EX-99.3 VOTING TRUST 4 ex_99-3.htm PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS Unassociated Document
Exhibit  99.3
AURASOUND, INC. AND SUBSIDIARIES
PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2010
(UNAUDITED)
 
The following unaudited Pro-Forma Statement of Financial Condition and Statement of Operations have been derived from the audited consolidated financial statements of AuraSound, Inc. (“AuraSound” or the “Company”) as of June 30, 2010 and the unaudited financial statements of ASI Holdings Limited (a Hong Kong corporation) (“ASI Holdings”) as of June 30, 2010. The unaudited Pro Forma Statement of Financial Condition and Statement of Operations reflect the 100% acquisition of ASI Holdings by AuraSound under an asset purchase agreement. The Company has accounted for the acquisition under the purchase method of accounting for business combinations. The Pro-forma Statement of Financial Condition and Pro-forma Statement of Operations assumes the acquisition was consummated as of July 1, 2009, the beginning of AuraSound’s fiscal year.

The total purchase price consideration of $24,352,505 is based on the aggregate fair values of the total share issuance to the stockholders of ASI Holdings as of July 31, 2010.

The Pro-Forma Statement of Financial Condition and Statement of Operations should be read in conjunction with the consolidated financial statements of AuraSound, related notes to the financial statements, and the consolidated financial statements of ASI Holdings. The Pro-Forma statements do not purport to represent what the Company’s financial condition and results of operations would actually have been if the acquisition of ASI Holdings had occurred on the date indicated or to project the Company’s results of operations for any future period or date.  The Pro-Forma adjustments, as described in the accompanying data, are based on available information and the assumptions set forth in the notes below, which management believes are reasonable.

 
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AURASOUND INC AND SUBSIDIARIES
UNAUDITED CONSOLIDATED PRO-FORMA STATEMENTS OF FINANCIAL CONDITION
AS OF JUNE 30, 2010
 
    Aurasound     ASI Holdings     Pro Forma     Pro Forma  
 ASSETS   June 30, 2010     June 30, 2010     Adjustment     Combined  
Current assets:
                        
Cash and cash equivalents
   $ 129,939     $ 272,432     $ -     $ 402,371  
Accounts receivable, net
     3,432,135       5,404,565       -       8,836,700  
Inventories, net
     537,198       2,606,109       -       3,143,307  
Deposits
     -       46,029       -       46,029  
Prepayments
     -       16,982       -       16,982  
Other receivables
     -       6,664       -       6,664  
Total current assets
     4,099,272       8,352,781       -       12,452,053  
                                 
Property and equipment, net
     106,465       50,247       -       156,712  
Goodwill
     -       -       12,149,476 (1)     12,149,476  
Intangible assets, net
     -       -       2,843,333 (1) (2)     2,843,333  
Total assets
   $ 4,205,737     $ 8,403,028     $ 14,992,809     $ 27,601,575  
                                 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
                                
Current liabilities:
                                
Short term loan
     -       500,000       (500,000 )(3)     -  
Accounts payable
     6,916,004       10,512,657       -       17,428,661  
Provision for warranty service
     -       469,365       -       469,365  
Accrued expenses
     800,044       509,237       -       1,309,281  
Notes payable
     1,253,558       -       -       1,253,558  
Due to officer
     25,000       -       -       25,000  
Note payable-related party
     1,724,724       -       -       1,724,724  
Due to bank under factoring agreement
     -       25,652       -       25,652  
Total liabilities
   $ 10,719,330     $ 12,016,911     $ (500,000 )   $ 22,236,241  
                                 
Stockholders' equity (deficit)
                                
Preferred stock
     -       -       -       -  
Common stock
     46,787       6,410       56,851 (1)     110,048  
Other comprehensive loss
     -       (26,494 )     -       (26,494 )
Retained earnings (deficit)
     (6,560,380 )     (3,593,799 )     15,435,959 (1) (2)     5,281,780  
Total stockholders' equity (deficit)
     (6,513,593 )     (3,613,883 )     15,492,810       5,365,334  
Total liabilities and stockholders' equity (deficit)
   $ 4,205,737     $ 8,403,028     $ 14,992,810     $ 27,601,575  
 
 NOTES:
                
 (1) Elimination of common stock and accumulated earnings of ASI Holdings before the acquisition and to record the purchase of ASI Holdings by Aurasound.
  
 (2)  Includes 1-year amortization totaling $956,667 of intangible assets acquired.
            
 (3)  Conversion of debt to common stock.
                

 
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AURASOUND INC AND SUBSIDIARIES
UNAUDITED CONSOLIDATED PRO-FORMA STATEMENTS OF OPERATIONS
FOR THE TWELVE MONTH PERIOD ENDED JUNE 30, 2010
 
   
Aurasound
    
ASI Holdings
    
Pro Forma
    
Pro Forma
  
   
12 Months Ended June 30, 2010
    
Adjustment
    
Combined
  
Net revenue
   $ 7,503,192     $ 23,543,049       -       31,046,241  
Cost of revenue
     7,388,488       21,436,708       -       28,825,196  
Gross profit
     114,704       2,106,341       -       2,221,045  
                                 
Operating expenses:
                                
Research & development
     411,779       -               411,779  
Selling, general and administrative
     1,765,263       3,187,345       (956,667 ) (2)     3,995,941  
                                 
Total operating expenses
     2,177,042       3,187,345       (956,667 )     4,407,720  
                                 
Loss from operations
     (2,062,338 )     (1,081,004 )     956,667       (2,186,675 )
                                 
Other income (expenses):
                                
Interest expense, net
     (176,609 )     -       -       (176,609 )
Factoring charges
     -       (220,254 )     -       (220,254 )
Total other income (expenses)
     (176,609 )     (220,254 )     -       (396,863 )
                                 
Net loss from continuing operations
     (2,238,947 )     (1,301,258 )     956,667       (2,583,538 )
                                 
Discontinued operations:
                                
Gain on disposal of subsidiary
     -       22,277       -       22,277  
                                 
Net loss
     (2,238,947 )     (1,278,981 )     956,667       (2,561,261 )
                                 
Other Comprehensive loss:
                                
Foreign currency translation loss
     -       (20,323 )     -       (20,323 )
                                 
Net comprehensive loss
   $ (2,238,947 )   $ (1,299,304 )   $ 956,667     $ (2,581,584 )
                                 
Earnings per share
                                
                                 
Weighted average shares - basic & diluted
     4,678,662       50,000         (1)     11,004,835  
Basic & diluted net loss per share
   $ (0.48 )   $ (25.99 )           $ (0.23 )
 
NOTES:
                        
 (1)  Weighted-average number of shares outstanding for the combined entity includes all shares issued for the acquisition of 50,000 shares as if outstanding as of July 1, 2009.
 (2)  Amortization expense of intangible assets acquired in acquisition for the 12 month period ended June 30, 2010.

 
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The total cost of acquisition is $24,352,505 which consists of common shares, warrants and assumed current non-interest bearing liabilities of ASI Holdings.
 
 Total cost of acquisition:
            
             
 Common share consideration
         $ 10,779,849  
 Warrants to stockholder
           3,060,000  
Assumed current non-interest bearing liabilities
     10,512,656  
    Total purchase price
         $ 24,352,505  
               
 Allocation of cost of acquired entity:
              
 Fair value of tangible assets
         $ 8,403,029  
 Intangible assets:
              
    Customer relationships
     1,500,000          
    Non-compete
     200,000          
    Trade name
     1,600,000          
    Backlog
     500,000          
 Total identified intangibles
     3,800,000       3,800,000  
                 
Unallocated cost of acquisition to goodwill
       12,149,476  
            $ 24,352,505  
 
 
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