Form: 8-K/A

Current report filing

January 20, 2012

Documents

EXHIBIT 99.3
 
CHINA YOUTH MEDIA, INC.
INTRODUCTION TO PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
 
Pro Forma Financial Information.

The following unaudited pro forma condensed combined financial statements give effect to the merger between China Youth Media, Inc. (“China Youth”) and Midwest Energy Emissions Control Corp (“Midwest”) in accordance with ASC 805-20. The transaction contemplated under the merger agreement is deemed to be a reverse acquisition, where China Youth Media, Inc. (the legal acquirer) is considered the accounting acquiree and Midwest Energy Emissions Corp. (the legal acquiree) is considered the accounting acquirer.  The assets and liabilities of Midwest are recorded at their historical cost with the capital structure of China Youth Media, Inc.  No goodwill will be recorded in the transaction.  China Youth is deemed a continuation of the business of Midwest and the historical financial statements of Midwest will become the historical financial statements of China Youth Media, Inc. The unaudited pro forma information is presented for illustration purposes only in accordance with the assumptions set forth below and in the notes to the pro forma condensed combined financial statements.
 
The unaudited pro forma condensed combined balance sheet as of March 31, 2011 combines the balance sheets of China Youth and Midwest and gives pro forma effect to (i) China Youth’s conversion of convertible notes and accrued salary as if the conversion had occurred March 31, 2011, (ii) the issuance of 20 shares of common stock by Midwest for $50,000 as if the transaction had occurred on March 31, 2011, (iii) the decision to discontinue China Youth’s subsidiaries as if the decision had been made on March 31, 2011, and (iv) the reverse merger between China Youth and Midwest, in which Midwest is deemed to be the acquiring entity for accounting purposes, as if the reverse merger had been completed as of March 31, 2011. The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2010 and the three month period ended March 31, 2011 combines the statement of operations of China Youth Media, Inc. and Midwest and gives pro forma effect to these transactions as if they were completed on December 31, 2010.
 
The unaudited pro forma balance sheet and statements of operations should be read in conjunction with the separate historical financial statements of Midwest, which was filed on Form 8-K on June 27, 2011 and the historical financial statements of the China Youth, as filed with the Securities and Exchange Commission and issued on Form10-K and 10-Q for the year ended December 31, 2010 and for the period ended March 31, 2011.  These pro forma condensed combined financial statements may not be indicative of what would have occurred if the acquisition had actually occurred on the indicated dates and they should not be relied upon as an indication of future results of operations.
 
 
1
 
 
CHINA YOUTH MEDIA, INC.
PRO FORMA CONDENSED BALANCE SHEETS
MARCH 31, 2011
(UNAUDITED)
 
   
Midwest Energy Emissions Corp.
    
China Youth
 Media, Inc.
    
Pro Forma
Adjustments
    
Pro Forma
Combined
  
ASSETS
                        
                         
CURRENT ASSETS
                        
Cash
  
$
779
    
$
53,530
    
$
-
    
$
54,309
  
Accounts receivable, net
    
-
      
1,181
      
-
      
1,181
  
Other current assets
    
104,167
      
1,852
      
-
      
106,019
  
Total current assets
    
104,946
      
56,563
      
-
      
161,509
  
                                 
Property and Equipment, Net
    
1,032,600
      
35,946
      
-
      
1,068,546
  
                                 
Other Asset
                                
Intangible assets, net of accumulated amortization
    
86,766
      
2,000
      
-
      
88,766
  
TOTAL ASSETS
  
$
1,224,312
    
$
94,509
    
$
-
    
$
1,318,821
  
                                 
LIABILITIES AND STOCKHOLDERS'  EQUITY (DEFICIT)
                                
                                 
CURRENT LIABILITIES
                                
Accounts payable and accrued expenses
  
$
1,021,890
    
$
372,412
    
$
-
    
$
1,394,302
  
Advances payable - related party
    
680,972
      
-
      
-
      
680,972
  
Note payable - related party
    
-
      
140,242
      
-
      
140,242
  
Total current liabilities
    
1,702,862
      
512,654
      
-
      
2,215,516
  
                                 
Note payable
    
-
      
50,000
      
-
      
50,000
  
Beneficial conversion feature
    
-
      
(116,071
)
    
-
      
(116,071
)
TOTAL LIABILITIES
    
1,702,862
      
446,583
      
-
      
2,149,445
  
                                 
STOCKHOLDERS' EQUITY (DEFICIT)
                                
Preferred stock
                                
Series A Preferred Stock
   
-
      
-
      
-
      
-
  
Series B Preferred Stock
     -      
-
      
10
      
10
  
Common stock
    
9,980
      
334,727
      
(9,980
)
    
334,727
  
Additional paid-in capital
    
287,238
      
23,746,266
      
(24,423,097
)
    
(389,593
)
Accumulated other comprehensive income
    
-
      
(16,525
)
    
16,525
      
-
  
Accumulated deficit
    
(775768
)
    
(24,416,542
)
    
24,416,542
      
(775,768
)
                                 
Total stockholders' deficit
    
(478,550
)
    
(352,074
)
    
-
      
(830,624
)
                                 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
  
$
1,224,312
    
$
94,509
    
$
-
    
$
1,318,821
  
 
(A)  
Represents the effect of the reverse merger on Stockholders’ Equity (Deficit).
 
 
2
 
 
CHINA YOUTH MEDIA, INC.
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
MARCH 31, 2011
 (UNAUDITED)
 
   
Midwest Energy
    
China Youth
    
Pro Forma
    
Pro Forma
  
   
Emissions Corp.
    
Media, Inc.
    
Adjustments
    
Combined
  
REVENUE
                        
Sales
  
$
-
    
$
-
    
$
-
    
$
-
  
                                 
Total revenue
    
-
      
-
      
-
      
-
  
                                 
OPERATING EXPENSES
                                
License Maintenance Fees
    
37,500
      
-
      
-
      
37,500
  
Research and development
    
102,418
      
-
      
-
      
102,418
  
Selling, general and administrative expenses
    
115,008
      
-
      
-
      
115,008
  
                                 
                                 
Total operating expenses
    
254,926
      
-
      
-
      
254,626
  
                                 
Operating loss
    
(254,926
)
    
-
      
-
      
(254,926
)
                                 
Other Income (expense)
                                
Interest income (expense)
    
(18,527
)
    
-
      
-
      
(18,527
)
                                 
                                 
Total other income (expense)
    
(18,527
)
    
-
      
-
      
(18,527
)
                                 
                                 
NET LOSS FROM CONTINUING OPERATIONS
    
(273,453
)
    
-
      
-
      
(273,453
)
                                 
NET LOSS FROM DISCONTINUED OPERATIONS
    
-
      
(140,251
)
    
-
      
(140,251
)
                                 
NET LOSS
    
(273,453
)
    
(140,251
)
    
-
      
(413,704
)
                                 
 Comprehensive Loss
                                
Foreign currency translation adjustment
    
-
      
(16,525
)
    
-
      
(16,525
)
Net loss
    
(273,453
)
    
(140,251
)
    
-
      
(413,704
)
COMPREHENSIVE LOSS
  
$
(273,453
)
  
$
(156,776
)
  
$
-
    
$
(430,229
)
                                 
NET LOSS PER COMMON SHARE - BASIC AND DILUTED:
                                
                                 
CONTINUING OPERATIONS
                            
-
  
DISCONTINUED OPERATIONS
                            
-
  
                           
$
-
  
                                 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
                            
334,727,476
  
 
 
3
 
 
CHINA YOUTH MEDIA, INC.
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
DECEMBER 31, 2010
 (UNAUDITED)
 
   
Midwest Energy
    
China Youth
    
Pro Forma
    
Pro Forma
  
   
Emissions Corp.
    
Media, Inc.
    
Adjustments
    
Combined
  
REVENUE
                        
Sales
  
$
7,000
    
$
-
    
$
-
    
$
7,000
  
                                 
Total revenue
    
7,000
      
-
      
-
      
7,000
  
                                 
OPERATING EXPENSES
                                
License Maintenance Fees
    
100,000
      
-
      
-
      
100,000
  
Research and development
    
125,834
      
-
      
-
      
125,834
  
General and administrative expenses
    
97,194
      
-
      
-
      
97,194
  
Professional Fees
    
149,655
      
-
      
-
      
149,655
  
Amortization of license fees
    
5,882
      
-
      
-
      
5,882
  
                                 
Total operating expenses
    
478,565
      
-
      
-
      
478,565
  
                                 
Operating loss
    
(471,565
)
    
-
      
-
      
(471,565
)
                                 
Other Income (expense)
                                
Interest income (expense)
    
-
      
-
      
-
      
-
  
                                 
                                 
Total other income (expense)
      
-
    
-
      
-
        
-
                                 
                                 
NET LOSS FROM CONTINUING OPERATIONS
    
(471,565
)
    
-
      
-
      
(471,565
)
                                 
NET LOSS FROM DISCONTINUED OPERATIONS
    
-
      
(4,117,192
)
    
-
      
(4,117,192
)
                                 
NET LOSS
    
(471,565
)
    
(4,117,192
)
    
-
      
(4,588,757
)
                                 
 Comprehensive Loss
                                
Foreign currency translation adjustment
    
-
      
(705
)
    
-
      
(705
)
Net loss
    
(471,565
)
    
(4,117,192
)
    
-
      
(4,588,757
)
COMPREHENSIVE LOSS
  
$
(471,565
)
  
$
(4,117,897
)
  
$
-
    
$
(4,589,462
)
                                 
NET LOSS PER COMMON SHARE - BASIC AND DILUTED:
                                
                                 
CONTINUING OPERATIONS
                            
(0.00
)
DISCONTINUED OPERATIONS
                            
(0.03
)
                           
$
(0.03
)
                                 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
                            
159,365,971
  

 
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