EXHIBIT 99.2
Muscle Pharm
Introduction to Pro Forma Combined Financial Statements
(Unaudited)
The following unaudited pro forma financial statements are presented to
illustrate the estimated effects of the Securities Exchange Agreement
("Exchange Transaction") between Tone in Twenty and Muscle Pharm, LLC
("Muscle Pharm"), dated February 1, 2010 on our historical financial position
and results of operations. The exchange transaction was completed on
February 18, 2010. We have derived the Tone in Twenty historical financial
data from its audited financial statements as of and for the year ended
August 31, 2009, and from its unaudited financial statements as of and for
the period ended November 30, 2009. We have derived Muscle Pharm's financial
data from its audited financial statements as of and for the year ended
December 31, 2009 and the period from inception (April 22, 2008) to December
31, 2008.
The unaudited pro forma combined balance sheet as of December 31, 2009
assumes the Exchange Transaction was consummated on December 31, 2009. The
information presented in the unaudited pro forma combined financial
statements does not purport to represent what the financial position or
results of operations would have been had the Exchange Transaction occurred
as of December 31, 2009, nor is it indicative of future financial position or
results of operations. You should not rely on this information as being
indicative of the historical results that would have been achieved dad the
companies always been combined, or the future result that the combined
company will experience after the Exchange Transaction is consummated.
The pro forma adjustments are based upon available information and certain
assumptions that the Company believes is reasonable under the circumstances.
The unaudited pro forma financial statements should be read in conjunction
with the accompanying notes and assumptions and the historical financial
statements of Tone in Twenty and Muscle Pharm, LLC.
Muscle Pharm
Pro Forma Combined Balance Sheets
(Unaudited)
Tone in Muscle Pharm
Twenty LLC
November 30, December 31, Adjustments(1) Pro Forma
2009 2009 (2) (3) (4) Combined
----------- ------------ --------- -------- ----------- -----------
Assets:
Current assets:
Cash $ 1,562 - $ 1,562
Accounts receivable 111,476 111,476
Inventory 4,245 4,245
Deposits on product 32,115 32,115
Prepaid expenses and
other current assets 76,686 76,686
----------------------- -----------
Total current assets 1,562 224,522 226,084
----------------------- -----------
Fixed assets, net 32,810 32,810
Website, net 7,005 7,005
Security deposits 2,665 2,665
----------------------- -----------
Total assets $ 1,562 267,002 $ 268,564
======================= ===========
Liabilities and Stockholder's Equity (Deficit):
Current liabilities:
Accounts payable 1,670 765,534 767,204
Accrued liabilities 103,519 103,519
Overdrawn bank accounts 17,841 17,841
Customer deposits 15,018 15,018
Other short term borrowings 25,000 25,000
Due to related parties 85,820 85,820
Notes payable 30,000 30,000
Convertible notes payable,
net of discount 429,864 429,864
----------------------- -----------
Total current liabilities 1,670 1,447,596 1,474,266
Equity:
Convertible preferred stock,
$0.001 par value, 5,000,000
shares authorized, 83,333
shares issued and outstanding 83 83
Common stock, $0.001 par value,
195,000,000 shares authorized,
437,500 shares issued and
outstanding (26,070,834
shares issued and outstanding
combined) 438 26,000 (367) 26,071
Additional paid-in capital 1,027,349 552,508 (24,633) (480,978) 1,074,246
Deficit accumulated during the
development stage (1,027,978) 1,027,978 -
Accumulated deficit (2,306,102) (2,306,102)
Member's deficit (1,180,594) (578,508) 1,759,102 -
----------------------- -----------
Total equity (108) (1,180,594) (1,205,702)
----------------------- -----------
Total Liabilities and
Stockholders' Equity (Deficit) $ 1,562 267,002 $ 268,564
======================= ===========
See notes to pro forma combined financial statements
Muscle Pharm
Pro Forma Combined Statement of Operations
(Unaudited)
Year ended Year Ended
August 31, December 31,
2009 2009
Tone in Muscle Pharm Adjustments(1) Pro Forma
Twenty LLC (2) (3) (4) Combined
----------- ------------ --------------- ---------
Revenues:
Net sales $ - 1,017,916 $ 1,017,916
Cost of sales (922,971) (922,971)
------------------------ -----------
Gross margin 94,945 94,945
Operating expenses:
Advertising & promotion - 1,069,308 1,069,308
Bad debt 6,452 6,452
Bank charges 24,137 24,137
Salaries & labor 418,271 418,271
Depreciation and amortization 7,945 7,945
Insurance 21,033 21,033
Information technology 27,350 27,350
Travel, meetings and entertainment 80,422 80,422
Occupancy, telephone and utilities 42,128 42,128
Office and warehouse supplies 17,956 17,956
Professional fees 7,000 184,024 191,024
Repairs and maintenance 1,373 1,373
Other general and administrative 4,233 5,628 9,861
------------------------ -----------
Total operating expenses 11,233 1,906,027 1,917,260
------------------------ -----------
Operating loss (11,233) (1,811,082) (1,822,315)
Extraordinary gain 2,357 2,357
Interest income - - -
Interest expense - (102,391) (102,391)
------------------------ -----------
Net loss $ (8,876) (1,913,473) $(1,922,349)
======================== ===========
See notes to pro forma combined financial statements
Muscle Pharm
Pro Forma Combined Statement of Operations
(Unaudited)
Three months Three months
ended ended
November 30, December 31,
2009 2009
Tone in Muscle Pharm Adjustments(1) Pro Forma
Twenty LLC (2) (3) (4) Combined
----------- ------------ --------------- ---------
Revenues:
Net sales $ - 346,569 $ 346,569
Cost of sales (259,122) (259,122)
-------------------------- ---------
Gross margin 87,447 87,447
Operating expenses:
Advertising & promotion - 451,340 451,340
Bad debt 821 821
Bank charges 3,091 3,091
Salaries & labor 268,835 268,835
Depreciation and amortization 2,977 2,977
Insurance 10,012 10,012
Information technology 14,012 14,012
Travel, meetings and entertainment 8,284 8,284
Occupancy, telephone and utilities 24,509 24,509
Office and warehouse supplies 3,905 3,905
Professional fees 5,020 93,413 98,433
Repairs and maintenance 574 574
Other general and administrative 265 4,995 5,260
-------------------------- ---------
Total operating expenses 5,285 886,768 892,053
-------------------------- ---------
Operating loss (5,285) (799,321) (804,606)
Interest income - - -
Interest expense - (93,701) (93,701)
-------------------------- ---------
Net loss $ (5,285) (893,022) $(898,307)
========================== =========
See notes to pro forma combined financial statements
Muscle Pharm
Notes to Pro Forma Combined Financial Statements (Unaudited)
(1) The Exchange Transaction is deemed to be a reverse acquisition. In
accordance with the Accounting and Financial Reporting Interpretations and
Guidance provided by the staff of the U.S. Securities and Exchange
Commission, Tone in Twenty (the legal acquirer) is considered the accounting
acquiree and Muscle Pharm (the legal acquiree) is considered the accounting
acquirer. The consolidated financial statements of the combined entity will
in substance be those of Muscle Pharm, with the assets and liabilities, and
revenues and expenses, of Tone in Twenty being included effective from the
date of consummation of the Exchange Transaction. Tone in Twenty is deemed to
be a continuation of the business of Muscle Pharm. The outstanding stock of
Tone in Twenty prior to the Exchange Transaction will be accounted for at its
net book value and no goodwill will be recognized.
(2) To reflect the issuance of 26,000,000 shares of common stock for all the
issued and outstanding equity and voting interests of Muscle Pharm members.
(3) To reflect the purchase and cancellation of 366,666 of common stock
owned by the Company's President for $25,000 to be paid by Muscle Pharm.
(4) To reflect the elimination of Tone in Twenty's deficit accumulated
during the development stage, and to reflect the operating entity's (Muscle
Pharm) accumulated operating deficits as the combined entity's accumulated
deficit.