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. We are amending our report filed
on Form 8-K on October 6, 2003 to reflect the material change in the valuation
of the intangible assets acquired since that report. Our valuation of the
intangible assets was based upona preliminary and tentative draft of a report
provided to us by the firm we hired to perform such an appraisal, and as has
been revised by them to reflect a valuation date of March 19, 2003 rather than
a more current date.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 has
engaged 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 shareholdersof New Age Staffing, Inc.. As a result,
for pro forma purposes, management has assumed the value of the Company's
common stock to be $0.36 per share. There can be no assurance that the
actual fair value of the Company's common stock will equal $0.36 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 - - 92,000 (a) 92,000
Interest expense - 80,229 - 80,229
----------- ----------- ------------- ----------------
(Loss)/income before income taxes (433,771) 397,829 (92,000) (127,942)
Provision for income taxes - 113,000 (113,000)(b) -
----------- ----------- ------------- ----------------
Net (loss)/income $ (433,771) $ 284,829 $ (21,000) $ (127,942)
=========== =========== ============= ================
Basic loss per share $ (0.05) $ (0.01)
=========== ================
Fully diluted loss per share $ (0.05) $ (0.01)
=========== ================
Weighted average number of shares
outstanding (basic) 8,562,822 15,408,235
=========== ================
Weighted average number of shares
outstanding (fully diluted) 8,562,822 17,124,673
=========== ================
(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 from 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 - - 46,000 (a) 46,000
Interest expense 4,858 58,871 - 63,729
----------- ----------- ------------- ----------------
(Loss)/income before income taxes (564,901) 476,922 (46,000) (133,979)
Provision for income taxes - 190,388 (190,388)(b) -
----------- ----------- ------------- ----------------
Net (loss)/income $ (564,901) $ 286,534 $ 144,388 $ (133,979)
=========== =========== ============= ================
Basic loss per share $ (0.06) $ (0.01)
=========== ================
Fully diluted 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 $ 60,567 $ 66,782
Accounts receivable, net - 844,501 844,501
Unbilled revenue - 254,674 254,674
Prepaid expenses 46,974 195,388 242,362
Other receivables 1,750 - 1,750
----------- ----------- ------------- ----------------
Total current assets 54,939 1,355,130 - 1,410,069
----------- ----------- ------------- ----------------
Long term assets
Fixed assets, net 5,285 28,346 33,631
Prepaid rent 4,560 - 4,560
Website development, net 2,332 - 2,332
Security deposits 9,119 28,581 37,700
Goodwill - - $ 3,618,371 (c) 3,618,371
Other intangible assets, net - - 460,000 (c) 460,000
----------- ----------- ------------- ----------------
21,296 56,927 4,078,371 4,156,594
----------- ----------- ------------- ----------------
TOTAL ASSETS $ 76,235 $ 1,412,057 $ 4,078,371 $ 5,566,663
=========== =========== ============= ================
LIABILITIES & STOCKHOLDERS' EQUITY
Liabilities
Accounts payable and accrued liabilities $ 220,220 $ 414,450 $ 634,670
Current portion of notes payable 180,000 - $ 1,290,000 (c) 1,470,000
Advances payable to factor - 585,650 585,650
----------- ----------- ------------- ----------------
Total current liabilities 400,220 1,000,100 1,290,000 2,690,320
Long term portion of notes payable - - 360,000 (c) 360,000
----------- ----------- ------------- ----------------
400,220 1,000,100 1,650,000 3,050,320
----------- ----------- ------------- ----------------
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 - 2,477,773 (c) 3,379,938
(Accumulated deficit)/retained earnings (1,227,250) 361,867 (865,383)
----------- ----------- ------------- ----------------
(323,985) 411,957 2,428,371 2,516,343
----------- ----------- ------------- ----------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 76,235 $ 1,412,057 $ 4,078,371 $ 5,566,663
=========== =========== ============= ================
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 $0.36
per share, as opposed to the $0.93 per share reported in our Form 8-K filed on
October 6, 2003. 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 June 30, 2003. 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 $ 60,567
Tangible assets acquired 1,351,490
Customer related intangible assets 460,000
Goodwill 3,618,371
---------
Total assets acquired 5,490,428
Liabilities assumed 1,000,100
---------
Net assets acquired $ 4,490,328
A preliminary estimate of $460,000 has been allocated to amortizable
intangible assets consisting of customer relationships with useful
lives of five years.
A preliminary estimate of $3.6 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,
$1,290,000 of which are payable within the next year and $360,000 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 dated May 15, 2002 between
the Company and James D. Durham, the Company's chairman and CEO, Mr. Durham
has the right to acquire 25% of the number of shares of the Company' Common
Stock issued to the sellers of New Age. Accordingly, Mr. Durham may purchase
1,721,154 shares 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 included only in the computation of the
fully diluted 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/A, the effect of this transaction
has been excluded from the computation of both basic and fully diluted
pro forma earnings/(loss) per share in these pro forma financial statements.