Pro-Forma Consolidated Financial Statements for Wireless Age Communications, Inc. and Wireless Age Communications, Ltd. (September 30, 2002)

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

This document presents unaudited pro-forma consolidated financial statements for Wireless Age Communications, Inc. and its acquisition of Wireless Age Communications, Ltd. The statements show the combined financial position and results as if the acquisition had occurred on September 30, 2002, and include adjustments to reflect the merger. The document outlines assets, liabilities, equity, and operational results, providing a hypothetical view of the companies' finances post-acquisition. These statements are for informational purposes and are not actual historical results.

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EX-10.2 3 a2110999zex-10_2.txt EXHIBIT 10.2 EXHIBIT 10.2 WIRELESS AGE COMMUNICATIONS, INC. PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS September 30, 2002 (Stated in US Dollars) (UNAUDITED) WIRELESS AGE COMMUNICATIONS, INC. PRO-FORMA CONSOLIDATED BALANCE SHEET September 30, 2002 (Stated in US Dollars) (UNAUDITED)
WIRELESS AGE WIRELESS AGE PRO-FORMA COMMUNICATIONS, COMMUNICATIONS PRO-FORMA CONSOLIDATED ASSETS INC. LTD. (NOTE 2) ADJUSTMENTS NOTES BALANCE SHEET - ------ --------------- ------------- ----------- ------------- Current Cash and cash equivalents $ 32,103 $ - $ - $ 32,103 Accounts receivable - 458,737 - 458,737 Inventories - 524,107 - 524,107 Prepaid and deposits - 15,436 - 15,426 Advance receivable 336 - - 336 Future income taxes - 20,680 - 20,680 --------------- -------------- ------------ ------------ 32,439 1,018,960 - 1,051,399 Capital assets - 364,062 - 364,062 Residual premiums - 61,735 2,264,837 (3) 2,326,572 Agency fee - 160,921 - 160,921 --------------- -------------- ------------ ------------ $ 32,439 $ 1,605,678 $ 2,264,837 $ 3,902,954 --------------- -------------- ------------ ------------ --------------- -------------- ------------ ------------ LIABILITIES - ----------- Current Bank indebtedness $ - $ 187,047 $ - $ 187,047 Accounts payable and accruals 4,749 594,311 - 599,060 Income taxes payable - 30,897 - 30,897 Customer deposits - 10,402 - 10,402 Current portion of long-term debt - 65,116 183,767 (3) 248,883 Due to related parties - 63,392 - 63,392 --------------- -------------- ------------ ------------ 4,749 951,165 201,750 1,157,664 Long-term debt - 87,307 476,271 (3) 563,578 Non-controlling interest - - 254,882 (3) 254,882 --------------- -------------- ------------ ------------ 4,749 1,038,472 914,920 1,958,141 --------------- -------------- ------------ ------------ SHAREHOLDERS' EQUITY - -------------------- Share capital 12,235 155,558 2,979 (3) (4) (155,558) (3) 15,214 Paid in capital 86,015 - 1,914,144 (3) (4) 2,000,159 Retained earnings (deficit) (70,560) 442,114 (442,114) (3) (70,560) Cumulative translation adjustment - (30,466) 30,466 (3) - --------------- -------------- ------------ ------------ 27,690 567,206 1,349,917 1,944,813 --------------- -------------- ------------ ------------ $ 32,439 $ 1,605,678 $ 2,264,837 $ 3,902,954 --------------- -------------- ------------ ------------ --------------- -------------- ------------ ------------
SEE ACCOMPANYING NOTES WIRELESS AGE COMMUNICATIONS, INC. PRO-FORMA CONSOLIDATED STATEMENT OF OPERATIONS for the nine months ended September 30, 2002 (Stated in US Dollars) (UNAUDITED)
PRO-FORMA WIRELESS AGE WIRELESS AGE CONSOLIDATED COMMUNICATIONS, COMMUNICATIONS PRO-FORMA STATEMENT INC. LTD. (NOTE 2) ADJUSTMENTS NOTES OF OPERATIONS --------------- ------------- ----------- ------ ------------- Sales $ - $ 4,171,866 $ - $ 4,171,866 Cost of goods sold - 2,252,051 - 2,252,051 --------------- -------------- ------------ ------------ Gross profit - 1,919,815 - 1,919,815 --------------- -------------- ------------ ------------ Selling and Administrative 21,386 1,659,369 - 1,680,755 Amortization - 169,066 339,726 (5d) 508,792 --------------- -------------- ------------ ------------ 21,386 1,828,435 339,726 2,189,547 --------------- -------------- ------------ ------------ Income (loss) before other items and taxes (21,386) 91,380 (339,726) (269,732) Interest expense - (13,219) (20,250) (5a) (33,469) Settlement - (32,500) - (32,500) Non-controlling interest - - (2,822) (5b) (2,822) --------------- -------------- ------------ ------------ Income (loss) before income taxes (21,386) 45,661 (362,798) (338,523) - Income tax provision - 14,300 (14,300) (5c) - --------------- -------------- ------------ ------------ Income (loss) for the period $ (21,386) $ 31,361 $ (348,498) $ (338,523) --------------- -------------- ------------ ------------ --------------- -------------- ------------ ------------ Pro-forma loss per share $ (0.03) ------------ ------------ Weighted average number of shares 10,123,994 ------------ ------------
SEE ACCOMPANYING NOTES WIRELESS AGE COMMUNICATIONS, INC. PRO-FORMA CONSOLIDATED STATEMENT OF OPERATIONS for the year ended December 31, 2001 (Stated in US Dollars) (UNAUDITED)
PRO-FORMA WIRELESS AGE WIRELESS AGE CONSOLIDATED COMMUNICATIONS, COMMUNICATIONS PRO-FORMA STATEMENT INC. LTD. (NOTE 2) ADJUSTMENTS NOTES OF OPERATIONS -------------- ------------- ----------- ----- ------------- Sales $ - $ 6,416,228 $ - $ 6,416,228 Cost of goods sold - 3,673,951 - 3,673,951 --------------- -------------- ------------ ------------ Gross profit - 2,742,277 - 2,742,277 --------------- -------------- ------------ ------------ Selling and Administrative 45,724 2,331,723 - 2,377,447 Amortization - 215,488 452,968 (5d) 668,456 --------------- -------------- ------------ ------------ 45,724 2,547,211 452,968 3,045,903 --------------- -------------- ------------ ------------ Income (loss) before other items and taxes (45,724) 195,066 (452,968) (303,626) Interest expense - (38,903) (15,750) (5a) (54,653) Gain on sale of capital assets - 795 - 795 Write-down on investment - (6,590) - (6,590) Interest income - 2,970 - 2,970 Non-controlling interest - - (12,972) (5b) (12,972) --------------- -------------- ------------ ------------ Income (loss) before income taxes (45,724) 153,338 (481,690) (374,076) Income tax provision - 11,204 (11,204) (5c) - --------------- -------------- ------------ ------------ Income (loss) for the period $ (45,724) $ 142,134 $ (470,486) $ (374,076) --------------- -------------- ------------ ------------ Pro-forma loss per share $ (0.05) ------------ ------------ Weighted average number of shares 7,979,104 ------------ ------------
SEE ACCOMPANYING NOTES WIRELESS AGE COMMUNICATIONS, INC. NOTES TO THE PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS September 30, 2002 (Stated in US Dollars) (UNAUDITED) Note 1 BASIS OF PRESENTATION The accompanying unaudited pro forma consolidated balance sheet and unaudited consolidated statements of operations give effect to the acquisition of Wireless Age Communications, Ltd. ("Wireless Canada") by Wireless Age Communications, Inc. ("Wireless") on October 8, 2002. The unaudited pro forma consolidated financial statements of Wireless included herein have been prepared by management of Wireless in accordance with the accounting principles generally accepted in the United States of America. They have been prepared from information derived from the September 30, 2002 (unaudited) and December 31, 2001 (audited) financial statements of Wireless and the September 30, 2002 (unaudited) and December 31, 2001 (audited) financial statements of Wireless Canada, together with other information available to the corporations. In the opinion of management of Wireless, these unaudited pro forma consolidated financial statements include all adjustments necessary for fair presentation of the acquisition of Wireless Canada by Wireless as described below. The unaudited pro forma consolidated financial statements should be read in conjunction with the historical financial statements and notes thereto of Wireless and Wireless Canada referred to above and included elsewhere in this 8-K. The Wireless unaudited pro forma consolidated balance sheet gives effect to the acquisition of Wireless Canada as if it had occurred on September 30, 2002. The unaudited pro forma consolidated statements of operations gives effect to the acquisition of Wireless Canada as if it had occurred at the start of the fiscal period beginning on January 1, 2001. These unaudited pro forma financial statements are not necessarily indicative of the financial position or results of operations, which would have resulted if the combination and related transactions had actually occurred on those dates. Note 2 WIRELESS AGE COMMUNICATIONS, LTD. Wireless Canada is a Canadian company. The financial statements of Wireless Canada were prepared in accordance with Canadian generally accepted accounting principles and disclose that they are not materially different in measurement from United States generally accepted accounting principles as they relate to those financial statements. The financial statements of Wireless Canada have been converted from Canadian dollars ("CDN") to United States dollars ("US") as follows: o Balance sheet amounts at the rate of exchange in effect at September 30, 2002 of one Canadian dollar equals $0.64627. o Revenues and expenses for the one-year period ended December 31, 2001 at the average rate of exchange in effect for the period of one Canadian dollar equals $0.65904 and for the nine-month period ended September 30, 2002, at the average rate of exchange in effect for the period of one Canadian Dollar equals $0.65001. WIRELESS AGE COMMUNICATIONS, INC. NOTES TO THE PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS September 30, 2002 (Stated in US Dollars) (Unaudited) - Page 2 Note 3 ACQUISITION OF WIRELESS CANADA Effective October 8, 2002, Wireless entered into agreements with certain shareholders to acquire 1,250,787 shares of Wireless Canada which represents approximately 91% of the issued and outstanding shares of Wireless Canada at the acquisition date. Of the acquired shares, 578,418 are held in a private company having no other assets or liabilities except those related to the shares held in Wireless Canada. Consideration for the acquisition will be the issue of 2,979,104 shares of Wireless to the vendors and the assumption of notes payable of $660,038 (CDN$325,000 and US$450,000). $210,038 (CDN$325,000) of the notes payable is interest free and is payable in 24 monthly instalments of $8,752 (CDN$13,542) starting November 1, 2002. The remaining note payable of $450,000 bears interest at 6% per annum and is payable in 36 monthly instalments starting March 1, 2003. The business combination will be accounted for using the purchase method. The fair value of the assets and liabilities acquired are as follows:
BOOK VALUE SEPTEMBER 30, FAIR VALUE FAIR VALUE 2002 ADJUSTMENTS ACQUIRED --------------- ------------- -------------- Current assets $ 1,018,960 $ - $ 1,018,960 Capital assets 364,062 - 364,062 Residual premiums 61,735 2,264,837 2,326,572 Agency fee 160,921 - 160,921 Liabilities ( 1,038,472) - ( 1,038,472) --------------- ------------- -------------- Net values $ 567,206 $ 2,264,837 2,832,043 --------------- ------------- --------------- ------------- Non-controlling interest - 9% (254,882) -------------- Fair value of 91% interest acquired $ 2,577,161 -------------- -------------- Consideration paid Current portion of long-term debt $ 183,767 Long-term debt 476,271 Shares issued 1,917,123 $ 2,577,161 --------------
Except for residual premiums, the carrying values of the assets and liabilities of Wireless Canada as presented in the September 30, 2002 historical financial statements approximate their fair values. The fair value of the residual premium was determined by management based on a comparison of a multiple of historical average net income compared to annual revenue per subscriber. WIRELESS AGE COMMUNICATIONS, INC. NOTES TO THE PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS September 30, 2002 (Stated in US Dollars) (Unaudited) - Page 3 Note 4 SHARE CAPITAL
COMMON SHARES ADDITIONAL ---------------------------- PAID-IN NUMBER PAR VALUE CAPITAL DEFICIT TOTAL ------------- -------------- ------------ ------------ ------------ Balance, September 30, 2002 12,325,000 $ 12,235 $ 86,015 $ (70,560) $ 27,690 Capital stock issued to acquire subsidiary 2,979,105 2,979 1,914,144 - 1,917,123 ------------- -------------- ------------ ------------ ------------ Pro forma, September 30, 2002 15,304,105 $ 15,214 $2,000,159 $ (70,560) $ 1,944,813 ------------- -------------- ------------ ------------ ------------ ------------- -------------- ------------ ------------ ------------
Note 5 PRO FORMA ADJUSTMENTS The unaudited pro forma consolidated statements of operations include the following pro forma adjustments. a) Notes payable The note payable of $450,000 bears interest at 6% per annum with payments commencing March 1, 2003. For purposes of the pro forma presentation, interest expense of $20,250 and $15,750 has been recorded on the pro forma statements of operations for the year ended December 31, 2001 and the nine months ended September 30, 2002 respectively. b) Non-controlling Interest A provision has been provided in the pro forma statements of operations for the non-controlling interest's share of the earnings of Wireless Canada. c) Income Tax Provision The pro forma income tax provision has been provided on the assumption that the maximum valuation allowance is provided on future income tax assets and liabilities. As a result, no tax provision (recovery) is provided on the pro forma loss for the period. d) Amortization Residual premiums are being amortized over five years on a straight-line basis. For purposes of the pro forma statement of operations, additional amortization expense has been provided on the excess of the fair value of the residual premiums over their book values. Note 6 PRO-FORMA LOSS PER SHARE Pro-forma loss per share has been calculated using the historical weighted average number of shares previously reported and amended as if the pro-forma common shares of Wireless issued pursuant to the acquisition have been outstanding since the beginning of the periods.