EX-99.2 4 exhibit_99-2.htm THE UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS OF MASSIVE FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013 AND THE UNAUDITED PRO FORMA COMBINED BALANCE SHEET OF MASSIVE AS OF SEPTEMBER 30, 2013 exhibit_99-2.htm
Exhibit 99.2


UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS


The following unaudited pro forma condensed combined financial information presents the unaudited pro forma condensed combined balance sheet and unaudited pro forma condensed combined statements of operations based upon the combined historical financial statements of Massive Interactive, Inc., formerly known as Xtreme Oil & Gas, Inc. (“Massive”) and Massive Media Pty Ltd. (“Massive Media”), after giving effect to the business combination between Massive and Massive Media and adjustments described in the accompanying notes.

The unaudited pro forma condensed combined balance sheet as of September 30, 2013 reflects the transaction as if it had occurred on that date. The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2012 and the nine months ended September 30, 2013 reflect the transaction as if it had occurred on January 1, 2012, the beginning of the earliest period presented.
 
The unaudited pro forma condensed combined financial information should be read in conjunction with the audited and unaudited historical financial statements of each of Massive and Massive Media and the notes thereto. Additional information about the basis of presentation of this information is provided in Note 1 hereto.

The unaudited pro forma condensed combined financial information was prepared in accordance with Article 11 of Regulation S-X. The unaudited pro forma adjustments reflecting the transaction have been prepared in accordance with business combination accounting guidance as provided in Accounting Standards Codification 805, and reflect the preliminary allocation of the purchase price to the acquired assets and liabilities based upon the preliminary estimate of fair values, using the assumptions set forth in the notes to the unaudited pro forma condensed combined financial information.

The unaudited pro forma condensed combined financial information is provided for informational purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the transaction had been completed as of the dates set forth above, nor is it indicative of the future results or financial position of the combined company. In connection with the pro forma financial information, the Company allocated the purchase price using its best estimates of fair value. Accordingly, the pro forma acquisition price adjustments are preliminary and subject to further adjustments as additional information becomes available and as additional analyses are performed. The unaudited pro forma condensed combined financial information also does not give effect to the potential impact of current financial conditions, any anticipated synergies, operating efficiencies or cost savings that may result from the transaction or any integration costs. Furthermore, the unaudited pro forma condensed combined statements of operations do not include certain nonrecurring charges and the related tax effects which result directly from the transaction as described in the notes to the unaudited pro forma condensed combined financial information.
 
 
 
 
 
 
 

 
 
 


 
1
 


Massive Interactive, Inc.
Unaudited Pro Forma Condensed Combined Balance Sheet
As of September 30, 2013


         
Pro Forma
          
  
  
Historical
    
Adjustments
  
  
  
Combined
  
  
  
Xtreme
    
Massive Media
    
(Note 4)
  
  
  
Pro Forma
  
                           
Assets
                          
Current Assets:
                          
Cash and cash equivalents
   $ 37,655     $ 197,224     $ 850,093  
(a)
   $ 1,084,972  
Accounts receivable – trade
     6,529       1,368,060       -         1,374,589  
Other receivables
     45,205       23,488       -         68,693  
Due from directors
     -       29,545       -         29,545  
Prepayments
     -       107,361       -         107,361  
Work in progress
     -       30,270       -         30,270  
Taxes refundable
     -       948,876       -         948,876  
Total current assets
     89,389       2,704,824       850,093         3,644,306  
Property and equipment, net
     6,851,415       248,715       (6,851,415 )
(b)
     248,715  
Deposits
     6,537       -       (6,537 )
(b)
     -  
Capitalized software costs, net
     -       4,445,163       -         4,445,163  
Goodwill
     -       -       -         -  
Other assets, net
     -       15,698       -         15,698  
Total non-current assets
     6,537       4,460,861       (6,537 )       4,460,861  
 Total assets
   $ 6,947,341     $ 7,414,400     $ (6,007,859 )     $ 8,353,882  
Liabilities and shareholders’ equity
                                  
Current liabilities:
                                  
Accounts payable
   $ 109,142     $ 311,215     $ -       $ 420,357  
Convertible notes payable
     282,445       -       (137,445 ) (c)     145,000  
Derivative liability
     40,235       -       (20,000 )
(c)
     20,235  
Accrued expenses and other current liabilities
     -       109,804       -         109,804  
Accrued compensation and related costs
     -       788,101       -         788,101  
Deferred revenue
     -       224,860       -         224,860  
Short-term borrowings
     -       752,005       (500,000 )
(d)
     252,005  
Short-term borrowings – related parties
     -       783,760       (360,543 )
(d)
     423,217  
Other current liabilities
     -       28,608       -         28,608  
Total current liabilities
     431,822       2,998,353       (1,017,988 )       2,412,187  
Asset retirement obligation
     300,000       -       (300,000 )
(b)
     -  
Accrued compensation and related costs – non-current
     -       81,438       -         81,438  
Other long-term liabilities
     -       116,419       -         116,419  
Total long-term liabilities
     300,000       197,857       (300,000 )       197,857  
Total Liabilities
   $ 731,822     $ 3,196,210     $ (1,317,988 )     $ 2,610,044  
Shareholders’ equity:
                                  
Common stock
   $ 5,598     $ 2,005,312     $ (1,950,312 )
(e)
   $ 60,598  
Preferred B Shares
     -       -       5,445,000  
(f)
     5,445,000  
Additional paid-in capital
     41,594,489       -       (932,686 )
(e)
     40,661,803  
Retained earnings/(accumulated deficit)
     (35,384,568 )     2,505,118       (7,177,397 )
(g)
     (40,056,847 )
Foreign currency translation adjustment
     -       (292,240 )     (74,476 )
(a)
     (366,716 )
Total Liabilities and shareholders’ equity
   $ 6,947,341     $ 7,414,400     $ (6,007,859 )     $ 8,353,882  

See accompanying notes to the unaudited pro forma condensed combined financial statements.
 

 
 
2
 
 
Massive Interactive, Inc.
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Nine Months Ended September 30, 2013
                   
  
  
Historical
    
Pro Forma
    
Combined
  
  
  
Xtreme
    
Massive Media
    
Adjustments
    
Pro Forma
  
                         
Revenues:
                        
Consultancy services
   $ -     $ 147,359     $ -     $ 147,359  
License fee
     -       356,571       -       356,571  
Project services
     -       4,772,918       -       4,772,918  
Support services
     -       90,586       -       90,586  
Other income
     -       160,547       -       160,547  
Income from sales of working interests, net
     65,876       -       -       65,876  
Oil and gas sales
     9,053       -       -       9,053  
Total revenues
     74,929       5,527,981       -       5,602,910  
                                 
Costs and expenses:
                                
Costs of revenues:
                                
   Oil production, workover and depreciation
     1,433       -       -       1,433  
   Loss on disposal of oil properties
     68,123       -       -       68,123  
Total cost of revenues:
     69,556       -       -       69,556  
                                 
Gross profit
     5,373       5,527,981       -       5,533,354  
                                 
General and administrative
     1,758,598       5,624,350       -       7,382,948  
Depreciation and amortization
     1,280       599,730       -       601,010  
Loss from operations
     (1,754,505 )     (696,099 )     -       (2,450,604 )
Other income (expense):
                                
Other income
     40,000       -       -       40,000  
Gain on debt forgiveness
     30,343       -       -       30,343  
Derivative income
     121,025       -       -       121,025  
Income from discontinued oil operations
     9,496       -       -       9,496  
Interest income
     -       609       -       609  
Interest expense
     (36,539 )     (199,151 )     -       (235,690 )
Total other income (expense)
     164,325       (198,542 )     -       (34,217 )
Loss before taxes
     (1,590,180 )     (894,641 )     -       (2,484,821 )
Income tax benefit
     -       571,142       -       571,142  
Net loss
   $ (1,590,180 )    $ (323,499 )   $ -     $ (1,913,679 ) 
                                 
Comprehensive income:
                                
    Foreign currency translation adjustment
     -       (302,287 )     -       (302,287 )
Total comprehensive income
   $ (1,590,180 )   $ (625,786 )   $ -     $ (2,215,966 )
                                 
Share Data:
                                
Loss per common share – Basic and diluted
   $ (0.84 )   $ (0.76 )         (h)    $ (0.04 )
                                 
Weighted average common shares– basic and diluted
     1,897,110       425,350           (i)      61,178,167  

See accompanying notes to the unaudited pro forma condensed combined financial statements.
 

 
3
 
 
Massive Interactive, Inc.
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Twelve Months Ended December 31, 2012
                   
  
  
Historical
    
Pro Forma
    
Combined
  
  
  
Xtreme
    
Massive Media
    
Adjustments
    
Pro Forma
  
                         
Revenues:
                        
License fee
   $ -     $ 788,111     $ -     $ 788,111  
Project services
     -       3,377,505       -       3,377,505  
Support services
     -       56,349       -       56,349  
Other income
     -       143,380       -       143,380  
Income from sales of working interests, net
     1,270,934       -       -       1,270,934  
Oil and gas sales
     68,113       -       -       68,113  
Total revenues
     1,339,047       4,365,345       -       5,704,392  
                                 
Costs and expenses:
                                
Costs of revenues:
                                
   Oil production, workover and depreciation
     137,502       -       -       137,502  
   Loss on disposal of oil properties
     233,266       -       -       233,266  
Total cost of revenues:
     370,768       -       -       370,768  
                                 
Gross profit
     968,279       4,365,345       -       5,333,624  
                                 
General and administrative
     1,766,403       6,793,784       -       8,560,187  
Depreciation and amortization
     75,163       929,657       -       1,004,820  
Loss from operations
     (873,287 )     (3,358,096 )     -       (4,231,383 )
Other income (expense):
                                
Other income
     930,972       -       -       930,972  
Loss on debt forgiveness
     (98,163 )     -       -       (98,163 )
Amortization of debt discount
     (2,064,402 )     -       -       (2,064,402 )
Derivative income
     2,430,514       -       -       2,430,514  
Interest income
     -       15,548       -       15,548  
Interest expense
     (396,071 )     (76,606 )     -       (472,677 )
Total other income (expense)
     802,850       (61,058 )     -       741,792  
Loss before taxes
     (70,437 )     (3,419,154 )     -       (3,489,591 )
Income tax benefit
     -       1,480,432       -       1,480,432  
Net loss
   $ (70,437 )   $ (1,938,722 )   $ -     $ (2,009,159 )
                                 
Comprehensive income:
                                
Foreign currency translation adjustment
     -       10,047       -       10,047  
Total comprehensive income
   $ (70,437 )   $ (1,928,675 )   $ -     $ (1,999,112 )
                                 
Share Data:
                                
Loss per common share – Basic and diluted
   $ (0.04 )   $ (4.56 )         (h)    $ (0.04 )
                                 
Weighted average common shares– basic and diluted
     1,897,110       425,350           (i)     61,178,167  

See accompanying notes to the unaudited pro forma condensed combined financial statements.

 
4
 
 
Notes to Unaudited Pro Forma Condensed Combined Financial Statements
 
1. Description of Transaction
 
On November 7, 2013, Massive Interactive, Inc., formerly known as Xtreme Oil and Gas (the “Company”) sold 55 shares of redeemable preferred B stock (the “Preferred Stock”) and 55,000,000 of common stock (the “Common Stock”, together with the Preferred Stock, the “Securities”) to Southport Lane, LP, through its subsidiaries and Southport Equity II, LLC, a wholly owned subsidiary of Southport Lane, LP, respectively, in exchange for an aggregate of $5,500,000.  The issuance of the Securities was made in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended.  The Preferred Stock accrues an annual dividend of $6,750 per share.  The Preferred Stock is redeemable by the Company at any time prior to November 1, 2016.  Southport Equity II, LLC may convert the Preferred Stock following the 3rd anniversary of the date of issuance.  The Preferred Stock is convertible at $.0144, 120% of the closing bid price of the Company’s common stock on November 1, 2013.

Southport Equity II now owns approximately 90% of the Company’s outstanding common stock and is the controlling shareholder of the Company.  Southport Equity II, LLC used its available cash as capitalized by its parent, Southport Lane, LP, to fund its purchase of the common stock.  There was no controlling party of the Company prior to this investment by Southport Equity II, LLC.

On November 12, 2013 the Company acquired all of the issued and outstanding capital stock of Massive Media Pty Ltd. (“Massive Media”) a proprietary limited company organized under the laws of New South Wales, Australia, from the shareholders of Massive in exchange for $4,167,190 pursuant to a stock purchase agreement dated October 17, 2013.  The other terms and conditions of the agreement were customary and standard.
 
2. Basis of Presentation
 
The historical financial information has been adjusted to give pro forma effect to events that are (i) directly attributable to the transaction, (ii) factually supportable, and (iii) with respect to the unaudited pro forma condensed combined statements of operations, expected to have a continuing impact on the combined results. At this time, the Company has not performed detailed valuation analyses to determine the fair values of Massive Media’s assets and liabilities. Accordingly, the pro forma adjustments are preliminary and based on estimates of the fair value and useful lives of the assets acquired and liabilities assumed and have been prepared to illustrate the estimated effect of the transaction and certain other adjustments. The final determination of the purchase price allocation will be based on the fair values of assets acquired and liabilities assumed as of November 12, 2013, the date the transaction closed, and will be reflected in the Company's quarterly report on Form 10-K for the year ended December 31, 2013. Accordingly, once the necessary valuation analyses have been performed and the final purchase price allocation has been completed, actual results may differ materially from the information presented in this unaudited pro forma condensed consolidated financial information.
 
3. Consideration Transferred
 
On November 12, 2013 the Company acquired all of the issued and outstanding capital stock of Massive Media, a proprietary limited company organized under the laws of New South Wales, Australia, from the shareholders of Massive Media in exchange for $4,167,190 in cash pursuant to a stock purchase agreement dated October 17, 2013.

The consideration transferred was allocated across the net assets of the Company as follows:

   
Fair Value
  
Cash and cash equivalents
  
$
197,224
  
Receivables, other
    
2,316,936
  
Property, plant and equipment
    
248,715
  
Intangible assets (software)
    
4,394,163
  
Other assets
    
206,362
  
Accounts payable and liabilities assumed
    
(1,660,445
)
Debt assumed
    
(1,535,765
)
Net assets acquired
  
$
4,167,190
  


 
5
 

4. Notes to Unaudited Pro Forma Condensed Combined Balance Sheet and Statement of Operations

(a)
Reflects the $5,500,000 total proceeds received from the transaction less the $4,167,190 from the acquisition of all of the issued and outstanding capital stock of Massive Media as well as the payment of approximately $460,000 in transaction related fees.  Also reflects the repayment of certain borrowings as detailed below in note (d) as well as the foreign currency translation adjustments associated with the transaction. The balance of the proceeds is available for general obligations as needed by the Company.

(b)
As a result of the transaction, the Company elected to focus solely on the Massive business and effectively discontinued its oil and gas business in Texas and Oklahoma, and this adjustment reflects the write-down of non-producing oil and gas assets in Kansas and Oklahoma as well as expired leases in Texas. Also represents the elimination of furniture and fixture related assets that were retained by landlord upon termination of a lease agreement for the leased office space in Texas for Xtreme. In addition, the security deposit associated with the office lease was utilized to pay the final month of rent.

(c)
Associated with the transaction, this reflects the conversion of $121,586 convertible notes into 578, 980 shares of common stock as well as the elimination of $20,000 of the derivative liability associated with the convertible notes.

(d)
Represents two Massive Media loans that were retired prior to the balance of the cash consideration being provided to the existing shareholders.

(e)
Represents the sale of 100% of Massive Media’s common stock to Massive Interactive, Inc.

(f)
Reflects sale of Preferred B Securities to Southport Lane as interim step to complete Massive Media Share Purchase Agreements, pay fees associated with transaction and retire Massive Media bridge loan from June 2013.

(g)
Represents the impact of the required pro forma adjustments on the retained earnings/accumulated deficit of the combined companies.
 
(h)
The loss per common share reflects the effect of the preferred stock dividend.

(i)
 
 
Shares at 30 Sept     5,587,187  
         
 
New issue
    55,000,000  
         
Conversion     578,980  
         
         
Shares for Attorney Services     13,000  
Pro forma balance     61,178,167  
 
 
 
 
 
 
 
 
 
 
 
 
 
6