Attached files
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| 8-K - SEQUENTIAL BRANDS GROUP, INC. | fm8k-042611.htm |
Exhibit 99.1
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
On April 26, 2011, People’s Liberation, Inc., a Delaware corporation (“People’s Liberation”), and its wholly owned subsidiary Bella Rose, LLC, a California limited liability company (“BR” and together with People’s Liberation, the “Sellers”), completed the sale of BR’s 50% membership interest in J. Lindeberg USA, LLC (“Lindeberg USA”) to J. Lindeberg USA Corp. (“Buyer”) pursuant to the terms of a Unit Purchase Agreement entered into by the parties on April 7, 2011.
The following unaudited pro forma financial statements of People’s Liberation are presented to comply with Article 8.05 Regulation S-X and follow proscribed SEC guidelines. The unaudited pro forma financial statements do not purport to present what the Company’s results would have been had the disposition actually occurred on the dates presented or to project the Company’s results from operations or financial position for any future period. The proscribed guidelines limit pro forma adjustments to those that are directly attributable to the disposition on a factually supportable basis. Further, the guidelines do not allow for the pro forma effect of cost saving actions that could have been taken by management if the sale of assets had occurred in prior periods.
The unaudited pro forma condensed consolidated balance sheet as of December 31, 2010, presents pro forma effects of the transaction as if the sale had occurred on December 31, 2010. The unaudited pro forma consolidated statement of operations for the fiscal year ended December 31, 2010, presents the pro forma effects as if the transaction occurred on January 1, 2010.
These unaudited pro forma financial statements and accompanying notes should be read together with the Company’s audited consolidated financial statements and the accompanying notes, as of and for the fiscal year ended December 31, 2010 included in the Company annual report filed on Form 10-K on March 31, 2011.
PEOPLE’S LIBERATION, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 2010
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As Reported
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Pro Forma Adjustment
(A)
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Pro Forma Adjustment
(B)
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Pro Forma
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Assets
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Current Assets:
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Cash and cash equivalents
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$ | 1,461,601 | $ | (276,858 | ) | $ | 900,000 | $ | 2,084,743 | |||||||
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Restricted cash
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156,248 | - | - | 156,248 | ||||||||||||
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Due from factors
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363,319 | (84,379 | ) | - | 278,940 | |||||||||||
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Accounts receivable, net of allowance for doubtful accounts
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270,328 | (202,601 | ) | - | 67,727 | |||||||||||
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Inventories
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2,691,714 | (1,079,497 | ) | - | 1,612,217 | |||||||||||
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Prepaid expenses and other current assets
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140,905 | (115,624 | ) | - | 25,281 | |||||||||||
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Note receivable
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- | - | 750,000 | 750,000 | ||||||||||||
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Deferred income tax assets, current
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450,000 | (66,000 | ) | 384,000 | ||||||||||||
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Total current assets
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5,534,115 | (1,824,959 | ) | 1,650,000 | 5,359,156 | |||||||||||
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Property and equipment, net of accumulated depreciation and amortization
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1,862,084 | (684,028 | ) | - | 1,178,056 | |||||||||||
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Trademarks, net of accumulated amortization
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629,799 | - | - | 629,799 | ||||||||||||
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Intangible asset
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428,572 | - | - | 428,572 | ||||||||||||
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Other assets
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461,066 | (391,100 | ) | - | 69,966 | |||||||||||
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Net deferred income tax asset, long-term
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384,000 | 140,000 | - | 524,000 | ||||||||||||
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Total assets
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$ | 9,299,636 | $ | (2,760,087 | ) | $ | 1,650,000 | $ | 8,189,549 | |||||||
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Liabilities and Stockholders’ Equity
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Current Liabilities:
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Accounts payable and accrued expenses
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$ | 5,330,769 | $ | (658,840 | ) | $ | - | $ | 4,671,929 | |||||||
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Current portion of due to member
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219,127 | (286,111 | ) | 66,984 | - | |||||||||||
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Income taxes payable
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39,082 | (17,765 | ) | 225,000 | 246,317 | |||||||||||
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Total current liabilities
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5,588,978 | (962,716 | ) | 291,984 | 4,918,246 | |||||||||||
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Long-Term Liabilities:
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Deferred lease obligations
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443,487 | (60,673 | ) | - | 382,814 | |||||||||||
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Due to member, net of current portion
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325,000 | (325,000 | ) | - | - | |||||||||||
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Note payable to related parties
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750,000 | - | - | 750,000 | ||||||||||||
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Total long-term liabilities
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1,518,487 | (385,673 | ) | - | 1,132,814 | |||||||||||
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Total liabilities
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7,107,465 | (1,348,389 | ) | 291,984 | 6,051,060 | |||||||||||
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Stockholders’ equity:
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Common stock, $0.001 par value, 150,000,000 shares authorized; 36,002,563 shares issued and outstanding at December 31, 2010
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36,002 | - | - | 36,002 | ||||||||||||
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Additional paid-in capital
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8,170,313 | - | - | 8,170,313 | ||||||||||||
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Accumulated deficit
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(5,453,514 | ) | - | 1,852,929 | (3,600,585 | ) | ||||||||||
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Total stockholders’ equity
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2,752,801 | - | 1,852,929 | 4,605,730 | ||||||||||||
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Noncontrolling interest
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(560,630 | ) | (1,906,611 | ) | - | (2,467,241 | ) | |||||||||
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Total equity
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2,192,171 | (1,906,611 | ) | 1,852,929 | 2,138,489 | |||||||||||
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Total liabilities and stockholders’ equity
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$ | 9,299,636 | $ | (3,255,000 | ) | $ | 2,144,913 | $ | 8,189,549 | |||||||
See accompanying notes to the unaudited pro forma consolidated financial statements.
PEOPLE’S LIBERATION, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2010
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As Reported
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Pro Forma Adjustment
(A)
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Pro Forma
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Net revenue
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$ | 30,952,508 | $ | (9,035,075 | ) | $ | 21,917,433 | |||||
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Cost of goods sold
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16,144,054 | (3,926,810 | ) | 12,217,244 | ||||||||
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Gross profit
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14,808,454 | (5,108,265 | ) | 9,700,189 | ||||||||
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Selling, design and production expenses
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7,946,065 | (1,970,699 | ) | 5,975,366 | ||||||||
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General and administrative
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10,801,967 | (3,422,131 | ) | 7,379,836 | ||||||||
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Total operating expenses
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18,748,032 | (5,392,830 | ) | 13,355,202 | ||||||||
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Loss from operations
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(3,939,578 | ) | 284,565 | (3,655,013 | ) | |||||||
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Interest expense, net
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181,574 | - | 181,574 | |||||||||
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Other income
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(750,000 | ) | - | (750,000 | ) | |||||||
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Total other income
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(568,426 | ) | - | (568,426 | ) | |||||||
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Loss before income taxes
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(3,371,152 | ) | 284,565 | (3,086,587 | ) | |||||||
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Income tax benefit
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(785,220 | ) | (93,390 | ) | (878,610 | ) | ||||||
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Net loss
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(2,585,932 | ) | 377,955 | (2,207,977 | ) | |||||||
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Noncontrolling interest in subsidiaries’ earnings
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(1,670,934 | ) | (188,979 | ) | (1,481,955 | ) | ||||||
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Net loss attributable to common stockholders
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$ | (914,998 | ) | 188,976 | $ | (726,022 | ) | |||||
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Basic and diluted weighted average loss per common share
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$ | (0.03 | ) | $ | (0.02 | ) | ||||||
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Basic and diluted average common shares outstanding
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36,002,563 | 36,002,563 | ||||||||||
See accompanying notes to the unaudited pro forma consolidated financial statements.
Notes to Unaudited Pro Forma Consolidated Financial Statements
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1.
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Basis of Presentation
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On April 26, 2011, the Sellers completed the sale of BR’s 50% membership interest in Lindeberg USA to Buyer pursuant to the terms of a Unit Purchase Agreement entered into by the parties on April 7, 2011. In consideration for Sellers’ 50% membership interest in Lindeberg USA, Buyer agreed to pay to Sellers an aggregate of $1,650,000, of which $900,000 was paid upon the closing of the transaction and $750,000 will be paid on the six month anniversary of the closing of the transaction.
In connection with the transfer of BR’s membership interest in the assets and liabilities identifiable in Lindeberg USA, certain customer lists and lease agreements related to Lindeberg USA were also transferred to the Sellers.
The unaudited pro forma consolidated balance sheet as of December 31, 2010, present pro forma effects of the transaction as if the sale had occurred on December 31, 2010. The unaudited pro forma consolidated statement of operations for the fiscal year ended December 31, 2010 present the pro forma effects as if the sale had occurred on January 1, 2010.
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2.
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Notes Regarding the Unaudited Pro Forma Adjustments
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(A)
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The pro forma data reflects the elimination of the assets and liabilities as of December 31, 2010, and direct revenue and costs of Lindeberg USA for the year ended December 31, 2010.
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(B)
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The unaudited pro forma consolidated balance sheet as of December 31, 2010, present pro forma effects of the transaction, including the receipt of the proceeds, as if the sale had occurred on December 31, 2010. The estimated tax liability on the gain is calculated using the effective tax rates as of December 31, 2010 and taking into effect Federal net operating losses available to carryforward to future periods.
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