8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K/A

CURRENT REPORT

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

Date of Report (Date of earliest event reported) February 14, 2008

US DRY CLEANING CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	000-23305	77-0357037
(State or other jurisdiction of incorporation	(Commission File Number)	(IRS Employer Identification No.)

4040 MacArthur Blvd., Suite 305 Newport Beach, California	92660
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code (949) 863-9669

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K/A filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

We hereby amend our Current Report on Form 8-K filed on February 25, 2008, which announced the completion on February 14, 2008 of our acquisition of certain net assets of Team Enterprises, Inc. and three affiliated companies (hereinafter collectively referred to as “Team”).  The purpose of this amendment is to file the combined audited financial statements of Team and the unaudited pro forma financial information of US Dry Cleaning Corporation and Subsidiaries required by Item 9.01.

Item 9.01.   Financial Statements and Exhibits.

(a)   Financial Statements of Business Acquired .

Audited combined balance sheet of Team as of December 31, 2007 and the related combined statements of operations, stockholders’ equity and cash flows for the years ended December 31, 2007 and 2006 as required by this Item 9.01 (a) are attached as Exhibit 99.1 hereto.

(b)   Pro Forma Financial Information .

Unaudited Pro Forma Combined Consolidated Financial Statements of US Dry Cleaning Corporation as required by this Item 9.01(b) are attached as Exhibit 99.2 hereto and incorporated into this Item 9.01(b) by reference.

(c)   Exhibits ..

99.1 Audited combined balance sheet of Team as of December 31, 2007 and the related combined statements of operations, stockholders’ equity and cash flows for the years ended December 31, 2007 and 2006.

99.2 Unaudited pro forma combined consolidated balance sheet of US Dry Cleaning Corporation and Subsidiaries as of December 31, 2007 and unaudited pro forma combined consolidated statements of operations of US Dry Cleaning Corporation and Subsidiaries for the year ended September 30, 2007 and for the three months ended December 31, 2007.

SIGNATURE

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

	US DRY CLEANING CORPORATION
Date: April 29, 2008	By:	/s/ Robert Y. Lee
		Robert Y. Lee Chief Executive Officer

EXHIBIT INDEX

Exhibit No.	Description
99.1	Audited combined balance sheet of Team as of December 31, 2007 and the related combined statements of operations, stockholders’ equity and cash flows for the years ended December 31, 2007 and 2006.
99.2	Unaudited pro forma combined consolidated balance sheet of US Dry Cleaning Corporation and Subsidiaries as of December 31, 2007 and unaudited pro forma combined consolidated statement of operations of US Dry Cleaning Corporation and Subsidiaries for the year ended September 30, 2007 and for the three months ended December 31, 2007.

EX-99.1

EXHIBIT 99.1

TEAM ENTERPRISES, INC. AND AFFILIATES

COMBINED FINANCIAL STATEMENTS

December 31, 2007
 

INDEX TO COMBINED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm	1
Balance Sheet as of December 31, 2007	2
Statements of Operations for the years ended December 31, 2007 and 2006	3
Statements of Stockholders’ Equity for the years ended December 31, 2007 and 2006	4
Statements of Cash Flows for the years ended December 31, 2007 and 2006	5
Notes to Combined Financial Statements	6

REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

Team Enterprises, Inc. and Affiliates

We have audited the accompanying combined balance sheet of Team Enterprises, Inc. and Affiliates (the “Company”), a combined reporting unit consisting of four corporations under common ownership and control, as of December 31, 2007, and the related combined statements of operations, stockholders’ equity and cash flows for the years ended December 31, 2007 and 2006. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company was not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that were appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the combined financial position of Team Enterprises, Inc. and Affiliates as of December 31, 2007, and the results of their operations and their cash flows for the years ended December 31, 2007 and 2006 in conformity with accounting principles generally accepted in the United States of America.

As more fully discussed in Note 1, the Company completed a merger with a publicly traded company on February 14, 2008.

/s/ Squar, Milner, Peterson, Miranda and Williamson, LLP

Newport Beach, California

April 29, 2008

TEAM ENTERPRISES, INC. AND AFFILIATES

BALANCE SHEET

December 31, 2007

ASSETS
Current Assets
Cash	$	128,764
Related party receivables		19,407
Notes receivable		191,780
Prepaid expenses		109,939
Other current assets		84,242
Total current assets		534,132
Property and Equipment, net		351,327
Other Assets		39,069
Total assets	$	924,528
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	122,833
Accrued expenses		132,381
Capital lease obligations		44,040
Notes payable to related parties		150,000
Total current liabilities		449,254
Commitments and Contingencies
Stockholders’ Equity
Common stock		147,000
Additional paid-in capital		33,000
Retained earnings		295,274
Total stockholders’ equity		475,274
Total liabilities and stockholders’ equity	$	924,528

The accompanying notes are an integral part of these combined financial statement.

2

TEAM ENTERPRISES, INC. AND AFFILIATES

STATEMENTS OF OPERATIONS

For the Years Ended December 31, 2007 and 2006

	2007			2006
NET SALES	$	6,748,785		$	7,136,051
COST OF SALES		4,803,350			4,966,634
GROSS PROFIT		1,945,435			2,169,417
OPERATING EXPENSES
Delivery		180,946			201,719
Store		869,172			866,133
Selling		205,252			217,069
Administrative		509,639			552,990
Other		431,499			321,463
Depreciation and amortization		138,889			172,748
		2,335,397			2,332,122
OPERATING LOSS		(389,962	)		(162,705	)
OTHER INCOME (EXPENSES)		(20,470	)		14,003
NET LOSS BEFORE INCOME TAXES		(410,432	)		(148,701	)
INCOME TAXES		-			-
NET LOSS	$	(410,432	)	$	(148,701	)
Basic and diluted loss per common share	$	(18.48	)	$	(6.69	)
Basic and diluted weighted average number of common shares outstanding		22,200			22,200

The accompanying notes are an integral part of these combined financial statements.

3

TEAM ENTERPRISES, INC. AND AFFILIATES

STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Years Ended December 31, 2007 and 2006

	Common Stock				Additional Paid-in		Retained
	Shares		Amount		Capital		Earnings			Total
BALANCE – December 31, 2005		22,200	$	147,000	$	33,000	$	875,408		$	1,055,408
Distributions		–		–		–		(21,001	)		(21,001	)
Net loss		–		–		–		(148,701	)		(148,701	)
BALANCE – December 31, 2006		22,200		147,000		33,000		705,706			885,706
Net loss		–		–		–		(410,432	)		(410,432	)
BALANCE – December 31, 2007		22,200	$	147,000	$	33,000	$	295,274		$	475,274

The accompanying notes are an integral part of these combined financial statements.

4

TEAM ENTERPRISES, INC. AND AFFILIATES

STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2007 and 2006

	2007			2006
CASH FLOWS FROM OPERATING ACTIVITIES	$	(410,432	)	$	(148,701	)
Net loss
Adjustments to reconcile net loss to net cash used in operating activities:
(Gain) loss on disposal of fixed assets		189,861			654
Depreciation and amortization		177,817			172,748
Changes in operating assets and liabilities:
Prepaid expenses		12,052			(10,230	)
Other assets		349,517			(121,411	)
Accounts payable		24,952			43,959
Accrued expenses		11,265			12,283
Related party receivables		(19,407	)		-
Net cash provided by (used in) operating activities		335,625			(50,698	)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment		(222,721	)		(130,736	)
Notes receivable		(66,746	)		5,781
Net cash used in investing activities		(289,467	)		(124,955	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings on line-of-credit		-			120,000
Repayments on borrowings on line-of-credit		(90,000	)		(30,000	)
Proceeds from related party notes payable		150,000			-
Distributions to stockholders		-			(21,001	)
Repayments of related parties notes payable		(235,000	)		-
Payments on capital lease obligations		(70,940	)		(73,727	)
Net cash used in financing activities		(245,940	)		(4,728	)
NET DECREASE IN CASH		(199,782	)		(180,381	)
CASH – beginning of year		328,546			508,927
CASH – end of year	$	128,764		$	328,546
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for interest	$	20,470		$	42,644

Please refer to the accompanying footnotes for information about the Company’s non-cash investing and financing activities.

The accompanying notes are an integral part of these combined financial statements.

5

TEAM ENTERPRISES, INC. AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS

December 31, 2007

1.      ORGANIZATION AND SALE

Team Enterprises, Inc. and Affiliates (the “Company”) consists of four corporations operating in the dry cleaning and laundry business under common ownership and control as follows:  (1) Team Enterprises, Inc. (“Enterprise”), a New Mexico corporation formed February 6, 1968; (2) Bell Hop Cleaners of California, Inc. (“Bell Hop”), a New Mexico corporation formed September 15, 1981; (3) Fabricare, Inc. (“Fabricare”), a California corporation formed April 6, 1992; and (3) Team Equipment, Inc. (“Equipment”), a California corporation formed January 4, 1989. The Company operates 18 dry cleaning and laundry retail locations (“stores”) in the Fresno, California area and two stores in the Phoenix, Arizona area.

Substantially all of the Company’s assets (consisting of store locations, trade names, and equipment) were sold on February 14, 2008 to US Dry Cleaning Corporation (“USDC”), a publicly traded company, for cash, convertible debt and common stock in USDC with aggregate value approximately $5.3 million.

2.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The summary of significant accounting policies presented below is designed to assist in understanding the Company’s combined financial statements. Such financial statements and accompanying notes are the representations of the Company’s management, who is responsible for their integrity and objectivity. Management believes that these accounting policies conform to accounting principles generally accepted in the United States of America (“GAAP”) in all material respects, and have been consistently applied in preparing the accompanying financial statements.

Principles of Combination

The accompanying combined financial statements include the accounts of Enterprise, Bell Hop, Fabricare, and Equipment. All significant intercompany balances and transactions have been eliminated in combination.

Common Stock

As of December 31, 2007, Enterprise had 4,000 common shares authorized and 1,600 common shares outstanding with a $50 per share value, Fabricare had 25,000 common shares authorized and 10,000 common shares outstanding with no par value, Equipment had 25,000 common shares authorized and 9,000 common shares outstanding with no par value, and Bell Hop had 4,000 common shares authorized and 1,600 common shares outstanding with a $50 per share value.

Segments of Business

The Company currently operates in one segment, that being the laundry and dry cleaning business. As noted earlier, the Company is geographically concentrated in the Fresno, California area.

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents. The Company had no cash equivalents at December 31, 2007.

6

TEAM ENTERPRISES, INC. AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS

December 31, 2007

2.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates made by management, among others, are the realization of long-lived assets and valuation of deferred tax assets. Actual results could differ from those estimates.

Concentrations of Credit Risk

The Company currently maintains substantially all of its day-to-day operating cash with several major financial institutions. At times, cash balances may be in excess of amounts insured by the Federal Deposit Insurance Corporation. Cash balances were in excess of such insured amounts at December 31, 2007.

For the years ended December 31, 2007 and 2006, no single vendor accounted for more than 10% of purchases.

Property and Equipment

Property and equipment are stated at cost. Major renewals and improvements are capitalized, while replacements, maintenance and repairs which do not significantly improve the useful life of the asset are expensed when incurred. Depreciation is provided over the estimated useful lives of the assets, which range from 5 to 15 years, using accelerated methods. Amortization of equipment under capital leases is provided for using the straight-line method over the lease term or the estimated useful life of the underlying asset, whichever is shorter. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful life of the improvements or the lease term.

7

TEAM ENTERPRISES, INC. AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS

December 31, 2007

2.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Long-Lived Assets

The Company follows Statement of Financial Accounting Standards (“SFAS”) No. 144, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of, which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. SFAS No. 144 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. If the cost basis of a long-lived asset is greater than the projected future undiscounted cash flows from such asset, an impairment loss is recognized. Impairment losses are calculated as the difference between the cost basis of an asset and its estimated fair value. See below for additional information regarding the identification and measurement of impairment of certain long-lived assets governed by SFAS No. 144.

The Company assesses the impairment of long-lived assets annually or whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held for use is based on expectations of future undiscounted cash flows from the related operations, and when circumstances dictate, the Company adjusts the asset to the extent that the carrying value exceeds the estimated fair value of the asset. Management’s judgments related to the expected useful lives of long-lived assets and the Company’s ability to realize undiscounted cash flows in excess of the carrying amounts of such assets are affected by factors such as the ongoing maintenance and improvements of the assets, changes in economic conditions, and changes in operating performance. As management assesses the ongoing expected cash flows and carrying amounts of the Company’s long-lived assets, these factors could cause the Company to realize a material impairment charge, which would result in decreased net income (or increased net loss) and reduce the carrying value of these assets.

During the reporting periods presented, management has determined that no impairment was necessary. There can be no assurance, however, that market conditions will not change which could result in impairment of long-lived assets in the future.

Revenue Recognition

The Company recognizes revenue when the services have been provided and the earnings process is complete. Therefore, when an order is complete and ready for customer pick-up, the sale and related account receivable are recorded. Generally, the Company cleans garments the same day they are dropped off.

Advertising

The Company expenses the cost of advertising when incurred. Advertising costs approximated $178,000 and $202,000 for the years ended December 31, 2007 and 2006, respectively.

Fair Value of Financial Instruments

SFAS No. 107, Disclosures About Fair Value of Financial Instruments, requires disclosure of fair value information about financial instruments when it is practicable to estimate that value. The carrying amounts of the Company’s cash, trade receivables, accounts payables and accrued liabilities approximate their estimated fair values due to the short-term maturities of those financial instruments. In the opinion of management, the fair value of payables to related parties cannot be estimated without incurring excessive costs; for that reason, the Company has not provided such disclosure. Other information about related-party liabilities (such as the carrying amount, the interest rates, and the maturity date) is provided elsewhere in these notes to the combined financial statements.

8

TEAM ENTERPRISES, INC. AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS

December 31, 2007

2.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Split Dollar Life Insurance

The Company follows Emerging Issues Task Force Issue No. 06-4, Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements for collateral assignment split dollar life insurance where the Company pays premiums on life insurance policies on certain officers and stockholders. The officers and stockholders are the owners and beneficiaries of the insurance policies, however, the Company upon either policy termination, surrender, or death of the insured, will recover the lesser of its entire policy to date premiums paid or the then policy cash surrender value. During March 2007, the Company terminated the policies and recovered the full amount of premiums paid.

Risks and Uncertainties

The Company operates in an industry that is subject to intense competition. The Company faces risks and uncertainties relating to its ability to successfully implement its business strategy. Among other things, these risks include the ability to develop and sustain revenue growth; managing the expansion of its operations; competition; attracting and retaining qualified personnel; maintaining and developing new strategic relationships; and the ability to anticipate and adapt to the changing markets and any changes in government or environmental regulations. Therefore, the Company is subject to the risks of delays and potential business failure.

The dry cleaning industry has been a target for environmental regulation during the past two decades due to the use of certain solvents in the cleaning process. In 2002, air quality officials in Southern California approved a gradual phase out of Perchloroethylene (“Perc”), the most common dry cleaning solvent, by 2020. Under this regulation, which went into effect January 1, 2003, any new dry cleaning business or facility that adds a machine must also add a non-Perc machine. While existing dry cleaners can continue to operate one Perc machine until 2020, by November 2007 all dry cleaners using Perc must utilize state-of-the-art pollution controls to reduce Perc emissions. The Company believes that it has successfully integrated the new dry cleaning processes in its operations.

9

TEAM ENTERPRISES, INC. AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS

December 31, 2007

2.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Risks and Uncertainties (continued)

To the extent that additional investment for environmental compliance may be necessary, the Company does not anticipate any significant financial impact. The Company believes that it complies in all material respects with all relevant rules and regulations pertaining to the use of chemical agents.

Loss Per Share

Under SFAS No. 128, Earnings Per Share, basic earnings per common share is computed by dividing income available to common shareholders by the weighted-average number of common shares assumed to be outstanding during the period of computation. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding, using the treasury stock method, if the potential common shares had been issued and if the additional common shares were dilutive. There were no potential common shares or potentially dilutive common shares outstanding during the reporting periods.

Income Taxes

Fabricare and Equipment have elected to be taxed as S Corporations for federal and state purposes while Enterprise and Bell Hop are taxed as C corporations. Income tax liabilities on taxable income of S corporations are payable by the corporation’s shareholders.  Accordingly, except for state income taxes imposed on S Corporations of 1.5%, no provision for income taxes has been provided for Fabricare and Equipment in the accompanying combined financial statements for the years ended December 31, 2007 and 2006.

For Enterprise and Bell Hop, income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The Company's income tax returns may be subject to examinations by federal and state taxing authorities. Because application of tax laws and regulations to many types of transactions is susceptible to varying interpretations, amounts could be changed at a later date upon final determination by taxing authorities. No such examinations by taxing authorities are presently in process.

10

TEAM ENTERPRISES, INC. AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS

December 31, 2007

3.      PROPERTY AND EQUIPMENT

Property and equipment consist of the following at December 31, 2007:

Delivery equipment and other vehicles	$	132,471
Office furniture and equipment		189,729
Store furniture and equipment		2,363,595
Leasehold improvements		55,102
Land		15,000
Building		41,181
		2,797,078
Accumulated depreciation and amortization		(2,445,751	)
	$	351,327

Approximately $89,000 of gross property and equipment has been accounted for as capital leases. Amortization of property and equipment accounted for as capital leases approximated $19,000 and $14,000 during the years ended December 31, 2007 and 2006, respectively. See Note 6 for additional information on capital leases.

4.        NOTES RECEIVABLE

During May 2004, the Company entered into a note receivable agreement with an unrelated party in the amount of approximately $140,000, secured by certain assets, with monthly principal and interest installment payments of $1,219. The note receivable bears interest of 6.5% per annum and matures on April 25, 2019. As of December 31, 2007, the outstanding balance was approximately $118,000.

During July 2007, the Company entered into an unsecured note receivable agreement with an unrelated party in the amount of approximately $15,000 with monthly principal payments of $1,800 plus interest. The note receivable bears interest of 12% per annum and matures on April 30, 2008. As of December 31, 2007, the outstanding balance was approximately $8,000.

During August 2007, the Company entered into an unsecured note receivable agreement with an unrelated party in the amount of approximately $65,000 with monthly principal payments of $5,000 plus interest. The note receivable bears interest of 5% per annum. During January 2008, the balance outstanding was paid in full.

5.      RELATED PARTY TRANSACTIONS

During 2007, the Company entered into two separate unsecured note payable agreements with stockholders in the amounts of $70,000 and $40,000. Each of the notes payable bears an interest rate of 9% per annum and matures in April and August 2008, respectively. In March 2008, the Company received full payment of $70,000 upon maturity of one of the notes payable.

During October 2007, the Company entered into an unsecured note payable agreement with a shareholder in the amount of $40,000. The note payable bears an interest rate of 9% per annum and matures in October 2008.

As of December 31, 2007, the Company had receivables from stockholders for approximately $19,400 for expenses paid on behalf of the stockholders.

11

TEAM ENTERPRISES, INC. AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS

December 31, 2007

6.      INCOME TAXES

Bell Hop and Enterprises did not record an income tax expense or benefit for the years ended December 31, 2007 and 2006 due to their net losses and 100% deferred tax asset valuation allowance. The Company’s deferred income tax assets and liabilities result principally from net operating loss and general business credit carryforwards.

The net deferred income tax asset consisted of the following at December 31, 2007:

Net operating loss carryforwards	$	65,000
General business credit carryforwards		98,000
		163,000
Less: valuation allowance		(163,000	)
	$	–

The provision for income taxes differs from that which would result from applying the federal statutory tax rate to pre-tax income due principally to recording a full valuation allowance.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences become deductible. Management considers projected future taxable income and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods, which the deferred tax assets are deductible, management has established a 100% valuation allowance on net deferred tax assets at December 31, 2007.

As of December 31, 2007, the Company had tax net operating loss carryforwards for federal and state purposes of approximately $200,000, expiring at various dates through 2026, and general business credit carryforwards of approximately $98,000.

12

TEAM ENTERPRISES, INC. AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS

December 31, 2007

7.      COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company leases its facilities under noncancelable operating leases extending through October 2013.

Future minimum payments under such operating leases for the years ending December 31 and thereafter are as follows:

2008	$	561,000
2009		421,000
2010		279,000
2011		210,000
2012		118,000
Thereafter		37,000
	$	1,626,000

Rent expense for the years ended December 31, 2007 and 2006 was approximately $834,000 and $832,000, respectively.

Capital Leases

The Company leases certain equipment under capital lease obligations that expire through June 2011. Monthly payments approximate $1,500, including interest at rates ranging from 0% to 10.5%. The assets under capital leases are recorded at the lower of present value of the minimum lease payments or fair market value.

Future minimum lease payments on capital lease obligations for the years ending December 31 approximate the following:

2008	$	18,000
2009		15,000
2010		13,000
2011		6,000
		52,000
Less imputed interest		8,000
	$	44,000

13

TEAM ENTERPRISES, INC. AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS

December 31, 2007

7.      COMMITMENTS AND CONTINGENCIES (continued)

Legal Matters

From time to time, the Company may be involved in various claims, lawsuits, or disputes with third parties incidental to the normal operations of the business.  The Company is not currently involved in any such litigation.

Environmental Litigation Matters

Also from time to time, the Company is subject to environmental claims related to the use of certain dry cleaning solvents (see Note 2 Risks and Uncertainties).  Management, based on consultation with its legal counsel, believes that the ultimate outcome of such claims will not exceed its insurance coverage.

8.      EMPLOYEE BENEFIT PLAN

The Company sponsors a 401(k) plan for all employees with at least one year of service. The Company does not match any employee contributions and made no discretionary contributions for the years ended December 31, 2007 and 2006.

14

EX-99.2

EXHIBIT 99.2

US DRY CLEANING CORPORATION AND SUBSIDIARIES

UNAUDITED PRO FORMA COMBINED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2007 AND DECEMBER 31, 2007

INTRODUCTION

On February 14, 2008, US Dry Cleaning Corporation (the "Company") completed the acquisition of certain assets and liabilities of TEAM Enterprises, Inc. and Affiliates ("Team”) in a purchase business combination by issuing 2,044,667 shares of its restricted common stock, paying cash of $1,572,000, issuing senior debt of $1,472,000, and the assumption of $44,000 in liabilities.  Team has a December 31 year-end.

Team consists of Team Enterprises, Inc. (a New Mexico corporation), Bell Hop Cleaners of California, Inc. (a New Mexico corporation), Fabricare Services, Inc. (a California corporation), and Team Equipment, Inc. (a California corporation).  All such entities were under common control and ownership prior to the purchase.

The following unaudited pro forma combined consolidated financial statements (hereinafter collectively referred to as "the pro forma financial statements") are presented for illustrative purposes only. The unaudited pro forma financial statements are subject to a number of estimates, assumptions, and other uncertainties and are not necessarily indicative of the combined financial position at an earlier date, the results of operations for future periods, or the results that would have been realized had the Company and Team been a combined entity during the specified periods. The unaudited pro forma financial statements (including the notes thereto) are qualified in their entirety by reference to, and should be read in conjunction with, the historical financial statements and notes of the Company and Team incorporated herein by reference or included elsewhere herein. The Company's historical financial statements incorporated herein by reference are the audited September 30, 2007 consolidated financial statements included in the related Form 10-KSB and the unaudited December 31, 2007 condensed consolidated financial statements included in the related Form 10-QSB filed with the Securities and Exchange Commission.

The following unaudited pro forma financial statements give effect to the purchase of 100% of the equity interest in Team by the Company using the purchase method of accounting. The unaudited pro forma financial statements are based on the respective historical financial statements and the notes thereto of the Company and Team. The unaudited December 31, 2007 pro forma combined consolidated balance sheet, which assumes that the purchase took place on December 31, 2007, combines the unaudited interim consolidated balance sheet of the Company and the audited year-end balance sheet of Team as of such date. The unaudited pro forma combined consolidated statements of operations for the year ended September 30, 2007 and the three months ended December 31, 2007, which assume that the purchase took place on October 1, 2006, combine (1) the audited consolidated statement of operations of the Company for the year ended September 30, 2007 and the unaudited statements of operations of Team for the year ended September 30, 2007 and (2) the unaudited statements of operations for both the Company (consolidated) and Team for the three months ended December 31, 2007.

The pro forma adjustments described in the accompanying notes are based on management's estimates of the fair value of the consideration paid and the net assets acquired. The Company’s management has estimated the fair value of the consideration paid to be $5,246,454 as follows: (1) 2,044,667 common shares given at $0.86 per share (the closing price of the Company’s common stock on the purchase date) equaling $1,758,414 less a marketability discount of $145,000 (approximately 8%) for a net value of $1,613,414; (2) cash totaling $1,572,000; (3) senior debt of $1,472,000 bearing annual interest at 10%; (4) acquisition costs incurred totaling $545,000; and (5) assumed liabilities of $44,040 for a total purchase price consideration of $5,246,454.  

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US DRY CLEANING CORPORATION AND SUBSIDIARIES

UNAUDITED PRO FORMA COMBINED CONSOLIDATED BALANCE SHEET

DECEMBER 31, 2007

	HISTORICAL										US DRY CLEANING
	US DRY					PRO FORMA					COMBINED
	CLEANING			TEAM		ADJUSTMENTS					CONSOLIDATED
	CONSOLIDATED			COMBINED		AMOUNT			REF		PRO FORMA
ASSETS
Current Assets
Cash	$	1,722,000		$	129,000	$	(1,701,000	)		C,D	$	150,000
Accounts receivable, net		496,000			-		-					496,000
Notes receivable		-			192,000		(192,000	)		C,D		-
Related party receivable		-			19,000		(19,000	)		C,D		-
Deferred acquisition costs		642,000			-		(545,000	)		C,D		97,000
Prepaid expenses and other current assets		199,000			194,000		(93,000	)		C,D		300,000
Total Current Assets		3,059,000			534,000		(2,550,000	)				1,043,000
Property and Equipment, net		1,732,000			351,000		349,000					2,432,000
Other Assets
Deposits		152,000			-		-					152,000
Deferred financing costs, net		70,000			-		-					70,000
Goodwill		5,362,000			-		3,959,000			C,D		9,321,000
Intangible assets and other assets		508,000			39,000		491,000			C,D		1,038,000
Total Other Assets		6,092,000			39,000		4,450,000					10,581,000
Total Assets	$	10,883,000		$	924,000	$	2,249,000				$	14,056,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities	$	3,162,000		$	255,000	$	(255,000	)		C,D	$	3,162,000
Capital lease obligation, current		186,000			44,000		44,000			C,D		274,000
Notes payable, current		289,000			-		-					289,000
Related party notes payable, current		-			150,000		(150,000	)		C,D		-
Convertible notes payable, net of discount		525,000			-		-					525,000
Line of credit		1,050,000			-		-					1,050,000
Total Current Liabilities		5,212,000			449,000		(361,000	)				5,300,000
Long Term Liabilities
Capital lease obligation, net of current		245,000			-		-					245,000
Notes payable, net of current		342,000			-		-					342,000
Convertible notes payable, net of current		3,318,000			-		1,472,000			C,D		4,790,000
Total Long Term Liabilities		3,905,000			-		1,472,000					5,377,000
Total Liabilities		9,117,000			449,000		1,111,000					10,677,000
Stockholders' Equity
Common stock at par value		22,000			147,000		(145,000	)		D		24,000
Additional paid-in capital		23,726,000			33,000		1,578,000			D		25,337,000
Stockholder receivable		(766,000	)		-		-					(766,000	)
Retained earnings (accumulated deficit)		(21,216,000	)		295,000		(295,000	)		D		(21,216,000	)
Total Stockholders' Equity		1,766,000			475,000		1,138,000					3,379,000
Total Liabilities and Stockholders' Equity	$	10,883,000		$	924,000	$	2,249,000				$	14,056,000

The accompanying notes are an integral part of these unaudited pro forma combined consolidated financial statements.

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US DRY CLEANING CORPORATION AND SUBSIDIARIES

UNAUDITED PRO FORMA COMBINED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED SEPTEMBER 30, 2007

	HISTORICAL										US DRY CLEANING
	US DRY						PRO FORMA				COMBINED
	CLEANING			TEAM			ADJUSTMENTS				CONSOLIDATED
	CONSOLIDATED			COMBINED			AMOUNT			REF	PRO FORMA
Net Sales	$	8,432,000		$	6,957,000		$	-			$	15,389,000
Cost of Sales		4,234,000			4,844,000			-				9,078,000
Gross Profit		4,198,000			2,113,000			-				6,311,000
Operating Expenses
Delivery expenses		752,000			169,000			-				921,000
Store expenses		2,172,000			866,000			-				3,038,000
Selling expenses		835,000			212,000			-				1,047,000
Administrative expenses		5,773,000			526,000			-				6,299,000
Impairment of goodwill		1,961,000			-			-				1,961,000
Depreciation and amortization expense		346,000			170,000			64,000		E		580,000
Other		50,000			457,000			-				507,000
Total Operating Expenses		11,889,000			2,400,000			64,000				14,353,000
Operating Loss		(7,691,000	)		(287,000	)		(64,000	)			(8,042,000	)
Other Expense		(2,143,000	)		(29,000	)		(165,000	)	E		(2,337,000	)
Loss Before Income Taxes		(9,834,000	)		(316,000	)		(229,000	)			(10,379,000	)
Provision for Income Taxes		-			-			-				-
Net Loss	$	(9,834,000	)	$	(316,000	)	$	(229,000	)		$	(10,379,000	)
Basic and Diluted Loss per Common Share											$	(0.56	)
Basic and Diluted Weighted Average Number of Common Shares Outstanding												18,632,349

The accompanying notes are an integral part of these unaudited pro forma combined consolidated financial statements.

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US DRY CLEANING CORPORATION AND SUBSIDIARIES

UNAUDITED PRO FORMA COMBINED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED DECEMBER 31, 2007

											US DRY
	HISTORICAL										CLEANING
	US DRY						PRO FORMA				COMBINED
	CLEANING			TEAM			ADJUSTMENTS				CONSOLIDATED
	CONSOLIDATED			COMBINED			AMOUNT			REF	PRO FORMA
Net Sales	$	2,371,000		$	1,641,000		$	-			$	4,012,000
Cost of Sales		1,181,000			1,318,000			-				2,499,000
Gross Profit		1,190,000			323,000			-				1,513,000
Operating Expenses
Delivery expenses		200,000			48,000			-				248,000
Store expenses		777,000			216,000			-				993,000
Selling expenses		162,000			53,000			-				215,000
Administrative expenses		1,510,000			121,000			-				1,631,000
Depreciation and amortization expense		96,000			98,000			(39,500	)	E		154,500
Other		10,000			32,000			-				42,000
Total Operating Expenses		2,755,000			568,000			(39,500	)			3,283,500
Operating Loss		(1,565,000	)		(245,000	)		39,500				(1,770,500	)
Other Expense		(295,000	)		(3,000	)		(46,000	)	E		(344,000	)
Loss Before Income Taxes		(1,860,000	)		(248,000	)		(6,500	)			(2,114,500	)
Provision for Income Taxes		-			-			-				-
Net Loss	$	(1,860,000	)	$	(248,000	)	$	(6,500	)		$	(2,114,500	)
Basic and Diluted Loss per Common Share											$	(0.10	)
Basic and Diluted Weighted Average Number of Common Shares Outstanding												21,834,452

  The accompanying notes are an integral part of these unaudited pro forma combined consolidated financial statements.

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US DRY CLEANING CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA COMBINED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2007 and December 31, 2007

Note (A) Basis of Presentation

The unaudited pro forma combined consolidated balance sheet assumes that the purchase took place on December 31, 2007 and that certain assets and liabilities of Team were acquired/assumed by the Company. Such financial statement combines the historical balance sheets of the Company and Team at December 31, 2007. The unaudited pro forma combined consolidated statements of operations assume that the purchase took place on October 1, 2006, and combine the historical statement of operations of the Company (consolidated) and Team for the year ended September 30, 2007 and the three months ended December 31, 2007. The historical statement of operations of Team for the year ended September 30, 2007 was prepared by starting with the audited statement of operations for the year ended December 31, 2007, excluding the statement of operations for the three months ended December 31, 2007, and adding the statement of operations for the three months ended December 31, 2006. All adjustments resulting from the audit of Team for the years ended December 31, 2007 and 2006 were recast to the proper quarterly periods in preparing the historical statement of operations for the year ended September 30, 2007. The aforementioned historical financial statements have been adjusted as discussed in the notes below.

There were no significant transactions on a combined basis between the acquired entities and the Company during the periods presented.

Note (B) Introduction to the Unaudited Pro Forma Adjustments

The accompanying pro forma information, including the allocation of the purchase price, is based on management's estimates of (1) the net assets acquired and (2) the fair value of the consideration given by the Company to consummate the purchase.  The principal reason that the Company agreed to pay a purchase price for Team in excess of its recorded net assets was to acquire an established revenue stream.

Note (C)

To reflect the excess of the total acquisition cost over the estimated fair value of the tangible and identifiable intangible assets acquired less liabilities assumed. The purchase price, purchase price allocation and financing of the transaction are summarized as follows:

Purchase price paid as:
Cash	$	1,572,000
Restricted common stock issued ($0.86 per share less 8% marketability discount)		1,613,000
10% Senior Convertible Debt		1,472,000
Acquisition costs incurred by the Company		545,000
Liabilities assumed by the Company		44,000
Total purchase consideration		5,246,000
Allocated to:
Historical book value of Team assets and liabilities:
Property and equipment		351,000
Prepaid expenses and deposits		101,000
Liabilities assumed		(44,000	)
		408,000
Adjustments to reflect assets and liabilities at estimated fair value:
Property and equipment		349,000
Noncompete agreement		470,000
Trademark portfolio		60,000
Excess of purchase price over allocation to identifiable assets and liabilities (goodwill)	$	3,959,000

If the purchase had been consumated on October 1, 2006, the Company would have recorded additional interest, depreciation and amortization expense as reflected in the accompanying pro forma financial statements.

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Note (D)

To reflect (1) the elimination of the stockholders' equity accounts of Team and certain Team assets and liabilities not purchased or assumed by the Company, (2) the equity component of the purchase price, and (3) the purchase price allocation as reflected above in Note (C).

Note (E)

To reflect the elimination of Team interest expense and the increased interest expense of the Company as a result of issuance of the $1,472,000 senior debt bearing interest at 10% annually.  Also to reflect (1) increased depreciation and amortization expense as a result of adjusting the carrying value of Team’s property and equipment from $351,000 to $700,000, depreciated on a straight-line basis over 5 years and (2) amortization of the $470,000 covenant not-to-compete on a straight-line basis over 5 years.  Finally, to reflect the pro forma loss of interest income on the $1,572,000 cash consideration paid at 3% annually.

Note (F)

Since the unaudited pro forma combined consolidated statements of operations report a loss, there is no income tax effect of the above pro forma adjustments.  Since the Company purchased certain net assets of Team, but did not acquire the Team legal entities via a stock purchase, the tax net operating loss and tax credit carryforwards of Team remain with the separate Team legal entities.

Note (G)

Pro forma basic loss per common share is computed by dividing the pro forma net loss applicable to common stockholders by the pro forma weighted average number of common shares assumed to be outstanding during the periods of computation. Pro forma diluted loss per common share is computed using the pro forma weighted average number of common shares and, if dilutive, potential common shares outstanding during the periods. During the pro forma periods presented, there were no additional potentially dilutive common shares (that is, resulting from the purchase transaction) that were excluded from pro forma diluted loss per common share because they were anti-dilutive.

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