CLEAN TRANSPORTATION GROUP, INC.
NOTES TO UNAUDITED CONDENSED PRO FORMA FINANCIAL STATEMENTS |
DECEMBER 31, 2010 (Revised) |
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 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 financial statements are presented as if the closing of Agreement had occurred as of December 31, 2010. Because of the contingent and uncertain nature of the $200,000 of the note payable attributable to the acquisition, no related value has been assigned as part of the acquisition transaction.
The following unaudited pro forma 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 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 | PRO FORMA 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’s common stock and a note payable of $500,000, which is to be used to satisfy obligations of Engine Clean with $14,917 of related party debt forgiveness. In connection with the acquisition, the Company identified intellectual property having a fair value of $90,000 and property, plant and equipment having a fair value of $80,000. Because of the contingent and uncertain nature of the $200,000 of the note payable attributable to the acquisition, no related value has been assigned as part of the acquisition transaction.
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(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. |
Clean Transportation Group Inc. and Engine Clean Solutions, Inc. |
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Unaudited Condensed Combining Proforma Balance Sheet |
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December 31, 2010 (Revised) |
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| Clean Transportation Group Inc. |
| Engine Clean Solutions Inc. |
| Proforma Adjustments |
| Consolidated Proforma |
Assets |
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Current Assets: |
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|
|
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Cash and cash equivalents | $ 401 |
| $ 28,245 |
| $ - |
| $ 28,646 |
Accounts receivable | - |
| 33,610 |
| - |
| 33,610 |
Inventories | - |
| 179,972 |
| - |
| 179,972 |
Prepaid expenses | 730 |
| 3,809 |
| - |
| 4,539 |
Total current assets | 1,131 |
| 245,636 |
| - |
| 246,767 |
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|
|
|
|
|
|
Deposits | - |
| 4,763 |
| - |
| 4,763 |
Property, plant and equipment | - |
| - |
| 80,000 | (a) | 80,000 |
Intellectual property | - |
| - |
| 90,000 | (a) | 90,000 |
Equipment, net | - |
| 41 |
| - |
| 41 |
Total Assets | $ 1,131 |
| $ 250,440 |
| $ 170,000 |
| $ 421,571 |
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |
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Current Liabilities: |
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Accounts payable and accrued liabilities | $ 73,802 |
| $ 49,141 |
| $ - |
| $ 122,943 |
Loan interest payable | - |
| 20,754 |
| (20,754) | (a) | - |
Income taxes payable | - |
| 11,200 |
| - |
| 11,200 |
Loans payable | - |
| 294,163 |
| (294,163) | (a) | - |
Note payable | - |
| - |
| 300,000 | (a) | 300,000 |
Due to related parties | 75,242 |
| - |
| (28,443) | (b) | 46,799 |
Total Current Liabilities | 149,044 |
| 375,258 |
| (43,360) |
| 480,942 |
Total Liabilities | 149,044 |
| 375,258 |
| (43,360) |
| 480,942 |
Stockholders' Equity (Deficit): |
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Common stock | 25,991 |
| 11,700 |
| 2,500 | (a) | 32,818 |
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| 284 | (b) |
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| (7,657) | (c) |
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Additional paid-in capital | 569,112 |
| 27,322 |
| 182,417 | (a) | 814,667 |
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| 28,159 | (b) |
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| 7,657 | (c) |
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Accumulated deficit | (743,016) |
| (163,840) |
| - |
| (906,856) |
Total Stockholders' Equity (Deficit) | (147,913) |
| (124,818) |
| 213,360 |
| (59,371) |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ 1,131 |
| $ 250,440 |
| $ 170,000 |
| $ 421,571 |
Clean Transportation Group Inc. and Engine Clean Solutions, Inc. |
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Unaudited Condensed Combining Proforma Statement of Operations |
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For the Year Ended December 31, 2010 |
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| Clean Transportation Group Inc. |
| Engine Clean Solutions Inc. |
| Proforma Adjustments |
| Consolidated Proforma |
Sales | $ - |
| $ 857,466 |
| $ - |
| $ 857,466 |
Cost of sales | - |
| 580,672 |
| - |
| 580,672 |
Gross Profit | - |
| 276,794 |
| - |
| 276,794 |
Operating Expenses |
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Selling, general and administrative | 59,699 |
| 210,499 |
| - |
| 267,198 |
Interest expense | 4,657 |
| 4,760 |
| - |
| 9,417 |
| 61,356 |
| 215,259 |
| - |
| 276,615 |
Net income before income taxes | (61,356) |
| 61,535 |
| - |
| 179 |
Provision for income taxes | - |
| (12,000) |
| - |
| (12,000) |
Net Loss | $ (61,356) |
| $ 49,535 |
| - |
| $ (11,821) |
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Net Loss per common share- basic and diluted | $ (0.00) |
| $ 29.73 |
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| $ (0.00) |
Weighted average of common shares- basic and diluted | 25,990,868 |
| 1,666 |
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| 25,990,868 |
CLEAN TRANSPORTATION GROUP, INC.
NOTES TO UNAUDITED CONDENSED PRO FORMA FINANCIAL STATEMENTS |
MARCH 31, 2011 (Revised) |
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 March 31, 2011 and the unaudited pro forma statement of operations for the year ended March 31, 2011 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 March 31, 2011. The unaudited pro forma financial statements are presented as if the closing of Agreement had occurred as of March 31, 2011.
Because of the contingent and uncertain nature of the $200,000 of the note payable attributable to the acquisition, no related value has been assigned as part of the acquisition transaction.
The following unaudited pro forma 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 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 | PRO FORMA 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’s common stock and a note payable of $500,000 which is to be used to satisfy obligations of Engine Clean with $14,917 of related party debt forgiveness. As of March 31, 2011, the Company has not identified any assets requiring fair value adjustment. In connection with the acquisition, the Company identified intellectual property having a fair value of $90,000 and property, plant and equipment having a fair value of $80,000. Because of the contingent and uncertain nature of the $200,000 of the note payable attributable to the acquisition, no related value has been assigned as part of the acquisition transaction.
|
(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. |
Clean Transportation Group Inc. and Engine Clean Solutions, Inc. |
|
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|
| |||
Unaudited Condensed Combining Proforma Balance Sheet |
|
|
|
|
|
| |
March 31, 2011 (Revised) |
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|
|
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|
| Clean Transportation Group Inc. |
| Engine Clean Solutions Inc. |
| Proforma Adjustments |
| Consolidated Proforma |
Assets |
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Current Assets: |
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Cash and cash equivalents | $ 400 |
| $ 6,234 |
| $ - |
| $ 6,634 |
Accounts receivable | - |
| 45,482 |
| - |
| 45,482 |
Inventories | - |
| 150,790 |
| - |
| 150,790 |
Prepaid expenses | 730 |
| 3,787 |
| - |
| 4,517 |
Total current assets | 1,130 |
| 206,293 |
| - |
| 207,423 |
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Deposits | - |
| 4,763 |
| - |
| 4,763 |
Property, plant and equipment | - |
| - |
| 80,000 | (a) | 80,000 |
Intellectual property | - |
| - |
| 90,000 | (a) | 90,000 |
Equipment, net | - |
| - |
| - |
| - |
Total Assets | $ 1,130 |
| $ 211,056 |
| $ 170,000 |
| $ 382,186 |
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |
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Current Liabilities: |
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Accounts payable and accrued liabilities | $ 84,862 |
| $ 32,683 |
| $ - |
| $ 117,545 |
Loan interest payable | - |
| 20,917 |
| (20,917) | (a) | - |
Income taxes payable | - |
| 8,400 |
| - |
| 8,400 |
Loans payable | - |
| 285,163 |
| (285,163) | (a) | - |
Note payable | - |
| - |
| 300,000 | (a) | 300,000 |
Due to related parties | 81,242 |
| - |
| (28,443) | (b) | 52,799 |
Total Current Liabilities | 166,104 |
| 347,163 |
| (34,523) |
| 478,744 |
Total Liabilities | 166,104 |
| 347,163 |
| (34,523) |
| 478,744 |
Stockholders' Equity (Deficit): |
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Common stock | 25,991 |
| 11,700 |
| 2,500 | (a) | 32,818 |
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| 284 | (b) |
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| (7,657) | (c) |
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Additional paid-in capital | 571,061 |
| 27,322 |
| 173,580 | (a) | 807,779 |
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| 28,159 | (b) |
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| 7,657 | (c) |
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Accumulated deficit | (762,026) |
| (175,129) |
| - |
| (937,155) |
Total Stockholders' Equity (Deficit) | (167,974) |
| (136,107) |
| 204,523 |
| (96,558) |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ 1,130 |
| $ 211,056 |
| $ 170,000 |
| $ 382,186 |
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Clean Transportation Group Inc. and Engine Clean Solutions, Inc. |
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| |||
Unaudited Condensed Combining Proforma Statement of Operations |
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| |||
For the Year Ended March 31, 2011 (Revised) |
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|
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|
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| Clean Transportation Group Inc. |
| Engine Clean Solutions Inc. |
| Proforma Adjustments |
| Consolidated Proforma |
Sales | $ - |
| $ 149,673 |
| $ - |
| $ 149,673 |
Cost of sales | - |
| 99,277 |
| - |
| 99,277 |
Gross Profit | - |
| 50,396 |
| - |
| 50,396 |
Operating Expenses |
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Selling, general and administrative | 17,061 |
| 63,146 |
| - |
| 80,207 |
Interest expense | 1,949 |
| 1,339 |
| - |
| 3,288 |
| 19,010 |
| 64,485 |
| - |
| 83,495 |
Net income before income taxes | (19,010) |
| (14,089) |
| - |
| (33,099) |
Provision for income taxes | - |
| 2,800 |
| - |
| 2,800 |
Net Loss | $ (19,010) |
| $ (11,289) |
| $ - |
| $ (30,299) |
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Net Loss per common share- basic and diluted | $ (0.00) |
| $ (6.78) |
|
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| $ (0.00) |
Weighted average of common shares- basic and diluted | 25,990,868 |
| 1,666 |
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| 25,990,868 |
