EX-99.2 5 whitewing_8kex99-2.txt EXHIBIT 99.2 UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The following unaudited pro forma condensed consolidated balance sheet as of March 31, 2003 and the unaudited pro forma condensed consolidated statements of operations for the the year ended December 31, 2002 and the three months ended March 31, 2003 of Whitewing Environmental Corp. and Subsidiaries ("Whitewing"), and Advanced Recovery Solutions Inc. d/b/a Complete Spill Solutions ("ARS"), are based on the historical financial statements of Whitewing and ARS after giving effect to the acquisition using the purchase method of accounting and the assumptions and adjustments described in the accompanying notes to the unaudited pro forma condensed consolidated financial statements. On May 8, 2003, Whitewing purchased 50% of ARS which, together with the 50% of ARS it owned at the time, brought Whitewing's ownership of ARS to 100% on the date of the acquisition. The unaudited pro forma condensed consolidated financial statements reflect this transaction. Whitewing issued 2,000,000 shares of Whitewing common stock, cash and a note payable of $223,122 to the 50% ARS stockholders. The unaudited pro forma condensed consolidated balance sheet as of March 31, 2003 is presented to give effect to the acquisition as if it occurred on March 31, 2003 and combines the historical balance sheets of Whitewing and ARS at March 31, 2003. The unaudited pro forma condensed consolidated statements of operations of Whitewing and ARS for the the year ended December 31, 2002 and the three months ended March 31, 2003 are presented as if the combination had taken place on January 1, 2002 and combines the historical results of Whitewing and ARS for the year ended December 31, 2002 and the three months ended March 31, 2003. The unaudited pro forma condensed consolidated financial statements have been obtained from, and should be read with, the historical consolidated financial statements and accompanying notes of Whitewing included in Whitewing's annual report on Form 10-KSB for the year ended December 31, 2002 filed on April 15, 2003, and Form 10QSB for the three months ended March 31, 2003 filed on May 28, 2003 and the historical financial statements and accompanying notes of ARS which are included in this Form 8-K/A filing. Such historical financial statements state that they have been prepared in conformity with generally accepted accounting principles which contemplate the continuance of Whitewing and ARS as a going concern. Certain factors raise substantial doubt about Whitewing's and ARS's ability to continue as a going concern. Such uncertainties also apply to these unaudited pro forma condensed consolidated financial statements. The unaudited pro forma condensed consolidated financial statements are presented for informational purposes only and, while they are based on assumptions that Management believes are reasonable, they are not necessarily indicative of the financial position or results of operations of Whitewing that would have occurred had the acquisition been completed as of the dates indicated. The unaudited pro forma condensed consolidated financial statements are not meant to project Whitewing's financial position or results of operations for any period or as of any date, nor do they give effect to any matters other than those described above or in the notes. Under the purchase method of accounting, the total estimated purchase price, calculated as described in Note 1 to these unaudited pro forma condensed consolidated financial statements, is allocated to the net tangible and intangible assets of ARS, based on their fair values as of March 31, 2003. The allocation of the purchase price reflected in the unaudited pro forma condensed consolidated financial statements is preliminary. Management believes substantially all of the purchase price will be allocated to intangibles. Management intends to hire independent valuation specialists in order to assist management in determining the fair values of the intangible assets and long term assets. The final valuation will be based on the actual net tangible and intangible assets of ARS that exist as of the date of completion of the acquisition. In the opinion of management, that allocation is not expected to materially differ from the preliminary allocation included in the unaudited pro forma condensed consolidated financial statements. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET WHITEWING ENVIRONMENTAL CORP. AND SUBSIDIARIES AND ADVANCED RECOVERY SOLUTIONS, INC. d/b/a COMPLETE SPILL SOLUTIONS MARCH 31, 2003

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS WHITEWING ENVIRONMENTAL CORP. AND SUBSIDIARIES AND ADVANCED RECOVERY SOLUTIONS, INC. D/B/A COMPLETE SPILL SOLUTIONS

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Pro Forma Presentation Prior to May 8, 2003, Whitewing Environmental Corp. and Subsidiaries ("Whitewing") had owned 50% or 100 shares of Advanced Recovery Solutions, Inc d/b/a Complete Spill Solutions ("ARS"). On May 8, 2003, Whitewing completed the purchase of the remaining 50% or 100 shares of common stock of ARS. The acquisition of ARS by Whitewing has been accounted for in the unaudited pro forma condensed consolidated financial statements by the purchase method of accounting, pursuant to the guidance in Statement of Financial Accounting Standards No. 141, "Business Combinations". The consideration given by Whitewing to the former ARS shareholders and their assigns consisted of 2 million shares of Whitewing common stock, $50,000, a promissory note in the amount of $173,122 and the amount due from ARS payable to Whitewing prior to the acquisition in the amount of $664,279. The unaudited pro forma condensed consolidated financial statements provide for the issuance of 2 million shares of Whitewing common stock valued at approximately $260,000 based on an average closing price for a seven-day period ended April 18, 2003 ($.13). The date of the announcement of the acquisition was April 15, 2003. The total estimated purchase price of the acquisition is as follows: Cash $ 50,000 Promissory note 173,122 Common stock 260,000 Amount due from ARS payable to Whitewing 664,279 ------------ $ 1,147,401 ============ Under the purchase method of accounting, the total estimated purchase price as shown in the table above is allocated to ARS's net tangible and intangible assets based on their estimated fair values as of the date of the completion of the acquisition. At the date of the transaction, ARS's assets and liabilities were primarily accounts receivable, inventory, property and equipment, line of credit, mortgage and equipment loan and accounts payble. Management believes the book value of these assets and liabilities approximates fair value for the purpose of recording the purchase transaction. The allocation of the purchase price reflected in the unaudited pro forma condensed consolidated financial statements is preliminary. Management believes substantially all of the purchase price will be allocated to intangibles with a life of 10 years. Management intends to hire independent valuation specialists in order to assist management in determining the fair values and useful lives of the intangible assets and long term assets. The final valuation will be based on the actual net tangible and intangible assets of ARS that exist as of the date of completion of the acquisition. The adjustments included in the unaudited pro forma condensed consolidated financial statements may change based upon the final allocation of the total purchase price. Preliminary estimated purchase price allocation: Net identifiable assets of ARS $ 593,743 Intangible assets 553,658 ------------ $ 1,147,401 ============ The unaudited pro forma condensed consolidated balance sheet as of March 31, 2003 is presented to give effect to the acquisition as if it occurred on March 31, 2003 and combines the historical balance sheet of Whitewing and ARS at March 31, 2003. The unaudited pro forma condensed consolidated statement of operations of Whitewing and ARS for the year ended December 31, 2002 and the period ended March 31, 2003 is presented as if the combination had taken place on January 1, 2002. 2. Pro Forma Adjustments Pro forma adjustments are necessary to reflect the estimated purchase price, interest expense on the promissory note issued in the acquisition, amortization of intangible assets obtained in the acquisition and elimination of intercompany activity. (A) Acquisition of ARS by Whitewing Whitewing acquired ARS for an aggregate consideration valued at $1,147,401 computed as follows: The consideration given by Whitewing to the former ARS stockholders and their assigns consisted of 2 million shares of Whitewing Common Stock valued at $260,000 based on an average closing price for a seven-day period ended April 18, 2003 ($.13), a deposit of $50,000, a promissory note in the amount of $173,122 and the amount due from ARS payable to Whitewing prior to the acquisition in the amount of $664,279. The adjustment also eliminates the historical deficit, and additional paid in capital of ARS and records the fair value of ARS tangible and intangible assets. ARS's estimated fair value at March 31, 2003 approximates book value of $593,743 which is exclusive of $734,608 due to Whitewing from ARS. (B) Interest on promissory note Interest on the promissory note at 8% that has been recorded as a result of the acquisition of ARS was included for the year ended December 31, 2002 and the period ended March 31, 2003 in the amounts of $11,756, and $2,755, respectively. (C) Amortization of intangible asset Amortization on the intangible asset that has been recorded as a result of the acquisition of ARS for the year ended December 31, 2002 and the period ended March 31, 2003 in the amounts of $55,366 and $13,842, respectively. The intangible assets have been estimated by management to have a useful life of 10 years and are subject to final adjustment. (D) Intercompany eliminations Elimination of intercompany activity which includes purchases, sales, accounts receivable and accounts payables. (E) Non-recurring expense Elimination of goodwill impairment because it is a non-recurring expense. 3. Pro Forma Loss Per Share Pro forma loss per share has been determined based on the amount of pro forma loss divided by the sum of the weighted average number of shares of Whitewing outstanding during the periods plus the additional shares issued by Whitewing in the acquisition.

WHITEWING ENVIRONMENTAL CORP 8-K/A