CLEAN TRANSPORTATION GROUP, INC.
| NOTES TO UNAUDITED CONDENSED PRO FORMA FINANCIAL STATEMENTS (Revised) |
| DECEMBER 31, 2010 |
On May 30, 2011, Clean Transportation Group, Inc. (the “Company”) closed on the transactions described in a Definitive Agreement dated May 13, 2011 (the “Agreement”). Under the terms of the Agreement, the Company agreed to acquire 100% of the issued and outstanding shares of Engine Clean Solutions, Inc. (“Engine Clean”) in exchange for 2,500,000 shares of common stock of the Company and $500,000 cash, $300,000 of which is to be used to satisfy obligations of Engine Clean. The $500,000 is in the form of a note payable as of the date of closing. A shareholder also agreed to contribute back to the Company a total of 7,657,535 shares of the Company’s common stock.
This transfer ownership transaction resulted in Engine Clean becoming a wholly-owned subsidiary of the Company.
The following unaudited pro forma condensed balance sheet as of December 31, 2010 and the unaudited pro forma condensed statement of operations for the year ended December 31, 2010 are derived from the historical financial statements of the Company and Engine Clean and have been prepared to give effect to the acquisition of the Engine Clean as at December 31, 2010. The unaudited pro forma condensed financial statements are presented as if the closing of Agreement had occurred as of December 31, 2010, and have been revised to reflect the value of shares issued for the acquisition of Engine Clean and conversion of debt at $0.10 per share, which more closely represents fair value at the date of the transactions.
The following unaudited pro forma condensed financial statements have been prepared for illustrative purposes only and do not purport to reflect the results the combined company may achieve in future periods or the historical results that would have been obtained. These unaudited pro forma condensed financial statements, including the notes hereto, should be read in conjunction with (i) the historical financial statements for the Company and (ii) the historical financial statements of Engine Clean.
| NOTE 1 Proforma Adjustments | |
These unaudited pro forma combined financial statements reflect the following pro forma adjustments:
| (a) | To record the acquisition of the shares of Engine Clean in exchange for 2,500,000 shares of the Company valued at $0.10 per share and a note payable of $500,000, $300,000 of which is to be used to satisfy obligations of Engine Clean with $14,917 of related party debt forgiveness. As of December 31, 2010, the Company has not identified any assets requiring fair value adjustment. Goodwill has been determined to be the total of the net purchase price of $450,000 together with the deficit equity in Engine Clean at December 31, 2010 in the amount of $124,818. |
| | (b) | To record the satisfaction of certain related party obligations of the Company totaling $28,443 in exchange for 284,434 shares of the Company’s common stock. | |
| | (c) | To record the contribution of 7,657,535 shares of the Company’s common stock back to the Company. | |
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| NOTE 2 Valuation of Shares Issued | |
The $0.10 price per share utilized in the accounting for the acquisition transaction and conversion of related party obligations is based on the value of shares of common stock issued for services during the quarter ended June 30, 2011 and represents management’s determination of fair value of shares of the Company’s common stock.
The value of the acquisition of Engine Clean Solutions, Inc. is based on management’s best estimate. The Company is in the process of having an independent valuation of Engine Clean Solutions, Inc. performed to determine the ultimate acquisition valuation and allocation of the purchase consideration.
