EXHIBIT 7
UNAUDITED CONDENSED COMBINED PRO FORMA FINANCIAL STATEMENTS
On February 20, 2003, AmerAlia, Inc. (AmerAlia), through its indirect,
wholly-owned subsidiary, Natural Soda, Inc., purchased the assets of White River
Nahcolite Minerals, LLC (WRNM), and certain related contracts held by IMC
Chemicals, Inc., in exchange for $20,600,000. The short-term financing used in
the acquisition was provided by The Sentient Group of Grand Cayman, and secured
by 100% of the outstanding common stock of Natural Soda Holdings, Inc. (a
subsidiary of AmerAlia and the parent of Natural Soda, Inc.).
The following unaudited condensed combined pro forma financial statements ("the
pro forma financial statements") and explanatory notes have been prepared and
give effect to the WRNM merger using the purchase method of accounting for
business combinations. The merger is being accounted for as a purchase business
combination as defined in SFAS No. 141.
In accordance with Article 11 of Regulation S-X under the Securities Act, an
unaudited condensed combined pro forma balance sheet (the "pro forma balance
sheet") as of December 31, 2002, and unaudited condensed combined pro forma
statement of income for the six months ended December 31, 2002, and the audited
condensed combined pro forma statement of income for the year ended June 30,
2002 (the "pro forma statements of income"), have been prepared to reflect, for
accounting purposes, the acquisition by AmerAlia of WRNM. The Company has
allocated the excess purchase price to goodwill. The Company is in the process
of finalizing the allocation of the purchase based on the fair values of the
assets and liabilities acquired.
The following pro forma financial statements have been prepared based upon the
historical financial statements of AmerAlia and WRNM. The pro forma financial
statements should be read in conjunction with (a) the historical consolidated
financial statements and related notes thereto of AmerAlia as of June 30, 2002,
and 2001, and for the years ended June 30, 2002, 2001, and 2000, as included in
this report; and (b) the audited historical financial statements and related
notes thereto of WRNM as of June 30, 2002, and 2001, and for the years ended
June 30, 2002, 2001, and 2000, as included in this report. See "Index to
Financial Statements."
The December 31, 2002, pro forma balance sheet assumes that the WRNM merger was
completed on December 31, 2002. The December 31, 2002, pro forma balance sheet
includes the historical unaudited consolidated balance sheet data of AmerAlia as
of December 31, 2002, and the historical unaudited balance sheet data of WRNM as
of December 31, 2002. AmerAlia and WRNM have no intercompany activity that would
require elimination in preparing the pro forma financial statements.
The pro forma statement of operations for the six months ended December 31,
2002, assumes that the WRNM merger occurred on July 1, 2002, and includes the
unaudited historical consolidated statement of income data of AmerAlia for the
six months ended December 31, 2002, and the unaudited historical statement of
income data of WRNM for the six months ended December 31, 2002.
The pro forma statement of operations for the year ended June 30, 2002, assumes
that the WRNM merger occurred on July 1, 2001, and includes the audited
historical consolidated statement of income data of AmerAlia for the year ended
June 30, 2002, and the audited historical statement of income data of WRNM for
the year ended June 30, 2002.
The pro forma financial statements are provided for illustrative purposes only,
and are not necessarily indicative of the operating results or financial
position that would have occurred if the mergers had been consummated at the
beginning of the periods or on the dates indicated, nor are they necessarily
indicative of any future operating results or financial position. The pro forma
financial statements do not include any adjustments related to any restructuring
charges or one-time charges which may result from the mergers or the final
result of valuations of inventories, property, plant and equipment, intangible
assets, debt, and other obligations.
AMERALIA, INC.
UNAUDITED CONDENSED COMBINED PRO FORMA BALANCE SHEET
<Table>
<Caption>
Ameralia, Inc.
Ameralia, Inc. White River and Subsidiaries
and Subsidiaries Nahcolite Minerals (Post Acquisition)
as of as of Acquisition as of
December 31, 2002 December 31, 2002 Entries December 31, 2002
----------------- ----------------- ---------------- ------------------
(Unaudited) (Unaudited)
ASSETS
CASH $ 1,498 $ 200 $ (200)(2) $ 1,498
RESTRICTED CASH 75,631 -- 24,000,000 (1) 1,036,582
(23,039,049)(2)
ACCOUNTS RECEIVABLE -- 1,918,164 1,918,164
DUE FROM IMCC -- 8,634,879 (8,634,879)(2) --
PREPAID EXPENSES 232,100 -- 470,845 (2) 702,945
INVENTORIES -- 592,153 (18,000)(2) 574,153
FIXED ASSETS, NET 10,590 11,303,190 (303,190)(2) 11,010,590
MINERAL PROPERTIES AND PATENTS, NET -- 3,425,709 (295,709)(2) 3,130,000
LEASE ACQUISITION, EXPLORATION & DEV 3,816,367 -- 3,816,367
PLANT CONSTRUCTION IN PROGRESS 12,415,533 -- 12,415,533
DEFERRED FINANCING COSTS 720,135 -- 720,135
GOODWILL -- -- 6,508,382 (2) 6,508,382
DEPOSITS & BONDS 34,744 2,500 37,244
--------------- --------------- --------------- ---------------
TOTAL ASSETS $ 17,306,598 $ 25,876,795 $ (1,311,800) $ 41,871,593
=============== =============== =============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
ACCOUNTS PAYABLE $ 1,799,288 $ 551,564 $ (595,000)(2) $ 1,755,852
ROYALTIES PAYABLE 541,667 -- 541,667
ACCRUED EXPENSE 578,708 604,876 1,183,584
ARO LIABILITY -- 352,545 697,500 (2) 1,050,045
DUE TO RELATED PARTIES 1,071,158 -- 1,071,158
NOTES PAYABLE 11,858,378 -- 24,000,000 (1) 37,058,378
1,200,000 (2)
INTEREST PAYABLE 94,758 -- 94,758
MINORITY INTEREST -- 3,855,500 (3,855,500)(2)
PREFERRED STOCK 4 -- 4
COMMON STOCK 149,822 -- 149,822
ADDITIONAL PAID IN CAPITAL 22,365,431 -- 22,365,431
PREPAID CONSTRUCTION COSTS (1,223,000) -- (1,223,000)
ACCUMULATED DEFICITS (19,929,616) 20,512,310 (2,246,500)(2) (22,176,106)
(20,512,300)(2)
--------------- --------------- --------------- ---------------
TOTAL LIABILITY AND STOCKHOLDERS' EQUITY $ 17,306,598 $ 25,876,795 $ (1,311,800) $ 41,871,593
=============== =============== =============== ===============
</Table>
- ----------
(1) To record the issuance of a $24,000,000 note payable and the receipt of
$24,000,000 in cash.
(2) To record the purchase of assets from White River (less balance sheet items
not acquired), to record the costs of acquisition, and to record the
payment of certain Company liabilities as required in the purchase
agreement.
AMERALIA, INC.
UNAUDITED CONDENSED COMBINED PRO FORMA STATEMENT OF OPERATIONS
<Table>
<Caption>
Ameralia, Inc.
Ameralia, Inc. White River and Subsidiaries
and Subsidiaries Nahcolite Minerals (Post Acquisition)
For The Six For The Six For The Six
Months Ended Months Ended Acquisition Months Ended
December 31, 2002 December 31, 2002 Entries December 31, 2002
----------------- ------------------ ----------------- ------------------
(Unaudited) (Unaudited)
SALES, NET $ -- $ 6,586,786 $ 6,586,786
COST OF SALES -- 7,868,856 7,868,856
---------------- ---------------- ----------------
GROSS PROFIT (DEFICIT) -- (1,282,070) (1,282,070)
---------------- ---------------- ----------------
EXPENSES
GENERAL AND ADMINISTRATIVE 932,689 322,437 84,000(1) 1,339,126
CONTRACT BUY-OUT EXPENSE -- -- 1,465,000(1) 1,465,000
ARO EXPENSE -- -- 697,500(1) 697,500
DEPRECIATION AND AMORTIZATION 4,462 -- 4,462
---------------- ---------------- ----------------
TOTAL EXPENSES 937,151 322,437 3,506,088
---------------- ---------------- ----------------
LOSS FROM OPERATIONS (937,151) (1,604,507) (4,788,158)
OTHER INCOME (EXPENSE)
OTHER FINANCING COSTS (279,556) -- (279,556)
INTEREST INCOME 139 -- 139
INTEREST EXPENSE (162,128) -- (162,128)
---------------- ---------------- ----------------
TOTAL OTHER INCOME (EXPENSE) (441,545) -- (441,545)
---------------- ---------------- ----------------
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE -- (229,300) (229,300)
---------------- ---------------- ----------------
NET LOSS BEFORE INCOME TAX EXPENSE (1,378,696) (1,833,807) (5,459,003)
INCOME TAX EXPENSE -- -- --
---------------- ---------------- ----------------
NET LOSS $ (1,378,696) $ (1,833,807) $ (5,459,003)
================ ================ ================
BASIC LOSS PER SHARE $ (0.09) $ (0.37)
================ ================
WEIGHTED AVERAGE SHARES OUTSTANDING 14,616,332 14,616,332
================ ================
</Table>
- ----------
(1) To record the costs of acquisition.
AMERALIA, INC.
UNAUDITED CONDENSED COMBINED PRO FORMA STATEMENT OF OPERATIONS
<Table>
<Caption>
Ameralia, Inc.
Ameralia, Inc. White River and Subsidiaries
and Subsidiaries Nahcolite Minerals (Post Acquisition)
For The For The For The
Year Ended Year Ended Acquisition Year Ended
June 30, 2002 June 30, 2002 Entries June 30, 2002
---------------- ------------------ ----------------- ------------------
SALES, NET $ -- $ 14,797,634 $ 14,797,634
COST OF SALES -- 14,906,225 14,906,225
---------------- ---------------- ----------------
GROSS PROFIT (DEFICIT) -- (108,591) (108,591)
---------------- ---------------- ----------------
EXPENSES
GENERAL AND ADMINISTRATIVE 2,099,751 750,626 84,000(1) 2,934,377
CONTRACT BUY-OUT EXPENSE -- -- 1,465,000(1) 1,465,000
ARO EXPENSE -- -- 697,500(1) 697,500
DEPRECIATION AND AMORTIZATION 13,660 -- 13,660
---------------- ---------------- ----------------
TOTAL EXPENSES 2,113,411 750,626 5,110,537
---------------- ---------------- ----------------
LOSS FROM OPERATIONS (2,113,411) (859,217) (5,219,128)
OTHER INCOME (EXPENSE)
OTHER INCOME 2,025 -- 2,025
OTHER FINANCING COSTS (411,303) -- (411,303)
INTEREST INCOME 263 -- 263
INTEREST EXPENSE (242,432) (6,806) (242,432)
---------------- ---------------- ----------------
TOTAL OTHER INCOME (EXPENSE) (651,447) (6,806) (651,447)
---------------- ---------------- ----------------
NET LOSS BEFORE INCOME TAX EXPENSE (2,764,858) (866,023) (5,870,575)
INCOME TAX EXPENSE -- -- --
---------------- ---------------- ----------------
NET LOSS $ (2,764,858) $ (866,023) $ (5,870,575)
================ ================ ================
BASIC LOSS PER SHARE $ (0.22) $ (0.46)
================ ================
WEIGHTED AVERAGE SHARES OUTSTANDING 12,819,479 12,819,479
================ ================
</Table>
- ----------
(1) To record the costs of acquisition.
AMERALIA INC AND SUBSIDIARIES
PRO FORMA ADJUSTMENTS
ADJUSTMENT #1
<Table>
Restricted Cash 24,000,000.00
Note Payable - Sentient 24,000,000.00
</Table>
To record the issuance of a $24,000,000 note payable and the receipt of
$24,000,000 in cash.
ADJUSTMENT #2
<Table>
Accumulated Deficit 20,512,300.00
Minority Interest 3,855,500.00
Accumulated Deficit 2,246,500.00
Prepaid Expenses 470,845.00
Accounts Payable 595,000.00
Goodwill 6,508,382.00
Cash 200.00
Restricted Cash 23,039,049.00
Inventory 18,000.00
Due From IMCC 8,634,879.00
Fixed assets, Net 303,190.00
Mineral Properties and Patents, Net 295,709.00
ARO Liability 697,500.00
Notes Payable 1,200,000.00
</Table>
To record the purchase of assets from White River (less balance sheet items not
acquired), to record the costs of acquisition, and to record the payment of
certain Company liabilities as required in the purchase agreement.
NOTE: The adjustment made to Accumulated Deficit (AJE#2 for $2,246,500) is due
to expenses incurred as part of the acquisition, and is broken out as
follows:
<Table>
Workman's Compensation 60,000.00
Bonding Expense 24,000.00
ARO Liability Expense 697,500.00
Contract Buy-out Expense 1,465,000.00
---------------
Total Acquisition Expenses 2,246,500.00
===============
</Table>