Attached files
Exhibit 99.1
Xhibit Corp.
Unaudited Pro Forma Condensed Balance Sheet
June 29, 2014
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Pro Forma Adjustments
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Xhibit Corp.
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Removal of SkyMall Ventures (A)
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Other
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Pro Forma
Total
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ASSETS
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Current assets:
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Cash
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$ | 897,664 | $ | - | $ | 969,398 |
(B)(C)
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$ | 1,867,062 | ||||||||
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Accounts receivable, net
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4,091,023 | (3,425,689 | ) | - | 665,334 | ||||||||||||
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Skymall Ventures holdback receivables
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- | - | 1,850,000 |
(B)
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1,850,000 | ||||||||||||
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Inventories
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36,074,307 | (35,783,048 | ) | - | 291,259 | ||||||||||||
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Prepaid expenses
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2,043,010 | (566,800 | ) | - | 1,476,210 | ||||||||||||
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Total current assets
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43,106,004 | (39,775,537 | ) | 2,819,398 | 6,149,865 | ||||||||||||
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Property and equipment, net
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6,121,892 | (243,095 | ) | - | 5,878,797 | ||||||||||||
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Intangible assets, net
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27,711,040 | (5,655,000 | ) | (11,980,100) | (D) | 10,075,940 | |||||||||||
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Deferred financing fees, net
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273,581 | - | (273,581 | ) |
(C)
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- | |||||||||||
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Other assets
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437,408 | - | - | 437,408 | |||||||||||||
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Total assets
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$ | 77,649,925 | $ | (45,673,632 | ) | $ | (9,434,283) | $ | 22,542,010 | ||||||||
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current liabilities:
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Accounts payable
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$ | 16,085,125 | $ | (6,452,274 | ) | $ | - | $ | 9,632,851 | ||||||||
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Accrued expenses
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1,371,018 | (419,587 | ) | - | 951,431 | ||||||||||||
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Accrued payroll and related expenses
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1,353,364 | (112,889 | ) | - | 1,240,475 | ||||||||||||
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Accrued restructuring costs
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42,222 | - | - | 42,222 | |||||||||||||
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Customer deposits
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44,295,808 | (44,295,808 | ) | - | - | ||||||||||||
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Related party debt
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10,113,862 | - | (10,113,862 | ) |
(C)
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- | |||||||||||
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Deferred revenue
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77,858 | (77,724 | ) | - | 134 | ||||||||||||
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Total current liabilities
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73,339,257 | (51,358,282 | ) | (10,113,862 | ) | 11,867,113 | |||||||||||
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Commitments and contingencies
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- | - | - | - | |||||||||||||
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Stockholders' equity:
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Preferred stock, 80,000,000 shares authorized, $0.0001 par value, none issued or outstanding
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- | - | - | - | |||||||||||||
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Common stock, 480,000,000 shares authorized, $0.0001 par value, 108,232,935 and 107,839,234 shares issued and outstanding at September 28, 2014 and December 31, 2013, respectively
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10,823 | - | - | 10,823 | |||||||||||||
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Additional paid-in-capital
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186,083,018 | - | - | 186,083,018 | |||||||||||||
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Accumulated deficit
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(181,783,173 | ) | 5,684,650 | 679,579 |
(B)(C)(D)
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(175,418,944 | ) | ||||||||||
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Total stockholders' equity
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4,310,668 | 5,684,650 | 679,579 | 10,674,897 | |||||||||||||
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Total liabilities and stockholders' equity
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$ | 77,649,925 | $ | (45,673,632 | ) | $ | (9,434,283) | $ | 22,542,010 | ||||||||
See notes to pro forma condensed financial statements.
Xhibit Corp.
Unaudited Pro Forma Condensed Statement of Operations
For the Six Month Period Ended June 29, 2014
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Pro Forma Adjustments
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Xhibit Corp.
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Removal of SkyMall Ventures (D)
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Other
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Pro Forma
Total
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Revenues:
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Internet marketing services
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$ | 1,543,821 | $ | - | $ | - | $ | 1,543,821 | |||||||||
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Net merchandise sales
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18,766,159 | (14,086,573 | ) | - | 4,679,586 | ||||||||||||
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Placement fees
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4,562,934 | (895,983 | ) | - | 3,666,951 | ||||||||||||
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Gift card and other sales
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9,820,784 | (7,618,800 | ) | - | 2,201,984 | ||||||||||||
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Total net revenues
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34,693,698 | (22,601,356 | ) | - | 12,092,342 | ||||||||||||
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Cost of revenues
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21,927,165 | (17,350,160 | ) | 273,696 | 4,303,309 | ||||||||||||
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Gross profit
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12,766,533 | (5,251,196 | ) | 273,696 | 7,789,033 | ||||||||||||
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Operating expenses:
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Catalog
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3,115,579 | (906,440 | ) | - | 2,209,139 | ||||||||||||
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Sales and marketing
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7,849,898 | (756,191 | ) | (77,328 | ) | 7,016,379 | |||||||||||
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Customer service and fulfillment
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1,319,213 | - | (652,300 | ) | 666,913 | ||||||||||||
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General and administrative
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6,543,906 | (435,000 | ) | (1,113,560 | ) | 4,995,346 | |||||||||||
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Development
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212,429 | - | - | 212,429 | |||||||||||||
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Total operating expenses
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19,041,025 | (2,097,631 | ) | (1,843,188 | ) | 15,100,206 | |||||||||||
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Loss from operations
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(6,274,492 | ) | (3,153,565 | ) | 2,116,884 | (7,311,173 | ) | ||||||||||
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Non-operating income (expenses):
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Interest expense
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(395,063 | ) | - | 395,063 |
(C)
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- | |||||||||||
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Other
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(40 | ) | - | - | (40 | ) | |||||||||||
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Loss before income taxes
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(6,669,595 | ) | (3,153,565 | ) | 2,511,947 | (7,311,213 | ) | ||||||||||
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Income taxes
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- | - | - | - | |||||||||||||
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Loss from continuing operations
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(6,669,595 | ) | (3,153,565 | ) | 2,511,947 | (7,311,213 | ) | ||||||||||
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Income from discontinued operations, net of income taxes
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27,620 | - | - | 27,620 | |||||||||||||
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Net loss
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$ | (6,641,975 | ) | $ | (3,153,565 | ) | $ | 2,511,947 | $ | (7,283,593 | ) | ||||||
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Net loss per common share (basic and diluted):
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Loss from continuing operations
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$ | (0.06 | ) | $ | (0.07 | ) | |||||||||||
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Income from discontinued operations
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- | - | |||||||||||||||
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Net loss
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$ | (0.06 | ) | $ | (0.07 | ) | |||||||||||
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Weighted-average shares used to calculate net loss per common share:
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Basic and diluted
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108,167,318 | 108,167,318 | |||||||||||||||
See notes to pro forma condensed financial statements.
Xhibit Corp.
Unaudited Pro Forma Condensed Statement of Operations
For the Year Ended December 31, 2013
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Pro Forma Adjustments
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Xhibit Corp.
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Add SkyMall for Period 1/01/13 to 5/16/13 (G)
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Remove SkyMall Ventures (H)
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Other
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Pro Forma
Total
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Revenues:
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Internet marketing services
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$ | 6,359,003 | $ | - | $ | - | $ | - | $ | 6,359,003 | |||||||||||
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Net merchandise sales
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40,650,317 | 16,622,350 | (44,734,659 | ) | - | 12,538,008 | |||||||||||||||
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Placement fees
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10,934,618 | 5,209,585 | (2,217,850 | ) | - | 13,926,353 | |||||||||||||||
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Gift card and other sales
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16,479,720 | 7,829,035 | (17,965,001 | ) | - | 6,343,754 | |||||||||||||||
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Total net revenues
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74,423,658 | 29,660,970 | (64,917,510 | ) | - | 39,167,118 | |||||||||||||||
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Cost of revenues
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44,877,520 | 19,218,751 | (51,916,268 | ) | (440,387 | ) | (I) | 11,739,616 | |||||||||||||
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Gross profit
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29,546,138 | 10,442,219 | (13,001,242 | ) | 440,387 | 27,427,502 | |||||||||||||||
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Operating expenses:
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Catalog
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5,232,461 | 2,704,745 | (2,081,226 | ) | - | 5,855,980 | |||||||||||||||
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Sales and marketing
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12,740,871 | 6,257,303 | (2,126,362 | ) | (154,656 | ) | (I) | 16,717,156 | |||||||||||||
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Customer service and fulfillment
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1,698,053 | 1,076,279 | - | (1,313,986 | ) | (I) | 1,460,346 | ||||||||||||||
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General and administrative
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12,834,670 | 2,938,283 | (1,174,122 | ) | (2,227,121 | ) | (I) | 12,371,710 | |||||||||||||
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Development
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1,299,547 | - | - | - | 1,299,547 | ||||||||||||||||
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Non-cash stock-based compensation resulting from sale of stock between affiliate shareholders
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27,037,500 | - | - | - | 27,037,500 | ||||||||||||||||
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Impairment charge
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140,052,142 | - | (6,996,129 | ) | - | 133,056,013 | |||||||||||||||
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Restructuring charge
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852,859 | - | - | - | 852,859 | ||||||||||||||||
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Total operating expenses
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201,748,103 | 12,976,610 | (12,377,839 | ) | (3,695,763 | ) | 198,651,111 | ||||||||||||||
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Loss from operations
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(172,201,965 | ) | (2,534,391 | ) | (623,403 | ) | 4,136,150 | (171,223,609 | ) | ||||||||||||
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Non-operating income (expenses):
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Interest expense
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(293,936 | ) | (28,553 | ) | - | 322,489 |
(C)
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- | |||||||||||||
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Loss on debt conversion
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(66,431 | ) | - | - | - | (66,431 | ) | ||||||||||||||
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Other
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8,783 | - | - | - | 8,783 | ||||||||||||||||
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Loss before income taxes
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(172,553,549 | ) | (2,562,944 | ) | (623,403 | ) | 4,458,639 | (171,281,257 | ) | ||||||||||||
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Income taxes
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- | (12,026 | ) | - | - | (12,026 | ) | ||||||||||||||
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Loss from continuing operations
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(172,553,549 | ) | (2,574,970 | ) | (623,403 | ) | 4,458,639 | (171,293,283 | ) | ||||||||||||
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Income from discontinued operations, net of income taxes
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(1,308,692 | ) | - | - | - | (1,308,692 | ) | ||||||||||||||
| Gain on sale of Sky Mall Ventures | - | - | - | 12,374,545 | (J) | 12,374,525 | |||||||||||||||
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Net loss
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$ | (173,862,241 | ) | $ | (2,574,970 | ) | $ | (623,403 | ) | $ | 16,833,164 | $ | (160,227,450 | ) | |||||||
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Net loss per common share (basic and diluted):
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Loss from continuing operations
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$ | (1.84 | ) | $ | (1.83 | ) | |||||||||||||||
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Loss from discontinued operations
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(0.01 | ) | (0.12 | ) | |||||||||||||||||
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Net loss
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$ | (1.85 | ) | $ | (1.71 | ) | |||||||||||||||
| Weighted-average shares used to calculate net loss per common share: | |||||||||||||||||||||
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Basic and diluted
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93,805,230 | 93,805,230 | |||||||||||||||||||
See notes to unaudited pro forma condensed financial statements.
Xhibit Corp.
Notes to Unaudited Pro Forma Condensed Financial Statements
1. Basis of Pro Forma Presentation
The Unaudited Pro Forma Condensed Financial Statements and explanatory notes of Xhibit Corp. (“Xhibit” or the “Company”) give effect to the sale of SkyMall Ventures, LLC (“SkyMall Ventures”) by SkyMall, LLC (“SkyMall”) to Connexions Loyalty, Inc. (“Connexions”), which occurred on September 9, 2014 (the “SkyMall Ventures Sale”).
The unaudited pro forma condensed balance sheet gives effect to the SkyMall Ventures Sale as if it had occurred on June 29, 2014. The unaudited pro forma condensed statement of operations for the six month period ended June 29, 2014 and year ended December 31, 2013 give effect to the SkyMall Ventures Sale as if it had occurred on January 1, 2013.
The unaudited pro forma condensed financial statements are based on the historical financial statements of Xhibit after giving effect to the SkyMall Ventures Sale, as well as the assumptions and adjustments described in the accompanying notes to the unaudited pro forma condensed financial statements. The unaudited pro forma condensed financial statements are not intended to represent or be indicative of the consolidated results of operations or financial position of the Company that would have been reported had the acquisition been completed as of the dates presented, and should not be taken as representative of the future consolidated results of operations or financial position of the Company. This information should be read in conjunction with the accompanying notes to the unaudited pro forma condensed financial statements, the historical consolidated financial statements and accompanying notes of Xhibit’s annual report on Form 10-K for the year ended December 31, 2013, filed on September 10, 2014.
2. Pro Forma Adjustments
The following pro forma adjustments are included in the unaudited pro forma condensed combined financial statements:
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(A)
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To reflect the removal of SkyMall Ventures assets and liabilities as of June 29, 2014.
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(B)
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To reflect the proceeds from the SkyMall Ventures sale less 1) the amounts held back for the working capital adjustment and potential indemnity claims, and 2) closing costs and professional fees paid by SkyMall related to the SkyMall Ventures Sale.
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(C)
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To reflect the complete paydown and termination of the related party debt.
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(D)
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To reflect an impairment charge for the full value of the SkyMall goodwill.
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(E)
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To reflect the removal of SkyMall Ventures revenues, costs and expenses for the six month period ended June 29, 2014.
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(F)
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To reflect the SkyMall cost recoveries under the Transition Services Agreement between SkyMall and Connexions for the six month period ended June 29, 2014.
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(G)
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To reflect the addition of SkyMall and SkyMall Ventures revenues, costs and expenses for the period January 1, 2013 through May 16, 2013.
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(H)
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To reflect the removal of SkyMall Ventures revenues, costs and expenses for the year ended December 31, 2013.
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(I)
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To reflect the SkyMall cost recoveries under the Transition Services Agreement between SkyMall and Connexions for the year ended December 31, 2013.
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(J)
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To reflect the pro forma gain on the sale of SkyMall Ventures of $12,374,525 as of January 1, 2013 as calculated below:
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Purchase price
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$ | 24,000,000 | ||
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Less working capital holdback
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(1,400,000 | ) | ||
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Less indemnity escrow holdback
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(1,800,875 | ) | ||
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Cash received from Connexions at closing
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20,799,125 | |||
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Estimated proceeds from working capital adjustment
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350,000 | |||
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Estimated proceeds from indemnity escrow holdback
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1,500,000 | |||
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Pro forma net assets of SkyMall Ventures at closing
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(9,841,574 | ) | ||
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Estimated closing costs
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(433,026 | ) | ||
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Pro forma gain on sale of SkyMall Ventures
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$ | 12,374,525 |