INVESTNET, INC.
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2004
(Unaudited)
INVESTNET, INC.
September 30, 2004
Introduction to Unaudited Pro Forma Consolidated Financial Statements
On November 11, 2004, Investnet, Inc., (“Investnet” or the “Company” or the “Seller”), a public company listed for trading on the Over-the-Counter Bulletin Board, and Leading Management Limited (the “Buyer”), entered into an Agreement for Sale of Stock (the “Agreement”), pursuant to which Investnet agreed to sell the Company’s 97.6% ownership interest of its majority owned subsidiary Advance Tech (Asia) Limited (“Advance Tech”), to the Buyer.
The sale of Advance Tech was completed on December 30, 2004 (the “Closing”). The transaction was completed pursuant to the terms of the Agreement.
In conjunction with the Closing, Buyer agreed to assume and pay, and to hold the Company harmless from liability on the Seller’s obligation to Advance Tech, which previously had been shown on the Company’s balance sheet as an amount due to a related company. Also, with the transfer of the Company’s ownership interest in Advance Tech to the Buyer, the Buyer and Advance Tech, agreed to jointly and severally indemnify and hold the Company harmless from and against any and all bank loans, mortgages, borrowings, liabilities, obligations, damages, losses, deficiencies, costs, penalties, inter-company debts, interests and expenses (collectively “Liabilities”) existing in or arising out the operations of Advance Tech on or before the date of the Agreement.
In conjunction with the Closing under the Agreement, Advance Tech executed necessary agreements to transfer ownership of its intellectual property rights in certain software products to the Company. Also in conjunction with Closing under the Agreement, in addition to transfer of the Company’s ownership interest in Advance Tech, Investnet issued 10,000 shares of Series A Preferred Stock to the Buyer. In all matters coming before the shareholders of the Company for a vote, each holder of Series A Preferred Stock is entitled to 1,460 votes for each share of Series A Preferred Stock standing in his or her name on the books of the Company. In all other respects, the Series A Preferred Stock has the same rights as the Company’s issued and outstanding common stock.
The following unaudited pro forma consolidated financial statements of Investnet adjust the historical financial statements of Investnet to give pro forma effect to the sale by Investnet of its 97.6% ownership interest in Advance Tech.
The unaudited pro forma consolidated balance sheet gives effect to the disposition by Investnet of Advance Tech as if the disposition had occurred at September 30, 2004 and the unaudited pro forma consolidated statements of earnings for the nine months ended September 30, 2004 and for the year ended December 31, 2003 gives effect to such disposition as if the disposition had occurred on January 1, 2004.
The pro forma information is not necessarily indicative of the results that would have been reported had such event actually occurred on the date specified, nor is it intended to project Investnet’s results of operations or financial position for any future period or date. The information set forth should be read in conjunction with Investnet’s audited consolidated financial statements for the year ended December 31, 2003, included in the Company’s Annual Report on Form 10-KSB, and Investnet’s unaudited financial statements for the nine month period ended September 30, 2004, included in the Company’s quarterly report on Form 10-QSB.
INVESTNET, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
September 30, 2004
(Unaudited)
(Stated in US Dollars)
| | | | | | | | |
| | | | | Pro Forma | | | Pro Forma |
| | | Historical | | Adjustments | | | Total |
| | | | | | | | |
Assets | | | | | | | |
Current | | | | | | | |
Cash and cash equivalents | | 5,810 | | (3,106) | [a] | | 2,704 |
Deposits and other receivables | | 119,189 | | (10,856) | [a] | | 108,333 |
| | | | | | | | |
| | | 124,999 | | | | | 111,037 |
Capital assets, net | | 1,289,825 | | (1,289,825) | [a] | | - |
| | | | | | | | |
| | | 1,414,824 | | | | | 111,037 |
| | | | | | | | |
Liabilities | | | | | | | |
Current | | | | | | | |
Accounts payables and other | | | | | | | |
accrued liabilities | | 109,183 | | (66,743) | [a] | | 42,440 |
Short-term bank loans | | 86,803 | | (86,803) | [a] | | - |
Due to Advance Tech | | - | | 63,282 | [b] | | 63,282 |
Due to related parties | | 240,257 | | (240,257) | [a] | | - |
| | | | | | | | |
| | | 436,243 | | | | | 105,722 |
Deferred taxes | | 33,342 | | (33,342) | [a] | | - |
| | | | | | | | |
| | | 469,585 | | | | | 105,722 |
| | | | | | | | |
Stockholders’ Equity | | | | | | | |
Common stock | | 39,197 | | | | | 39,197 |
Series A Preferred Stock | | - | | 10 | [d] | | 10 |
Additional paid-in capital | | 3,756,891 | | (663,711) | [a] | | 3,208,788 |
| | | | | 115,618 | [c] | | |
| | | | | (10) | [d] | | |
Accumulated other comprehensive income | | 2,214 | | (2,214) | [a] | | - |
Accumulated deficit | | (2,853,063) | | (273,378) | [a] | | (3,242,680) |
| | | | | (116,239) | [c] | | |
| | | | | | | | |
| | | 945,239 | | | | | 5,315 |
| | | | | | | | |
| | | 1,414,824 | | | | | 111,037 |
| | | | | | | | |
| | | | | | | | |
See accompanying notes to financial statements.
INVESTNET, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the nine months ended September 30, 2004
(Unaudited)
(Stated in US Dollars)
| | | | | | | | |
| | | | | Pro Forma | | | Pro Forma |
| | | Historical | | Adjustments | | | Total |
| | | | | | | | |
Net Revenues | | | | | | | |
IT services income | | 257 | | (257) | [e] | | - |
Other income | | 36 | | (27) | [e] | | 9 |
| | | | | | | | |
| | | 293 | | | | | 9 |
| | | | | | | | |
Expenses | | | | | | | |
Administrative expenses | | 434,478 | | (390,519) | [e] | | 43,959 |
Consulting and marketing fees and expenses | | 3,157,290 | | (119,764) | [e] | | 3,037,526 |
Depreciation | | 310,314 | | (310,314) | [e] | | - |
Finance costs | | 7,554 | | (7,528) | [e] | | 26 |
Other operating expenses | | 1,019 | | (541) | [e] | | 478 |
Selling and distribution costs | | 193 | | (193) | [e] | | - |
| | | | | | | | |
| | | 3,910,848 | | | | | 3,081,989 |
| | | | | | | | |
Loss from operations before | | | | | | | |
other items and taxes | | (3,910,555) | | | | | (3,081,980) |
| | | | | | | | |
Other items | | | | | | | |
Gain on disposal of capital assets | | 3,555 | | (3,555) | [e] | | - |
| | | | | | | | |
Loss from operations before taxes | | (3,907,000) | | | | | (3,081,980) |
| | | | | | | | |
Current taxes | | - | | | | | - |
Deferred taxes recovery | | 100,113 | | (100,113) | [e] | | - |
| | | | | | | | |
Net loss | | (3,806,887) | | | | | (3,081,980) |
| | | | | | | | |
Basic and diluted loss per share | | (0.10) | | | | | (0.08) |
| | | | | | | | |
Weighted average shares | | | | | | | |
outstanding – basic and diluted | | 36,273,141 | | 10,000 | [d] | | 36,283,141 |
| | | | | | | | |
See accompanying notes to financial statements.
INVESTNET, INC.
NOTES TO THE PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2004
(Stated in US Dollars)
(Unaudited)
Note 1
Pro Forma Adjustments
The following pro forma adjustments have been reflected in the pro forma financial information:
a.
To reflect the balances of Advance Tech.
b.
To restate the balance due to Advance Tech.
c.
To eliminate the results of reverse acquisition by Advance Tech.
d.
To reflect the issue of 10,000 shares of Preferred Stock to the Buyer
e.
To exclude the results of Advance Tech from the Company’s results
