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UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
Unaudited Pro Forma Condensed Combined Statement of Income
(Maximum Approval Assumption)
At December 31, 2006
(in US dollars, in thousand)
PRO-FORMA COMBINED
ADJUSTMENTS PRO-FORMA
(ASSUMING (ASSUMING
MAXIMUM MAXIMUM
TONGXIN AAAC APPROVAL) APPROVAL)
----------- ---------- ------------ ----------
Revenue
Revenues (Net) $ 66,205 $ -- $ -- $ 66,205
COST OF REVENUE
Cost of good sold 47,741 47,741
----------- ---------- ------- ----------
Gross profit 18,464 -- 18,464
OPERATING EXPENSES
--
Selling, general and administrative 8,492 7,818(G) 16,310
----------- ---------- ------- ----------
--
----------- ---------- ------- ----------
OPERATING INCOME 9,972 -- (7,818) 2,154
Interest income -- 1,308 432(H) 876
Interest expense (1,707) -- (1,707)
Other income, net 400 400
Unrealized loss on warrant liability -- (3,783) (3,783)
Formation and operating costs -- (637) (637)
----------- ---------- ------- ----------
TOTAL OTHER INCOME (EXPENSE) (1,307) (3,112) (432) (4,581)
NET INCOME (LOSS) BEFORE TAXES 8,665 (3,112) 8,250 (2,697)
Income tax provision (2,946) (458) 173(H) (3,231)
----------- ---------- ------- ----------
NET INCOME (LOSS) $ 5,719 $ (3,570) $(8,077) $ (5,928)
=========== ========== ======= ===========
Weighted average common shares outstanding
Basic 72,521,705
4,901,284 9,401,284
Diluted 72,521,705
4,901,284 11,131,552
=========== ========== ===========
Income (loss) per share:
Basic $ 0.0786 $
(0.7283) $ (0.6306)
Diluted $ 0.0786 $
(0.7283) $ (0.5236)
=========== ========== ===========
Unaudited Pro Forma Condensed Combined Statement of Income
(Minimum Approval Assumption)
At December 31, 2006
(in US dollars, in thousand)
PRO FORMA COMBINED
ADJUSTMENTS PRO FORMA
(ASSUMING (ASSUMING
HUNAN MINIMUM MINIMUM
TONGXIN AAAC APPROVAL) APPROVAL)
----------- ---------- ----------- ----------
Total revenue (net) $ 66,205 $ 0 $ 0 $ 66,205
----------
COST OF REVENUE
Cost of good sold $ 47,741 $ 0 $ 0 $ 47,741
----------- ---------- ------ ----------
Gross profit $ 18,464 $ 0 $ 0 $ 18,464
OPERATING EXPENSES
Selling, general and administrative $ 8,492 $ 0 $7,818(G) $ 16,310
----------- ---------- ------ ----------
--
----------- ---------- ------ ----------
OPERATING INCOME $ 9,972 $ 0 $(7,818) $ 2,154
Interest income $ 1,707 $1,308 (602)(H) 706
Interest expense $ (1,707) $ 0 $ 0 $ (1,707)
Other Income 400 400
Unrealized loss on warrant liability $ 0 $ (3,783) $ 0 $ (3,783)
Formation and operating costs $ 0 $ (637) $ 0 $ (637)
----------- ---------- ------ ----------
TOTAL OTHER INCOME (EXPENSE) $ (1,307) $ (3,112) ($170) $ (5,021)
Net income(loss) before taxes $ 8,665 ($3,112) ($170) (2,867)
Income tax provision ($2,946) ($458) ($68)(H) ($3,163)
----------- ---------- ------ ----------
Net income(loss) $ 5,719 ($3,570) (102) (6,030)
Basic 72,521,705
4,901,284 8,395,538
Diluted 72,521,705
4,901,284 10,125,806
----------- ---------- ----------
Income(loss) per share
Basic $ 0.0786
($0.7283) (0.5955)
Diluted $ 0.0786
($0.7283) (0.5955)
Unaudited Pro Forma Condensed Combined Balance Sheet
(Maximum Approval Assumption)
At September 30, 2007,
(US dollars, in thousand)
PRO-FORMA COMBINED
ADJUSTMENTS PRO-FORMA
(ASSUMING (ASSUMING
MAXIMUM MAXIMUM
TONGXIN AAAC APPROVAL) APPROVAL)
------- ------- -------------- ---------
ASSETS
Current assets
Cash and cash equivalents $ 7,646 $ 60 $ 39,912 (A) $ 28,591
(13,000)(B)
(4,100)(B)
(1,207)(E)
Accounts receivable, net 16,902 -- -- 16,902
Inventories 15,403 -- 15,403
Investments held in trust -- 39,192 (39,192)(A) --
Other receivables 4,309 -- 4,309
Other receivables due related party 10,056 -- -- 10,056
Deferred tax assets 1,710 358 -- 2,068
Prepaid expenses and other current assets 1,635 -- -- 1,635
Advanced suppliers 1,760 -- 1,760
------- ------- -------- --------
Total current assets 59,421 39,610 (18,307) 80,724
Property and equipment, net 24,002 -- -- 24,002
Land occupancy rights 1,876 -- (1,876)(B) --
Investments in operating businesses 5,225 -- -- 5,225
New goodwill 11,828 (B) 11,192
New intangible assets 20,447 (B) 21,083
-- --
------- ------- -------- --------
Total assets $90,524 $39,610 $ 12,092 $142,226
======= ======= ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable $16,215 $ $ -- $ 16,215
Short-term bank loans 15,871 -- 15,871
Short-term bank loans from related parties 6,974 -- 6,974
Accrued expenses 4,894 383 5,277
Accrued income tax payable 11,068 -- 11,068
Warrant liability -- 9,599 9,599
Dividend payable 5,279 -- 5,279
Advances to customers 2,813 -- 2,813
Deferred underwriters fee -- 966 (966)(E) --
--
------- ------- -------- --------
Total current liabilities 63,114 10,948 (966) 73,096
Long-term debt, net of current maturities 4,394 -- 4,394
Long-term payables 630 -- 630
--
------- ------- -------- --------
Total Liabilities 68,138 10,948 (966) 78,120
------- ------- -------- --------
Common stock, subject to possible
redemption, 1,005,746 shares at
redemption value -- 7,829 (7,829)(C) --
Stockholders' equity (deficit)
Preferred stock -- -- -- --
Common stock -- 6 34 (B) 40
Additional paid-in-capital 8,762 22,327 34,477 (B,C) 65,566
Deficit accumulated during the development
stage --
Reserve funds 1,994 -- (1,994)(B) --
Other Comprehensive Income 2,421 -- (2,421)(B) --
Appropriated earnings -- --
Accumulated other comprehensive income
Retained earnings (accumulated deficit) 9,209 (1,500) (9,209)(B,F) (1,500)
------- ------- -------- --------
Total stockholders' equity (deficit) 22,386 20,833 20,887 64,106
------- ------- -------- --------
Total liabilities and stockholders'
equity (deficit) $90,524 $39,610 $ 12,092 $142,226
======= ======= ======== ========
-- -- --
Unaudited Pro Forma Condensed Combined Balance Sheet
(Minimum Approval Assumption)
At September 30, 2007,
(US dollars, in thousand)
PRO-FORMA COMBINED
ADJUSTMENTS PRO-FORMA
(ASSUMING (ASSUMING
MINIMUM MINIMUM
TONGXIN AAAC APPROVAL) APPROVAL)
------- ------- ----------- ----------
ASSETS
Current assets
Cash and cash equivalents $ 7,646 $ 60 $ 31,363 (A,D) $ 21,003
(12,759)(B,E)
(4,100)(B)
(1,207)(E)
Accounts receivable, net 16,902 -- 16,902 16,902
Inventories 15,403 -- -- 15,403
Investments held in trust -- (39,192) (39,192) --
Other receivables 4,309 -- -- 4,309
Other receivables due related party 10,056 -- -- 10,056
Deferred tax assets 1,710 358 -- 2,068
Prepaid expenses and other current assets 1,635 -- -- 1,635
Advanced suppliers 1,760 -- 1,760
------- ------- ----------- --------
Total current assets 59,421 39,610 (25,895) 73,136
Property and equipment, net 24,002 -- 24,002
Land occupancy rights 1,876 -- 1,876 (B) --
Investments in operating businesses 5,225 -- 5,225
New goodwill 11,828 (B) 11,192
New intangible assets 20,447 (B) 21,083
--
------- ------- ----------- --------
Total assets $90,524 $39,610 $ 4,504 $134,638
======= ======= =========== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable $16,215 $ $ $ 16,215
Short-term bank loans 15,871 -- 15,871
Short-term bank loans from related parties 6,974 -- 6,974
Accrued expenses 4,894 383 5,277
Accrued income tax payable 11,068 -- 11,068
Warrant liability -- 9,599 9,599
Dividend payable 5,279 -- 5,279
Advances to customers 2,813 -- 2,813
Deferred underwriters fee -- 966 (966)(E) --
--
------- ------- ----------- --------
Total current liabilities 63,114 10,948 (966) 73,096
Long-term debt, net of current maturities 4,394 -- 4,394
Long-term payables 630 -- 630
--
------- ------- ----------- --------
Total Liabilities 68,138 10,948 (966) 78,120
------- ------- ----------- --------
Common stock, subject to possible
redemption, 1,005,746 shares at
redemption value -- 7,829 --
Stockholders' equity (deficit)
Preferred stock -- -- -- --
Common stock -- 6 (7)(D) 33
Additional paid-in-capital 8,762 22,327 26,896 (D,E) 57,985
Deficit accumulated during the development
stage --
Reserve funds 1,994 -- (1,994) (B)
Other Comprehensive Income 2,421 -- (2,421) (B)
Appropriated earnings -- --
Accumulated other comprehensive income --
Retained earnings (accumulated deficit) 9,209 (1,500) (9,209) (B,F) (1,500)
------- ------- ----------- --------
Total stockholders' equity (deficit) 22,386 20,833 13,299 56,518
------- ------- ----------- --------
Total liabilities and stockholders'
equity (deficit) $90,524 $39,610 $ 4,504 $134,638
======= ======= =========== ========
Unaudited Pro Forma Condensed Combined Statement of Income
(Maximum Approval Assumption)
At September 30, 2007
(in US dollars, in thousand)
PRO-FORMA COMBINED
ADJUSTMENTS PRO-FORMA
(ASSUMING (ASSUMING
MAXIMUM MAXIMUM
TONGXIN AAAC APPROVAL) APPROVAL)
---------- ---------- ----------- ----------
Revenue
Revenues (Net) $ 62,922 $ -- $ -- $ 62,922