EX-99.3 4 proforma.htm proforma.htm Exhibit 99.3
 
   
 Page
     
  Introduction to Unaudited Pro Forma Condensed Consolidated Financial Statements
100
     
  Pro Forma Condensed Consolidated Balance Sheets as of June 30, 2009 (Unaudited)
101
     
  Pro Forma Condensed Consolidated Statement of Operations for the Year Ended September 30, 2008 (Unaudited)
102
     
  Pro Forma Condensed Consolidated Statement of Operations for the Nine Months Ended June 30, 2009 (Unaudited)
103
     
  Notes to Condensed Consolidated Pro Forma Financial Statements (Unaudited)  104

 
99
 
CHINA AGRO SCIENCES CORP
INTRODUCTION TO UNAUDITIED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS

               On August 21, 2009, China Agro Sciences Corp., a corporation formed under the laws of the State of Florida (“CHAS”), China HGS Investment, Inc., a corporation formed under the laws of the State of Delaware (“HGS”) and Rising Pilot, Inc., a British Virgin Islands business company which owns 100% issued and outstanding capital stock of HGS (the “HGS Shareholder”) signed a Share Exchange Agreement.

Pursuant to the Share Exchange Agreement, the HGS Shareholder shall transfer and assign to CHAS all of the issued and outstanding capital stock of HGS to exchange for  the issuance of a total of 14,000,000 shares of CHAS’s common stock, $0.001 par value, (the “Share Exchange”).  As a result of this Share Exchange, HGS will become a wholly-owned subsidiary of CHAS.

               Prior to and in conjunction with the consummation of the Share Exchange, CHAS will spin off all of its liabilities to Dalian Holding Corp., a Florida corporation and a wholly-owned subsidiary of CHAS, which owns all the assets of CHAS. So the only material assets of CHAS following the Spin-off will be the ownership of HGS.
 
                In addition, the Boards of Directors of each of CHAS and HGS agree that within 30 days after the closing of the Share Exchange, CHAS shall enter into an entrusted management agreement (the “Entrusted Management Agreement”) with the management of Shaanxi Guangsha Investment and Development Group Co., Ltd. (the “Shaanxi Guangsha Investment”) and will issue to Mr. Xiaojun Zhu, CEO of Shaanxi Guangsha Investment and his management team an aggregate of 25,000,000 newly issued shares of common stock of CHAS.

In connection with the change of control contemplated by the Share Exchange, the directors and officers of CHAS will be resigning from their positions and new directors and officers will be appointed effective ten days following the filing and mailing of a Schedule 14F-1.
 
                The transaction will be accounted for as a reverse merger under the purchase method of accounting since there was a change of control. Accordingly, HGS will be treated as the continuing entity for accounting purposes.

The accompanying unaudited pro forma condensed consolidated balance sheet has been presented with consolidated subsidiaries at June 30, 2009. The unaudited pro forma condensed consolidated statement of operations for the nine months ended June 30, 2009 and for the year ended September 30, 2008 has been presented as if the share exchange had occurred on October 1, 2007.

The unaudited pro forma condensed consolidated financial statements do not necessarily represent the actual results that would have been achieved had the companies been combined at the beginning of the year, nor may they be indicative of future operations. These unaudited pro forma condensed financial statements should be read in conjunction with the companies’ respective historical financial statements and notes included thereto.

 
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CHINA AGRO SCIENCES CORP
      
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
      
JUNE 30, 2009
      
(UNAUDITED)
      
                             
ASSETS
                        
(1)
  
   
CHINA AGRO
    
CHINA HGS
              
PRO
  
   
SCIENCES CORP
    
INVESTMENT INC.
    
ADJUSTMENTS
    
NOTES
   FORMA  
                             
Current Assets
                            
    Cash and cash equivalents
   $ 102,631     $ 351,681     $ (102,631 )     a    $ 351,681  
    Restricted cash
     -       629,617                     629,617  
    Prepaid financial consulting expenses
     29,671       -       (29,671 )     a      -  
    Loan to outside parties, net of allowance
     -       26,447                     26,447  
    Real estate property development completed
     -       8,304,460                     8,304,460  
    Real estate property under development
     -       28,941,185                     28,941,185  
    Other receivables
     -       40,552                     40,552  
    Prepaid tax expenses
     -       213,453                     213,453  
    Advances to venders
     -       5,597,760                     5,597,760  
    Other current assets
     6,661       -       (6,661 )     a      -  
                                       
        Total current assets
     138,963       44,105,155                     44,105,155  
                                       
Property and Equipment, Net
     4,149,639       675,532       (4,149,639 )     a      675,532  
                                       
         TOTAL ASSETS
   $ 4,288,602     $ 44,780,687                   $ 44,780,687  
                                       
                                       
LIABILITIES AND STOCKHOLDERS' EQUITY
                        
                                       
Current Liabilities
                                      
    Short-term loans
   $ -     $ 819,829                   $ 819,829  
    Accounts payable
     306,018       875,810       (306,018 )     a      875,810  
    Other payables
     -       2,554,683                     2,554,683  
    Accrued expenses
     29,052       1,795       (29,052 )     a      1,795  
    Taxes payable
     -       684,845                     684,845  
    Due to affiliated company
     703,485       -       (703,485 )     a      -  
    Customer deposits
     -       17,471,218                     17,471,218  
                                       
        Total current liabilities
     1,038,555       22,408,180                     22,408,180  
                                       
Long-term Debt
     375,040       -       (375,040 )     a      -  
                                       
STOCKHOLDERS' EQUITY
                                      
    Common Stock, $0.001 par value 100,000,000 shares authorized,
                      
     20,050,000 shares issued and outstanding at June 30, 2009
     20,050       -       -             20,050  
                                       
    Common Stock, $0.001 par value, 100,000,000 shares authorized,
                      
     1,000 shares issued and outstanding as of June 30, 2009
     -       1       (1 )     b     -  
                                       
    Additional paid-in capital
     3,772,900       17,677,396       (3,792,949 )     a,b     17,657,347  
                                    -  
    Statutory surplus
     -       2,303,977                     2,303,977  
                                    -  
    Retained earnings (accumulated deficit)
     (1,674,678 )     459,030       1,674,678             459,030  
                                    -  
    Accumulated other comprehensive income
     756,735       1,932,103       (756,735 )     a,b     1,932,103  
                                       
        Total stockholders' equity
     2,875,007       22,372,507                     22,372,507  
                                       
          TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
   $ 4,288,602     $ 44,780,687                   $ 44,780,687  
                                       
                                       
Represents reverse acquisition showing the assets and liabilities of China HGS Investment, Inc. only.
  

                                                                                                              The accompanying notes are an integral part of these Pro Forma Condensed Consolidated financial statements
 
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CHINA AGRO SCIENCES CORP
      
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
      
FOR THE YEAR ENDED SEPTEMBER 30, 2008
      
(UNAUDITED)      
                             
    CHINA AGRO     CHINA HGS               PRO  
    SCIENCES CORP     INVESTMENT INC.     ADJUSTMENTS     NOTES   FORMA  
                             
REVENUES
   $ -     $ 17,106,521               $ 17,106,521  
                                   
COST OF GOODS SOLD
     -       9,179,480                 9,179,480  
                                   
GROSS PROFIT
     -       7,927,041                 7,927,041  
                                   
OPERATING EXPENSES
                                  
Selling expense
     -       230,038                 230,038  
General and administrative expenses
     495,782       1,476,214       (495,782 )     a      1,476,214  
Total operating expense
     495,782       1,706,252                     1,706,252  
                                       
                                       
NET INCOME (LOSS) FROM OPERATIONS
     (495,782 )     6,220,789                     6,220,789  
                                       
OTHER INCOME (EXPENSE)
                                      
Interest income (expense)
     (27,964 )     (91,736 )     27,964       a     (91,736 )
Other income
     36,673       -       (36,673 )     a     -  
Other expense
     -       (53,541 )                   (53,541 )
Total other income and (expense)
     8,709       (145,277 )                   (145,277 )
                                       
NET INCOME (LOSS) BEFORE INCOME TAXES
     (487,073 )     6,075,512                     6,075,512  
                                       
PROVISION FOR INCOME TAX
     -       151,299                     151,299  
                                       
NET INCOME (LOSS) APPLICABLE TO COMMON SHARES
   $ (487,073 )   $ 5,924,213                   $ 5,924,213  
                                       
OTHER COMPREHENSIVE INCOME
                                      
Foreign currency translation adjustments
     307,571       1,616,340       (307,571 )     a      1,616,340  
                                       
COMPREHENSIVE INCOME (LOSS)
   $ (179,502 )   $ 7,540,553                   $ 7,540,553  
                                       
BASIC AND DILUTED INCOME (LOSS) PER SHARE
   $ (0.02 )   $ 5,924.21       (5,924 )     b   $ 0.30  
                                       
WEIGHTED AVERAGE NUMBER
                                      
   OF COMMON SHARES
     20,050,000       1,000                     20,050,000  
                                                                                                                   The accompanying notes are an integral part of these Pro Forma Condensed Consolidated financial statements
 
102
 

CHINA AGRO SCIENCES CORP
      
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
      
FOR THE NINE MONTHS ENDED JUNE 30, 2009
      
(UNAUDITED)      
                             
    CHINA AGRO     CHINA HGS               PRO  
    SCIENCES CORP     INVESTMENT INC.     ADJUSTMENTS     NOTES   FORMA  
                             
REVENUES
   $ -     $ 10,012,186               $ 10,012,186  
COST OF GOODS SOLD
     -       5,418,811                 5,418,811  
                                   
GROSS PROFIT
     -       4,593,375                 4,593,375  
                                   
OPERATING EXPENSES
                                  
    Selling expense
     -       261,768                 261,768  
    General and administrative expenses
     379,071       427,738       (379,071 )     a      427,738  
Total operating expense
     379,071       689,506                     689,506  
                                       
                                       
NET INCOME (LOSS) FROM OPERATIONS
     (379,071 )     3,903,869                     3,903,869  
                                       
OTHER EXPENSES
                                      
    Interest income expense
     (34,474 )     (97,551 )     34,474       a     (97,551 )
    Other expense
     -       (310 )                   (310 )
Total other expenses
     (34,474 )     (97,860 )                   (97,860 )
                                       
NET INCOME (LOSS) BEFORE  INCOME TAXES
     (413,545 )     3,806,008                     3,806,008  
                                       
PROVISION FOR INCOME TAX
     -       39,463                     39,463  
                                       
NET INCOME (LOSS) APPLICABLE TO COMMON SHARES
   $ (413,545 )   $ 3,766,546                   $ 3,766,546  
                                       
OTHER COMPREHENSIVE INCOME
                                      
    Foreign currency translation adjustments
     (15,295 )     1,932,061       15,295       a      1,932,061  
                                       
COMPREHENSIVE INCOME
   $ (413,545 )   $ 5,698,607                   $ 5,698,607  
                                       
BASIC AND DILUTED INCOME (LOSS) PER SHARE
   $ (0.02 )   $ 3,766.55       (3,767 )     b   $ 0.28  
                                       
WEIGHTED AVERAGE NUMBER
                                      
   OF COMMON SHARES
     20,050,000       1,000                     20,050,000  
The accompanying notes are an integral part of these Pro Forma Condensed Consolidated financial statements
 
103
 
CHINA AGRO SCIENCES CORP
NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



The following unaudited pro forma adjustments are included in the accompanying unaudited pro forma condensed consolidated balance sheet as of June 30, 2009 and the unaudited pro forma condensed consolidated statement of operations for the nine months ended June 30, 2009 and for the year ended September 30, 2008 to reflect the Share Exchange between CHAS and HGS:

a.  
To record the spin-off of the Shell Company’s (CHAS) assets and liabilities prior to the Share Exchange;

b.  
These adjustments reflect the recapitalization as a result of the transactions related to the Share Exchange.

 
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