$
(19,722)
    
$
943,694
            
$
82,494
  
                                 
                                         
Net income per common share:
                                        
Basic
                                  
$
0.01
  
Diluted
                                  
$
-
  
                                       
Weighted average number of common shares outstanding:
                                        
Basic
                                    
15,943,000
  
Common stock equivalents
                                    
6,637,388
  
Diluted
                                    
22,580,388
  
                                       

 
5
 

NOTES TO THE CONDENSED PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
 
     As a result of the merger, Magla became ADSO’s wholly-owned subsidiary and the security holders of Magla received an aggregate of 15,000,000 shares of common stock. As a result of the merger and the issuance of stock to the security holders of Magla, the former security holders of Magla held approximately 69% of ADSO’s outstanding common stock immediately after the merger and the issuance of 500,000 shares of common stock to settle debt issuance costs. Accounting principles generally accepted in the United States generally require that a company whose security holders retain the majority voting interest in the combined business be treated as the acquirer for financial reporting purposes. The acquisition was accounted for as a reverse acquisition whereby Magla was deemed to be the “accounting acquirer.”
 
(A)  This pro forma adjustment reflects the removal of miscellaneous, non-business expenses incurred by related parties who will not be involved in or employed by the Company subsequent to the merger as of the beginning of the year.
 
(B)  This pro forma adjustment reflects the removal of professional fees incurred by related parties who will not be involved in or employed by the Company subsequent to the merger as of the beginning of the year.
 
(C)  This pro forma adjustment reflects the removal of entertainment expenses incurred by related parties who will not be involved in or employed by the Company subsequent to the merger as of the beginning of the year.
 
(D)  This pro forma adjustment reflects the removal of payments to related parties who will not be involved in or employed by the Company subsequent to the merger as of the beginning of the year.
 
(E)  This pro forma adjustment reflects the increase in professional fees the Company expects to incur from being a public company, including quarterly and annual Securities and Exchange Commission (“SEC”) filings.
 
(F)  This pro forma adjustment reflects the director’ fees the Company expects to incur to the members of its board of directors as a result of being a public company.
 
(G)  This pro forma adjustment reflects the decrease in interest income associated with related party note receivables, which were not transferred in the merger as of the beginning of the year.
 
(H)  This pro forma adjustment reflects the decrease in interest expense associated with the related party and former member’s notes payable not transferred in the merger as of the beginning of the year.
 
(I)  To record the accretion of the original issue discount on the 8% convertible debentures.
 
(J)  To record the amortization of deferred financing costs.
 
(K)  The provision for income tax “Pro Forma Adjustment” outlined above reflects the estimated net historical tax impact of the pro forma assuming a 40% effective tax rate.

 
 
 
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