Attached files
Exhibit
99.1
SOONER
HOLDINGS, INC.
(SUCCESSOR
OF SHISHI FEIYING PLASTIC CO., LTD.)
UNAUDITED
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER
31, 2010
(Amounts
expressed in US Dollars)
|
Historical
|
Historical
|
Historical
|
Historical
|
Pro
Forma
|
Combined
|
||||||||||||||||||||
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SHISHI
FEIYING PLASTIC CO., LTD.
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SOONER
HOLDINGS, INC.
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FFP
|
San
Ming
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Adjustments
|
Note
|
Pro
Forma
|
|||||||||||||||||||
|
(unaudited)
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(unaudited)
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(unaudited)
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(unaudited)
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(unaudited)
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ASSETS
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|||||||||||||||||||||||||
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Current
assets:
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|||||||||||||||||||||||||
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Cash
and restricted cash
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$ | 1,202,857 | $ | 2,213 | $ | 3,214 | $ | 34,938 | (2,213 | ) |
(b)
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$ | 1,241,009 | ||||||||||||
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Accounts
receivable
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7,520,835 | - | - | - | 7,520,835 | ||||||||||||||||||||
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Prepaid
expenses and other assets
|
1,155,104 | - | 582,954 | 4,614,626 | 6,352,684 | ||||||||||||||||||||
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Related
party receivable
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5,693,832 | - | 125,914 | - | (5,819,746 | ) |
(a)
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- | |||||||||||||||||
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Inventories
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6,471,602 | - | - | - | 6,471,602 | ||||||||||||||||||||
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Total
current assets
|
22,044,230 | 2,213 | 712,082 | 4,649,564 | 21,586,130 | ||||||||||||||||||||
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Plant
and equipment, net
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10,742,118 | - | 4,780 | 4,247,708 | 14,994,606 | ||||||||||||||||||||
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Land
use rights, net
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1,049,864 | - | 1,532,573 | 910,223 | 3,492,660 | ||||||||||||||||||||
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Long-term
investment
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151,704 | - | - | - | 151,704 | ||||||||||||||||||||
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Other
assets
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6,084 | - | - | - | 6,084 | ||||||||||||||||||||
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Total
assets
|
$ | 33,994,000 | $ | 2,213 | $ | 2,249,435 | $ | 9,807,495 | $ | 40,231,184 | |||||||||||||||
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LIABILITIES
AND STOCKHOLDERS' EQUITY (DEFICIT)
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Liabilities:
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Short-term
loans and notes payable
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11,584,866 | - | - | - | 11,584,866 | ||||||||||||||||||||
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Related
party payable
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125,914 | 102,367 | - | 5,693,832 | (5,819,746 | ) |
(a)
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- | |||||||||||||||||
| (102,367 | ) |
(b)
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|||||||||||||||||||||||
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Accounts
payable and accrued expenses
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3,113,757 | 68,602 | - | - | (68,602 | ) |
(b)
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3,113,757 | |||||||||||||||||
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Other
payable
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297,066 | 540,020 | - | ||||||||||||||||||||||
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Income
tax payable
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1,629,545 | - | - | - | 1,629,545 | ||||||||||||||||||||
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Total
liabilities
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16,751,148 | 170,969 | 540,020 | 5,693,832 | 16,328,168 | ||||||||||||||||||||
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Shareholders'
equity (Deficit)
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|||||||||||||||||||||||||
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Common
stock, $0.001 par value 100,000,000 shares authorized
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|||||||||||||||||||||||||
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12,688,016
shares issued and outstanding
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- | 12,688 | - | - | 12,688 | ||||||||||||||||||||
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Series
A Preferred stock, $0.001 par value 10,000,000 shares
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|||||||||||||||||||||||||
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authorized,
19,200 shares issued and outstanding
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19 |
(c)
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19 | ||||||||||||||||||||||
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Owner's
capital
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4,999,603 | - | 1,709,415 | 4,113,663 |
(10,822,681
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) | (d) | - | |||||||||||||||||
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Additional
paid in capital
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- | 6,197,690 | - | - | 1,003,287 |
(b)
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11,674,404 | ||||||||||||||||||
| (6,349,254 | ) |
(c)
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|||||||||||||||||||||||
| 10,822,681 |
(d)
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Capital
Surplus
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27,344 | - | - | - | (27,344 | ) |
(d)
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- | |||||||||||||||||
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Retained
earnings (Accmulated deficit)
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10,639,715 | (6,379,134 | ) | - | - | 29,899 |
(b)
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10,639,715 | |||||||||||||||||
| 6,349,235 |
(c)
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||||||||||||||||||||||||
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Accumulated
other comprehensive income
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1,576,190 | - | - | - | 1,576,190 | ||||||||||||||||||||
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Total
equity
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17,242,852 | (168,756 | ) | 1,709,415 | 4,113,663 | 23,903,016 | |||||||||||||||||||
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Total
liabilities and equity
|
$ | 33,994,000 | 2,213 | $ | 2,249,435 | $ | 9,807,495 | $ | 40,231,184 | ||||||||||||||||
SOONER
HOLDINGS, INC.
(SUCCESSOR
OF SHISHI FEIYING PLASTIC CO., LTD.)
UNAUDITED
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR
ENDED DECEMBER 31, 2010
(Amounts
expressed in US Dollars)
|
Historical
|
Historical
|
Historical
|
Historical
|
Pro
Forma
|
Combined
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||||||||||||||||||||
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SHISHI
FEIYING
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SOONER | ||||||||||||||||||||||||
| PLASTIC CO., LTD. | HOLDINGS, INC. | FFP | San Ming | Adjustments | Note | Pro Forma | |||||||||||||||||||
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(unaudited)
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(unaudited)
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(unaudited)
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(unaudited)
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(unaudited)
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Revenues
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$ | 33,071,506 | $ | - | $ | - | $ | - | $ | 33,071,506 | |||||||||||||||
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Cost
of revenues
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24,693,776 | - | - | - | 24,693,776 | ||||||||||||||||||||
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Gross
profit
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8,377,730 | - | - | - | 8,377,730 | ||||||||||||||||||||
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Operating
expenses:
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|||||||||||||||||||||||||
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Selling
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511,314 | - | - | - | 511,314 | ||||||||||||||||||||
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General
and administrative
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563,270 | 21,327 | - | - | (21,327 | ) |
(b)
|
563,270 | |||||||||||||||||
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Total
operating expenses
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1,074,584 | 21,327 | - | - | 1,074,584 | ||||||||||||||||||||
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Income
from operations
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7,303,146 | (21,327 | ) | - | - | 7,303,146 | |||||||||||||||||||
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Other
income (expense):
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|||||||||||||||||||||||||
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Interest
expense and bank fees
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(594,027 | ) | (8,572 | ) | - | - | 8,572 |
(b)
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(594,027 | ) | |||||||||||||||
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Other
income (expense), net
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(1,874 | ) | - | - | - | (1,874 | ) | ||||||||||||||||||
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Total
other income (expense)
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(595,901 | ) | (8,572 | ) | - | - | (59,5901 | ) | |||||||||||||||||
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Income
before provision for income taxes
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6,707,245 | (29,899 | ) | - | - | 6,707,245 | |||||||||||||||||||
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Provision
for income taxes
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871,942 | 0 | - | - | 87,1942 | ||||||||||||||||||||
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Net
income (loss)
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$ | 5,835,303 | $ | (29,899 | ) | $ | - | $ | - | $ | 5,835,303 | ||||||||||||||
Sooner
Holdings, Inc.
(Successor
of Shishi Feiying Plastic Co., Ltd.)
Notes
to Unaudited Pro Forma Condensed Consolidated
Financial
Information
The
following unaudited pro forma condensed consolidated financial information has
been prepared to give effect to the proposed merger of Shishi Feiying Plastic
Co., Ltd. and Sooner Holdings, Inc. as a reverse acquisition of assets and a
recapitalization in accordance with accounting principles generally accepted in
the United States. For accounting purposes Shishi Feiying Plastic
Co., Ltd. is considered to be acquiring Sooner Holdings, Inc. in the
merger.
Note
1 – Securities Exchange Agreement
The
foregoing description of the terms of the Securities Exchange Agreement is
qualified in its entirety by reference to the provisions of the agreements filed
as Exhibit 2.1
to this report, which are incorporated by reference herein.
On
February 14, 2011, Sooner Holdings, Inc., an Oklahoma corporation, (the
“Company”) entered into a Securities Exchange Agreement with R.C. Cunninghham II
and R.C. Cunningham III (collectively the “Control Shareholders”) and Chinese
Weituo Technical Limited (“Chinese Weituo”), a BVI corporation and its
shareholders, China Changsheng Investment Limited, a BVI company, China Longshan
Investment Limited, a BVI company, High-Reputation Assets Management Longshan
Limited, a BVI company, Joint Rise Investment Limited, a BVI company, and W-Link
Investment Limited, a BVI company (the “Share Exchange Agreement”), pursuant to
which Sooner Holdings acquired 100% of the issued and outstanding capital stock
of Chinese Weituo in exchange for 19,200 shares of Series A Preferred
Stock. Each share of Series A Preferred Stock is convertible in one
thousand shares of common stock, $0.001, par value which will constitute
approximately 96.0% of Sooner Holdings issued and outstanding common stock on an
as converted basis. Subsequent to the completion of the Securities
Exchange Agreement, Sooner Holdings intends to amend its articles and change its
name and effect a 1 for 18.29069125 share consolidation.
In
addition, pursuant to the Securities Exchange Agreement, in the event that
Chinese Weituo’s subsidiary ShiShi Feiying’s net income is less than $5.5
million as determined in accordance with generally accepted accounting
principles of the United States and set forth in ShiShi Feiying’s audited
financial statements for the year ended December 31, 2010, then we will be
required to issue an additional 113,637 shares of common stock (post
consolidation) to the Control Shareholders.
As a
result the share exchange, (i) Sooner Holdings, Inc. ceased being a shell
company as such term is defined in Rule 12b-2 under the Securities Exchange Act
of 1934, and (ii) we indirectly control though subsidiaries, ShiShi Feiying
Plastic Co., Ltd., which is engaged in the business of manufacturing of and
selling of synthetic polyurethane leather (“PU leather”) for the retail leather
industry and for the flip-flops and slippers industry. ShiShi Feiying
Plastic Co., Ltd.is located in ShiShi City, Fujian, China.
Accounting
principles generally accepted in the United States of America require that the
company whose shareholders retain the majority interest in a combined business
be treated as the acquirer for accounting purpose, resulting in a reverse
acquisition. Accordingly, the stock exchange transaction has been accounted for
as a recapitalization effected by a share exchange, wherein Chinese Weituo is
considered the acquirer for accounting and financial reporting purposes. The
assets and liabilities of the acquired entity have been brought forward at their
book value and no goodwill has been recognized.
The
unaudited pro forma condensed consolidated financial information gives effect to
the reverse acquisition, and the formation of HongKong Weituo Technical
Limited., as if it had occurred at the earliest date in these pro forma
statements.
Note
2 – Accounting Period Change
To
coincide with the accounting cycle of our acquired subsidiary Shishi Feiying
Plastic Co. Ltd., we have changed our fiscal year end from September 30th to
December 31st. This change is reflected in the pro forma financial
information.
Note
3 – Consolidation of Variable Interest Entities
The
Company consolidates entities where it has less than a 50% ownership investment,
the Company has determined the entity to be a variable interest entity (“VIE”)
because of insufficient capital to carry out their principal operating
activities, and the Company is the primary beneficiary. Fuijian
Feiying Plastic Co., Ltd. (“FFP”) and Feiying Industrial Co., Ltd. (“San Ming”)
have both been determined to be VIE’s by the Company. Both FFP and
San Ming are wholly-foreign owned enterprises (“WFOE”) in the PRC, which were
established by Mr. Hong to build PU leather factories. The Company
has a call option agreement with Mr. Ang allowing the Company to purchase the
factories at 90% of the net tangible asset value when the factories are
completed. The Company has determined that they have the power to
direct the activities of FFP and San Ming through Mr. Hong the Company’s CEO and
Chairman of the Board. The Company has also determined that neither
FFP or San Ming currently have been adequately capitalized to carry out their
principal operating activities, which is to build a PU leather
factory. The Company will continue to reassess the status of the VIEs
including any potential change in VIE status.
Note
4 – Adjustments to Unaudited Pro Forma Condensed Consolidated Financial
Information
The
accompanying unaudited pro forma condensed consolidated financial information
gives effect to the Securities 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 Shishi Feiying Plastic Co., Ltd., FFP, San Ming and Sooner
Holdings, Inc. 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 consolidated 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 consolidated 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 of Shishi Feiying Plastic Co., Ltd. in this
Form 8-K.
The
adjustments to the unaudited pro forma condensed consolidated financial
information as of and for the year ended December 31, 2010 in connection with
the proposed acquisition are presented below:
(a) This
adjustment eliminates the related party receivable and payable between
consolidated entities.
(b) This
adjustment eliminates Sooner Holdings, Inc.’s liabilities, cash, the related
party interest expense, and the non-recurring expenses.
(c) This
adjustment reflects the issuance of shares of Sooner Holdings, Inc.’s Series A
preferred stock for the reverse acquisition of all issued and outstanding shares
of Shishi Feiying Plastic Co., Ltd., the cancellation of common shares of Sooner
Holding, Inc.’s common stock held by the pre-acquisition principal shareholder
of Sooner Holdings, Inc., and the elimination of pre-acquisition accumulated
deficit of Sooner Holdings, Inc.
(d) This
adjustment reflects the reclassification of Owner’s capital from Shishi Feiying
and the two VIEs FFP and San Ming, a the capital surplus from Shishi Feiying
into Additional paid in capital.