EXHIBIT 9.02
CARDINAL COMMUNICATIONS, INC.
PROFORMA EXPLANATORY HEADNOTE
The following unaudited, proforma financial statements give effect to the
purchase of all outstanding shares of the capital stock of Connect Paging, Inc.
by Cardinal Communications, Inc. and is based on the estimates and assumptions
set forth herein and in the notes to such statements. This proforma information
has been prepared utilizing the historical financial statements of the Company
and notes thereto, which are incorporated by reference herein. The historical
results of the Company are incorporated by reference to its 10-KSB for the year
ended December 31, 2003. The proforma financial data does not purport to be
indicative of the results which actually would have been obtained had the
acquisition been effected on the dates indicated or the results which may be
obtained in the future.
Effective April 20, 2004, Cardinal Communications, Inc., a Nevada corporation,
("Cardinal") signed a definitive agreement to acquire all of the issued and
outstanding common stock of Connect Paging, Inc., a Texas Corporation ("CPI"),
doing business as Get A Phone. This acquisition was effected pursuant to a Stock
Purchase Agreement dated April 20, 2004 by and between Cardinal, and Brandon
Young, Brian Young and Byron Young the shareholders of all the outstanding
shares of the capital stock of CPI. Cardinal paid the shareholders of CPI a
total of $2,000,000 in cash and a total of 14,250,000 shares of Cardinal $.0001
par-value common stock.
The transaction was accounted for as a purchase. The purchase price was
allocated to the acquired assets and assumed liabilities based upon fair market
values on the date of acquisition.
The following table summarizes the assets acquired and liabilities assumed by
Cardinal in the transaction and the amount attributable to cost in excess of
assets acquired:
Connect Paging, Inc. Purchase Price Allocation
Preliminary, Actual
Consideration Purchase Price Allocation
Stock $1,567,500
Cash 2,000,000
Assumption of liabilities 32,000
----------
Adjusted Purchase Price 3,599,500
Allocation to Assets 1,611,686
----------
Residual Value of Goodwill $1,987,814
==========
One year has passed since the acquisition date of April 20, 2004 and Cardinal
has not revised this initial purchase price allocation.
The following unaudited proforma balance sheet and unaudited, proforma statement
of operations assume the CPI acquisition occurred on January 1, 2003 and
presents proforma financial information for the year ended December 31, 2003. In
the opinion of management, all adjustments necessary to present fairly such
unaudited proforma condensed statements of operations have been made.
Proforma, Consolidating (Unaudited) Balance Sheet
For the Year Ended December 31, 2003
Cardinal
Cardinal Connect Communications,
Communications, Paging Proforma Inc. Proforma
Inc. Inc. Adjustments Consolidated
--------------- --------------- --------------- ---------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 72,597 $ 78,242 $ -- $ 150,839
--------------- --------------- ---------------
Marketable Securities 280,000 -- -- 280,000
Accounts Receivable 69,205 336,672 -- 405,877
Due from related parties -- 26,243 -- 26,243
Inventory 71,906 -- -- 71,906
Deposits and prepaid expenses 44,910 3,202 -- 48,112
--------------- --------------- --------------- ---------------
538,618 444,359 -- 982,977
--------------- --------------- --------------- ---------------
PROPERTY AND EQUIPMENT
Cost 681,511 74,665 (29,665) 726,511
Less: accumulated depreciation (98,836) (16,812) 1,812 (113,836)
--------------- --------------- --------------- ---------------
582,675 57,853 (27,853) 612,675
--------------- --------------- --------------- ---------------
INTANGIBLES AND OTHER ASSETS 1,714,932 -- 3,241,163 4,956,095
--------------- --------------- --------------- ---------------
TOTAL ASSETS $ 2,836,225 $ 502,212 $ 3,213,310 $ 6,551,747
=============== =============== =============== ===============
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Notes payable $ 168,300 $ 45,000 $ 2,000,000 $ 2,213,300
Accounts payable 429,954 1,460,149 32,000 1,922,103
Accrued liabilities & other liabilities 294,071 212,148 160,000 666,219
Deferred Revenue 403,333 292,584 -- 695,917
------------------------------------------------------------------------
1,295,658 2,009,881 2,192,000 5,497,539
------------------------------------------------------------------------
STOCKHOLDERS EQUITY (DEFICIT)
Common stock 11,468 1,000 425 12,893
Additional paid-in capital 47,159,317 1,000 1,565,075 48,725,392
Accumulated deficit (43,861,843) (1,509,669) (544,190) (45,915,702)
Other Comprehensive Income (160,000) -- -- (160,000)
Deferred consulting (1,608,375) -- -- (1,608,375)
------------------------------------------------------------------------
1,540,567 (1,507,669) 1,021,310 1,054,208
------------------------------------------------------------------------
TOTAL LIABILITIES AND EQUITY (DEFICIT) $ 2,836,225 $ 502,212 $ 3,213,310 $ 6,551,747
=============== =============== =============== ===============
Cardinal Communications, Inc.
Proforma, Consolidating (Unaudited) Statement of Operations
For the Year Ended December 31, 2003
Cardinal
Cardinal Connect Communications,
Communications, Paging Proforma Inc. Proforma
Inc. Inc. Adjustments Consolidated
--------------- --------------- --------------- ---------------
Revenues $ 403,764 $ 6,402,372 $ -- $ 6,806,136
Expenses
Internet access cost 493,504 -- -- 493,504
Cost of Sales -- 5,559,097 -- 5,559,097
Depreciation and amortization 130,384 10,976 317,361 458,721
General and administrative 3,363,336 1,772,115 -- 5,135,451
--------------- --------------- --------------- ---------------
Total Operating Expenses 3,987,224 7,342,188 317,361 11,646,773
--------------- --------------- --------------- ---------------
Operating loss (3,583,460) (939,816) (317,361) (4,840,637)
Other Income (expense) (70,896) (907) (795,775) (867,578)
--------------- --------------- --------------- ---------------
Net loss $ (3,654,356) $ (940,723) $ (1,113,136) $ (5,708,215)
=============== =============== =============== ===============
Net loss per common share $ (0.04) $ (0.06)
--------------- ---------------
Weighted average shares outstanding 89,186,106 89,186,106
CARDINAL COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED UNAUDITED PROFORMA FINANCIAL STATEMENTS
PROFORMA ADJUSTMENTS
The adjustments related to the unaudited pro forma consolidating balance sheet
are computed assuming the acquisition of CPI by the Company was consummated at
January 1, 2003. The adjustments related to the unaudited pro forma
consolidating financial statements for the year ended December 31, 2003 are
computed assuming the acquisition was consummated at the beginning of the period
presented.
NOTE 1 - ADJUSTMENT TO LIABILITIES, EQUITY AND STATEMENT OF OPERATIONS
In connection with the acquisition the Company assumed $32,000 of liabilities of
CPI. The capital structure of CPI was converted to the structure of the Company.
All expenses of CPI have been adjusted to reflect the expenses of the Company.
NOTE 2 - ADJUSTMENT TO ASSETS, LIABILITIES AND EQUITY
In connection with the acquisition, the Company issued 14,250,000 shares of
Cardinal $.0001 par-value common stock and issued a note payable for $2,000,000
at 8% interest due in April 2006.