CHINA ORGANIC AGRICULTURE, INC UNAUDITED PRO FORMA CONDENSED CONSOLIDATING FINANCIAL INFORMATION Expressed in US dollars China Organic Agriculture, Inc. (the "Company") entered into a Share Purchase Agreement (the "Agreement") dated as of September...
CHINA ORGANIC AGRICULTURE, INC
UNAUDITED PRO FORMA CONDENSED CONSOLIDATING FINANCIAL INFORMATION
Expressed in US dollars
China Organic Agriculture, Inc. (the "Company") entered into a Share Purchase
Agreement (the "Agreement") dated as of September 29, 2008, with Xxxx Xxxxx,
Xxxxx Xxxxx, and Reilong Group, the shareholders of all of the outstanding
capital stock of Dalian Huiming Industry Ltd. ("FTZ") (each, a "Shareholder"
and, collectively, the "Shareholders"), The Company had announced its intent to
acquire 60% of the outstanding shares of FTZ and has worked with FTZ to complete
its due diligence and obtain the necessary governmental consents. Pursuant to
the Agreement, in consideration of an aggregate of US$10,600,000, each of the
Shareholders will assign to the Company 60% of his or its shares of FTZ, which
in the aggregate will represent 60% of the shares then outstanding. To
facilitate the acquisition, the 60% of the shares of FTZ to be acquired by the
Company were assigned to Princeton International Investment Ltd., a holding
company which has engaged in no operations other than ownership of shares of
FTZ.
The Company paid RMB 73,569,300 (approximately $10.6 million) in cash in
exchange for all of the outstanding capital stock of Princeton, thereby
obtaining indirect ownership of 60% of the shares of FTZ. Operational control of
Princeton and FTZ was passed to the Company effective September 30, 2008.
The accompanying unaudited pro forma condensed consolidating balance sheet gives
effect to the acquisition as if it had been consummated on September 30, 2008.
The accompanying unaudited pro forma condensed consolidating statement of income
for the period ended September 30, 2008, gives effect to the acquisition as if
it had been consummated on January 1, 2008.
There was no significant accounting policy differences or other items which
required adjustment in the accompanying unaudited pro forma condensed
consolidated financial statements.
The unaudited pro forma condensed consolidated financial statements should be
read in conjunction with the historical financial statements of FTZ as well as
those of the Company. The unaudited pro forma condensed consolidated financial
statements do not purport to be indicative of the financial position or results
of operations that would have actually been obtained had such transactions been
completed as of the assumed dates and for the periods presented, or which may be
obtained in the future. The pro forma adjustments are described in the
accompanying notes and are based upon available information and certain
assumptions that the Company believes are reasonable.
CHINA ORGANIC AGRICULTURE, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATING BALANCE SHEET
AS OF SEPTMEBER 30,2008,
CNOA (Pro
Dalian Huiming Princeton HK CNOA Adjustment forma)
Items 30-Sep-08 30-Sep-08 30-Sep-08 a b C 30-Sep-08
Assets In USD In USD In USD In USD In USD In USD In USD
Current Assets
Cash And Cash Equivalents 3,148,940 4,124 1,562,144 4,715,208
Accounts Receivable 8,806,935 46,080,401 54,887,336
Due from related parties 438,884 438,884
Inventories 5,419,932 - 5,419,932
Acquisition deposits 13,260,561 (10,642,609) 2,617,952
Consideration receivable 8,700,000 8,700,000
Other receivables and prepayments 8,213 2,163,317 2,171,530
Other Current Assets - -
------------------------------------ ----------
Total Current Assets 17,822,904 4,124 71,766,423 78,950,842
------------------------------------ ----------
Long-term Investment -
Goodwill 5,717,521 5,717,521
long-term equity investments 1,119,024 (1,119,024) -
------------------------------------ ----------
Total Long-term Investment - 1,119,024 - 5,717,521
------------------------------------ ----------
Fixed Assets
Historical cost of Fixed Assets 5,792 14,567,052 14,572,844
Accumulated depreciation (1,731) (113,692) (115,423)
Net fixed assets 4,061 - 14,453,360 14,457,421
fixed assets-clean value 4,061 - 14,453,360 14,457,421
Mortgage cost-cost - - 150,038 150,038
Mortgage cost-amortization - - (4,375) (4,375)
------------------------------------ ----------
Total Fixed Assets 4,061 - 14,599,023 14,603,084
------------------------------------ ----------
------------------------------------ ----------
Total Assets 17,826,965 1,123,148 86,365,446 99,271,447
==================================== ==========
Liabilities and Shareholder's Equity
Current Liabilities
Mortgages payables- current - - 195,075 195,075
Accounts payable and accrued expenses 3,186,291 33,652,592 36,838,883
Due to related parties 4,344,642 3,359,505 7,704,147
Notes Payables 1,173,313 - 1,173,313
Taxes Payable 411,542 3,335,751 3,747,293
Other payables 2,948 - 2,948
------------------------------------ ----------
Total Current Liabilities 9,115,788 2,948 40,542,923 49,661,659
------------------------------------ ----------
long-term liabilities
Long-term Loans-Morgtage - - 8,212,858 8,212,858
Minority interest - - - 3,283,392 3,283,392
------------------------------------ ----------
Total long-term liabilities - - 8,212,858 11,496,250
------------------------------------ ----------
------------------------------------ ----------
Total Liabilities 9,115,788 2,948 48,755,781 61,157,909
==================================== ==========
Shareholder's Equity
Paid in Capital 1,865,040 1,304 7,648,410 (1,120,328) (746,016) 7,648,410
Additional paid in capital - 545,932 4,926,392 (4,925,088) 547,236
Statutory reserves 502,697 - - 502,697
Retained earning 5,534,780 1,118,901 26,825,570 (3,320,868) (2,213,912) (1,119,124) 26,825,447
Variance of translation of foreign currency
financial statements 808,660 (5) 2,589,753 (485,196) (323,464) 2,589,748
------------------------------------ ----------
Total Shareholder's Equity 8,711,177 1,120,200 37,609,665 38,113,538
==================================== ==========
Total Liabilities and Shareholder's Equity 17,826,965 1,123,148 86,365,446 99,271,447
==================================== ==========
CHINA ORGANIC AGRICULTURE, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE PERIOD ENDED SEPTEMBER 30, 2008
CNOA (Pro
Dalian Huiming Princeton HK CNOA Adjustment forma)
Items 30-Sep-08 30-Sep-08 30-Sep-08 a b C 30-Sep-08
In USD In USD In USD In USD In USD In USD In USD
Sales 33,884,929 53,913,511 87,798,440
Cost of goods sold (29,548,411) (40,946,593) (70,495,004)
------------------------------------- ------------
Gross profit 4,336,518 - 12,966,918 17,303,436
------------------------------------- ------------
Gain on debt relief 1,119,024 432,169 (1,119,024) 432,169
Other operation income - - 373 373
Other operation expense - - (35,497) (35,497)
------------------------------------- ------------
Profit from other income - 1,119,024 397,045 397,045
------------------------------------- ------------
Selling, G&A expenses (506,277) (1,275,716) (1,781,993)
Interest Income 25,511 - 25,511
Interest expense (136,819) (123) (380,422) (517,364)
------------------------------------- ------------
Profit from operation 3,718,933 1,118,901 11,707,825 15,426,635
------------------------------------- ------------
Disposal gain on disposal 934,194 934,194
Discontinued operating income 934,037 934,037
Non-operation expense (30,197) - (30,197)
------------------------------------- ------------
Profit before income taxes 3,688,736 1,118,901 13,576,056 17,264,669
------------------------------------- ------------
Income tax (922,184) (3,222,007) (4,144,191)
------------------------------------- ------------
Net income 2,766,552 1,118,901 10,354,049 13,120,478
===================================== ============
CHINA ORGANIC AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(a)
Dr Xx
Xxxx in Capital 1,120,328
Additional paid in capital 4,926,392
Retain earning 3,320,868
Variance of translation of foreign currency financial statements 485,196
To recognize the 60% interests in FTZ.
(b)
Dr Cr
Minority interest 3,283,392
Paid in Capital 746,016
Retain earning 2,213,912
Variance of translation of foreign currency financial statements 323,464
To recognize the 40% minority interests of the equity of FTZ.
(c)
Dr Cr
Acquisition deposits 10,642,609
Goodwill 5,717,521
long-term equity investments 1,119,024
Additional paid in capital 4,925,088
Gain on debt relief 1,119,024
To recognize the goodwill occurred during the acquisition and eliminate the long
term equity investments of Princeton in FTZ.
CHINA ORGANIC AGRICULTURE, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 31, 2007
CNOA (Pro
Dalian Huiming CNOA Adjustment forma)
Items 31-Dec-07 31-Dec-07 a b C D 31-Dec-07
Assets In USD In USD In USD In USD In USD In USD In USD
Current Assets
Cash And Cash Equivalents 34,828 9,697,793 (9,697,793) 34,828
Accounts Receivable 8,608,600 1,924,080 (1,924,080) 8,608,600
Inventories 5,770,841 3,176,034 (3,176,034) 5,770,841
Trade deposits 988,484 - 988,484
Consideration Receivable 4,133,160 4,133,160
Other receivables and prepayments 389,427 355,010 (355,010) 389,427
------------------------ -----------
Total Current Assets 15,792,180 15,152,917 19,925,340
------------------------ -----------
Long-term Investment
Goodwill 5,717,521 5,717,521
long-term equity investments
------------------------ -----------
Total Long-term Investment 5,717,521
------------------------ -----------
Fixed Assets
Historical cost of Fixed Assets 2,096 1,720,807 (1,720,807) 2,096
Accumulated depreciation (992) (215,024) 215,024 (992)
Net fixed assets 1,104 1,505,783 1,104
------------------------ -----------
Total Fixed Assets 1,104 1,505,783 1,104
------------------------ -----------
Intangible assets - 3,304,776 (3,304,776) -
------------------------ -----------
Total Assets 15,793,284 19,963,476 25,643,965
======================== ===========
Liabilities and Shareholder's Equity
Current Liabilities
Accounts payable and accrued expenses 5,017,807 431,388 (431,388) 5,017,807
Due to related parties 2,016,196 364,865 (364,865) 2,016,196
Notes Payables 1,165,182 1,165,182
Customer deposits 1,457,807 1,457,807
Taxes Payable 202,474 114,807 (114,807) 202,474
Other payables 468,814 8,694,905 9,163,719
------------------------ -----------
Total Current Liabilities 10,328,280 911,060 19,023,185
------------------------ -----------
Minority interest - - 1,984,923 1,984,923
------------------------ -----------
Total Liabilities 10,328,280 911,060 21,008,108
======================== ===========
Shareholder's Equity
Paid in Capital 1,865,040 733,704 (1,119,024) (746,016) 733,704
Additional paid in capital - 420,525 2,977,384 (2,977,384) 420,525
Statutory reserves 502,697 824,168 (824,168) 502,697
Retained earning 2,768,228 16,471,521 (1,660,937) (1,107,291) (13,492,590) - 2,978,931
Variance of translation of foreign currency
financial statements 329,039 602,498 (197,423) (131,616) (602,498) -
------------------------ -----------
Total Shareholder's Equity 5,465,004 19,052,416 4,635,857
======================== ===========
Total Liabilities and Shareholder's Equity 15,793,284 19,963,476 25,643,965
======================== ===========
CHINA ORGANIC AGRICULTURE, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2007
CNOA (Pro
Dalian Huiming CNOA Adjustment forma)
Items 31-Dec-07 31-Dec-07 a b C D 31-Dec-07
In USD In USD In USD In USD In USD In USD In USD
Sales 40,249,147 40,249,147
Cost of goods sold (34,620,384) (34,620,384)
------------------------- ------------
Gross profit 5,628,763 - 5,628,763
------------------------- ------------
Selling, G&A expenses (1,115,642) (1,115,642)
Interest Income 4,162 4,162
Interest expense (431,015) (431,015)
------------------------- ------------
Profit from operation 4,086,268 - 4,086,268
------------------------- ------------
Discontinued operating income 13,492,590 (13,492,590) -
Non-operation expense (450) (450)
------------------------- ------------
Profit before income taxes 4,085,818 13,492,590 4,085,818
------------------------- ------------
Income tax (1,348,320) (1,348,320)
------------------------- ------------
Net income 2,737,498 13,492,590 2,737,498
========================= ============
CHINA ORGANIC AGRICULTURE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2007
(a)
Dr Xx
Xxxx in Capital 1,119,024
Additional paid in capital 2,977,384
Retain earning 1,660,937
Variance of translation of foreign currency financial statements 197,423
To recognize the 60% interests in FTZ.
(b)
Dr Cr
Minority interest 1,984,923
Paid in Capital 746,016
Retain earning 1,107,291
Variance of translation of foreign currency financial statements 131,616
To recognize the 40% minority interests of the equity in FTZ.
(c)
Xx Xx
Xxxx And Cash Equivalents 9,697,793
Accounts Receivable 1,924,080
Inventories 3,176,034
Consideration Receivable 4,133,160
Other receivables and prepayments 355,010
Historical cost of Fixed Assets 1,720,807
Accumulated depreciation 215,024
Intangible Asset 3,304,776
Accounts payable and accrued expenses 431,388
Due to related parties 364,865
Taxes Payable 114,807
Statutory reserves 824,168
Variance of translation of foreign currency financial statements 602,498
Discontinued operating income 13,492,590
To recognize the sales of ErMaPao, the subsidiary of CNOA.
(d)
Xx Xx
Xxxxxxxx 5,717,521
Other payables 8,694,905
Additional paid in capital 2,977,384
To recognize the goodwill occurred during the acquisition.
