Exhibit 99.2
InferX Corporation
Proforma Unaudited Consolidated Financial Statements
The following unaudited proforma financial statements for InferX Corporation (“The Company”) have been prepared to illustrate the acquisition of The Irus Group, Inc. (“Irus”) in a merger transaction and are based on estimates and assumptions set forth herein and in the notes to such proforma statements.
On June 15, 2009 InferX entered into an amended and restated merger agreement, with Irus, under which it effected a reverse triangular merger between Irus and InferX’s wholly-owned subsidiary, Irus Acquisition Corp. (the Merger”). On October 27, 2009, the Company and Irus completed the Merger. As consideration for the Merger, InferX issued 9,089,768 shares of InferX’s common stock, par value $.0001 per share (the “Common Stock”) and 1,000,000 shares of preferred stock, par value $.0001 per share (the “Preferred Stock”), to the sole shareholder of Irus. As a result, Common Stock was credited for $909 and Preferred Stock was credited for $100. The $15 Common Stock of Irus was eliminated.
In connection with the merger InferX issued of 233,740 shares of common stock in connection with the conversion of A and B warrants into common shares. In addition, InferX issues 1,895,000 shares of common stock in connection with the conversion of $304,488 of notes payable into common stock.
The following proforma condensed consolidated statements of operations for the nine months ended September 30, 2009 and the year ended December 31, 2008 reflects the financial results of the Company and Irus as if the acquisition had occurred on January 1, 2008.
InferX Corporation
Proforma Unaudited Consolidated Financial Statements
The unaudited proforma financial information combines the historical financial information of the Company and Irus for the nine months ended September 30, 2009 and the year ended December 31, 2008. The unaudited proforma balance sheet assumes the acquisition was completed on that date. The unaudited proforma statements of operations give effect to the merger and acquisitions as if the merger and acquisition had been completed on January 1, 2008. These unaudited proforma financial statements are based upon and should be read in conjunction with InferX’s audited financial statements as of and for the year ended December 31, 2008, InferX’s unaudited financial statements for the nine months ended September 30, 2009, Irus’s unaudited financial statements for the year ended December 31, 2008 and Irus’s unaudited financial statements for the nine months ended September 30, 2009.
These unaudited proforma financial statements and the notes thereto contain forward-looking statements that involve risks and uncertainties. Therefore, our actual results may vary materially from those discussed herein. They do not purport to indicate the results that would have actually been obtained had the merger and acquisition been completed on the assumed dates or for the periods presented, or which may be realized in the future. The accounting adjustments reflected in these unaudited proforma consolidated financial statements included herein are preliminary and are subject to change.
InferX Corporation
Notes To Unaudited Proforma Consolidated Financial Statements
For the Year Ended December 31, 2008 and the Nine Months Ended September 30, 2009
NOTE A – ACCOUNTING TREATMENT APPLIED AS A RESULT OF THIS TRANSACTION
The transaction is being accounted for as a reverse acquisition. InferX is the acquirer for accounting purposes. Accordingly, InferX’s historical financial statements for periods prior to the acquisition have been retroactively restated for the equivalent number of shares issued in the transaction. The accumulated deficit of Irus has been eliminated. Operations prior to the transaction ate those of both InferX and Irus. Earnings per share for the period prior to the transaction are restated to reflect the equivalent number of shares outstanding.
NOTE B – ADJUSTMENT
(A) | – To record the issuance of 9,089,768 common shares and 1,000,000 preferred shares to the shareholders of Irus in exchange for 100% of their shares in Irus. |
(B) | – To reflect the cancellation of the 15 common shares of Irus as a result of the acquisition. Also, to reflect the elimination of the additional paid-in capital balance of $80,085 and the retained earnings (deficit) of $415,228 that were recorded on the financial statements of Irus at September 30, 2009. |
(C) | – To record the conversion of $304,488 in convertible notes payable into 1,895,000 shares of common stock. |
(D) | – To record the conversion of 116,870 A warrants and 116,870 B warrants into 233,740 shares of common stock |
The following table reflects the changes to the common stock balance as a result of the merger and the conversion of the A and B warrants and notes payable into common stock:
Common shares outstanding at September 30, 2009 | 886,926 | |||
Common shares issued in the merger | 9,089,768 | |||
Common shares issued for conversion of warrants | 233,940 | |||
Common shares issued for conversion of notes payable | 1,895,000 | |||
Total common shares | 12,105,634 | |||
INFERX CORPORATION |
CONDENSED CONSOLIDATED BALANCE SHEETS |
SEPTEMBER 30, 2009 (UNAUDITED) |
ASSETS | ||||||||||||||||||
InferX | Irus | Adjustments | Consolidated | |||||||||||||||
CURRENT ASSETS | ||||||||||||||||||
Cash | $ | 13,829 | $ | 45,056 | $ | 58,885 | ||||||||||||
Accounts receivable, net | 1,032,847 | 1,032,847 | ||||||||||||||||
Other current assets | 30,064 | 30,064 | ||||||||||||||||
Total current assets | 13,829 | 1,107,967 | - | 1,121,796 | ||||||||||||||
Fixed assets, net of depreciation | 24,398 | 35,441 | 59,839 | |||||||||||||||
Other Asset | ||||||||||||||||||
Security deposit | 6,000 | 6,000 | ||||||||||||||||
Note receivable | 18,255 | 18,255 | ||||||||||||||||
Computer software development costs, net of amortization | 83,728 | 83,728 | ||||||||||||||||
Total other asset | 83,728 | 24,255 | - | 107,983 | ||||||||||||||
TOTAL ASSETS | $ | 121,955 | $ | 1,167,663 | - | $ | 1,289,618 | |||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||||||||||||
CURRENT LIABILITIES | ||||||||||||||||||
Accounts payable and accrued expenses | $ | 1,748,051 | $ | 1,122,791 | $ | 2,870,842 | ||||||||||||
Line of credit | - | �� | 380,000 | 380,000 | ||||||||||||||
Liability for stock to be issued | 127,000 | 127,000 | ||||||||||||||||
Current portion of notes payable, net of debt discount of $85,928 | 304,488 | $ | (304,488 | ) | C | 0 | ||||||||||||
Total current liabilities | 2,179,539 | 1,502,791 | (304,488 | ) | 3,377,842 | |||||||||||||
Long-term Liabilities | ||||||||||||||||||
Notes payable, net of current portion, net of debt discount of $1,059 | 341,461 | 341,461 | ||||||||||||||||
TOTAL LIABILITIES | 2,521,000 | 1,502,791 | (304,488 | ) | 3,719,303 | |||||||||||||
STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||||||||||||
Preferred stock, par value $0.0001 per share, 10,000,000 shares authorized | - | 100 | A | 100 | ||||||||||||||
Common stock, par value $0.0001 per share, 400,000,000 shares authorized | 89 | 15 | 909 | A | 1,210 | |||||||||||||
(15 | ) | B | ||||||||||||||||
189 | C | |||||||||||||||||
23 | D | |||||||||||||||||
Additional paid-in capital | 4,950,377 | 80,085 | (336,137 | ) | A | 4,918,516 | ||||||||||||
(80,085 | ) | B | ||||||||||||||||
304,299 | C | |||||||||||||||||
(23 | ) | D | ||||||||||||||||
Retained earnings (defict) | (7,349,511 | ) | (415,228 | ) | 415,228 | B | (7,349,511 | ) | ||||||||||
Total stockholders' equity (deficit) | (2,399,045 | ) | (335,128 | ) | 304,488 | (2,429,685 | ) | |||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ | 121,955 | $ | 1,167,663 | $ | - | $ | 1,289,618 |
INFERX CORPORATION | ||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | ||||||||||||||
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 |
InferX | Irus | Adjustments | Consolidated | ||||||||||||||
REVENUE | $ | - | $ | 5,636,895 | $ | 5,636,895 | |||||||||||
COST OF REVENUES | |||||||||||||||||
Direct labor and other finges | - | 680,326 | 680,326 | ||||||||||||||
Subcontractor | - | 3,392,133 | 3,392,133 | ||||||||||||||
Other direct costs | - | 187,778 | 187,778 | ||||||||||||||
Amortization of computer software development costs | 56,521 | 56,521 | |||||||||||||||
Total costs of revenues | 56,521 | 4,260,237 | 4,316,758 | ||||||||||||||
GROSS PROFIT (LOSS) | (56,521 | ) | 1,376,658 | - | 1,320,137 | ||||||||||||
OPERATING EXPENSES | |||||||||||||||||
Indirect and overhead labor and fringes | 199,254 | 493,905 | 693,159 | ||||||||||||||
Professional fees | 65,979 | 61,830 | 127,809 | ||||||||||||||
Advertising and promotion | 9,461 | 9,461 | |||||||||||||||
Travel related costs | 5,481 | 5,481 | |||||||||||||||
Business development | 34,823 | 34,823 | |||||||||||||||
Bad debts | 4,264 | 4,264 | |||||||||||||||
Rent | 500 | 67,090 | 67,590 | ||||||||||||||
General and administrative | 95,780 | 128,106 | 223,886 | ||||||||||||||
Stock issued for services | - | - | |||||||||||||||
Stock based compensation | - | - | |||||||||||||||
Depreciation | 7,180 | 26,309 | 33,489 | ||||||||||||||
Total operating expenses | 374,174 | 825,788 | - | 1,199,962 | |||||||||||||
NET INCOME (LOSS) FROM OPERATIONS BEFORE OTHER EXPENSE AND | |||||||||||||||||
PROVISION FOR INCOME TAXES | (430,695 | ) | 550,870 | - | 120,175 | ||||||||||||
OTHER EXPENSE | |||||||||||||||||
Interest expense, net of interest income | 117,181 | 16,381 | 133,562 | ||||||||||||||
NET INCOME (LOSS) FROM OPERATIONS BEFORE PROVISION FOR INCOME TAXES | (547,876 | ) | 534,489 | - | (13,387 | ) | |||||||||||
Provision for income taxes | - | - | - | - | |||||||||||||
NET INCOME (LOSS) APPLICABLE TO SHARES | $ | (547,876 | ) | $ | 534,489 | $ | - | $ | (13,387 | ) | |||||||
NET INCOME (LOSS) PER BASIC AND DILUTED SHARES | $ | (0.05 | ) | $ | 0.36 | $ | (0.00 | ||||||||||
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING | 12,105,634 | 1,500,000 | 12,105,634 |