Attached files

file filename
8-K/A - FITT HIGHWAY PRODUCTS, INC. - Global Future City Holding Inc.fitt_8ka2.htm
EX-10.1 - PRODUCT DEVELOPMENT MARKETING AGREEMENT - Global Future City Holding Inc.fitt_8ka2-ex1001.htm
EX-10.5 - CORE.MARK - Global Future City Holding Inc.fitt_8ka2-ex1005.htm
EX-10.3 - BROKERAGE AGREEMENT - Global Future City Holding Inc.fitt_8ka2-ex1003.htm
EX-10.2 - EXCLUSIVE MASTER MARKETING AGREEMENT - Global Future City Holding Inc.fitt_8ka2-ex1002.htm
EX-10.4 - CONSULTING AGREEMENT - Global Future City Holding Inc.fitt_8ka2-ex1004.htm
EX-99.1 - AUDITED FINANCIAL STATEMENTS - Global Future City Holding Inc.fitt_8ka2-ex9901.htm

EXHIBIT 99.2

 

 

 

INDEX

 

  Page
   
Pro-Forma Unaudited Financial Statements of FITT Highway Products, Inc. (“FHWY”)  
   
Pro-Forma Condensed Combined Balance Sheet as of September 30, 2013 F-2
   
Pro-Forma Condensed Combined Statement of Operations for the nine months ended September 30, 2013 F-3
   
Pro-Forma Condensed Combined Statement of Operations for the year ended December 31, 2013 F-4
   
Notes to Unaudited Pro-Forma Condensed Combined Financial Statements F-5
   
   

 

 

 

 

 

 

F-1
 

FITT HIGHWAY PRODUCTS, INC. AND SUBSIDIARY

PRO-FORMA CONDENSED COMBINED BALANCE SHEET

September 30, 2013

(Unaudited)

  

 

FITT

Highway Products, Inc.

   F.I.T.T. Energy Products, Inc.

  

Pro-Forma

Adjustments

       Pro-Forma Combined 
Assets                         
Current assets:                         
Cash and cash equivalents  $   $69,243   $       $69,243 
Inventories       6,822            6,822 
Prepaid expenses   99,318    34,403            133,721 
Deferred financing costs   46,000                46,000 
Advances to related party       169,751    (169,751)   (2)    
Total current assets   145,318    280,219    (169,751)       255,786 
Property and equipment, net   127    13,573            13,700 
Investment securities of related party:                         
Available for sale       31,500    (31,500)   (2)    
Held to maturity       315,000    (315,000)   (2)    
Total Assets  $145,445   $640,292   $(516,251)      $269,486 
                         
Liabilities, Redeemable Preferred Stock and Shareholders' Deficit                        
Current liabilities:                        
Accounts payable  $473,404   $104,919   $       $578,323 
Accrued expenses   9,287    397,260            406,547 
Accrued compensation   1,572,364                 1,572,364 
Notes payable   20,000    1,839,918            1,859,918 
Advances from related parties   328,527      (169,751)   (2)   158,776 
Total current liabilities   2,403,582    2,342,097    (169,751)       4,575,928 
Notes payable – long-term   195,132                 195,132 
Total liabilities   2,598,714    2,342,097    (169,751)       4,771,060 
Redeemable Series A convertible preferred stock   315,000        (315,000)   (2)    
Shareholders’ deficit:                         
Preferred stock                     
Common stock   4,035    57,678    33,000    (1)   36,338 
              (29)   (2)   
              (668)   (3)   
              (57,678)   (4)   
Additional paid-in capital   30,292,257    2,194,389    (33,000)   (1)    
              (31,471)   (2)   
              (86,500)   (2)   
              (671,427)   (3)   
              (31,664,248)   (4)   
Advances to shareholder      (672,095)   672,095   (3)    
Accumulated other comprehensive loss      (86,500)   86,500   (2)    
Accumulated deficit   (33,064,561)   (3,195,277)   31,721,926    (4)   (4,537,912)
Total shareholders’ deficit   (2,768,269)   (1,701,805)   (31,500)       (4,501,574)
Total liabilities, redeemable preferred stock and shareholders’ deficit  $145,445   $640,292   $(516,251)      $269,486 

 

See accompanying notes

F-2
 

 

FITT HIGHWAY PRODUCTS, INC. AND SUBSIDIARY

PRO-FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

For the Nine Months Ended September 30, 2013

(Unaudited)  

 

 

   FITT Highway Products, Inc.   F.I.T.T. Energy Products, Inc.   Pro-Forma Adjustments      Pro-Forma Combined 
                    
Revenue  $383   $6,422   $(383)  (5)  $6,422 
                        
Cost of revenue       31,598           31,598 
                        
Gross profit (loss)   383    (25,176)   (383)      (25,176)
                        
Operating expenses                       
Selling and marketing   43,923    192,308    (383)  (5)   235,848 
General and administrative   623,589    181,027           804,616 
Fair value of contributed services        210,255    (210,255)  (5)    
Total operating expenses   667,512    583,590    (210,638)      1,040,464 
Operating loss   (667,129)   (608,766)   210,255       (1,065,640)
                        
Other (income) expense:                       
Interest expense   257,917    421,409           679,326 
Interest income        (24,257)          (24,257)
Gain on extinguishment of debt and creditor obligations   (595,304)              (595,304)
Other expense, net   1,200    600           1,800 
Income (loss) before income taxes   (330,942)   (1,006,518)   210,255       (1,127,205)
Income taxes                   
Net income (loss)  $(330,942)  $(1,006,518)  $210,255      $(1,127,205)
                        
Income (loss) per common share - basic  $(0.15)               $(0.03)
Income (loss) per common share - diluted  $(0.15)               $(0.03)
                        
Weighted average number of common shares:                       
Used in basic calculations   2,179,177                 35,179,177 
Used in diluted calculations   2,179,177                 35,179,177 

  

 

 

See accompanying notes

  

F-3
 

FITT HIGHWAY PRODUCTS, INC. AND SUBSIDIARY

PRO-FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

For the Year Ended December 31, 2012

(Unaudited)  

 

 

   FITT Highway Products, Inc.   F.I.T.T. Energy Products, Inc.   Pro-Forma Adjustments      Pro-Forma Combined 
                        
Revenue  $454   $29,924   $(454)  (5)  $29,924 
                        
Cost of revenue       11,299           11,299 
                        
Gross profit (loss)   454    18,625    (454)      18,625 
                        
Operating expenses                       
Selling and marketing   2,667    57,448    (454)  (5)   59,661 
General and administrative   755,229    87,763           842,992 
Fair value of contributed services       280,340    (280,340)  (5)    
Total operating expenses   757,896    425,551    (280,794)      902,653 
Operating income (loss)   (757,442)   (406,926)   280,340       (884,028)
                        
Other (income) expense:                       
Interest expense   21,122    370,500           391,622 
Interest income       (26,061)          (26,061)
Gain on extinguishment of debt and creditor obligations   (2,379,049)              (2,379,049)
Other expense, net   800               800 
Income (loss) before income taxes   1,599,685    (751,365)   280,340       1,128,660 
Income taxes   800    800           1,600 
Net income (loss)  $1,598,885   $(752,165)  $280,340      $1,127,060 
                        
Income (loss) per common share - basic  $1.04                $0.03 
Income (loss) per common share - diluted  $1.00                $0.03 
                        
Weighted average number of common shares:                       
Used in basic calculations   1,533,333                 34,533,333 
    Used in diluted calculations   1,599,317                 34,533,333 

  

 

See accompanying notes

  

F-4
 

 

FITT HIGHWAY PRODUCTS, INC. AND SUBSIDIARY

NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED

FINANCIAL STATEMENTS

 

Basis of Presentation

 

In 2012, F.I.T.T. Energy Products, Inc. (“FITT”) proposed negotiating a business combination with us and, on November 5, 2012, our Board of Directors approved commencing formal negotiations with FITT in this regard. On June 12, 2013, the Board, by unanimous written consent, recommended that our stockholders approve the Company entering into a Merger and Reorganization Agreement (the “Merger Agreement”) with FITT and on June 12, 2013, holders of a majority of the voting power of all shares of our common and preferred stock entitled to vote, by written consent in lieu of a special meeting of our stockholders, approved the following action: entry into the Merger Agreement with FITT whereby FITT will be merged into the Company, with the Company being the surviving entity (the “Merger”). The Merger Agreement, which was entered into on June 18, 2013, required that FITT obtain an independent valuation which would serve as the basis for a share exchange once all necessary approvals were obtained. A Definitive Information Statement on Schedule 14C (“DEF 14C”) was mailed to our shareholders on October 8, 2013 and the Merger became effective on October 29, 2013. On October 29, 2013, we issued 33,000,000 shares of our common stock to the shareholders of FITT in the manner set out in the Merger Agreement. As such, the FITT shareholders own approximately 89% of our Company.

 

The acquisition of FITT was accounted for using the purchase method of accounting in accordance with ASC 805 Business Combinations, whereby the estimated purchase would be allocated to tangible net assets acquired based upon preliminary fair values at the date of acquisition. For accounting purposes, this merger is being treated as a reverse-acquisition since control of our Company passed to the FITT shareholders. As a result of this accounting treatment, subsequent to October 29, 2013, the effective date of the reverse-acquisition, the historical financial statements of the accounting acquirer (FITT) will be presented for all periods prior to the acquisition, along with the consolidated financial statements of both entities for all periods after the reverse acquisition date. The assets and liabilities of our Company will be recorded at fair value on the acquisition date and included in the financial information post-merger.

 

The accompanying pro forma financial information should be read in conjunction with the historical consolidated financial statements and related notes in FHWY’s Annual Report on Form 10-K for the year ended December 31, 2012 and the Quarterly Report on Form 10-Q for the nine month period ended September 30, 2013. The unaudited pro forma combined condensed statements of operations are not necessarily indicative of what the actual results of operations would have been had such transactions taken place at the beginning of the respective periods.

 

The unaudited pro forma combined condensed balance sheet was prepared assuming the transaction closed on September 30, 2013. The unaudited pro forma combined condensed statements of operations for nine months ended September 30, 2013 and year ended December 31, 2012 was prepared assuming the transaction closed as of the beginning of the respective period. The unaudited pro forma combined condensed balance sheet and statements of operations have been prepared to give effect to the following pro forma adjustments:

 

(1)   Issuance of 33,000,000 common shares of FHWY to the FITT shareholders in connection with the acquisition. These shares were recorded at their par value due to the transaction being accounted for as a reverse acquisition. These shares have been added to the weighted average of shares outstanding at the beginning of the periods in determining net loss per share.

 

(2)   Elimination of advances and capital stock between FHWY and FITT and elimination of accumulated other comprehensive loss relating to the issuance of FHWY shares owned by FITT.  Also reflects repayment of advances to shareholder, including interest at 6%, with 668,386 shares of common stock beneficially owned by him.

 

(3) 

 

Conversion of advances to shareholder to equity subsequent to September 30, 2013. Conversion would have been required prior to September 30, 2013 assuming the combined company was a public company, which restricts advances to shareholders/officers.

 

(4) 

Reflection of new capital structure including the removal of certain FHWY historical information due to the accounting for the transaction as a reverse acquisition.

   
(5) Elimination of royalties paid by FITT to FHWY. Also elimination of the fair value of contributed services recorded on FITT as such services are also provided by FHWY.

 

F-5