Iron Eagle Group, Inc.

CIK:0001043825|SEC Filings

12. Discontinued Operations of Delta Mechanical	3 Months Ended
Mar. 31, 2012
Notes to Financial Statements
12. Discontinued Operations of Delta Mechanical	12. DISCONTINUED OPERATIONS OF DELTA MECHANICAL On January 21, 2011, the Company entered into an agreement for a purchase price of: (i) a $9,000,000 buyer note (secured by Delta Mechanical) (ii) future contingency payment(s), based on the registrant's results for the years ended December 31, 2011, 2012, 2013 and 2014, not to exceed $250,000 per year or $1,000,000 in aggregate, and (iii) a four year employment contract with the president and chief financial officer of Delta Mechanical. As discussed in Note 1, the Company had planned to raise the capital to repay the seller note through sales of securities in the public and private markets. Due to market conditions, the Company was unable to raise the capital by the due date and on September 23, 2011, Mr. Bookbinder exercised his right to revert 100 percent of the membership interest back to him that also simultaneously extinguished the seller note including accrued interest. As a result, the Company has chosen to exit the mechanical contracting business in Rhode Island and has reclassified the results of operations to discontinued operations during the third quarter, ended September 30, 2011. As the acquisition occurred in January, 2011 no prior periods were required to be restated. The Company has accounted for these in accordance with FASB 205-20-45-6, “Accounting for the Impairment or Disposal of Long-Lived Assets.” Accordingly, any operating results of these businesses, and the resulting loss on disposal, are presented in the Consolidated Statement of Operations as discontinued operations, net of income tax. Revenue included in the discontinued operations totaled approximately $12.2 million for the period from January 21, 2011 through March 31, 2011 and had pre-tax income of approximately $86,000.

12. Discontinued Operations of Delta Mechanical

3 Months Ended

Mar. 31, 2012

Notes to Financial Statements

12. Discontinued Operations of Delta Mechanical

12. DISCONTINUED OPERATIONS OF DELTA MECHANICAL

On January 21, 2011, the Company entered into an agreement for a purchase price of:

(i) a $9,000,000 buyer note (secured by Delta Mechanical)

(ii) future contingency payment(s), based on the registrant's results for the years ended December 31, 2011, 2012, 2013 and 2014, not to exceed $250,000 per year or $1,000,000 in aggregate, and

(iii) a four year employment contract with the president and chief financial officer of Delta Mechanical.

As discussed in Note 1, the Company had planned to raise the capital to repay the seller note through sales of securities in the public and private markets. Due to market conditions, the Company was unable to raise the capital by the due date and on September 23, 2011, Mr. Bookbinder exercised his right to revert 100 percent of the membership interest back to him that also simultaneously extinguished the seller note including accrued interest.

As a result, the Company has chosen to exit the mechanical contracting business in Rhode Island and has reclassified the results of operations to discontinued operations during the third quarter, ended September 30, 2011. As the acquisition occurred in January, 2011 no prior periods were required to be restated. The Company has accounted for these in accordance with FASB 205-20-45-6, “Accounting for the Impairment or Disposal of Long-Lived Assets.” Accordingly, any operating results of these businesses, and the resulting loss on disposal, are presented in the Consolidated Statement of Operations as discontinued operations, net of income tax.

Revenue included in the discontinued operations totaled approximately $12.2 million for the period from January 21, 2011 through March 31, 2011 and had pre-tax income of approximately $86,000.

Condensed Consolidated Statement of Cash Flows (Unaudited) (USD $)	3 Months Ended		29 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2012
Adjustments to reconcile net income to net cash provided by operating activities:
Contributions to Capital of Services by Related Parties	$ 0	$ 615,250	$ 615,250
Shares Issued for Services	58,006	423,735	634,199
Shares Issued for Interest Expense	0	0	130,642
Stock Warrants Issued	0	0	147,728
Decrease in Fair Value of Warrant Derivative Liability	29,831	0	32,704
Depreciation and Amortization Expense	0	586	2,834
Decrease in Other Assets	0	0	6,000
(Increase) Decrease in Prepaid Expenses	0	(257,342)	505,612
Increase in Accounts Payable - Related Party	45,000	60,000	614,439
Increase in Accounts Payable	147,573	67,046	347,683
Increase (Decrease) in Advances from Officer	7,412	(224,159)	(6,204)
Increase (Decrease) in Accrued Liabilities	279,904	(136,558)	1,540,445
Net Cash Provided (Used in) by Operating Activities	3,727	(277,732)	(475,226)
CASH FLOWS USED IN INVESTING ACTIVITIES
Cash Acquired in Business combination	0	2,639,333	0
Net cash Provided by Investing Activities	0	2,639,333	0
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
Proceeds from Borrowing	0	7,514	157,500
NET INCREASE IN CASH AND CASH EQUIVALENTS	3,727	2,683,163	3,789
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	62	976	0
CASH AND CASH EQUIVALENTS AT END OF PERIOD	3,789	2,684,139	3,789
SUPPLEMENTAL CASH DISCLOSURES:
Cash Paid for Interest Expense	1,040	1,083	4,537
SUPPLEMENTAL NON-CASH DISCLOSURES:
Shares Issued due to Conversion of Liabilities	1,245,799	0	1,245,799
Note Payable to Finance the Acquisition of Delta	0	8,757,463	0
Shares Issued in Repayment of Debt	$ 0	$ 0	$ 8,142

Condensed Consolidated Balance Sheets (Unaudited) (USD $)	Mar. 31, 2012	Dec. 31, 2011
Current Assets
Cash	$ 3,789	$ 62
Prepaid Expenses	164,190	164,190
Total Current Assets	167,979	164,252
Long Term Portion of Prepaid Expenses	151,429	151,429
TOTAL ASSETS	319,408	315,681
Current Liabilities
Accounts Payable-Related Parties	45,000	659,439
Accounts Payable	516,202	368,629
Advances From Officer	100,231	92,819
Accrued Liabilities	1,190,295	1,537,355
Notes Payable-Related Party	325,000	325,000
Notes Payable	150,000	150,000
Accrued Interest, Including accrued interest due to related parties of $36,979 as of March 31, 2012 and $28,523 as of December 31, 2011	50,549	34,945
Warrant Derivative Liability	32,704	2,873
Common Stock to be Issued	75,000	50,000
Line of Credit	50,000	50,000
Total Current Liabilities	2,534,981	3,271,060
TOTAL LIABILITIES	2,534,981	3,271,060
Stockholders' Equity
Preferred Stock ($.00001 par value, 20,000,000 shares authorized, 0 shares issued and outstanding as of March 31, 2012 and December 31, 2011)	0	0
Common Stock ($.00001 par value, 875,000,000 shares authorized, 7,780,568 and 1,630,288 shares issued and outstanding as of March 31, 2012 and December 31, 2011, respectively)	182	118
Additional Paid-in Capital	2,830,803	1,527,062
Deficit Accumulated During the Development Stage	(5,046,558)	(4,482,559)
Total Stockholders' Equity	(2,215,573)	(2,955,379)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$ 319,408	$ 315,681