Notes to Pro forma Consolidated Financial Statements
Notes to Pro forma Consolidated Financial Statements
NOTE 1 - BASIS OF PRESENTATION
On June 23, 2015, Xxxxx Tek Inc. (the “Company”) entered into an Agreement of Merger and Plan of Reorganization (the “Merger Agreement”) with Cinjet, Inc. (“Cinjet”), a Nevada corporation, and CJA Acquisition Corp. (“CJA”), a California corporation and a wholly owned subsidiary of Cinjet, providing for the merger of CJA with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly-owned subsidiary of Cinjet. The Merger Agreement was approved by the Company’s Board of Directors and the sole Director of Cinjet, effective June 23, 2015. The Merger closed on June 23, 2015.
At the effective time of the Merger, each share of the Company’s common stock was converted into the right to receive .166 shares of common stock of Cinjet, with an aggregate of 4,364,500 shares issued to the shareholders of the Company.
Upon the Closing of the Merger, the Company paid a total of $22,500 to four shareholders of Cinjet for the cancellation of a total of 10,245,334 shares of Cinjet common stock. Also at the closing of the Merger, the Company paid $198,100 to Cinjet for Cinjet to settle and pay all of the current liabilities of Cinjet, totaling $405,932 as of the Closing date. After the closing, a total of 4,925,333 shares of Cinjet were outstanding.
The accompanying unaudited pro forma consolidated Balance Sheet presents the accounts of Xxxxx Tek and Cinjet as if Merger occurred at March 31, 2015. The accompanying unaudited pro forma Statements of Operations present the accounts of the Company and Cinjet for the three months ended March 31, 2015 and for the year ended December 31, 2014 as if the Merger occurred on January 1, 2014.
The Merger will be accounted for as a “reverse merger” immediately following the completion of the transaction. For accounting purposes, the Company will be deemed to be the accounting acquirer in the transaction and, consequently, the transaction will be treated as a recapitalization of Cinjet. Accordingly, the Company’s assets, liabilities and results of operations will become the historical financial statements of the registrant. No step-up in basis or intangible assets or goodwill will be recorded in this transaction and the cash paid by the Company of $220,600 will be reflected as a cost of the transaction.
The unaudited consolidated pro forma financial information is presented for informational purposes only and is subject to a number of uncertainties and assumptions and do not purport to represent what the company’s actual performance or financial position would have been had the transaction occurred on the dates indicated and does not purport to indicate the financial position or results of operations as of any future date or for any future period.
1
Cinjet, Inc. and Xxxxx Tek Inc. |
|
|
|
|
|
|
|
|
|
Pro Forma Consolidated Balance Sheets |
|
|
|
|
|
|
|
|
|
March 31, 2015 |
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
| Pro forma |
|
| Pro forma |
|
| Cinjet |
| Xxxxx Tek |
| Adjustments |
|
| Consolidated |
ASSETS |
| (Unaudited) |
| (Unaudited) |
| (Unaudited) |
|
| (Unaudited) |
CURRENT ASSETS |
|
|
|
|
|
|
|
|
|
Cash | $ | 322 | $ | 1,215,592 | $ | (220,600) | (1) | $ | 995,314 |
Accounts receivable, net |
| - |
| 588,462 |
| - |
|
| 588,462 |
Inventories |
| - |
| 1,606,216 |
| - |
|
| 1,606,216 |
Inventories under warranty claims |
| - |
| 372,438 |
| - |
|
| 372,438 |
Advances to suppliers - related party |
| - |
| 65,775 |
| - |
|
| 65,775 |
Prepaid expenses and other current assets |
| - |
| 15,987 |
| - |
|
| 15,987 |
Income taxes receivable |
| - |
| 99,816 |
| - |
|
| 99,816 |
TOTAL CURRENT ASSETS |
| 322 |
| 3,964,286 |
| (220,600) |
|
| 3,744,008 |
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
| - |
| 125,042 |
| - |
|
| 125,042 |
Other assets |
| - |
| 30,422 |
| - |
|
| 30,422 |
TOTAL ASSETS | $ | 322 | $ | 4,119,750 | $ | (220,600) |
| $ | 3,899,472 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) |
|
|
|
|
|
|
| ||
CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses | $ | 129,206 | $ | 498,324 | $ | (129,206) | (1) | $ | 498,324 |
Amounts due to officers-shareholders |
| 49,326 |
| 315,512 |
| (49,326) | (1) |
| 315,512 |
Income taxes payable |
| 2,400 |
| 297,174 |
| (2,400) | (1) |
| 297,174 |
Capital lease obligations, current portion |
| - |
| 12,956 |
| - |
|
| 12,956 |
Convertible debentures |
| 225,000 |
| - |
| (225,000) | (1) |
| - |
Line of credit |
| - |
| 600,000 |
| - |
|
| 600,000 |
TOTAL CURRENT LIABILITIES |
| 405,932 |
| 1,723,966 |
| (405,932) |
|
| 1,723,966 |
|
|
|
|
|
|
|
|
|
|
Capital lease obligations, long-term |
| - |
| 33,108 |
| - |
|
| 33,108 |
TOTAL LIABILITIES |
| 405,932 |
| 1,757,074 |
| (405,932) |
|
| 1,757,074 |
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
Common stock |
| 1,078 |
| 2,689,025 |
| (2,689,610) |
|
| 493 |
Additional paid-in capital |
| 87,322 |
| - |
| 2,654,342 | (1) |
| 2,741,664 |
Accumulated deficit |
| (494,010) |
| (326,349) |
| 220,600 | (1) |
| (599,759) |
TOTAL SHAREHOLDERS' EQUITY (DEFICIT) |
| (405,610) |
| 2,362,676 |
| 185,332 |
|
| 2,142,398 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) | $ | 322 | $ | 4,119,750 | $ | (220,600) |
| $ | 3,899,472 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) To reflect the payment of $220,600 upon closing as a cost of the reverse merger and the extinguishment of $185,332 in Cinjet liabilities. | |||||||||
2
Cinjet, Inc. and Xxxxx Tek Inc. |
|
|
|
|
|
|
|
|
Pro Forma Consolidated Statement of Operations |
|
|
|
|
|
|
| |
For the Three Months Ended March 31, 2015 |
|
|
|
|
|
| ||
(Unaudited) |
|
|
|
|
| Pro forma |
| Pro forma |
|
| Cinjet |
| Xxxxx Tek |
| Adjustments |
| Consolidated |
|
| (Unaudited) |
| (Unaudited) |
| (Unaudited) |
| (Unaudited) |
|
|
|
|
|
|
|
|
|
Sales | $ | - | $ | 2,091,484 | $ | - | $ | 2,091,484 |
|
|
|
|
|
|
|
|
|
Cost of goods sold |
| - |
| 1,346,451 |
| - |
| 1,346,451 |
|
|
|
|
|
|
|
|
|
Gross profit |
| - |
| 745,033 |
| - |
| 745,033 |
|
|
|
|
|
|
|
|
|
Research and development |
| - |
| 46,841 |
| - |
| 46,841 |
Selling, general and administrative expenses |
| 8,368 |
| 672,867 |
| - |
| 681,235 |
Total operating expenses |
| 8,368 |
| 719,708 |
| - |
| 728,076 |
|
|
|
|
|
|
|
|
|
Income (loss) from operations |
| (8,368) |
| 25,325 |
| - |
| 16,957 |
|
|
|
|
|
|
|
|
|
Other income (expenses) |
|
|
|
|
|
|
|
|
Interest expense |
| (6,759) |
| (12,015) |
| - |
| (18,774) |
Interest income |
| - |
| 1,272 |
| - |
| 1,272 |
Costs relating to merger |
| - |
| - |
| (220,600) | (1) | (220,600) |
|
| (6,759) |
| (10,743) |
| (220,600) |
| (238,102) |
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
| (15,127) |
| 14,582 |
| (220,600) |
| (221,145) |
|
|
|
|
|
|
|
|
|
Provision (benefit) for income taxes |
| - |
| 11,990 |
| - |
| 11,990 |
Net income (loss) | $ | (15,127) | $ | 2,592 | $ | (220,600) | $ | (233,135) |
|
|
|
|
|
|
|
|
|
Basic and Diluted Loss per Share |
|
|
|
|
|
| $ | (0.05) |
|
|
|
|
|
|
|
|
|
Weighted Average Common Shares Outstanding |
|
|
|
|
|
|
| 4,251,279 |
(1) To reflect the cost of the reverse merger.
3
Cinjet, Inc. and Xxxxx Tek Inc. |
|
|
|
|
|
|
|
|
Pro Forma Consolidated Statement of Operations |
|
|
|
|
|
|
| |
For the Year Ended December 31, 2014 |
|
|
|
|
|
| ||
(Unaudited) |
|
|
|
|
| Pro forma |
| Pro forma |
|
| Cinjet |
| Xxxxx Tek |
| Adjustments |
| Consolidated |
|
|
|
|
|
| (Unaudited) |
| (Unaudited) |
|
|
|
|
|
|
|
|
|
Sales | $ | - | $ | 6,155,379 | $ | - | $ | 6,155,379 |
|
|
|
|
|
|
|
|
|
Cost of goods sold |
| - |
| 4,638,749 |
| - |
| 4,638,749 |
|
|
|
|
|
|
|
|
|
Gross profit |
| - |
| 1,516,630 |
| - |
| 1,516,630 |
|
|
|
|
|
|
|
|
|
Research and development |
| - |
| 120,537 |
| - |
| 120,537 |
Selling, general and administrative expenses |
| 16,344 |
| 1,808,291 |
| - |
| 1,824,635 |
Total operating expenses |
| 16,344 |
| 1,928,828 |
| - |
| 1,945,172 |
|
|
|
|
|
|
|
|
|
Loss from operations |
| (16,344) |
| (412,198) |
| - |
| (428,542) |
|
|
|
|
|
|
|
|
|
Other income (expenses) |
|
|
|
|
|
|
|
|
Interest expense |
| (26,060) |
| (48,101) |
| - |
| (74,161) |
Interest income |
| - |
| 59 |
| - |
| 59 |
Impairment of loan receivable |
| - |
| (250,000) |
| - |
| (250,000) |
|
| (26,060) |
| (298,042) |
| - |
| (324,102) |
|
|
|
|
|
|
|
|
|
Loss before income taxes |
| (42,404) |
| (710,240) |
| - |
| (752,644) |
|
|
|
|
|
|
|
|
|
Provision (benefit) for income taxes |
| - |
| (49,608) |
| - |
| (49,608) |
Net loss | $ | (42,404) | $ | (660,632) | $ | - | $ | (703,036) |
|
|
|
|
|
|
|
|
|
Basic and Diluted Loss per Share |
|
|
|
|
|
| $ | (0.20) |
|
|
|
|
|
|
|
|
|
Weighted Average Common Shares Outstanding |
|
|
|
|
|
|
| 3,552,522 |
4
