La Cortez Energy, Inc. Unaudited Pro Forma Combined Financial Information
Exhibit
99.2
▇▇
▇▇▇▇▇▇ Energy, Inc.
Unaudited
Pro Forma Combined Financial Information
UNAUDITED
PRO FORMA COMBINED FINANCIAL STATEMENTS
On March
2, 2010 (the “Closing Date”), we entered into a Stock Purchase Agreement (the
“SPA”) with Avante Petroleum S.A., a Luxembourg public limited liability company
(“Avante”). Pursuant to the terms of the SPA, we acquired all of the
outstanding capital stock (the “Acquisition”) of Avante’s wholly owned
subsidiary, Avante Colombia S.à.▇.▇., a Luxembourg private limited liability
company (“Avante Colombia”), in exchange for 10,285,819 newly issued shares of
our common stock (the “Purchase Price Shares”). A portion of the
consideration (1,500,000 shares) is held in escrow to secure the Sellers’
indemnification obligations under the SPA.
The
following unaudited pro forma combined balance sheet combines balance sheet data
for ▇▇ ▇▇▇▇▇▇ Energy, Inc. (“▇▇ ▇▇▇▇▇▇”) and Avante Colombia as of
December 31, 2009 as if the acquisition had been completed on
December 31, 2009. The following unaudited pro forma combined statement of
operations combines the statements of operations data for ▇▇ ▇▇▇▇▇▇ and Avante
Colombia for the year ended December 31, 2009 as if the acquisition had
been completed on January 1, 2009. The unaudited pro forma financial
information is based upon the historical consolidated financial statements of ▇▇
▇▇▇▇▇▇ and the historical consolidated financial statements of Avante Colombia
and the assumptions, estimates and adjustments which are described in the notes
to the unaudited pro forma combined financial statements. The assumptions,
estimates and adjustments are preliminary and have been made solely for purposes
of developing such pro forma information. The unaudited pro forma combined
financial statements include adjustments that have been made to reflect the
preliminary purchase price allocations. These preliminary allocations represent
estimates made for purposes of these pro forma financial statements and are
subject to change upon a final determination of fair value.
The
unaudited pro forma combined financial statements are presented for illustrative
purposes only and are not necessarily indicative of the consolidated financial
position or consolidated results of operations of ▇▇ ▇▇▇▇▇▇ that would have been
reported had the acquisitions occurred on the dates indicated, nor do they
represent a forecast of the consolidated financial position of ▇▇ ▇▇▇▇▇▇ at any
future date or the consolidated results of operations for any future period.
Furthermore, no effect has been given in the unaudited pro forma combined
statements of operations for synergistic benefits or cost savings that may be
realized through the combination of ▇▇ ▇▇▇▇▇▇ and Avante Colombia or costs that
may be incurred in integrating ▇▇ ▇▇▇▇▇▇ and Avante Colombia. The unaudited pro
forma combined financial statements should be read in conjunction with the
audited consolidated financial statements and related notes, together with
management’s discussion and analysis of financial condition and results of
operations, contained in ▇▇ ▇▇▇▇▇▇’▇ Annual Report on Form 10-K for the period
ended December 31, 2009, which is on file with the SEC, and the historical
consolidated financial statements and related notes of Avante Colombia included
in this Form 8-K/▇.
▇▇
▇▇▇▇▇▇ Energy, Inc.
Unaudited
Pro Forma Combined Balance Sheet
As
of December 31, 2009
|
Historical
|
Pro
Forma
|
Pro
Forma
|
|||||||||||||||
|
▇▇
▇▇▇▇▇▇
|
Avante
Colombia
|
Adjustments
|
Combined
|
||||||||||||||
|
ASSETS
|
|||||||||||||||||
|
Current
assets:
|
|||||||||||||||||
|
Cash
and cash equivalents
|
$ | 2,376,585 | $ | 258,110 | $ | - | $ | 2,634,695 | |||||||||
|
Accrued
oil receivables
|
189,835 | - | - | 189,835 | |||||||||||||
|
Employee
advances
|
26,294 | - | - | 26,294 | |||||||||||||
|
Prepaid
expenses and other current assets
|
19,519 | 43,151 | - | 62,670 | |||||||||||||
|
Total
current assets
|
2,612,233 | 301,261 | - | 2,913,494 | |||||||||||||
|
Oil
properties, net
|
2,406,405 | 5,213,351 | 4,595,119 | (a) | 12,214,875 | ||||||||||||
|
Other
property and equipment, net
|
204,206 | 55,440 | - | 259,646 | |||||||||||||
|
Goodwill
|
- | - | 5,792,577 | (b) | 5,792,577 | ||||||||||||
|
Restricted
cash
|
2,672,500 | - | - | 2,672,500 | |||||||||||||
|
Total
assets
|
$ | 7,895,344 | $ | 5,570,052 | $ | 10,387,696 | $ | 23,853,092 | |||||||||
|
Liabilities:
|
|||||||||||||||||
|
Accounts
payable
|
$ | 2,518,565 | $ | 30,960 | $ | - | $ | 2,549,525 | |||||||||
|
Accrued
liabilities
|
267,155 | 235,810 | - | 502,965 | |||||||||||||
|
Income
tax payable
|
- | 54,686 | - | 54,686 | |||||||||||||
|
Derivative
warrant instruments
|
7,500,138 | - | - | 7,500,138 | |||||||||||||
|
Total
current liabilities
|
10,285,858 | 321,456 | - | 10,607,314 | |||||||||||||
|
Asset
retirement obligation
|
3,860 | 186,924 | - | 190,784 | |||||||||||||
|
Payable
to related parties
|
- | 164,368 | - | 164,368 | |||||||||||||
|
Total
liabilities
|
10,289,718 | 672,748 | - | 10,962,466 | |||||||||||||
|
Shareholders'
equity (deficit):
|
|||||||||||||||||
|
Preferred
stock
|
- | - | - | - | |||||||||||||
|
Common
stock
|
25,429 | 9,691,403 | (9,691,403 | ) | (c) | 35,715 | |||||||||||
| 10,286 | (c) | ||||||||||||||||
|
Additional
paid-in capital
|
11,396,506 | - | 15,274,714 | (c) | 26,671,220 | ||||||||||||
|
Accumulated
deficit
|
(13,816,309 | ) | (4,794,099 | ) | 4,794,099 | (c) | (13,816,309 | ) | |||||||||
|
Total
shareholders' equity (deficit)
|
(2,394,374 | ) | 4,897,304 | 10,387,696 | 12,890,626 | ||||||||||||
|
Total
liabilities and shareholders' equity (deficit)
|
$ | 7,895,344 | $ | 5,570,052 | $ | 10,387,696 | $ | 23,853,092 | |||||||||
See notes
to the unaudited pro forma combined financial information.
1
▇▇
▇▇▇▇▇▇ Energy, Inc.
Unaudited
Pro Forma Combined Statement of Operations
For
the Year Ended December 31, 2009
|
Historical
|
Pro
Forma
|
Pro
Forma
|
|||||||||||||||
|
▇▇
▇▇▇▇▇▇
|
Avante
Colombia
|
Adjustments
|
Combined
|
||||||||||||||
|
Oil
revenues
|
$ | 189,835 | $ | - | $ | - | $ | 189,835 | |||||||||
|
Costs
and expenses:
|
|||||||||||||||||
|
Operating
costs
|
421,693 | 164,816 | - | 586,509 | |||||||||||||
|
Depletion
and depreciation
|
364,787 | 34,581 | - | 399,368 | |||||||||||||
|
Impairment
of oil and gas properties
|
6,403,544 | - | - | 6,403,544 | |||||||||||||
|
Accretion
expense
|
156 | - | - | 156 | |||||||||||||
|
Loss
from terrorism
|
- | 115,602 | - | 115,602 | |||||||||||||
|
General
and administrative
|
3,274,786 | 451,850 | - | 3,726,636 | |||||||||||||
|
Total
costs and expenses
|
10,464,966 | 766,849 | - | 11,231,815 | |||||||||||||
|
Loss
from operations
|
(10,275,131 | ) | (766,849 | ) | - | (11,041,980 | ) | ||||||||||
|
Non-operating
income (expense)
|
133,401 | (476,538 | ) | - | (343,137 | ) | |||||||||||
|
Loss
before income taxes
|
(10,141,730 | ) | (1,243,387 | ) | - | (11,385,117 | ) | ||||||||||
|
Income
taxes
|
(656 | ) | (40,054 | ) | - | (40,710 | ) | ||||||||||
|
Net
loss
|
$ | (10,142,386 | ) | $ | (1,283,441 | ) | $ | - | $ | (11,425,827 | ) | ||||||
|
Loss
per share
|
|||||||||||||||||
|
Basic
and diluted loss per share
|
$ | (0.47 | ) | $ | (0.36 | ) | |||||||||||
|
Basic
and diluted weighted average common shares
outstanding
|
21,625,442 | 10,285,819 | (d) | 31,911,261 | |||||||||||||
See notes
to the unaudited pro forma combined financial information.
2
▇▇
▇▇▇▇▇▇ Energy, Inc.
Notes
to Unaudited Pro Forma Combined Financial Information
1.
Basis of Pro Forma Presentation
The pro
forma data is presented for illustrative purposes only and is not necessarily
indicative of the operating results that would have occurred had the transaction
been consummated as of January 1, 2009. Pro forma adjustments reflect only
those adjustments which are factually determinable and do not include the impact
of potential contingencies, which will not be known until the resolution of the
contingency. The preliminary purchase consideration and purchase price
allocation has been presented and does not necessarily represent the final
purchase price allocation. The preliminary allocations of the purchase
consideration to tangible and intangible assets acquired and liabilities assumed
herein were based upon preliminary valuations and our estimates and assumptions
are still subject to change.
2.
Preliminary Purchase Price Allocation
The
purchase price of the assets acquired from Avante Colombia was 10,285,819 shares
of ▇▇ ▇▇▇▇▇▇ common stock valued at $15,285,000. The allocation of the purchase
price and the purchase price accounting is based upon preliminary estimates of
the assets and liabilities acquired on March 2, 2010 in accordance with ASC
topic 805, Business
Combinations.
|
Cash
|
$ | 289,937 | ||
|
Accounts
receivable
|
3,653 | |||
|
Prepaid
expenses and other current assets
|
43,001 | |||
|
Unproved
oil and gas properties
|
9,808,470 | |||
|
Other
fixed assets
|
48,743 | |||
|
Goodwill
|
5,591,422 | |||
| 15,785,226 | ||||
|
Accounts
payable and other current liabilities
|
(313,071 | ) | ||
|
Asset
retirement obligation
|
(187,155 | ) | ||
|
Purchase
price
|
$ | 15,285,000 |
3.
Pro Forma Adjustments
The
unaudited pro forma combined financial statements include the following pro
forma entries and assumptions:
|
(a)
|
Adjustment to record oil and gas
properties at fair market value as of the date of the unaudited pro forma
financial statements.
|
|
(b)
|
Adjustment to record goodwill of
$5,792,577 as of the date of the unaudited pro forma financial statements
as a result of the purchase price consideration in excess of the fair
value of assets acquired and liabilities
assumed.
|
|
(c)
|
Adjustment to record the removal
of the existing common stock and accumulated deficit of Avante Colombia
and to record the common stock of $10,286 and Additional Paid-in Capital
of $15,274,714 related to the issuance of 10,285,819 shares of ▇▇ ▇▇▇▇▇▇
common stock.
|
|
(d)
|
Adjustment to record the weighted
impact of 10,285,819 shares of ▇▇ ▇▇▇▇▇▇ common stock issued in connection
with the acquisition for the period from January 1, 2009 to
December 31, 2009.
|
3