Exhibit 99.3
Notes to Condensed Combined Pro Forma Unaudited Financial Statements
On July 25, 2014, Surna, Inc. (“Surna” or “the Company”) acquired Hydro Innovations LLC (“Hydro”), a company that manufactures and sells equipment for the indoor gardening industry. The Company manufactures and/or assembles its products (the “Acquisition”).
The unaudited condensed combined pro forma statements of operations are presented as if the Acquisition had been completed on January 1, 2013 combining Hydro’s condensed audited statement of operations for the year ended December 31, 2013 and Surna’s audited condensed statement of operations for the year ended December 31, 2013. The unaudited condensed combined pro forma statements of operations for the six months ended June 30, 2014 are presented as if the Acquisition had been completed on January 1, 2013 combining Hydro’s condensed unaudited statement of operations for the six months ended June 30, 2014 and Surna’s unaudited condensed statement of operations for the six months ended June 30, 2014. The unaudited condensed combined pro forma balance sheet gives effect to the acquisition as if the Acquisition had taken place on June 30, 2014 and combines Hydro’s unaudited condensed balance sheet as of June 30, 2014 with Surna’s unaudited condensed balance sheet as of June 30, 2014.
The unaudited pro forma combined statement of income is presented for illustrative purposes only and, therefore, is not necessarily indicative of the operating results that might have been achieved had the transaction occurred as of an earlier date, nor is it necessarily indicative of the operating results that may be achieved in the future. You should not rely on the pro forma condensed combined financial information as being indicative of the historical results that would have been achieved had the companies always been combined or the future results that the combined companies will experience after the Acquisition.
The unaudited pro forma combined statement of income, including the notes thereto, should be read in conjunction with Surna’s audited historical consolidated financial statements for the year ended December 31, 2013 included in our Annual Report on Form 10-K for the year ended December 31, 2013, the Form 10-Q for the quarterly periods ended March 31, 2014 and June 30, 2014 as well as Hydro’s audited financial statements for the years ended December 31, 2013 and 2012 included in Exhibit 99.1 to this Form 8-K/A.
Surna, Inc.
Unaudited Combined Pro Forma Balance Sheet
as of June 30, 2014
June 30, 2014 | ||||||||||||||||
(Unaudited) | Pro Forma (Unaudited) | |||||||||||||||
Surna | Hydro | Adjustments | Combined | |||||||||||||
ASSETS | ||||||||||||||||
CURRENT ASSETS | ||||||||||||||||
Cash | $ | 214,067 | $ | 2,637 | $ | - | $ | 216,704 | ||||||||
Accounts receivable | 68,399 | 76,444 | - | 144,843 | ||||||||||||
Advance to related party | 84,681 | - | (84,681 | ) | - | |||||||||||
Assets held for sale | - | - | - | - | ||||||||||||
Inventory | 2,507 | 17,631 | - | 20,138 | ||||||||||||
Total current assets | 369,654 | 96,712 | (84,681 | ) | 381,685 | |||||||||||
Property and equipment | 128,188 | 72,617 | - | 200,805 | ||||||||||||
Accumulated depreciation | (5,366 | ) | (42,809 | ) | - | (48,175 | ) | |||||||||
122,822 | 29,808 | - | 152,630 | |||||||||||||
Intangible assets | 13,500 | 5,178 | (1)(2) | 631,064 | 649,742 | |||||||||||
Accumulated amortization | - | (3,747 | ) | - | (3,747 | ) | ||||||||||
13,500 | 1,432 | 631,064 | 645,995 | |||||||||||||
TOTAL ASSETS | $ | 505,976 | $ | 127,951 | $ | 546,383 | $ | 1,180,310 | ||||||||
LIABILITIES AND MEMBERS’ DEFICIT | ||||||||||||||||
CURRENT LIABILITIES | ||||||||||||||||
Accounts payable and accrued liabilities | $ | 62,469 | $ | 46,992 | $ | $ | 109,461 | |||||||||
Payroll taxes payable | 54,138 | 54,138 | ||||||||||||||
Short term line of credit | 21,386 | 21,386 | ||||||||||||||
Short term loans | 260,000 | 260,000 | ||||||||||||||
Advances from others | 28,186 | 28,186 | ||||||||||||||
Advances from Surna, Inc. | 84,681 | (1)(2) | (84,681 | ) | - | |||||||||||
Current portion of promissory note | (1) | 60,000 | 60,000 | |||||||||||||
Amounts due to related parties held for sale | - | - | ||||||||||||||
Total current liabilities | 62,469 | 495,383 | (24,681 | ) | 533,171 | |||||||||||
LONG TERM DEBT | ||||||||||||||||
Vehicle loan | 46,571 | 46,571 | ||||||||||||||
Promissory note issued for purchase | (1) | 190,000 | 190,000 | |||||||||||||
Long term line of credit | 13,632 | 13,632 | ||||||||||||||
Convertible promissory notes | 759,283 | 759,283 | ||||||||||||||
Debt discount on convertible notes | (691,118 | ) | (691,118 | ) | ||||||||||||
Total long term debt | 114,736 | 13,632 | 190,000 | 318,368 | ||||||||||||
NONCURRENT LIABILITIES | ||||||||||||||||
Derivative liability on convertible debt | 2,497,425 | 2,497,425 | ||||||||||||||
TOTAL LIABILITIES | 2,674,630 | 509,015 | 165,319 | 3,348,964 | ||||||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||||||||
SHAREHOLDERS’ AND MEMBERS’ DEFICIT | ||||||||||||||||
Members’ deficit | (381,064) | (2) | 381,064 | - | ||||||||||||
Shareholders’ deficit | (2,168,654 | ) | - | (2,168,654 | ) | |||||||||||
(2,168,654 | ) | (381,064 | ) | 381,064 | (2,168,654 | ) | ||||||||||
TOTAL LIABILITIES AND MEMBER’S DEFICIT | $ | 505,976 | $ | 127,951 | $ | 546,383 | $ | 1,180,310 |
See accompanying notes to the financial statements