Exhibit 99.2
LiveDeal, Inc.,
and Marquis Industries, Inc.
Pro Forma Consolidated Financial Statements
(unaudited)
Contents
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| Pro Forma Consolidated Financial Statements: | |
| | |
| Pro Forma Consolidated Balance Sheetas of June 30, 2015 (unaudited) | 2 |
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| Pro Forma Consolidated Statements of Operationsfor the nine months ended June 30, 2015 (unaudited) | 3 |
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| Pro Forma Consolidated Statements of Operations for the year ended September 30, 2014 (unaudited) | 4 |
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| Notes to Pro Forma Consolidated Financial Statements (unaudited) | 5 |
Live Deal, Inc.,
and Marquis Industries, Inc.
Pro Forma Consolidated Balance Sheet
June 30, 2015
(unaudited)
| | | | | | Marquis | | | Pro forma | | | Pro forma | |
| | LiveDeal, Inc. | | | Industries, Inc. | | | Adjustments | | | Consolidated | |
| | (historical) | | | (historical) | | | | | | | |
| | | | | | | | | | | | | |
| Assets | | | | | | | | | | | | | | | | |
| Cash and cash equivalents | | $ | 6,605,304 | | | $ | 2,363,163 | | | $ | (7,163,163 | ) | a | $ | 1,805,304 | |
| Accounts receivable, net | | | 914,813 | | | | 7,904,389 | | | | | | | | 8,819,202 | |
| Due from officer | | | – | | | | 229,499 | | | | (229,499 | ) | a | | – | |
| Inventory, net | | | 2,536,839 | | | | 10,173,017 | | | | | | | | 12,709,856 | |
| Prepaid expenses and other current assets | | | 338,449 | | | | 1,931,570 | | | | (557,732 | ) | a | | 1,712,287 | |
| Total current assets | | | 10,395,405 | | | | 22,601,638 | | | | (7,950,394 | ) | | | 25,046,649 | |
| Accounts receivable, long term portion, net | | | – | | | | | | | | | | | | – | |
| Property and equipment, net | | | 98,358 | | | | 14,124,757 | | | | (1,586,281 | ) | a | | 12,636,834 | |
| Deposits and other assets | | | 70,243 | | | | – | | | | | | | | 70,243 | |
| Intangible assets, net | | | 3,727,287 | | | | | | | | 213,000 | | a | | 3,940,287 | |
| Goodwill | | | 1,169,904 | | | | | | | | | | | | 1,169,904 | |
| Total assets | | $ | 15,461,197 | | | $ | 36,726,395 | | | $ | (9,323,675 | ) | | $ | 42,863,917 | |
| | | | | | | | | | | | | | | | | |
| Liabilities and Equity | | | | | | | | | | | | | | | | |
| Liabilities: | | | | | | | | | | | | | | | | |
| Accounts payable | | $ | 1,311,013 | | | $ | 4,014,101 | | | $ | | | | $ | 5,325,114 | |
| Accrued liabilities | | | 2,538,066 | | | | 644,129 | | | | | | | | 3,182,195 | |
| Demand loans | | | – | | | | 697,900 | | | | (697,900 | ) | a | | – | |
| Notes Payable | | | 483,702 | | | | 1,917,515 | | | | (969,515 | ) | a | | 1,431,702 | |
| Total current liabilities | | | 4,332,781 | | | | 7,273,645 | | | | (1,667,415 | ) | | | 9,939,011 | |
| | | | | | | | | | | | | | | | | |
| Loan payable - long term | | | 224,364 | | | | 11,005,424 | | | | 2,591,066 | | a | | 13,820,854 | |
| Loan payable - long term, related party | | | | | | | | | | | 7,000,000 | | a | | 7,000,000 | |
| Commitments and contingencies | | | 273,500 | | | | | | | | | | | | 273,500 | |
| Total liabilities | | | 4,830,645 | | | | 18,279,069 | | | | 7,923,651 | | | | 31,033,365 | |
| | | | | | | | | | | | | | | | | |
| Equity: | | | | | | | | | | | | | | | | |
| Series E convertible preferred stock | | | 10,866 | | | | | | | | | | | | 10,866 | |
| Common stock | | | 16,904 | | | | 7,415,447 | | | | (7,415,447 | ) | a | | 16,904 | |
| Paid in capital | | | 52,852,222 | | | | | | | | | | | | 52,852,222 | |
| Accumulated deficit | | | (42,249,440 | ) | | | 11,031,879 | | | | (11,031,879 | ) | a | | (42,249,440 | ) |
| | | | 10,630,552 | | | | 18,447,326 | | | | (18,447,326 | ) | | | 10,630,552 | |
| Noncontrolling interest | | | – | | | | – | | | | 1,200,000 | | a | | 1,200,000 | |
| Total equity | | | 10,630,552 | | | | 18,447,326 | | | | (17,247,326 | ) | | | 11,830,552 | |
| Total liabilities and equity | | $ | 15,461,197 | | | $ | 36,726,395 | | | $ | (9,323,675 | ) | | $ | 42,863,917 | |
See accompanying notes to pro forma consolidated financial statements.
LiveDeal, Inc.,
and Marquis Industries, Inc.
Pro Forma Consolidated Statement of Operations
For the Nine Months ended June 30, 2015
(unaudited)
| | | | | | Marquis | | | Pro forma | | | Pro forma | |
| | | LiveDeal, Inc. | | | Industries, Inc. | | | Adjustments | | | Consolidated | |
| | | (Historical) | | | (Historical) | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Net revenues | | $ | 15,210,436 | | | $ | 47,952,858 | | | $ | | | | $ | 63,163,294 | |
| Cost of services | | | 8,895,338 | | | | 35,401,410 | | | | | | | | 44,296,748 | |
| Gross profit | | | 6,315,098 | | | | 12,551,448 | | | | – | | | | 18,866,546 | |
| | | | | | | | | | | | | | | | | |
| Operating expenses: | | | | | | | | | | | | | | | | |
| General and administrative expenses | | | 7,429,372 | | | | 2,767,962 | | | | 53,250 | | b | | 10,250,584 | |
| Sales and marketing expenses | | | 4,540,708 | | | | 4,099,029 | | | | | | | | 8,639,737 | |
| Impairment of intangible assets | | | 445,884 | | | | | | | | | | | | 445,884 | |
| Total operating expenses | | | 12,415,964 | | | | 6,866,991 | | | | 53,250 | | | | 19,336,205 | |
| Operating loss | | | (6,100,866 | ) | | | 5,684,457 | | | | (53,250 | ) | | | (469,659 | ) |
| Other expense: | | | | | | | | | | | | | | | | |
| Interest expense, net | | | (4,202,622 | ) | | | (385,297 | ) | | | (705,202 | ) | c | | (5,293,121 | ) |
| Other income | | | (31,137 | ) | | | 42,145 | | | | | | | | 11,008 | |
| Gain (loss) on derivative liability | | | 83,580 | | | | | | | | | | | | 83,580 | |
| Total other expense, net | | | (4,150,179 | ) | | | (343,152 | ) | | | (705,202 | ) | | | (5,198,533 | ) |
| | | | | | | | | | | | | | | | | |
| Net loss | | | (10,251,045 | ) | | | 5,341,305 | | | | (758,452 | ) | | | (5,668,192 | ) |
| | | | | | | | | | | | | | | | | |
| Noncontrolling interest | | | – | | | | 103 | | | | (916,591 | ) | d | | (916,488 | ) |
| | | | | | | | | | | | | | | | | |
| Net loss attributed to LiveDeal, Inc. | | $ | (10,251,045 | ) | | $ | 5,341,408 | | | $ | (1,675,043 | ) | | $ | (6,584,680 | ) |
| | | | | | | | | | | | | | | | | |
| Earnings per share - basic and diluted: | | $ | (0.65 | ) | | | | | | | | | | $ | (0.36 | ) |
| Weighted average common shares outstanding: | | | | | | | | | | | | | | | | |
| Basic and diluted | | | 15,766,001 | | | | | | | | | | | | 15,766,001 | |
See accompanying notes to pro forma consolidated financial statements.
LiveDeal, Inc.,
and Marquis Industries, Inc.
Pro Forma Consolidated Statement of Operations
For the Year Ended September 30, 2014
(unaudited)
| | | | | | Marquis | | | Pro forma | | | Pro forma | |
| | | LiveDeal, Inc. | | | Industries, Inc. | | | Adjustments | | | Consolidated | |
| | | (Historical) | | | (Historical) | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Net revenues | | $ | 7,265,276 | | | $ | 56,421,239 | | | $ | | | | $ | 63,686,515 | |
| Cost of services | | | 5,226,637 | | | | 41,669,934 | | | | | | | | 46,896,571 | |
| Gross profit | | | 2,038,639 | | | | 14,751,305 | | | | – | | | | 16,789,944 | |
| | | | | | | | | | | | | | | | | |
| Operating expenses: | | | | | | | | | | | | | | | | |
| General and administrative expenses | | | 5,644,218 | | | | 3,685,458 | | | | 71,000 | | b | | 9,400,676 | |
| Sales and marketing expenses | | | 893,705 | | | | 5,355,215 | | | | | | | | 6,248,920 | |
| Total operating expenses | | | 6,537,923 | | | | 9,040,673 | | | | 71,000 | | | | 15,649,596 | |
| Operating loss | | | (4,499,284 | ) | | | 5,710,632 | | | | (71,000 | ) | | | 1,140,348 | |
| Other expense: | | | | | | | | | | | | | | | | |
| Interest expense, net | | | (458,934 | ) | | | (605,521 | ) | | | (940,269 | ) | c | | (2,004,724 | ) |
| Other income | | | 240,565 | | | | (133,343 | ) | | | | | | | 107,222 | |
| Gain (loss) on derivative liability | | | 56,272 | | | | | | | | | | | | 56,272 | |
| Total other expense, net | | | (162,097 | ) | | | (738,864 | ) | | | (940,269 | ) | | | (1,841,230 | ) |
| | | | | | | | | | | | | | | | | |
| Net loss | | | (4,661,381 | ) | | | 4,971,768 | | | | (1,011,269 | ) | | | (700,882 | ) |
| | | | | | | | | | | | | | | | | |
| Noncontrolling interest | | | – | | | | (32,458 | ) | | | (799,808 | ) | d | | (832,266 | ) |
| | | | | | | | | | | | | | | | | |
| Net loss attributed to LiveDeal, Inc. | | $ | (4,661,381 | ) | | $ | 4,939,310 | | | $ | (1,811,077 | ) | | $ | (1,533,148 | ) |
| | | | | | | | | | | | | | | | | |
| Earnings per share - basic and diluted: | | $ | (0.35 | ) | | | | | | | | | | $ | (0.05 | ) |
| Weighted average common shares outstanding: | | | | | | | | | | | | | | | | |
| Basic and diluted | | | 13,144,248 | | | | | | | | | | | | 13,144,248 | |
See accompanying notes to pro forma consolidated financial statements.
LiveDeal, Inc.,
and Marquis Industries, Inc.
Notes to Pro Forma Consolidated Financial Statements
NOTE 1 - BASIS OF PRESENTATION
On July 6 and July 7, 2015, the Company, through its newly formed, wholly-owned subsidiary, Live Ventures, Inc. (“Live Ventures”), entered into a series of agreements in connection with its indirect purchase of Marquis Industries, Inc., a Georgia corporation (“Marquis Industries”), and its subsidiaries. The purchase was effectuated between Marquis Affiliated Holdings LLC, a Delaware limited liability company (“Marquis Holdings”) that is 80% owned by Live Ventures, and the shareholders of Marquis Industries. The remaining 20% of Marquis Holdings is owned by the former owners of Marquis Industries.
The purchase price was paid through a combination of debt financing that was provided by (i) the Bank of America Term and Revolving Loan in the aggregate amount of (x) approximately $7.8 million for the term component and (y) approximately $15 million for the revolving component and (ii) a mezzanine loan in an amount of up to $7,000,000 provided by Isaac Capital Fund I, LLC, a private lender whose managing member is Jon Isaac, the chief executive officer of the Company. In connection with operations of Marquis Industries after the closing of the purchase transaction, and as part of the Bank of America Term and Revolving Loan, Marquis Industries may borrow up to $15 million (based on eligibility).
The Bank of America term loan bears interest at a variable rate based on a base rate plus a margin. Monthly payments to Bank of America are approximately $79,000 plus accrued interest. The term component is due and payable in July 2020, which is when the revolving component terminates.
The Isaac Capital Fund I, LLC mezzanine loan bears interest at 12.5% with payment obligations of interest each month and all principal due in January 2021.
The accompanying pro forma consolidated balance sheet presents the accounts of LiveDealand Marquisas if the acquisition occurred June 30, 2015. The accompanying pro forma consolidated statement of operations presents the accounts of LiveDeal andMarquis for the nine months ended June 30, 2015 and the year ended September 30, 2014 as if the acquisition occurred on October 1, 2013.
The following adjustments would be required if the acquisition occurred as indicated above:
| a. | To allocate the purchase price based on the terms of the transactions to include: |
| · | record cash paid by LiveDeal and Marquis shareholder for interest in Live Ventures of $4,800,000 and $1,200,000 respectively; |
| · | remove assets not acquired in transactions – cash of $2,363,163; due to officer of $229,499; property and equipment of $1,586,281 and cash surrender value of life insurance of $557,732; |
| · | record purchased intangible of $213,000; |
| · | record repayment of existing Marquis debt of $13,620,839; |
| · | record additional borrowings from Bank of America of $14,544,490 and Isaac Capital Fund of $7,000,000; |
| · | and to remove equity accounts of Marquis; |
| b. | To record amortization of the purchased intangible assets assuming an estimated useful life of 36 months; |
| c. | To record interest expense on the additional debt being taken on by MAH, including the $7,000,000 in mezzanine loan financing; and |
| d. | To record net income attributed to the 20% noncontrolling interest. |
The unaudited consolidated pro forma financial information is presented for informational purposes only and is subject to a number of uncertainties and assumptions and do not purport to represent what the company’s actual performance or financial position would have been had the transaction occurred on the dates indicated and does not purport to indicate the financial position or results of operations as of any future date or for any future period.
