U.S. RARE EARTHS, INC - FORM 8-K - EX-99

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file	filename
EX-99 - U.S. RARE EARTHS, INC	finstatementsusredec2010fina.htm
8-K - U.S. RARE EARTHS, INC	form8kamend1usremergerclosin.htm

Notes to Unaudited Pro Forma Consolidated Financial Statements

Effective July 18, 2011, Seaglass Holding Corp., “Seaglass”, a wholly owned subsidiary of Colorado Rare Earths, Inc. “Colorado” entered into an agreement and plan of merger agreement with U.S. Rare Earths, Inc.“USRE” wherein Seaglass acquired all of the issued and outstanding shares of USRE for 5,000,000 shares of the restricted common stock of Colorado.

Immediately after the transaction, USRE will cease to exist and Seaglass will become the surviving corporation, a wholly owned subsidiary of Colorado.

Proforma adjustments reflect[1] the cancellation of the shares of USRE [2] the issuance of 5,000,000 shares of Colorado in exchange for all issued and outstanding shares of USRE, resulting in a total of 19,451,454 shares outstanding, [3] eliminate the accumulated deficit of USRE and [4] the payment of $500,000 against the related note payable . The mineral assets acquired in the transaction were valued at the trading price of the shares issued on the effective date of the agreement of $8.50 per share.

The proforma, consolidated balance sheets and statements of operations of Colorado and USRE are presented here as of June 30, 2011 and December 31, 2010.


COLORADO RARE EARTHS, INC.
Proforma Consolidated Balance Sheet
June 30, 2011

			Colorado		U.S.							Adjusted
			Rare		Rare		Combined		Pro Forma			ProForma
			Earths, Inc.		Earths, Inc.		Totals		Adjustments		REF	Totals
ASSETS
CURRENT ASSETS
	Cash		$	1,872,920	$	2,892	$	1,875,812	$	(500,000)	[4]	$	1,375,812
	Accounts receivable, net			613,538		-		613,538		-			613,538
	Other current assets			1,633		-		1,633		-			1,633
		Total Current Assets		2,488,091		2,892		2,490,983		(500,000)			1,990,983
PROPERTY AND EQUIPMENT, net				55,792		-		55,792		-			55,792
OTHER ASSETS
	Mineral properties			1,071,507		-		1,071,507		42,500,000	[2]		43,571,507
		Total Other Assets		1,071,507		-		1,071,507		42,500,000			43,571,507
		TOTAL ASSETS	$	3,615,390	$	2,892	$	3,618,282	$	42,000,000		$	45,618,282
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
	Accounts payable and accrued expenses		$	457,873	$	12,049	$	469,922	$	-		$	469,922
	Related party payable			374,150		1,418,718		1,792,868		(500,000)	[4]		1,292,868
	Warrant derivative liability			6,552,864		-		6,552,864		-			6,552,864
		Total Current Liabilities		7,384,887		1,430,767		8,815,654		(500,000)			8,315,654
		TOTAL LIABILITIES		7,384,887		1,430,767		8,815,654		(500,000)			8,315,654
STOCKHOLDERS' EQUITY (DEFICIT)
	Preferred stock			-		-		-		-			-
	Common stock			145		33,200		33,345		(33,200)	[1]		195
										50	[2]		-
	Additional paid-in capital			10,092,171		69,800		10,161,971		(1,530,875)	[3]		51,164,246
										33,200	[1]		-
				-		-		-		42,499,950	[2]		-
	Stock subscription receivable			(480,000)				(480,000)					(480,000)
	Retained earnings (deficit)			(13,381,813)		(1,530,875)		(14,912,688)		1,530,875	[3]		(13,381,813)

		Total Stockholders' Equity (Deficit)		(3,769,497)		(1,427,875)		(5,197,372)		42,500,000			37,302,628
		TOTAL LIABILITIES AND
		STOCKHOLDERS' EQUITY (DEFICIT)	$	3,615,390	$	2,892	$	3,618,282	$	42,000,000		$	45,618,282


COLORADO RARE EARTHS, INC.
Proforma Consolidated Statements of Operations
For the Six Months Ended June 30, 2011

												Pro-Forma
			Colorado		U.S.							Adjusted
			Rare		Rare		Combined		Pro Forma			Combined
			Earths, Inc.		Earths, Inc.		Totals		Adjustments		REF	Totals
REVENUES			$	1,422,220	$	-	$	1,422,220	$	-		$	1,422,220
COST OF SALES				983,244		-		983,244		-			983,244

GROSS PROFIT				438,976		-		438,976		-			438,976

OPERATING EXPENSES

	General and administrative			6,825,159		84,425		6,909,584		-			6,909,584
	Depreciation expense			11,501		-		11,501		-			11,501

		Total Costs and Expenses		6,836,660		84,425		6,921,085		-			6,921,085

		OPERATING LOSS		(6,397,684)		(84,425)		(6,482,109)		-			(6,482,109)

OTHER INCOME (EXPENSE)

	Change in fair value of warrant liability			(3,666,114)		-		(3,666,114)		-			(3,666,114)
	Interest income			532		-		532		-			532
	Interest expense			-		-		-		-			-

		Total Other Income (Expense)		(3,665,582)		-		(3,665,582)		-			(3,665,582)

		LOSS BEFORE INCOME TAXES		(10,063,266)		(84,425)		(10,147,691)		-			(10,147,691)
		PROVISION FOR INCOME TAXES		-		-		-		-			-

		NET LOSS	$	(10,063,266)	$	(84,425)	$	(10,147,691)	$	-		$	(10,147,691)

		BASIC AND DILUTED LOSS PER SHARE	$	(0.76)	$	(0.02)						$	(0.56)

		WEIGHTED AVERAGE NUMBER OF COMMON
		SHARES OUTSTANDING		13,218,234		5,000,000							18,218,234


COLORADO RARE EARTHS, INC.
Proforma Consolidated Balance Sheet
December 31, 2010

			Colorado		U.S.							Adjusted
			Rare		Rare		Combined		Pro Forma			ProForma
			Earths, Inc.		Earths, Inc.		Totals		Adjustments		REF	Totals
ASSETS
CURRENT ASSETS
	Cash		$	61,574	$	3,167	$	64,741	$	(500,000)	[4]	$	(435,259)
	Accounts receivable, net			710,411		-		710,411		-			710,411
	Other current assets			51,730		-		51,730		-			51,730
		Total Current Assets		823,715		3,167		826,882		(500,000)			326,882
PROPERTY AND EQUIPMENT, net				49,807		-		49,807		-			49,807
OTHER ASSETS
	Mineral properties			326,000		-		326,000		42,500,000			42,826,000
		Total Other Assets		326,000		-		326,000		42,500,000	[2]		42,826,000
		TOTAL ASSETS	$	1,199,522	$	3,167	$	1,202,689	$	42,000,000		$	43,202,689
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
	Accounts payable and accrued expenses		$	408,099	$	12,544	$	420,643	$	-		$	420,643
	Related party payable			-		1,337,073		1,337,073		(500,000)	[4]		837,073
	Warrant derivative liability			-		-		-		-			-
		Total Current Liabilities		408,099		1,349,617		1,757,716		(500,000)			1,257,716
		TOTAL LIABILITIES		408,099		1,349,617		1,757,716		(500,000)			1,257,716
STOCKHOLDERS' EQUITY (DEFICIT)
	Preferred stock			-		-		-		-			-
	Common stock			123		33,200		33,323		(33,200)	[1]		173
										50	[2]		-
	Additional paid-in capital			4,109,847		66,800		4,176,647		(1,446,450)	[3]		45,263,347
										33,200	[1]		-
				-		-		-		42,499,950	[2]		-
	Retained earnings (deficit)			(3,318,547)		(1,446,450)		(4,764,997)		1,446,450	[3]		(3,318,547)
		Total Stockholders' Equity (Deficit)		791,423		(1,346,450)		(555,027)		42,500,000			41,944,973
		TOTAL LIABILITIES AND
		STOCKHOLDERS' EQUITY (DEFICIT)	$	1,199,522	$	3,167	$	1,202,689	$	42,000,000		$	43,202,689


COLORADO RARE EARTHS, INC.
Proforma Consolidated Statements of Operations
For the Year Ended December 31, 2010
												Pro-Forma
			Colorado		U.S.							Adjusted
			Rare		Rare		Combined		Pro Forma			Combined
			Earths, Inc.		Earths, Inc.		Totals		Adjustments		REF	Totals
REVENUES			$	3,890,960	$	-	$	3,890,960	$	-		$	3,890,960
COST OF SALES				2,853,677		-		2,853,677		-			2,853,677

GROSS PROFIT				1,037,283		-		1,037,283		-			1,037,283

OPERATING EXPENSES
	General and administrative			2,191,194		176,094		2,367,288		-			2,367,288
	Depreciation expense			22,462		-		22,462		-			22,462
	Impairment of intangible assets			2,624,000		-		-		-			-

		Total Costs and Expenses		4,837,656		176,094		2,389,750		-			2,389,750

		OPERATING LOSS		(3,800,373)		(176,094)		(1,352,467)		-			(1,352,467)

OTHER INCOME (EXPENSE)
	Change in fair value of warrant liability			-		-		-		-			-
	Interest income			1,022		-		1,022		-			1,022
	Interest expense			-		-		-		-			-

		Total Other Income (Expense)		1,022		-		1,022		-			1,022

		LOSS BEFORE INCOME TAXES		(3,799,351)		(176,094)		(1,351,445)		-			(1,351,445)
		PROVISION FOR INCOME TAXES		-		-		-		-			-

		NET LOSS	$	(3,799,351)	$	(176,094)	$	(1,351,445)	$	-		$	(1,351,445)
		BASIC AND DILUTED LOSS PER SHARE	$	(0.71)	$	(0.04)						$	(0.13)

		WEIGHTED AVERAGE NUMBER OF COMMON
		SHARES OUTSTANDING		5,344,384		5,000,000							10,344,384


Common Stock	145		To eliminate common stock of USRE
Additional Paid-in Capital		145	To eliminate common stock of USRE
Common Stock		5,000	Record issuance of 5,000,000 shares for USRE valued at $8.50 per share
Additional Paid-in Capital		42,495,000	Record issuance of 5,000,000 shares for USRE valued at $8.50 per share
Mineral Properties	43,500,000		Record issuance of 5,000,000 shares for USRE valued at $8.50 per share
Additional Paid-in Capital	1,530,875		To eliminate accumulated deficit of USRE
Retained Earnings		1,530,875	To eliminate accumulated deficit of USRE
Related Party Payable	500,000		To record cash paid at closing
Cash		500,000	To record cash paid at closing

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