SINO CHARTER INC.
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
Basis of Presentation
The unaudited pro forma combined financial statements of SINO CHARTER INC. (“Sino” or the “Shell”) in the opinion of management include all material adjustments directly attributable to the share exchange contemplated by a share exchange agreement, dated February 13, 2009, among Peng Xiang Peng Fei Investments Limited (“PXPF”), the Shell and all of the shareholders of PXPF (the “Share Exchange Agreement”). Pursuant to the Share Exchange Agreement, on February 13, 2009, the Shell issued to the shareholders of PXPF 14,560,000 shares of common stock at par value $0.00001 each in exchange for all of the issued and outstanding common stock of PXPF (“Share Exchange Transaction”). PXPF thereby became a wholly owned subsidiary of the Shell. The pro forma combined statements of operations include the accounts of the Shell and PXPF.
The statements of operations were prepared as if the above mentioned acquisition of PXPF by the Shell were consummated on January 1, 2007 and 2008 and the balance sheet was prepared as if they were consummated on September 30, 2008. These pro forma combined 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 dates indicated and are not necessarily indicative of the results that may be expected in the future.
SINO CHARTER INC.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET AS AT SEPTEMBER 30, 2008
(Amount in thousands)
August 31, | September 30, | Unaudited | ||||||||||||||||||
2008 | 2008 | Pro-forma | Pro-forma | |||||||||||||||||
Sino | PXPF | Adjustment | Combined | Note | ||||||||||||||||
ASSETS | ||||||||||||||||||||
Current Assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | - | $ | 4,721 | $ | 4,721 | ||||||||||||||
Pledged bank deposits | - | 88 | 88 | |||||||||||||||||
Accounts receivable | - | 6,890 | 6,890 | |||||||||||||||||
Inventories | - | 657 | 657 | |||||||||||||||||
Prepayment and other receivables | 18 | 25 | 43 | |||||||||||||||||
Total current assets | 18 | 12,381 | 12,399 | |||||||||||||||||
Property, plant and equipment, net | - | 1,089 | 1,089 | |||||||||||||||||
Land use rights | - | 274 | 274.00 | |||||||||||||||||
TOTAL ASSETS | $ | 18 | $ | 13,744 | $ | 13,762 | ||||||||||||||
LIABILITIES AND EQUITY | ||||||||||||||||||||
Current Liabilities: | ||||||||||||||||||||
Accounts payable | $ | - | $ | 1,623 | $ | 1,623 | ||||||||||||||
Accrued expenses and other payables | 2 | 1,112 | 1,114 | |||||||||||||||||
Amount due to a shareholder | 18 | 2 | 20 | |||||||||||||||||
Bills payable | - | 293 | 293 | |||||||||||||||||
Short-term bank loans | - | 585 | 585 | |||||||||||||||||
Taxes payable | - | 366 | 366 | |||||||||||||||||
Total current liabilities | 20 | 3,981 | 4,001 | |||||||||||||||||
Non-current Liabilities: | ||||||||||||||||||||
Other payable | - | 65 | 65 | |||||||||||||||||
Total liabilities | 20 | 4,046 | 4,066 | |||||||||||||||||
Commitments and contingencies | ||||||||||||||||||||
Equity: | ||||||||||||||||||||
Common stock | - | - | - | - | 2 | |||||||||||||||
Additional paid-in capital | 116 | 1,237 | (118 | ) | 1,235 | 3 | ||||||||||||||
Statutory reserve | 913 | 913 | ||||||||||||||||||
Retained earnings | (118 | ) | 7,033 | 118 | 7,033 | 3 | ||||||||||||||
Accumulated other comprehensive income | - | 515 | 515 | |||||||||||||||||
Total equity | (2 | ) | 9,698 | 9,696 | ||||||||||||||||
TOTAL LIABILITIES AND EQUITY | $ | 18 | $ | 13,744 | $ | 13,762 |
The accompanying notes are an integral part of this statement.
SINO CHARTER INC.
UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
(Amount in thousands)
For the year ended | ||||||||||||||||
November 30, 2007 Sino | December 31, 2007 PXPF | Pro-forma Adjustment | Unaudited Pro-forma Combined | |||||||||||||
Net sales | $ | - | $ | 39,727 | $ | 39,727 | ||||||||||
Cost of sales | - | 24,939 | 24,939 | |||||||||||||
Gross profit | - | 14,788 | 14,788 | |||||||||||||
Operating expenses: | ||||||||||||||||
Selling expenses | - | 1,847 | 1,847 | |||||||||||||
General and administrative expenses | 65 | 1,380 | 1,445 | |||||||||||||
Other operating expenses | 1 | 3 | 4 | |||||||||||||
66 | 3,230 | 3,296 | ||||||||||||||
Income from operations | (66 | ) | 11,558 | 11,492 | ||||||||||||
Other income (expenses): | ||||||||||||||||
Interest income | - | 54 | 54 | |||||||||||||
Interest expense | - | (46 | ) | (46 | ) | |||||||||||
- | 8 | 8 | ||||||||||||||
Income before provision for income taxes | (66 | ) | 11,566 | 11,500 | ||||||||||||
Provision for income taxes | - | 3,817 | 3,817 | |||||||||||||
Net income/ (loss) | $ | (66 | ) | $ | 7,749 | $ | 7,683 | |||||||||
Weighted average number of shares outstanding -basic and diluted | 125,921 | 100 | 16,000,000 | |||||||||||||
Net (loss) income per common share -basic and diluted (amounts in dollars) | $ | (0.05 | ) | $ | 7,749.00 | $ | 0.05 |
The accompanying notes are an integral part of this statement.
SINO CHARTER INC.
UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
(Amount in thousands)
For the nine months ended | ||||||||||||||||||||
August 31, 2008 Sino | September 30, 2008 PXPF | Pro-forma Adjustment | Unaudited Pro-forma Combined | Note | ||||||||||||||||
Net sales | $ | - | $ | 40,013 | $ | 40,013 | ||||||||||||||
Cost of sales | - | 25,620 | 25,620 | |||||||||||||||||
Gross profit | - | 14,393 | 14,393 | |||||||||||||||||
Operating expenses: | ||||||||||||||||||||
Selling expenses | - | 2,965 | 2,965 | |||||||||||||||||
General and administrative expenses | 5 | 2,076 | 2,081 | |||||||||||||||||
Other operating expenses | - | 2 | 2 | |||||||||||||||||
5 | 5,043 | 5,048 | ||||||||||||||||||
Income from operations | (5 | ) | 9,350 | 9,345 | ||||||||||||||||
Other income (expenses): | ||||||||||||||||||||
Interest income | - | 13 | 13 | |||||||||||||||||
Interest expense | - | (50 | ) | (50 | ) | |||||||||||||||
- | (37 | ) | (37.00 | ) | ||||||||||||||||
Income before provision for income taxes | (5 | ) | 9,313 | 9,308 | ||||||||||||||||
Provision for income taxes | 2,364 | 2,364 | ||||||||||||||||||
Net income/ (loss) | $ | (5 | ) | $ | 6,949 | $ | 6,944 | |||||||||||||
Weighted average number of shares outstanding -basic and diluted | 125,921 | 100 | 16,000,000 | |||||||||||||||||
Net (loss) income per common share - basic and diluted (amounts in dollars) | $ | (0.00 | ) | $ | 6,949.00 | $ | 0.04 |
The accompanying notes are an integral part of this statement.
Notes to pro-forma combined financial statements:
1. As shareholders of PXPF obtain the majority voting rights and operating control of the combined entity and PXPF's senior management has been appointed to represent the majority of the senior management of the combined entity following the Share Exchange Transactions, the Share Exchange Transactions is deemed to be a reverse acquisition. In accordance with the Accounting and Financial Reporting Interpretations and Guidance prepared by the staff of the U.S. Securities and Exchange Commission, Sino (the legal acquirer) is considered the accounting acquiree and PXPF (the legal acquiree) is considered the accounting acquirer. The combined financial statements of the combined entities will in substance be those of PXPF, with the assets and liabilities, and revenues and expenses, of Sino being included effective from the date of consummation of Share Exchange Transactions. PXPF will be the successor to Sino for accounting and reporting purposes. The outstanding common stock of Sino prior to the Share Exchange Transactions will be accounted for at net book value and no goodwill will be recognized.
2. To reflect the issuance of Sino’s 14,560,000 shares of common stocks at par value $0.00001 each in connection with the Share Exchange Transactions. Subsequent to the Share Exchange Transactions, the total amount of issued and outstanding common stock was 16,000,000.
3. To eliminate the pre-acquisition retained earnings of Sino under reverse acquisition.
4. There were no inter-company transactions and balances between Sino and PXPF during the periods covered by the pro forma combined financial statements.