Unaudited Pro Forma Combined Financial Statements for Merger of Electronic Sensor Technology, LP and Bluestone Ventures, Inc.

Contract Categories: Mergers & Acquisitions › Plan of Reorganization Agreements
Summary

This document presents unaudited pro forma combined financial statements reflecting the merger of Electronic Sensor Technology, LP (EST) and Bluestone Ventures, Inc. The statements illustrate how the companies’ financials would appear if the merger had occurred on January 1, 2004, with EST treated as the continuing entity. The document outlines the combined balance sheet and statements of operations, including key adjustments for the merger, but does not represent actual or future results. It is intended for informational purposes and should be read alongside Bluestone’s SEC filings.

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EX-10.4 3 v016562_ex10-4.txt UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS The following Unaudited Pro Forma Combined Financial Statements of Electronic Sensor Technology, LP ("EST") and Bluestone Ventures, Inc. ("Bluestone") give effect to the merger between EST and Bluestone under the purchase method of accounting prescribed by Financial Accounting Standards Board 141, Business Combinations. The acquisition of Bluestone by EST has been accounted for as a reverse acquisition under the purchase method for business combinations. The combination of the two companies is recorded as a recapitalization of Bluestone pursuant to which EST is treated as the continuing entity. These pro forma combined financial statements are presented for illustrative purposes only. The pro forma adjustments are based upon available information and assumptions that management believes are reasonable. The Unaudited Pro Forma Combined Financial Statements do not purport to represent what the results of operations or financial position of EST would actually have been if the merger had in fact occurred on January 1, 2004, nor do they purport to project the results of operations or financial position of EST for any future period or as of any date, respectively. These Unaudited Pro Forma Combined Financial Statements do not give effect to any restructuring costs or to any potential cost savings or other operating efficiencies that could result from the merger between EST and Bluestone. The financial statements of Bluestone for the year ended December 31, 2004, are derived from audited financial statements and are included in the Form 10-K as filed by Bluestone on April 15, 2005, with the Securities and Exchange Commission. You should read the financial information in this section along with Bluestone's Financial Statements and accompanying notes in prior Securities and Exchange Commission filings. P-1 Electronic Sensor Technology, Inc. Unaudited Pro Forma Combined Balance Sheet December 31, 2004
Pro forma adjustments Electronic Sensor Bluestone -------------------------------- Technology, LP Ventures, Inc. DR CR Pro forma ------------ ------------- -------------- --------------- ----------- (Unaudited) (Unaudited) (Unaudited) CURRENT ASSETS: Cash $ 26,205 $ 225 3,985,000 (4) $ 4,011,430 Accounts receivable 30,687 -- 30,687 Prepaid expenses 14,257 -- 14,257 Deferred transaction costs 21,398 21,398(1) -- Inventories 480,648 -- 480,648 ------------ ------------- ----------- TOTAL CURRENT ASSETS 551,797 21,623 4,537,022 PROPERTY AND EQUIPMENT 51,199 -- 51,199 SECURITY DEPOSITS 12,957 -- 12,957 ------------ ------------- ----------- $ 615,953 $ 21,623 $ 4,601,178 ============ ============= =========== CURRENT LIABILITIES: Line of credit $ 1,969,137 $ -- $ 1,969,137 Accounts payable and accrued expenses 212,802 47,898 260,700 Note payable-- related parties 1,272,000 -- 1,272,000 (2) -- Due to related party 60,000 14,815 74,815 Partners' loans payable 1,308,630 -- 1,198,630 (2) 110,000 Interest payable 333,455 -- 313,112 (2) 20,343 Accrued compensation due to partners' 934,957 -- 934,957 (3) -- Other current liabilities 35,665 -- 35,665 ------------ ------------- ----------- TOTAL CURRENT LIABILITIES 6,126,646 62,713 2,470,660 ------------ ------------- ----------- -- -- -- -- PARTNERS' / STOCKHOLDERS' DEFICIT (EQUITY): Preferred stock, $.001 par value 50,000,000 shares authorized non issued and outstanding -- -- -- Common stock, $.001 par value, 200,000,000 -- 81,279 54,279 (6) 2,784(2) 53,969 shares authorized, 81,127,147 issued and outstanding, 3,985(4) and 53,968,643 issued and outstanding -- pro forma 20,200(5) Additional paid-in capital -- 61,071 21,398 (1) 934,957(3) 7,587,242 20,200 (5) 2,780,958(2) 3,981,015(4) 54,279(6) 237,440 (7) 54,000(8) Donated Capital -- 54,000 54,000 (8) -- Accumulated deficit (5,510,693) (237,440) 237,440(7) (5,510,693) ------------ ------------- ----------- TOTAL STOCKHOLDERS' DEFICIT (EQUITY) (5,510,693) (41,090) 2,130,518 ------------ ------------- ----------- $ 615,953 $ 21,623 $ 4,601,178 ============ ============= ===========
See Note 2 of Pro Forma Combined Financial Statements regarding footnotes. P-2 Electronic Sensor Technology, Inc. Unaudited Pro Forma Combined Statements of Operations December 31, 2004
Pro forma adjustments Electronic Sensor Bluestone -------------------------------- Technology, LP Ventures, Inc. DR CR Pro forma ------------ ------------- -------------- --------------- ----------- (Unaudited) (Unaudited) (Unaudited) REVENUES $ 1,268,416 $ -- $ 1,268,416 COST OF SALES 1,039,280 -- 1,039,280 ------------ ------------- ----------- GROSS PROFIT 229,136 -- 229,136 COSTS AND EXPENSES: Compensation 81,734 -- 81,734 Selling 161,546 -- 161,546 General and administrative 282,305 88,877 72,901(8) 298,281 ------------ ------------- ----------- Total Expense 549,033 88,877 565,009 LOSS FROM OPERATIONS (296,449) (88,877) (312,425) OTHER INCOME AND EXPENSE Other income 57,076 -- 57,076 Gain (loss) on sale of property and equipment (7,710) -- (7,710) Gain on settlement of debt -- 16,317 16,317(8) -- Interest expense (164,133) -- (164,133) ------------ ------------- ----------- TOTAL OTHER INCOME AND EXPENSE (114,767) 16,317 (114,767) NET LOSS $ (411,216) $ (72,560) $ (427,192) ============ ============= =========== LOSS PER SHARE-- BASIC AND DILUTED $ -- $ (0.00) $ (0.01) ============ ============= =========== WEIGHTED AVERAGE NUMBER OF SHARES USED IN CALCULATION OF BASIC AND DILUTED LOSS PER SHARE -- 53,968,643 53,968,643 ============ ============= ===========
See Note 2 of Pro Forma Combined Financial Statements regarding footnotes. P-3 Electronic Sensor Technology, Inc. Unaudited Pro Forma Combined Statements of Operations December 31, 2003
Pro forma adjustments Electronic Sensor Bluestone -------------------------------- Technology, LP Ventures, Inc. DR CR Pro forma ------------ ------------- -------------- --------------- ----------- (Unaudited) (Unaudited) (Unaudited) REVENUES $ 1,242,296 $ -- $ 1,242,296 COST OF SALES 1,143,350 -- 1,143,350 ------------ ------------- ----------- GROSS PROFIT 98,946 -- 98,946 COSTS AND EXPENSES: Compensation 80,601 -- 80,601 Selling 114,124 -- 114,124 General and administrative 219,646 63,277 61,722(8) 221,201 ------------ ------------- ----------- Total Expense 414,371 63,277 415,926 LOSS FROM OPERATIONS (315,425) (63,277) (316,980) OTHER INCOME AND EXPENSE Other income 264 -- 264 Gain (loss) on sale of property and equipment 1,182 -- 1,182 Interest expense (80,418) -- (80,418) ------------ ------------- ----------- TOTAL OTHER INCOME AND EXPENSE (78,972) -- (78,972) NET LOSS $ (394,397) $ (63,277) $ (395,952) ============ ============= =========== LOSS PER SHARE-- BASIC AND DILUTED $ -- $ (0.00) $ (0.01) ============ ============= =========== WEIGHTED AVERAGE NUMBER OF SHARES USED IN CALCULATION OF BASIC AND DILUTED LOSS PER SHARE -- 53,968,643 53,968,643 ============ ============= ===========
See Note 2 of Pro Forma Combined Financial Statements regarding footnotes. P-4 ELECTRONIC SENSOR TECHNOLOGY, INC. Notes to Pro Forma Combined Financial Statements (Unaudited) NOTE 1 - BASIS OF PRESENTATION The accompanying pro forma condensed combined financial statements present the combined financial position and results of operations of Electronic Sensor Technology, LP, a California limited partnership ("EST"), and Bluestone Ventures, Inc., a Nevada corporation (now known as Electronic Sensor Technology, Inc.) ("Bluestone"). NOTE 2 - PRO FORMA ENTRIES The pro forma condensed combined financial statements give effect to the following adjustments: (1) To record deferred transaction costs against additional paid-in capital. (2) To record conversion of EST debt into Bluestone common shares and warrants to purchase Bluestone shares. (3) To record contribution of accrued compensation as additional paid-in capital. (4) To record 3,985,000 Bluestone common shares sold for $3,985,000 in private placement financing on February 1, 2005. (5) To record issuance of 20,200,000 Bluestone common shares in connection with acquisition of all limited partnership interests of ELP. (6) To record cancellation of 54,279,147 Bluestone common shares held by directors. (7) To record reverse acquisition of Bluestone by EST. (8) To eliminate Bluestone activity except for expenses associated with being a publicly-traded corporation. P-5