Exhibit 99.1
GUM TECH INTERNATIONAL, INC. AND SUBSIDIARY
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE
----
Proforma Condensed Financial Statements Summary of Presentation F-2
Proforma Condensed Balance Sheet as of June 30, 2001 F-3
Proforma Condensed Statement of Operations for the six months
ended June 30, 2001 F-5
Proforma Condensed Statement of Operations for the year
ended December 31, 2000 F-7
Notes to Proforma Condensed Financial Statements F-8
F-1
GUM TECH INTERNATIONAL, INC. AND SUBSIDIARY
PROFORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited proforma condensed consolidated financial statements
gives effect to the sale of selected assets of Gum Tech International, Inc.'s
(the "Company's") gum business to Wm. Wrigley Jr. Company ("Wrigley"). The
proforma condensed consolidated financial statements are based on the Company's
historical financial statements and estimates and assumptions set forth below.
The proforma condensed consolidated balance sheet as of June 30, 2001 gives
effect to the sale of selected assets of the Company's gum business to Wrigley
as if the sale took place on June 30, 2001.
The proforma condensed consolidated statement of operations for the six months
ended June 30, 2001 includes the sale of selected assets of the Company's gum
business as if the transaction was completed at the beginning of the year.
The proforma condensed consolidated statement of operations for the year ended
December 31, 2000 includes the sale of selected assets of the Company's gum
business as if the transaction was completed at the beginning of the year.
Proforma adjustments are based upon preliminary estimates, available information
and certain assumptions that management deems appropriate. The unaudited
proforma financial information presented herein is not necessarily indicative of
the results of operations or financial position that the Company would have
obtained had such events occurred at the beginning of the year, as assumed, or
of the future results of the Company. The proforma financial statements should
be read in conjunction with the historical financial statements and notes
thereto included in the Company's Annual Report on Form 10-K/A filed June 13,
2001 for the year ended December 31, 2000.
F-2
GUM TECH INTERNATIONAL, INC. AND SUBSIDIARY
PROFORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 2001
ASSETS
Proforma Proforma
Adjustments Combined
------------ ------------
Current Assets:
Cash and cash equivalents $ 4,227,148 $ 22,900,000(1) $ 28,629,024
1,501,876(2)
Accounts receivable 1,040,695 -- 1,040,695
Accounts receivable - other -- 1,000,000(1) 1,000,000
Inventories 1,408,515 -- 1,408,515
Prepaid expenses and other 111,658 -- 111,658
Note receivable 150,000 -- 150,000
Assets of discontinued operations 5,503,374 (5,503,374)(1) --
------------ ------------ ------------
Total Current Assets 12,441,390 19,898,502 32,339,892
------------ ------------ ------------
Property and Equipment, at cost:
Office furniture and equipment 55,926 -- 55,926
Leasehold improvements 2,112 -- 2,112
------------ ------------ ------------
58,038 -- 58,038
Less accumulated depreciation (23,221) -- (23,221)
------------ ------------ ------------
Net Property and Equipment 34,817 -- 34,817
------------ ------------ ------------
Other Assets:
Deposits and other assets 885,992 -- 885,992
------------ ------------ ------------
Total Other Assets 885,992 -- 885,992
------------ ------------ ------------
Total Assets $ 13,362,199 $ 19,898,502 $ 33,260,701
============ ============ ============
The accompanying notes are an integral
part of these proforma condensed consolidated financial statements.
F-3
GUM TECH INTERNATIONAL, INC. AND SUBSIDIARY
PROFORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 2001
LIABILITIES AND STOCKHOLDERS' EQUITY
Proforma Proforma
Adjustments Combined
------------ ------------
Current Liabilities:
Accounts payable and accrued expenses $ 2,835,178 $ 400,000(1) $ 3,235,178
Customer deposits 233,422 -- 233,422
Sales returns and allowances 466,911 -- 466,911
Notes payable 1,000,000 -- 1,000,000
------------ ------------ ------------
Total Current Liabilities 4,535,511 400,000 4,935,511
------------ ------------ ------------
Minority interest in consolidated affiliate (851,047) -- (851,047)
------------ ------------ ------------
Commitments and Contingencies -- -- --
Stockholders' Equity:
Preferred stock -- -- --
Common stock 31,618,775 1,501,876(2) 33,120,651
Additional paid in capital 3,701,529 -- 3,701,529
Accumulated deficit (25,642,569) 17,996,626(1) (7,645,943)
------------ ------------ ------------
Total Stockholders' Equity 9,677,735 19,498,502 29,176,237
------------ ------------ ------------
Total Liabilities and Stockholders' Equity $ 13,362,199 $ 19,898,502 $ 33,260,701
============ ============ ============
The accompanying notes are an integral
part of these proforma condensed consolidated financial statements.
F-4
GUM TECH INTERNATIONAL, INC. AND SUBSIDIARY
PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2001
Proforma Proforma
Adjustments Combined
----------- -----------
Net sales $ 7,845,520 $ -- 7,845,520
Cost of sales 2,095,691 -- 2,095,691
----------- ----------- -----------
Gross Profit 5,749,829 -- 5,749,829
Operating expenses 8,091,066 -- 8,091,066
Research and development 234,191 -- 234,191
----------- ----------- -----------
Income (Loss) From Operations (2,575,428) -- (2,575,428)
----------- ----------- -----------
Other Income (Expense):
Interest and other income 64,913 -- 64,913
Interest expense (64,909) 47(4) (64,862)
----------- ----------- -----------
Total Other Income (Expense) 4 47 51
----------- ----------- -----------
Income (Loss) Before Provision For Income Taxes and
Minority Interest (2,575,424) 47 (2,575,377)
Provision for income taxes -- -- --
Minority interest in earnings (loss) of consolidated
affiliate (743,500) -- (743,500)
----------- ----------- -----------
Net Income (Loss) From Continuing Operations (1,831,924) 47 (1,831,877)
Discontinued Operations:
Loss from discontinued operations (124,052) 124,052(3) --
----------- ----------- -----------
Net Income (Loss) (1,955,976) 124,099 (1,831,877)
Preferred stock dividends -- -- --
----------- ----------- -----------
Net Income (Loss) Applicable to Common Shareholders $(1,955,976) $ 124,099 $(1,831,877)
=========== =========== ===========
The accompanying notes are an integral
part of these proforma condensed consolidated financial statements.
F-5
GUM TECH INTERNATIONAL, INC. AND SUBSIDIARY
PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2001
(CONTINUED)
Proforma Proforma
Adjustments Combined
----------- -----------
Net Income (Loss) Per Share of Common Stock:
Basic:
Weighted Average Number of Common Shares
Outstanding 9,157,033 9,357,033
Net Income (Loss) Per Share of Common Stock:
Continuing operations $ (0.20) $ (0.20)
Discontinued operations (0.01) --
----------- -----------
Net Loss $ (0.21) $ (0.20)
=========== ===========
Diluted:
Weighted Average Number of Common Shares
Outstanding 9,157,033 9,357,033
Net Income (Loss) Per Share of Common Stock:
Continuing operations $ (0.20) $ (0.20)
Discontinued operations (0.01) --
----------- -----------
Net Loss $ (0.21) $ (0.20)
=========== ===========
The accompanying notes are an integral
part of these proforma condensed consolidated financial statements.
F-6
GUM TECH INTERNATIONAL, INC. AND SUBSIDIARY
PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2000
Proforma Proforma
Adjustments Combined
------------ ------------
Net sales $ 13,377,889 $ (2,560,603)(3) $ 10,817,286
Cost of sales 7,151,903 (3,740,999)(3) 3,410,904
------------ ------------ ------------
Gross Profit 6,225,986 1,180,396 7,406,382
Operating expenses 16,753,166 (992,893)(3) 15,760,273
Research and development 782,383 (348,823)(3) 433,560
------------ ------------ ------------
Income (Loss) From Operations (11,309,563) 2,522,112 (8,787,451)
------------ ------------ ------------
Other Income (Expense):
Interest and other income 274,225 -- 274,225
Other income 698,138 (688,859)(3) 9,279
Interest expense (458,460) 25,223 (4) (433,237)
------------ ------------ ------------
Total Other Income (Expense) 513,903 (663,636) (149,733)
------------ ------------ ------------
Income (Loss) Before Provision For Income Taxes and
Minority Interest (10,795,660) 1,858,476 (8,937,184)
Provision for income taxes 8,585 -- 8,585
Minority interest in earnings (loss) of consolidated
affiliate (2,667,165) -- (2,667,165)
------------ ------------ ------------
Net Income (Loss) (8,137,080) 1,858,476 (6,278,604)
Preferred stock dividends 12,005 -- 12,005
------------ ------------ ------------
Net Income (Loss) Applicable to Common Shareholders $ (8,149,085) $ 1,858,476 $ (6,290,609)
============ ============ ============
Net Income (Loss) Per Share of Common Stock:
Basic:
Weighted Average Number of Common Shares Outstanding 8,906,635 9,106,635
Net Loss $ (0.91) $ (0.69)
Diluted:
Weighted Average Number of Common Shares Outstanding 8,906,635 9,106,635
Net Loss $ (0.91) $ (0.69)
The accompanying notes are an integral
part of these proforma condensed consolidated financial statements.
F-7
GUM TECH INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO UNAUDITED PROFORMA CONDENSED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
On July 20, 2001, the Company sold substantially all of its assets related
to its gum operations to Wrigley for $25,000,000 which consists of
$24,000,000 in cash at closing and a holdback of $1,000,000 which is
payable within sixty days after the closing date. The holdback is payable
subject to any expenses paid by Wrigley to satisfy any Food and Drug
Administration ("FDA") recommendations pursuant to an inspection of the
Real Property by an inspector of the FDA under the rules and regulations of
the FDA. The assets sold consist of the Company's manufacturing operations
and certain other assets associated with its gum business, excluding cash
and accounts receivable. The Agreement also provides for royalty payments
on certain gum products.
Under the arrangement, Wrigley also purchased 200,000 shares of the
Company's common stock for investment purposes for $7.50938 per share
(based on the average market price for a recently completed ten day trading
period) for a total of $1,501,876.
The proforma condensed consolidated balance sheet as of June 30, 2001 gives
effect to the sale of selected assets of the Company's gum business to
Wrigley as if the sale took place on June 30, 2001.
The proforma condensed consolidated statement of operations for the six
months ended June 30, 2001 and for the year ended December 31, 2000
includes the sale of selected assets of the Company's gum business as if
the transaction was completed on January 1, 2000. The gain on sale of the
gum business is not included in the proforma condensed statement of
operations. The estimated gain on sale as if the sale took place on January
1, 2000 would have been approximately $17,500,000, which is net of
estimated federal alternative minimum tax that would be due as a result of
the gain on sale. There would be no regular income tax expense on the gain
on sale as a result of the utilization of net operating loss carryovers.
2. PROFORMA NET INCOME (LOSS) PER SHARE OF COMMON STOCK
The proforma net income (loss) per share of common stock is based on the
weighted average number of common shares outstanding during the period
after giving effect to the sale of 200,000 shares of common stock to
Wrigley.
3. PROFORMA ADJUSTMENTS
Adjustments to present the proforma condensed consolidated financial
statements are as follows:
1. Adjustment to record the sales proceeds for the sale of selected
assets of the Company's gum business to Wrigley and to remove the
assets sold as of June 30, 2001. Includes payment of estimated legal,
appraisal, consulting and other estimated costs of the sale of
approximately $1,100,000. Also includes an accrual of $400,000 for
estimated federal alternative minimum tax that would be due as a
result of the gain on sale.
2. Adjustment to record the sale of 200,000 shares of the Company's
common stock for $1,501,876 under the arrangement with Wrigley.
3. Adjustment to remove the operations of the gum business for the year.
4. Adjustment to remove the interest expense incurred on the notes
payable of the gum business. The notes are assumed to have been repaid
at the beginning of the year for purposes of the statement of
operations.
F-8