Exhibit 99.2
Stratus Media Group, Inc. and ProElite, Inc.
Pro Forma Combined Financial Statements
(unaudited)
Contents
| Page | |
| Pro Forma Combined Financial Statements: | |
| Pro Forma Combined Balance Sheets as of June 30, 2011 (unaudited) | F-2 |
| Pro Forma Combined Statements of Operations for the six months June 30, 2011 (unaudited) | F-3 |
| Pro Forma Combined Statements of Operations for the six months June 30, 2010 (unaudited) | F-4 |
| Pro Forma Combined Statements of Operations for the year ended December 31, 2010 (unaudited) | F-5 |
| Notes to Pro Forma Combined Financial Statements (unaudited) | F-6 |
Stratus Media Group, Inc. and ProElite, Inc.
Pro Forma Combined Balance Sheets
June 30, 2011
(unaudited)
| Stratus Media | Pro forma | Pro Forma | |||||||||||||||
| Group, Inc. (1) | ProElite, Inc. (2) | Adjustments | Combined | ||||||||||||||
| (Historical) | �� | (Historical) | |||||||||||||||
| ASSETS | |||||||||||||||||
| Current assets | |||||||||||||||||
| Cash | $ | 5,843,367 | $ | 21,694 | $ | - | $ | 5,865,061 | |||||||||
| Advances to subsidiary | 2,011,659 | (2,011,659 | ) | (a) | - | ||||||||||||
| Accounts receivable | 53,500 | 53,500 | |||||||||||||||
| Deposits and prepaid expenses | 1,054,450 | 1,054,450 | |||||||||||||||
| Total current assets | 8,909,476 | 75,194 | (2,011,659 | ) | 6,973,011 | ||||||||||||
Property and equipment, net | 87,576 | 87,576 | |||||||||||||||
Intangible assets, net | 2,232,983 | 2,232,983 | |||||||||||||||
| Goodwill | 1,073,345 | 2,000,000 | (b) | 3,073,345 | |||||||||||||
| Acquisition deposit | 100,000 | 100,000 | |||||||||||||||
| Total assets | $ | 12,403,380 | $ | 75,194 | $ | (11,659 | ) | $ | 12,466,915 | ||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||||||||
| Current liabilities | |||||||||||||||||
| Advances from parent | $ | - | $ | 11,659 | $ | (11,659 | ) | (a) | $ | - | |||||||
| Accounts payable | 622,733 | 4,358 | 627,091 | ||||||||||||||
| Deferred salary | 345,529 | 345,529 | |||||||||||||||
| Accrued interest | 439,473 | 439,473 | |||||||||||||||
| Accrued expenses - legal judgments | 90,732 | 90,732 | |||||||||||||||
| Other accrued expenses and other liabilities | 972,117 | 972,117 | |||||||||||||||
| Loans payable to officers and a director | 185,334 | 185,334 | |||||||||||||||
| Current portion of notes payable | 455,000 | 455,000 | |||||||||||||||
| Notes payable | 73,017 | 73,017 | |||||||||||||||
| Total current liabilities | 3,183,935 | 16,017 | (11,659 | ) | 3,188,293 | ||||||||||||
| Non-current liabilities | |||||||||||||||||
| Non-current portion of notes payable | 625,000 | 625,000 | |||||||||||||||
| Total liabilities | 3,808,935 | 16,017 | (11,659 | ) | 3,813,293 | ||||||||||||
| Commitments and contingencies | |||||||||||||||||
| Shareholders' equity | |||||||||||||||||
| Preferred Stock | 69 | 69 | |||||||||||||||
| Common stock | 75,555 | 6,685 | (6,685 | ) | (c) | 75,555 | |||||||||||
| Common stock to be issued | 1,079,973 | (1,079,973 | ) | (c) | - | ||||||||||||
| Minority interest | (92,079 | ) | (d) | (92,079 | ) | ||||||||||||
| Additional paid-in capital | 38,860,283 | 84,051,915 | (84,051,915 | ) | (c) | 39,011,539 | |||||||||||
| 151,256 | (e) | ||||||||||||||||
| Accumulated deficit | (30,341,462 | ) | (85,079,396 | ) | 85,079,396 | (c) | (30,341,462 | ) | |||||||||
| Total shareholders' equity | 8,594,445 | 59,177 | - | 8,653,622 | |||||||||||||
| Total liabilities and shareholders' equity | $ | 12,403,380 | $ | 75,194 | $ | (11,659 | ) | $ | 12,466,915 | ||||||||
(2) Source: unaudited financial statements of ProElite, Inc. for the six months ended June 30, 2011 included elsewhere in this Form 8-K.
See accompanying notes to pro forma combined financial statements
F-2
Stratus Media Group, Inc. and ProElite, Inc.
Pro Forma Combined Statements of Operations
For the Six Months Ended June 30, 2011
(unaudited)
| Stratus Media | Pro forma | Pro Forma | |||||||||||||||
| Group, Inc. (1) | ProElite, Inc. (2) | Adjustments | Combined | ||||||||||||||
| (Historical) | (Historical) | ||||||||||||||||
| Net revenues | $ | - | $ | 259,000 | $ | - | $ | 259,000 | |||||||||
| Cost of revenues | - | - | - | - | |||||||||||||
| Gross profit | - | 259,000 | - | 259,000 | |||||||||||||
| Operating expenses | |||||||||||||||||
| General and administrative | 1,999,024 | 971,162 | (602,800 | ) | (f) | 2,367,386 | |||||||||||
Warrant expense and fair value charge for stock sales | 883,105 | 883,105 | |||||||||||||||
| Legal and professional services | 822,213 | 822,213 | |||||||||||||||
| Depreciation and amortization | 26,759 | 26,759 | |||||||||||||||
| Total operating expenses | 3,731,101 | 971,162 | (602,800 | ) | 4,099,463 | ||||||||||||
| Loss from operations | (3,731,101 | ) | (712,162 | ) | 602,800 | (3,840,463 | ) | ||||||||||
| Other (income)/expenses | |||||||||||||||||
| Other (income)/expenses | - | - | - | ||||||||||||||
| Interest expense | 128,839 | 31,694 | 160,533 | ||||||||||||||
| Total other expenses | 128,839 | 31,694 | - | 160,533 | |||||||||||||
| Net loss | $ | (3,859,940 | ) | $ | (743,856 | ) | $ | 602,800 | $ | (4,000,996 | ) | ||||||
Basic and diluted loss per share | $ | (0.06 | ) | $ | (0.01 | ) | $ | (0.06 | ) | ||||||||
Basic and diluted weighted- average common shares | 68,704,527 | 63,854,726 | 68,704,527 | ||||||||||||||
(1) Source: unaudited financial statements of Stratus Media Group, Inc. included in Form 10-Q for the six months ended June 30, 2011.
(2) Source: unaudited financial statements of ProElite, Inc. for the six months ended June 30, 2011 included elsewhere in this Form 8-K.
See accompanying notes to pro forma combined financial statements
F-3
Stratus Media Group, Inc. and ProElite, Inc.
Pro Forma Combined Statements of Operations
For the Six Months Ended June 30, 2010
(unaudited)
| Stratus Media | Pro forma | Pro Forma | |||||||||||||||
| Group, Inc. (1) | ProElite, Inc. (2) | Adjustments | Combined | ||||||||||||||
| (Historical) | (Historical) | ||||||||||||||||
| Net revenues | $ | - | $ | 42,500 | $ | - | $ | 42,500 | |||||||||
| Cost of revenues | - | - | - | - | |||||||||||||
| Gross profit | - | 42,500 | - | 42,500 | |||||||||||||
| Operating expenses | |||||||||||||||||
| General and administrative | 947,008 | 634,073 | (286,800 | ) | (g) | 1,294,281 | |||||||||||
| Warrant expense and fair value | - | ||||||||||||||||
| charge for stock sales | 1,455,437 | 1,455,437 | |||||||||||||||
| Legal and professional services | 589,813 | 589,813 | |||||||||||||||
| Depreciation and amortization | 23,886 | 23,886 | |||||||||||||||
| Total operating expenses | 3,016,144 | 634,073 | (286,800 | ) | 3,363,417 | ||||||||||||
| Loss from operations | (3,016,144 | ) | (591,573 | ) | 286,800 | (3,320,917 | ) | ||||||||||
| Other (income)/expenses | |||||||||||||||||
| Other (income)/expenses | 525,378 | - | 525,378 | ||||||||||||||
| Interest expense | 32,622 | 32,622 | |||||||||||||||
| Total other expenses | 558,000 | - | - | 558,000 | |||||||||||||
| Net loss | $ | (3,574,144 | ) | $ | (591,573 | ) | $ | 286,800 | $ | (3,878,917 | ) | ||||||
Basic and diluted loss per share | $ | (0.06 | ) | $ | (0.01 | ) | $ | (0.06 | ) | ||||||||
Basic and diluted weighted- average common shares | 59,938,132 | 60,854,726 | 59,938,132 | ||||||||||||||
(1) Source: unaudited financial statements of Stratus Media Group, Inc. included in Form 10-Q for the six months ended June 30, 2010.
(2) Source: unaudited financial statements of ProElite, Inc. for the six months ended June 30, 2010 included elsewhere in this Form 8-K.
See accompanying notes to pro forma combined financial statements
F-4
Stratus Media Group, Inc. and ProElite, Inc.
Pro Forma Combined Statements of Operations
For the Year Ended December 31, 2010
| Stratus Media | Pro forma | Pro Forma | |||||||||||||||
| Group, Inc. (1) | ProElite, Inc. (2) | Adjustments | Combined | ||||||||||||||
| (Historical) | (Historical) | ||||||||||||||||
| Net revenues | $ | 40,189 | $ | 324,500 | $ | - | $ | 364,689 | |||||||||
| Cost of revenues | 210,393 | - | - | 210,393 | |||||||||||||
| Gross profit (loss) | (170,204 | ) | 324,500 | - | 154,296 | ||||||||||||
| Operating expenses | |||||||||||||||||
| General and administrative | 2,167,840 | 1,365,972 | (508,600 | ) | (h) | 3,025,272 | |||||||||||
| Impairment of intangible assets | 650,000 | 972 | 650,000 | ||||||||||||||
Warrant expense and fair value charge for stock sales | 2,934,040 | 2,934,040 | |||||||||||||||
| Legal and professional services | 1,665,200 | 1,665,200 | |||||||||||||||
| Depreciation and amortization | 49,672 | 49,672 | |||||||||||||||
| Total operating expenses | 7,466,752 | 1,365,972 | (508,600 | ) | 8,324,124 | ||||||||||||
| Loss from operations | (7,636,956 | ) | (1,041,472 | ) | 508,600 | (8,169,828 | ) | ||||||||||
| Other (income)/expenses | |||||||||||||||||
| Other (income)/expenses | 691,260 | - | 691,260 | ||||||||||||||
| Interest expense | 81,389 | 81,389 | |||||||||||||||
| Total other expenses | 772,649 | - | - | 772,649 | |||||||||||||
| Net loss | $ | (8,409,605 | ) | $ | (1,041,472 | ) | $ | 508,600 | $ | (8,942,477 | ) | ||||||
Basic and diluted loss per share | $ | (0.14 | ) | $ | (0.02 | ) | $ | (0.15 | ) | ||||||||
Basic and diluted weighted- average common shares | 61,580,154 | 60,854,726 | 61,580,154 | ||||||||||||||
(1) Source: audited financial statements of Stratus Media Group, Inc. for included in Form 10-K for the year ended December 31, 2010.
(2) Source: audited financial statements of ProElite, Inc. for the year ended December 31, 2010 included elsewhere in this Form 8-K.
See accompanying notes to pro forma combined financial statements
F-5
Stratus Media Group, Inc. and ProElite, Inc.
Notes to Pro Forma Combined Financial Statements
NOTE 1 - BASIS OF PRESENTATION
The accompanying pro forma combined balance sheet presents the accounts of Stratus Media Group, Inc. (“Stratus”) and ProElite, Inc. (“ProElite”) as if the acquisition of ProElite by Stratus occurred on June 30, 2011. The accompanying pro forma combined statement of operations presents the accounts of Stratus and ProElite for the year ended December 31, 2010, for the six months ended June 30, 2010 as if the acquisition occurred on January 1, 2010, and for the six months ended June 30, 2011 as if the acquisition occurred on January 1, 2011.
The following adjustments would be required if the acquisition occurred as indicated above (referenced to pro forma financial statements):
| (a) | Advances from Stratus to ProElite ($2,000,000 recorded by ProElite as additional paid-in capital to reflect acquisition price) |
| (b) | Goodwill related to acquisition of ProElite by Stratus |
| (c) | Eliminate equity accounts of ProElite |
| (d) | Recognize minority interest related to Stratus’ ownership of 95% of ProElite |
| (e) | Miscellaneous pro forma adjustments to additional paid in capital |
| (f) | Adjustment for expenses that would not be incurred if the acquisition had occurred on January 1, 2011, or are non-recurring in nature: $100,000 for directors and officers insurance; $19,800 for depreciation related to assets that would be written off; $101,000 for stock compensation expense related to a ProElite stock option program that would be replace by a Stratus stock option program; $350,000 for a legal settlement; and $31,000 for interest on that settlement. |
| (g) | Adjustment for expenses that would not be incurred if the acquisition had occurred on January 1, 2010: $100,000 for directors and officers insurance; $19,800 for depreciation related to assets that would be written off; and $167,000 for stock compensation expense related to a ProElite stock option program that would be replace by a Stratus stock option program. |
| (h) | Adjustment for expenses that would not be incurred if the acquisition had occurred on January 1, 2010: $200,000 for directors and officers insurance; $39,600 for depreciation related to assets that would be written off; and $269,000 for stock compensation expense related to a ProElite stock option program that would be replace by a Stratus stock option program. |
F-6