Attached files
Exhibit 99.2
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ECO BUILDING INTERNATIONAL
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UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
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AS OF DECEMBER 31, 2009
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Assets
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Historical
City Zone
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Historical
Eco Building
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Pro Forma
Adjustments
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Note
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Combined
Pro Forma
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Current Assets
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Cash and cash equivalents
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$ | 2,562,501 | $ | 6,967 | (6,967 | ) | b | $ | 2,562,501 | |||||||||||
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Accounts receivable, net
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4,200,749 | - | 4,200,749 | |||||||||||||||||
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Inventory
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8,233,760 | - | 8,233,760 | |||||||||||||||||
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Other receivable
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28,998 | - | 28,998 | |||||||||||||||||
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Prepaid expenses
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1,104,072 | - | 1,104,072 | |||||||||||||||||
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Due from related parties
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- | - | - | |||||||||||||||||
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Total Current Assets
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16,130,080 | 6,967 | 16,130,080 | |||||||||||||||||
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Property, plant, and equipment, net
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2,939,475 | - | 2,939,475 | |||||||||||||||||
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Construction-in-progress
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3,254,696 | - | 3,254,696 | |||||||||||||||||
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Other assets
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1,506,902 | - | 1,506,902 | |||||||||||||||||
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Intangible assets, net
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- | - | - | |||||||||||||||||
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Total Assets
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$ | 23,831,153 | $ | 6,967 | $ | 23,831,153 | ||||||||||||||
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Liabilities and Stockholders' Equity
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Current Liabilities
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Short-term loan
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$ | 1,801,960 | $ | - | 1,801,960 | |||||||||||||||
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Accrued expenses
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116,968 | - | 116,968 | |||||||||||||||||
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Due to related parties
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145,650 | 325 | (325 | ) | b | 145,650 | ||||||||||||||
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Other current liabilities
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68,339 | - | 68,339 | |||||||||||||||||
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Total Current Liabilities
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2,132,917 | 325 | 2,132,917 | |||||||||||||||||
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Stockholders' Equity
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Common stock
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9,690,628 | 4,930 | (9,684,891 | ) | a | 10,667 | ||||||||||||||
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Additional paid-in capital
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- | 19,870 | 9,666,733 | a | 9,679,961 | |||||||||||||||
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Other comprehensive income
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202,140 | - | 202,140 | |||||||||||||||||
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Retained earnings (Accumulated deficit)
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11,805,468 | (18,158 | ) | 18,158 | a | 11,805,468 | ||||||||||||||
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Total Stockholders' Equity
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21,698,236 | 6,642 | 21,698,236 | |||||||||||||||||
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Total Liabilities and Stockholders' Equity
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$ | 23,831,153 | $ | 6,967 | $ | 23,831,153 | ||||||||||||||
1
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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
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FOR THE YEAR ENDED DECEMBER 31, 2009
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Historical
City Zone
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Historical
Eco Building
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Pro Forma
Adjustments
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Note
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Combined
Pro Forma
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Net revenue
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$ | 40,732,447 | $ | - | $ | 40,732,447 | ||||||||
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Cost of revenue
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(30,136,581 | ) | - | (30,136,581 | ) | |||||||||
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Gross Profit
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10,595,866 | - | 10,595,866 | |||||||||||
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Selling expenses
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(1,947,613 | ) | - | (1,947,613 | ) | |||||||||
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General and administrative expenses
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(719,910 | ) | (17,833 | ) | (737,743 | ) | ||||||||
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Other expenses
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(556,312 | ) | - | (556,312 | ) | |||||||||
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Research and development expenses
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(98,087 | ) | - | (98,087 | ) | |||||||||
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Total Operating Expenses
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(3,321,922 | ) | (17,833 | ) | (3,339,755 | ) | ||||||||
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Operating income (loss)
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7,273,944 | (17,833 | ) | 7,256,111 | ||||||||||
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Interest income
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10,081 | - | 10,081 | |||||||||||
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Interest expense
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(102,893 | ) | - | (102,893 | ) | |||||||||
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Total other expense
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(92,812 | ) | - | (92,812 | ) | |||||||||
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Income (loss) before income taxes
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7,181,132 | (17,833 | ) | 7,163,299 | ||||||||||
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Provision for income taxes
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- | - | - | |||||||||||
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Net income (loss)
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$ | 7,181,132 | $ | (17,833 | ) | $ | 7,163,299 | |||||||
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Net earnings per share:
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Basic & diluted
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$ | 0.82 | $ | - |
d
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$ | 0.67 | |||||||
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Weighted average number
of shares outstanding:
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Basic & diluted
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8,736,932 | - |
1,930,000
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c
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10,666,932 | |||||||||
2
ECO BUILDING INTERNATIONAL
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL INFORMATION
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NOTE 1.
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THE ACQUISITION
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On April 27, 2010, Eco Building International (“Eco Building”) completed the acquisition of City Zone Holdings, Limited (“City Zone”) pursuant to the Share Exchange Agreement (the “Exchange Agreement”) among Eco Building, City Zone, each of the equity owners of City Zone (“City Zone Shareholders”), and the pre-acquisition principal shareholder of Eco Building. Pursuant to the terms of the Exchange Agreement, Eco Building issued 8,736,932 shares of its common stock in exchange for 100% equity interest of City Zone.
As City Zone Shareholders have become the majority shareholders of the combined entity and City Zone’s senior management has been appointed to control the management of the combined entity following the acquisition, the acquisition has been accounted for as a reverse acquisition using the purchase method of accounting, where Eco Building (the legal acquirer) is deemed to be the accounting acquiree and City Zone (the legal acquiree) to be the accounting acquirer. The consolidated financial statements of the combined entity will in substance be those of City Zone, with the assets and liabilities, and revenue and expenses, of Eco Building being included effective from the date of consummation of the Exchange Agreement. Eco Building is deemed to be a continuation of the business of City Zone. The cost of the acquisition has been measured at the carrying value of the net assets of Eco Building with no goodwill or other intangible assets being recorded in accordance with the accounting interpretation and guidance issued by the SEC staff.
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NOTE 2.
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ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
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The accompanying unaudited pro forma condensed combined financial information gives effect to the Exchange Agreement as if it had occurred at an earlier date, and has been prepared for illustrative purposes only and is not necessarily indicative of the condensed consolidated financial position or results of operations in future periods or the results that actually would have been realized had City Zone and Eco Building been a combined company during the specified periods. The pro forma adjustments are based on the preliminary information available at the time of the preparation of this document. In addition, the unaudited pro forma condensed combined financial information gives effect only to the adjustments set forth in the accompanying notes and does not reflect any restructuring or acquisition related costs, or any potential cost savings or other synergies that management expects to realize as a result of the acquisition. The unaudited pro forma condensed combined financial information, including the notes thereto, are qualified in their entirety by reference to, and should be read in conjunction with, the historical consolidated financial statements.
The adjustments to the unaudited pro forma condensed combined financial information as of December 31, 2009 in connection with the proposed acquisition are presented below:
(a) This adjustment reflects the issuance of 8,736,932 shares of Eco Building’s common stock for the reverse acquisition of all issued and outstanding shares of common stock of City Zone, the cancellation of 3,000,000 restricted shares of Eco Building’s common stock held by the pre-acquisition principal shareholder of Eco Building, and the elimination of pre-acquisition accumulated deficit of Eco Building.
(b) This adjustment reflects the repayment of $325 due to Eco Building shareholder and return of additional paid-in capital with the remaining cash balance of $6,642.
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ECO BUILDING INTERNATIONAL
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL INFORMATION
(c) The historical earnings per share are computed based on the historical net earnings of City Zone as City Zone is considered the accounting acquirer.
(d) The weighted average number of shares used in computing the historical earnings per share is based on the number of shares issued in the reverse acquisition of City Zone by Eco Building.