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EXHIBIT 99.2
Unaudited Pro Forma Consolidated Financial Statements
The accompanying unaudited financial statements of Wheels Sports Group, Inc.
present the Company's financial position at December 31, 1996 and results of
operations and cash flows for the year then ended, giving retroactive effect to
the June 30, 1997 acquisition of Diamond Sports Group, Inc. Diamond Sports
Group, Inc. was acquired for 485,000 shares of the Company's stock in a
transaction which was accounted for as a pooling of interests.
During 1996, both the Company and Diamond Sports Group, Inc. were Subchapter S
corporations and so were not subject to income tax. The accompanying financial
statements include a pro forma tax provision as though both entities had been
subject to tax at statutory rates.
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WHEELS SPORTS GROUP, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
Wheels Sports Diamond Pro Forma
Group, Inc. Sports Group, Inc. Consolidated
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Net sales $ 4,782,999 $ 1,084,198 $ 5,867,197
Cost of sales 2,873,361 834,369 3,707,730
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Gross margin 1,909,638 249,829 2,159,467
Selling, general and administrative expenses 1,059,653 321,802 1,381,455
Other (income), net (978) (3,080) (4,058)
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Operating income/(loss) 850,963 (68,893) 782,070
Interest expense 23,075 11,332 34,407
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Net income/(loss) $ 827,888 $ (80,225) $ 747,663
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Pro forma data:
Net income/(loss) as reported 827,888 (80,225) 747,663
Pro forma income tax expense/(benefit) 331,155 (32,090) 299,065
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Pro forma net income/(loss) 496,733 (48,135) 448,598
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Pro forma income/(loss) per share 0.23 (0.10) 0.16
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Weighted average number of shares used
to compute per share data 2,144,640 485,000 2,804,640
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WHEELS SPORTS GROUP, INC.
UNAUDITED PRO FORMA COMBINED STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1996
Wheels Sports Diamond Pro Forma
Group, Inc. Sports Group, Inc. Consolidated
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Cash flows from operating activities:
Net income/(loss) $ 827,888 $ (80,225) $ 747,663
Adjustments to reconcile net loss to net cash flows used in
operating activities:
Depreciation and amortization 39,099 9,607 48,706
Provision for allowances for doubtful
accounts and returns 39,000 39,000
Loss on disposition 1,490 1,490
Changes in operating assets and liabilities:
Accounts receivable, net of allowances (1,292,805) (95,443) (1,388,248)
Interest receivable (2,468) (2,468)
Prepaid expense (11,000) (11,000)
Inventories (541,274) (28,807) (570,081)
Advance hospitality payments 54,654
Customer deposits 6,994 6,994
Other noncurrent assets 448
Accounts payable 963,038 52,385 1,015,423
Accrued expenses 4,654 4,654
Deferred revenue 86,994 86,994
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Net cash provided by/(used in) operating activities 34,616 (387) (20,873)
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Cash flows from investing activities:
Acquisition of property and equipment (10,130) (30,811) (40,941)
Notes receivable originated (115,436) (115,436)
Notes receivable repayments 20,000 20,000
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Net cash (used in) investing activities (105,566) (30,811) (136,377)
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Cash flows from financing activities:
Borrowings on line of credit 65,000
Repayments on line of credit (25,000)
Proceeds from long term debt 261,250 48,671 309,921
Payments on long term debt (48,346) (48,346)
Loans from shareholders 150,000 150,000
Purchase of treasury stock (25,000) (25,000)
Offering costs (248,778) (248,778)
Loans from shareholders (8,000) (8,000)
Increase in loans to shareholders (12,989) (12,989)
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Net cash provided by financing activities 89,126 67,682 116,808
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Net increase in cash 18,176 36,484 54,660
Cash, beginning of year 191,658 11,432 203,090
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Cash, end of year $ 209,834 $ 47,916 $ 257,750
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Supplemental disclosure of cash paid for interest $ 18,854 11,332 30,186
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Non-cash investing and financing activities:
Vehicles assumed by shareholders, net book value $ 2,613 2,613
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Vehicle traded in, net book value $ 18,889 18,889
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Long term debt discharged on vehicle traded in $ 20,012 (8,775) 11,237
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Capital lease $ 15,955 298,879 314,834
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WHEELS SPORTS GROUP, INC.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
DECEMBER 31, 1996
Wheels Sports Diamond Consolidated
Group, Inc. Sports Group, Inc. Adjustments Pro Forma
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ASSETS
Current assets:
Cash $ 209,834 $ 47,916 $ $ 257,750
Accounts receivable, net of allowances 2,006,127 95,463 2,101,590
Interest receivable 2,468 2,468
Prepaid expense 11,000 11,000
Inventories 541,274 28,807 570,081
Advance hospitality payments 88,196 88,196
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Total current assets 2,770,703 260,382 3,031,085
Property and equipment, net 118,871 332,777 451,648
Land held for sale 127,968 127,968
Other assets 248,778 2,143 250,921
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Total assets $ 3,266,320 $ 595,302 $ -0- $3,861,622
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ $ 40,000 $ $ 40,000
Current maturities of long term debt 261,306 2,670 263,976
Loans from shareholders and officers 150,000 150,000
Customer deposits 6,994 6,994
Accounts payable 1,659,296 100,072 1,759,368
Accrued expenses 17,455 7,484 24,939
Deferred revenue 255,844 255,844
Capital lease obligation 2,704 298,879 301,583
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Total current liabilities 2,097,755 704,949 2,802,704
Long-term debt, net of current portion 124,960 5,087 130,047
Note payable to stockholder
Capital lease obligation 12,409 12,409
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Total liabilities 2,235,124 710,036 2,945,160
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Stockholders' equity:
Preferred stock
Note receivable from World of Racing, Inc. (95,436) (95,436)
Shareholder loans receivable (12,989) (12,989)
Common stock, 2,635,000 shares outstanding 21,500 20 4,830 26,350
Additional paid in capital 344,500 (4,830) 339,670
Retained earnings 760,632 (101,765) 658,867
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Total stockholders' equity 1,031,196 (114,734) 916,462
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Total liabilities and
stockholders' equity $ 3,266,320 $ 595,302 $ -0- $3,861,622
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