Note 5 - Acquisition of Subsidiary

12 Months Ended

Dec. 31, 2011

Note 5 - Acquisition of Subsidiary [Abstract]

NOTE 5 - ACQUISITION OF SUBSIDIARY

Effective May 30, 2011, the Company closed on the acquisition of Engine Clean Solutions, Inc., a private California corporation (“Engine Clean”) by which Engine Clean became our wholly owned subsidiary. Following the closing of the acquisition, we have become engaged in the business of Engine Clean. The acquisition transaction has not been considered a change in control with the shareholders of the Company retaining 90% interest in the consolidated entity upon the completion of the transaction.

Under the terms of the Acquisition Agreement, we acquired 100% of the issued and outstanding capital stock of Engine Clean, held by two stockholders, in exchange for 2,500,000 shares of the Company’s authorized, but previously unissued common stock, and $500,000 in cash. The cash portion is to be paid subsequently from funds raised by the Company pursuant to a private placement of securities or by other financings. The cash payment is evidenced by a promissory note in the amount of $500,000 payable as follows: (i) $285,000 to be paid 45 days after the first day the Company’s shares are traded on the OTC Bulletin Board (“OTCBB”), or an equivalent trading medium, such cash funds to be utilized in retiring Engine Clean related party liabilities (ii) $100,000 to be paid six months after the first day the Company’s shares are traded on the OTCBB; (iii) $100,000 to be paid twelve months after the first day the Company’s shares are traded on the OTCBB; and (iv) repayment of two loans totalling $15,000.

The Company has agreed to use its best efforts to seek funding in order to satisfy the promissory note prior to the closing of the Acquisition Agreement. However, at the closing, the promissory note had not yet been satisfied and there can be no assurance that the funds will be raised. The Company intends to continue to seek the necessary funds following the closing. In the event of inability by the Company to satisfy payments as required by the promissory note, the Company will retire any unpaid portion of the promissory note by issuing two million common shares to the stockholders of Engine Clean.

The allocation of total consideration to the assets acquired and liabilities assumed based on the estimated fair value of Engine Clean Solutions were as follows:

	May 30, 2011			Estimated Life
Property, plant and equipment	$	58,000		5 years
Current assets		225,474
Intangible assets acquired		87,000		4 years

Accounts payable and accrued liabilities		(67,125	)
Line of credit and reserve accounts		(9,700	)
Notes payable		(288,000	)
Total consideration	$	5,649

Pro Forma Financial Information

The following unaudited pro forma statement of operations for the year ended December 31, 2011 and the unaudited pro forma statement of operations for the year ended December 31, 2010 are derived from the historical financial statements of the Company and Engine Clean and have been prepared to give effect to the acquisition of Engine Clean as of the beginning of the year. The unaudited pro forma financial statements are presented as if the closing of the acquisition agreement had occurred as of January 1, 2011 and January 1, 2010, respectively.

The following unaudited pro forma financial statements have been prepared for illustrative purposes only and do not purport to reflect the results the combined company may achieve in future periods or the historical results that would have been obtained. These unaudited pro forma financial statements, including the notes hereto, should be read in conjunction with (i) the historical financial statements for the Company and (ii) the historical financial statements of Engine Clean.

	For the Year Ended		For the Year Ended
	December 31, 2011		December 31, 2010
	(Pro Forma Unaudited)		(Pro Forma Unaudited)
Sales	$	513,192	$ 857,466
Cost of sales		447,005	580,672
Gross Profit		66,187	276,794

General and Administrative Costs		866,357	276,615
Income (loss) from Operations	$	(800,171)	$ 179

- Definition

Tabular disclosure of pro forma results of operations for a material business acquisition or series of individually immaterial business acquisitions that are material in the aggregate.

+ References+ Details

CLEAN TRANSPORTATION GROUP, INC. 10-K