Exhibit 99.2
CRDENTIA CORP.
Unaudited Pro Forma Combined Condensed Statements of Operations
The following unaudited pro forma combined condensed statements of operations
have been prepared to give effect to the merger of Crdentia Corp. and New Age
Staffing, Inc., using the purchase method of accounting and the assumptions and
adjustments described in the accompanying notes to the unaudited pro forma
combined condensed statements of operations. These pro forma statements were
prepared as if the transaction had been completed as of January 1, 2002.
The unaudited pro forma combined condensed statements of operations are
presented for illustrative purposes only and are not necessarily indicative of
the results of operations that would have actually been reported had the
transaction occurred on January 1, 2002, nor are they necessarily indicative of
the future results of operations. The pro forma combined condensed statements of
operations include adjustments, which are based upon preliminary estimates, to
reflect the allocation of purchase price to the acquired assets and assumed
liabilities of New Age Staffing, Inc. The preliminary purchase price allocation
for New Age Staffing, Inc. is subject to revision as more detailed analysis is
completed and additional information on the fair values of New Age Staffing,
Inc.'s assets and liabilities becomes available. Any change in the fair value of
the net assets of New Age Staffing, Inc. will change the amount of the purchase
price allocable to goodwill. Final purchase accounting adjustments may differ
materially from the pro forma adjustments presented herein.
These unaudited pro forma combined condensed statements of operations are based
upon the respective historical consolidated statements of operations of Crdentia
Corp. and New Age Staffing, Inc. and should be read in conjunction with the
historical consolidated financial statements of Crdentia Corp. and New Age
Staffing, Inc. and related notes. Also refer to "Management's Discussion and
Analysis of Financial Condition and Results of Operations" contained in the
reports and other information Crdentia Corp. has on file with the SEC.
The pro forma adjustments described in the accompanying notes are preliminary
and are based on management's assumptions. The Company is in the process of
engaging a third party to perform the required valuation of the fair value of
the net assets acquired and of the Company's restricted common stock issued to
the former shareholders of New Age Staffing, Inc. As a result, for pro forma
purposes, management has assumed the value of the Company's common stock to
be $1.00 per share. There can be no assurance that the actual fair value of the
Company's common stock will equal $1.00 per share. Management intends to file
an amended 8-K if the valuation results in material differences from assumed
value.
CRDENTIA CORP.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2002
Historical Pro Forma
------------------------ ---------------------------------
Crdentia(1) New Age Adjustments Combined
----------- ----------- ------------- ----------------
Revenue $ - $ 5,663,672 $ - $ 5,663,672
Cost of revenue - 4,126,495 - 4,126,495
----------- ----------- ------------- ----------------
Gross profit - 1,537,177 - 1,537,177
Selling, general & administrative expenses 433,771 1,059,119 - 1,492,890
----------- ----------- ------------- ----------------
(Loss)/income from operations (433,771) 478,058 - 44,287
Amortization of intangibles - - 180,000 (a) 180,000
Interest expense - 80,229 - 80,229
----------- ----------- ------------- ----------------
(Loss)/income before income taxes (433,771) 397,829 (180,000) (215,942)
Provision for income taxes - 113,000 (113,000)(b) -
----------- ----------- ------------- ----------------
Net (loss)/income $ (433,771) $ 284,829 $ (67,000) $ (215,942)
=========== =========== ============= ================
Basic loss per share $ (0.05) $ (0.01)
=========== ================
Weighted average number of shares
outstanding 8,562,822 15,408,235
=========== ================
(1) On October 22, 2002, Crdentia's board of directors voted to change the
Company's fiscal year end from August 31st to December 31st. As such,
Crdentia's results of operations for the twelve months ended December 31, 2002
were calculated by adding the results of operations for the four months ended
December 31, 2002 and deducting the results of operations for the four months
ended December 31, 2001 to the results of operations for the twelve months ended
August 31, 2002.
The accompanying notes are an integral part of these unaudited pro forma
combined condensed financial statements.
CRDENTIA CORP.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2003
Historical Pro Forma
------------------------ ---------------------------------
Crdentia New Age Adjustments Combined
----------- ----------- ------------- ----------------
Revenue $ - $ 4,743,392 $ - $ 4,743,392
Cost of revenue - 3,515,255 - 3,515,255
----------- ----------- ------------- ----------------
Gross profit - 1,228,137 - 1,228,137
Selling, general & administrative expenses 560,043 692,344 - 1,252,387
----------- ----------- ------------- ----------------
(Loss)/income from operations (560,043) 535,793 - (24,250)
Amortization of intangibles - - 90,000 (a) 90,000
Interest expense 4,858 58,871 - 63,729
----------- ----------- ------------- ----------------
(Loss)/income before income taxes (564,901) 476,922 (90,000) (177,979)
Provision for income taxes - 190,388 (190,388)(b) -
----------- ----------- ------------- ----------------
Net (loss)/income $ (564,901) $ 286,534 $ 100,388 $ (177,979)
=========== =========== ============= ================
Basic loss per share $ (0.06) $ (0.01)
=========== ================
Weighted average number of shares
outstanding 10,036,728 17,882,781
=========== ================
The accompanying notes are an integral part of these unaudited pro forma
combined condensed financial statements.
CRDENTIA CORP.
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEETS
June 30, 2003
Historical Pro Forma
------------------------ ---------------------------------
Crdentia New Age Adjustments Combined
----------- ----------- ------------- ----------------
ASSETS
Current assets
Cash $ 6,215 $ 60,334 $ 66,549
Accounts receivable, net - 840,511 840,511
Unbilled revenue - 254,674 254,674
Prepaid expenses 46,974 261,061 308,035
Other receivables 1,750 - 1,750
----------- ----------- ------------- ----------------
Total current assets 54,939 1,416,580 - 1,471,519
----------- ----------- ------------- ----------------
Long term assets
Fixed assets, net 5,285 28,624 33,909
Prepaid rent 4,560 - 4,560
Website development, net 2,332 - 2,332
Security deposits 9,119 28,581 37,700
Goodwill - - $ 7,102,602 (c) 7,102,602
Other intangible assets, net - - 900,000 (c) 900,000
----------- ----------- ------------- ----------------
21,296 57,205 8,002,602 8,081,103
----------- ----------- ------------- ----------------
TOTAL ASSETS $ 76,235 $ 1,473,785 $ 8,002,602 $ 9,552,622
=========== =========== ============= ================
LIABILITIES & STOCKHOLDERS' EQUITY
Liabilities
Accounts payable and accrued liabilities $ 220,220 $ 435,605 $ 655,825
Current portion of notes payable 180,000 612,783 $ 957,500 (c) 1,750,283
----------- ----------- ------------- ----------------
Total current liabilities 400,220 1,048,388 957,500 2,406,108
Long term portion of notes payable - - 692,500 (c) 692,500
----------- ----------- ------------- ----------------
400,220 1,048,388 1,650,000 3,098,608
----------- ----------- ------------- ----------------
Stockholders' Equity
688 (c)
Common stock 1,100 50,090 (50,090)(c) 1,788
Additional paid in capital, net of costs
incurred in obtaining financing 902,165 - 6,402,004 (c) 7,304,169
(Accumulated deficit)/retained earnings (1,227,250) 375,307 (851,943)
----------- ----------- ------------- ----------------
(323,985) 425,397 6,352,602 6,454,014
----------- ----------- ------------- ----------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 76,235 $ 1,473,785 $ 8,002,602 $ 9,552,622
=========== =========== ============= ================
The accompanying notes are an integral part of these unaudited pro forma
combined condensed financial statements.
Notes To Unaudited Pro Forma Combined Condensed Financial Statements
1. Basis of Pro Forma Presentation
On September 22, 2003, the Company acquired New Age Staffing, Inc. ("New Age")
for a purchase price of $2,050,000 in cash and notes payable to the former
shareholders of New Age. Additionally, these former shareholders were issued
6,884,614 shares of the Company's common stock at an appraised value of $0.93
per share. The Company will account for the merger under the purchase method of
accounting.
The unaudited pro forma condensed combined balance sheet at June 30, 2003 is
presented to give effect to the merger of Crdentia and New Age as if the
transaction had been consummated on January 1, 2002. The unaudited pro forma
combined condensed statement of operations of Crdentia and New Age for the year
ended December 31, 2002 is presented as if the transaction had been consummated
on January 1, 2002. The unaudited pro forma combined statement of operations for
the twelve months ended December 31, 2002 combines the results of operations of
Crdentia for the twelve months ended December 31, 2002 and New Age's results of
operations for the fiscal year ended December 31, 2002. Crdentia's results of
operations for the twelve months ended December 31, 2002 were calculated by
adding the results of operations for the four months ended December 31, 2002,
and deducting the results of operations for the four months ended December 31,
2001, to the results of operations for the twelve months ended August 31, 2002.
Under the purchase method of accounting, the total estimated purchase price is
allocated to New Age's net tangible and intangible assets based upon their
estimated fair value as of the date of completion of the merger. Based upon the
estimated purchase price and the preliminary valuation, the preliminary purchase
price allocation, which is subject to change based upon Crdentia's final
analysis, is as follows:
Cash acquired $ 37,970
Tangible assets acquired 1,518,902
Customer related intangible assets 900,000
Goodwill 7,075,338
-------------
Total assets acquired 9,532,210
Liabilities assumed 1,079,518
-------------
Net assets acquired $ 8,452,692
=============
A preliminary estimate of $900,000 has been allocated to amortizable intangible
assets consisting of customer contracts with useful lives of five to seven
years.
A preliminary estimate of $7.1 million has been allocated to goodwill. Goodwill
represents the excess of the purchase price over the fair value of the net
tangible and intangible assets acquired. In accordance with Statement of
Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets",
goodwill will not be amortized and will be tested for impairment at least
annually. The preliminary purchase price allocation for New Age is subject to
revision as more detailed analysis is completed and additional information on
the fair values of New Age's assets and liabilities becomes available. Any
change in the fair value of the net assets of New Age will change the amount of
the purchase price allocable to goodwill. Final purchase accounting adjustments
may therefore differ materially from the pro forma adjustments presented here.
2. Pro Forma Adjustments
The accompanying unaudited pro forma combined condensed financial statements
have been prepared as if the merger was completed on June 30, 2003 for balance
sheet purposes and as of January 1, 2002 for statements of operations purposes
and reflect the following pro forma adjustments:
(a) Amortization of intangible assets acquired for the year ended December
31, 2002 and the six months ended June 30, 2003. The useful lives of
these assets have been assumed to be five years.
(b) Crdentia has net operating loss carryforward credits in excess of the
tax liability of New Age. As such, there is no income tax expense
recognized in these pro forma financial statements.
(c) To reflect assets acquired and liabilities assumed in the merger. As
more fully discussed in Item 2, paragraph (a) above, the Company is
obligated to make periodic payments to the former shareholders of New
Age, $957,500 of which are payable within the next year and $692,500
are payable in the following year.
3. Pro Forma Combined Net Income (Loss) Per Share
Shares used to calculate unaudited pro forma combined net loss per share were
computed using Crdentia's weighted average shares outstanding during the
respective periods. Additionally, the issuance of 6,884,614 shares to the
sellers of New Age was assumed to have occurred on January 1, 2002.
Pursuant to the Common Stock Purchase Agreement between the Company and James D.
Durham, the Company's chairman and CEO, Mr. Durham has the right to acquire
1,721,154 shares of the Company's Common Stock at a purchase price of $.0001 per
share. As of the date of this report, Mr. Durham has not exercised his right
under this Agreement. Accordingly, these shares have been excluded from the
computation of pro forma earnings/(loss) per share in these pro forma financial
statements.
In connection with Registrant's acquisition program and on-going financing
efforts, management, in conjunction with several of the Company's largest
shareholders, have determined that it would be in the best interest of the
Company to reduce the number of shares of Common Stock that are issued and
outstanding. In discussions with management these shareholders agreed on August
6, 2003 to return an aggregate of 3,048,000 shares to the Company for no
consideration. These 3,048,000 shares have been canceled by the Company and
returned to Treasury. As this event occurred subsequent to the reporting period
in this Form 8-K, the effect of this transaction has been excluded from the
computation of pro forma earnings/(loss) per share in these pro forma financial
statements.