UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
MARCH 31, 2004
AllianceCorner
Essential Distributors, Pro Forma Pro Forma
Reality, Inc. Inc. Adjustments Balance
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ASSETS
Current assets:
Cash $ -- $ 183,368 $ -- $ 183,368
Funds on deposit with escrow agent 158,088 -- (1) 3,799,500 3,042,258
(2) (915,330)
Accounts receivable, net -- 366,840 -- 366,840
Due from factor -- 291,153 -- 291,153
Inventory -- 1,809,470 -- 1,809,470
Due from vendors -- 721,022 -- 721,022
Prepaid expenses and other current assets 40,870 39,649 -- 80,519
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Total current assets 198,958 3,411,502 2,884,170 6,494,630
Equipment and improvements, net -- 410,414 -- 410,414
Other assets -- 17,636 -- 17,636
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Total assets $ 198,958 $3,839,552 $ 2,884,170 $ 6,922,680
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current liabilities:
Book overdraft $ 280 $ -- (2) $ (280) $ --
Accounts payable 2,317,100 2,594,315 (2) (2,269,602) 2,641,813
Loan payable unsecured 25,000 -- (2) (25,000) --
Due to related parties 503,699 -- (2) (503,699) --
Secured convertible debenture 1,000,000 -- (2) (1,000,000) --
Notes payable 2,241,142 -- (2) (2,241,142) --
Current portion of long-term liabilities 28,647 -- 28,647
Accrued expenses and other current liabilities -- 138,693 -- 138,693
Liabilities payable in common stock -- -- (5) 32,200 32,200
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Total current liabilities 6,087,221 2,761,655 (6,007,523) 2,841,353
Long-term obligations -- 302,931 -- 302,931
Stockholders' equity (deficit)
Series A 6% Convertible Non Redeemable Preferred Stock -- -- (1) 1,125 1,685
(2) 452
(3) 108
Series B Convertible Non Redeemable Preferred Stock -- -- (4) 1,551 1,551
Common stock 18,588 300 (6) 3,412 22,000
(7) (300)
Additional paid in capital 15,003,142 435,715 (1) 3,998,875 3,414,209
(2) 2,690,199
(3) 384,892
(4) (1,251)
(6) 1,152,250
(7) (20,249,613)
Deferred merger costs (108,396) -- (1) (200,500) --
(3) (385,000)
(5) (32,200)
(7) 726,096
Retained earnings (accumulated deficit) (20,801,597) 338,951 (2) 2,433,742 338,951
(6) (1,155,662)
(7) 19,523,517
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Total stockholders' equity (deficiency) (5,888,263) 774,966 8,891,693 3,778,396
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Total liabilities and stockholders' equity
(deficiency) $ 198,958 $3,839,552 $ 2,884,170 $ 6,922,680
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Notes to Unaudited Pro Forma Condensed Balance Sheet at March 31, 2004
1 Reflects the Private Placement Offering ("PPO") for 1,124,767 shares of
Series A 6% Convertible Non Redeemable Preferred Stock ("Series A
Preferred Stock"). The PPO resulted in gross proceeds of $4,000,000 and
net proceeds to the Company of $3,799,500 less $915,330 for payments of
Essential's liabilities (see Note #2), leaving a balance of $2,884,171, to
be held by the escrow agent.
2 Reflects the following resolution of outstanding liabilities of Essential
as a result of the Share Exchange Agreement:
Outstanding Forgiveness Pro Forma
Balance at Converted of Unpaid Total Balance at
3/31/04 Paid to Stock Balance Adjustments 3/31/04
---------- ---------- ---------- ---------- ---------- ----------
(a)
Book overdraft $ 280 $ -- $ -- $ 280 $ 280 $ --
Accounts payable 2,317,100 631,965 128,100 1,509,537 2,269,602 47,498
Loan payable unsecured 25,000 -- -- 25,000 25,000 --
Related parties 503,699 19,035 -- 484,664 503,699 --
Secured convertible debenture 1,000,000 -- 1,000,000 -- 1,000,000 --
Notes payable 2,241,142 264,330 1,562,551 414,261 2,241,142 --
---------- ---------- ---------- ---------- ---------- ----------
$6,087,221 $ 915,330 $2,690,651 $2,433,742 $6,039,723 $ 47,498
========== ========== ========== ========== ========== ==========
(a) - Amounts were converted to 452,202 shares of Series A Preferred Stock
3 Reflects 108,146 shares of Series A Preferred Stock issued to an
investment banker as a fee for the PPO at $3.56 per share.
4 Reflects the issuance of 1,551,314 shares of Series B Convertible Non
Redeemable Preferred Stock to the shareholders of Alliance per the Share
Exchange Agreement.
5 Reflects the liability for the issuance of 110,000, post-split, shares of
common stock for services in the amount of $32,200.
6 Reflects the issuance of 3,411,890 shares of common stock, net of
cancellations, issued to employees (in accordance with severance
agreements) and vendors at $.35 per share.
7 Reflects adjustment for reverse acquisition and reclassification of
deferred merger costs to additional paid-in capital.