8-K/A 1 form8ka.htm IMPART MEDIA GROUP 8-K/A 2-28-2006 Impart Media Group 8-K/A 2-28-2006
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________

FORM 8-K/A

CURRENT REPORT

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

_____________________

Date of report: February 28, 2006
(Date of earliest event reported)
 

IMPART MEDIA GROUP, INC.
(Exact name of Registrant as specified in its charter)


Nevada
(State or other jurisdiction of incorporation)


 
0-09358
  
88-0441338
  
 
(Commission File No.)
  
(I.R.S. Employer Identification No.)
  


1300 North Northlake Way
Seattle, Washington 98103
(Address of principal executive offices; zip code)

(206) 633-1852
(Registrant’s telephone number, including area code)

N/A
(Former Name or Former Address, if changed Since Last Report)

Check the appropriate box below if the Form 8-K 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 14-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

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

Explanatory Note:

Impart Media Group, Inc. filed a Current Report on Form 8-K on March 6, 2006 announcing that it had completed its acquisition of substantially all of the assets of E&M Advertising, Inc., a New York corporation and its affiliates, E&M West/Camelot Media, Inc., a California corporation and NextReflex, Inc., a New York corporation (collectively, “E&M”). The purpose of this amendment is to file certain audited financial statements and certain pro forma financial information relating to the E&M business.


SECTION 9 - FINANCIAL STATEMENTS AND EXHIBITS

Item 9.01
Financial Statements and Exhibits.

Paragraphs (a) and (b) of Item 9.01, “Financial Statements and Exhibits” are hereby amended to include the following:

 
(a)
Financial Statements of Business Acquired (E&M).
 
(1)       Audited Financial Statements:
Page
   
Independent Auditors’ Report
F-1
   
Balance Sheets as of December 31, 2005 and December 31, 2004
F-2
   
Statements of Operations for the years ended December 31, 2005 and 2004
F-3
   
Statements of Stockholders’ Deficit for the years ended December 31, 2005 and 2004
F-4
   
Statements of Cash Flows for the years ended December 31, 2005 and 2004
F-5
   
Notes to Financial Statements
F-6
 
 
(b)
Pro Forma Condensed Combined Financial Information (Unaudited):

Pro Forma Condensed Combined Balance Sheet as of December 31, 2005 (Unaudited)
F-13
   
Pro Forma Condensed Combined Statement of Operations for the year ended December 31, 2005 (Unaudited)
F-14
   
Notes to Pro Forma Condensed Combined Financial Information
F-15
 

SIGNATURES

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

   
IMPART MEDIA GROUP, INC.
     
     
Date: May 17, 2006
By:
 /s/Joseph Martinez
   
Joseph Martinez
   
Chief Executive Officer
 
 
INDEPENDENT AUDITORS’ REPORT


To the Board of Directors of
E & M Advertising, Inc. and Affiliates:

We have audited the accompanying consolidated balance sheets of E & M Advertising, Inc. and Affiliates (the Company) as of December 31, 2005 and 2004 and the related consolidated statements of operations, stockholders’ deficit and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of E & M Advertising, Inc. and Affiliates as of December 31, 2005 and 2004 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

On February 28, 2006, the Company sold substantially all of its assets to Impart Media Advertising, Inc. See Note 8 for further information.
 
 April 26, 2006
/s/ Kahn, Litwin, Renza & Co., Ltd.
 
F-1

E & M ADVERTISING, INC. AND AFFILIATES
CONSOLIDATED BALANCE SHEETS
December 31, 2005 and 2004


   
2005
  
2004
  
ASSETS
          
           
CURRENT ASSETS:
          
Cash and cash equivalents
  
$
1,745,272
  
$
1,099,303
  
Accounts receivable, net of allowance of $208,500 and $123,000 at December 31, 2005 and 2004, respectively
    
3,575,356
   
3,864,793
 
Prepaid expenses
    
54,187
   
377,105
 
Total current assets
    
5,374,815
   
5,341,201
 
               
NONCURRENT ASSETS:
              
Property and equipment, net
    
61,799
   
71,012
 
Receivable - related party
    
24,277
   
14,789
 
Deposits
    
40,250
   
40,550
 
Total noncurrent assets
    
126,326
   
126,351
 
               
Total assets
  
$
5,501,141
  
$
5,467,552
  
               
LIABILITIES AND STOCKHOLDERS' DEFICIT
              
               
CURRENT LIABILITIES:
              
Accounts payable
  
$
4,746,295
  
$
4,506,538
  
Advance billings
    
576,180
   
716,198
 
Accrued expenses
    
247,226
   
402,068
 
Total current liabilities
    
5,569,701
   
5,624,804
 
               
STOCKHOLDERS' DEFICIT:
              
Common stock, no par value; 200 shares authorized, 125 shares issued and outstanding at December 31, 2005 and 2004
    
49,049
   
49,049
 
Additional paid-in capital
    
773,955
   
569,505
 
Minority interest in VIE
    
(427,224
)
  
(119,990
)
Accumulated deficit
    
(464,340
)
  
(655,816
)
Total stockholders' deficit
    
(68,560
)
  
(157,252
)
               
COMMITMENTS AND CONTINGENCIES (notes 3 and 4)
    
-
   
-
 
               
Total liabilities and stockholders' deficit
  
$
5,501,141
  
$
5,467,552
  
 
F-2

E & M ADVERTISING, INC. AND AFFILIATES
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31, 2005 and 2004


   
2005
  
2004
  
           
OPERATING REVENUES
  
$
4,532,737
  
$
3,522,267
  
               
OPERATING EXPENSES
    
3,857,362
   
3,440,923
 
               
Total operating income
    
675,375
   
81,344
 
               
OTHER INCOME
    
22,350
   
3,213
 
               
Total earnings
    
697,725
   
84,557
 
               
Income attributable to minority interest
    
59,766
   
306,910
 
               
Net income (loss)
  
$
637,959
  
$
(222,353
)
 
F-3

E & M ADVERTISING, INC. AND AFFILIATES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
Years Ended December 31, 2005 and 2004

   
Common Stock
  
Additional
  
Minority
      
Total
  
   
Shares
     
Paid-In
 
Interest
  
Accumulated
  
Stockholders'
  
   
Outstanding
  
Amount
  
Capital
  
in VIE
  
Deficit
  
Equity (Deficit)
  
                           
Balances, December 31, 2003
    
125
 
$
49,049
  
$
249,370
  
$
70,100
  
$
(279,817
)
$
88,702
  
                                       
Capital contributions
                
320,135
               
320,135
 
Distributions
                      
(497,000
)
  
(153,646
)
  
(650,646
)
Net income (loss)
    
 
   
 
   
 
   
306,910
   
(222,353
)
  
84,557
 
                                       
Balances, December 31, 2004
    
125
    
49,049
   
569,505
   
(119,990
)
  
(655,816
)
  
(157,252
)
                                       
Capital contributions
                
204,450
               
204,450
 
Distributions
                      
(367,000
)
  
(446,483
)
  
(813,483
)
Net income
    
 
   
 
   
 
   
59,766
   
637,959
   
697,725
 
                                       
Balances, December 31, 2005
    
125
 
$
49,049
  
$
773,955
  
$
(427,224
)
$
(464,340
)
$
(68,560
)
 
F-4

E & M ADVERTISING, INC. AND AFFILIATES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2005 and 2004


   
2005
  
2004
  
           
CASH FLOWS FROM OPERATING ACTIVITIES:
          
Total earnings
  
$
697,725
  
$
84,557
  
Adjustments to reconcile total earnings to net cash provided by operating activities:
              
Bad debt provision
    
85,500
   
84,400
 
Depreciation
    
30,031
   
42,501
 
Changes in assets and liabilities:
              
Accounts receivable
    
203,937
   
227,678
 
Prepaid expenses
    
322,918
   
(859,102
)
Deposits
    
300
   
(800
)
Accounts payable
    
239,757
   
427,044
 
Advance billings
    
(140,018
)
  
189,209
 
Accrued expenses
    
(154,842
)
  
(227,005
)
Payables - related party
    
-
   
102,234
 
Total adjustments
    
587,583
   
(13,841
)
Net cash provided by operating activities
    
1,285,308
   
70,716
 
               
CASH FLOWS FROM INVESTING ACTIVITIES:
              
Capital expenditures
    
(20,818
)
  
(14,734
)
Decrease (increase) in receivable - related party
    
(9,488
)
  
30,132
 
Net cash provided (used) by investing activities
    
(30,306
)
  
15,398
 
               
CASH FLOWS FROM FINANCING ACTIVITIES:
              
Principal payments on capital lease obligations
    
-
   
(3,592
)
Capital contributions
    
204,450
   
320,135
 
Stockholder distributions
    
(813,483
)
  
(650,646
)
Net cash used by financing activities
    
(609,033
)
  
(334,103
)
               
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
645,969
   
(247,989
)
               
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
    
1,099,303
   
1,347,292
 
               
CASH AND CASH EQUIVALENTS AT END OF YEAR
  
$
1,745,272
  
$
1,099,303
  
 
F-5

E & M ADVERTISING, INC. AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2005 and 2004


1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies of E & M Advertising, Inc. and Affiliates (the Company) is presented to assist in understanding the Company’s consolidated financial statements. The consolidated financial statements and notes are representations of the Company’s management, who is responsible for the integrity and objectivity of the consolidated financial statements. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the consolidated financial statements.

Nature of Operations
The Company is headquartered in New York City and also has locations in Los Angeles and Las Vegas. The Company offers a range of media services to clients looking to build their customer base through direct response electronic media marketing. These services include strategic planning, creative, production, telemarketing, fulfillment, and on-line marketing. The Company’s clients include traditional product marketers, financial, insurance, music, entertainment, and healthcare service corporations, as well as, catalog companies.

On February 28, 2006, the Company sold substantially all of its assets to Impart Media Advertising, Inc. See Note 8 for further information.

Principles of Consolidation
The consolidated financial statements of E & M Advertising Inc. include E & M Advertising West/Camelot Media, Inc. (Camelot) and NextReflex, Inc. (NextReflex), (collectively the Affiliates). These Affiliates are considered variable interest entities of which E & M Advertising, Inc. is the primary beneficiary as further described in Note 7. Camelot is a sales division of E & M Advertising, Inc. that provides a sales presence on the West Coast. NextReflex provides the Company with internet and website capabilities. The affiliates share common ownership and engage in business transactions with E & M Advertising, Inc. All significant intercompany accounts and transactions have been eliminated in the consolidated financial statements.

F-6

E & M ADVERTISING, INC. AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2005 and 2004


1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (Continued)

Revenue Recognition
Substantially all revenue is derived from fees for services. Additionally, commissions are earned based upon the placement of advertisements in various media. Revenue is realized when the service is performed in accordance with the terms of each client arrangement and upon completion of the earnings process.

Revenue recognition policies are in compliance with the Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin (SAB) 101, Revenue and Recognition in Financial Statements as updated by SAB 104, Revenue Recognition (SAB 104) which summarizes certain views of the SEC staff in applying generally accepted accounting principles to revenue recognition in the financial statements. In July 2000, the Emerging Issues Task Force (EITF) of the Financial Accounting Standards Board (FASB) released Issue 99-19 (EITF 99-19). This Issue summarized the EITF’s views on when revenue should be recorded at the gross amount billed because revenue has been earned from the sale of goods or services, or the net amount retained because revenue has been earned from a fee or commission.

The Company recognizes revenue in compliance with SAB 101, SAB 104, and EITF 99-19. The determination whether revenue in a particular line of business should be recognized net or gross involves difficult judgments. If the Company makes these judgments differently, it could significantly affect the financial presentation. If it were determined that the Company must recognize a significant portion of revenues on a gross basis rather than a net basis, it would positively impact revenues, but have no impact on operating income.

The Company typically acts as an agent on behalf of their clients in their primary lines of business. Accordingly, most revenues are recorded based upon the net commissions earned. The Company records non-media and internet services at a gross billings amount, due to the actual services it performs or provides. The gross billing amounts included in the operating revenues for the years ended December 31, 2005 and 2004 were approximately $534,000 and $714,000, respectively.

Although most revenues are presented on a net commissions earned basis, the related accounts receivable and accounts payable are recorded on a gross basis in order to match the actual cash due from the applicable client or due to the applicable vendor, as committed in these arrangements. The accounts receivable balance of approximately $3,575,000 and $3,865,000 and the corresponding accounts payable balance of approximately $4,746,000 and $4,507,000 at December 31, 2005 and 2004, respectively, represents remaining unremitted funds from gross bookings of approximately $39,917,000 and $34,085,000 for 2005 and 2004, respectively.

F-7

E & M ADVERTISING, INC. AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2005 and 2004


1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (Continued)

Operating Expenses
Operating expenses include salaries and related payroll costs associated with client service professional and administrative staff. These costs also include office and general expenses attributable to the support of client service professional staff, depreciation, rent expenses, professional fees, and bad debt expense relating to accounts receivable.

Cash Equivalents
The Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.

Accounts Receivable
The majority of client agreements permit the Company to bill for the cost the Company incurs for media advertisement on the client’s behalf plus a commission. The Company carries its accounts receivable at net realizable value. On a periodic basis, the Company evaluates its accounts receivable and establishes an allowance for doubtful accounts, based on a history of past bad debt expense and collections and current credit conditions.

The Company does not accrue interest on receivables. A receivable is considered past due if payments have not been received by the Company within stated terms. Accounts are written off as uncollectible if no payments are received after a reasonable amount of time, and it is evident after exhausting all reasonable means that the client will not be remitting payment. In most circumstances, the Company has been absolved of amounts owed to a media outlet in connection with the underlying client payment default and, accordingly, the Company will offset the related payable against the uncollectible receivable.

Depreciation
Depreciation is provided using the straight-line and accelerated methods over the estimated useful lives of the assets. The majority of the Company’s assets are furniture and fixtures and office equipment which has useful lives between 3 to 7 years.

Advance billings
Advance billings represent cash received from clients in advance of their media placement.

F-8

E & M ADVERTISING, INC. AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2005 and 2004


1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (Continued)

Income Taxes
The Company, with the consent of its stockholders, elected to have its income taxed under the provisions of Subchapter S of the Internal Revenue Code. Subchapter S provides that the individual stockholders be taxed on the Company’s taxable income in lieu of the Company paying income taxes. Therefore, no provision or liability for income taxes is reflected in these consolidated financial statements.

Advertising
The Company follows the policy of charging the costs of advertising to expense as incurred. Advertising expense for the years ended December 31, 2005 and 2004 was approximately $73,100 and $6,200, respectively.

Concentrations of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, accounts receivable, and related party receivables. The Company performs ongoing credit evaluations of its customers’ financial conditions and generally requires no collateral.

The Company maintains its operating bank accounts in a financial institution located in New York City. The balances are insured by the Federal Deposit Insurance Corporation up to $100,000. The aggregate amount of all balances exceeded insured limits by approximately $2,001,000 and $1,803,000 at December 31, 2005 and 2004, respectively.

Fair Value of Financial Instruments
The carrying amounts and estimated fair values of the Company’s financial instruments approximate fair value due to the short-term nature.

Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Reclassifications
Certain accounts in the 2004 financial statements have been reclassified for comparative purposes to conform with the 2005 consolidated financial statement presentation.

F-9

E & M ADVERTISING, INC. AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2005 and 2004


2.
PROPERTY AND EQUIPMENT

A summary of the property and equipment is as follows:

   
2005
  
2004
  
           
Furniture and fixtures
  
$
233,351
  
$
233,351
  
Leasehold improvements
    
3,264
    
3,264
  
Office equipment
    
620,996
    
600,178
  
Total property and equipment
    
857,611
    
836,793
  
Less accumulated depreciation
    
795,812
    
765,781
  
               
Property and equipment, net
  
$
61,799
  
$
71,012
  

3.
LEASE COMMITMENTS

The Company leases its office facilities under an operating lease, which expires April, 2006. Subsequent to year-end, the Company extended the lease agreement through June, 2011. Total rental expense under the facilities lease was approximately $210,600 and $207,200 for the years ended December 31, 2005 and 2004, respectively. The Company also has various non-cancelable operating leases for automobiles and equipment that expire at various dates through 2008.

Approximate future minimum lease payments are as follows:

    Year Ending
      
       
December 31, 2006
  
$
206,800
  
December 31, 2007
    
232,200
  
December 31, 2008
    
235,300
  
December 31, 2009
    
235,400
  
December 31, 2010
   
240,100
  
December 31, 2011
    
121,200
  
         
   
$
1,271,000
  
 
F-10

E & M ADVERTISING, INC. AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2005 and 2004


4.
EMPLOYEE BENEFIT PLAN

The Company has a profit sharing plan that qualifies under Section 401(k) of the Internal Revenue Code. The profit sharing plan covers employees who have completed six months of service and have attained age twenty-one. The Company allows eligible employees to contribute up to 15% of their compensation with the Company matching 100% of the employees’ contribution of the first $1,000 and 50% of the next $1,500.

The Company contributed approximately $31,100 and $22,900 to its profit sharing plan for the years ended December 31, 2005 and 2004, respectively.


5.
RELATED PARTY TRANSACTIONS

Revenue
The Company performs services and pays expenses for a company affiliated through common ownership, for which it is reimbursed. Revenue from this related party was approximately $24,000 for the years ended December 31, 2005 and 2004.
 
Receivable - Related Party
Receivable - related party includes various unsecured loans due from a company affiliated through common ownership. The loans are non-interest bearing and are payable upon demand. Outstanding balances on the loans at December 31, 2005 and 2004 are approximately $24,300 and $14,800, respectively.


6.
MAJOR CLIENTS/VENDORS

The Company had one major client that accounted for approximately $1,318,300 (29%) of net revenues for 2005. The Company had one major client that accounted for approximately $1,254,500 (36%) of net revenues for 2004.

The Company had one major vendor that accounted for approximately $1,732,300 (6%) of gross billed broadcast time purchased on behalf of their clients during 2004. There were no major vendors in 2005.

F-11

E & M ADVERTISING, INC. AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2005 and 2004


7.
VARIABLE INTEREST ENTITIES

During 2003, the Financial Accounting Standards Board issued an then revised Interpretation No. 46, “Consolidation of Variable Interest Entities” (“FIN 46R”) which requires the primary beneficiary of a variable interest entity (VIE) to consolidate that entity. The primary beneficiary of a VIE is the party that absorbs a majority of that entity’s expected losses, receives a majority of that entity’s expected returns, or both, as a result of ownership, contractual or other financial interests in the entity.

Application of FIN 46R was required in the Company’s consolidated financial statements for the year ended December 31, 2005. This resulted in the consolidation of Camelot and NextReflex of which the Company is considered the primary beneficiary as a result of common ownership and management. As permitted by FIN 46R, the 2004 balances have been restated to reflect the consolidation of these VIEs.


8.
SUBSEQUENT EVENT

On February 28, 2006, the Company entered into an Asset Purchase Agreement (the Agreement) with Impart Media Advertising, Inc. (Impart), a wholly-owned subsidiary of Impart Media Group, Inc. (the Group). Under the terms of the Agreement, the Company will receive an aggregate amount of $800,000 and 1,608,392 restricted shares of the Group’s common stock in exchange for substantially all of the Company’s assets. See the Group’s Form 8-K filed with the Securities and Exchange Commission on March 6, 2006 for additional information.

Concurrently with the acquisition, the Group entered into a three year employment agreement with Michael Medico, the Company’s founder and principal stockholder, pursuant to which Mr. Medico will serve as Executive Vice President of the Group and President of Impart.

F-12

Unaudited Pro Forma Condensed Combined Balance Sheet

As of December 31, 2005

   
Impart Media Group, Inc.
  
E&M Advertising
  
Pro Forma Adjustments
      
Pro Forma Combined
  
Assets
                      
Current Assets
  
 
                  
Cash and cash equivalents
  
$
66,641
  
$
1,745,272
  
$
(1,745,272
)
  
(1)
  
$
66,640
  
Accounts receivable, net
    
766,450
   
3,575,356
   
(2,358,495
)
  
(1) (2)
   
1,983,311
 
Other current assets
    
491,340
   
54,187
   
(54,187
)
  
(1)
    
491,340
 
Total current assets
    
1,324,431
   
5,374,815
   
(4,157,954
)
        
2,541,292
 
                               
Fixed assets, net
    
1,269,804
   
61,799
   
83,551
   
(1) (2)
   
1,415,154
 
Receivable-related party
          
24,277
   
(24,277
)
  
(1)
    
-
 
Deposits
          
40,250
   
(10,500
)
  
(1) (2)
   
29,750
 
Other assets
    
29,617
   
-
   
6,384,650
   
(2)
    
6,414,267
 
Total assets
  
$
2,623,852
  
$
5,501,141
  
$
2,275,470
        
$
10,400,463
  
                               
Liabilities and Stockholders' equity (deficit)
                              
Current liabilities
                              
Account payable
  
$
1,654,117
  
$
4,746,295
  
$
(3,035,943
)
  
(1) (2)
  
$
3,364,469
  
Holdback payable short term
                
200,000
   
(2)
    
200,000
 
Stock issuance payable
                
461,538
   
(2)
    
461,538
 
Advance billings
          
576,180
    
(576,180
)
  
(1)
    
-
 
Accrued liabilities
    
152,094
   
247,226
   
(247,226
)
  
(1)
    
152,093
 
Other current liabilities
    
3,522,198
                          
3,522,198
 
Total current liabilities
    
5,328,409
   
5,569,701
   
(3,197,811
)
        
7,700,299
 
                               
Capital lease obligation -long term portion
    
96,430
   
-
   
-
         
96,430
 
Total liabilities
    
5,424,839
   
5,569,701
   
(3,197,811
)
        
7,796,729
 
                                 
Shareholders' equity (deficit)
                              
Common stock
    
15,338
   
49,049
   
(47,580
)
  
(1) (2)
   
16,807
 
Additional paid-in capital
    
1,369,668
   
773,955
   
4,070,732
   
(1) (2)
   
6,214,355
 
Minority interest in VIE
          
(427,224
)
  
427,224
   
(1)
    
-
 
Accumulated deficit
    
(4,185,993
)
  
(464,340
)
  
1,022,905
   
(1)
    
(3,627,428
)
 
                              
Total Shareholders' equity (deficit)
    
(2,800,987
)
  
(68,560
)
  
5,473,281
         
2,603,734
 
Total Liabilities and Shareholders' equity (deficit)
  
$
2,623,852
  
$
5,501,141
  
$
2,275,470
        
$
10,400,463
  

See accompanying notes to unaudited Pro Forma Condensed Combined Financial Statements

F-13

Unaudited Pro Forma Condensed Combined Statement of Operations

For the year ended December 31, 2005

   
 Impart Media Group, Inc.
  
E&M Advertising
  
Pro Forma Adjustments
  
Pro Forma Combined
  
                    
Revenues
  
$
4,944,549
  
$
4,532,737
    
-
 
$
9,477,286
  
Operating expenses
    
7,403,698
   
3,857,362
   
-
   
11,261,060
 
Total operating income
    
(2,459,149
)
  
675,375
   
-
   
(1,783,774
)
                           
Other income
    
38,822
   
22,350
   
(19,628
)
  
41,544
 
Income attributable to minority interest
          
59,766
   
(59,766
)
  
-
 
 
                                
Net loss (income)
  
$
(2,420,327
)
$
637,959
  
$
(79,394
)
$
(1,861,762
)
 
                                    
Net loss per share - basic and diluted
  
$
(0.28
)
  
   
   
 
   
(0.18
)
 
                            
Basic and diluted average common shares outstanding
    
8,739,026
         
1,608,392
    
10,347,418
 
 
See accompanying notes to Proforma Condensed Combined Financial Statements

F-14
 
Notes to Unaudited Pro Forma Condensed Combined Financial Statements

Notes:

 
1
To eliminate E&M Advertising, Inc. and affiliates.

 
2
To reflect the issuance of 1,608,392 shares of common stock of Impart Media Group, Inc., $0.001 par value per share, to the shareholders of E&M Advertising, Inc.
The components of the preliminary purchase price are summarized as follows:

Common stock issued
  
$
4,846,155
  
Common stock to be issued
    
461,538
  
Cash payment
    
800,000
  
Liabilities assumed
    
1,110,352
  
Acquired assets, net
    
(1,391,961
)
Net Purchase price to be allocated
  
$
5,826,084
  
 
 
F-15