NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED
FINANCIAL STATEMENTS
Basis of
presentation
On November 9, 2010, Sea 2 Sky Corporation (the
“Company” or “Sea 2 Sky”) entered into Business Combination Agreement (“Agreement”) with ecoTECH Energy Group (Canada) Inc.
(‘ecoTECH”) and 7697112 Canada Corp., a wholly owned subsidiary of
the Company (“Subco”),
pursuant to which ecoTECH
will amalgamate and merge with Subco and the Company will acquire 100% of the outstanding equity
interests of ecoTECH through the issuance of 110,606,239
shares of the Company’s common stock. Upon completion of theamalgamation onNovember 12,
2010, ecoTECH became a
wholly-owned subsidiary of the Company; however, due to the exchange of common
stock shares, ecoTECH assumed control of the Company.
The acquisition of ecoTECH by Sea 2
Sky is being accounted for as a reverse
acquisition, whereby the assets and liabilities of ecoTECH are reported at their
historical cost since ecoTECH was issued common stock equal toapproximately 58%
of the total outstanding shares immediately after the transaction. In
addition, ecoTECH has the right to appoint four of the five initial members to
the board of directors. The Company is accounting for the transaction in
accordance with Accounting Standards Codification No 805 "Business
Combinations." The assets and liabilities of ecoTECH are recorded at their
historical cost basis on the date immediately preceding the transaction. Sea 2
Sky’s assets and
liabilities will be recorded at fair value in connection with the reverse
acquisition; however, we believe the estimated fair value of assets and
liabilities as of the date of acquisition will approximate their carrying
values. Accordingly no pro forma adjustment is made herein to adjust
the carrying values of Sea
2 Sky’s assets and
liabilities.
The unaudited pro forma combined
condensed balance sheet was prepared assuming the transaction closed on
June 30, 2010. The unaudited pro
forma combined condensed statements of operations and comprehensive loss were prepared as if the transaction had
taken place (i) at the beginning of ecoTECH’s year ended December 31, 2009 and
(ii) for the six months ended June 30, 2010. Additionally, since Sea
2 Sky’s year end is August 31, the pro forma statement of operations
and comprehensive
lossfor Sea 2 Sky were
prepared as if the transaction had taken place (i) at the beginning of Sea 2
Sky’s year ended August 31, 2009 and (ii) for the nine months ended May 31,
2010.
These statements should be read in
conjunction with the historical financial statements and related notes in Sea 2
Sky’s Annual Report on Form 10-K for the year ended August 31, 2009 and the
Quarterly Report on Form 10-Q for the nine-month period ended May 31, 2010. The
unaudited pro forma combined condensed statements of operations and comprehensive lossare not necessarily indicative of what
the actual results of operations would have been had such transactions taken
place at the beginning of the respective periods.
We are providing this information to aid
you in your analysis of the financial aspects of the transaction. The unaudited
pro forma condensed combined financial statements described above should be read
in conjunction with the historical financial statements of Sea 2 Sky and ecoTECH
and the related notes thereto.
The columns captioned “Sea 2 Sky
Corporation” represent the balance sheet of Sea 2 Sky as of May 31, 2010 and the
related statements of operations and comprehensive lossfor the twelve month period ended August
31, 2009 and for the nine months ended May 31, 2010. The columns captioned
“ecoTECH Energy Corporation (Canada), Inc.” represent the balance sheet of
ecoTECH as of June 30, 2010 and the related statements of operations
and comprehensive
lossfor the year ended
December 31, 2009 and for the six months ended June 30, 2010. It was
deemed impractical to obtain ecoTECH’s statement of operations for the nine
months ended September 30, 2010.
The unaudited pro forma combined
condensed balance sheet and statements of operations and comprehensive losshave been prepared to give effect to the
following pro forma adjustments which are deemed to be directly attributable to
the transaction:
|
|
1.
|
To reflect the issuance of 110,606,239 shares ($110,606 at par value) and to
adjust the common stock account to par value of $191,059.
|
|
|
2.
|
Elimination of Sea 2 Sky
Corporation’s accumulated deficit and reduction of additional
paid-in capital.
|
|
Sea 2 Sky
|
ecoTECH
Energy Group
|
|||||||||||||||
| Pro Forma Balance Sheet |
Corporation
|
(Canada), Inc.
|
Pro Forma
|
Pro Forma
|
||||||||||||
|
May 31, 2010
|
June 30, 2010
|
Adjustments
|
Combined
|
|||||||||||||
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
||||||||||||||
|
Assets:
|
||||||||||||||||
|
Current
assets:
|
||||||||||||||||
|
Cash
and cash equivalents
|
$ | 15,695 | $ | - | $ | 15,695 | ||||||||||
|
Prepaids
|
- | 9,365 | 9,365 | |||||||||||||
|
Due
from related parties
|
- | 4,819 | 4,819 | |||||||||||||
|
Total
current assets
|
15,695 | 14,184 | 29,879 | |||||||||||||
|
Property,
plant and equipment, net
|
- | 190,493 | 190,493 | |||||||||||||
|
Deposits
|
- | 41,809 | 41,809 | |||||||||||||
|
Total
assets
|
$ | 15,695 | $ | 246,486 | $ | 262,181 | ||||||||||
|
Liabilities
and Shareholders’ Deficit:
|
||||||||||||||||
|
Current
liabilities:
|
||||||||||||||||
|
Accounts
payable
|
$ | 3,267 | $ | 417,585 | $ | 420,852 | ||||||||||
|
Accrued
payroll
|
100,000 | 764,830 | 864,830 | |||||||||||||
|
Accrued
liabilities – related party
|
- | 145,972 | 145,972 | |||||||||||||
|
Other
accrued liabilities
|
- | 82,438 | 82,438 | |||||||||||||
|
Notes
payable to related parties
|
- | 129,866 | 129,866 | |||||||||||||
|
Convertible
debentures – current
|
- | 19,084 | 19,084 | |||||||||||||
|
Total liabilities
|
103,267 | 1,559,775 | 1,663,042 | |||||||||||||
|
Commitments
and contingencies
|
- | - | - | |||||||||||||
|
Shareholders’
deficit:
|
||||||||||||||||
|
Common
Stock, $0.001 par value:
|
80,453 | 103,252 | 7,354 | 1 | 191,059 | |||||||||||
|
Additional
paid-in capital
|
1,617,507 | 26,038,733 | (1,795,385 | ) 2 | 25,860,855 | |||||||||||
|
Accumulated
other comprehensive income
|
2,499 | - | 2,499 | |||||||||||||
|
Cumulative
foreign currency translation
adjustment
|
- | (33,612 | ) | (33,612 | ) | |||||||||||
|
Deficit
accumulated during the development
stage
|
(1,788,031 | ) | (27,421,662 | ) | 1,788,031 | 2 | (27,421,662 | ) | ||||||||
|
Total
shareholders’ deficit
|
(87,572 | ) | (1,313,289 | ) | (1,400,861 | ) | ||||||||||
|
Total
liabilities and shareholders'
deficit
|
$ | 15,695 | $ | 246,486 | $ | 262,181 | ||||||||||
|
Pro Forma Statements of Operations
|
Sea 2 Sky
|
ecoTECH
Energy
Group
(Canada),
Inc.
|
||||||||||||
|
and Comprehensive Loss
|
Corporation
|
Year ended
|
||||||||||||
|
Year ended August 31, 2009 |
December 31,
2009
|
Pro Forma Adjustments |
Pro Forma Combined |
|||||||||||
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
||||||||||||
|
Revenues
|
- | - | - | |||||||||||
|
Operating
expenses:
|
||||||||||||||
|
Selling
|
- | - | - | |||||||||||
|
General
and
administrative
|
$ | 857,212 | $ | 7,770,411 | $ | 8,627,623 | ||||||||
|
Total
operating
expenses
|
857,212 | 7,770,411 | 8,627,623 | |||||||||||
|
Operating
loss
|
(857,212 | ) | (7,770,411 | ) | (8,627,623 | ) | ||||||||
|
Other
(income) and
expense:
|
||||||||||||||
|
Loss
on disposal of fixed
assets
|
- | 5,704 | 5,704 | |||||||||||
|
Interest
expense
|
- | 125,539 | 125,539 | |||||||||||
|
Extinguishment
of convertible
debt
|
37,198 | 37,198 | ||||||||||||
|
Loss
from continuing
operations
|
(857,212 | ) | (7,938,852 | ) | (8,796,064 | ) | ||||||||
|
Net
loss from continuing operations before income tax
benefit
|
$ | (857,212 | ) | $ | (7,938,852 | ) | $ | (8,796,064 | ) | |||||
|
Income
tax
benefit
|
- | (20,599 | ) | (20,599 | ) | |||||||||
|
Net
loss
|
$ | (857,212 | ) | $ | (7,918,253 | ) | $ | (8,775,465 | ) | |||||
|
Change
in cumulative foreign currency translation
adjustment
|
- | 146,435 | 146,435 | |||||||||||
|
Comprehensive
loss from continuing
operations
|
$ | (857,212 | ) | $ | (8,064,688 | ) | $ | (8,921,900 | ) | |||||
|
Basic
and diluted loss per common
share
|
$ | (0.01 | ) | $ | (0.04 | ) | ||||||||
|
Weighted
average common shares outstanding, basic and
diluted
|
106,610,176 |
110,606,239
|
(1) | 217,216,415 | ||||||||||
|
Pro Forma Statements of
Operations and Comprehensive
Loss
|
Sea 2 Sky
Corporation
|
ecoTECH
Energy Group
(Canada), Inc.
|
||||||||||||||
|
Nine Months
Ended
|
Six Months
Ended
|
Pro Forma
|
Pro Forma
|
|||||||||||||
|
May 31, 2010
|
June 30, 2010 *
|
Adjustments
|
Combined
|
|||||||||||||
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
||||||||||||||
|
Revenues
|
- | - | - | |||||||||||||
|
Operating
expenses:
|
||||||||||||||||
|
Selling
|
- | - | - | |||||||||||||
|
General
and
administrative
|
$ | 829,328 | $ | 15,372,879 | $ | 16,202,207 | ||||||||||
|
Total
operating
expenses
|
829,328 | 15,372,879 | 16,202,207 | |||||||||||||
|
Operating
loss
|
(829,328 | ) | (15,372,879 | ) | (16,202,207 | ) | ||||||||||
|
Other
(income) and
expense:
|
||||||||||||||||
|
Loss
on disposal of fixed
assets
|
- | - | - | |||||||||||||
|
Interest
expense
|
- | 19,014 | 19,014 | |||||||||||||
|
Extinguishment
of convertible
debt
|
- | - | - | |||||||||||||
|
Loss
from continuing
operations
|
(829,328 | ) | (15,391,893 | ) | (16,221,221 | ) | ||||||||||
|
Net
loss before income tax
benefit
|
$ | (829,328 | ) | $ | (15,391,893 | ) | $ | (16,221,221 | ) | |||||||
|
Income
tax
benefit
|
- | (17,411 | ) | (17,411 | ) | |||||||||||
| - | ||||||||||||||||
|
Net
loss
|
$ | (829,328 | ) | $ | (15,374,482 | ) | $ | (16,203,810 | ) | |||||||
|
Change
in cumulative foreign currency translation adjustment
|
- | (5,835 | ) | (5,835 | ) | |||||||||||
|
Comprehensive
loss
|
$ | (829,328 | ) | $ | (15,368,647 | ) | $ | (16,197,975 | ) | |||||||
|
Basic
and diluted loss per common
share
|
$ | (0.01 | ) | $ | (0.08 | ) | ||||||||||
|
Weighted
average common shares outstanding, basic and
diluted
|
101,510,869 | 110,606,239 | (1) | 212,117,108 | ||||||||||||
|
*
|
Six months ended June 30, 2010 was
used for this proforma, as it was not practical to obtain comparative nine
month balances ended September 30,
2010.
|
