Attached files
file | filename |
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8-K/A - FORM 8-K/A AMENDED CURRENT REPORT - Pharmagen, Inc. | f8ka071912_8kz.htm |
EX-99.1 - EXHIBIT 99.1 AUDITED FINANCIAL STATEMENTS OF HDS - Pharmagen, Inc. | f8ka071912_ex99z1.htm |
EX-10.15 - EXHIBIT 10.15 PROMISSORY NOTE WITH EAGLE BANK - Pharmagen, Inc. | f8ka071912_ex10z15.htm |
EX-10.11 - EXHIBIT 10.11 SETTLEMENT AGREEMENT WITH WHETU - Pharmagen, Inc. | f8ka071912_ex10z11.htm |
EX-10.17 - EXHIBIT 10.17 AGREEMENT WITH NCPA AND GNR - Pharmagen, Inc. | f8ka071912_ex10z17.htm |
EX-10.16 - EXHIBIT 10.16 AGREEMENT WITH GLOBAL NUTRITIONAL - Pharmagen, Inc. | f8ka071912_ex10z16.htm |
EX-10.14 - EXHIBIT 10.14 PROMISSORY NOTE WITH EAGLE BANK - Pharmagen, Inc. | f8ka071912_ex10z14.htm |
Exhibit 99.2
Unaudited Pro Forma Condensed Combined Financial Statements
On February 16, 2012, pursuant to a Share Exchange Agreement (Exchange Agreement) dated February 13, 2012, Sunpeaks acquired 100% ownership interest in Healthcare Distribution Specialists LLC (HDS), a Delaware limited liability company, in exchange for the issuance of 200,000,000 newly-issued restricted shares of Sunpeaks common stock and 3,000,000 newly-issued restricted shares of Sunpeaks class A Preferred Stock (the Exchange Shares), to the former owner of HDS, resulting in HDS becoming a wholly-owned subsidiary of the Company. Also pursuant to the Exchange Agreement, 200,000,000 shares of Sunpeaks common stock held by Sunpeaks former owners were cancelled.
For financial accounting purposes, the acquisition of HDS by Sunpeaks (referred to as the Merger) was a reverse acquisition of Sunpeaks by HDS and was treated as a recapitalization. Accordingly, financial statements presented following the Merger will be prepared to give retroactive effect of the reverse acquisition completed on February 16, 2012, and represent the operations of HDS prior to the Merger. The Company will continue to operating under the name Sunpeaks Ventures, Inc.
Immediately prior to the Merger, Sunpeaks entered into settlement agreements to settle all of its outstanding obligations, consisting of accounts payable and accrued liabilities, notes payable, and an amount due to a related party, in exchange for payments of cash by Sunpeaks and issuance of 50,000,000 shares of common stock.
Prior to the Merger, Sunpeaks and HDS had fiscal year ends of June 30 and December 31, respectively. As of the Merger date, the Company adopted December 31 as its fiscal year end. The accompanying unaudited pro forma condensed combined financial statements were prepared based on a December 31 year end. The Unaudited Pro Forma Condensed Combined Balance Sheet at December 31, 2011 combines the historical consolidated balance sheets of Sunpeaks and HDS, giving effect to the Merger as if it had been consummated on December 31, 2011. The Unaudited Pro Forma Condensed Combined Statement of Operations for the fiscal year ended December 31, 2011 combines the historical consolidated statements of income of Sunpeaks and HDS, giving effect to the Merger as if it had occurred on January 1, 2011. The unaudited pro forma combined financial data should be read in connection with the notes to these unaudited pro forma condensed combined financial statements and the following:
·
The Companys separate historical unaudited consolidated financial statements and the related notes included in the Companys Quarterly Report on Form 10-Q for the six month periods ended December 31, 2011 and 2010;
·
The Companys separate historical audited consolidated financial statements and the related notes for the fiscal year ended June 30, 2011 included in the Companys Annual Report on Form 10-K for the year ended June 30, 2011;
·
HDSs separate historical audited consolidated financial statements and related notes as of and for the year ended December 31, 2011, included as exhibit 99.1 in this Form 8-K/A.
The unaudited pro forma condensed combined financial statements have been prepared for informational purposes only. The historical financial information has been adjusted to give effect to pro forma events that are: (1) directly attributable to the Merger and (2) factually supportable and reasonable under the circumstances.
The unaudited pro forma adjustments represent managements estimates based on information available at this time. The unaudited pro forma combined financial statements are not necessarily indicative of what the financial position or results of operations actually would have been had the acquisition been completed at the dates indicated. In addition, the unaudited pro forma combined financial statements do not purport to project the future financial position or operating results of the consolidated company. The unaudited pro forma combined financial statements do not give consideration to the impact of possible revenue enhancements, expense efficiencies, future underwriting decisions or changes in the book of business that may result from the acquisition.
Unaudited Pro Forma Condensed Combined Balance Sheet
December 31, 2011
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| Historical |
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| Pro Forma |
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| Sunpeaks |
| HDS |
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| Adjustments |
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| Combined |
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ASSETS |
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CURRENT ASSETS |
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Cash |
| $ | 9,916 |
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| $ | 38,658 |
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| $ | (9,916) |
| (a) |
| $ | 38,658 |
| ||||
Accounts receivable, net |
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| - |
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| 211,549 |
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|
| - |
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| 211,549 |
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Inventory |
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| - |
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| 12,144 |
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| - |
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| 12,144 |
| ||||
Prepaid expenses and other current assets |
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| - |
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| 12,568 |
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| - |
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| 12,568 |
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Total current assets |
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| 9,916 |
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| 274,919 |
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| (9,916) |
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| 274,919 |
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Property and equipment, net |
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| - |
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| 29,683 |
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| - |
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| 29,683 |
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TOTAL ASSETS |
| $ | 9,916 |
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| $ | 304,602 |
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| $ | (9,916) |
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| $ | 304,602 |
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LIABILITIES AND STOCKHOLDERS DEFICIT |
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CURRENT LIABILITIES |
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Accounts payable and accrued liabilities |
| $ | 54,343 |
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| $ | 97,606 |
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| $ | (54,343) |
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| (a) |
| $ | 97,606 |
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Notes payable and lines of credit |
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| 110,000 |
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| 200,000 |
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| (110,000) |
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| (a) |
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| 200,000 |
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Due to related parties |
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| 50,000 |
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| 376,745 |
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| (50,000) |
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| (a) |
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| 376,745 |
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Total current liabilities |
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| 214,343 |
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| 674,351 |
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| (214,343) |
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| 674,351 |
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Total liabilities |
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| 214,343 |
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| 674,351 |
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| (214,343) |
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| 674,351 |
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Commitments and contingencies |
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STOCKHOLDERS DEFICIT |
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Preferred stock |
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| - |
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| - |
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| 3,000 |
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| (b) |
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| 3,000 |
| |||
Common stock |
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| 370,501 |
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| 1,000 |
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| 49,000 |
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| (b) |
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| 420,501 |
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Additional paid in capital |
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| (330,560) |
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| 5,866 |
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| (91,941) |
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| (b) |
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| (416,635) |
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Accumulated deficit |
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| (244,368) |
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| (376,615) |
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| 244,368 |
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| (c) |
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| (376,615) |
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Total stockholders deficit |
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| (204,427) |
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| (369,749) |
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| 204,427 |
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| (369,749) |
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TOTAL LIABILITIES AND STOCKHOLDERS DEFICIT |
| $ | 9,916 |
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| $ | 304,602 |
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| $ | (9,916) |
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| $ | 304,602 |
|
See notes to unaudited pro forma condensed combined financial statements.
Unaudited Pro Forma Condensed Combined Statement of Operations
Year Ended December 31, 2011
|
| Historical |
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| Pro Forma |
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| Sunpeaks |
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| HDS |
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| Adjustments | Combined |
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Revenues, net |
| $ | - |
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| $ | 862,750 |
| $ | - |
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| $ | 862,750 |
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Operating Expenses |
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Cost of sales |
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| - |
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| 453,553 |
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| - |
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| 453,553 |
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General and administrative expenses |
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| 25,816 |
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| 313,826 |
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| - |
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| 339,642 |
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Salaries and commissions |
|
| - |
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| 233,838 |
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| - |
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| 233,838 |
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Professional fees |
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| 48,120 |
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| 144,080 |
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| - |
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| 192,200 |
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Total Operating Expenses |
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| 73,936 |
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| 1,145,297 |
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| - |
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| 1,219,233 |
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Loss from Operations |
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| (73,936) |
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| (282,547) |
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| - |
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| (356,483) |
| |
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OTHER INCOME (EXPENSE) |
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Interest expense |
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| (8,603) |
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| (14,266) |
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| 8,603 |
| (d) |
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| (14,266) |
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Gain on settlement of debt |
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| 700 |
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| - |
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| (700) |
| (d) |
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| - |
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Total Other Income (Expense) |
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| (7,903) |
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| (14,266) |
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| 7,903 |
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| (14,266) |
| |
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Net Loss |
| $ | (81,839) |
|
| $ | (296,813) |
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| $ | 7,903 |
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| $ | (370,749) |
| |
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Loss per common share: |
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Basic |
| $ | (0.00) |
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| $ | (0.00) |
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Diluted |
| $ | (0.00) |
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| $ | (0.00) |
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Weighted average number of common shares outstanding: |
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Basic and Diluted |
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| 363,000,375 |
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| 50,000,000 |
| (b) |
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| 413,000,375 |
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See notes to unaudited pro forma condensed combined financial statements.
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS
Note 1 Basis of Presentation
On February 16, 2012, pursuant to a Share Exchange Agreement dated February 13, 2012 (Exchange Agreement), Sunpeaks, acquired 100% ownership interest in Healthcare Distribution Specialists LLC (HDS), a Delaware limited liability company, in exchange for the issuance of 200,000,000 newly-issued restricted shares of Sunpeaks common stock and 3,000,000 newly-issued restricted shares of Sunpeaks class A Preferred Stock (the Exchange Shares), to the former owner of HDS, resulting in HDS becoming a wholly-owned subsidiary of the Company. Also pursuant to the Exchange Agreement, 200,000,000 shares of Sunpeaks common stock held by Sunpeaks former owners were cancelled. Pursuant to the Exchange Agreement, the former controlling owner of Sunpeaks resigned from the board of directors and each of his officer positions, and the former controlling owner of HDS was appointed to the board of directors and was appointed to serve as the Companys sole officer, resulting in a change of control of the Company.
For financial accounting purposes, the acquisition of HDS by Sunpeaks (referred to as the Merger) was a reverse acquisition of Sunpeaks by HDS and was treated as a recapitalization. Accordingly, financial statements presented following the Merger will be prepared to give retroactive effect of the reverse acquisition completed on February 16, 2012, and represent the operations of HDS prior to the Merger. See Note 2 for further discussion.
The unaudited pro forma condensed combined financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and certain footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (GAAP) have been condensed or omitted pursuant to such rules and regulations; however, management believes that the disclosures are adequate to make the information presented not misleading.
The accompanying unaudited pro forma condensed combined financial statements present the pro forma consolidated financial position and operations of the combined company based upon the historical financial statements of Sunpeaks and HDS, after giving effect to the Merger and adjustments described in the following footnotes, and are intended to reflect the impact of the Merger on a pro forma basis. The accompanying unaudited pro forma condensed combined financial statements are presented for illustrative purposes only.
The accompanying unaudited Pro Forma Condensed Combined Balance Sheet at December 31, 2011 combines the historical consolidated balance sheets of Sunpeaks and HDS, giving effect to the Merger as if it had been consummated on December 31, 2011. The unaudited Pro Forma Condensed Combined Statement of Operations for the fiscal year ended December 31, 2011 combines the historical consolidated statements of operations of Sunpeaks and HDS, giving effect to the Merger as if it had occurred on January 1, 2011. Prior to the Merger, Sunpeaks and HDS had fiscal year ends of June 30 and December 31, respectively. As of the Merger date, the Company adopted December 31 as its fiscal year end.
Note 2 - Merger
Sunpeaks, acquired 100% ownership interest in HDS in exchange for the issuance of 200,000,000 newly-issued restricted shares of Sunpeaks common stock and 3,000,000 newly-issued restricted shares of Sunpeaks class A Preferred Stock to the former owner of HDS. Also pursuant to the Exchange Agreement, 200,000,000 shares of Sunpeaks common stock held by Sunpeaks former owners were cancelled. Pursuant to the Exchange Agreement, the former controlling owner of Sunpeaks resigned from the board of directors and each of his officer positions, and the former controlling owner of HDS was appointed to the board of directors and was appointed to serve as the Companys sole officer, resulting in a change of control of the Company.
Reverse recapitalization accounting is attributable to a long-held position of the staff of the SEC as the acquisition of a non-operating public shell company does not qualify as a business for business combination purposes, as described in ASC Topic 805, Business Combinations. Reverse recapitalization accounting applies when a non-operating public shell company acquires a private operating company and the owners and management of the private operating company have actual or effective voting and operating control of the combined company. In the Merger transaction, Sunpeaks qualifies as a non-operating public shell company because as of the Merger date, Sunpeaks held nominal net monetary assets, consisting of cash.
A reverse recapitalization is equivalent to the issuance of stock by the private operating company for the net monetary assets of the public shell corporation accompanied by a recapitalization with accounting similar to that resulting from a reverse acquisition, except that no goodwill or other intangible assets are recorded. Under recapitalization accounting, the equity of the accounting acquirer, HDS, is presented as the equity of the combined enterprise and the capital stock account of HDS is adjusted to reflect the par value of the outstanding stock of the legal acquirer (Sunpeaks) after giving effect to the number of shares issued in the business combination. Shares retained by Sunpeaks are reflected as an issuance as of the merger date for the historical amount of the net assets of the acquired entity which in this case is zero.
Note 3 Sunpeaks Historical Results of Operations
Prior to the Merger, Sunpeaks and HDS had fiscal year ends of June 30 and December 31, respectively. As of the Merger date, the Company adopted December 31 as its fiscal year end. The following table presents a reconciliation of the results of operations of Sunpeaks prior to the Merger, as previously filed with the SEC, to the results of operations of Sunpeaks for the twelve months ended December 31, 2011, as presented in the accompanying Pro Forma Condensed Combined Statement of Operations.
| As Previously Filed |
| As Presented | ||||
| Twelve Months Ended June 30, 2010 |
| Six Months Ended December 31, 2010 |
| Six Months Ended December 31, 2011 |
| Twelve Months Ended December 31, 2011 |
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Revenues, net | $ - |
| $ - |
| $ - |
| $ - |
|
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Operating Expenses |
|
|
|
|
|
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|
Cost of sales | - |
| - |
| - |
| - |
General and administrative expenses | 22,666 |
| 11,527 |
| 14,677 |
| 25,816 |
Salaries and commissions | - |
| - |
| - |
| - |
Professional fees | 46,635 |
| 24,275 |
| 25,760 |
| 48,120 |
Total Operating Expenses | 69,301 |
| 35,802 |
| 40,437 |
| 73,936 |
|
|
|
|
|
|
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|
Loss from Operations | (69,301) |
| (35,802) |
| (40,437) |
| (73,936) |
|
|
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|
OTHER INCOME (EXPENSE) |
|
|
|
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|
|
|
Interest expense | (5,074) |
| (2,016) |
| (5,545) |
| (8,603) |
Gain on settlement of debt | 700 |
| - |
| - |
| 700 |
Total Other Income (Expense) | (4,374) |
| (2,016) |
| (5,545) |
| (7,903) |
|
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Net Loss | $ (73,675) |
| $ (37,818) |
| $ (45,982) |
| $ (81,839) |
Note 4 - Pro Forma Adjustments
Pro forma adjustments are necessary to reflect events that are: directly attributable to the Merger; factually supportable, and expected to have a continuing impact. The pro forma adjustments included in the unaudited pro forma condensed combined financial statements are as follows:
(a) | To remove carrying value of Sunpeaks net assets that either did not carry over or were settled in conjunction with the merger. |
|
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(b) | To eliminate Sunpeaks historical stockholders equity accounts, recapitalize HDSs historical stockholders equity accounts, and adjust stockholders equity accounts to reflect issued equity, based on the equity structure of Sunpeaks, to be the sum of: (1) HDSs issued equity immediately prior to the Merger and (2) the issued shares retained by former stockholders of Sunpeaks, pursuant to the Merger, which includes 50,000,000 shares of common stock issued immediately prior to and in connection with the Merger, to settle outstanding debt of Sunpeaks. |
|
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(c) | To eliminate Sunpeaks historical accumulated deficit and to adjust accumulated deficit to equal HDSs accumulated deficit as of December 31, 2011. |
|
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(d) | To eliminate Sunpeaks interest expense and gain on settlement of debt related to debt extinguished in connection with the Merger. |
Note 5 Loss per Share
Basic net loss per common share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. In periods when losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive.
The combined entitys financial statements are prepared as if the transaction had been completed at the beginning of the period. The net loss and shares used in computing the net income loss per share for the year ended December 31, 2011 is based on weighted average common shares outstanding during the period. The effect of the additional shares of common stock issued as part of the Merger has been included for purposes of presenting pro forma net loss per share.