8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

(Amendment No. 1)

Current Report

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 13, 2012

VIPER POWERSPORTS INC.

(Exact name of Registrant as specified in its charter)

Nevada	000-51632	41-1200215
(State or other jurisdiction of incorporation or organization)	(Commission File No)	(IRS Employer Identification No.)

2458 West Tech Lane, Auburn, AL	36832
(Address of principal executive offices)	(Zip Code)

(334) 887-4445

(Registrant’s telephone number)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨  Written communications pursuant to Rule 425 under the Securities Act (17 CER 230.425)

¨  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.l4a-12)

¨  Pre-commencement communications pursuant to Rule 1 4d-2(b) under the Exchange Act (17 CFR 240. 14d-2(b))

¨  Pre-commencement communications pursuant to Rule 1 3e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Explanatory Note

On April 24, 2012, Viper Powersports, Inc. (the “Company”) filed a Current Report on Form 8-K with the Security and Exchange Commission (the “Original 8-K”). This amendment on Form 8-K/A amends and restates items 9.01 appearing in the Original 8-K in its entirety. Except as so specifically amended and restated, the Original 8/K shall not be deemed to have been modified by the filing of this amendment on Form 8-K/A.

Item 9.01 Financial Statements and Exhibits

(a) Financial Statements of Business Acquired.

The financial statements of Precision Metal Fab Racing, including Precision Metal Fab Racing's balance sheets as of December 31, 2010 and 2011 and statements of operations, and owner’s capital and cash flows for the years ended December 31, 2010 and 2011, and the interim financial statements of Precision Metal Fab Racing, including Precision Metal Fab Racing's balance sheet as of March 31, 2012, statements of operations and cash flows for the three months ended March 31, 2012, and unaudited statement of owner’s capital for the three months ended March 31, 2012, and the notes related thereto, are being filed as Exhibit 99.1 to this Form 8-K/A.

(b) Pro Forma Financial Information.

The unaudited pro forma condensed consolidated financial information that gives effect to the acquisition of Precision Metal Fab Racing, including the unaudited pro forma condensed consolidated balance sheet as of March 31, 2012 and the unaudited pro form condensed consolidated statement of operations for the three months ended March 31, 2012 and the year ended December 31, 2011, and the notes related thereto, are being filed as Exhibit 99.2 to this Form 8-K/A.

(d) Exhibits.

Exhibit 99.1	Financial statements of Precision Metal Fab Racing as of and for the years ended December 31, 2010 and 2011 and financial statements of Precision Metal Fab Racing as of March 31, 2012 and for the three months ended March 31, 2012
Exhibit 99.2	Unaudited pro forma condensed consolidated financial statements as of and for the year ended March 31, 2012

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SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. 

Dated: August 13, 2012	Viper Powersports Inc.
	By:	/s/ Timothy Kling
		Timothy Kling Chief Financial Officer

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EXHIBIT INDEX

(d) Exhibits.

Exhibit 99.1	Financial statements of Precision Metal Fab Racing as of and for the years ended December 31, 2010 and 2011 and financial statements of Precision Metal Fab Racing as of March 31, 2012 and for the three months ended March 31, 2011 and 2012
Exhibit 99.2	Unaudited pro forma condensed consolidated financial statements as of and for the year ended March 31, 2012

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EX-99.1

EXHIBIT 99.1

Precision Metal Fab Racing

Financial Statements

As of March 31, 2012, December 31, 2011 and 2010

PRECISION METAL FAB RACING

INDEX TO FINANCIAL STATEMENTS

	PAGE
Independent Auditor’s Report	2
Balance Sheets – March 31, 2012, December 31, 2011 and 2010	3
Statements of Operations – For the Three Months Ended March 31, 2012 and for the Years Ended
December 31, 2011 and 2010	4
Statements of Owner’s Capital – For the Three Months Ended March 31, 2012 and
For the Years Ended December 31, 2011 and 2010	5
Statements of Cash Flows – For the Three Months Ended March 31, 2012 and
For the Years Ended December 31, 2011 and 2010	6
Notes to Financial Statements	7

1

INDEPENDENT AUDITOR’S REPORT

Owners

Precision Metal Fab Racing

Minneapolis, Minnesota

We were engaged to audit the accompanying balance sheets of Precision Metal Fab Racing as of December 31, 2011 and 2010, and the related statements of operations, owner’s capital, and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management.

The Company did not take a physical inventory of merchandise at December 31, 2011 or 2010, which is stated at $144,000 and $188,000, respectively, in the accompanying financial statements. The Company’s records do not permit the application of other auditing procedures to inventories.

Also, the Company’s inventories and cost of goods sold are accounted for on a cash basis, which should be recorded on an accrual basis in order to conform with accounting principles generally accepted in the United States of America.

Since the Company did not take a physical inventory and we were unable to apply other auditing procedures to satisfy ourselves as to inventory quantities, and the Company did not properly account for inventories and costs of goods sold, the scope of our work was not sufficient to enable us to express, and we do not express, an opinion on these financial statements.

We were also engaged to review the March 31, 2012 financial statements, but the scope of our work was not sufficient to complete the review for the same reasons as listed above.

/s/ Hein & Associates LLP

Denver, Colorado

August 13, 2012

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PRECISION METAL FAB RACING

BALANCE SHEETS

	March 31,		December 31,
	2012		2011		2010
ASSETS
Current Assets:
Cash and cash equivalents	$	95,840	$	60,123	$	29,803
Accounts receivable		7,610		7,610		6,862
Inventories		149,380		144,000		188,000
Total current assets		252,830		211,733		224,665
Property and Equipment, net		44,435		49,815		61,091
Total Assets	$	297,265	$	261,548	$	285,756
LIABILITIES AND OWNER’S CAPITAL
Current Liabilities:
Accounts payable	$	2,654	$	7,134	$	9,250
Accrued expenses		121		801		1,776
Total current liabilities		2,775		7,935		11,026
Owner’s Capital		294,490		253,613		274,730
Total Liabilities and Owner’s Capital	$	297,265	$	261,548	$	285,756

See accompanying notes to these financial statements.

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PRECISION METAL FAB RACING

STATEMENTS OF OPERATIONS

	For the Three Months Ended March 31,		December 31,
	2012		2011		2010
Net Sales	$	195,978	$	667,098	$	584,337
Costs and Expenses:
Cost of products sold		138,650		569,580		497,842
Selling, general and administrative		9,233		50,512		51,761
Depreciation and amortization		5,380		21,518		21,841
Total costs and expenses		153,263		641,610		571,444
Net Income (Loss)	$	42,715	$	25,488	$	12,893

See accompanying notes to these financial statements.

4

PRECISION METAL FAB RACING

STATEMENTS OF OWNER’S CAPITAL

FOR THE THREE MONTHS ENDED MARCH 31, 2012
AND FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

Balance at January 1, 2010	$	308,636
Net income		12,893
Distributions		(46,799	)
Balance at December 31, 2010		274,730
Net income		25,488
Distributions		(46,605	)
Balance at December 31, 2011		253,613
Net income		42,715
Distributions		(1,838	)
Balance at March 31, 2012	$	294,490

See accompanying notes to these financial statements.

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PRECISION METAL FAB RACING

STATEMENTS OF CASH FLOWS

	For the Three Months Ended March 31,			December 31,
	2012			2011			2010
Cash Flows from Operating Activities:
Net income	$	42,715		$	25,488		$	12,893
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation and amortization		5,380			21,518			21,841
Changes in operating assets and liabilities:
Accounts receivable		0			(748	)		14,422
Inventories		(5,380	)		44,000			4,500
Accounts payable		(4,480	)		(2,116	)		2,014
Accrued liabilities		(680	)		(975	)		572
Net cash provided by (used in) operating activities		37,555			87,167			56,242
Cash Flows from Investing Activities:
Purchases of property and equipment, net		0			(10,242	)		(7,027	)
Net cash provided by (used in) investing activities		0			(10,242	)		(7,027	)
Cash Flows from Financing Activities:
Distributions paid		(1,838	)		(46,605	)		(46,799	)
Net cash provided by (used in) financing activities		(1,838	)		(46,605	)		(46,799	)
Increase (Decrease) in Cash and Cash Equivalents		35,717			30,320			2,416
Cash and Cash Equivalents, beginning of year		60,123			29,803			27,387
Cash and Cash Equivalents, end of year	$	95,840		$	60,123		$	29,803

See accompanying notes to these financial statements.

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1. Organization and Significant Accounting Policies

Organization and Business – Precision Metal Fab Racing (the “Company” or PMFR) (a business-owned by a sole proprietor) is an experienced manufacturer and marketer of high performance racing and custom motorcycle components and accessories. The Company was started in 1978, and is based in Shakopee, Minnesota and markets its products directly through its proprietary catalogs, website and certain distributors.

Basis of Presentation – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenue and expense during the reporting period. Despite management’s best effort to establish good faith estimates and assumptions; actual results may differ from these estimates.

The balance sheet as of March 31, 2012, the statement of operations, owner’s capital, and cash flows for the months ended March 31, 2012 have been prepared by the Company without audit. In the opinion of management, all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position, as of March 31, 2012 and results of operations, owner’s capital, and cash flows for the three months ended March 31, 2012 have been made.

Revenue Recognition – Revenue is recognized when risk and title on products passes to the customer. Generally, both risk and title pass to the customers at date of shipment via common carrier. There is no right of return for customers, other than for defective products.

Revenue includes shipping and handling fees of $11,150 for the three months ended March 31, 2012 and $40,420 and $33,365 for the years ended 2011 and 2010, respectively.

Cash and Cash Equivalents – The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. The Company periodically maintains cash balances at commercial banks in excess of insured limits.

Accounts Receivable and Allowance for Doubtful Accounts – The Company’s headquarters are located in Minnesota and its customers are geographically disbursed throughout the United States. All amounts are due in 30 days and no interest is charged on account balances. The Company reviews all receivable balances for risk of loss, and as of March 31, 2012 and December 31, 2011 and 2010, there were no allowance for doubtful accounts.

Inventories –Inventories, consisting of raw materials and finished products, are stated at the lower of cost (first-in, first-out method) or market and are recorded under the cash basis method. Cost of finished products includes materials and contracted conversion costs. The Company records provisions for slow-moving inventory to the extent the cost of inventory exceeds estimated net realizable value.

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Property and Equipment – Property and equipment are stated at cost. Depreciation is provided over the estimated useful lives of the assets ranging from three to seven years using an accelerated method of depreciation. The cost of normal maintenance and repairs is charged to operating expenses as incurred. Material expenditures which increase the life of an asset are capitalized and depreciated over the estimated remaining useful life of the asset. Upon disposing of assets, the related cost and accumulated depreciation are removed from the books and the resulting gain or loss, if any, is recognized in the year of the disposition.

Income Taxes – The Company files its tax returns in the United States and Minnesota. As a sole proprietor, the Company will not be required to pay federal income taxes applicable to federal taxable income. Income and losses after that date will be included in the personal income tax returns of the stockholders and taxed depending on their personal tax strategies.

The Company has not recorded any liabilities as of December 31, 2011 related to its assessment of uncertain tax positions. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2011, the Company made no provision for interest or penalties related to uncertain tax returns in the U.S. federal jurisdiction and various states. There are currently no federal or state income tax examinations underway for these jurisdictions.

Impairment of Long-Lived Assets – Impairment losses are recorded on long-lived assets used in operations when impairment indicators are present and the undiscounted cash flows estimated to be generated by those assets are less than the asset’s carrying amount. When impairment is indicated, a loss is recognized for the excess of the carrying values over the fair values. The Company has not recorded any impairment or long-lived assets.

Fair Value of Financial Instruments – The carrying value of cash and cash equivalents, trade accounts receivable and payable, and accrued liabilities and expenses are considered to approximate fair value due to the short-term nature of these instruments.

2. INVENTORIES

Inventories consist of the following:

		March 31,		December 31,
		2012		2011		2010
Raw materials	$	0	$	0	$	0
Finished goods		149,380		144,000		188,000
	$	149,380	$	144,000	$	188,000

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3. PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost and are comprised of the following:

	March 31,			December 31,
	2012			2011			2010
Shop office equipment	$	466,589		$	466,589		$	456,349
Equipment		24,422			24,422			24,422
		491,011			491,011			480,771
Less accumulated depreciation		(446,576	)		(441,196	)		(419,680	)
	$	44,435		$	49,815		$	61,091

Depreciation and amortization expense for the years ended December 31, 2011 and 2010 was $21,518 and $21,841, respectively, and $5,380 for the period ended March 31, 2012.

4. CONTINGENCIES AND COMMITMENTS

Operating Leases – The Company has a warehouse lease. The lease expired on April 30, 2012. The current rent payment is based on a monthly rental fee.

Rent expense was $33,000 for the years ended December 31, 2011 and 2010, respectively, and $8,250 for the period ended March 31, 2012.

Concentrations of Credit Risk – Credit risk represents the accounting loss that would be recognized at the reporting date if counterparties failed completely to perform as contracted. Concentrations of credit risk, whether on or off balance sheet, that arise from financial instruments, exist for groups of customers or counterparties when they have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions.

5. SUBSEQUENT EVENTS

On April 24, 2012 the Company sold all its assets to PMFR Inc., a wholly owned subsidiary of Viper Powersports Inc. (VPWI) for $640,000 in cash. The Company will continue to be based at its current facility and the former owner has agreed to remain with PMFR, Inc. and remain in charge of product marketing and operations. VPWI issued approximately $48,000 of its shares as a condition of an employment contract.

Subsequent events have been evaluated through August 13, 2012, the date the financial statements were available to be issued.

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EX-99.2

EXHIBIT 99.2

INTRODUCTION TO UNAUDITED PRO FORMA
FINANCIAL STATEMENTS

The Unaudited Pro Forma Consolidated Balance Sheet combines the historical consolidated balance sheet of Viper Powersports Inc. (Viper) as of March 31, 2012 and the historical balance sheet of Precision Metal Fab Racing (PMFR) as of March 31, 2012, giving effect to the acquisition as if it had occurred January 1, 2012.  The Unaudited Pro Forma Statement of Operations for year ended December 31, 2011 combines the historical statement of operations of Viper and PMFR for the year ended December 31, 2011 as if the merger had occurred on January 1, 2011.  No pro forma effects have been given to any operational or other synergies that may be realized from the acquisitions.

The unaudited pro forma financial information is based on the estimates and assumptions described in the notes to the unaudited pro forma consolidated financial statements.  The unaudited pro forma financial information has been prepared using the purchase method of accounting in which the total cost of the PMFR acquisition are allocated to the tangible and intangible assets acquired based on their estimated fair values at the date of the acquisition.  This allocation has been done on a preliminary basis and is subject to change pending final determination of fair values for the acquired assets and assumed liabilities and a final analysis of the total purchase price paid, including direct costs of the acquisition. The adjustments included in the unaudited pro forma consolidated financial information represent the preliminary determination of such adjustments based upon currently available information.  Accordingly, the actual fair value of the assets acquired and the related adjustments may differ from those reflected in this filing.  Viper expects to finalize the purchase price allocations within one year of the date of the PMFR acquisition.

The unaudited pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that might have been achieved had the transaction occurred as of an earlier date, and they are not necessarily indicative of future operating results or financial position.  These pro forma amounts do not, therefore, project Viper’s financial position or results of operations for any future date or period.  The accompanying unaudited pro forma financial information should be read in conjunction with the historical financial statements and the related notes thereto of Viper,  which are included in its Annual Report on Form 10-K, as well as other financial information included elsewhere in this filing.

1

. VIPER POWERSPORTS INC.

UNAUDITED PRO FORMA BALANCE SHEET

MARCH 31, 2012

	Viper Powersports Inc.			Precision Metal Fab Racing		Pro Forma Adjustments				Viper Powersports Inc. Pro Forma
		(Historical)			(Historical)
ASSETS
Current Assets:
Cash and cash equivalents	$	9,281		$	95,840	$	1,484,160		A,B	$	1,589,281
Accounts receivable		6,553			7,610		(7,610	)	B		6,553
Inventory and supplies		476,709			149,380		65,620		B		691,709
Prepaid and other current assets		74,043			0		0				74,043
Total current assets		566,586			252,830		1,542,170				2,361,586
Property and Equipment, net		483,294			44,435		255,565		B		783,294
Long-Term Assets:
Intangible assets		0			0		85,000		B		85,000
Other		13,400			0		2,617,415		A		2,630,815
Total long-term assets		13,400			0		2,702,415				2,715,815
Total Assets	$	1,063,280		$	297,265	$	4,500,150			$	5,860,695
liabilities and Stockholders’ equity (Deficit)
Current Liabilities:
Accounts payable	$	209,744		$	2,654	$	(2,654	)	B	$	209,744
Accrued liabilities		167,946			121		(121	)	B		167,946
Notes payable, short-term net of discount		225,000			0		(200,000	)	A		25,000
Notes payable – related party, net of discount		454,933			0		(80,000	)	A		374,933
Current portion of long-term liabilities		100,000			0		0				100,000
Total current liabilities		1,157,623			2,775		(282,775	)			877,623
Long-Term Liabilities:
Note payable		170,000			0		2,500,000		A		2,670,000
Total Liabilities		1,327,623			2,775		2,217,225				3,547,623
Stockholders’ quity(deficit)
Preferred stock, $0.001 par value, 20,000,000 authorized,366,668 issued and outstanding		367			0		0				367
Common stock, $0.001 par value, 100,000,000 shares authorized 33,368,174 shares issued and outstanding		33,683			0		9,694		A		43,377
Additional paid-in capital		41,261,113			0		2,607,721		A		43,868,834
Accumulated earnings(deficit)		(41,559,506	)		294,490		(334,490	)	B		(41,599,506	)
Total Stockholders’ Equity(deficit)		(264,343	)		294,490		2,282,925				2,313,072
Total Liabilities and Stockholders’ Equity	$	1,063,280		$	297,265	$	4,500,150			$	5,860,695

See accompanying notes to these unaudited pro forma financial statements.

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VIPER POWERSPORTS INC

UNAUDITED PRO FORMA STATEMENT OF OPERATIONS

FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2011

	Viper Powersports Inc			Precision Metal Fab Racing		Pro Forma Adjustments				Viper Powersports Inc. Pro forma
		(Historical)			(Historical)
Revenue	$	165,209		$	667,098	$	0			$	832,307
Cost of Revenue		165,538			569,580		0				735,118
Gross Profit		(329	)		97,518		0				97,189
Operating Expense:
Research and development costs		69,585			0		0				69,585
Selling, general and administrative		3,136,316			72,030		(40,000	)	B		3,248,346
Loss on impairment and charge-off of assets and inventory		75,802			0		0				75,802
Income (Loss) from Operations		(3,282,032	)		25,488		(40,000	)			(3,296,544	)
Other Income (Expense):
Interest expense		(59,444	)		0		0				(59,444	)
Financing costs related to debt discount		(83,304	)		0		0				(83,304	)
Accretion of debt discount		(227,419	)		0		0				(227,419	)
Beneficial conversion features		(183,566	)		0		0				(183,566	)
Other income		2,905			0		0				2,905
Total other income (expense)		550,828	)		0		0				(1,108	)
Net Income (Loss)		(3,832,860	)		25,488		(40,000	)	B		(3,847,372	)
Deemed dividend of preferred stock		(338,508	)		0		0				(338,508	)
Net Income (Loss) attributed to common sharesholders	$	(4,171,368	)	$	25,488	$	(40,000	)		$	(4,185,880	)
Net Income (Loss) per Common Share from Continuing Operations:
Basic and diluted	$	(0.19	)	$	0.00	$	0.00			$	(0.12	)
Diluted	$	(0.19	)	$	0.00	$	0.00			$	(0.12	)
Weighted Average Common Shares Outstanding:
Basic and diluted		20,493,779			–		9,694,128				30,187,907

See accompanying notes to these unaudited pro forma financial statements.

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UNAUDITED PRO FORMA STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2012

	Viper Powersports Inc			Precision Metal Fab Racing		Pro Forma Adjustments				Viper Powersports Inc. Pro forma
		(Historical)			(Historical)
Revenue	$	74,172		$	195,978	$	0			$	270,150
Cost of Revenue		83,412			138,650		0				222,062
Gross Profit		(9,240	)		57,328		0				48,088
Operating Expense:
Research and development costs		30,247			0		0				30,247
Selling, general and administrative		605,875			14,613		40,000		B		660,488
Income (Loss) from Operations		(645,362	)		42,715		(40,000	)			(642,647	)
Other Income (Expense):
Interest expense		(101,426	)		0		0				(101,426	)
Accretion of debt discount		(80,488	)		0		0				(80,488	)
Other income		30,356			0		0				30,356
Total other income (expense)		(151,558	)		0		0				(151,558	)
Net Income (Loss) attributed to common sharesholders	$	(796,920	)	$	42,715	$	(40,000	)		$	(794,205	)
Net Income (Loss) per Common Share from Continuing Operations:
Basic and diluted	$	(0.03	)	$	0.00	$	(0.00	)		$	(0.02	)
Diluted	$	(0.03	)	$	0.00	$	(0.00	)		$	(0.02	)
Weighted Average Common Shares Outstanding:
Basic and diluted		30,765,090			–		9,694,128				40,459,218

See accompanying notes to these unaudited pro forma financial statements.

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1. Basis of Presentation:

On April 24, Viper Powersports Inc (VIPER) entered into definitive purchase and sale agreement to acquire assets and some of the business lines of Precision Metal Fab Racing (PMFR). The PMFR purchase price is approximately $640,000, to be paid with cash. The effective date is the same as the purchase date with no final purchase price adjustments to be calculated.

The Unaudited Pro Forma Balance Sheet combines the historical consolidated balance sheets of Viper and PMFR as of March 31, 2012, giving effect to the acquisition as if it had occurred January 1, 2011.  The Unaudited Pro Forma Statement of Operations for the year ended December 31, 2011 combines the historical consolidated statements of operations of Viper and PMFR for the year ended December 31, 2011, as if the merger had occurred on January 1, 2011.  No pro forma effects have been given to any operational or other synergies that may be realized from the acquisitions.

The unaudited pro forma financial information is based on the estimates and assumptions described in the notes to the unaudited pro forma financial statements.  The unaudited pro forma financial information has been prepared using the purchase method of accounting in which the total cost of the PMR acquisition are allocated to the tangible and intangible assets acquired based on their estimated fair values at the date of the acquisition.  This allocation has been done on a preliminary basis and is subject to change pending final determination of fair values for the acquired assets and a final analysis of the total purchase price paid, including direct costs of the acquisition. The adjustments included in the unaudited pro forma financial information represent the preliminary determination of such adjustments based upon currently available information.  Accordingly, the actual fair value of the assets acquired and the related adjustments may differ from those reflected in this statement.  Viper expects to finalize the purchase price allocations within one year of the date of the PMFR acquisition.

2. Pro Forma Adjustments to the Balance Sheet and Statement of Operations:

A To account for new Loan and Security Agreement; $2,500,000 initial loan advance on the agreement. The proceeds of the loan are to be used to pay existing debt of $280,000, purchase PMFR and other future operating costs. Included in the agreement is the issuance of 9,694,128 unregistered shares as a fee for the transaction (at $0.27 per share), of which the value of $2,617,415 is reflected as deferred financing costs.

B To record the assets purchased for cash, for the acquisition of PMFR:

Purchase price	$	640,000
Less fair value of assets acquired:
Inventories		215,000
Property and equipment		300,000
Identifiable intangible (customer list)		85,000
Finder’s fee expense		40,000
Total	$	640,000

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Total change in cash is reflected as such;
Borrowing under new Loan agreement:	$	2,500,000
Payment for acquisition of PMFR:		(640,000	)
Payoff of existing debt		(280,000	)
Cash not acquired from PMFR:		(95,840	)
Net increase in cash	$	1,484,160

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