Action Acquisition CORP - FORM 8-K/A - EX-99.3 - August 3, 2011

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8-K/A - Action Acquisition CORPv230666_8ka.htm
EX-99.2 - Action Acquisition CORPv230666_ex99-2.htm
EX-99.1 - Action Acquisition CORPv230666_ex99-1.htm
Exhibit 99.3
ORB AUTOMOTIVE CORPORATION AND HEBEI HONGTU AUTO PARTS CO., LTD
PRO FORMA CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31, 2010
(UNAUDITED)

   
ORB
    
Hongtu
    
Pro forma
    
Pro Forma
  
     (1)      (2)    
Adjustments
    
Consolidated
  
   
(historical)
    
(historical)
              
                             
Net Revenue
   $ 8,459,327     $ 18,285,199           $ 26,744,526  
                               
Cost of Revenue
     4,592,598       14,529,113             19,121,711  
                               
Gross Profit
     3,866,729       3,756,086       -       7,622,815  
                                 
Operating expenses:
                                
Selling expenses
     307,696       639,520               947,216  
General and administrative expenses
     976,530       217,522               1,194,052  
Research and development expense
     119,592                       119,592  
                                 
Total operating expenses
     1,403,818       857,042       -       2,260,860  
                                 
Income from operations
     2,462,911       2,899,044       -       5,361,955  
                                 
Non-operating income (expenses):
                                
Interest income (expense)
     (40,314 )     (311,095 )             (351,409 )
Bargain purchase gain
     172,518       -               172,518  
Other income
     1,966       69,335       1,921,660   A   1,992,961  
Other expenses
                             -  
                                 
Total non-operating expenses
     134,170       (241,760 )     1,921,660       1,814,070  
                                 
Income before income tax
     2,597,081       2,657,284       1,921,660       7,176,025  
                                 
Income tax
     682,884       664,321               1,347,205  
                                 
Net income
     1,914,197       1,992,963       1,921,660       5,828,820  
                                 
Other comprehensive item
                                
Foreign currency translation
     150,944       102,666       -       253,610  
                                 
Comprehensive Income
   $ 2,065,141     $ 2,095,629     $ 1,921,660     $ 6,082,430  
                                 
Earnings per share - basic
     0.26                       0.53  
Earnings per share - diluted
     0.14                       0.41  
                                 
Weighted average shares outstanding
     7,296,262               3,700,000       10,996,262  
Diluted average shares outstanding
     14,150,508               -       14,150,508  
 
(1) 
Source:  Audited financial statements of ORB Automotive Corporation for the year ended December 31, 2010as filed in 10-K filed with the SEC on April 15, 2011.
(2) 
Source:  Audited financial statements of Hebei Hongtu Auto Parts Co., Ltd. included in this Form 8-K/A.
A. 
Allocation of the purchase price to the fair value of assets acquired and liabilities assumed.  The excess of the fair value of net assets acquired over purchaseprice of $1,921,660 is recorded as bargain purchase gain.
 
See accompanying notes to pro forma consolidated financial statements
 
 
99.3 - 1
 
 
ORB AUTOMOTIVE CORPORATION AND HEBEI HONGTU AUTO PARTS CO., LTD
PRO FORMA CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2011
(UNAUDITED)

   
ORB
    
HONGTU
    
Pro forma
    
Pro Forma
  
   
(1)
    
(2)
    
Adjustments
    
Consolidated
  
   
(historical)
    
(historical)
              
                         
Net Revenue
   $ 4,074,309     $ 5,683,579           $ 9,757,888  
                               
Cost of Revenue
     2,818,744       4,229,172             7,047,916  
                               
Gross Profit
     1,255,565       1,454,407       -       2,709,972  
                                 
Operating expenses:
                                
Selling expenses
     150,850       176,807               327,657  
General and administrative expenses
     352,874       50,820               403,694  
                                 
Total operating expenses
     503,724       227,627       -       731,351  
                                 
Income from operations
     751,841       1,226,780       -       1,978,621  
                                 
Non-operating income (expenses):
                                
Interest income (expense)
     (72,593 )     (127,244 )             (199,837 )
Other income
     -                   A   -  
Other expenses
     (796 )     (547 )             (1,343 )
                                 
Total non-operating expenses
     (73,389 )     (127,791 )     -       (201,180 )
                                 
Income before income tax
     678,452       1,098,989       -       1,777,441  
                                 
Income tax
     189,827       274,880               464,707  
                                 
Net income
     488,625       824,109       -       1,312,734  
                                 
Other comprehensive item
                                
Foreign currency translation
     77,620       41,054       -       118,674  
                                 
Comprehensive Income
   $ 566,245     $ 865,163     $ -     $ 1,431,408  
                                 
Earnings per share - basic
     0.03                       0.06  
Earnings per share - diluted
     0.03                       0.06  
                                 
Weighted average shares outstanding
     17,133,991               3,700,000       20,833,991  
Diluted average shares outstanding
     17,133,991               3,700,000       20,833,991  

(1) 
Source:  unaudited financial statements of ORB Automotive Corporation for the three months ended March 31, 2011 as filed in Quarterly Report filed with the SEC on May 23, 2011.
(2) 
Source:  unaudited financial statements of Hebei Hongtu Auto Parts Co., Ltd. included in this Form 8-K/A.
 
See accompanying notes to pro forma consolidated financial statements
 
 
99.3 - 2
 
 
ORB AUTOMOTIVE CORPORATION AND HEBEI HONGTU AUTO PARTS CO., LTD
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 2011
（UNAUDITED)

   
ORB
    
HONGTU
    
Pro Forma
    
Pro Forma
  
    (1)     (2)    
Adjustments
    
Consolidated
  
ASSETS
  
(historical)
    
(historical)
              
                         
CURRENT ASSETS
                        
Cash & cash equivalents
   $ 578,370     $ 151,874           $ 730,244  
restricted cash
     1,666,103       -             1,666,103  
Accounts receivable, net
     1,933,177       3,137,976             5,071,153  
Notes receivable
     1,518,379       1,397,103             2,915,482  
Prepaid expenses and other receivables, net
     4,703,107       -             4,703,107  
Advance to suppliers
     -       393,174             393,174  
Deposit
     15,501       -             15,501  
Inventory
     2,898,167       3,116,311             6,014,478  
                               
TOTAL CURRENT ASSETS
     13,312,804       8,196,438       -       21,509,242  
                                 
NONCURRENT ASSETS
                                
Plant, property & equipment, net
     2,325,745       1,743,570       10,021   B   4,079,336  
Construction in progress
     38,980       -               38,980  
Intangible assets, net
     5,203       -               5,203  
Prepayment for fixed assets
     428,033       270,514               698,547  
Deferred tax assets
     8,497       -               8,497  
                                 
TOTAL NONCURRENT ASSETS
     2,806,458       2,014,084       10,021       4,830,563  
                                 
TOTAL ASSETS
   $ 16,119,262     $ 10,210,522     $ 10,021     $ 26,339,805  
                                 
LIABILITIES AND SHAREHOLDERS' EQUITY
                                
                                 
CURRENT LIABILITIES
                                
Accounts payable
   $ 430,568     $ 2,493,586             $ 2,924,154  
Bill payable
     1,666,103       -               1,666,103  
Accrued liabilities and other payables
     278,910       460,182               739,092  
Short-term loans
     3,381,429       1,372,705               4,754,134  
Taxes payable
     2,012,368       1,333,677               3,346,045  
Loan from related party
     76,261       -               76,261  
Other payable-related party
     40,000       -               40,000  
Other payable to Shenzhen ORB original shareholders
     407,678       -               407,678  
                                 
TOTAL CURRENT LIABILITIES
     8,293,317       5,660,150       -       13,953,467  
                                 
DEFERRED TAX LIABILITY
     -       -       2,505       2,505  
                                 
SUBSIDY RECEIVED IN ADVANCE
     186,840       -       -       186,840  
                                 
TOTAL LIABILITIES
     8,480,157       5,660,150       2,505       14,142,812  
                                 
SHAREHOLDER'S EQUITY
                                
Convertible preferred stock, $0.000128 par value, 781,250 shares authorized, 0 and 0 shares issued and outstanding as of March31, 2011 and December 31, 2010, respectively
             -       -       -  
Common stock, $0.000384 par value, 100,000,000 shares authorized, 17,133,991 shares issued and outstanding as of March 31, 2011 and December 31, 2010, respectively
     6,579       -       1,421   D   8,000  
     Additional paid in capital
     2,672,319       1,462,865       760,359   A,B,C   4,895,543  
     Statutory reserve
     360,388       411,583               771,971  
     Accumulated other comprehensive income
     339,741       145,231       (145,231 )     339,741  
     Retained earnings
     4,260,078       2,530,693       (609,033 )     6,181,738  
                              -  
                                 
TOTAL SHAREHOLDERS' EQUITY
     7,639,105       4,550,372       7,516       12,196,993  
                                 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
   $ 16,119,262     $ 10,210,522     $ 10,021     $ 26,339,805  

(1) 
Source:  unaudited financial statements of ORB Automotive Corporation for the three months ended March 31, 2011 as filed in Quarterly Report filed with the SEC on May 23, 2011.
(2) 
Source:  unaudited financial statements of Hebei Hongtu Auto Parts Co., Ltd. included in this Form 8-K/A.
A. 
Allocation of the purchase price to the fair value of assets acquired and liabilities assumed.  The excess of the fair value of net assets acquired over purchase price of $1,921,660 is recorded as bargain purchase gain.
B. 
Record the increase of fixed assets to fair value.
C. 
Record deferred tax liability as a result of book and tax basis difference of fixed assets.
D. 
Record 3,700,000 common shares issued for the acquisition at par.
 
See accompanying notes to pro forma consolidated financial statements
 
 
99.3 - 3
 

ORB AUTOMOTIVE CORPORATION
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BASIS OF PRESENTATION

On May 20, 2011, ORB Automotive Corporation (the “Company” or “ORB” ), completed the acquisition of 100% of the equity interest in Hebei Hongtu Auto Parts Co., Ltd. (“Hongtu”), a company registered in the People’s Republic of China, from Hongtu’s shareholders. The purchase agreement of this acquisition was entered on May 18, 2011. Pursuant to the terms of the stock purchase agreement among the parties (the “Stock Purchase Agreement”), all of the issued and outstanding shares of Hongtu were exchanged for
3.7 million ordinary shares of the Company. The Stock Purchase Agreement contained such representations, warranties, obligations and conditions as are customary for transactions of the type governed by such agreements.

The fair value of the stock price for the shares issued for Hongtu acquisition was determined based on the fair value of the stock issued in ORB’s equity financing completed on May 4, 2011; that is, the total financing amount less the fair value of the warrants issued to investors divided by total shares of ordinary stock issued during the equity financing, which was $0.85 per share.

The accompanying unaudited pro forma consolidated balance sheet presents the accounts of ORB and Hongtu as if the acquisition of Hongtu by ORB occurred on March 31, 2011 for balance sheet purpose. The accompanying unaudited pro forma consolidated statements of income and comprehensive income present the accounts of ORB and Hongtu for the three months ended March 31, 2011 and for the year ended December 31, 2010 as if the acquisition occurred on January 1, 2010, respectively. The fair values of the assets acquired and liabilities assumed at acquisition date are used for the purpose of purchase price allocation. The excess of the fair value of nets assets acquired over purchase price of $1,921,660 is recorded as bargain purchase gain.

The following adjustments would be required if the acquisition of Hongtu by ORB occurred as indicated above:

 
A)
Allocation of the net purchase price to the fair value of assets acquired and liabilities assumed.  The excess of the fair value of nets assets acquired over purchase price of $1,921,660 is recorded as bargain purchase gain.

 
B)
Record the fair value of fixed assets at acquisition date.

 
C)
Record deferred tax liability as a result of book and tax basis difference of fixed assets.

 
D)
Record 3,700,000 common shares issued for the acquisition at par.
 
 
99.3 - 4
 

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