Exhibit 99.7
RODOBO INTERNATIONAL, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEETS
December 31, 2009
Pro Forma | Pro Forma | ||||||||||||||||||||||||||
Rodobo | Hailaer | Ewenkeqi | Hulunbeier | Adjustments | Notes | Combined | |||||||||||||||||||||
ASSETS | |||||||||||||||||||||||||||
Current assets: | |||||||||||||||||||||||||||
Cash and cash equivalents | $ | 2,876,418 | $ | 1,174,439 | $ | 15,762 | $ | 8,194 | (307,593 | ) | a | $ | 3,767,220 | ||||||||||||||
Accounts receivable, net | 3,533,430 | 3,924,234 | - | 164,489 | 7,622,153 | ||||||||||||||||||||||
Other receivable | 11,978 | 116,744 | - | - | 128,722 | ||||||||||||||||||||||
Due from related parties | - | 1,413,622 | - | - | (1,413,622 | ) | b | - | |||||||||||||||||||
Loan to others | - | 1,559,990 | - | - | 1,559,990 | ||||||||||||||||||||||
Inventories | 562,560 | 1,473,634 | 26,471 | 979 | 2,063,644 | ||||||||||||||||||||||
Prepaid expenses | 226,542 | - | - | 21,140 | 247,682 | ||||||||||||||||||||||
Advances to suppliers, net | - | 3,171,566 | - | - | 3,171,566 | ||||||||||||||||||||||
Total current assets | 7,210,929 | 12,834,229 | 42,233 | 194,802 | 18,560,978 | ||||||||||||||||||||||
Property, plant and equipment, net of accumulated depreciation | 1,985,487 | 10,810,049 | 1,461,856 | 4,656,077 | 1,292,441 | c | 20,205,910 | ||||||||||||||||||||
Biological assets, net | 2,439,713 | - | - | - | 2,439,713 | ||||||||||||||||||||||
Other assets: | |||||||||||||||||||||||||||
Investment advances | 410,135 | - | - | - | 410,135 | ||||||||||||||||||||||
Restricted cash | - | 39,549 | - | - | 39,549 | ||||||||||||||||||||||
Loan to shareholders | - | 88,881 | 1,655,624 | - | 1,744,505 | ||||||||||||||||||||||
Deposits on biological assets | 988,718 | - | - | - | 988,718 | ||||||||||||||||||||||
Deposits on land and equipment | 9,520,991 | - | - | - | 9,520,991 | ||||||||||||||||||||||
Intangible assets, net | 4,462,142 | 648,687 | - | 675,702 | 4,882,234 | d | 10,668,765 | ||||||||||||||||||||
Total other assets | 15,381,986 | 777,117 | 1,655,624 | 675,702 | 23,372,663 | ||||||||||||||||||||||
Total Assets | $ | 27,018,115 | $ | 24,421,395 | $ | 3,159,713 | $ | 5,526,581 | $ | 64,579,265 | |||||||||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||||||||||||||||||
Current liabilities: | |||||||||||||||||||||||||||
Accounts payable | $ | 1,518,958 | $ | 1,557,837 | $ | 31,320 | $ | 48,675 | $ | 3,156,789 | |||||||||||||||||
Short-term loan | - | 1,259,700 | - | - | 1,259,700 | ||||||||||||||||||||||
Other payable | 290,149 | 86,992 | 3,548 | - | 380,689 | ||||||||||||||||||||||
Accrued expenses | 70,248 | 526,866 | 20,400 | 4,251 | 621,765 | ||||||||||||||||||||||
Advance from customers | - | 2,585,971 | - | 10,283 | 2,596,254 | ||||||||||||||||||||||
Loan from shareholders | - | - | - | 1,933,845 | 1,933,845 | ||||||||||||||||||||||
Due to related parties | 1,185,054 | - | 951,055 | 462,567 | (1,413,622 | ) | b | 1,185,054 | |||||||||||||||||||
Total current liabilities | 3,064,409 | 6,017,366 | 1,006,322 | 2,459,621 | 11,134,096 | ||||||||||||||||||||||
Temporary equity - series A preferred stock, $0.0001 par value, 30,000,000 shares authorized, 2,000,000 shares issued and outstanding as of December 31, 2009 | - | - | - | - | 4,100,000 | e | 4,100,000 | ||||||||||||||||||||
Stockholders' equity | |||||||||||||||||||||||||||
Common stock, $0.0001 par value, 200,000,000 shares authorized, 26,892,614 shares issued and outstanding as of December 31, 2009 | 1,629 | - | - | - | 1,060 | f | 2,689 | ||||||||||||||||||||
Registered capital | - | 72,494 | 60,412 | 129,206 | (262,112 | ) | g | - | |||||||||||||||||||
Additional paid in capital | 13,936,367 | 11,023,102 | 2,325,484 | 2,983,183 | 7,517,171 | f, g | 37,785,307 | ||||||||||||||||||||
Additional paid in capital - warrants | 971,788 | - | - | - | 971,788 | ||||||||||||||||||||||
Subscription receivable | (50,000 | ) | - | - | - | (50,000 | ) | ||||||||||||||||||||
Retained earnings | 8,250,895 | 5,988,514 | (399,253 | ) | (188,111 | ) | (3,859,688 | ) | h | 9,792,357 | |||||||||||||||||
Accumulated other comprehensive income | 843,027 | 1,319,919 | 166,747 | 142,682 | (1,629,348 | ) | i | 843,027 | |||||||||||||||||||
Total stockholders' equity | 23,953,706 | 18,404,029 | 2,153,390 | 3,066,960 | 49,345,168 | ||||||||||||||||||||||
Total Liabilities and Stockholders' Equity | $ | 27,018,115 | $ | 24,421,395 | $ | 3,159,713 | $ | 5,526,581 | $ | 64,579,265 |
The accompanying notes are an integral part of these financial statements
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RODOBO INTERNATIONAL, INC.
UNAUDITED PRO FROMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2009
Pro Forma | Pro Forma | ||||||||||||||||||||||||||
Rodobo | Hailaer | Ewenkeqi | Hulunbeier | Adjustments | Notes | Combined | |||||||||||||||||||||
Net sales | $ | 10,075,445 | $ | 4,242,294 | $ | - | $ | - | $ | 14,147,888 | |||||||||||||||||
Cost of goods sold | 4,780,299 | 3,605,391 | - | - | 8,215,838 | ||||||||||||||||||||||
Gross profit | 5,295,146 | 636,903 | - | - | 5,932,050 | ||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||
Distribution expenses | 2,586,173 | 18,040 | - | - | 2,604,213 | ||||||||||||||||||||||
General and administrative expenses | 722,880 | 104,415 | 1,509 | - | 402,437 | l | 1,231,240 | ||||||||||||||||||||
Total operating expenses | 3,309,053 | 122,455 | 1,509 | - | 3,835,453 | ||||||||||||||||||||||
Operating income | 1,986,094 | 514,448 | (1,509 | ) | - | 2,096,596 | |||||||||||||||||||||
Subsidy income | 273,897 | - | - | - | 273,897 | ||||||||||||||||||||||
Interest expenses | - | (141,737 | ) | - | - | (141,737 | ) | ||||||||||||||||||||
Other income / (expenses) | 2,390 | - | - | 23,533 | 25,923 | ||||||||||||||||||||||
Income before income taxes | 2,262,381 | 372,711 | (1,509 | ) | 23,533 | 2,254,679 | |||||||||||||||||||||
Provision for income taxes | - | - | - | - | - | ||||||||||||||||||||||
Net income | $ | 2,262,381 | $ | 372,711 | $ | (1,509 | ) | $ | 23,533 | $ | 2,254,679 | ||||||||||||||||
Other comprehensive income: | |||||||||||||||||||||||||||
Foreign currency translation adjustment | (2,184 | ) | (1,803 | ) | (218 | ) | (307 | ) | (4,511 | ) | |||||||||||||||||
Comprehensive income | $ | 2,260,197 | $ | 370,909 | $ | (1,727 | ) | $ | 23,226 | $ | 2,250,168 | ||||||||||||||||
Earnings per share | |||||||||||||||||||||||||||
Basic | $ | 0.15 | $ | 0.62 | $ | (0.00 | ) | $ | 0.02 | $ | 0.15 | ||||||||||||||||
Diluted | $ | 0.13 | $ | 0.62 | $ | (0.00 | ) | $ | 0.02 | $ | 0.13 | ||||||||||||||||
Weighted average shares outstanding | |||||||||||||||||||||||||||
Basic | 15,212,690 | 600,000 | 500,000 | 1,000,000 | 15,212,690 | ||||||||||||||||||||||
Diluted | 16,914,508 | 600,000 | 500,000 | 1,000,000 | 16,914,508 |
The accompanying notes are an integral part of these financial statements
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RODOBO INTERNATIONAL, INC.
UNAUDITED PRO FROMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 2009
Pro Forma | Pro Forma | ||||||||||||||||||||||||||
Rodobo | Hailaer | Ewenkeqi | Hulunbeier | Adjustments | Notes | Combined | |||||||||||||||||||||
Net sales | $ | 34,690,987 | $ | 22,456,948 | $ | 63,133 | $ | 424,798 | $ | (63,133 | ) | j | $ | 55,796,551 | |||||||||||||
Cost of goods sold | 17,089,006 | 19,565,073 | 89,933 | 586,387 | (63,133 | ) | k | 35,491,085 | |||||||||||||||||||
Gross profit | 17,601,981 | 2,891,875 | (26,800 | ) | (161,589 | ) | 20,305,467 | ||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||
Distribution expenses | 9,790,602 | 184,231 | - | 5,242 | 9,980,075 | ||||||||||||||||||||||
General and administrative expenses | 1,454,994 | 373,796 | 5,252 | 27,339 | 1,609,747 | l | 3,471,127 | ||||||||||||||||||||
Total operating expenses | 11,245,596 | 558,027 | 5,252 | 32,581 | 13,451,202 | ||||||||||||||||||||||
Operating income | 6,356,385 | 2,333,848 | (32,052 | ) | (194,170 | ) | 6,854,265 | ||||||||||||||||||||
Subsidy income | 439,208 | - | - | - | 439,208 | ||||||||||||||||||||||
Interest expenses | - | (348,444 | ) | - | - | (348,444 | ) | ||||||||||||||||||||
Other income / (expenses) | - | - | (13,444 | ) | (9,672 | ) | (23,116 | ) | |||||||||||||||||||
Income before income taxes | 6,795,593 | 1,985,404 | (45,496 | ) | (203,842 | ) | 6,921,912 | ||||||||||||||||||||
Provision for income taxes | - | - | - | - | - | ||||||||||||||||||||||
Net income | $ | 6,795,593 | $ | 1,985,404 | $ | (45,496 | ) | $ | (203,842 | ) | $ | 6,921,912 | |||||||||||||||
Other comprehensive income: | |||||||||||||||||||||||||||
Foreign currency translation adjustment | (42,274 | ) | (48,852 | ) | (880 | ) | (63,806 | ) | (155,812 | ) | |||||||||||||||||
Comprehensive income | $ | 6,753,319 | $ | 1,936,552 | $ | (46,376 | ) | $ | (267,648 | ) | $ | 6,766,100 | |||||||||||||||
Earnings per share | |||||||||||||||||||||||||||
Basic | $ | 1.01 | $ | 3.31 | $ | (0.09 | ) | $ | (0.20 | ) | $ | 1.03 | |||||||||||||||
Diluted | $ | 0.42 | $ | 3.31 | $ | (0.09 | ) | $ | (0.20 | ) | $ | 0.43 | |||||||||||||||
Weighted average shares outstanding | |||||||||||||||||||||||||||
Basic | 6,708,121 | 600,000 | 500,000 | 1,000,000 | 6,708,121 | ||||||||||||||||||||||
Diluted | 16,026,645 | 600,000 | 500,000 | 1,000,000 | 16,026,645 |
The accompanying notes are an integral part of these financial statements
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NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
Note 1: Description of transaction and basis of presentation
On February 5, 2010, Rodobo International, Inc. (the “Company” or “Rodobo”), through its wholly-owned subsidiary, Tengshun Technology and Development Co., Ltd., acquired 100% of the equity interest in Hulunbeier Hailaer Beixue Dairy Factory (“Hailaer Beixue”), Ewenkeqi Beixue Dairy, Ltd. (“Ewenkeqi Beixue”), and Hulunbeier Beixue Dairy Co., Ltd (“Hulunbeier Beixue”). The acquisition has been accounted for as a purchase under accounting principles generally accepted in the United States (GAAP). Under the purchase method of accounting, in accordance with Statement of Financial Accounting Standards No. 141(R), Business Combinations, the assets and liabilities of Hailaer Beixue, Ewenkeqi Beixue and Hulunbeier Beixue are recorded as of the acquisition date at their respective fair values, and consolidated with the Company’s assets and liabilities.
Note 2: Purchase Price
For the purposes of this pro forma analysis, the purchase price has been allocated based on an estimate of the fair value of assets and liabilities acquired as of the date of acquisition. The determination of estimated fair value requires management to make significant estimates and assumptions.
Hailaer Beixue:
Cash paid | $ | 87,884 | ||
Fair value of common stock issued | 19,800,000 | |||
Fair value of Series A preferred stock issued | 4,100,000 | |||
Total purchase price | $ | 23,987,884 | ||
Assets | ||||
Cash and cash equivalents | $ | 1,339,645 | ||
Accounts receivable, net | 4,009,453 | |||
Other receivable | 3,202,939 | |||
Inventories | 1,829,438 | |||
Prepaid expenses | 3,331,526 | |||
Property, plant and equipment, net | 12,525,546 | |||
Restricted cash | 39,548 | |||
Intangible assets, net | 5,411,337 | |||
Total assets | $ | 31,689,432 | ||
Liabilities | ||||
Accounts payable | $ | 2,376,376 | ||
Short-term loan | 1,127,856 | |||
Other payables | 106,130 | |||
Accrued expenses | 477,001 | |||
Advances from customers | 2,585,937 | |||
Total liabilities | $ | 6,673,300 | ||
Gain on bargin purchase* | $ | 1,028,248 | ||
Estimated purchase price | $ | 23,987,884 |
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Ewenkeqi Beixue:
Cash paid | $ | 73,236 | ||
Fair value of common stock issued | 1,800,000 | |||
Total purchase price | $ | 1,873,236 | ||
Assets | ||||
Cash and cash equivalents | $ | 15,762 | ||
Other receivable | 1,655,603 | |||
Inventories | 26,470 | |||
Property, plant and equipment, net | 1,237,614 | |||
Total assets | $ | 2,935,449 | ||
Liabilities | ||||
Accounts payable | $ | 31,319 | ||
Other payables | 954,591 | |||
Accrued expenses | 20,399 | |||
Total liabilities | $ | 1,006,309 | ||
Gain on bargin purchase* | $ | 55,904 | ||
Estimated purchase price | $ | 1,873,236 |
Hulunbeier Beixue:
Cash paid | $ | 146,473 | ||
Fair value of common stock issued | 2,250,000 | |||
Total purchase price | $ | 2,396,473 | ||
Assets | ||||
Cash and cash equivalents | $ | 8,194 | ||
Accounts receivable | 164,487 | |||
Inventories | 979 | |||
Prepaid expenses | 21,139 | |||
Property, plant and equipment, net | 4,457,264 | |||
Intangible assets, net | 795,286 | |||
Total assets | $ | 5,447,349 | ||
Liabilities | ||||
Accounts payable | $ | 48,675 | ||
Other payables | 2,398,873 | |||
Accrued expenses | 176 | |||
Advances from customers | 10,284 | |||
Total liabilities | $ | 2,458,008 | ||
Gain on bargin purchase* | $ | 592,868 | ||
Estimated purchase price | $ | 2,396,473 |
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* The gain on bargain purchase will be recorded as a separate component of revenues in the Company’s Form 10-Q for the quarter ended March 31, 2010.
Note 3: Pro Forma Adjustments
Adjustments included in the column under the heading “Pro Forma Adjustments” primarily relate to the following:
a: Represents cash payment in connection with the acquisitions of Hailaer Beixue, Ewenkeqi Beixue and Hulunbeier Beixue.
b: Represents the elimination of intercompany due to and due from between Hailaer Beixue, Ewenkeqi Beixue and Hulunbeier Beixue.
c: Represents an adjustment to fixed assets at costs to bring them to their fair value for purchase accounting purposes.
d: Represents an adjustment to intangible assets to bring them to their fair value for purchase accounting purposes.
e: Represent issuance of Series A preferred stock for acquisition.
f: Represent issuance of common stock for acquisition.
g: Represent an adjustment to eliminate the registered capital of Hailaer Beixue, Ewenkeqi Beixue and Hulunbeier Beixue upon acquisition and consolidation into the Company’s financial statements.
h: Represent the elimination of the historical balance of retained earnings (accumulated deficits) of Hailaer Beixue, Ewenkeqi Beixue and Hulunbeier Beixue and the extraordinary gain on bargain purchase recognized
on the acquisition date.
i: Represent the elimination of the historical balance of accumulated other comprehensive income of Hailaer Beixue, Ewenkeqi Beixue and Hulunbeier Beixue.
j: Represent the elimination of intercompany sales between Hailaer Beixue, Ewenkeqi Beixue and Hulunbeier Beixue.
k: Represent the elimination of cost of goods sold due to intercompany sales between Hailaer Beixue, Ewenkeqi Beixue and Hulunbeier Beixue. All products purchased through intercompany sales were sold in the same period.
l: Represent an adjustment of depreciation expense of fixed assets and amortization expense of intangible assets as historically reported by Hailaer Beixue, Ewenkeqi Beixue and Hulunbeier Beixue on a fair value basis for purchase accounting purposes.
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