SPYR, Inc., and Subsidiaries Unaudited Pro Forma Consolidated Financial Information
SPYR, Inc., and Subsidiaries
Unaudited Pro Forma Consolidated Financial Information
On December 31, 2015, SPYR, Inc. (“SPYR”) entered into an agreement to unwind and dispose of its wholly owned subsidiary Franklin Networks, Inc. (“FNI”). Pursuant to the agreement, the Company agreed to return to 100% of the shares of FNI to its former owners, along with its intangible assets including website properties and goodwill related to: xxxxxx.xxx, xxxxxxxxxx.xxx, xxxxxxxx.xxx, xxxxxx.xxx, xxxxxxxxxxxx.xxx, xxxxxxxxx.xxx, xxxxx.xxx, xxxxxxxxxxxx.xxx, and xxxxxxxxxxx.xxx. FNI and its former owners agreed to return to SPYR all two million five hundred thousand shares of restricted SPYR common stock issued to them in the initial exchange transaction with FNI.
The following unaudited pro forma consolidated statement of operations of SPYR for the nine months ended September 30, 2015 is presented as if the disposition had occurred as of January 1, 2015. The following unaudited pro forma consolidated balance sheet as of September 30, 2015 assumes that the disposition occurred on September 30, 2015.
The statements are presented based on information currently available, are intended for informational purposes only, and do not purport to represent what SPYR’s financial position and results of operations actually would have been had the disposition occurred on the dates indicated, or to project SPYR’s financial performance for any future period.
The unaudited pro forma consolidated financial statements and the accompanying notes should be read in conjunction with the audited consolidated financial statements and accompanying notes and “Management's Discussion and Analysis of Financial Condition and Results of Operations” included in SPYR’s Form 10-K for the fiscal year ended December 31, 2014 and the unaudited condensed consolidated financial statements and accompanying notes and “Management's Discussion and Analysis of Financial Condition and Results of Operations” included in SPYR’s Form 10-Q for the quarterly period ended September 30, 2015.
The “As Reported” column in the “Unaudited Pro Forma Consolidated Statement of Operations” and in the “Unaudited Pro Forma Consolidated Balance Sheet” reflect SPYR’s historical financial statements for the periods presented and does not reflect any adjustments related to the disposition and related events.
The information in the “Disposal of Franklin Networks, Inc.” column in the “Unaudited Pro Forma Consolidated Statement of Operations” and the “Unaudited Pro Forma Consolidated Balance Sheet” were derived from SPYR Inc.’s Form 10-Q for the nine months ended September 30, 2015.
The “Other Adjustments” column in the “Unaudited Pro Forma Consolidated Statements” reflects pro forma adjustments which are further described in the accompanying notes.
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| SPYR, INC., AND SUBSIDIARIES | ||||||||||
| UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS | ||||||||||
| FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015 | ||||||||||
| Disposal of | Other | |||||||||
| As Reported | Franklin Networks, Inc. | Adjustments | Notes | Pro Forma Operations | ||||||
| Revenues | $ 1,610,188 | (386,513) | - | $ 1,223,675 | ||||||
| Cost of sales | 358,248 | - | - | 358,248 | ||||||
| Gross Margin | 1,251,940 | (386,513) | - | 865,427 | ||||||
| Expenses | ||||||||||
| Labor and related expenses | 1,561,948 | (238,681) | 75,361 | (a) | 1,398,628 | |||||
| Depreciation and amortization | 108,235 | (41,423) | 447 | (a) | 67,259 | |||||
| Professional fees | 2,328,275 | (39,878) | - | 2,288,397 | ||||||
| Other general and administrative | 1,501,155 | (669,840) | - | 831,315 | ||||||
| Total Operating Expenses | 5,499,613 | (989,822) | 75,808 | 4,585,599 | ||||||
| Operating Loss | (4,247,673) | 603,309 | (75,808) | (3,720,172) | ||||||
| Other Income (Expense) | ||||||||||
| Interest and dividend income | 16,699 | - | - | 16,699 | ||||||
| Change in unrealized gain (loss) on trading securities | (1,314,931) | - | - | (1,314,931) | ||||||
| Gain (loss) on sale of marketable securities | (971,257) | - | - | (971,257) | ||||||
| Total Other Income (Expense) | (2,269,489) | - | - | (2,269,489) | ||||||
| Income (Loss) Before Income Taxes | (6,517,162) | 603,309 | (75,808) | (5,989,661) | ||||||
| Provision for income taxes | - | - | - | - | ||||||
| Net Income (Loss) | (6,517,162) | 603,309 | (75,808) | (5,989,661) | ||||||
| Earnings (Loss) Per Share: | ||||||||||
| Basic | $ (0.04) | $ (0.04) | ||||||||
| Diluted | $ (0.04) | $ (0.04) | ||||||||
| Weighted Average Common Shares | ||||||||||
| Basic | 151,840,448 | 149,340,448 | ||||||||
| Diluted | 151,840,448 | 149,340,448 | ||||||||
| See accompanying notes. | ||||||||||
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| SPYR, INC., AND SUBSIDIARIES | ||||||||||
| UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET | ||||||||||
| AS OF SEPTEMBER 30, 2015 | ||||||||||
| Disposal of | Other | |||||||||
| As Reported | Franklin Networks, Inc. | Adjustments | Notes | Pro Forma Balance | ||||||
| ASSETS | ||||||||||
| Current Assets: | ||||||||||
| Cash and cash equivalents | $ 7,256,437 | (14,976) | 14,976 | (b) | $ 7,256,437 | |||||
| Accounts receivable | 53,662 | (46,777) | 46,777 | (b) | 53,662 | |||||
| Inventory | 11,085 | - | - | 11,085 | ||||||
| Prepaid expenses and other current assets | 61,472 | (100) | - | 61,372 | ||||||
| Trading securities, at market value | 1,163,925 | - | - | 1,163,925 | ||||||
| Total Current Assets | 8,546,581 | (61,853) | 61,753 | 8,546,481 | ||||||
| Property and equipment, net | 251,986 | (6,715) | 6,715 | (b) | 251,986 | |||||
| Goodwill and other intangible assets, net | 1,801,967 | (1,776,765) | - | 25,202 | ||||||
| Other assets | 22,299 | - | - | 22,299 | ||||||
| TOTAL ASSETS | $ 10,622,833 | $ (1,845,333) | $ 68,468 | $ 8,845,968 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
| LIABILITIES | ||||||||||
| Current Liabilities: | ||||||||||
| Accounts payable and accrued liabilities | 157,252 | - | - | 157,252 | ||||||
| Related party accounts payable | 7,606 | (7,606) | - | 0 | ||||||
| Total Current Liabilities | 164,858 | (7,606) | - | 157,252 | ||||||
| Deferred tax liability – non-current | 117,741 | (117,741) | - | 0 | ||||||
| Total Liabilities | 282,599 | (125,347) | - | 157,252 | ||||||
| STOCKHOLDERS’ EQUITY | ||||||||||
| Total Stockholders’ Equity | 10,340,234 | (1,719,986) | 68,468 | (b) | 8,688,716 | |||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ 10,622,833 | $ (1,845,333) | $ 68,468 | $ 8,845,968 | ||||||
| See accompanying notes. | ||||||||||
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SPYR, Inc., and Subsidiaries
Notes to Unaudited Pro Forma Consolidated Financial Information
Note 1. Other Pro Forma Adjustments
(a) Reflects the adjustments for salaries continuing after the agreement and depreciation expense on office equipment which was not disposed of pursuant to the agreement.
(b) Reflects that adjustment for cash, accounts receivable and office equipment which was not disposed of pursuant to the agreement.
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