Exhibit 99.2
Earth911, Inc. |
Unaudited Pro Forma Condensed Consolidated Balance Sheets |
September 30, 2012 |
| | | | | | | | | | | | | | |
| | | Historical | | | Pro Forma | | | | Pro Forma | |
| | | Earth 911 | | | YouChange | | | Adjustments | | | | Combined | |
Current assets: | | | | | | | | | | | | | |
| Cash and cash equivalents | | | 261,258 | | | | 17,056 | | | | - | | | | | 278,314 | |
| Accounts receivable, net | | | 223,219 | | | | - | | | | - | | | | | 223,219 | |
| Inventory | | | - | | | | 4,415 | | | | - | | | | | 4,415 | |
| Prepaid expenses and other current assets | | | 28,720 | | | | - | | | | - | | | | | 28,720 | |
| Total current assets | | | 513,197 | | | | 21,471 | | | | - | | | | | 534,668 | |
Property and equipment , net of accumulated depreciation | | | 164,636 | | | | 6,301 | | | | - | | | | | 170,937 | |
Ownership interest in Quest Recycling, LLC | | | 3,706,480 | | | | - | | | | - | | | | | 3,706,480 | |
Deferred tax asset-non current | | | 1,731,462 | | | | - | | | | - | | | | | 1,731,462 | |
Goodwill | | | - | | | | - | | | | 17,586,665 | | (1 | ) | | 17,586,665 | |
Deposits and other assets | | | 245,160 | | | | 9,774 | | | | - | | | | | 254,934 | |
| Total assets | | | 6,360,935 | | | | 37,546 | | | | 17,586,665 | | | | | 23,985,147 | |
| | | | | | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | | | | | |
| Accounts payable | | | 366,243 | | | | 86,622 | | | | - | | | | | 452,865 | |
| Accrued liabilities | | | 447,747 | | | | 5,504 | | | | - | | | | | 453,251 | |
| Notes and advances payable-related party | | | - | | | | 37,500 | | | | - | | | | | 37,500 | |
| Deferred revenue | | | 253,754 | | | | - | | | | - | | | | | 253,754 | |
| Long term debt and capital lease obligations-current portion | | | 77,611 | | | | 6,000 | | | | - | | | | | 83,611 | |
| Convertible notes payable-short term | | | - | | | | 111,989 | | | | - | | | | | 111,989 | |
| Senior secured convertible note-related party | | | 492,696 | | | | - | | | | | | | | | 492,696 | |
| Other current liabilities | | | 60,200 | | | | - | | | | - | | | | | 60,200 | |
| Total current liabilities | | | 1,698,251 | | | | 247,615 | | | | - | | | | | 1,945,866 | |
Long term debt and capital lease obligations-net of current portion | | | 10,845 | | | | - | | | | - | | | | | 10,845 | |
Convertible notes payable-long term | | | - | | | | 43,620 | | | | - | | | | | 43,620 | |
Convertible notes payable-long term- related party | | | - | | | | - | | | | - | | | | | - | |
Warrant liabilities | | | 2,509,360 | | | | - | | | | - | | | | | 2,509,360 | |
| Total liabilities | | | 4,218,455 | | | | 291,235 | | | | - | | | | | 4,509,690 | |
| | | | | | | | | | | | | | | | | | |
Stockholders' equity/(deficit) | | | | | | | | | | | | | | | | | |
| Common stock | | | 3,510 | | | | 8,681 | | | | 8,666 | | (1 | ) | | 57,776 | |
| | | | | | | | | | | | 45,600 | | (2 | ) | | | |
| | | | | | | | | | | | (8,681 | ) | (1 | ) | | | |
| | | | | | | | | | | | | | | | | | |
| Additional paid in capital | | | 11,621,600 | | | | 3,723,743 | | | | 17,324,310 | | (1 | ) | | 28,900,310 | |
| | | | | | | | | | | | (3,723,743 | ) | (1 | ) | | | |
| | | | | | | | | | | | (45,600 | ) | (2 | ) | | | |
| Treasury stock, at cost (75,000 common shares as of | | | | | | | | | | | | | | | | | |
| September 30, 2012) | | | - | | | | (26,250 | ) | | | 26,250 | | (1 | ) | | - | |
| Accumulated deficit | | | (9,482,631 | ) | | | (3,959,863 | ) | | | 3,959,863 | | (1 | ) | | (9,482,631 | ) |
| Total stockholders' equity/(deficit) | | | 2,142,479 | | | | (253,689 | ) | | | 17,586,665 | | | | | 19,475,455 | |
| | | | | | | | | | | | | | | | | | |
| Total Liabilities and Stockholders' Equity/(Deficit) | | | 6,360,935 | | | | 37,546 | | | | 17,586,665 | | | | | 23,985,146 | |
See the accompanying notes to the unaudited pro forma financial statements
Earth911, Inc. |
Unaudited Pro Forma Condensed Consolidated Statement of Operations |
for the Nine Months Ended September 30, 2012 |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | Historical | | | Pro Forma | | | ProForma | |
| | Earth911 | | | YouChange | | | Adjustments | | | Combined | |
| | | | | | | | | | | | |
Revenues | | | 790,244 | | | | 100,051 | | | | | | | 890,295 | |
| | | | | | | | | | | | | | | |
Cost of products sold | | | - | | | | 19,418 | | | | | | | 19,418 | |
| | | | | | | | | | | | | | | |
Gross Profit | | | 790,244 | | | | 80,633 | | | | - | | | | 870,877 | |
| | | | | | | | | | | | | | | | |
Operating expenses: | | | | | | | | | | | | | | | | |
Employee compensation and related expenses | | | | | | | | | | | | | | | | |
(inclusive of stock-based compensation) | | | 3,250,833 | | | | 165,764 | | | | | | | | 3,416,597 | |
Professional Fees | | | 246,101 | | | | 1,146,432 | | | | | | | | 1,392,533 | |
General, administrative, sales and marketing | | | 943,170 | | | | 546,413 | | | | | | | | 1,489,583 | |
Total operating expenses | | | 4,440,104 | | | | 1,858,609 | | | | - | | | | 6,298,713 | |
| | | | | | | | | | | | | | | | |
Loss from operations | | | (3,649,860 | ) | | | (1,777,976 | ) | | | - | | | | (5,427,836 | ) |
| | | | | | | | | | | | | | | | |
Other income (expense): | | | | | | | | | | | | | | | | |
Interest income | | | - | | | | 6,600 | | | | | | | | 6,600 | |
Interest expense | | | (674,286 | ) | | | (55,331 | ) | | | | | | | (729,617 | ) |
Gain/Loss on Sale of Assets | | | (406 | ) | | | - | | | | | | | | (406 | ) |
Amortization expense | | | 46,495 | | | | - | | | | | | | | 46,495 | |
Financing costs-Senior Convertible Note | | | (2,055,855 | ) | | | - | | | | | | | | (2,055,855 | ) |
Total other income (expense) | | | (2,684,052 | ) | | | (48,731 | ) | | | - | | | | (2,732,783 | ) |
| | | | | | | | | | | | | | | | |
Loss before taxes and equity income | | | (6,333,912 | ) | | | (1,826,707 | ) | | | - | | | | (8,160,619 | ) |
| | | | | | | | | | | | | | | | |
Equity method income of Quest Recycling Services, LLC | | | 1,548,909 | | | | - | | | | | | | | 1,548,909 | |
| | | | | | | | | | | | | | | | |
Loss before taxes | | | (4,785,003 | ) | | | (1,826,707 | ) | | | - | | | | (6,611,710 | ) |
| | | | | | | | | | | | | | | | |
Income tax expense (benefit) | | | (877,230 | ) | | | - | | | | | | | | (877,230 | ) |
| | | | | | | | | | | | | | | | |
Net loss | | | (3,907,773 | ) | | | (1,826,707 | ) | | | - | | | | (5,734,480 | ) |
| | | | | | | | | | | | | | | | |
Basic and diluted loss per share | | | | | | $ | (0.21 | ) | | | | | | $ | (0.10 | ) |
Number of common shares used in per share amounts | | | | | | | 8,605,192 | | | | | | | | 57,776,611 | |
See the accompanying notes to the unaudited pro forma financial statements
Earth911, Inc. | |
Unaudited Pro Forma Condensed Consolidated Statements of Operations | |
for the Year Ended December 31, 2011 | |
| | | | | | | | | | |
| | | | | | | | | | |
| | Historical | | Pro Forma | | ProForma | |
| | Earth911 | | | YouChange | | Adjustments | | Combined | |
| | | | | | | | | | |
Revenues | | | 979,833 | | | | 37,360 | | | | | 1,017,193 | |
| | | | | | | | | | | | | |
Cost of product sold | | | - | | | | 13,229 | | | | | 13,229 | |
| | | | | | | | | | | | | |
Gross Profit | | | 979,833 | | | | 24,131 | | | | | 1,003,964 | |
| | | | | | | | | | | | | |
Operating expenses: | | | | | | | | | | | | | |
Employee compensation and related expenses | | | | | | | | | | | | | |
(inclusive of stock-based compensation) | | | 3,820,557 | | | | 113,506 | | | | | 3,934,063 | |
Professional Fees | | | 89,717 | | | | 366,231 | | | | | 455,948 | |
General, administrative, sales and marketing | | | 1,213,578 | | | | 143,234 | | | | | 1,356,812 | |
Total operating expenses | | | 5,123,852 | | | | 622,971 | | | | | 5,746,823 | |
| | | | | | | | | | | | | |
Loss from operations | | | (4,144,019 | ) | | | (598,840 | ) | | | | (4,742,859 | ) |
| | | | | | | | | | | | | |
Other income (expense): | | | | | | | | | | | | | |
Interest income | | | 105 | | | | 16,101 | | | | | 16,206 | |
Interest expense | | | (463,011 | ) | | | (69,080 | ) | | | | (532,091 | ) |
Gain/Loss on Sale of Assets | | | - | | | | - | | | | | - | |
Distribution fee-Quest Recycling Services, LLC | | | (79,998 | ) | | | - | | | | | (79,998 | ) |
Total other income (expense) | | | (542,904 | ) | | | (52,979 | ) | | | | (595,883 | ) |
| | | | | | | | | | | | | |
Loss before taxes and equity income | | | (4,686,923 | ) | | | (651,819 | ) | | | | (5,338,742 | ) |
| | | | | | | | | | | | | |
Equity method income of Quest Recycling Services, LLC | | | 2,233,028 | | | | - | | | | | 2,233,028 | |
| | | | | | | | | | | | | |
Loss before taxes | | | (2,453,895 | ) | | | (651,819 | ) | | | | (3,105,714 | ) |
| | | | | | | | | | | | | |
Income tax expense (benefit) | | | (874,775 | ) | | | - | | | | | (874,775 | ) |
| | | | | | | | | | | | | |
Net loss | | | (1,579,120 | ) | | | (651,819 | ) | | | | (2,230,939 | ) |
| | | | | | | | | | | | | |
Basic and diluted loss per share | | | | | | $ | (0.01 | ) | | | $ | (0.04 | ) |
Number of common shares used in per share amounts | | | | 37,711,993 | | | | | 57,776,611 | |
See the accompanying notes to the unaudited pro forma financial statements
EARTH911, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE - BASIS OF PRESENTATION
On May 21, 2012, Earth911, Inc. (“Earth911”) entered into a Merger Agreement ("Agreement") with YouChange Holding Corp., a Nevada corporation (“YouChange”) and YouChange Merger Subsidiary Corp., a Delaware corporation and wholly owned subsidiary of YouChange (“YCMS”) wherby (i) YCMS will merge with and into Earth911 and the corporate existence of Earth911 shall continue as the surviving entity and a wholly owned subsidiary of YouChange (“the Merger”); (ii) all issued and outstanding shares of capital stock of Earth911 will be exchanged for newly issued shares of YouChange’s Common Stock such that former stockholders of Earth911 will own 85% of the issued and outstanding shares of YouChange’s Common Stock; (iii) the terms of each outsanding option and warrant to purchase shares of Earth911 common stock, shall be converted into options and warrants, as the case may be, to acquire shares of YouChange’s Common Stock using the same ratio as the exchange of shares of Earth911 capital stock for shares of YouChange’s Common Stock. Upon completion of the acquisition, the existing YouChange stockholders will own approximately 15% of the outstanding common stock of the combined company. Consequently, for accounting purposes, the transaction will be accounted for as a reverse acquisition, with Earth911 as the acquirer. Subsequent to the consummation of the transaction, the historical financial statements of Earth911 will become the historical financial statements of the combined company and the assets and liabilities of YCMS and YouChange, will be accounted for as required under the purchase method of accounting. The results of operations of YCMS and YouChange will be included in the consolidated financial statements from the closing date of acquisition.
The accompanying pro forma condensed consolidated financial statements are unaudited and illustrate the effect of the Earth911 reverse acquisition ("ProForma") of YouChange. The pro forma condensed balance sheet as of September 30, 2012 is based on the historical balance sheets of YouChange and Earth 911 as of that date and assumes the acquisition took place on that date. The pro forma condensedconsolidated statements of operations for the nine months ended September 30, 2012 and the year ended December 31, 2011 are based on the historical statements of operations of YouChange and Earth911 for those periods. The pro forma condensed consolidated statements of operations assume the acquisition took place on the first day of the respective periods, January 1, 2012 and January 1, 2011.
The pro forma condensed consolidated financial statements may not be indicative of the acquisition. In particular, the pro forma condensed consolidated financial statements are based on management's current estimate of the allocation of the purchase price, the actual allocation of which may differ.
The accompanying pro forma condensed financial statements should be read in connection with the historical financial statements of YouChange and Earth911, including the related notes and other financial information included in the filing.
EARTH911, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 - PRO FORMA ADJUSTMENTS
The pro forma adjustments to the unaudited condensed consolidated balance sheet are as follows:
(1) To reflect the reverse acquisition of YouChange equal to the value of the stock retained by the shareholders of YouChange in the merger. YouChange shareholders will retain 8,666,488 shares of common stock valued, after the reverse split, at $2.00 per share based on the YouChange stock price on the Merger date of October 17, 2012.
(2) Adjustment to the common stock and additional paid-in capital of Earth911 to reflect the adjustment in the number of common shares issued to Earth911 stockholders.
NOTE 3 - PRO FORMA NET LOSS PER COMMON SHARE
The unaudited pro forma basic and diluted net loss per share are based on the assumption that the number of shares of YouChange common stock issued in connection with the reverse acquisition of YouChange were outstanding at the inception of the respective operating statements.
NOTE 4 - YEAR END DATE CHANGE
On December 11, 2012, the Board of Directors of Infinity Resources Holding Corporation approved the change of the Company’s fiscal year-end from June 30th to December 31st. Therefore, the accompanying pro forma unaudited financial statements utilize the December 31st year-end of Earth911 rather than the June 30th year-end historically reported by YouChange.
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