Pro forma financial information for the year ended
December 31, 1998 and for the six months ended June 30, 1999.
On June 25, 1999, IMI, Inc., a wholly-owned subsidiary of Galaxy Enterprises,
Inc. ("Galaxy") acquired substantially all of the assets of Impact Media,
L.L.C., a Utah limited liability company ("Impact Media"). The acquisition was
accounted for by the purchase method.
This section contains the unaudited pro forma condensed combined statements of
income for the six months ended June 30, 1999, and for the year ended December
31, 1998, giving effect to the acquisition as if this transaction had occurred
at the beginning of each period. The pro forma statements have been prepared by
Galaxy management based upon the historical financial statements of Impact Media
included herein. Impact Media's results for the six months ended June 30, 1999
were derived from their results for the five months ended May 31, 1999 plus the
results for the consolidated Company for the month of June 30, 1999. No periods
for Impact Media were excluded from or included more than once in the condensed
combined pro forma statements of income. The Galaxy statement of income for the
year ended December 31, 1998, was audited and was the statement used for the
Galaxy 1998 Annual Report to Shareholders. The Galaxy statement of income for
the six months ended June 30, 1999, was unaudited and was the statement used for
the Galaxy Form 10-QSB report for its second quarter ended June 30, 1999. The
pro forma combined results in the statements referred to above are not
necessarily indicative of the actual operating results that would have occurred
had the acquisition been consummated on January 1, 1998, or of future operating
results of the combined operations. The pro forma financial statements should be
read in conjunction with the consolidated financial statements contained in
Galaxy's 1998 Annual Report to Shareholders, Galaxy's report on Form 10-QSB for
the quarter ended June 30, 1999, and Impact Media's audited financial statements
included herein. A copy of Galaxy's 1998 Annual Report to Shareholders and its
Form 10-QSB report for the quarter ended June 30, 1998, may be obtained, upon
request, from the Company.
The following pro forma statements do not include the effect of additional
consideration of 250,000 shares of previously authorized but unissued shares of
Galaxy's common stock that are subject to an earn-out agreement during the
annual periods ending on May 31, 2000 and May 31, 2001 because as of the date of
this amendment, none of the shares have been earned. A pro forma combined
balance sheet as of June 30, 1999 has not been included, as the acquisition of
Impact Media has already been reflected in the combined balance sheet issued
with the June 30, 1999 Form 10-QSB.
Galaxy Enterprises, Inc.
Pro Forma Condensed Combined Statement Of Income
Year Ended December 31, 1998
(Unaudited)
Pro Forma
Galaxy Impact Pro Forma Statement
Enterprises, Inc. Media LLC Adjustments of Income
----------------------------------------- ----------------- ------------------
Net Sales $ 11,448,392 $ 3,211,072 $ (226,345)(1) $ 14,433,119
Cost of Sales 5,105,614 2,615,227 (226,345)(1) 7,494,496
-------------------- ----------------- ----------------- ------------------
Gross Profit 6,342,778 595,845 - 6,938,623
Operating Expenses
Selling 4,764,340 17,450 4,781,790
General and administrative 1,426,853 451,172 1,878,025
Depreciation 53,260 3,935 57,195
Amortization 80,175 8,370 (2) 88,545
-------------------- ----------------- ----------------- ------------------
Total operating expenses 6,324,628 472,557 8,370 6,805,555
Income from operations 18,150 123,288 (8,370) 133,068
Other Income (Expenses)
Interest income 11 - 11
Other income 5,405 - 5,405
Interest expense (4,142) (3,650) - (7,792)
-------------------- ----------------- ----------------- ------------------
1,274 (3,650) - (2,376)
Income before income taxes 19,424 119,638 (8,370) 130,692
Income Taxes 15,951 - (50,010)(3) (34,059)
-------------------- ----------------- ----------------- ------------------
Net Income $ 35,375 $ 119,638 $ (58,380) $ 96,633
==================== ================= ================= ==================
Net Income Per Share:
Basic $ 0.0067 $ 0.0227 $ (0.0111) $ 0.0183
==================== ================= ================= ==================
Diluted $ 0.0062 $ 0.0209 $ (0.0102) $ 0.0169
==================== ================= ================= ==================
See Notes to Pro Forma Statements.
Galaxy Enterprises, Inc.
Pro Forma Condensed Combined Statement Of Income
Six Months Ended June 30, 1999
(Unaudited)
Pro Forma
Galaxy Impact Pro Forma Statement
Enterprises, Inc. Media LLC Adjustments of Income
---------------------------------------- ----------------- ------------------
Net Sales $ 8,167,288 $ 722,899 $ (60,657)(1) $ 8,829,530
Cost of Sales 4,643,970 353,391 (60,657)(1) 4,936,704
------------------- ---------------- ----------------- ------------------
Gross Profit 3,523,318 369,508 - 3,892,826
Operating Expenses
Selling 3,009,021 13,250 3,022,271
General and administrative 1,101,036 614,492 1,715,528
Depreciation 43,175 2,708 45,883
Amortization 29,100 - 4,185 (2) 33,285
------------------- ---------------- ----------------- ------------------
Total Operating Expenses 4,182,332 630,450 4,185 4,816,967
Operating Profit (659,014) (260,942) (4,185) (924,141)
Other Income (Expenses)
Interest income 6,177 - 6,177
Other income/(expense) (7,241) - (7,241)
Interest expense (4,567) (962) (5,529)
------------------- ---------------- ----------------- ------------------
(5,631) (962) - (6,593)
Income before taxes (664,645) (261,904) (4,185) (930,734)
Income Taxes 277,997 - 111,350 (3) 389,347
------------------- ---------------- ----------------- ------------------
Income before cumulative effect of
a change in accounting principal (386,648) (261,904) 107,165 (541,387)
Cumulative effect on prior years of
accounting change (less income
taxes of $25,432) (44,982) - - (44,982)
------------------- ---------------- ----------------- ------------------
Net Income(Loss) $ (431,630) $ (261,904) $ 107,165 $ (586,369)
=================== ================ ================= ==================
Net Income(Loss) Per Share:
Basic $ (0.0757) $ (0.0459) $ 0.0188 $ (0.1028)
=================== ================ ================= ==================
Diluted $ (0.0755) $ (0.0458) $ 0.0188 $ (0.1025)
=================== ================ ================= ==================
See notes to Pro Forma Statements.
EXPLANATORY NOTES TO PRO FORMA ADJUSTMENTS (UNAUDITED)
1) Elimination of sales and costs between Galaxy Enterprises, Inc. and Impact Media.
2) Increase in goodwill amortization
3) Income tax expense was adjusted based on pro forma net income.