COLOR MAN HOLDINGS LIMITED AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
PRO FORMA FINANCIAL STATEMENTS AT SEPTEMBER 30, 2007 | |
Basis of Presentation | 1 |
Unaudited Pro Forma Consolidated Balance Sheets as of September 30, 2007 | 2 |
Unaudited Pro Forma Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the three months ended September 30, 2007 | 4 |
Notes to Unaudited Pro Forma Consolidated Financial Statements for the three months ended September 30, 2007 | 5 |
PRO FORMA FINANCIAL STATEMENTS AT JUNE 30, 2007 | |
Basis of Presentation | 6 |
Unaudited Pro Forma Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the year ended June 30, 2007 | 7 |
Notes to Unaudited Pro Forma Consolidated Financial Statements for the year ended June 30, 2007 | 8 |
COLOR MAN HOLDINGS LIMITED AND SUBSIDIARIES
Basis of Presentation
On June 18, 2007, the shareholders of Pingdingshan Pinglin Expressway Co., Ltd. (the “Company”) entered into a share exchange agreement with Wise On China Limited (“WOCL”), a holding company located in Hong Kong. WOCL acquired 100% equity interest of the Company in exchange for $98,913,273. As a result, the Company became a wholly-owned foreign-invested enterprise by WOCL. Subsequently, the transaction was approved by State Administration of Foreign Exchange and Ministry of Commerce of China on July 30, 2007. WOCL is wholly-owned by Color Man Holdings Limited (“CMH”), CMH is a privately held company organized under the laws of the British Virgin Islands. WOCL and CMH are inactive holding companies.
On February 8, 2008, Learning Quest Technologies, Inc. (“LQTI”) and Joylink Holdings Limited, the sole stockholder of CMH (the “Shareholder”) consummated a Share Exchange Agreement pursuant to which Shareholder transferred to LQTI all of the shares of CMH, which such shares constitute 100% of the outstanding capital stock of CMH, in exchange for the issuance by LQTI to the Shareholder of Fifty-Four Million Four Hundred Thousand (54,400,000) shares of LQTI’s common stock, which shares constitute sixty-eight percent (68%) of the fully diluted outstanding shares of LQTI’s common stock immediately after the closing of the transaction. This share exchange transaction resulted in the Shareholder obtaining a majority voting interest in LQTI. Generally accepted accounting principles require that the company whose shareholders retain the majority interest in a combined business be treated as the acquirer for accounting purposes, resulting in a reverse acquisition. Accordingly, the share exchange transaction has been accounted for as a recapitalization of CMH.
The unaudited pro forma consolidated financial statements of CMH in the opinion of management include all material adjustments directly attributable to the aforementioned share exchanges contemplated by the agreements. The unaudited pro forma consolidated balance sheet reflects the financial position of the company had the share exchange occurred on July 1, 2007. The unaudited pro forma consolidated statements of income (loss) and comprehensive income (loss) were prepared as if the transactions were consummated on July 1, 2007. These unaudited pro forma financial statements have been prepared for comparative purposes only and do not purport to be indicative of the results of operations which actually would have resulted had the transaction occurred on the date indicated and are not necessarily indicative of the results that may be expected in the future.
EXH 99.3 -1
COLOR MAN HOLDINGS LIMITED AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEETS AT
SEPTEMBER 30, 2007
Learning Quest Technologies, Inc. | Color Man Holdings Ltd. | Wise On China Limited | Pingdingshan Pinglin Expressway Co., Ltd. | Combined | Pro forma adjustment | Pro forma | ||||||||||||||||
ASSETS | ||||||||||||||||||||||
CURRENT ASSETS | ||||||||||||||||||||||
Cash and cash equivalents | $ | 2,139 | $ | - | $ | - | $ | 5,624,936 | $ | 5,627,075 | $ | $ 5,627,075 | ||||||||||
Restricted cash | - | - | - | 159,770 | 159,770 | 159,770 | ||||||||||||||||
Note receivable | - | - | - | 675,444 | 675,444 | 675,444 | ||||||||||||||||
Accounts receivable | - | - | - | 3,028,773 | 3,028,773 | 3,028,773 | ||||||||||||||||
Other receivable | - | - | - | 1,432,117 | 1,432,117 | 1,432,117 | ||||||||||||||||
Due from related parties | - | - | - | 154,647,511 | 154,647,511 | 154,647,511 | ||||||||||||||||
Other current assets | 2,500 | 10 | - | 926,089 | 928,599 | 928,599 | ||||||||||||||||
Total current assets | 4,639 | 10 | - | 166,494,640 | 166,499,289 | - | 166,499,289 | |||||||||||||||
Investment in affiliated company | - | - | 98,913,273 | - | 98,913,273 | (98,913,273 | ) | - | ||||||||||||||
Toll road infrastructures, net | - | - | - | 402,993,077 | 402,993,077 | 402,993,077 | ||||||||||||||||
Plant and equipment, net | - | - | - | 14,891,657 | 14,891,657 | 14,891,657 | ||||||||||||||||
Land use rights, net | - | - | - | 46,255,854 | 46,255,854 | 46,255,854 | ||||||||||||||||
Construction in progress | - | - | - | 2,166,064 | 2,166,064 | 2,166,064 | ||||||||||||||||
Long-term investment | - | - | - | 1,331,416 | 1,331,416 | 1,331,416 | ||||||||||||||||
Deferred taxes | - | - | - | 5,713,908 | 5,713,908 | 5,713,908 | ||||||||||||||||
Total long-term assets | - | - | 98,913,273 | 473,351,976 | 572,265,249 | (98,913,273 | ) | 473,351,976 | ||||||||||||||
TOTAL ASSETS | $ | 4,639 | $ | 10 | $ | 98,913,273 | $ | 639,846,616 | $ | 738,764,538 | $ | (98,913,273 | ) | $ | 639,851,265 |
See accompanying notes to unaudited pro forma consolidated financial statements.
EXH 99.3 -2
COLOR MAN HOLDINGS LIMITED AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEETS AT
SEPTEMBER 30, 2007
Learning Quest Technologies, Inc. | Color Man Holdings Ltd. | Wise On China Ltd. | Pingdingshan Pinglin Expressway Co., Ltd. | Combined | Pro forma adjustment | Pro forma | ||||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||||
CURRENT LIABILITIES | ||||||||||||||||||||||
Accounts payable | $ | 3,352 | $ | - | $ | - | $ | - | $ | 3,352 | $ | $ 3,352 | ||||||||||
Other payables and accrued liabilities | 974 | - | - | 2,751,917 | 2,752,891 | 2,752,891 | ||||||||||||||||
Short-term bank loans | - | - | - | 5,325,664 | 5,325,664 | 5,325,664 | ||||||||||||||||
Current portion of long-term bank loans | - | - | - | 2,774,671 | 2,774,671 | 2,774,671 | ||||||||||||||||
Notes payable | 23,000 | - | - | 319,540 | 342,540 | 342,540 | ||||||||||||||||
Payable to contractors | - | - | - | 26,731,735 | 26,731,735 | 26,731,735 | ||||||||||||||||
Deferred taxes | - | - | - | 5,541,304 | 5,541,304 | 5,541,304 | ||||||||||||||||
Other current liabilities | - | - | - | 172,170 | 172,170 | 172,170 | ||||||||||||||||
Total current liabilities | 27,326 | - | - | 43,617,001 | 43,644,327 | - | 43,644,327 | |||||||||||||||
LONG-TERM LIABILITIES | ||||||||||||||||||||||
Long-term bank loans | - | - | - | 436,592,640 | 436,592,640 | 436,592,640 | ||||||||||||||||
Deferred revenue | - | - | - | 6,110,127 | 6,110,127 | 6,110,127 | ||||||||||||||||
Total long-term liabilities | - | - | - | 442,702,767 | 442,702,767 | - | 442,702,767 | |||||||||||||||
TOTAL LIABILITIES | 27,326 | - | - | 486,319,768 | 486,347,094 | - | 486,347,094 | |||||||||||||||
CONTINGENCIES SHAREHOLDERS’ EQUITY | ||||||||||||||||||||||
Common share capital | 50,000 | 10 | - | 33,090,802 | 33,140,812 | (33,060,812 | ) | 80,000 | ||||||||||||||
Additional paid-in capital | 52,500 | - | 98,913,273 | 107,625,990 | 206,591,763 | (65,852,461 | ) | 140,739,302 | ||||||||||||||
Accumulated other comprehensive income | - | - | - | 12,274,260 | 12,274,260 | 12,274,260 | ||||||||||||||||
(Accumulated deficit) Retained earnings | (125,187 | ) | - | - | 535,796 | 410,609 | 410,609 | |||||||||||||||
Total Shareholders’ Equity | (22,687 | ) | 10 | 98,913,273 | 153,526,848 | 252,417,444 | (98,913,273 | ) | 153,504,171 | |||||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 4,639 | $ | 10 | $ | 98,913,273 | $ | 639,846,616 | $ | 738,764,538 | $ | (98,913,273 | ) | $ | 639,851,265 |
See accompanying notes to unaudited pro forma consolidated financial statements.
EXH 99.3 -3
COLOR MAN HOLDINGS LIMITED AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME
(LOSS) FOR THE THRE MONTHS ENDED SEPTEMBER 30, 2007
(LOSS) FOR THE THRE MONTHS ENDED SEPTEMBER 30, 2007
Learning Quest Technologies, Inc. | Color Man Holdings Ltd. | Wise On China Ltd. | Pingdingshan Pinglin Expressway Co., Ltd. | Combined | Pro forma adjustment | Pro forma | ||||||||||||||||
REVENUES | $ | - | $ | - | $ | - | $ | 14,520,907 | $ | 14,520,907 | $ | $ | 14,520,907 | |||||||||
OPERATING COSTS | - | - | - | 486,882 | 486,882 | 486,882 | ||||||||||||||||
DEPRECIATION AND AMORTIZATION | - | - | - | 1,801,574 | 1,801,574 | 1,801,574 | ||||||||||||||||
GROSS PROFIT | - | - | - | 12,232,451 | 12,232,451 | - | 12,232,451 | |||||||||||||||
General and administrative expenses | 4,038 | - | - | 929,997 | 934,035 | 934,035 | ||||||||||||||||
(LOSS) INCOME FROM OPERATIONS | (4,038 | ) | - | - | 11,302,454 | 11,298,416 | - | 11,298,416 | ||||||||||||||
OTHER INCOME (EXPENSES) | ||||||||||||||||||||||
Interest expense, net | - | - | - | (5,877,275 | ) | (5,877,275 | ) | (5,877,275 | ) | |||||||||||||
Other income, net | - | - | - | 195,035 | 195,035 | 195,035 | ||||||||||||||||
(LOSS) INCOME FROM OPERATIONS BEFORE INCOME TAXES | (4,038 | ) | - | - | 5,620,214 | 5,616,176 | - | 5,616,176 | ||||||||||||||
INCOME TAX EXPENSE | - | - | - | (1,405,053 | ) | (1,405,053 | ) | - | (1,405,053 | ) | ||||||||||||
NET (LOSS) INCOME | (4,038 | ) | - | - | 4,215,161 | 4,211,123 | - | 4,211,123 | ||||||||||||||
OTHER COMPREHENSIVE INCOME | ||||||||||||||||||||||
Foreign currency translation gain | - | - | - | 2,081,780 | 2,081,780 | 2,081,780 | ||||||||||||||||
Income taxes related to other comprehensive income | - | - | - | (520,445 | ) | (520,445 | ) | (520,445 | ) | |||||||||||||
OTHER COMPREHENSIVE INCOME, NET | - | - | - | 1,561,335 | 1,561,335 | - | 1,561,335 | |||||||||||||||
COMPREHENSIVE (LOSS) INCOME | $ | (4,038 | ) | - | - | $ | 5,776,496 | $ | 5,772,458 | $ | - | $ | 5,772,458 | |||||||||
WEIGHTED AVERAGE SHARES OUTSTANDING BASIC AND DILUTED | 50,000,000 | - | - | - | 50,000,000 | 30,000,000 | 80,000,000 | |||||||||||||||
Net (loss) income per common share, basic and diluted | $ | (0.00 | ) | - | - | $ | - | $ | 0.08 | $ | - | $ | 0.05 |
See accompanying notes to unaudited pro forma consolidated financial statements.
EXH 99.3 -4
COLOR MAN HOLDINGS LTD AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS FOR
THE YEAR ENDED JUNE 30, 2007
The following adjustments to the unaudited pro forma consolidated financial statements are based on the assumption that the share exchange was consummated on July 1, 2007.
(a) Adjustment to reflect the share capital had the share exchanges occurred on July 1, 2007.
According to the share exchange agreement entered between the Company and WOCL, upon the consummation of the transaction contemplated herein, WOCL owned 100% equity interest of the Company with an initial investment amounted to US$98,913,273. Such investment in the Company should be eliminated with the share capital and additional paid-in capital of the Company.
According to the share exchange agreement entered between LQTI and the Shareholder of CMH, prior to the closing date, Fred Hall, the principal shareholder cancelled a total number of Six Hundred Fifty Thousand and Five (650,005) shares of LQTI’s Common Stock. LQTI issued Fifty-Four Million Four Hundred Thousand (54,400,000) shares to exchange of 100% capital stock of CMH. Prior to the closing of the share exchange, LQTI effectuated a 2-1 reverse stock split for the issued and outstanding shares of its Common Stock and completed a dividend distribution to its shareholders of record in the amount equal to five percent (5%) (1,250,005 shares) of the then issued and outstanding Common Stock. Following the dividend distribution and immediately prior to the consummation of the share exchange, LQTI had 26,250,005 shares of Common Stock issued and outstanding. Upon consummation of the transactions contemplated herein, there should be Eighty Million (80,000,000) shares of LQTI’s Common Stock issued and outstanding.
EXH 99.3 -5
COLOR MAN HOLDINGS LTD AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS FOR
THE THREE MONTHS ENDED SEPTEMBER 30, 2007
Basis of Presentation
On June 18, 2007, the shareholders of Pingdingshan Pinglin Expressway Co., Ltd. (the “Company”) entered into a share exchange agreement with Wise On China Limited (“WOCL”), a holding company located in Hong Kong. WOCL acquired 100% equity interest of the Company in exchange for $98,913,273. As a result, the Company became a wholly-owned foreign-invested enterprise by WOCL. Subsequently, the transaction was approved by State Administration of Foreign Exchange and Ministry of Commerce of China on July 30, 2007. WOCL is wholly-owned by Color Man Holdings Limited (“CMH”), CMH is a privately held company organized under the laws of the British Virgin Islands. WOCL and CMH are inactive holding companies.
On February 8, 2008, Learning Quest Technologies, Inc. (“LQTI”) and Joylink Holdings Limited, the sole stockholder of CMH (the “Shareholder”) consummated a Share Exchange Agreement pursuant to which Shareholder transferred to LQTI all of the shares of CMH, which such shares constitute 100% of the outstanding capital stock of CMH, in exchange for the issuance by LQTI to the Shareholder of Fifty-Four Million Four Hundred Thousand (54,400,000) shares of LQTI’s common stock, which shares constitute sixty-eight percent (68%) of the fully diluted outstanding shares of LQTI’s common stock immediately after the closing of the transaction. This share exchange transaction resulted in the Shareholder obtaining a majority voting interest in LQTI. Generally accepted accounting principles require that the company whose shareholders retain the majority interest in a combined business be treated as the acquirer for accounting purposes, resulting in a reverse acquisition. Accordingly, the share exchange transaction has been accounted for as a recapitalization of CMH.
The unaudited pro forma consolidated financial statements of CMH in the opinion of management include all material adjustments directly attributable to the aforementioned share exchanges contemplated by the agreements. The unaudited pro forma consolidated balance sheet reflects the financial position of the company had the share exchange occurred on July 1, 2007. The unaudited pro forma consolidated statements of income (loss) and comprehensive income (loss) were prepared as if the transactions were consummated on July 1, 2007. These unaudited pro forma financial statements have been prepared for comparative purposes only and do not purport to be indicative of the results of operations which actually would have resulted had the transaction occurred on the date indicated and are not necessarily indicative of the results that may be expected in the future.
EXH 99.3 -6
COLOR MAN HOLDINGS LTD AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2007
Learning Quest Technologies, Inc. | Color Man Holdings Ltd. | Wise On China Ltd. | Pingdingshan Pinglin Expressway Co., Ltd. | Combined | Pro forma adjustment | Pro forma | ||||||||||||||||
REVENUES | $ | - | $ | - | $ | - | $ | 38,449,103 | $ | 38,449,103 | $ | $ | 38,449,103 | |||||||||
OPERATING COSTS | - | - | - | 1,353,310 | 1,353,310 | 1,353,310 | ||||||||||||||||
DEPRECIATION AND AMORTIZATION | - | - | - | 5,811,456 | 5,811,456 | 5,811,456 | ||||||||||||||||
GROSS PROFIT | - | - | - | 31,284,337 | 31,284,337 | - | 31,284,337 | |||||||||||||||
General and administrative expenses | 26,365 | - | - | 2,189,499 | 2,215,864 | 2,215,864 | ||||||||||||||||
(LOSS) INCOME FROM OPERATIONS | (26,365 | ) | - | - | 29,094,838 | 29,068,473 | - | 29,068,473 | ||||||||||||||
OTHER INCOME (EXPENSES) | ||||||||||||||||||||||
Interest expense, net | - | - | - | (19,326,104 | ) | (19,326,104 | ) | (19,326,104 | ) | |||||||||||||
Other income, net | - | - | - | 188,577 | 188,577 | 188,577 | ||||||||||||||||
(LOSS) INCOME FROM OPERATIONS BEFORE INCOME TAXES | (26,365 | ) | - | - | 9,957,311 | 9,930,946 | - | 9,930,946 | ||||||||||||||
INCOME TAX EXPENSE | - | - | - | (2,489,328 | ) | (2,489,328 | ) | (2,489,328 | ) | |||||||||||||
NET (LOSS) INCOME | (26,365 | ) | - | - | 7,467,983 | 7,441,618 | - | 7,441,618 | ||||||||||||||
OTHER COMPREHENSIVE INCOME | ||||||||||||||||||||||
Foreign currency translation gain | - | - | - | 6,730,246 | 6,730,246 | 6,730,246 | ||||||||||||||||
Income taxes related to other comprehensive income | - | - | - | (1,682,561 | ) | (1,682,561 | ) | (1,682,561 | ) | |||||||||||||
OTHER COMPREHENSIVE INCOME, NET | - | 5,047,685 | 5,047,685 | - | 5,047,685 | |||||||||||||||||
COMPREHENSIVE (LOSS) INCOME | $ | (26,365 | ) | $ | - | $ | - | $ | 12,515,668 | $ | 12,489,303 | $ | - | $ | 12,489,303 | |||||||
WEIGHTED AVERAGE SHARES OUTSTANDING BASIC AND DILUTED | 46,585,918 | - | - | - | 46,585,918 | 30,000,000 | 76,585,918 | |||||||||||||||
Net (loss) income per common share, basic and diluted | $ | (0.00 | ) | $ | - | $ | - | $ | - | $ | 0.16 | $ | - | $ | 0.10 |
See accompanying notes to unaudited pro forma consolidated financial statements.
EXH 99.3 -7
COLOR MAN HOLDINGS LTD AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS FOR
THE THREE MONTHS ENDED SEPTEMBER 30, 2007
The following adjustments to the unaudited pro forma consolidated financial statements are based on the assumption that the share exchange was consummated on July 1, 2006.
(a) Adjustment to reflect the share capital had the share exchange occurred on July 1, 2007.
According to the share exchange agreement, prior to the closing date, Fred Hall, the principal shareholder cancelled a total number of Six Hundred Fifty Thousand and Five (650,005) shares of LQTI’s common stock. LQTI issued Fifty-Four Million Four Hundred Thousand (54,400,000) shares to exchange of 100% capital stock of CMH. Prior to the closing of the share exchange, LQTI effectuated a 2-1 reverse stock split for the issued and outstanding shares of its Common Stock and completed a dividend distribution to its shareholders of record in the amount equal to five percent (5%) (1,250,005 shares) of the then issued and outstanding Common Stock. Following the dividend distribution and immediately prior to the consummation of the share exchange, LQTI had 26,250,005 shares of Common Stock issued and outstanding. Upon consummation of the transaction contemplated herein, there should be Eighty Million (80,000,000) shares of LQTI’s common stock issued and outstanding.
EXH 99.3 -8