Attached files
file | filename |
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8-K/A - FIRST CHINA PHARMACEUTICAL GROUP, INC. | v204666_8ka.htm |
EX-99.3 - FIRST CHINA PHARMACEUTICAL GROUP, INC. | v204666_ex99-3.htm |
EX-99.2(B) - FIRST CHINA PHARMACEUTICAL GROUP, INC. | v204666_ex99-2b.htm |
EX-99.1(B) - FIRST CHINA PHARMACEUTICAL GROUP, INC. | v204666_ex99-1b.htm |
EX-99.1(A) - FIRST CHINA PHARMACEUTICAL GROUP, INC. | v204666_ex99-1a.htm |
First
China Pharmaceutical Group, Inc.
Pro-Forma
Consolidated Financial Statements
As
of and for the year ended March 31, 2010
First
China Pharmaceutical Group, Inc.
INTRODUCTION
AND BASIS OF PRESENTATION
FOR
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The
following pro forma consolidated financial statements give effect to the
acquisition of Kun Ming Xin Yuan Tang Pharmacies Co., Ltd. (“Target”) by First
China Pharmaceutical Group, Inc. (“FCPG”) via the acquisition of First China
Pharmaceutical Group Limited (“Parent”) by FCPG. Target is a 100%
wholly owned subsidiary of Parent.
Pursuant
to a Share Exchange Agreement dated August 23, 2010, FCPG, a public corporation
incorporated in Nevada on July 31, 2007, acquired 100% of the issued and
outstanding shares of Parent, a private company formed in Hong Kong on April 29,
2010, in exchange for 15,000,000 shares of common stock of FCPG, representing
25% of its total issued and outstanding shares at the time.
The share
exchange transaction between Parent and FCPG is considered an acquisition and
was accounted for as such with FCPG being treated as the accounting and legal
parent and Parent being treated as the accounting and legal subsidiary. This
means the consolidated results of operations of FCPG going forward will include
those of FCPG for the period from its inception on July 31, 2007 and those of
Parent since the date of the acquisition, September 15, 2010.
The
following pro forma consolidated balance sheet includes the balance sheets of
FCPG and Target as of March 31, 2010, as if the acquisition of Target
occurred on that date.
The pro
forma consolidated balance sheet and statement of operations should be read in
conjunction with the separate historical audited financial statements for both
FCPG and Target, as follows:
(i)
for FCPG, audited financial statements for the years ended March 31, 2010 and
2009, as filed in FCPG’s annual report on Form 10-K on May 10,
2010;
(ii)
for Target, audited financial statements as of and for the years ended December
31, 2009, 2008 and 2007, as filed as Exhibit 99.1(a) of this current report on
Form 8-K.
The
fiscal year ends of FCPG and Target are March 31 and December 31,
respectively. The pro forma balance sheet and earnings (loss) per
share data of FCPG and Target are indicative of their consolidated financial
position, had the acquisition occurred on March 31, 2010.
FIRST
CHINA PHARMACEUTICAL GROUP, INC.
PRO
FORMA CONSOLIDATED BALANCE SHEET
|
FCPG
March 31,
2010
|
Target
December 31,
2009
|
Pro-Forma
Adjustments
March 31,
2010
|
Pro-Forma
Consolidated
March 31,
2010
|
||||||||||||
(A)
|
(B)
|
(Note2)
|
||||||||||||||
$
|
$
|
$
|
$
|
|||||||||||||
ASSETS
|
||||||||||||||||
Current
Assets
|
||||||||||||||||
Cash
and cash equivalents
|
$
|
7,331
|
$
|
37,906
|
$
|
45,237
|
||||||||||
Restricted
cash
|
-
|
808,439
|
808,439
|
|||||||||||||
Due
from a related party
|
-
|
11,799,953
|
11,799,953
|
|||||||||||||
Inventories
|
-
|
2,938,291
|
2,938,291
|
|||||||||||||
Prepaid
expenses
|
233
|
-
|
233
|
|||||||||||||
7,564
|
15,584,589
|
15,592,153
|
||||||||||||||
Plant
and equipment, net
|
-
|
4,271
|
4,271
|
|||||||||||||
Intangible
assets, net
|
-
|
3,003
|
3,003
|
|||||||||||||
Goodwill
|
-
|
-
|
(a)
|
9,924,427
|
9,924,427
|
|||||||||||
Goodwill
Impairment
|
-
|
-
|
-
|
|||||||||||||
TOTAL
ASSETS
|
$
|
7,564
|
$
|
15,591,863
|
$
|
9,924,427
|
$
|
25,523,854
|
||||||||
LIABILITIES
|
||||||||||||||||
Current
Liabilities
|
||||||||||||||||
Accounts
payable and accrued liabilities and other
|
$
|
14,663
|
$
|
7,728,348
|
$
|
7,743,011
|
||||||||||
Short
term borrowings
|
-
|
732,408
|
732,408
|
|||||||||||||
Income
tax payable
|
-
|
1,740,599
|
1,740,599
|
|||||||||||||
Notes
payable
|
-
|
314,935
|
314,935
|
|||||||||||||
Due
to related party
|
11,512
|
-
|
11,512
|
|||||||||||||
26,175
|
10,516,290
|
10,542,465
|
||||||||||||||
STOCKHOLDERS' EQUITY
|
||||||||||||||||
Capital
Stock
|
||||||||||||||||
Authorized
– 200,000,000
common shares $0.001 par value;
|
||||||||||||||||
60,000,000
issued and outstanding
|
45,000
|
266,101
|
(a)
|
15,000
|
60,000
|
|||||||||||
(a)
|
(266,101
|
)
|
||||||||||||||
Additional
Paid-in Capital
|
5,000
|
-
|
(a)
|
14,985,000
|
14,990,000
|
|||||||||||
Retained
Earnings (Deficit)
|
(68,611
|
)
|
4,692,321
|
(a)
|
(4,692,321
|
)
|
(68,611
|
)
|
||||||||
Effect
of Foreign Currency Translation Adjustments
|
-
|
117,151
|
(117,151
|
)
|
-
|
|||||||||||
TOTAL
STOCKHOLDERS’ EQUITY
|
(18,611
|
)
|
5,075,573
|
14,981,389
|
||||||||||||
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
7,564
|
$
|
15,591,863
|
$
|
9,924,427
|
$
|
25,523,854
|
(a) –
Refer to Note 2(C) to the pro forma financial statements.
The
accompanying notes are an integral part of these pro forma financial
statements.
FIRST
CHINA PHARMACEUTICAL GROUP, INC.
PRO
FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FCPG
Year ended
March 31,
2010
|
Target
Year ended
December 31,
2009
|
Pro-Forma
Adjustments
March 31,
2010
|
Pro Forma
March 31,
2010
|
|||||||||||||
Sales,
net of tax
|
$ | - | $ | 25,285,526 | $ | - | $ | 25,285,526 | ||||||||
Cost
of sales
|
- | 20,726,221 | - | 20,726,221 | ||||||||||||
Gross
margin
|
- | 4,559,305 | - | 4,559,305 | ||||||||||||
Expenses
and other items:
|
||||||||||||||||
Selling
expenses
|
- | 784,622 | - | 784,622 | ||||||||||||
Administrative
expenses
|
16,530 | 170,788 | - | 187,318 | ||||||||||||
Depreciation
and amortization
|
- | 6,769 | - | 6,769 | ||||||||||||
Other
operating expenses
|
- | 7,443 | - | 7,443 | ||||||||||||
Interest
income
|
- | (13,057 | ) | - | (13,057 | ) | ||||||||||
Other
income
|
- | (48,543 | ) | - | (48,543 | ) | ||||||||||
Interest
expense
|
- | 1,513 | - | 1,513 | ||||||||||||
Total
expenses and other items
|
16,530 | 909,535 | - | 926,065 | ||||||||||||
Income
before tax
|
(16,530 | ) | 3,649,770 | - | 3,633,240 | |||||||||||
Income
tax
|
- | (906,274 | ) | - | (906,274 | ) | ||||||||||
Net
(Loss) Income
|
(16,530 | ) | 2,743,496 | - | 2,726,966 | |||||||||||
Loss
per Share – basic and diluted
|
$ | (0.000 | ) | $ | 0.045 | |||||||||||
Shares
used in calculating basic and diluted loss per share
|
45,000,000 |
|
(a) | 15,000,000 | 60,000,000 |
The
accompanying notes are an integral part of these pro forma financial
statements.
FIRST
CHINA PHARMACEUTICAL GROUP, INC.
PRO
FORMA CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
NOTE
1 – Share Exchange Transaction
On
September 15, 2010, FCPG, a public shell company, closed a share exchange
agreement with Target and Parent, each a private corporation, whereby 100% of
the shares of Target were exchanged for 15,000,000 shares of FCPG common
stock. There was no change in beneficial ownership of FCPG as a
result of the transaction and accordingly, the acquisition of Parent by FCPG is
considered a purchase and was accounted for as such.
For the
purposes of these pro forma financial statements, a pro forma consolidated
statement was used for Kun Ming Xin Yuan Tang Pharmacies Co., Ltd. (“Target”) as
Target has historical operations rather than First China Pharmaceutical Group
Limited. (“Parent”), as Parent was formed on April 29, 2010 and has no
historical operations which add value to these pro forma financial
statements.
NOTE
2 - Pro Forma Adjustments
The pro
forma adjustments to the consolidated balance sheet give effect to the
acquisition of Target as if the transactions had occurred at the companies’
respective balance sheet dates of their respective most recent
audits.
A.
|
Derived from the audited balance
sheet of FCPG as of March 31,
2010.
|
B.
|
Derived from the audited balance
sheet of Target as of December 31,
2009.
|
C.
|
Pro forma adjustment to issue
15,000,000 common shares of FCPG for 100% of outstanding shares of Parent
valued at $15,000,000 being the consideration given in the transaction
valued at the market price on the date of the transaction being $1.00 per
share. The quoted market price is from OTCBB
Market.
|
NOTE
3- Goodwill
Goodwill
was initially recognized from the premium paid over the value of net asset of
the FCPG HK (XYT) as at the acquisition date, September 15, 2010.
In
accordance to the Statement of Financial Accounting Standards No. 142, Goodwill
and Other Intangible Assets, or SFAS No. 142, it requires goodwill to be
subsequently tested for impairment on an annual basis and between annual tests
in certain circumstances, and written down when impaired.