SunSi Energies Inc.
INTRODUCTION TO PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS
AS OF
THE FISCAL YEAR ENDED MAY 31, 2010
AND
THE SIX MONTH PERIOD ENDED NOVEMBER 30, 2010
On December 8, 2010, the Company completed its acquisition of 90% of Zibo Baokai Trade Co. (“Baokai”), a company with the exclusive right to distribute the trichlorisilane production of Zibo Commerce and Trade Co. (“ZBC”) in the China market.
We expect the cost of the acquisition to be approximately $270,000. This acquisition will enable SunSi to generate revenue and to create a presence within the Chinese and other international TCS markets.
With this acquisition, SunSi now owns the exclusive distribution rights to 100% of ZBC’s production both internationally and domestically; however, we will not have any interest or ownership position in the ZBC factory.
As part of the Baokai distribution rights, ZBC has agreed to sell all of its TCS production to us at a price of cost, plus a 10%-15% mark-up. The resale price of the TCS will be determined at our discretion.
The following unaudited pro-forma income statements and the explanatory notes give effect to the acquisition by SunSi of Baokai on December 8, 2010.
The pro-forma consolidated income statements and balance sheet and explanatory notes are based on the estimates and assumptions set forth in the explanatory notes. These pro-forma consolidated income statements have been prepared utilizing the historical financial statements of SunSi and Baokai and should be read in conjunction with the historical financial statements and notes thereto included elsewhere in this filing.
The pro-forma income statements have been prepared as if the acquisition had occurred on June 1, 2009. This pro-forma consolidated financial data is provided for comparative purposes only, and does not purport to be indicative of the actual financial position or results of operations had the acquisition occurred at the beginning of the periods presented, nor are they necessarily indicative of the results of future operations.
Sunsi Energies, Inc.
Unaudited Balance Sheet
for the Year ended May 31, 2010
| | Sunsi | | | Zibo Baoaki | | | Adjustments | | | Consolidated | |
| | Energies, Inc. | | | Trade Co. Ltd | | | | | | | |
| | 2010 | | | 2010 | | | | | | 2010 | |
ASSETS | | | | | | | | | | | | |
Current assets | | | | | | | | | | | | |
Cash and cash equivalents | | $ | 598,468 | | | $ | 63,452 | | | $ | (270,000 | )(b) | | $ | 391,920 | |
Inventory | | | - | | | | 210,341 | | | | | | | | 210,341 | |
Tax receivabe | | | - | | | | 32,784 | | | | | | | | 32,784 | |
Other receivable | | | - | | | | 117,165 | | | | | | | | 117,165 | |
Total current assets | | | 598,468 | | | | 423,742 | | | | (270,000 | ) | | | 752,210 | |
Related party receivable | | | - | | | | 408,084 | | | | | | | | 408,084 | |
Total assets | | $ | 598,468 | | | $ | 831,826 | | | | (270,000 | ) | | $ | 1,160,294 | |
| | | | | | | | | | | | | | | | |
LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | | | | | | | | | | |
Current liabilities | | | | | | | | | | | | | | | | |
Accounts payable and accrued liabilities | | $ | 149,538 | | | $ | 134,926 | | | | | (a) | | $ | 284,464 | |
Other payable | | | - | | | | 320,738 | | | | | | | | 320,738 | |
Related party payable | | | - | | | | 73,228 | | | | | | | | 73,228 | |
Advances payable | | | 230,981 | | | | - | | | | | | | | 230,981 | |
Compensation payable-related party | | | 5,671 | | | | - | | | | | | | | 5,671 | |
Total current liabilities | | | 386,190 | | | | 528,892 | | | | - | | | | 915,082 | |
| | | | | | | | | | | | | | | | |
Minority interest | | | - | | | | - | | | | 1,448 | | | | 1,448 | |
| | | | | | | | | | | | | | | | |
Stockholders' equity | | | | | | | | | | | | | | | | |
Common stock, $0.001 par value, 75,000,000 shares authorized, 27,312,500and 26,760,000 issued and outstanding in 2010 and 2009, respectively | | | 27,312 | | | | - | | | | | | | | 27,312 | |
Additional paid-in capital | | | 1,018,764 | | | | 287,886 | | | | (270,000 | )(b) | | | 1,036,650 | |
Accumulated deficit | | | (833,798 | ) | | | 10,210 | | | | (1,448 | )(a) | | | (825,036 | ) |
Accumulated othe comprehensive income | | | - | | | | 4,838 | | | | | | | | 4,838 | |
Total stockholders' equity | | | 212,278 | | | | 302,934 | | | | (271,448 | ) | | | 243,764 | |
Total liabilities and stockholders' equity | | $ | 598,468 | | | $ | 831,826 | | | $ | (270,000 | ) | | $ | 1,160,294 | |
(a) to record liability for minority interest
(b) to reflect the net impact of the purchase price that SunSi paid for Baokai
Sunsi Energies, Inc.
Unaudited Proforma Statement of Operations
and Comprehensive Income for the Year ended
May 31, 2010
| | Historical | | | | | | | |
| | Sunsi | | | Zibo Baoaki | | | | | | Combined | |
| | Energies, Inc. | | | Trade Co. Ltd | | | Adjustments | | | Pro Forma | |
| | | | | | | | | | | | |
Sales | | $ | - | | | | 483,148 | | | | - | | | $ | 483,148 | |
Cost of goods sold | | | - | | | | 433,386 | | | | - | | | | 433,386 | |
Gross margin | | | - | | | | 49,762 | | | | - | | | | 49,762 | |
Operating expenses | | | | | | | | | | | | | | | | |
Selling,general and administrative | | | 40,854 | | | | 35,336 | | | | - | | | | 76,190 | |
Professional and outside services | | | 580,981 | | | | - | | | | - | | | | 580,981 | |
Total operating expenses | | | 621,835 | | | | 35,336 | | | | - | | | | 657,171 | |
Loss from operations | | | (621,835 | ) | | | 14,426 | | | | - | | | | (607,409 | ) |
Other expense | | | | | | | | | | | | | | | | |
Interest income | | | - | | | | 477 | | | | - | | | | 477 | |
Total other expense | | | - | | | | 477 | | | | - | | | | 477 | |
Loss before income taxes | | | (621,835 | ) | | | 14,903 | | | | - | | | | (606,932 | ) |
Income taxes | | | - | | | | 615 | | | | - | | | | 615 | |
Net income | | | (621,835 | ) | | | 14,288 | | | | | | | | (607,547 | ) |
Other comprehensive income: | | | | | | | | | | | | | | | | |
Foreign currency translation adjustments | | | - | | | | 190 | | | | | | | | 190 | |
Total comprehensive income | | | (621,835 | ) | | | 14,478 | | | | | | | | (607,357 | ) |
Less: minority interest Baokai | | | | | | | | | | | (1,448 | )(a) | | | (1,448 | ) |
Net loss | | $ | (621,835 | ) | | $ | 14,478 | | | $ | (1,448 | ) | | $ | (608,805 | ) |
| | | | | | | | | | | | | | | | |
Loss per share: | | | | | | | | | | | | | | | | |
Basic and diluted | | $ | (0.02 | ) | | | | | | $ | - | | | $ | (0.02 | ) |
| | | | | | | | | | | | | | | | |
Weighted average number of common shares outstanding: | | | | | | | | | | | | | | | | |
Basic and diluted | | | 26,972,486 | | | | | | | | - | | | | 26,972,486 | |
(a) Reflects a 10% minority interest in Baokai
Sunsi Energies, Inc.
Unaudited Proforma Statement of Operations
and Comprehensive Income for the Six-Month period ended
November 30, 2010
UNAUDITED PROFORMA STATEMENTS OF OPERATIONS | | | | | | | | | | | | |
AND COMPREHENSIVE INCOME FOR | | | | | | | | | | | | |
FOR THE SIX MONTHS ENDED NOVEMBER 30, 2010 | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | |
| | SunSi Energies, Inc. | | | ZiboBaokai | | | | | | Combined | |
| | (unaudited) | | | (unaudited)(a) | | | Adjustments | | | Pro Forma | |
| | | | | | | | | | | | |
Sales | | | - | | | | - | | | | - | | | | - | |
Cost of goods sold | | | - | | | | - | | | | - | | | | - | |
Gross margin | | | - | | | | - | | | | - | | | | - | |
Operating expenses | | | | | | | | | | | | | | | | |
Professional Fees | | | 322,978 | | | | - | | | | - | | | | 322,978 | |
General and administrative expenses | | | 67,131 | | | | - | | | | - | | | | 67,131 | |
Total operating expenses | | | 390,109 | | | | - | | | | - | | | | 390,109 | |
Loss from operations | | | (390,109 | ) | | | - | | | | - | | | | (390,109 | ) |
Other expense | | | | | | | | | | | | | | | | |
Other income | | | - | | | | - | | | | - | | | | - | |
Interest expense | | | - | | | | - | | | | - | | | | - | |
Total other expense | | | - | | | | - | | | | - | | | | - | |
Loss before income taxes | | | (390,109 | ) | | | - | | | | - | | | | (390,109 | ) |
Income taxes | | | - | | | | - | | | | - | | | | | |
Less: minority interest Baokai | | | (390,109 | ) | | | | | | | | | | | - | |
Net loss | | | (390,109 | ) | | | - | | | | - | | | | (390,109 | ) |
| | | | | | | | | | | | | | | | |
Loss per share: | | | | | | | | | | | | | | | | |
Basic and diluted | | $ | (0.01 | ) | | | | | | $ | - | | | $ | (0.01 | ) |
| | | | | | | | | | | | | | | | |
Weighted average number of common shares outstanding: | | | | | | | | | | | | | | | | |
Basic and diluted | | | 27,456,180 | | | | | | | | - | | | | 27,456,180 | |
(a) There was no activity at Zibo Baokai for the six month period from June 1, 2010 -through November 30, 2010. Zibo Baokai is a distribution company that distributes trichlorsilane("TCS") produced by the Zibo Commerce and Trade Co. ("ZBC") located in Zibo, China. Once SunSi began performing due diligence on Zibo Baokai, ZBC no longer used Baokai as its TCS distributor pending the outcome of the due diligence. Once SunSi acquired Zibo Baokai on December 9, 2010 it also acquired exclsuive distribution rights from ZBC as part of the transactions. Subsequent to December 9, 2010, all of the TCS produced by ZBC is sold through the Zibo Baokai company which is 90% owned by Sunsi.