ALTITUDE INTERNATIONAL HOLDINGS, INC. UNAUDITED PRO-FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Exhibit 99.3
ALTITUDE INTERNATIONAL HOLDINGS, INC.
UNAUDITED PRO-FORMA CONDENSED COMBINED
FINANCIAL INFORMATION
INTRODUCTION
On March 7, 2022, Altitude International Holdings, Inc. (the “Company”) and its wholly owned subsidiary CMA Soccer, LLC (“CMAS”), entered into a Consulting, Management and License Agreement (the “Agreement”) with Soccer Partners America, a Colorado not-for-profit corporation (“RUSH Soccer”).
RUSH Soccer is a national competitive youth soccer club that administers boys’ and girls’ teams internationally (the “RUSH Programs”) with proprietary training methodology, documentation and materials (the “RUSH Materials”), proprietary technologies and platforms (the “RUSH Technologies”), and a database of individuals (the “RUSH Database”).
Pursuant to the terms of the Agreement, CMAS agreed to administer, deliver and develop the RUSH Programs for an initial term of ten years, with automatic renewals for two five-year terms. RUSH Soccer has granted CMAS an exclusive license to use the RUSH name, logo, the RUSH Materials and the RUSH Technologies in connection with the operation, marketing and exploitation of full time, school semester, school year and short time weekly, junior, adult, professional and family, boarding and non-boarding soccer programs.
CMAS agreed to pay RUSH Soccer a fee of $20,000 per year annually during the term of the Agreement.
CMAS and the Company agreed to engage certain key personnel from RUSH Soccer as consultants for CMAS.
Additionally, the Company, CMAS and RUSH Soccer agreed to establish a RUSH-branded men’s professional soccer team (the “Pro Team”) that shall be a wholly owned subsidiary of CMAS and shall be managed by Xxxxxx. The Company, CMAS and RUSH Soccer agree to work together to raise $3,000,000, $2,700,000 of which shall be used for the establishment and operation of the Pro Team and $300,000 of which will be used for the administration of the RUSH Programs. If the amount for the Pro Team is not raised within the first three years of the Agreement, RUSH Soccer may terminate the Agreement with 60 days’ notice.
The following unaudited pro-forma condensed combined financial information is based on the historical financial statements of the Company and the historical financial statements of RUSH Soccer.
The unaudited pro-forma condensed combined statement of operations for the three months ended March 31, 2022, reflects the acquisition as if it occurred on January 1, 2022 and are based on the historical consolidated financial statements of the Company and RUSH Soccer, as adjusted to give effect to the Agreement. The unaudited condensed balance sheet as of March 31, 2022, as reflected in the Form 10-Q for the period ended March 31, 2022, presents an unaudited condensed consolidated balance sheet of the Company and RUSH Soccer as of March 31, 2022.
The unaudited pro-forma condensed combined balance sheet as of December 31, 2021 and the unaudited pro-forma condensed combined statement of operations for the year ended December 31, 2021 reflects the acquisition as if it occurred on January 1, 2021 and are based on historical consolidated financial statements of the Company and unaudited condensed financial statements of RUSH Soccer, as adjusted to give effect to the Agreement.
The unaudited pro-forma condensed combined financial information should be read in conjunction with the audited financial statements and related disclosures contained in the Company’s Annual Report filed with the SEC on Form 10-K for the year ended December 31, 2021, and the audited financial statements of RUSH Soccer that are attached to this Form 8-K/A as an exhibit.
The unaudited pro-forma condensed combined financial information is presented for illustrative purposes only and are not necessarily indicative of the results of operations and financial position that would have been achieved had the acquisition been completed and taken place on the dates indicated or the future consolidated results of operations or financial position of the Company.
| UNAUDITED PRO-FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS | ||||||||||||||||
| For the Three Months Ended March 31, 2022 | ||||||||||||||||
| Rush | Pro-forma | |||||||||||||||
| ALTD | Soccer | Adjustments | Total | |||||||||||||
| Revenue and income, net | $ | 2,065,772 | $ | 420,293 | $ | - | $ | 2,486,065 | ||||||||
| Operating expenses | ||||||||||||||||
| Direct costs of revenue | 672,706 | 267,418 | - | 940,124 | ||||||||||||
| Professional fees | 309,496 | 161,460 | - | 470,956 | ||||||||||||
| Salary and related expenses | 638,501 | 215,992 | - | 854,493 | ||||||||||||
| Stock-based compensation | 85,900 | - | - | 85,900 | ||||||||||||
| Marketing expense | 47,430 | 8,390 | - | 55,820 | ||||||||||||
| Rent expense | 172,550 | - | - | 172,550 | ||||||||||||
| Other general and administrative expenses | 382,204 | 58,419 | - | 440,623 | ||||||||||||
| Total operating expenses | 2,308,787 | 711,679 | - | 3,020,466 | ||||||||||||
| Loss from operations | (243,015 | ) | (291,386 | ) | - | (534,401 | ) | |||||||||
| Other income (expense) | ||||||||||||||||
| Interest expense | (15,972 | ) | - | - | (15,972 | ) | ||||||||||
| Total other income (expense) | (15,972 | ) | - | - | (15,972 | ) | ||||||||||
| Net loss | $ | (258,987 | ) | $ | (291,386 | ) | $ | - | $ | (550,373 | ) | |||||
| Net loss per common share - basic and fully diluted | $ | (0.00 | ) | $ | (0.00 | ) | ||||||||||
| Weighted average number of common shares outstanding during the period - basic and fully diluted | 360,995,488 | 370,995,488 | ||||||||||||||
| UNAUDITED PRO-FORMA CONDENSED COMBINED BALANCE SHEETS | ||||||||||||||||||
| December 31, 2021 | ||||||||||||||||||
| Rush | Pro-forma | |||||||||||||||||
| ALTD | Soccer | Adjustments | Total | |||||||||||||||
| ASSETS | ||||||||||||||||||
| Current assets | ||||||||||||||||||
| Cash | $ | 423,165 | $ | 854,770 | $ | - | $ | 1,277,935 | ||||||||||
| Accounts, receivable, net | 91,520 | 890,606 | - | 982,126 | ||||||||||||||
| Inventory | 161,235 | - | - | 161,235 | ||||||||||||||
| Prepaid expense | 88,134 | 59,618 | - | 147,752 | ||||||||||||||
| Total current assets | 764,054 | 1,804,994 | - | 2,569,048 | ||||||||||||||
| Fixed assets, net | 71,036 | 4,065 | - | 75,101 | ||||||||||||||
| Intangible assets, net | 287,500 | - | - | 287,500 | ||||||||||||||
| Goodwill | 29,493,398 | - | (a) | 956,000 | 30,449,398 | |||||||||||||
| Total assets | $ | 30,615,988 | $ | 1,809,059 | $ | 956,000 | $ | 33,381,047 | ||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||
| Current liabilities | ||||||||||||||||||
| Accounts payable and accrued expenses | $ | 436,896 | $ | 42,279 | (a) | $ | 20,000 | $ | 499,175 | |||||||||
| Stockholders’ advance | 36,211 | - | - | 36,211 | ||||||||||||||
| PPP loan | 20,800 | 140,800 | - | 161,600 | ||||||||||||||
| Loan payable | - | 501,724 | - | 501,724 | ||||||||||||||
| Deferred revenue | 1,388,126 | 208,992 | - | 1,597,118 | ||||||||||||||
| Total current liabilities | 1,882,033 | 893,795 | 20,000 | 2,795,828 | ||||||||||||||
| Non-current liabilties | - | |||||||||||||||||
| Other non-current liability | - | - | (a) | 380,000 | 380,000 | |||||||||||||
| Notes payable, net of current portion | 1,288,887 | 100,000 | - | 1,388,887 | ||||||||||||||
| Total non-current liabilities | 1,288,887 | 100,000 | 380,000 | 1,768,887 | ||||||||||||||
| Total liabilities | 3,170,920 | 993,795 | 400,000 | 4,564,715 | ||||||||||||||
| Stockholders’ equity | ||||||||||||||||||
| Preferred stock | - | - | - | - | ||||||||||||||
| Common stock | 30,362,949 | - | (a) | 556,000 | 30,918,949 | |||||||||||||
| Net assets without donor restrictions | - | 815,264 | - | 815,264 | ||||||||||||||
| Accumulated deficit | (2,917,881 | ) | - | - | (2,917,881 | ) | ||||||||||||
| Total stockholders’ equity | 27,445,068 | 815,264 | 556,000 | 28,816,332 | ||||||||||||||
| Total liabilities and stockholders’ equity | $ | 30,615,988 | $ | 1,809,059 | $ | 956,000 | $ | 33,381,047 | ||||||||||
| UNAUDITED PRO-FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS | ||||||||||||||||
| For the Year Ended December 31, 2021 | ||||||||||||||||
| Rush | Pro-forma | |||||||||||||||
| ALTD | Soccer | Adjustments | Total | |||||||||||||
| Revenue and income, net | $ | 6,595,867 | $ | 2,998,214 | $ | - | $ | 9,594,081 | ||||||||
| Operating expenses | ||||||||||||||||
| Direct costs of revenue | 2,862,941 | 987,309 | - | 3,850,250 | ||||||||||||
| Professional fees | 407,401 | 17,050 | - | 424,451 | ||||||||||||
| Salary expenses | 2,396,915 | 651,293 | - | 3,048,208 | ||||||||||||
| Stock-based compensation | 657,947 | - | - | 657,947 | ||||||||||||
| Marketing expense | 240,080 | 20,109 | - | 260,189 | ||||||||||||
| Rent expense | 648,080 | - | - | 648,080 | ||||||||||||
| Other general and administrative expenses | 1,804,505 | 580,005 | - | 2,384,510 | ||||||||||||
| Total operating expenses | 9,017,869 | 2,255,766 | - | 11,273,635 | ||||||||||||
| Income (loss) from operations | (2,422,002 | ) | 742,448 | - | (1,679,554 | ) | ||||||||||
| Other income (expense) | ||||||||||||||||
| Loss on settlement of debt | (11,754 | ) | - | - | (11,754 | ) | ||||||||||
| Gain on forgiveness of PPP loans | 614,972 | - | - | 614,972 | ||||||||||||
| Interest expense | (22,833 | ) | - | - | (22,833 | ) | ||||||||||
| Other income (expense) | 580,385 | - | - | 580,385 | ||||||||||||
| Net income (loss) | $ | (1,841,617 | ) | $ | 742,448 | $ | - | $ | (1,099,169 | ) | ||||||
| Net loss per common share - basic and fully diluted | $ | (0.01 | ) | $ | (0.01 | ) | ||||||||||
| Weighted average number of common shares outstanding during the period - basic and fully diluted | 189,059,461 | 199,059,461 | ||||||||||||||
NOTE 1 - BASIS OF PRESENTATION
The Company follows the accrual basis of accounting in accordance with generally accepted accounting principles in the United States of America and has a year-end of December 31.
The unaudited pro-forma condensed combined statements of operations of the Company and RUSH Soccer for the three-month period ended March 31, 2022 and the unaudited pro-forma condensed combined financial statements of the Company and RUSH Soccer for the year ended December 31, 2021 have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Regulation S-X. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. However, such information reflects all adjustments (consisting solely of normal recurring adjustments unless otherwise indicated), which are, in the opinion of management, necessary for the fair presentation of the financial position and the results of operations. Results shown for interim periods are not necessarily indicative of the results to be obtained for a full fiscal year. The balance sheet information as of December 31, 2021, was derived from the audited financial statements included in the Company’s financial statements as of and for the year ended December 31, 2021, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 15, 2022. These financial statements should be read in conjunction with that report.
NOTE 2 - DESCRIPTION OF THE TRANSACTION
On March 7, 2022, the Company and its wholly owned subsidiary CMAS, entered into a Consulting, Management and License Agreement (the “Agreement”) with Soccer Partners America, a Colorado not-for-profit corporation (“RUSH Soccer”).
RUSH Soccer is a national competitive youth soccer club that administers boys’ and girls’ teams internationally (the “RUSH Programs”) with proprietary training methodology, documentation and materials (the “RUSH Materials”), proprietary technologies and platforms (the “RUSH Technologies”), and a database of individuals (the “RUSH Database”).
Pursuant to the terms of the Agreement, CMAS agreed to administer, deliver and develop the RUSH Programs for an initial term of ten years, with automatic renewals for two five-year terms. RUSH Soccer has granted CMAS an exclusive license to use the RUSH name, logo, the RUSH Materials and the RUSH Technologies in connection with the operation, marketing and exploitation of full time, school semester, school year and short time weekly, junior, adult, professional and family, boarding and non-boarding soccer programs.
CMAS agreed to pay RUSH Soccer a fee of $20,000 per year annually during the term of the Agreement.
CMAS and the Company agreed to engage certain key personnel from RUSH Soccer as consultants for CMAS.
Additionally, the Company, CMAS and RUSH Soccer agreed to establish a RUSH-branded men’s professional soccer team (the “Pro Team”) that shall be a wholly owned subsidiary of CMAS and shall be managed by Xxxxxx. The Company, CMAS and RUSH Soccer agree to work together to raise $3,000,000, $2,700,000 of which shall be used for the establishment and operation of the Pro Team and $300,000 of which will be used for the administration of the RUSH Programs. If the amount for the Pro Team is not raised within the first three years of the Agreement, RUSH Soccer may terminate the Agreement with 60 days’ notice.
NOTE 3 - PURCHASE PRICE ALLOCATION
The following table summarizes the consideration given for Altitude and the fair values of the assets and liabilities assumed at the acquisition date.
| Consideration given: | ||||
| Common stock shares given | $ | 556,000 | ||
| Future consideration | 400,000 | |||
| Total consideration given | $ | 956,000 | ||
| Fair value of identifiable assets acquired, and liabilities assumed: | ||||
| Cash | $ | 1,216,126 | ||
| Accounts receivable | 447,941 | |||
| Prepaid expenses | 118,150 | |||
| Other current assets | 800 | |||
| Fixed assets, net | 4,065 | |||
| Loan payable | (501,724 | ) | ||
| Accounts payable and accrued expenses | (176,275 | ) | ||
| Deferred revenue | (219,917 | ) | ||
| Note payable | (100,000 | ) | ||
| Total identifiable net asset | 789,166 | |||
| Goodwill | 166,834 | |||
| Total consideration | $ | 956,000 |
NOTE 4 – ADJUSTMENTS TO FINANCIAL INFORMATION
Explanation of Pro-Forma Adjustments
The pro-forma adjustments reflect the accounting for the acquisition should it have occurred on January 1, 2022 (for the period ended March 31, 2022) or January 1, 2021 (for the year ended December 31, 2021). The adjustments account for the consideration as reflect in Note 3.
