UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K/A
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of the
Securities
Exchange Act of 1934
Date of
Report (Date of earliest event reported):
November 13, 2008
KIDVILLE,
INC.
(Exact
Name of Registrant as Specified in Charter)
|
Delaware
|
333-130110
|
76-0763470
|
|
(State
or Other Jurisdiction
of
incorporation)
|
(Commission
File Number)
|
(I.R.S.
Employer
Identification
No.)
|
|
163
E. 84
th
Street
New
York, NY
(Address
of Principal Executive Offices)
|
|
10028
(Zip
Code)
|
Registrant’s
telephone number, including area code: (212) 772-8435
(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:
|
r
|
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|
|
r
|
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
r
|
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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|
r
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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EXPLANATORY
NOTE
On August
11, 2008 Kidville, Inc., formerly known as Longfoot Communications Corp.
(“Kidville” or the “Company” or “we” or “our” or “us”), filed a Current Report
on Form 8-K (the “8-K”) in connection with the consummation of its acquisition
of Kidville Holdings, LLC pursuant to that certain Merger Agreement, dated
July 14, 2008, by and among the Company, Kidville Holdings, LLC and
Kidville Merger Corp., Inc., our wholly-owned subsidiary (“Merger Sub”). In
accordance with the Merger Agreement, Kidville Holdings, LLC merged with and
into Merger Sub (the “Merger”), with Kidville Holdings, LLC as the surviving
corporation and as our wholly-owned subsidiary.
The
consolidation effected by the Merger has been accounted for as a reverse
acquisition wherein Kidville Holdings, LLC has been treated as the acquirer for
accounting purposes since its former owners now control the combined enterprise.
Prior to July 14, 2008, the Kidville Holdings, LLC business comprised nine
separate limited liability companies, all of which were affiliated through
common ownership. On July 14, 2008, each of such companies was
brought under the common ownership of Kidville Holdings, LLC (the
“Rollup”). The Kidville financial statements contained in the
8-K set forth financial information for such companies on a combined basis for
the quarter ended March 31, 2008. The Company is filing an amendment
to the 8-K to set forth financial information for such companies on a combined
basis for the six-month period ended June 30, 2008.
The
financial statements included in Item 9.01 of this Current Report on Form
8-K/A are incorporated by reference in to Items 13 and 15 of the Form 10
disclosures set forth in the 8-K.
Item 9.01.
Financial Statements
and Exhibits.
(a) Financial
statements of business acquired.
(b) Pro
forma financial information.
INDEX TO FINANCIAL
STATEMENTS
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Page
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Financial
Statements of Kidville, NY, LLC and Affiliates
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Combined
Financial Statements for the Six Months Ended June 30, 2008 and 2007
(Unaudited)
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Report
of Independent Registered Public Accounting Firm
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F-
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1
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Combined
Balance Sheets as of June 30, 2008 and 2007
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F-
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2
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Combined
Statements of Operation for the Six Months Ended June 30, 2008 and
2007
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F-
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3
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Combined
Statements of Changes in Members’ Equity (Deficiency) for the Six Months
Ended June 30, 2008 and 2007
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F-
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4
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Combined
Statements of Cash Flows for the Six Months Ended June 30, 2008 and
2007
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F-
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5
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Notes
to Combined Financial Statements for the Six Months Ended June 30, 2008
and 2007
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F-
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7
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Pro
Forma Financial Information
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Condensed
Pro Forma Balance Sheet as of June 30, 2008 (Unaudited)
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F-
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18
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Condensed
Pro Forma Statement of Operations for the six months ended June 30, 2008
(Unaudited)
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F-
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20
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Notes
to the Condensed Pro Forma Financial Statements
(Unaudited)
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F-
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21
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REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Members
Kidville,
NY, LLC and Affiliates
We have
reviewed the accompanying combined balance sheets of Kidville, NY, LLC and
Affiliates as of June 30, 2008 and 2007, and the related combined statements of
operations, changes in members' equity (deficiency) and cash flows for the six
months then ended. These combined financial statements are the responsibility of
the Companies' management.
We
conducted our reviews in accordance with the standards of the Public Company
Accounting Oversight Board (United States). A review of interim financial
information consists principally of applying analytical procedures and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with the
standards of the Public Company Accounting Oversight Board, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an
opinion.
Based on
our reviews, we are not aware of any material modifications that should be made
to the accompanying interim combined financial statements for them to be in
conformity with accounting principles generally accepted in the United States of
America.
/s/
Friedman LLP
New York,
New York
October
20, 2008
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COMBINED
BALANCE SHEETS
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June
30,
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2008
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2007
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ASSETS
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Current
assets
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Cash
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$
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465,202
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|
$
|
352,016
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Inventories
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190,618
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98,327
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Due
from members
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-
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6,358
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Prepaid
merger costs
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244,620
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-
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Prepaid
expenses and other current assets
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566,240
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565,090
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Total
current assets
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1,466,680
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1,021,791
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Property
and equipment - at cost, less accumulated
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depreciation
and amortization
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6,343,323
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5,560,271
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Software
and website development costs - at cost,
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less
accumulated amortization
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304,880
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11,390
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Other
assets
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49,427
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104,818
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$
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8,164,310
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$
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6,698,270
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LIABILITIES
AND MEMBERS' DEFICIENCY
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Current
liabilities
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Current
maturities of long-term debt
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$
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509,821
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$
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51,215
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Current
maturities of capital lease obligations
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18,663
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24,372
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Accounts
payable
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1,849,849
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664,690
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Accrued
expenses and other current liabilities
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774,950
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354,052
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Current
portion of deferred revenue
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2,493,407
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2,304,693
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Current
portion of deferred rent
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62,870
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27,175
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Total
current liabilities
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5,709,560
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3,426,197
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Long-term
debt, less current maturities
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2,099,043
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1,946,364
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Capital
lease obligations, less current maturities
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20,561
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16,130
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Deferred
revenue, net of current portion
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-
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150,000
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Deferred
rent, net of current portion
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1,279,058
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1,187,916
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Tenant
security deposit payable
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103,000
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60,000
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Excess
of losses over equity investment
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66,693
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24,420
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9,277,915
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6,811,027
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Commitments
and contingencies
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Members'
deficiency
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(1,113,605
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)
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(112,757
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)
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$
|
8,164,310
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$
|
6,698,270
|
|
See notes
to combined financial statements and Report of Independent Registered Public
Accounting Firm.
|
KIDVILLE,
NY, LLC AND AFFILIATES
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COMBINED
STATEMENTS OF OPERATIONS
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Six
Months Ended June 30,
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2008
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2007
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Revenues
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$
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5,832,144
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$
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5,046,377
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Costs
and expenses
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Operating
expenses
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4,251,291
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3,341,842
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Cost
of goods sold
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565,454
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469,111
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Selling,
general and administrative expenses
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1,537,721
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1,296,495
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Depreciation
and amortization
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512,488
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371,520
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6,866,954
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5,478,968
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Operating
loss
|
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|
(1,034,810
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)
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|
|
(432,591
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)
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Interest
income
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|
243
|
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3,167
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Interest
expense
|
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|
(111,240
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)
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|
(87,892
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)
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Loss
from equity investment
|
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|
(18,509
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)
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|
(23,766
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)
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|
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Net
loss
|
|
$
|
(1,164,316
|
)
|
|
$
|
(541,082
|
)
|
See notes
to combined financial statements and Report of Independent Registered Public
Accounting Firm.
|
KIDVILLE,
NY, LLC AND AFFILIATES
|
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COMBINED
STATEMENTS OF CHANGES IN MEMBERS' EQUITY (DEFICIENCY)
|
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Members'
equity, January 1, 2007
|
|
$
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409,741
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Contributions
|
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|
150,000
|
|
|
Distributions
|
|
|
(131,416
|
)
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Net
loss
|
|
|
(541,082
|
)
|
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Members'
deficiency, June 30, 2007
|
|
$
|
(112,757
|
)
|
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|
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|
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|
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Members'
deficiency, January 1, 2008
|
|
$
|
(1,149,289
|
)
|
|
Contributions
|
|
|
1,200,000
|
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|
Net
loss
|
|
|
(1,164,316
|
)
|
|
Members'
deficiency, June 30, 2008
|
|
$
|
(1,113,605
|
)
|
See notes
to combined financial statements and Report of Independent Registered Public
Accounting Firm.
|
KIDVILLE, NY, LLC AND
AFFILIATES
|
|
|
|
|
|
COMBINED
STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six
Months Ended June 30,
|
|
|
|
|
2008
|
|
|
2007
|
|
|
Cash
flows from operating activities
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(1,164,316
|
)
|
|
$
|
(541,082
|
)
|
|
Adjustments
to reconcile net loss to net cash
|
|
|
|
|
|
|
|
|
|
used
in operating activities
|
|
|
|
|
|
|
|
|
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Depreciation
and amortization
|
|
|
512,488
|
|
|
|
371,520
|
|
|
Deferred
rent
|
|
|
20,132
|
|
|
|
4,737
|
|
|
Loss
from equity investment
|
|
|
18,509
|
|
|
|
23,766
|
|
|
Changes
in assets and liabilities
|
|
|
|
|
|
|
|
|
|
Inventories
|
|
|
(2,518
|
)
|
|
|
75,669
|
|
|
Prepaid
expenses and other current assets
|
|
|
(165,360
|
)
|
|
|
(222,610
|
)
|
|
Other
assets
|
|
|
13,765
|
|
|
|
(58,666
|
)
|
|
Accounts
payable
|
|
|
429,516
|
|
|
|
(80,977
|
)
|
|
Accrued
expenses and other current liabilities
|
|
|
246,894
|
|
|
|
177,542
|
|
|
Deferred
revenue
|
|
|
(704,996
|
)
|
|
|
(248,131
|
)
|
|
Net
cash used in operating activities
|
|
|
(795,886
|
)
|
|
|
(498,232
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities
|
|
|
|
|
|
|
|
|
|
Acquisition
of property and equipment
|
|
|
(285,373
|
)
|
|
|
(74,545
|
)
|
|
Software
and website development costs
|
|
|
(201,551
|
)
|
|
|
-
|
|
|
Due
from members
|
|
|
10,639
|
|
|
|
(2,989
|
)
|
|
Net
cash used in investing activities
|
|
|
(476,285
|
)
|
|
|
(77,534
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities
|
|
|
|
|
|
|
|
|
|
Prepaid
merger costs
|
|
|
(25,000
|
)
|
|
|
-
|
|
|
Proceeds
from notes payable
|
|
|
-
|
|
|
|
300,000
|
|
|
Repayment
of notes payable
|
|
|
(24,807
|
)
|
|
|
(18,803
|
)
|
|
Repayment
of capital lease obligations
|
|
|
(16,058
|
)
|
|
|
(10,102
|
)
|
|
Contributions
by members
|
|
|
1,200,000
|
|
|
|
150,000
|
|
|
Distribution
to members
|
|
|
-
|
|
|
|
(131,416
|
)
|
|
Net
cash provided by financing activities
|
|
|
1,134,135
|
|
|
|
289,679
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
decrease in cash
|
|
|
(138,036
|
)
|
|
|
(286,087
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash,
beginning of period
|
|
|
603,238
|
|
|
|
638,103
|
|
|
Cash,
end of period
|
|
$
|
465,202
|
|
|
$
|
352,016
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
cash flow disclosures
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
$
|
34,921
|
|
|
$
|
73,597
|
|
|
|
|
|
|
|
|
|
|
|
|
KIDVILLE,
NY, LLC AND AFFILIATES
|
|
|
|
|
|
COMBINED
STATEMENTS OF CASH FLOWS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six
Months Ended June 30,
|
|
|
|
|
2008
|
|
|
2007
|
|
|
Noncash
investing and financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition
of property and equipment financed by
|
|
|
|
|
|
|
|
capital
lease obligations
|
|
|
2,770
|
|
|
|
14,228
|
|
|
Unpaid
additions to property and equipment included in
|
|
|
|
|
|
|
|
|
|
accounts
payable and accrued expenses
|
|
|
376,223
|
|
|
|
356,316
|
|
|
Unpaid
additions to website and software costs included in
|
|
|
|
|
|
|
|
|
|
accounts
payable and accrued expenses
|
|
|
68,014
|
|
|
|
11,990
|
|
|
Prepaid
merger costs included in accounts payable
|
|
|
219,620
|
|
|
|
-
|
|
See notes
to combined financial statements and Report of Independent Registered Public
Accounting Firm.
KIDVILLE,
NY, LLC AND AFFILIATES
NOTES
TO COMBINED FINANCIAL STATEMENTS
1
- NATURE OF BUSINESS AND BASIS FOR PRESENTATION
Nature
of Business
Kidville,
NY, LLC and Affiliates (collectively, "Kidville", the "Company", "us" or "we")
operate large upscale facilities that cater to newborns through five-year-olds
and their families. Kidville offers a wide range of developmental classes such
as Little Maestros, Run Wiggle Paint & Giggle, Big Muscles for Little
Babies, Kidville Tumblers, and Kidville University (Kidville's Pre-School
Alternative Program). Kidville also features an indoor playground, a retail
boutique and the Kidville Salon. Kidville also operates Kidville
Annex locations that feature a selection of Kidville offerings.
Basis
for Presentation
The
combined balance sheets as of June 30, 2008 and 2007, and the combined
statements of operations, changes in members' equity (deficiency) and cash flows
for the six months then ended include the accounts of Kidville, NY, LLC;
Kidville UWS, LLC; Kidville Park Slope, LLC; Kidville Tribeca, LLC; Kidville
Entertainment, LLC; Kidville Media, LLC; Kidville Franchise Company, LLC;
Kidville DC, LLC; Kidville Summerlin, LLC and Kidville Payroll,
LLC.
2
- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use
of Estimates
Management
uses estimates and assumptions in preparing financial
statements. Those estimates and assumptions affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and
liabilities, and reported revenues and expenses. Actual results could
differ from those estimates.
Revenues
The
Company's revenues are derived from providing early childhood development
classes for children ranging from newborns to five-year-olds, an indoor
playground, birthday parties, retail/boutique sales and salon
services. Revenues are recognized as earned.
Deferred
Revenue
Deferred
revenue consists of fees for classes received in advance of the upcoming
semesters. Each semester is four months. Revenue is
recognized over the term of the semester once it begins. The Company
has specific refund policies for the various classes or
services. Management has determined that no accruals for refunds were
required at June 30, 2008 and 2007.
Principles
of Combination
The
combined financial statements include the accounts of Kidville, NY, LLC and its
affiliates, which are affiliated through common ownership. All significant
intercompany balances and transactions have been eliminated in
combination.
KIDVILLE,
NY, LLC AND AFFILIATES
NOTES
TO COMBINED FINANCIAL STATEMENTS
2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
(Continued)
Cash
and Cash Equivalents
We
consider all short-term investments with a maturity of six months or less from
the date of purchase to be cash equivalents.
Cash
balances in banks are insured by the Federal Deposit Insurance Corporation
subject to certain limitations.
Inventories
Inventories
are stated at the lower of cost, determined by a gross profit percentage
valuation method, or market and consist principally of children's clothing,
toys, games, food, beverages and birthday party items.
Depreciation
and Amortization
Depreciation,
including depreciation of assets held under capital leases, is computed
primarily using the straight-line method over the estimated useful asset lives
of five to seven years. Leasehold improvements are amortized using
the straight-line method over the term of the leases or estimated useful lives,
whichever is shorter.
Software
and Website Development Costs
Software
and website development costs are capitalized in accordance with Statement of
Position 98-1, "Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use," and are amortized using the straight-line method
based on an estimated useful life of three years.
Deferred
Financing Costs
Deferred
financing costs are included in other assets and are amortized using the
straight-line method over the term of the related debt. Amortization
expense was $446 and $891 for the six months ended June 30, 2008 and 2007,
respectively.
Impairment
of Long-Lived Assets
We
periodically review the carrying value of our long-lived assets in relation to
historical results, as well as management's best estimate of future trends,
events and overall business climate. If such reviews indicate an issue as to
whether the carrying value of such assets may not be recoverable, we will then
estimate the future cash flows generated by such assets (undiscounted and
without interest charges). If such future cash flows are insufficient to recover
the carrying amount of the assets, then impairment is triggered and the carrying
value of any impaired assets would then be reduced to fair value.
KIDVILLE,
NY, LLC AND AFFILIATES
NOTES
TO COMBINED FINANCIAL STATEMENTS
2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
(Continued)
Equity
Investment
The
Company uses the equity method to account for its investments with ownership
between 20% and 50% when it does not exercise a controlling interest. Under the
equity method, the Company recognizes in earnings its proportionate share of the
income or loss of the investee. The Company has an investment of 33%
in Little Maestros Media LLC with joint control, and the Company is responsible
for funding any losses incurred in excess of its equity
investment. The Company and Little Maestros LLC, both members of
Little Maestros Media LLC, are in a joint venture to develop media
properties.
Fair
Value of Financial Instruments
Statement
of Financial Accounting Standards ("SFAS") No. 107, "Disclosures About Fair
Value of Financial Instruments", as amended, requires certain entities to
disclose the fair value of specified financial instruments for which it is
practicable to estimate that value. The carrying values of current
assets and current liabilities approximate fair values due to their short-term
nature. Except for the note payable to a member that bears interest
at 1.98%, the carrying values of the notes payable and capital lease obligations
approximate their fair values because their interest rates reflect the borrowing
rates currently available to the Company for instruments with similar
terms. It was impracticable to estimate the fair value of the note
payable to a member that bears interest at 1.98%. There is no market
for the Company's equity method investment and it was impracticable to estimate
its fair value.
Rent
Expense
The
leases for the Company's facilities are classified as operating leases in
accordance with the provisions of SFAS No. 13, "Accounting for
Leases". One of these provisions requires the recognition of
scheduled rent increases and deferred rent concessions on a straight-line basis
over the lease term. Included in rent expense is an adjustment to
increase rent by $20,132 and $4,737 for the six months ended June 30, 2008 and
2007, respectively.
In
accordance with SFAS No. 13, the Company capitalizes its equipment
leases.
Advertising
We
expense the costs of general advertising, promotion and marketing programs at
the time those costs are incurred. Advertising expense was $179,732 and $158,632
for the six months ended June 30, 2008 and 2007, respectively.
KIDVILLE,
NY, LLC AND AFFILIATES
NOTES
TO COMBINED FINANCIAL STATEMENTS
2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
(Continued)
Income
Taxes
The
Company is not a taxpaying entity for income tax purposes and, accordingly, no
provision has been made for income taxes. The members' allocable
shares of the Company's taxable income or loss are reportable on their income
tax returns. The Company is subject to New York City unincorporated
business tax.
As a
result of the reverse acquisition that occurred on August 11, 2008 (see Note
11), the Company will be a taxpaying entity for tax purposes. The
Company will apply the asset and liability approach to financial accounting and
reporting for income taxes. Deferred income tax assets and liabilities will be
computed for differences between the financial statement and tax bases of assets
and liabilities that will result in future taxable or deductible amounts, based
on enacted tax laws and rates for the periods in which the differences are
expected to affect taxable income. Valuation allowances will be established,
when necessary, to reduce deferred tax assets to the amount expected to be
realized.
At June
30, 2008 and 2007, the Company's estimated deferred income tax asset would have
been comprised of the tax benefit associated with the following items based on
the statutory tax rates currently in effect if the reverse acquisition had
occurred on January 1, 2008 and 2007, respectively:
|
|
|
June
30,
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
Net
operating loss carryforwards
|
|
$
|
1,164,000
|
|
|
$
|
541,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
income tax asset
|
|
|
396,000
|
|
|
|
184,000
|
|
|
Valuation
allowance
|
|
|
(396,000
|
)
|
|
|
(184,000
|
)
|
|
Deferred
income tax asset, net
|
|
$
|
-0-
|
|
|
$
|
-0-
|
|
The
Company believes that it is more likely than not that the deferred tax assets
will not be realized and, accordingly, have therefore provided a valuation
allowance in the table above equal to the entire amount of the deferred tax
assets.
Because
the Company would have had a net operating loss carryforward, the Company would
not have recorded a provision for income taxes related to its pretax
income.
Presentation
of Sales Taxes
The
Company collects sales taxes from customers and remits them to the applicable
taxing authority. The Company's accounting policy is to exclude these
taxes from revenues.
KIDVILLE,
NY, LLC AND AFFILIATES
NOTES
TO COMBINED FINANCIAL STATEMENTS
3
- PROPERTY AND EQUIPMENT
Property
and equipment consist of:
|
|
|
June
30,
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
Equipment
|
|
$
|
774,625
|
|
|
$
|
573,181
|
|
|
Furniture
and fixtures
|
|
|
698,166
|
|
|
|
616,247
|
|
|
Leasehold
improvements
|
|
|
6,974,718
|
|
|
|
5,560,125
|
|
|
|
|
|
8,447,509
|
|
|
|
6,749,553
|
|
|
Less
- Accumulated depreciation and
amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
2,104,186
|
|
|
|
1,189,282
|
|
|
|
|
$
|
6,343,323
|
|
|
$
|
5,560,271
|
|
Depreciation
and amortization expense was $477,267 and $370,029 for the six months ended June
30, 2008 and 2007, respectively.
At June
30, 2008 and 2007, assets with a cost of approximately $112,000 and $82,000 and
accumulated depreciation of approximately $46,000 and $24,000, respectively,
were held under capital leases.
4
- SOFTWARE AND WEBSITE DEVELOPMENT COSTS
Software
and website development costs consist of:
|
|
|
June
30,
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
Software
|
|
$
|
26,990
|
|
|
$
|
11,990
|
|
|
Website
development costs
|
|
|
320,953
|
|
|
|
-
|
|
|
|
|
|
347,943
|
|
|
|
11,990
|
|
|
Less
- Accumulated amortization
|
|
|
43,063
|
|
|
|
600
|
|
|
|
|
$
|
304,880
|
|
|
$
|
11,390
|
|
Amortization
expense was $34,775 and $600 for the six months ended June 30, 2008 and 2007,
respectively.
KIDVILLE,
NY, LLC AND AFFILIATES
NOTES
TO COMBINED FINANCIAL STATEMENTS
5
- ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued
expenses and other current liabilities are comprised of the
following:
|
|
|
June
30,
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
Accrued
interest
|
|
$
|
211,840
|
|
|
$
|
63,171
|
|
|
Accrued
payroll
|
|
|
189,026
|
|
|
|
103,169
|
|
|
Sales
tax payable
|
|
|
96,779
|
|
|
|
10,067
|
|
|
Other
|
|
|
277,305
|
|
|
|
177,645
|
|
|
|
|
$
|
774,950
|
|
|
$
|
354,052
|
|
6
- LONG-TERM DEBT
Long-term
debt consists of the following:
|
|
|
June
30,
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
Notes
payable to members
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bears
interest at 6.75% and matures on October 20, 2008 (a)
|
|
$
|
450,000
|
|
|
$
|
450,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Bears
interest at 8.25% and matures on October 20, 2009 (a)
|
|
|
500,000
|
|
|
|
500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Bears
interest at 8.25% and matures on February 6, 2010 (a)
|
|
|
100,000
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Bears
interest at 8.25% and matures on February 14, 2010 (a)
|
|
|
322,500
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Bears
interest at 8.25% and matures on April 19, 2010 (a)
|
|
|
465,000
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Bears
interest at 1.98% and matures on January 1, 2010 (b)
|
|
|
100,000
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Bears
interest at 8.25% and matures on February 8, 2010 (b)
|
|
|
75,000
|
|
|
|
-
|
|
|
|
|
|
2,012,500
|
|
|
|
1,350,000
|
|
KIDVILLE,
NY, LLC AND AFFILIATES
NOTES
TO COMBINED FINANCIAL STATEMENTS
6 - LONG-TERM DEBT
(Continued)
|
|
|
June
30,
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
Small
Business Administration loan payable, bears interest at prime plus 2.75%,
adjusted on a quarterly basis, payable in 120 equal consecutive monthly
installments of principal and interest, matures in February 2015, secured
by Kidville UWS, LLC's assets and guaranteed by certain members of
Kidville
|
|
$
|
596,364
|
|
|
$
|
647,579
|
|
|
|
|
|
2,608,864
|
|
|
|
1,997,579
|
|
|
Less
- Current maturities
|
|
|
509,821
|
|
|
|
51,215
|
|
|
Long-term
debt, less current maturities
|
|
$
|
2,099,043
|
|
|
$
|
1,946,364
|
|
|
(a)
|
These
member loans are secured by a subordinated interest in the Company's
property and business and limited guarantees of two
members.
|
|
(b)
|
These
member loans are secured by a subordinated interest in the Company's
property and business.
|
Interest
expense for the above loans was $105,384 and $81,553 for the six months ended
June 30, 2008 and 2007, respectively.
Approximate
maturities of long-term debt are as follows:
|
Year
Ending
|
|
|
|
|
June 30,
|
|
|
|
|
|
|
|
|
|
2009
|
|
$
|
510,000
|
|
|
2010
|
|
|
1,622,000
|
|
|
2011
|
|
|
65,000
|
|
|
2012
|
|
|
71,000
|
|
|
2013
|
|
|
79,000
|
|
|
Thereafter
|
|
|
262,000
|
|
|
|
|
$
|
2,609,000
|
|
KIDVILLE,
NY, LLC AND AFFILIATES
NOTES
TO COMBINED FINANCIAL STATEMENTS
7 -
CAPITAL LEASE
OBLIGATIONS
The
Company entered into various capital lease agreements. These
equipment leases require monthly payments ranging from $78 to $1,303, including
interest.
Future
minimum payments required under these capital leases are as
follows:
|
Year
Ending
|
|
|
|
|
June 30,
|
|
|
|
|
|
|
|
|
|
2009
|
|
$
|
26,155
|
|
|
2010
|
|
|
20,256
|
|
|
2011
|
|
|
3,219
|
|
|
Total
approximate minimum lease payments
|
|
|
49,630
|
|
|
Less
- Amount representing interest
|
|
|
10,406
|
|
|
|
|
|
39,224
|
|
|
Less
- Current obligations under capital leases
|
|
|
18,663
|
|
|
Long-term
obligations under capital leases
|
|
$
|
20,561
|
|
Interest
expense for the capital lease obligations was $5,856 and $6,339 for the six
months ended June 30, 2008 and 2007, respectively.
8
- FAIR VALUE MEASUREMENTS
In the
first quarter of 2008, the Company adopted SFAS No. 157, "Fair Value
Measurements", for financial assets and liabilities. Management elected the
deferral option available for one year for non-financial assets and
liabilities. This standard defines fair value, provides guidance for
measuring fair value and requires certain disclosures. This standard does not
require any new fair value measurements, but discusses valuation techniques,
such as the market approach (comparable market prices), the income approach
(present value of future income or cash flows) and the cost approach (cost to
replace the service capacity of an asset or replacement cost).
As
permitted, the Company chose not to elect the fair value option as prescribed by
SFAS No. 159, "The Fair Value Option for Financial Assets and Financial
Liabilities - Including an Amendment of FASB Statement No. 115", for its
financial assets and liabilities that had not been previously carried at fair
value. Therefore, material financial assets and liabilities not carried at fair
value, such as the note payable to member that bears interest at 1.98% and the
equity investment, are reported at their carrying values.
KIDVILLE,
NY, LLC AND AFFILIATES
NOTES
TO COMBINED FINANCIAL STATEMENTS
8 - FAIR VALUE MEASUREMENTS
(Continued)
The
Company's financial assets and liabilities subject to recurring fair value
measurements and the necessary disclosures are as follows:
|
|
|
|
|
|
|
|
|
Fair
Value Measurements at June 30,
|
|
|
|
|
At
June 30, 2008
|
|
|
2008
Using Fair Value Hierarchy
|
|
|
|
|
Cost
|
|
|
Fair
Value
|
|
|
Level
1
|
|
|
Level
2
|
|
|
Level
3
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
payable to members
|
|
$
|
1,912,500
|
|
|
$
|
1,912,500
|
|
|
$
|
-
|
|
|
$
|
1,912,500
|
|
|
$
|
-
|
|
|
Small
Business Administration
loan payable
|
|
|
596,364
|
|
|
|
596,364
|
|
|
|
-
|
|
|
|
596,364
|
|
|
|
-
|
|
|
Capital
lease obligations
|
|
|
39,224
|
|
|
|
39,224
|
|
|
|
-
|
|
|
|
39,224
|
|
|
|
-
|
|
|
|
|
$
|
2,548,088
|
|
|
$
|
2,548,088
|
|
|
$
|
-0-
|
|
|
$
|
2,548,088
|
|
|
$
|
-0-
|
|
The
financial liabilities measured at fair value using Level 2 inputs at June 30,
2008, were previously reported as using Level 1 inputs.
9
- RELATED PARTY TRANSACTIONS
One of
our locations is leased from an affiliate of a member, under a lease which
expires on April 30, 2015 (see Note 10). Rent for such location was $315,938 and
$309,743 for the six months ended June 30, 2008 and 2007,
respectively.
The
Company incurred interest of $76,319 and $44,670 related to notes payable to
members (see Note 6) during the six months ended June 30, 2008 and 2007,
respectively.
KIDVILLE,
NY, LLC AND AFFILIATES
NOTES
TO COMBINED FINANCIAL STATEMENTS
|
10
- COMMITMENTS AND CONTINGENCIES
|
Lease
Arrangements
The
Company is obligated under six leases for its facilities, all of which include
provisions for additional rental payments for real estate taxes and expire
between August 31, 2014 and August 31, 2019.
Approximate minimum future annual rentals payable under these leases are as
follows:
|
Year
Ending
|
|
|
|
|
June 30,
|
|
|
|
|
|
|
|
|
|
2009
|
|
$
|
2,104,000
|
|
|
2010
|
|
|
2,559,000
|
|
|
2011
|
|
|
2,700,000
|
|
|
2012
|
|
|
2,796,000
|
|
|
2013
|
|
|
2,864,000
|
|
|
Thereafter
|
|
|
10,711,000
|
|
|
|
|
$
|
23,734,000
|
|
Rent
expense was $867,901 and $687,096 for the six months ended June 30, 2008 and
2007, respectively.
The
Company has outstanding letters of credit of approximately $983,000 as security
deposits on leased premises, which are guaranteed by an affiliate of a
member.
The
Company subleases a portion of one its facilities under an operating lease,
which includes a provision for additional rental payments for real estate
taxes. Minimum future annual rentals to be received under the
noncancelable operating lease are approximately as follows:
|
Year
Ending
|
|
|
|
|
June 30,
|
|
|
|
|
|
|
|
|
|
2009
|
|
$
|
252,000
|
|
|
2010
|
|
|
259,000
|
|
|
2011
|
|
|
267,000
|
|
|
2012
|
|
|
275,000
|
|
|
2013
|
|
|
283,000
|
|
|
Thereafter
|
|
|
1,020,000
|
|
|
|
|
$
|
2,356,000
|
|
Rental
income was $143,183 and $120,000 for the six months ended June 30, 2008 and
2007, respectively.
KIDVILLE,
NY, LLC AND AFFILIATES
NOTES
TO COMBINED FINANCIAL STATEMENTS
|
10 - COMMITMENTS AND
CONTINGENCIES
(Continued)
|
Consulting,
Administrative Services and Licensing Agreement
The
Company has an agreement with an entity for the development of certain classes
and the right to operate those classes. This agreement, which is for
a term of five years and expires on December 31, 2011, provides for a base
annual consideration of $1,075,000, payable in monthly
installments.
Maryland
Location
The
Company has a construction commitment to build out the Maryland location at an
estimated cost of $758,000 less a landlord allowance of approximately
$214,000. The estimated cost to completion is $448,000.
Legal
Proceedings
The
Company is a party to various legal proceedings and administrative actions, all
arising in the ordinary course of business. Although it is impossible
to predict the outcome of any such claims or legal proceedings, the Company
believes any liability that may finally be determined should not have a material
effect on its combined financial position, results of operations or cash
flows.
Kidville
Holdings, LLC ("Holdings"), the holding company of Kidville, which was formed on
April 14, 2008, entered into an agreement under which various investors will
purchase from Holdings, for total consideration of $10 million, membership
interests in aggregate equal to 25% of the outstanding membership interests in
Holdings. On July 14, 2008, the membership interests of Kidville were
transferred to Holdings and Holdings completed the sale of 25% of its
outstanding membership interests. The Company used approximately $3.3
million to retire its long-term debt and accrued interest and for the redemption
of Series A Preferred units of Kidville Franchise Company, LLC.
On August
11, 2008, Longfoot Communications Corp. ("Longfoot"), a Delaware corporation,
consummated its acquisition of Holdings, a Delaware limited liability company,
pursuant to the Merger Agreement, dated July 14, 2008, by and among Longfoot,
Holdings and Kidville Merger Corp., Inc., a Delaware corporation and Longfoot's
wholly owned subsidiary ("Merger Sub"). In accordance with the Merger
Agreement, Holdings merged with and into Merger Sub, with Holdings as the
surviving corporation and as Longfoot's wholly owned subsidiary. The
merger will be accounted for as a reverse acquisition whereby Holdings will be
treated as the acquirer for accounting purposes since it will control the
combined enterprise.
UNAUDITED
PRO FORMA
CONDENSED
FINANCIAL STATEMENTS
The
following unaudited pro forma condensed balance sheet as of June 30, 2008 was
prepared as if the merger was effective as of such date. The unaudited pro forma
condensed statement of operations for the six months ended June 30, 2008 was
prepared as if the merger was effective as of January 1, 2008. The
consolidated balance sheet as of March 31, 2008 and the statement of
operations for the six months then ended of Longfoot Communications Corp.
(“Longfoot”) was used for pro forma purposes, as that is Longfoot’s fiscal
second quarter.
The
unaudited pro forma condensed financial statements should be read in conjunction
with the unaudited historical combined financial statements and notes thereto
included herein for Kidville, NY, LLC and Affiliates (“Kidville” or the
“Company” or “we” or “us” or “our”) and the unaudited consolidated historical
financial statements of Longfoot. The pro forma financial information is
presented for illustrative purposes only and is not necessarily indicative of
the future financial position or future results of operations of the combined
enterprise after the Merger of Longfoot with Kidville, or of the financial
position or results of operations of the combined enterprise that would have
actually occurred had the Merger been effected as of the dates described above.
The Merger will be accounted for as a reverse acquisition wherein Kidville will
be treated as the acquirer for accounting purposes since it will control the
combined enterprise.
Condensed
Pro Forma Balance Sheet as of June 30, 2008 (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
Accounting
Acquirer
Kidville
|
|
|
|
|
|
Pro
Forma Adjustments
|
|
Notes
|
|
Pro
Forma Balance Sheet
|
|
|
Current
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
465,202
|
|
|
$
|
63,986
|
|
|
$
|
9,560,000
|
|
(A)
|
|
$
|
6,880,984
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(387,500
|
)
|
(B)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,820,704
|
)
|
(C),
(I)
|
|
|
|
|
|
Inventories
|
|
|
190,618
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
190,618
|
|
|
Prepaid
merger costs
|
|
|
244,620
|
|
|
|
—
|
|
|
|
(244,620)
|
|
(H)
|
|
|
——
|
|
|
Prepaid
expenses and other current assets
|
|
|
566,240
|
|
|
|
14,196
|
|
|
|
—
|
|
|
|
|
580,436
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
current assets
|
|
|
1,466,680
|
|
|
|
78,182
|
|
|
|
6,107,176
|
|
|
|
|
7,652,038
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property
and equipment — net
|
|
|
6,343,323
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
6,343,323
|
|
|
Software
and website development costs — net
|
|
|
304,880
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
304,880
|
|
|
Other
assets
|
|
|
49,427
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
49,427
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
8,164,310
|
|
|
$
|
78,182
|
|
|
$
|
6,107,176
|
|
|
|
$
|
14,349,668
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed
Pro Forma Balance Sheet as of June 30, 2008 (Unaudited) (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND
STOCKHOLDERS’
EQUITY
|
|
Accounting
Acquirer
Kidville
|
|
|
|
|
|
Pro
Forma Adjustments
|
|
|
Notes
|
|
|
Pro
Forma Balance Sheet
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
maturities of long-term debt
|
|
$
|
509,821
|
|
|
$
|
—
|
|
|
$
|
(509,821
|
)
|
|
|
(C
|
)
|
|
$
|
—
|
|
|
Current
maturities of capital lease obligations
|
|
|
18,663
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
18,663
|
|
|
Accounts
payable
|
|
|
1,849,849
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
1,849,849
|
|
|
Accrued
expenses and other current liabilities
|
|
|
774,950
|
|
|
|
11,053
|
|
|
|
(211,840
|
)
|
|
|
(I
|
)
|
|
|
574,163
|
|
|
Current
portion of deferred revenue
|
|
|
2,493,407
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
2,493,407
|
|
|
Current
portion of deferred rent
|
|
|
62,870
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
62,870
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
current liabilities
|
|
|
5,709,560
|
|
|
|
11,053
|
|
|
|
(721,661
|
)
|
|
|
|
|
|
|
4,998,952
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term
debt, less current maturities
|
|
|
2,099,043
|
|
|
|
—
|
|
|
|
(2,099,043
|
)
|
|
|
(C
|
)
|
|
|
—
|
|
|
Capital
leases obligations, less current maturities
|
|
|
20,561
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
20,561
|
|
|
Deferred
rent, net of current portion
|
|
|
1,279,058
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
1,279,058
|
|
|
Tenant
security deposit payable
|
|
|
103,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
103,000
|
|
|
Excess
of losses over equity investment
|
|
|
66,693
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
66,693
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,277,915
|
|
|
|
11,053
|
|
|
|
(2,820,704
|
)
|
|
|
|
|
|
|
6,468,264
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’
equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock
|
|
|
—
|
|
|
|
3,330
|
|
|
|
88,677
|
|
|
|
(D
|
)
|
|
|
89,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,207
|
)
|
|
|
(E
|
)
|
|
|
|
|
|
Additional
paid-in capital
|
|
|
—
|
|
|
|
665,782
|
|
|
|
(88,677
|
)
|
|
|
(D
|
)
|
|
|
(22,671)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,207
|
|
|
|
(E
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(601,983
|
)
|
|
|
(F
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Members’
equity (deficiency)/Accumulated deficit)/
Retained earnings
|
|
|
(1,113,605
|
)
|
|
|
(601,983
|
)
|
|
|
9,560,000
|
|
|
|
(A
|
)
|
|
|
7,814,275
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(387,500
|
)
|
|
|
(B
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
601,983
|
|
|
|
(F
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(244,620)
|
|
|
|
(H
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,113,605
|
)
|
|
|
67,129
|
|
|
|
8,927,880
|
|
|
|
|
|
|
|
7,881,404
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
8,164,310
|
|
|
$
|
78,182
|
|
|
$
|
6,
107,176
|
|
|
|
|
|
|
$
|
14,349,668
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Pro Forma
Statements of Operations for the six months ended June 30, 2008
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounting
Acquirer
Kidville
|
|
|
Legal
Survivor
Longfoot
|
|
|
Pro
Forma Adjustments
|
|
|
Notes
|
|
|
Pro
Forma
Statement
of
Operations
|
|
|
Revenues
|
|
$
|
5,832,144
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
$
|
5,832,144
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs
and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of goods sold
|
|
|
565,454
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
565,454
|
|
|
Selling,
general and administrative expenses
|
|
|
1,537,721
|
|
|
|
28,756
|
|
|
|
305,000
|
|
|
|
(G
|
)
|
|
|
2,606,477
|
|
|
|
|
|
|
|
|
|
|
|
|
|
430,000
|
|
|
|
(H
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
305,000
|
|
|
|
(J
|
)
|
|
|
|
|
|
Operating
expenses
|
|
|
4,251,291
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
4,251,291
|
|
|
Depreciation
and amortization
|
|
|
512,488
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
512,488
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,866,954
|
|
|
|
28,756
|
|
|
|
1,040,000
|
|
|
|
|
|
|
|
7,935,710
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
loss
|
|
|
(1,034,810
|
)
|
|
|
(28,756)
|
|
|
|
(1,040,000
|
)
|
|
|
|
|
|
|
(2,103,566
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from discontinued operations
|
|
|
—
|
|
|
|
(73,274
|
)
|
|
|
—
|
|
|
|
|
|
|
|
(73,274
|
)
|
|
|
|
|
Interest
expense, net
|
|
|
(110,997
|
)
|
|
|
—
|
|
|
|
105,384
|
|
|
|
(I
|
)
|
|
|
(5,613
|
)
|
|
Beneficial
conversion cost
|
|
|
—
|
|
|
|
(14,935
|
)
|
|
|
—
|
|
|
|
|
|
|
|
(14,935
|
)
|
|
Income
(loss) from equity investment
|
|
|
(18,509)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
(18,509)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
before income tax benefit
|
|
|
(1,164,316
|
)
|
|
|
(116,965
|
)
|
|
|
(934,616
|
)
|
|
|
|
|
|
|
(2,215,897
|
)
|
|
Income
tax (benefit)
|
|
|
—
|
|
|
|
1,600
|
|
|
|
(887,959
|
)
|
|
|
(K
|
)
|
|
|
(886,359
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(1,164,316
|
)
|
|
$
|
(118,565
|
)
|
|
$
|
(46,657
|
)
|
|
|
|
|
|
$
|
(1,329,538
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss per common share, basic and diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares
outstanding, basic and diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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89,799,920
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F-20
NOTES
TO THE CONDENSED PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
As
a result of the merger, Kidville became Longfoot’s wholly-owned subsidiary and
the security holders of Kidville received an aggregate of 88,677,422 shares of
our common stock. As a result of the merger and the issuance of stock to the
security holders of Kidville, the former security holders of Kidville held
approximately 75% of Longfoot’s outstanding common stock immediately after the
merger. Accounting principles generally accepted in the United States generally
require that a company whose security holders retain the majority voting
interest in the combined business be treated as the acquirer for financial
reporting purposes. The acquisition was accounted for as a reverse acquisition
whereby Kidville was deemed to be the “accounting acquirer.”
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(A)
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To
record the sale of 25% of the outstanding membership interests in Kidville
for a total consideration of $10 million, net of the related capital
raise expenses of approximately $440,000
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(B)
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To
record the redemption of Kidville Series A Preferred
units.
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(C)
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To
reflect the retirement of Kidville’s debt and accrued
interest.
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(D)
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To
record the issuance of 88,677,422 shares of common stock in the reverse
acquisition.
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(E)
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To
record the recapitalization of Longfoot’s common stock to additional
paid-in-capital.
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(F)
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To
record the recapitalization of Longfoot’s accumulated deficit to
additional paid-in-capital.
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(G)
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The
pro forma adjustments to general and administrative expenses represent the
estimated pro forma impact of the incremental cost of salaries and related
cost to the management team of Kidville, although no formal employment
contracts are signed. These expenses were not incurred on a historical
basis and we did not receive any historical benefits in terms of revenue
generation or operating management, for these expenses in the historical
periods presented herein.
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(H)
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The
pro forma adjustments to general and administrative expenses represent the
estimated pro forma impact of the incremental cost of professional fees
related to the transaction and the estimated public company costs the
Company expects to incur.
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(I)
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The
pro forma adjustments to interest expense reflect the pro forma
decremental interest expense associated with loan obligations as if the
loan amounts were paid off in the beginning of the
year.
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(J)
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The
pro forma adjustments to general and administrative expenses represent the
estimated pro forma impact of the incremental cost of stock-based
compensation to the employees of Kidville. These expenses were not
incurred on a historical basis and we did not receive any historical
benefits in terms of revenue generation or operating management, for these
expenses in the historical periods presented herein.
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(K)
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The
provision for income tax “Pro Forma Adjustment” outlined above reflects
the estimated net historical tax impact of the pro forma expense increase
assuming a 40% effective tax rate.
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F-21
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
Date: November 13, 2008
Kidville
/s/ Andy Stenzler
Andy
Stenzler
Chairman and Chief
Executive Officer
Kidville (CE) (USOTC:KVIL)
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