EXHIBIT 99.2

NUVILEX, INC.

Unaudited Pro Forma Combined Financial Statements

On January 12, 2009, Nuvilex, Inc. and Freedom-2 Holdings, Inc. entered into a Share Exchange agreement pursuant to which Nuvilex has agreed to acquire 100% of the issued and outstanding securities of Freedom-2 from Freedom-2s' shareholders in exchange for the issuance of 48,205,000 shares of Nuvilex common stock.

On March 2, 2009, Nuvilex exchanged these shares at $0.055 per share for a total purchase price of $2,651,275. The following unaudited pro forma combined balance sheet presents the historical financial position combined with Freedom-2 as if the acquisition and the financing for the acquisition had occurred on April 30, 2008, and includes adjustments which give effect to events that are directly attributable to the transaction and that are factually supportable, regardless of whether they have a continuing impact or are nonrecurring. The unaudited pro forma combined statements of income present the combined results of our operations with Freedom-2 as if the acquisition and the financing for the acquisition had occurred at the beginning of each of the periods presented and include adjustments that are directly attributable to the acquisition, are expected to have a continuing impact on the combined results, and are factually supportable. The pro forma financial statements are not necessarily indicative of what our financial position or results of operations actually would have been had we completed the merger at the dates indicated. In addition, the unaudited pro forma combined financial information does not purport to project the future financial position or operating results of the combined company.


The unaudited pro forma combined financial statements should be read in conjunction with the:

·

accompanying Notes to the Unaudited  Pro Forma Combined Financial Statements;

·

separate historical financial statements included in our Annual Report on Form 10-KSB for the year ended April 30, 2008 and Form 10-Q as of and for the nine months ended January 31, 2009; and

·

Freedom-2 Holdings, Inc. Audited Consolidated Financial Statements included as Exhibit 99.1 to this Current Report on Form 8-K.


We prepared the unaudited pro forma combined financial information using the purchase method of accounting. Accordingly, our estimated cost to acquire Freedom-2 of $2,265,635 has been allocated to the assets acquired and liabilities assumed according to their estimated fair values at the date of acquisition. Any excess of the purchase price over the estimated fair value of the net assets acquired has been recorded as goodwill. We are currently determining the fair values of a significant portion of these net assets. The preliminary work performed in estimating the fair values is reflected in these unaudited pro forma combined financial statements. The final determination of these fair values will be completed as soon as possible but no later than one year from the acquisition date.

This final valuation will be based on the actual assets acquired and liabilities assumed at the acquisition date. Although the final determination may result in asset and liability fair values that are different than the preliminary estimates of these amounts included herein, it is not expected that those differences will be material to an understanding of the impact of this transaction to our financial results.

1



NUVILEX, INC. & SUBSIDIARIES

Unaudited Pro Forma Combined Balance Sheets

 

 

 

 

Nuvilex, Inc. April 30, 2008

Freedom-2 Holdings, Inc. December 31, 2008

Pro Forma Adjustments 1 (Note 4)

 

Pro Forma Adjustments 2 (Note 5)

Combined

Assets

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

Cash

 

 

 $            1,513,541

 $                 25,229

 $               186,501

 a

 $                          -   

 $               1,725,271

 

Marketable Securities

 

                            -   

                            -   

                            -   

 

                             -   

                              -   

 

Accounts Receivable

 

                  376,495

                            -   

                            -   

 

                             -   

                     376,495

 

Inventory

 

                  242,901

                    47,913

                            -   

 

                             -   

                     290,814

 

Prepaid Expenses

 

               1,489,267

                  220,744

                            -   

 

                             -   

                  1,710,011

 

Loan Receivable

 

                  113,125

                            -   

                            -   

 

                             -   

                     113,125

 

 

Total Current Assets

               3,735,329

                  293,886

                  186,501

 

                             -   

                  4,215,716

 

 

 

 

 

 

 

 

 

 

Property & Equipment, Net

 

                    23,188

               2,578,337

                            -   

 

                             -   

                  2,601,525

Intangible Assets, Net

 

                  863,403

                            -   

                            -   

 

                             -   

                     863,403

Prepaid Expenses & Other

 

               2,994,294

                    15,760

                            -   

 

                             -   

                  3,010,054

Goodwill

 

 

                            -   

                            -   

                            -   

 

                1,895,401

                  1,895,401

 

 

 

 

   

   

   

 

   

 

Total Assets

 

 

 $          7,616,214

 $          2,887,983

 $             186,501

 

 $           1,895,401

 $          12,586,099

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities & Stockholders' Equity (Deficit)

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Accounts Payable and Accrued Expenses

 $               173,058

 $            1,679,116

 $           (1,403,081)

 b

 $                          -   

 $                  449,093

 

Deferred Revenue

 

                      7,500

                            -   

                            -   

 

                             -   

                         7,500

 

License Fee Payable

 

                            -   

                  100,000

                            -   

 

                             -   

                     100,000

 

Current Portion of Notes Payable

                            -   

                  573,333

                 (573,333)

 c

                             -   

                              -   

 

Current Portion of Mortgage Payable

                            -   

                    88,011

                            -   

 

                             -   

                       88,011

 

 

Total Current Liabilities

                  180,558

               2,440,460

              (1,976,414)

 

                             -   

                     644,604

 

 

 

 

 

 

 

 

 

 

Non-Current Liabilities

 

 

 

 

 

 

 

 

Mortgage Payable, Net of Current Portion

                            -   

               1,511,989

                  404,228

 a,b

                             -   

                  1,916,217

 

License Fee Payable, Net of Current Portion

                            -   

                            -   

                  300,000

 b

                             -   

                     300,000

 

Bridge Notes Payable

 

                            -   

                  816,000

                 (796,000)

 d,a,b

                             -   

                       20,000

 

Tenant Deposits

 

                            -   

                      3,987

                            -   

 

                             -   

                         3,987

 

 

Total Non-Current Liabilities

                            -   

               2,331,976

                   (91,772)

 

                             -   

                  2,240,204

 

 

 

 

 

 

 

 

 

 

 Total Liabilities

 

                  180,558

               4,772,436

              (2,068,186)

 

                             -   

                  2,884,808

 

 

 

 

 

 

 

 

 

 

Commitments & Contingencies

 

                            -   

                            -   

                            -   

 

                             -   

                              -   

 

 

 

 

 

 

 

 

 

 

Stockholders' Equity (Deficit)

 

 

 

 

 

 

 

 

Preferred Stock

 

                             1

                      3,703

                     (3,703)

 e

                             -   

                                1

 

Common Stock

 

                    19,192

                      8,109

                    87,437

 a,b,c,d,e

                    (90,725)

                       24,013

 

Additional Paid-in Capital

 

             30,866,539

               6,996,628

               2,170,953

 a,b,c,d,e

               (6,906,767)

                33,127,353

 

Comprehensive Income (Loss)

                            -   

                            -   

                            -   

 

                             -   

                              -   

 

Accumulated Deficit

 

            (23,450,076)

              (8,892,893)

                            -   

 

                8,892,893

              (23,450,076)

 

 

Total Stockholders' Equity (Deficit)

               7,435,656

              (1,884,453)

               2,254,687

 

                1,895,401

                  9,701,291

 

 

 

 

 

 

 

 

 

 

Total Liabilities & Stockholders' Equity (Deficit)

 $          7,616,214

 $          2,887,983

 $             186,501

 

 $           1,895,401

 $          12,586,099

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these pro forma financial statements

 

2


NUVILEX, INC. & SUBSIDIARIES

Unaudited Pro Forma Combined Statements of Operations

 

 

 

 

Nuvilex, Inc. for the Year Ended April 30, 2008

Freedom-2 Holdings, Inc. for the Year Ended December 31, 2008

Pro Forma Adjustments 1 (Note 4)

 

Pro Forma Adjustments 2 (Note 5)

Combined

 

 

 

 

 

 

 

 

 

 

 Revenues

 

 $      1,189,954

 $         207,297

 $                 -   

 

 $                  -   

 $        1,397,251

 

 

 

 

 

 

 

 

 

 

 Cost of Goods Sold

 

            266,202

            216,153

                    -   

 

                     -   

             482,355

 

 

 

 

 

 

 

 

 

 

 Gross Profit

 

            923,752

              (8,856)

                    -   

 

                     -   

             914,896

 

 

 

 

 

 

 

 

 

 

 Operating Expenses

 

 

 

 

 

 

 

 

 Sales & Marketing

 

            204,593

            813,056

                    -   

 

                     -   

           1,017,649

 

 Research and Development

 

            412,882

         1,572,468

                    -   

 

                     -   

           1,985,350

 

 Consulting

 

         3,321,941

                    -   

                    -   

 

                     -   

           3,321,941

 

 Legal Settlements

 

                    -   

            214,196

                    -   

 

                     -   

             214,196

 

 General & Administrative

 

            733,580

         1,972,661

                    -   

 

                     -   

           2,706,241

 

 

 Total Operating Expenses

 

         4,672,996

         4,572,381

                    -   

 

                     -   

           9,245,377

 

 

 

 

 

 

 

 

 

 

 Operating Income (Loss)

 

        (3,749,244)

        (4,581,237)

                    -   

 

                     -   

          (8,330,481)

 

 

 

 

 

 

 

 

 

 

 Other Income (Expense)

 

 

 

 

 

 

 

 

 Interest Income

 

             26,223

             28,535

                    -   

 

                     -   

               54,758

 

 Dividend Income

 

               7,800

                    -   

                    -   

 

                     -   

                 7,800

 

 Interest Expense

 

              (2,953)

           (164,999)

                    -   

 

                     -   

            (167,952)

 

 Gain (Loss) on Sale of Marketable Securities

            (73,792)

                    (5)

                    -   

 

                     -   

              (73,797)

 

 Royalty Income

 

                    -   

            164,093

                    -   

 

                     -   

             164,093

 

 Rent Income

 

                    -   

             17,030

                    -   

 

                     -   

               17,030

 

 

 Total Other  Income (Expense)

 

            (42,722)

             44,654

                    -   

 

                     -   

                 1,932

 

 

 

 

 

 

 

 

 

 

 Net Income (Loss) Before Income Taxes

 

        (3,791,966)

        (4,536,583)

                    -   

 

                     -   

          (8,328,549)

 

 

 

 

 

 

 

 

 

 

 Provision for Income Taxes

 

                    -   

              (7,703)

                    -   

 

                     -   

                (7,703)

 

 

 

 

 

 

 

 

 

 

 Net Income (Loss)

 

 $     (3,791,966)

 $     (4,544,286)

 $                 -   

 

 $                  -   

 $       (8,336,252)

 

 

 

 

 

 

 

 

 

 

 Income (Loss) Per Share-Basic and Diluted

 

 $              (0.02)

 $               (0.56)

 

 

 

 $                (0.05)

 

 

 

 

 

 

 

 

 

 

 Weighted Average Number of Shares

 

     167,925,432

         8,097,632

 

 

 

       167,925,432

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these pro forma financial statements

 

3



NUVILEX, INC. & SUBSIDIARIES

Unaudited Pro Forma Combined Statements of Cash Flows

 

 

Nuvilex, Inc. for the Year Ended April 30, 2008

Freedom-2 Holdings, Inc. for the Year Ended December 31, 2008

Pro Forma Adjustments 1 (Note 4)

 

Pro Forma Adjustments 2 (Note 5)

Combined

Cash Flows from Operating Activities

 

 

 

 

 

 

 Net Income (Loss)

 $             (3,791,966)

 $             (4,544,286)

 $                         -   

 

 $                          -   

 $           (8,336,252)

 

 

 

 

 

 

 

 

 Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation & Amortization

                         6,380

                     119,009

                            -   

 

                             -   

                  125,389

 

Stock Based Compensation

                  5,324,821

                       43,225

                            -   

 

                             -   

               5,368,046

 

Share-Based Payment

                               -   

                       20,000

                            -   

 

                             -   

                    20,000

 

Legal Settlements

                               -   

                     214,196

                            -   

 

                             -   

                  214,196

 

Royalty Income

                               -   

                   (164,093)

                            -   

 

                             -   

                 (164,093)

 Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts Receivable

                   (145,024)

                              -   

                            -   

 

                             -   

                 (145,024)

 

Inventory

                   (242,901)

                     (47,913)

                            -   

 

                             -   

                 (290,814)

 

Prepaid Expenses and Deposits

                (2,449,415)

                       73,538

                            -   

 

                             -   

              (2,375,877)

 

Shareholder Advances

                       14,983

                              -   

                            -   

 

                             -   

                    14,983

 

Accounts Payable and Accrued Expenses

                       54,252

                     758,308

                            -   

 

                             -   

                  812,560

 

Loans Receivable

                     (13,125)

                              -   

                            -   

 

                             -   

                   (13,125)

 

Deferred Revenue

                         7,500

                              -   

                            -   

 

                             -   

                      7,500

 

License Fee Payable

                               -   

                   (100,000)

                            -   

 

                             -   

                 (100,000)

 

Tenant Deposits

                               -   

                         3,987

                            -   

 

                             -   

                      3,987

 

 

 

 

 

 

 

 

Net Cash Used in Operating Activities

              (1,234,495)

              (3,624,029)

                            -   

 

                             -   

           (4,858,524)

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities

 

 

 

 

 

 

 

Sales (Purchases) of Marketable Securities

                       (2,524)

                     850,000

                            -   

 

                             -   

                  847,476

 

Purchase of Property and Equipment

                       (7,049)

                   (238,360)

                            -   

 

                             -   

                 (245,409)

 

 

 

 

 

 

 

 

Net Cash Used in Investing Activities

                      (9,573)

                   611,640

                            -   

 

                             -   

                602,067

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities

 

 

 

 

 

 

 

Due to Related Party

                               -   

                   (135,326)

                            -   

 

                             -   

                 (135,326)

 

Proceeds from Mortgage Note on Property

                               -   

                  1,600,000

                  150,000

 a

                             -   

               1,750,000

 

Proceeds from Bridge Notes

                               -   

                     816,000

                    35,000

 a,d

                             -   

                  851,000

 

Proceeds from Exercise of Stock Options

                               -   

                            625

                      1,501

 a

                             -   

                      2,126

 

Contribution of Capital

                     164,000

                              -   

                            -   

 

                             -   

                  164,000

 

Proceeds from Sale of Preferred Stock

                  1,000,000

                              -   

                            -   

 

                             -   

               1,000,000

 

Proceeds from Sale of Common Stock

                     484,500

                              -   

                            -   

 

                             -   

                  484,500

 

 

 

 

 

 

 

 

Net Cash Provided by Financing Activities

                1,648,500

               2,281,299

                186,501

 

                             -   

             4,116,300

 

 

 

 

 

 

 

 

Net Increase (Decrease) in Cash

                   404,432

                 (731,090)

                186,501

 

                             -   

               (140,157)

 

 

 

 

 

 

 

 

Cash Beginning of Period

                  1,109,109

                     756,319

                            -   

 

                             -   

               1,865,428

 

 

 

 

 

 

 

 

Cash End of Year

 $            1,513,541

 $                  25,229

 $             186,501

 

 $                          -   

 $          1,725,271

 

 

 

 

 

 

 

 

Supplemental Disclosure of Cash Flow Information:

 

 

 

 

 

 

 

Cash Paid during the period for interest

 $                            -   

 $                  122,836

 $                         -   

 

 $                          -   

 $               122,836

 

Cash Paid during the period for income taxes

                               -   

                         7,703

                            -   

 

                             -   

                      7,703

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these pro forma financial statements

 

4


NUVILEX, INC. & SUBSIDIARIES

NOTES TO UNAUDITED COMBINED PRO FORMA FINANCIAL STATEMENTS

Note 1 – Description of Transaction and Basis of Presentation

On March 2, 2009, Nuvilex, Inc., exchanged 48,205,000 shares for all of the outstanding shares of Freedom-2 Holdings, Inc. at $0.047 per share for a total purchase price of $2,265,635. The merger has been accounted for as a purchase under accounting principles generally accepted in the United States (GAAP). Under the purchase method of accounting, the assets and liabilities of Freedom-2 are recorded as of the completion of the merger, at their respective fair values, and consolidated with our assets and liabilities. The results of operations of Freedom-2 will be consolidated beginning on the date of the merger. Our financial statements issued after completion of the merger will reflect these values, but will not be restated retroactively to reflect the historical financial position or results of operations of Freedom-2.

Note 2 – Purchase Price

For the purposes of this pro forma analysis, the purchase price has been preliminarily allocated based on an estimate of the fair value of assets and liabilities acquired as of the date of acquisition. The determination of estimated fair value requires management to make significant estimates and assumptions. The final valuation of net assets is expected to be completed as soon as possible but no later than one year from the acquisition date. We will adjust our estimates as needed based upon the final valuation.


Elements of Purchase Consideration

Common Stock Issued for Freedom-2's Outstanding Shares

 

 $               2,265,635

 

 

 

 

Purchase Price Allocation

Cash

 

 

 $                  211,730

Inventory

 

                       47,913

Prepaid Expenses & Other

 

                     236,504

Property and Equipment

 

                  2,578,337

Goodwill

 

                  1,895,401

Accounts Payable and Accrued Expenses

 

                   (276,035)

License Fee Payable

 

                   (400,000)

Mortgage Payable

 

                (2,004,228)

Bridge Notes Payable

 

                     (20,000)

Tenant Deposits

 

                       (3,987)

Total

 

 

 $               2,265,635

In accordance with the requirements of Statement of Financial Accounting Standard (SFAS) No. 142, Goodwill and Other Intangible Assets, any goodwill associated with the merger will not be amortized, but will be evaluated for impairment on a periodic basis.

Goodwill for the allocation of the purchase price was based on the fair value of the net assets acquired on the date of acquisition. Goodwill presented in the unaudited combined balance sheet was based on the net assets as if the acquisition had occurred on March 2, 2009.

Note 3 - Accounting Policies and Financial Statement Classifications

As a result of our review of Freedom-2's accounting policies and financial statement classifications, we determined that is was not necessary to make reclassifications to their audited financial statements to conform to accounting policies and classifications that are consistent with our practices.

 

5


Note 4 - Pro Forma Adjustments 1

Adjustments included in the column under the heading “Pro Forma Adjustments 1” primarily relate to Freedom-2 Holdings, Inc. transactions that relate to the Merger on March 2, 2009 but occurred subsequent to the audit report dated December 31, 2008 and include the following:

a-The adjustments to cash include a $150,000 received for an increase to the Mortgage Payable, $35,000 received for an increase to Bridge Notes (d) and $1,501 received for the conversion of all outstanding stock options.

b-The adjustments to Accounts Payable and Accrued Expenses include ($833,853) relating to various parties converting payable amounts due to common stock in Freedom-2, ($15,000) relating to the conversion of amounts due to Bridge Notes Payable (c), ($300,000) relates to a subsequent contract amendment for License Fees Payable, and ($254,228) relates to a subsequent vendor agreement whereby the vendor converted a trade payable to a secured note collateralized by the building and land.

c-The adjustment to Notes Payable ($573,333) represents the conversion of this loan to common stock.

d-The adjustments to Bridge Notes include $35,000 received in cash, $15,000 relating to the conversion of accounts payable and accrued expenses (b), and the conversion of ($846,000) to Common Stock.

e-The adjustments to Preferred Stock of ($3,703) represents the conversion of all outstanding preferred stock to common.

 Note 5 - Pro Forma Adjustments 2

Adjustments included in the column under the heading “Pro Forma Adjustments 2” relate to the elimination of Freedom-2, Inc.'s equity and Nuvilex, Inc.'s allocation of the purchase price to Goodwill.


Elimination of Freedom-2 Equity

 

 

Common Stock

 

 $                  (95,546)

Additional Paid-in Capital

 

                (9,167,581)

Accumulated Deficit

 

                  8,892,893

Total

 

 

                   (370,234)

 

 

 

 

Nuvilex Purchase Price

 

 

Common Stock

 

                         4,821

Additional Paid-in Capital

 

                  2,260,814

Accumulated Deficit

 

                              -   

Total

 

 

                  2,265,635

 

 

 

 

Adjustment Totals

 

 

Common Stock

 

                     (90,725)

Additional Paid-in Capital

 

                (6,906,767)

Accumulated Deficit

 

                  8,892,893

Total (Goodwill)

 

 $               1,895,401

 

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