Southridge Technology Group, Inc. RxElite Holdings, Inc. Unaudited Pro Forma Condensed Consolidated Financial Information

Exhibit 99.3


RxElite Holdings, Inc.

Unaudited Pro Forma
Condensed Consolidated Financial Information

On July 13, 2007, Southridge Technology Group, Inc., a Delaware corporation (“STG”), entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) by and among STG, RxElite Holdings Inc., a privately held Delaware corporation (“RxElite”), and RxElite Acquisition Corp., a newly formed, wholly-owned Delaware subsidiary of STG (“Acquisition Sub”). Upon closing of the merger transaction contemplated under the Merger Agreement (the “Merger”), Acquisition Sub was merged with and into RxElite, and RxElite, as the surviving corporation, became a wholly-owned subsidiary of STG.

After the cash purchase and cancellation of 15,000 shares of STG’s common stock, the subsequent cancellation of 9,050,000 shares of STG’s common stock, and the issuance of an aggregate of 4,145,806 shares of STG’s common stock to the holders of RxElite’s common stock in the Merger, the former stockholders of RxElite owned 73.5% of the outstanding common stock of STG. As a result, the Merger has been accounted for as a “reverse acquisition” whereby RxElite acquired STG, and the assets and liabilities of RxElite have been recorded at their historical cost basis. All of the pre-Merger assets and liabilities of STG were distributed to certain STG shareholders in the Merger. The unaudited pro forma condensed consolidated financial information includes adjustments to reflect certain equity transactions by STG and RxElite directly related to the Merger and completed in order to establish the number of common shares outstanding for each company to effect the Merger. In addition, the pro forma adjustments include the issuance by STG of new common stock warrants issued to shareholders and a stock dividend declared by STG in connection with the Merger.

The unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2006 and the three months ended March 31, 2007 have been prepared in accordance with accounting principles generally accepted in the United States to give effect to the July 13, 2007 ▇▇▇▇▇▇ as if the transaction occurred on January 1, 2006. Pro forma adjustments related to the Merger include elimination of the historical revenues and expenses of STG and changes in income (loss) per share and the weighted average number of common shares outstanding to include the effect of the change in shares of common stock and warrants in the Merger.

The unaudited pro forma condensed consolidated balance sheet as of March 31, 2007 has been prepared in accordance with accounting principles generally accepted in the United States to give effect to the July 13, 2007 Merger as if the transaction occurred on March 31, 2007. Pro forma adjustments related to the Merger or to transactions directly related to the Merger include: the elimination of STG assets and liabilities distributed to the shareholders of STG as part of the Merger and the resulting elimination of a portion of the retained earnings of STG; the cancellation of certain shares of STG’s common stock; the issuance of additional shares of RxElite’s common stock and warrants to purchase shares of RxElite’s common stock in completion of a financing transaction; the issuance of shares of STG’s common stock to the shareholders of RxElite; the issuance of a stock dividend by STG; the recording of a cash distribution and an obligation for a future cash distribution to the prior preferred stock holders of RxElite required by the Merger; and the issuance of warrants to purchase additional shares of STG’s common stock issued to the shareholders of STG.
 
 
1
 

The unaudited pro forma combined condensed financial statements are prepared for informational purposes only and are not necessarily indicative of future results or actual results that would have been achieved had the Merger been consummated as of the dates specified above.
 
 
2
 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2006

   
Historical
  
Pro Forma
          
   
RxElite
  
STG {a}
  
Adjustments
      
Pro Forma
  
                       
Sales, net
  
$
14,171,134
  
$
1,176,538
  
$
(1,176,538
)
  
{1}
  
$
14,171,134
  
Cost of goods sold
    
13,870,372
    
434,587
    
(434,587
)
  
{1}
    
13,870,372
  
                                 
Gross profit
    
300,762
    
741,951
    
(741,951
)
        
300,762
  
                                 
Operating costs and expenses
    
4,528,503
    
597,965
    
(597,965
)
  
{1}
    
4,528,503
  
                                 
Income (loss) from operations
    
(4,227,741
)
  
143,986
    
(143,986
)
        
(4,227,741
)
                                 
Other income (expense):
                                
Interest and other income
    
12,398,406
    
-
    
-
          
12,398,406
  
Interest and other expense
    
(644,834
)
  
-
    
-
          
(644,834
)
                                 
Total other income
    
11,753,572
    
-
    
-
          
11,753,572
  
                                 
Income (loss) before taxes
    
7,525,831
    
143,986
    
(143,986
)
        
7,525,831
  
                                 
Provision for income taxes
    
-
    
(50,000
)
  
50,000
    
{1}
    
-
  
                                 
Net income (loss)
  
$
7,525,831
  
$
93,986
  
$
(93,986
)
      
$
7,525,831
  
                                 
                                 
Income (loss) per share:
                                
Basic
  
$
0.37
  
$
0.01
  
$
(0.26
)
  
{2}
  
$
0.12
  
Diluted
  
$
0.27
  
$
0.01
  
$
(0.18
)
  
{2}
  
$
0.10
  
                                 
Weighted average number of shares outstanding
                                
Basic
    
20,091,557
    
10,469,479
    
31,604,829
    
{3}
    
62,165,865
  
Diluted
    
29,542,134
    
10,469,479
    
36,830,089
    
{3}
    
76,841,702
  

{a} The operations of STG are for the year ended September 30, 2006.

 
3
 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2007

   
Historical
  
Pro Forma
          
   
RxElite
  
STG
  
Adjustments
      
Pro Forma
  
                       
Sales, net
  
$
146,873
  
$
299,833
  
$
(299,833
)
  
{1}
  
$
146,873
  
Cost of goods sold
    
139,245
    
153,973
    
(153,973
)
  
{1}
    
139,245
  
                                 
Gross profit
    
7,628
    
145,860
    
(145,860
)
        
7,628
  
                                 
Operating costs and expenses
    
2,135,153
    
87,827
    
(87,827
)
  
{1}
    
2,135,153
  
                                 
Income (loss) from operations
    
(2,127,525
)
  
58,033
    
(58,033
)
        
(2,127,525
)
                                 
Other income (expense):
                                
Interest and other income
    
25,901
    
-
    
-
          
25,901
  
Interest and other expense
    
(106,738
)
  
-
    
-
          
(106,738
)
                                 
Total other expense
    
(80,837
)
  
-
    
-
          
(80,837
)
                                 
Income (loss) before taxes
    
(2,208,362
)
  
58,033
    
(58,033
)
        
(2,208,362
)
                                 
Provision for income taxes
    
-
    
6,138
    
(6,138
)
  
{1}
    
-
  
                                 
Net income (loss)
  
$
(2,208,362
)
$
64,171
  
$
(64,171
)
      
$
(2,208,362
)
                                 
                                 
Income (loss) per share:
                                
Basic
  
$
(0.06
)
$
-
  
$
0.02
    
{2}
  
$
(0.04
)
Diluted
  
$
(0.06
)
$
-
  
$
0.02
    
{2}
  
$
(0.04
)
                                 
Weighted average number of shares outstanding
                                
Basic
    
36,861,241
    
10,560,000
    
14,835,145
    
{3}
    
62,256,386
  
Diluted
    
36,861,241
    
10,560,000
    
14,835,145
    
{3}
    
62,256,386
  
 
 
4
 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 2007

   
Historical
  
Pro Forma
          
   
RxElite
  
STG
  
Adjustments
      
Pro Forma
  
Assets
                      
                       
Current assets:
                      
Cash and cash equivalents
  
$
701,108
  
$
1,561
  
$
(15
)
  
{4}
  
$
2,807,321
  
                 
(1,546
)
  
{5}
        
                 
2,706,213
    
{6}
        
                 
(600,000
)
  
{9}
        
Accounts receivable, net
    
75,657
    
348,767
    
(348,767
)
  
{5}
    
75,657
  
Related party receivables
    
30,192
    
-
    
-
    
 
    
30,192
  
Inventory
    
6,158,780
    
9,696
    
(9,696
)
  
{5}
    
6,158,780
  
Prepaid expenses and other
    
91,742
    
657
    
(657
)
  
{5}
    
91,742
  
                       
 
        
Total current assets
    
7,057,479
    
360,681
    
1,745,532
    
 
    
9,163,692
  
                       
 
        
Property and equipment, net
    
528,491
    
25,245
    
(25,245
)
  
{5}
    
528,491
  
Intangible assets
    
69,145
    
-
    
-
    
 
    
69,145
  
Restricted deposits
    
201,183
    
-
    
-
    
 
    
201,183
  
                                 
   
$
7,856,298
  
$
385,926
  
$
1,720,287
        
$
9,962,511
  
 
 
5
 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 2007
(continued)

   
Historical
  
Pro Forma
          
   
RxElite
  
STG
  
Adjustments
      
Pro Forma
  
Liabilities and Stockholders’ Equity
                      
                       
Current liabilities:
                      
Accounts payable
  
$
4,770,610
  
$
31,338
  
$
(31,338
)
  
{5}
  
$
5,217,135
  
                 
446,525
    
{7}
        
Accrued expenses
    
483,445
    
52,580
    
(52,580
)
  
{5}
    
483,445
  
Convertible debentures
    
500,000
    
-
    
-
          
500,000
  
Current portion of capital lease obligations
    
14,304
    
-
    
-
          
14,304
  
Current portion of long-term debt - related party
    
238,893
    
-
    
-
          
238,893
  
                                 
Total current liabilities
    
6,007,252
    
83,918
    
362,607
          
6,453,777
  
                                 
Long-term liabilities:
                                
Capital lease obligations
    
28,106
    
-
    
-
          
28,106
  
Long-term debt - related party
    
725,727
    
-
    
-
          
725,727
  
Obligation to former preferred stock holders
    
-
    
-
    
1,400,000
    
{9}
    
1,400,000
  
                                 
Total long-term liabilities
    
753,833
    
-
    
1,400,000
          
2,153,833
  
                                 
Total liabilities
    
6,761,085
    
83,918
    
1,762,607
          
8,607,610
  
                                 
Stockholders’ equity:
                                
Common stock
    
91,124
    
10,560
    
(15
)
  
{4}
    
62,257
  
                 
(9,050
)
  
{5}
        
                 
17,319
    
{6}
        
                 
(108,443
)
  
{8}
        
                 
4,146
    
{8}
        
                 
56,616
    
{10}
        
Additional paid-in capital
    
9,333,300
    
-
    
4,367,232
    
{6}
    
14,926,896
  
                 
(446,525
)
  
{7}
        
                 
108,443
    
{8}
        
                 
(4,146
)
  
{8}
        
                 
1,568,592
    
{11}
        
Subscription shares payable
    
2,908,707
    
-
    
(1,678,338
)
  
{6}
    
1,230,369
  
Retained earnings (deficit)
    
(11,237,918
)
  
291,448
    
(292,943
)
  
{5}
    
(14,864,621
)
                 
(2,000,000
)
  
{5}
        
                 
(56,616
)
  
{10}
        
                 
(1,568,592
)
  
{11}
        
                                 
Total stockholders’ equity
    
1,095,213
    
302,008
    
(42,320
)
        
1,354,901
  
                                 
   
$
7,856,298
  
$
385,926
  
$
1,720,287
        
$
9,962,511
  

 
6
 
 
UNAUDITED PRO FORMA ADJUSTMENTS

{1} Eliminates the revenues and expenses of STG.
 
{2} Records changes in basic and diluted income (loss) per share to reflect the pro forma adjustments and to include the effect of the change in shares of common stock and warrants in the Merger.

{3} Reflects the change in shares of common stock and warrants in the Merger, eliminating common stock equivalents where a net loss is reported on a pro forma basis.

{4} Records STG’s repurchase and cancellation of 15,000 shares of its common stock.

{5} Eliminates the pre-Merger assets and liabilities of STG distributed to certain shareholders of STG, and the cancellation of 9,050,000 shares of STG’s common stock.

{6} Records the consideration for and the issuance of a total of 7,307,585 shares of RxElite’s common stock at $0.60 per share.

{7} Records the obligation of RxElite to issue warrants earned in connection with the sale of RxElite’s common stock reflected in pro forma adjustment {6}.

{8} Records the exchange of 45,756,417 shares of RxElite’s common stock for 4,145,806 shares of STG’s common stock in the Merger at an exchange ratio of .090606 shares of STG’s common stock for each share of RxElite’s common stock.

{9} Records a current cash distribution of $600,000 and the obligation to distribute $1.4 million in cash on or before December 31, 2008 to former preferred stock holders of RxElite required as a result of the Merger.

{10} Records the stock dividend declared by STG immediately after the Merger at 10.36789 common shares for each share of common stock outstanding.

{11} Records the issuance of common stock warrants to the shareholders in the Merger.
 
The following schedules present the changes in the number of common shares outstanding for RxElite and STG in the Merger described in the above pro forma adjustments.

RxElite $0.00237 par value common stock:

Number of common shares outstanding, March 31, 2007
    
38,448,832
  
Merger transactions:
        
Issuance of common shares in financing transaction {6}
    
7,307,585
  
Exchange of common shares for shares of STG’s common stock {8}
    
(45,756,417
)
         
Number of common shares outstanding, pro forma
    
-
  
 
 
7
 
 
STG $0.001 par value common stock:

Number of common shares outstanding, March 31, 2007
    
10,560,000
  
Merger transactions:
        
Repurchase and cancellation of common shares {4}
    
(15,000
)
Cancellation of common shares {5}
    
(9,050,000
)
Exchange of common shares for shares of RxElite’s common stock {8}
    
4,145,806
  
Stock dividend declared {10}
    
56,615,580
  
         
Number of common shares outstanding, pro forma
    
62,256,386
  

 
8
 

Document Metadata

Filed: July 17th, 2007