Exhibit 99.2

Mandalay Digital Group, Inc.

and Subsidiaries Acquired From Logia Group, Ltd.

Pro Forma Combined Financial Statements

(unaudited)

 

Contents   
     Page  

Pro Forma Combined Financial Statements:

  

Pro Forma Combined Balance Sheet as of June 30, 2012 (unaudited)

     28   

Pro Forma Combined Statement of Operations for the three months ended June 30, 2012 (unaudited)

     29   

Pro Forma Combined Statement of Operations for the year ended March 31, 2012 (unaudited)

     30   

Notes to Pro Forma Combined Financial Statements (unaudited)

     31   

 

27


Mandalay Digital Group, Inc.

and Subsidiaries Acquired From Logia Group, Ltd.

Pro Forma Combined Balance Sheet

June 30, 2012

(unaudited)

 

     Mandalay
Digital
Group, Inc. (1)
    Subsidiaries
Acquired  From
Logia Group, Ltd.(2)
    Pro Forma
Adjustments
    Pro Forma
Combined
 
     (historical)     (historical)              
ASSETS         

CURRENT ASSETS

        

Cash & cash equivalents

   $ 8,240,000      $ 22,000      $ (3,416,000 ) a    $ 4,846,000   

Accounts receivable

     1,019,000        800,000        —          1,819,000   

Prepaid expenses and other current assets

     136,000        32,000        —          168,000   

Due from related parties

     —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL CURRENT ASSETS

     9,395,000        854,000        (3,416,000     6,833,000   

Restricted cash

     —          197,000        —          197,000   

Property and equipment, net

     201,000        53,000          254,000   

Intangible assets, net

     759,000        —          4,470,000   b      5,229,000   

Goodwill

     3,640,000        —          492,000   c      4,132,000   

Other assets

     —          104,000        —          104,000   
  

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL ASSETS

   $ 13,995,000      $ 1,208,000      $ 1,546,000      $ 16,749,000   
  

 

 

   

 

 

   

 

 

   

 

 

 
LIABILITIES AND SHAREHOLDERS’ DEFICIT         

CURRENT LIABILITIES

        

Accounts payable

   $ 3,032,000      $ 707,000      $ —        $ 3,739,000   

Accrued license fees

     1,049,000        —          —          1,049,000   

Accrueed compensation

     370,000        —          —          370,000   

Current maturities and short term loans

     2,234,000        745,000        —          2,979,000   

Other current liabilities

     553,000        944,000        —          1,497,000   

Due to related parties

     —          86,000        —          86,000   
  

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL CURRENT LIABILITIES

     7,238,000        2,482,000        —          9,720,000   

Long term debt and convertible debt

     1,378,000        —            1,378,000   

Provision for uncertain tax provisions

     —          360,000          360,000   

Other long term liabilities

     —          34,000        758,000   d      792,000   
  

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL LIABILITIES

     8,616,000        2,876,000        758,000        12,250,000   

SHAREHOLDERS’ EQUITY

        

Preferred stock

     100,000        —            100,000   

Common stock

     7,000        1,000        (1,000 ) f      7,000   

Treasury stock

     (71,000     —            (71,000

Additional paid in capital

     135,702,000        257,000        1,000   f      134,822,000   
         94,000   g   
         (2,020,000 ) h   
         788,000   e   

Accumulated other comprehensive loss

     (163,000     94,000        (94,000 ) g      (163,000

Accumulated deficit

     (130,196,000     (2,020,000     2,020,000   h      (130,196,000
  

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL SHAREHOLDERS’ EQUITY

     5,379,000        (1,668,000     788,000        4,499,000   
  

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

   $ 13,995,000      $ 1,208,000      $ 1,546,000      $ 16,749,000   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

Source: unaudited financial statements of Mandalay Digital Group, Inc. obtained from 10-Q filing with the SEC for period ended June 30, 2012.

(2)

Source: unaudited financial statements of Subsidiaries Acquired from Logia Group, Ltd. as of June 30, 2012 included elsewhere in this 8-K

See accompanying notes to pro forma combined financial statements

 

28


Mandalay Digital Group, Inc.

and Subsidiaries Acquired From Logia Group Ltd.

Pro Forma Combined Statement of Operations

 

     Three Months Ended June 30, 2012  
     Mandalay
Digital

Group,  Inc. (1)
    Subsidiaries
Acquired From
Logia Group, Ltd.(2)
    Pro Forma
Adjustments
    Pro Forma
Combined
 

Net revenue

   $ 1,290,000      $ 1,429,000      $ —        $ 2,719,000   

Cost of revenue

     672,000        1,046,000        —          1,718,000   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     618,000        383,000        —          1,001,000   

Product development

     366,000        —          —          366,000   

Selling, general and administrative

     2,504,000        122,000        117,250  (i)      2,743,250   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

     (2,252,000     261,000        (117,250     (2,108,250

Non-operating expense

     (487,000     (63,000     —          (550,000
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before provision for income taxes

     (2,739,000     198,000        (117,250     (2,658,250

Provision for income taxes

     14,000        16,000        —          30,000   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ (2,753,000   $ 182,000      $ (117,250   $ (2,688,250
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding :

        

Basic

     84,504,000            85,441,500   
  

 

 

       

 

 

 

Diluted

     84,504,000            85,441,500   
  

 

 

       

 

 

 

Basic and diluted earnings per share

   $ (0.03       $ (0.03
  

 

 

       

 

 

 

 

(1)

Source: unaudited financial statements of Mandalay Digital Group, Inc. obtained from 10-Q filing with the SEC for period ended June 30, 2012.

(2)

Source: unaudited financial statements of Subsidiaries Acquired from Logia Group, Ltd. for the period ended June 30, 2012

See accompanying notes to pro forma combined financial statements

 

29


Mandalay Digital Group, Inc.

and Subsidiaries Acquired From Logia Group Ltd.

Pro Forma Combined Statement of Operations

 

     Year Ended March 31, 2012  
     Mandalay
Digital

Group, Inc. (1)
    Subsidiaries
Acquired From
Logia Group, Ltd.(2)
    Pro Forma
Adjustments
    Pro Forma
Combined
 

Net revenue

   $ 7,230,000      $ 8,863,000      $ —        $ 16,093,000   

Cost of revenue

     2,873,000        8,481,000        —          11,354,000   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     4,357,000        382,000        —          4,739,000   

Product development

     2,154,000        —          —          2,154,000   

Selling, general and administrative

     13,886,000        843,000        469,000  (i)      15,198,000   

Impairment of intangibles including goodwill

     5,288,000        —          —          5,288,000   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from operations

     (16,971,000     (461,000     (469,000     (17,901,000

Non-operating expense

     (13,626,000     (246,000     —          (13,872,000
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before provision for income taxes

     (30,597,000     (707,000     (469,000     (31,773,000

Provision for income taxes

     110,000          —          110,000   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ (30,707,000   $ (707,000   $ (469,000   $ (31,883,000
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding:

        

Basic

     49,418,000            50,355,500   
  

 

 

       

 

 

 

Diluted

     49,418,000            50,355,500   
  

 

 

       

 

 

 

Basic and diluted earnings per share

   $ (0.62       $ (0.63
  

 

 

       

 

 

 

 

(1)

Source: audited financial statements of Mandalay Digital Group, Inc. obtained from 10-K filing with the SEC for year ended March 31, 2012.

(2)

Source: audited financial statements of Subsidiaries Acquired from Logia Group, Ltd. for the year ended December 31, 2011 included elsewhere in this 8-K

See accompanying notes to pro forma combined financial statements

 

30


Mandalay Digital Group, Inc.

and Subsidiaries Acquired From Logia Group, Ltd.

Notes to Pro Forma Combined Financial Statements

NOTE 1 - BASIS OF PRESENTATION

The accompanying pro forma combined balance sheet presents the accounts of Mandalay Digital Group, Inc. (“Mandalay”) and Logia Content Development and Management, Ltd., Volas Entertainment, Ltd. and Mail Bit-Logia (2008) Ltd. (together: The “Subsidiaries Acquired From Logia Group Ltd”) as if the acquisition of the Subsidiaries Acquired From Logia Group, Ltd. occurred on April 1, 2011. The accompanying pro forma combined statement of operations presents the accounts of Mandalay and the Subsidiaries Acquired From Logia Group, Ltd. for the year ended March 31, 2012, and for the three months ended June 30, 2012 as if the acquisition occurred on April 1, 2011. For accounting purposes, the transaction is being accounted for as an acquisition of a business.

The following adjustments (unaudited) would be required if the acquisition occurred as indicated above:

 

a.

To record the $3,416,000 cash paid to the sellers.

 

b.

To record the $4,470,000 fair value of purchased intangible assets.

 

c.

To record the $492,000 fair value of goodwill.

 

d.

To record the $758,000 fair value of the contingent consideration, net of discount of $242,000.

 

e.

To record the $788,000 fair value of the 937,500 shares issued to the sellers.

 

f.

To eliminate the common stock of the Subsidiaries Acquired From Logia Group, Ltd.

 

g.

To eliminate the pre-acquisition of other comprehensive loss of the Subsidiaries Acquired From Logia Group, Ltd.

 

h.

To eliminate pre-acquisition accumulated deficit of the Subsidiaries Acquired From Logia Group, Ltd.

 

i.

To record amortization of purchased intangibles.

 

31