Blue Earth, Inc. - FORM 8-K/A - EX-99.5 - PRO FORMA FINANCIAL INFORMATION FOR CASTROVILLA, INC., XNERGY, INC., AND HVAC CONTROLS & SPECIALTIES, INC.

Attached files

file	filename
8-K/A - CURRENT REPORT - Blue Earth, Inc.	bblu_8ka2.htm
EX-99.1 - FINANCIAL STATEMENTS OF XNERGY, INC. - Blue Earth, Inc.	bblu_ex991.htm
EX-99.3 - INTERIM FINANCIAL STATEMENTS OF XNERGY, INC. - Blue Earth, Inc.	bblu_ex993.htm
EX-99.4 - INTERIM FINANCIAL STATEMENTS OF HVAC CONTROLS & SPECIALTIES, INC. - Blue Earth, Inc.	bblu_ex994.htm
EX-99.2 - FINANCIAL STATEMENTS OF HVAC CONTROLS & SPECIALTIES, INC. - Blue Earth, Inc.	bblu_ex992.htm

Exhibit 99.5


BLUE EARTH, INC.
Proforma Consolidated Balance Sheet
June 30, 2011

			Blue Earth, Inc.		Xnergy, Inc.		HVAC							Adjusted
			and		and Variable		Controls &		Combined		Pro Forma			Pro Forma
			Subsidiary		Interest Entity		Specialities, Inc.		Totals		Adjustments		REF	Totals
ASSETS

CURRENT ASSETS

	Cash		$	2,255,286	$	1,267,648	$	148,435	$	3,671,369	$	(50,000)	[9]	$	3,621,369
	Accounts receivable, net			624,223		249,225		177,733		1,051,181		-			1,051,181
	Inventory			361,453		-		-		361,453		-			361,453
	Costs in excess of billings			-		383		-		383		-			383
	Other current assets			809,304		177,352		-		986,656		-			986,656

		Total Current Assets		4,050,266		1,694,608		326,168		6,071,042		(50,000)			6,021,042

PROPERTY AND EQUIPMENT, net				214,047		3,631,671		19,662		3,865,380		(2,921,016)	[11]		944,364

OTHER ASSETS

	Deposits			17,930		29,864		-		47,794		-			47,794
	Related party receivables			-		2,239,910		-		2,239,910		-			2,239,910
	Customer lists and contracts			2,819,416		-		-		2,819,416		7,740,000	[5]		11,316,814
												1,626,217	[7]
												44,903	[11]
												(913,722)	[12]

		Total Other Assets		2,837,346		2,269,774		-		5,107,120		8,497,398			13,604,518

		TOTAL ASSETS	$	7,101,659	$	7,596,053	$	345,830	$	15,043,542	$	5,526,382		$	20,569,924


LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
	Accounts payable and accrued expenses		$	711,821	$	2,713,700	$	202,797	$	3,628,318	$	(50,000)	[9]	$	3,578,318
	Billings in excess of revenues			-		142,644		-		142,644		-			142,644
	Loans and notes payable			254,023		5,034		46,218		305,275		-			305,275
	Related party payable			-		149,000		18,273		167,273		-			167,273
	Warrant derivative liability			1,223,960		-		-		1,223,960		-			1,223,960

		Total Current Liabilities		2,189,804		3,010,378		267,288		5,467,470		(50,000)			5,417,470

LONG TERM LIABILITIES
	Loans and notes payable-related parties			-		677,117		42,209		719,326		-			719,326
	Loans and notes payable			117,079		4,360,429		5,818		4,483,326		(2,589,263)	[11]		1,894,063

		Long term liabilities		117,079		5,037,546		48,027		5,202,652		(2,589,263)			2,613,389

		TOTAL LIABILITIES		2,306,883		8,047,924		315,315		10,670,122		(2,639,263)			8,030,859

STOCKHOLDERS' EQUITY (DEFICIT)

	Preferred stock			-		-		-		-		-			-
	Common stock			13,708		50,000		5,771		69,479		(50,000)	[2]		18,275
												(5,771)	[3]		-
												4,500	[5]		-
												67	[10]
	Additional paid-in capital			15,889,285		424,968		-		16,314,253		50,000	[2]		24,657,396
												5,771	[3]		-
				-		-		-		-		8,172,772	[5]		-
												114,600	[10]
	Non controlling interest			-		286,850		-		286,850		(286,850)	[11]		-
	Retained earnings (deficit)			(11,108,217)		(1,213,689)		24,744		(12,297,162)		1,188,945	[7]		(12,136,606)
												(114,667)	[10]
												(913,722)	[12]

		Total Stockholders' Equity (Deficit)		4,794,776		(451,871)		30,515		4,373,420		8,165,645			12,539,065

		TOTAL LIABILITIES AND
		STOCKHOLDERS' EQUITY (DEFICIT)	$	7,101,659	$	7,596,053	$	345,830	$	15,043,542	$	5,526,382		$	20,569,924


BLUE EARTH, INC.
Proforma Consolidated Statements of Operations
For the Six Months Ended June 30, 2011

														Pro-Forma
			Blue Earth, Inc.		Xnergy, Inc.		HVAC							Adjusted
			and		and Variable		Controls &		Combined		Pro Forma			Combined
			Subsidiary		Interest Entity		Specialities, Inc.		Totals		Adjustments		REF	Totals
REVENUES			$	2,043,636	$	1,540,098	$	653,656	$	4,237,390	$	-		$	4,237,390
COST OF SALES				752,303		1,012,043		508,116		2,272,462		-			2,272,462

GROSS PROFIT				1,291,333		528,055		145,540		1,964,928		-			1,964,928

OPERATING EXPENSES

	General and administrative			2,659,253		1,771,645		112,281		4,543,179		114,667	[10]		4,657,846
	Depreciation and amortization expense			-		30,000		-		30,000		913,722	[12]		943,722

		Total Costs and Expenses		2,659,253		1,801,645		112,281		4,573,179		1,028,389			5,601,568

		OPERATING LOSS		(1,367,920)		(1,273,590)		33,259		(2,608,251)		(1,028,389)			(3,636,640)

OTHER INCOME (EXPENSE)

	Change in fair value of warrant liability			64,199		-		-		64,199		-			64,199
	Interest income			956		6,610		-		7,566		-			7,566
	Interest expense			-		(60,173)		(2,260)		(62,433)		-			(62,433)

		Total Other Income (Expense)		65,155		(53,563)		(2,260)		9,332		-			9,332

		LOSS BEFORE INCOME TAXES		(1,302,765)		(1,327,153)		30,999		(2,598,919)		(1,028,389)			(3,627,308)
		PROVISION FOR INCOME TAXES		-		-		(12,090)		(12,090)		-			(12,090)

		NET LOSS	$	(1,302,765)	$	(1,327,153)	$	18,909	$	(2,611,009)	$	(1,028,389)		$	(3,639,398)


BLUE EARTH, INC.
Proforma Consolidated Balance Sheet
December 31, 2010

					Castrovilla, Inc.		Xnergy, Inc.		HVAC							Adjusted
			Blue		and Humitech		and Variable		Controls &		Combined		Pro Forma			Pro Forma
			Earth, Inc.		of NC, LLC		Interest Entity		Specialities, Inc.		Totals		Adjustments		REF	Totals
ASSETS

CURRENT ASSETS

	Cash		$	3,900,096	$	466,620	$	1,565,006	$	16,941	$	5,948,663	$	(150,000)	[8]	$	5,748,663
														(50,000)	[9]
	Accounts receivable, net			-		308,939		665,845		91,652		1,066,436		-			1,066,436
	Costs in excess of billings			-		-		10,830		-		10,830		-			10,830
	Inventory			-		125,627		-		-		125,627		-			125,627
	Other current assets			38,039		1,220		29,975		-		69,234		-			69,234

		Total Current Assets		3,938,135		902,406		2,271,656		108,593		7,220,790		(200,000)			7,020,790

PROPERTY AND EQUIPMENT, net				10,932		100,187		3,672,902		25,445		3,809,466		(2,921,016)	[11]		888,450

OTHER ASSETS

	Deposits			3,000		33,831		29,864		-		66,695		-			66,695
	Related party receivables			-		-		2,590,523		-		2,590,523		-			2,590,523
	Distributorship and customer base			-		74,914		-		-		74,914		2,148,639	[4]		7,739,945
														(287,347)	[6]
														7,740,000	[5]
														(145,380)	[7]
														36,563	[11]
														(1,827,444)	[12]

		Total Other Assets		3,000		108,745		2,620,387		-		2,732,132		7,665,031			10,397,163

		TOTAL ASSETS	$	3,952,067	$	1,111,338	$	8,564,945	$	134,038	$	13,762,388	$	4,544,015		$	18,306,403


LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
	Accounts payable and accrued expenses		$	37,339	$	432,858	$	1,654,532	$	19,844	$	2,144,573	$	(50,000)	[9]	$	2,094,573
	Billings in excess of revenues			-		-		207,350		-		207,350		-			207,350
	Loans and notes payable			-		253,107		1,578,361		6,314		1,837,782		(150,000)	[8]		1,687,782
	Related party payable			-		-		-		18,273		18,273		-			18,273
	Warrant derivative liability			1,288,159		-		-		-		1,288,159		-			1,288,159

		Total Current Liabilities		1,325,498		685,965		3,440,243		44,431		5,496,137		(200,000)			5,296,137

LONG TERM LIABILITIES
	Loans and notes payable-related parties			-		250,899		677,117		51,645		979,661		-			979,661
	Loans and notes payable			-		52,715		3,555,623		8,615		3,616,953		(2,589,263)	[11]		1,027,690

		Long term liabilities		-		303,614		4,232,740		60,260		4,596,614		(2,589,263)			2,007,351

		TOTAL LIABILITIES		1,325,498		989,579		7,672,983		104,691		10,092,751		(2,789,263)			7,303,488

STOCKHOLDERS' EQUITY (DEFICIT)

	Preferred stock			-		-		-		-		-		-			-
	Common stock			11,855		3,000		50,000		5,771		70,626		(3,000)	[1]		17,701
														(50,000)	[2]		-
														(5,771)	[3]
														1,279	[4]
														4,500	[5]
														67	[10]
	Additional paid-in capital			12,420,166		(168,588)		424,968		-		12,676,546		3,000	[1]		22,732,777
														50,000	[2]
				-		-		-		-		-		5,771	[3]
														2,147,360	[4]
														7,735,500	[5]
														114,600	[10]
	Non controlling interest			-		-		295,190				295,190		(295,190)	[11]		-
	Retained earnings (deficit)			(9,805,452)		287,347		121,804		23,576		(9,372,725)		(287,347)	[6]		(11,747,563)
														(145,380)	[7]
														(114,667)	[10]
														(1,827,444)	[12]

		Total Stockholders' Equity (Deficit)		2,626,569		121,759		891,962		29,347		3,669,637		7,333,278			11,002,915

		TOTAL LIABILITIES AND
		STOCKHOLDERS' EQUITY (DEFICIT)	$	3,952,067	$	1,111,338	$	8,564,945	$	134,038	$	13,762,388	$	4,544,015		$	18,306,403


BLUE EARTH, INC.
Proforma Consolidated Statements of Operations
For the Year Ended December 31, 2010

																Pro-Forma
					Castrovilla, Inc.		Xnergy, Inc.		HVAC							Adjusted
			Blue		and Humitech		and Variable		Controls &		Combined		Pro Forma			Combined
			Earth, Inc.		of NC, LLC		Interest Entity		Specialities, Inc.		Totals		Adjustments		REF	Totals
REVENUES			$	-	$	3,433,145	$	18,120,860	$	844,756	$	22,398,761	$	-		$	22,398,761
COST OF SALES				-		1,228,133		14,084,438		556,131		15,868,702		-			15,868,702

GROSS PROFIT				-		2,205,012		4,036,422		288,625		6,530,059		-			6,530,059

OPERATING EXPENSES

	General and administrative			2,202,320		2,125,725		3,272,237		159,562		7,759,844		114,667	[10]		7,874,511
	Depreciation and amortization expense			-		61,284		135,021		-		196,305		1,827,444	[12]		2,023,749

		Total Costs and Expenses		2,202,320		2,187,009		3,407,258		159,562		7,956,149		1,942,111			9,898,260

		OPERATING LOSS		(2,202,320)		18,003		629,164		129,063		(1,426,090)		(1,942,111)			(3,368,201)

OTHER INCOME (EXPENSE)

	Change in fair value of warrant liability			(483,441)		-		-		-		(483,441)		-			(483,441)
	Other income			15,311		-		159,216		3,776		178,303		-			178,303
	Interest expense			-		(56,544)		(218,378)		(7,147)		(282,069)		164,660	[11]		(117,409)

		Total Other Income (Expense)		(468,130)		(56,544)		(59,162)		(3,371)		(587,207)		164,660			(422,547)

		LOSS BEFORE INCOME TAXES		(2,670,450)		(38,541)		570,002		125,692		(2,013,297)		(1,777,451)			(3,790,748)
		PROVISION FOR INCOME TAXES		(12,781)		-		(30,738)		(52,288)		(95,807)		-			(95,807)


		NET LOSS	$	(2,683,231)	$	(38,541)	$	539,264	$	73,404	$	(2,109,104)	$	(1,777,451)		$	(3,886,555)


PRO FORMA ADJUSTMENTS


Common Stock	3,000		[1]	To eliminate common stock of Castrovilla/Humatech
Additional Paid-in Capital		3,000	[1]	To eliminate common stock of Castrovilla/Humatech
Common Stock	50,000		[2]	To eliminate common stock of Xnergy
Additional Paid-in Capital		50,000	[2]	To eliminate common stock of Xnergy
Common Stock	5,771		[3]	To eliminate common stock of HVAC Controls
Additional Paid-in Capital		5,771	[3]	To eliminate common stock of HVAC Controls
Common Stock		1,279	[4]	Record issuance of 1,278,952 shares for Castrovilla/Humitech valued at $1.68 per share
Additional Paid-in Capital		2,147,360	[4]	Record issuance of 1,278,952 shares for Castrovilla/Humitech valued at $1.68 per share
Customer Lists and Contracts	2,148,639		[4]	Record issuance of 1,278,952 shares for Castrovilla/Humitech valued at $1.68 per share
Common Stock		4,500	[5]	Record issuance of 4,500,000 shares for Xnergy and HVAC Controls valued at $1.72 per share
Additional Paid-in Capital		7,735,500	[5]	Record issuance of 4,500,000 shares for Xnergy and HVAC Controls valued at $1.72 per share
Customer Lists and Contracts	7,740,000		[5]	Record issuance of 4,500,000 shares for Xnergy and HVAC Controls valued at $1.72 per share
Customer Lists and Contracts		287,347	[6]	To eliminate retained earnings of Castrovilla/Humatech
Retained Earnings	287,347		[6]	To eliminate retained earnings of Castrovilla/Humatech
Customer Lists and Contracts		145,380	[7]	To eliminate retained earnings of Xnergy and HVAC Controls
Retained Earnings	144,706		[7]	To eliminate retained earnings of Xnergy and HVAC Controls
Related Party Payable	150,000		[8]	To record cash paid at closing of Castrovilla/Humatech
Cash		150,000	[8]	To record cash paid at closing of Castrovilla/Humatech
Accounts Payable and Accrued Expenses	50,000		[9]	To record cash paid at closing of Xnergy and HVAC Controls
Cash		50,000	[9]	To record cash paid at closing of Xnergy and HVAC Controls
Common Stock		67	[10]	Record issuance of 66,667 shares for Xnergy employees valued at $1.72 per share
Additional Paid-in Capital		114,600	[10]	Record issuance of 66,667 shares for Xnergy employees valued at $1.72 per share
Salaries and Wages	114,667		[10]	Record issuance of 66,667 shares for Xnergy employees valued at $1.72 per share
Property and Equipment		2,921,016	[11]	Remove real estate not acquired in with Xnergy
Loans and Notes Payable	2,589,263		[11]	Remove real estate not acquired in with Xnergy
Customer Lists and Contracts	36,563		[11]	Remove real estate not acquired in with Xnergy
Non Controlling Interest	295,190		[11]	Remove real estate not acquired in with Xnergy
Amortization Expense	1,827,444		[12]	To amortize intangible assets
Customer Lists and Contracts		1,827,444	[12]	To amortize intangible assets

Notes to Unaudited Pro Forma Consolidated Financial Statements

Effective January 1, 2011, Castrovilla Energy, Inc., “Energy”, a newly formed subsidiary of Blue Earth Energy Management Services, Inc., which is a subsidiary of Blue Earth, Inc, entered into a merger agreement with Castrovilla, Inc. wherein Energy purchased all of the issued and outstanding shares of Castrovilla, Inc. for 1,011,095 shares of restricted common stock of Blue Earth, Inc. These shares were valued based on the quoted market price on the effective date of the transaction, January 1, 2011, at $1.90 per share, or $1,921,081.

Immediately after the transaction, Energy ceased to exist and Castrovilla, Inc. became the surviving corporation, a wholly owned subsidiary of Blue Earth Energy Management Services, Inc.. Simultaneous with this purchase, Energy entered into an asset purchase agreement with Humitech of NC, LLC, “Humitech”, whereby the assets of Humitech and certain related liabilities were sold to Energy for $150,000 cash and 267,857 restricted common shares of Blue Earth, Inc. valued based on the quoted market price on the effective date of the transaction, January 1, 2011, at $1.90 per share or $528,928.

Proforma adjustment [4] reflects the issuance of 1,011,095 shares of Blue Earth, Inc. common stock to shareholders of Castrovilla, Inc. in exchange for all issued and outstanding shares of Castrovilla and the issuance of 267,857 shares of Blue Earth, Inc. for the net assets of Humitech of NC, LLC. Entries [1] and [6] reflect the elimination of equity balances, including the common stock of Castrovilla and the partner capital of Humitech, retained earnings of both entities and the allocation of excess purchase price above the market value of the fixed assets acquired and liabilities assumed in the acquisition to the Bay Area Gasket Guy distributorship held by Humitech.

The calculation of the $2,458,250 excess purchase price was calculated as shown in the table below.



Purchase Price	Shares		Price		Total
Castrovilla		1,011,095	$	1.90	$	1,921,081
Humitech		267,857	$	1.90		508,928
Cash						150,000
Total Purchase Price						2,580,009
Tangible Assets Acquired						(1,111,338	)
Total Liabilities Assumed						989,579
Cost of Distributorship and Customer Base Acquired					$	2,458,250

The proforma, consolidated balance sheets and statements of operations of Blue Earth, Inc. and Castrovilla, Inc. and Humitech of NC, LLC are presented here as of December 31, 2010. The balance sheet and statement of operations of Castrovilla, Inc. are included in the consolidated balance sheet and statement of operations of Blue Earth, Inc. as of June 30, 2011.

On September 7, 2011 the Company acquired 100% of the outstanding common stock of Xnergy, Inc. and its wholly-owned subsidiary HVAC Controls & Specialties, Inc., a Carlsbad, California based energy services company (“Xnergy’). Simultaneously, the Company purchased all of the membership interests of ecoLegacy, LLC (“eco”), a California limited liability company, which serves as a financing vehicle for Xnergy. The Company issued 4,500,000 shares of its common stock for all of the outstanding shares of Xnergy valued at $3.00 per share in the merger agreement. However, the common shares were subsequently valued at $1.72 per share for accounting purposes based upon the average closing price of the Company’s common stock from September 8, 2011 through trading on September 26, 2011. The Company also assumed the obligation of $1,415,088 due to a former shareholder of Xnergy for the purchase of his shares by the exchanging shareholders of Xnergy. The Company assumed $143,681 of debt as the consideration for the purchase of ecoLegacy, a California limited liability company. Hence, for valuation purposes, the proper price/share for accounting purposes is $1.72/share or $7,740,000 for the shares plus the cash component as stated above.

The proforma, consolidated balance sheets and statements of operations of Blue Earth, Inc. and Xnergy, Inc. and HVAC Controls & Specialties, Inc. are presented here as of December 31, 2010 and June 30, 2011. Proforma adjustment [5] reflects the issuance of 4,500,000 shares of Blue Earth, Inc. common stock to shareholders of Xnergy, Inc. in exchange for all issued and outstanding shares of Xnergy, Inc and its wholly owned subsidiary, HVAC Controls & Specialties, Inc. and the allocation of excess purchase price above the market value of the fixed assets acquired and liabilities assumed to the customer base and existing or potential contracts owned by Xnergy and HVAC. Entries [2], [3] and [7] reflect the elimination of equity balances, including the common stock of Xnergy and HVAC and the retained earnings of both entities.

The calculation of the $8,497,398 excess purchase price was calculated as shown in the table below.



Purchase Price	Shares		Price		Total
Xnergy, Inc. and HVAC Controls & Specialties, Inc.		4,500,000	$	1.72	$	7,740,000

Total Purchase Price						7,740,000
Tangible Assets Acquired						(4,675,037)
Total Liabilities Assumed						5,432,435
Cost of Customer Base Acquired					$	8,497,398

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