Exhibit 99.1
LEXINGTON RESOURCES, INC.
UNAUDITED PRO FORMA BALANCE SHEET
As of December 31, 2005
Oak Hills
Lexington Drilling &
Resources, Operating, Pro Forma
Inc. Inc. Adjustments Pro Forma
------------ ------------ ------------ ------------
Assets
Current assets:
Cash and cash equivalents $ 520,332 $ 85,035 $ -- $ 605,367
Accounts receivable:
Trade 184,546 736,747 -- 921,293
Related Parties -- 149,116 (68,692)(1) 80,424
Current portion of deferred finance fees 401,715 -- -- 401,715
Other assets -- 20,449 -- 20,449
------------ ------------ ------------ ------------
Total current assets 1,106,593 991,347 (68,692) 2,029,248
Deferred finance fees 267,810 -- -- 267,810
Property, plant, and equipment, net 6,331,639 1,146,746 4,152,460(2) 11,630,845
------------ ------------ ------------ ------------
Total assets $ 7,706,042 $ 2,138,093 $ 4,083,768 $ 13,927,903
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Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 936,265 $ 872,060 $ 6,308(1)(2) $ 1,814,633
Current portion of long-term debt & convertible debt 2,542,754 117,069 -- 2,659,823
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Total current liabilities 3,479,019 989,129 6,308 4,474,456
Long-term debt and convertible debt, less current portion 1,220,965 1,404,424 -- 2,625,389
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Total liabilities 4,699,984 2,393,553 6,308 7,099,845
Commitments and contingencies -- -- -- --
Stockholders' equity:
Common stock, without par value 5,575 -- -- 5,575
Additional paid-in-capital 16,297,665 10,245 3,811,755(2) 20,119,665
Common stock purchase warrants 2,809,836 -- -- 2,809,836
Accumulated deficit (16,107,018) (265,705) 265,705(2) (16,107,018)
------------ ------------ ------------ ------------
Total stockholders' equity 3,006,058 (255,460) 4,077,460 6,828,058
------------ ------------ ------------ ------------
Total liabilities and stockholders' equity $ 7,706,042 $ 2,138,093 $ 4,083,768 $ 13,927,903
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LEXINGTON RESOURCES, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
Year Ended December 31, 2005
Oak Hills
Lexington Drilling &
Resources, Operating, Pro Forma
Inc. Inc. Adjustments Pro Forma
------------ ------------ ------------ ------------
Revenues $ 693,860 $ 3,079,550 $ -- $ 3,773,410
Expenses:
Cost of revenues 472,986 2,360,715 407,746(1) 3,241,447
Consulting - stock based 1,913,991 -- -- 1,913,991
Selling, general and administrative 2,070,707 608,608 -- 2,679,315
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Total expenses 4,457,684 2,969,323 407,746 7,834,753
------------ ------------ ------------ ------------
Operating income (loss) (3,763,824) 110,227 (407,746) (4,061,343)
Interest expense and finance fees (4,775,039) (115,922) -- (4,890,961)
------------ ------------ ------------ ------------
Net loss $ (8,538,863) $ (5,695) $ (407,746) $ (8,952,304)
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Earnings (loss) per common share - basic
and diluted $ (0.49) $ (0.38)
Weighted average common shares outstanding 17,470,971 23,470,971
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UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2005
The following unaudited pro forma financial statements give effect to the
acquisition by Lexington Resources, Inc. ("Lexington Resources") of Oak Hills
Drilling & Operating International, Inc. ("Oak Hills") for 6,000,000 restricted
common shares in the capital of Lexington Resources.
The following unaudited pro forma statement of operations for the year ended
December 31, 2005 gives effect to the aforementioned transaction as if the
transaction had occurred on January 1, 2005. The following unaudited pro forma
balance sheet as of December 31, 2005 gives effect to the aforementioned
transaction as if the transaction had occurred as of that date. The following
unaudited pro forma financial data may not be indicative of what the
consolidated results of operations or financial position of Lexington Resources
would have been, had the transaction to which such data gives effect been
completed on the dates assumed, nor are such data necessarily indicative of the
consolidated results of operations or financial position of Lexington Resources
that may exist in the future. The following unaudited pro forma information
should be read in conjunction with the notes thereto, the consolidated financial
statements and notes of Lexington Resources as of December 31, 2005 and 2004 and
for each of the two years then ended appearing in Lexington Resource's Form
10-KSB, and the consolidated financial statements of Oak Hills appearing
elsewhere in this filing.
Notes to Unaudited Pro Forma Statement of Operations
The Unaudited Pro Forma Statement of Operations for the Year Ended December 31,
2005 has been adjusted to reflect the following:
(1) To adjust depreciation expense for the step-up in basis of property, plant
and equipment resulting from the purchase price allocation for the acquisition
of Oak Hills.
The Unaudited Pro Forma Balance Sheet as of December 31, 2005 has been adjusted
to reflect the following:
(1) To remove accounts receivable due to Oak Hills from Lexington Resources.
(2) Records the acquisition of Oak Hills, as discussed above, for the total
consideration of $3,897,000, comprised of the 6,000,000 restricted common stock
shares valued at $3,822,000 and estimated transaction costs of $75,000:
Current assets.............................................$ 991,347
Property, plant and equipment.............................. 5,299,206
Current liabilities........................................ (989,129)
Long-term debt............................................. (1,404,424)
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$ 3,897,000
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