Attached files
Exhibit
99.2
Pro
Forma Combined Financial Statements
The
following pro forma balance sheet has been derived from the balance sheet of
Silver Pearl Enterprises, Inc. at December 31, 2009, and adjusts such
information to give the effect of the acquisition of Keyuan International Group,
LTD, a British Virgin Island corporation, as if the acquisition had occurred at
December 31, 2009. The following pro forma EPS statement has been
derived from the income statement of Keyuan International Group, LTD,, and
adjusts such information to give the effect that the acquisition by Silver Pearl
Enterprises, Inc. at December 31, 2009 and 2008, respectively. The
pro forma balance sheet and EPS statement is presented for informational
purposes only and does not purport to be indicative of the financial condition
that would have resulted if the acquisition had been consummated at December 31,
2009 and 2008.
PRO
FORMA CONSOLIDATED BALANCE SHEET
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(Unaudited)
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||||||||||||||||||
Keyuan
International Group LTD.
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Silver
Pearl Enterprises, Inc.
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December
31,
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December
31,
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|||||||||||||||||
2009
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2009
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|||||||||||||||||
(audited)
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(audited)
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Adjustments | Proforma | |||||||||||||||
ASSETS
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||||||||||||||||||
Current
assets:
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||||||||||||||||||
Cash
and cash equivalents
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$ | 14,030,655 | $ | 454 | $ | (454 | ) | A | $ | 34,932,951, | ||||||||
$ | (400,000 | ) | C | |||||||||||||||
21,302,296 | D | |||||||||||||||||
Restricted
cash
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6,012,690 | $ | 6,012,690 | |||||||||||||||
Trade
notes receivable
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400,491 | $ | 400,491 | |||||||||||||||
Inventory
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32,595,045 | 32,595,045 | ||||||||||||||||
Advance
payments
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7,417,202 | 7,417,202 | ||||||||||||||||
Prepaid
VAT taxes
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15,263,949 | 15,263,949 | ||||||||||||||||
Due
from directors
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211,493 | 211,493 | ||||||||||||||||
Due
from shareholders
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50,000 | 50,000 | ||||||||||||||||
Due
from unrelated parties
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1,068,741 | 1,068,741 | ||||||||||||||||
Deferred
tax assets
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3,486,922 | 3,486,922 | ||||||||||||||||
Other
current assets
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320,213 | - | 320,213 | |||||||||||||||
Total
current assets
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80,857,401 | 454 | 20,901,842 | $ | 101,759,697 | |||||||||||||
Property,
plant and equipment, net
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$ | 131,824,617 | - | $ | 131,824,617 | |||||||||||||
Other
assets:
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||||||||||||||||||
Intangible
assets, net
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6,378,316 | - | 6,378,316 | |||||||||||||||
Deferred
tax assets
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- | - | - | - | ||||||||||||||
Total
other assets
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6,378,316 | - | - | 6,378,316 | ||||||||||||||
Total
assets
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$ | 219,060,334 | $ | 454 | $ | 20,901,842 | $ | 239,962,630 | ||||||||||
1
LIABILITIES
AND STOCKHOLDERS' EQUITY
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Current
liabilities:
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Short-term
bank loans
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$ | 82,885,500 | $ | - | $ | 82,885,500 | ||||||||||||
Current
portion of long-term bank loans
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$ | 7,628,400 | - | 7,628,400 | ||||||||||||||
Accounts
payable - trade and accrued expenses
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2,888,860 | 25,950 | (25,950 | ) | A | 2,888,860 | ||||||||||||
Accounts
payable - construction related
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45,374,656 | - | 45,374,656 | |||||||||||||||
Trade
notes payable
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13,719,134 | - | 13,719,134 | |||||||||||||||
Advance
from customers
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16,549,644 | - | 16,549,644 | |||||||||||||||
Due
to former shareholder
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733,500 | 733,500 | ||||||||||||||||
Due
to unrelated parties
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953,550 | 953,550 | ||||||||||||||||
Due
to related parties
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- | 16,500 | (16,500 | ) | A | |||||||||||||
Other
current liabilities
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290,631 | 290,631 | ||||||||||||||||
Total
current liabilities
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171,023,875 | 42,450 | (42,450 | ) | A | $ | 171,023,875 | |||||||||||
Long
term liabilities:
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Revolving
line-of-credit - related party
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- | 58,717 | (58,717 | ) | A | $ | 37,408,500 | |||||||||||
Long-term
bank loans
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37,408,500 | 37,408,500 | ||||||||||||||||
Total
long-term liabilities
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37,408,500 | 58,717 | (58,717 | ) | A | 37,408,500 | ||||||||||||
Total
Liabilities
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208,432,375 | 101,167 | (101,167 | ) | A | $ | 208,432,375 | |||||||||||
Stockholders'
equity
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Common
stock ($1 par value; authorized - 50,000 shares;
3,094,362 issued and outstanding)
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50,000 | 5,697 | 3,095 | |||||||||||||||
(50,000 | ) | D | ||||||||||||||||
(3,264 | ) | C | ||||||||||||||||
662 | D | |||||||||||||||||
Series
A preferred stock,$0.001 par value, 20,000,000 authorized, 5,954,058
issued and outstanding
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- | - | 5,954 | 5,954 | ||||||||||||||
Series
M preferred stock,$0.001 par value, 47,658 authorized, 47,658 issued and
outstanding
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- | - | 48 | B | 48 | |||||||||||||
Additional
paid in capital
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20,179,997 | 555,453 | (561,150 | ) | A | 41,123,196 | ||||||||||||
(48 | ) | B | ||||||||||||||||
50,000 | D | |||||||||||||||||
(396,736 | ) | C | ||||||||||||||||
21,295,680 | E | |||||||||||||||||
Retained
earning (deficit)
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(10,664,819 | ) | (661,863 | ) | 661,863 | A | (10,664,819 | ) | ||||||||||
Accumulated
other comprehensive income
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1,062,781 | - | $ | 1,062,781 | ||||||||||||||
Total
stockholders' equity (deficit)
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$ | 10,627,959 | $ | (100,713 | ) | $ | 21,003,009 | $ | 31,530,255 | |||||||||
Total
liabilities and stockholders' equity
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$ | 219,060,334 | 454 | 20,901,842 | $ | 239,962,630 |
See notes
to financial statements
2
PRO
FORMA EPS (UNAUDITED)
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Keyuan
International Group LTD.
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Keyuan
International Group LTD.
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Year
Ended
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Year
Ended
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December
31,
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December
31,
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2009
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2008
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(unaudited)
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(unaudited)
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Net
income/(loss)
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$ | (8,833,069 | ) | $ | (1,501,928 | ) | ||
Other
comprehensive income (loss)
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Foreign
currency translation gain
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15,991 | 649,089 | ||||||
Comprehensive
income (loss)
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$ | (8,817,078 | ) | $ | (852,839 | ) | ||
Net
income (loss) per Share
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Basic
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$ | (3.63 | ) | $ | (0.62 | ) | ||
Diluted
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$ | (3.63 | ) | $ | (0.62 | ) | ||
Weighted
average shares outstanding
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Basic
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2,432,800 | 2,432,800 | ||||||
Diluted
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2,432,800 | 2,432,800 |
See notes
to financial statements
3
PRO
FORMA CONSOLIDATED INCOME STATEMENT (UNAUDITED)
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Keyuan
International Group LTD.
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Silver
Pearl Enterprises, Inc.
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Year
ended
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Year
ended
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December
31,
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December
31,
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2009
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2009
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(unaudited)
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(unaudited)
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Adjustments | Proforma | ||||||||||||||
Sales
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$ | 68,653,603 | $ | - | - | A | 68,653,603 | ||||||||||
Cost
of sales
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75,311,595 | - | - | 75,311,595 | |||||||||||||
Gross
profit (loss)
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(6,657,992 | ) | - | - | A | (6,657,992 | ) | ||||||||||
Operating
expenses:
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Selling
expenses
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24,836 | - | - | A | 24,836 | ||||||||||||
General
and administrative expenses
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2,714,093 | 15,492 | (15,492 | ) | 2,714,093 | ||||||||||||
Total | 2,738,929 | 15,492 | (15,492 | ) | A | 2,738,929 | |||||||||||
Income/(loss)
from operations
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(9,396,921 | ) | (15,492 | ) | 15,492 | (9,396,921 | ) | ||||||||||
Other
income (expense):
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Interest
income (expense), net
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(2,031,983 | ) | (2,473 | ) | 2,473 | A | (2,031,983 | ) | |||||||||
Non-operating
expenses
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(348,515 | ) | - | - | (348,515 | ) | |||||||||||
Unrealized
gain (loss) on securities
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- | 305 | (305 | ) | - | ||||||||||||
Dividend
income
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- | 8 | (8 | ) | - | ||||||||||||
Other
income (expense), net
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(2,380,498 | ) | (2,160 | ) | 2,160 | A | (2,380,498 | ) | |||||||||
Loss
before provision (benefit) for income tax
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(11,777,419 | ) | (17,652 | ) | 17,652 | A | (11,777,419 | ) | |||||||||
Provision
(benefit) for income taxes
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Current
year
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- | - | - | ||||||||||||||
Deferred
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(2,944,350 | ) | - | (2,944,350 | ) | ||||||||||||
Net
income/(loss)
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$ | (8,833,069 | ) | $ | (17,652 | ) | $ | 17,652 | A | (8,833,069 | ) | ||||||
Other
comprehensive income (loss)
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Foreign
currency translation adjustment
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15,991 | - | - | 15,991 | |||||||||||||
Total
comprehensive income (loss)
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$ | (8,817,078 | ) | $ | (17,652 | ) | $ | 17,652 | A | (8,817,078 | ) | ||||||
Net
income (loss) per Share
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Basic
and diluted
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$ | (176.66 | ) | $ | (0.00 | ) | $ | (3.63 | ) | ||||||||
Basic
and diluted
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$ | (176.66 | ) | $ | (0.00 | ) | $ | (3.63 | ) | ||||||||
Weighted
average shares outstanding
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Basic
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50,000 | 5,696,800 | (3,314,000 | ) | B,C,D,E | 2,432,800 | |||||||||||
Diluted
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50,000 | 5,696,800 | (3,314,000 | ) | B,C,D,E | 2,432,800 |
See notes
to financial statements
4
Unaudited
Notes to Pro Forma Combined Financial Statements
On April
22, 2010, Silver Pearl Enterprises, Inc., (the “Silver Pearl” or the "Company"),
entered into a Share Exchange Agreement (the “Exchange Agreement”), with (i)
Keyuan International Group Limited a company organized under the laws of British
Virgin Islands (“Keyuan International”),,”), (ii) Delight Reward Limited, the
sole shareholder of Keyuan International and a company organized under the laws
of the British Virgin Islands ”), and Denise Smith, our former principal
stockholder (“Smith”).Pursuant to the terms of the Exchange Agreement, the
Keyuan International’s Shareholders transferred to us all of the Keyuan
International shares in exchange for the issuance of 47,658 shares of shares of
our Series M preferred stock. As a result of the Share Exchange, we
are now the holding company of Keyuan Plastics Co. Ltd., the operating
subsidiary of Keyuan International organized in the People’s Republic of China
(“China” or the “PRC”) and engaged in manufacturing and supplying various
petrochemical products in China.
Immediately
prior to the Share Exchange, 3,264,000 shares of our outstanding common stock
were cancelled and retired. Keyuan International also deposited
$400,000 into an escrow account, which amount was paid to the Remediation
Principal Shareholder, who owned the 3,264,000 shares, as a result of the Share
Exchange having been consummated.
As a
result of the transactions described above, we became the record and beneficial
owner of 100% of the share capital of Keyuan International and therefore own
100% of the share capital of its subsidiaries and Variable Interest
Entities indirectly.
As a
result of the Share Exchange, the cancellation of 3,264,000 shares and the
closing of Series A financing, we will have 3,094,362 shares of common stock,
5,954,058 shares of Series A preferred and 47,658 shares of Series M preferred
issued and outstanding. Pursuant to the terms of the Agreement,
Keyuan International’s officers and directors were appointed as our officers and
directors, and Denise Smith resigned as our President, CEO and sole
director. However, the change in our board of directors will not be
effective until 10 days after the mailing of a Schedule 14F Information
Statement to our shareholders, which we expect to do promptly after the closing
of the Share Exchange.
The
transaction was regarded as a reverse merger whereby Keyuan International was
considered to be the accounting acquirer as it retained control of Silver Pearl
after the Share Exchange.
All
amounts of Remediation were reversed as the net assets assumed by Keyuan
International in the reverse merger were $0 after the Company satisfied the
remaining portion of a $58,717 line of credit with part of the $400,000 escrow
deposit (described above).
Operating
through our wholly-owned subsidiary, Keyuan Plastics, Co. Ltd. (“Keyuan
Plastics”), located in Ningbo, China, we are a leading independent manufacturer
and supplier of various petrochemical products in China. Through Keyuan
Plastics, our operations include (i) an annual petrochemical manufacturing
capacity of 550,000 metric tons (MT) of a variety of petrochemical products,
(ii) facilities for the storage and loading of raw materials and finished goods,
(iii) a manufacturing technology that can support our manufacturing process with
low raw material costs and high utilization and yields, (iv) a strong management
team consisting of petrochemical experts with proven track records from some of
China’s largest state-owned enterprises in the petrochemical industry, and (v) a
robust customer base with long-term purchase contracts.
The
consolidated financial statements reflect all predecessor statements of income
and cash flow activities and include the accounts of Keyuan International, and
its subsidiaries and Variable Interest Entities (VIEs). Keyuan
International (and its historical financial statements) is the continuing entity
for financial reporting purposes.
5
The
preceding unaudited pro forma combined balance sheet represents the combined
financial position of Keyuan International as of December 31, 2009, as if the
reverse merger acquisition occurred on December 31, 2009. The
unaudited combined income statements give effect to the reverse acquisition of
Keyuan International by Silver Pearl assuming that the reverse acquisition took
place on January 1, 2010.
The
unaudited pro forma combined financial information is presented for illustrative
purposes only and is not necessarily indicative of the operating results that
would have been achieved if the reverse acquisition of Keyuan International had
been consummated as of the beginning of the period indicated, nor is necessarily
indicative of the result of future operations.
Assumptions
and Adjustments:
A)
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Per
the terms of the Share Exchange, Silver Pearl was delivered with zero
assets and zero liabilities at time of
closing;
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B)
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At
closing and pursuant to the Exchange Agreement, we acquired all of the
issued and outstanding capital stock of Keyuan International in exchange
for the issuance of 47,658 shares of Series M preferred
stock;
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C)
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In
exchange for $400,000, the Company agreed to cancel 3,264,000 shares of
common stock;
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D)
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At
closing, common stock of Keyuan International will be reclassified to
additional paid-in-capital to reflect the additional shares of Series M
preferred stock issued as part of the Share Exchange;
and
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E)
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Silver
Pearl issues 5,954,058 shares of convertible Series A preferred stock and
661,562 shares of common stock at $3.50 per share to investors for net
proceeds of approximately
$21,300,000.
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6