HEADNOTE TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION
HEADNOTE TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION
On February 29, 2012, Integrated Management Information, Inc. (“IMI” or the “Company”) entered into a Purchase and Exchange Agreement (the “Purchase Agreement”), dated February 29, 2012 but effective as of the close of business on December 31, 2011, by and among IMI and International Certification Services, Inc. (ICS), and other shareholders as individually named in the Agreement (collectively the “Sellers”).
Pursuant to the Purchase Agreement, on February 29, 2012 (the “Closing”) the Company acquired 60% of the issued and outstanding common stock of ICS (the “Acquisition”) in exchange for aggregate consideration of $427,778, which includes $350,000 in cash and 172,840 shares (the “Shares”) of common stock of IMI valued at approximately $77,800 based upon the closing price of our common stock on February 29, 2012, of $0.45 per share.
A preliminary allocation of the purchase price has been made to major categories of assets and liabilities in the accompanying pro forma condensed consolidated financial statements. The actual allocation of the purchase price and the resulting effect on income from operations may differ from the pro forma amounts included herein. The pro forma adjustments represent the Company’s provisional allocation of acquisition accounting adjustments and are based upon available information and certain assumptions that the Company believes to be reasonable. Consequently, the amounts reflected in the unaudited pro forma condensed consolidated financial statements are subject to change, and the final amounts may differ substantially from the provisional amounts.
The accompanying pro forma condensed consolidated balance sheet as of December 31, 2011, gives effect to the acquisition as if it had been consummated on that date. The accompanying pro forma condensed consolidated statement of operations for the year ended December 31, 2011, gives effect to the acquisition as if it had been consummated at the beginning of the period presented.
The pro forma financial information should be read in conjunction with our historical consolidated financial statements used in the presentation of the pro forma financial information. THE PRO FORMA INFORMATION PRESENTED IS NOT NECESSARILY INDICATIVE OF THAT WHICH WOULD HAVE BEEN ATTAINED HAD THE TRANSACTION OCCURRED AT THE DATES INCLUDED IN THE PRO FORMA FINANCIAL INFORMATION.
Unaudited Pro Forma Condensed Consolidated Balance Sheet
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IMI
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ICS
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as of
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as of
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Pro Forma
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December 31,
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December 31,
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Pro Forma
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December 31,
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2011
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2011
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Adjustments
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Notes
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2011
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Assets
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(historical)
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(historical)
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Current assets:
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Cash and cash equivalents
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$ | 969,020 | $ | 13,506 | $ | (350,000 | ) |
(a)
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$ | 632,526 | |||||||
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Accounts receivable, net
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226,760 | 33,192 | - | 259,952 | |||||||||||||
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Investment in marketable securities
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283,511 | - | - | 283,511 | |||||||||||||
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Prepaid expenses and other current assets
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36,776 | 13,952 | - | 50,728 | |||||||||||||
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Deferred tax assets
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224,350 | 8,000 | - | 232,350 | |||||||||||||
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Total current assets
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1,740,417 | 68,650 | (350,000 | ) | 1,459,067 | ||||||||||||
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Property and equipment, net
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57,354 | 62,668 | - | 120,022 | |||||||||||||
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Deferred tax assets, noncurrent
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- | 13,349 | 13,349 | ||||||||||||||
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Intangible assets, net
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9,205 | - | 706,070 |
(c)
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715,275 | ||||||||||||
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Other assets
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- | 867 | - | 867 | |||||||||||||
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Total assets
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$ | 1,806,976 | $ | 145,534 | $ | 356,070 | $ | 2,308,580 | |||||||||
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Liabilities and Stockholders’ Equity
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Current liabilities:
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Accounts payable
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$ | 148,384 | $ | 9,461 | $ | - | $ | 157,845 | |||||||||
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Accrued expenses and other current liabilities
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42,960 | 16,213 | - | 59,173 | |||||||||||||
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Customer deposits
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- | 14,945 | - | 14,945 | |||||||||||||
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Deferred revenue
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- | 90,529 | 90,529 | ||||||||||||||
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Short-term debt and current portion of notes payable
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25,644 | - | - | 25,644 | |||||||||||||
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Current portion of capital lease obligations
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- | 5,947 | - | 5,947 | |||||||||||||
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Total current liabilities
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216,988 | 137,095 | - | 354,083 | |||||||||||||
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Capital lease obligations, net of current portion
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- | 1,546 | - | 1,546 | |||||||||||||
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Notes payable and other long-term debt
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176,201 | - | - | 176,201 | |||||||||||||
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Notes payable, related party
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250,000 | - | - | 250,000 | |||||||||||||
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Total liabilities
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643,189 | 138,641 | - | 781,830 | |||||||||||||
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Stockholders’ equity:
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Common stock
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21,049 | 116,766 | (116,766 | ) |
(b)
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21,222 | |||||||||||
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Common stock issued in acquisition
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- | - | 173 |
(a)
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- | ||||||||||||
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Additional paid-in-capital
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3,416,343 | - | 77,605 |
(a)
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3,493,948 | ||||||||||||
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Treasury stock
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(109,014 | ) | - | - | (109,014 | ) | |||||||||||
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Accumulated other comprehensive loss
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(6,693 | ) | - | - | (6,693 | ) | |||||||||||
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Accumulated deficit
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(2,157,898 | ) | (109,873 | ) | 109,873 |
(b)
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(2,157,898 | ) | |||||||||
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Total stockholders’ equity
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1,163,787 | 6,893 | 70,885 | 1,241,565 | |||||||||||||
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Non-controlling interest
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- | - | (285,185 | ) |
(d)
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(285,185 | ) | ||||||||||
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Total liabilities and stockholders’ equity
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$ | 1,806,976 | $ | 145,534 | $ | 356,070 | $ | 2,308,580 | |||||||||
See accompanying notes to unaudited pro forma condensed consolidated financial statements.
2
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Unaudited Pro Forma Condensed Consolidated Statement of Operations
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IMI
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ICS
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Pro Forma
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Year ended
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Year ended
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Year ended
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December 31,
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December 31,
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Pro Forma
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December 31,
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2011
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2011
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Adjustments
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Notes
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2011
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(historical)
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(historical)
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Revenues:
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Service revenues
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$ | 3,329,615 | $ | 1,163,565 | $ | - | $ | 4,493,180 | |||||||||
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Product sales
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843,098 | - | - | 843,098 | |||||||||||||
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Other revenue
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60,036 | - | - | 60,036 | |||||||||||||
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Total revenues
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4,232,749 | 1,163,565 | - | 5,396,314 | |||||||||||||
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Costs of revenues:
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Labor and other costs of services
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1,282,342 | 594,096 | - | 1,876,438 | |||||||||||||
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Costs of products
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602,049 | - | - | 602,049 | |||||||||||||
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Total costs of revenues
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1,884,391 | 594,096 | - | 2,478,487 | |||||||||||||
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Gross profit
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2,348,358 | 569,469 | - | 2,917,827 | |||||||||||||
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Selling, general and administrative expenses
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1,671,835 | 550,874 | 71,296 |
(e)
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2,294,005 | ||||||||||||
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Income from operations
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676,523 | 18,595 | (71,296 | ) | 623,822 | ||||||||||||
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Other expense (income):
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Interest expense
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29,539 | 1,224 | - | 30,763 | |||||||||||||
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Loss on sale of marketable securities
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13,597 | - | - | 13,597 | |||||||||||||
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Other income, net
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(6,715 | ) | (3,752 | ) | - | (10,467 | ) | ||||||||||
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Income before income taxes
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640,102 | 21,123 | (71,296 | ) | 589,929 | ||||||||||||
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Income tax expense (benefit)
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(224,350 | ) | 8,376 | - | (215,974 | ) | |||||||||||
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Net income
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864,452 | 12,747 | (71,296 | ) | 805,903 | ||||||||||||
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Adjustment to net income for non-controlling interest
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- | - | (5,099 | ) |
(d)
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(5,099 | ) | ||||||||||
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Net income attributable to IMI common shareholders
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$ | 864,452 | $ | 12,747 | $ | (76,395 | ) | $ | 800,804 | ||||||||
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Net income per share:
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Basic
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$ | 0.04 | $ | 0.04 | |||||||||||||
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Diluted
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$ | 0.04 | $ | 0.04 | |||||||||||||
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Weighted average number of common shares outstanding:
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Basic
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20,674,739 | 172,840 |
(f)
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20,847,579 | |||||||||||||
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Diluted
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21,008,549 | 172,840 |
(f)
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21,181,389 | |||||||||||||
See accompanying notes to unaudited pro forma condensed consolidated financial statements.
3