Stone Harbor Investments, Inc. - FORM 8-K/A - EX-99.5 - EXHIBIT 99.5 - February 10, 2012

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8-K/A - CURRENT REPORT - Stone Harbor Investments, Inc.v301307_8-ka.htm
EX-99.4 - EXHIBIT 99.4 - Stone Harbor Investments, Inc.v301307_ex99-4.htm
EX-99.3 - EXHIBIT 99.3 - Stone Harbor Investments, Inc.v301307_ex99-3.htm

 

EXHIBIT 99.5

 

LTS Nutraceuticals, Inc.

INTRODUCTION TO PRO FORMA CONDENSED

COMBINED FINANCIAL STATEMENTS

(Unaudited)

 

The following unaudited pro forma condensed combined financial statements give effect to the acquisition of BioCalth International, Inc. (“BII”) and LTS Nutraceuticals, Inc. (“LTSN” or the “Company”), contemplated in the Agreement of Acquisition dated as of October 20, 2011. Effective on December 14, 2011, BII was acquired by LTSN, becoming a wholly-owned subsidiary of LTSN whereby 81.58% of the issued and outstanding common shares of BII were exchanged for 1,989,756 shares of LTSN, a public corporation. The unaudited pro forma information is presented for illustration purposes only in accordance with the assumptions set forth below and in the notes to the unaudited pro forma combined condensed financial statements.

 

The unaudited pro forma condensed combined balance sheet combines the balance sheets of LTSN and BII as if the acquisition has occurred on September 30, 2011. The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2010 and the nine months ended September 30, 2011 combines the historical statements of operations of LTSN and BII for the year ended December 31, 2010 and the nine months ended September 30, 2011 and gives pro forma effect to the acquisition as if it were completed on January 1, 2010 and January 1, 2011 References are made to the notes to the pro forma statements and a detailed explanation of these combinations.

 

The unaudited pro forma balance sheet and statements of operations should be read in conjunction with the separate historical financial statements of LTSN for the year ended December 31, 2010 included in Form 8-K of LTSN filed on April 6, 2011 and the historical financial statements of LTSN, as filed and issued in its Form 10-Q for the nine months ended September 30, 2011. These pro forma condensed combined financial statements may not be indicative of what would have occurred if the acquisition had actually occurred on the indicated dates and they should not be relied upon as an indication of future results of operations.

 

 

 

F-1
 

 

 

LTS Nutraceuticals, Inc.

Balance Sheet

 

      LTSN  BII         
      As of  As of      
      September 30,  September 30,     Pro form
      2011  2011  Adjustments  Combined
   Note:  (1)  (2)  Debit  Credit  Total
Assets                  
Current Assets:                              
Cash and cash equivalents       $387,002   $335,840   $—     $—     $722,842 
Restricted Cash        873,747    —      —      —      873,747 
Accounts receivable        720,377    100,504    —      —      820,881 
Inventory        229,277    413,536    —      130,386    512,427 
Prepaid expenses and other current assets        383,084    3,469    —      3,469    383,084 
Deferred loan costs        33,346    —      —      —      33,346 
                               
Total Current Assets        2,626,833    853,349    —      133,855    3,346,327 
                               
Equipment and software - net        73,142    147,076    —      147,076    73,142 
Intangible assets       784,444    —      —      —      784,444 
Other assets        —      2,797    —      2,797    —   
                               
Total Assets       $3,484,419   $1,003,222   $—     $283,728   $4,203,913 
                               
Liabilities and Stockholders’ (Deficit) Equity                              
                               
Current Liabilities:                              
Accounts payable       $457,133   $89,725   $—     $—     $546,858 
Accrued liabilities        —      4,769    —      —      4,769 
Accrued expenses        548,944    —      —      —      548,944 
Accrued interest        273,808    —      —      —      273,808 
Accrued rebate liability        672,265    —      —      —      672,265 
Deferred revenue        35,039    —      —      —      35,039 
Derivative Liability        286,136    —      —      —      286,136 
Current portion of convertible debentures        70,000    —      —      —      70,000 
                               
Total Current Liabilities        2,343,325    94,494    —      —      2,437,819 
                               
Convertible debentures        200,000    —      —      —      200,000 
Accrued licensing fee        800,000    —      —      —      800,000 
Convertible notes payable        4,690,376    —      —      —      4,690,376 
Total Liabilities        8,033,701    94,494    —      —      8,128,195 
                               
Stockholders' (Deficit) Equity:                              
Common stock   3    421    32,300    32,300    20    441 
Additional paid in capital   3    276,639    6,227,564    6,227,564    509,855    786,494 
Minority interest   3    —      —      —      115,125    115,125 
Accumulated deficit   3    (4,826,342)   (5,351,136)   —      5,351,136    (4,826,342)
                               
Total Stockholders' (Deficit) Equity        (4,549,282)   908,728    6,259,864    5,976,136    (3,924,282)
                               
Total Liabilities and Stockholders' (Deficit) Equity       $3,484,419   $1,003,222   $6,259,864   $5,976,136   $4,203,913 
                               

 

 

 

F-2
 

NOTES TO UNAUDITED CONDENSED COMBINED PRO FORMA BALANCE SHEET

 

(1) Derived from the unaudited balance sheet of LTS Nutraceuticals, Inc. as of September 30, 2011 included in Form 10-Q filed with the SEC.
(2) Derived from audited balance sheet of BII as of September 30, 2011 included in this Form 8K.

(3) To record effect of acquisition based upon management estimates and subject to final valuation.
   

 

 

 

F-3
 

 

 

LTS Nutraceuticals, Inc.

Statement of Operations

 

      LTSN  BII         
      For the Year Ended  For the Year Ended      
      December 31, 2010  December 31, 2010  Adjustments  Pro Forma
   Note:  (1)  (2)  Debit  Credit  Combined
                   
Net Sales       $1,211,465   $1,643,774   $—     $—     $2,855,239 
Cost of Sales        396,579    802,368    —      —      1,198,947 
Gross Profit        814,886    841,406    —      —      1,656,292 
Operating Expenses                              
Distributor incentives        332,476    —      —      —      332,476 
Selling, general and administrative expenses       1,081,800    2,199,294    —      —      3,281,094 
Total operating expenses        1,414,276    2,199,294    —      —      3,613,570 
Loss from operations        (599,390)   (1,357,888)   —     —      (1,957,278)
                               
Other Expense:                              
Interest income (expense)        (247,136)   4,885    —      —      (242,251)
Legal Settlement        —      (50,000)   —      —      (50,000)
Other income        —      440,507    —      —      440,507 
Loss on disposal of fixed assets        —      (33,368)   —      —      (33,368)
Total Other Expense        (247,136)   362,024              114,888 
Loss before income tax provision        (846,526)   (995,864)   —     —      (1,842,390)
Income tax expense        —      18,366    —      —      18,366 
Net Loss       $(846,526)  $(1,014,230)  $—    $—     $(1,860,756)
                               
Net loss per common share - basic and diluted       $(.02)                 $(.05)
                               
Weighted average number of shares outstanding during the period - basic and diluted        36,185,129                   38,685,129 

 

 

 

 

F-4
 

 

 

LTS Nutraceuticals, Inc.

Statement of Operations

 

      LTSN  BII         
      For the Nine Months Ended  For the Nine Months Ended      
      September 30, 2011  September 30, 2011  Adjustments  Pro Forma
   Note:  (1)  (2)  Debit  Credit  Combined
                   
Net Sales       $1,758,390   $1,042,048   $—     $—     $2,800,438 
Cost of Sales        1,090,273    616,866    —      —      1,707,139 
Gross Profit        668,117    425,182              1,093,299 
Operating Expenses                              
Distributor incentives        578,553    —      —      —      578,553 
Selling, general and administrative expenses       2,232,356    2,131,213    —      —      4,363,569 
Total operating expenses        2,810,909    2,131,213    —      —      4,942,122 
Loss from operations        (2,142,792)   (1,706,031)   —          (3,848,823)
                               
Other Expense:                              
Interest income (expense)        (530,537)   2,159    —      —      (528,378)
Change in fair value derivative liability        (286,136)   —      —      —      (286,136)
Other income             96,447    —      —      96,447 
Total Other Expense        (816,673)   98,606    —      —      (718,067)
Net Loss       $ (2,959,465)  $ (1,607,425)  $ —    $  —     $ (4,566,890)
                               
Net loss per common share - basic and diluted       $(0.08)                 $(0.12)
                               
Weighted average number of shares outstanding during the period - basic and diluted        36,171,496                   38,671,496 

 

 

 

F-5
 

 

NOTES TO UNAUDITED CONDENSED COMBINED PRO FORMA STATEMENTS OF OPERATIONS

 

  (1) Derived from the audited income statements of LTS Nutraceuticals, Inc. for the year ended December 31, 2010 included in Form 8-K and for the nine months ended September 30, 2011 included in Form 10-Q both filed with the SEC.
  (2) Derived from the audited income statements of BII for the year ended December 31, 2010 included and the unaudited financial statements for  the nine months ended September 30, 2011 included in this Form 8-K.

 

 

F-6

 

 

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