EX-99.7 8 ex99x7.htm EXHIBIT 99.7 ex99x7.htm
Exhibit 99.7
 
RODOBO INTERNATIONAL, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEETS
December 31, 2009
                           
Pro Forma
          
Pro Forma
  
   
Rodobo
    
Hailaer
    
Ewenkeqi
    
Hulunbeier
    
Adjustments
    
Notes
    
Combined
  
                                           
ASSETS
                                          
                                           
Current assets:
                                          
    Cash and cash equivalents
   $ 2,876,418     $ 1,174,439     $ 15,762     $ 8,194       (307,593 )   a     $ 3,767,220  
    Accounts receivable, net
     3,533,430       3,924,234       -       164,489                     7,622,153  
    Other receivable
     11,978       116,744       -       -                     128,722  
    Due from related parties
     -       1,413,622       -       -       (1,413,622 )   b       -  
    Loan to others
     -       1,559,990       -       -                     1,559,990  
    Inventories
     562,560       1,473,634       26,471       979                     2,063,644  
    Prepaid expenses
     226,542       -       -       21,140                     247,682  
    Advances to suppliers, net
     -       3,171,566       -       -                     3,171,566  
                                                               
        Total current assets
     7,210,929       12,834,229       42,233       194,802                     18,560,978  
                                                       
Property, plant and equipment, net of accumulated depreciation
     1,985,487       10,810,049       1,461,856       4,656,077       1,292,441     c       20,205,910  
                                                       
Biological assets, net
     2,439,713       -       -       -                     2,439,713  
                                                       
Other assets:
                                                      
    Investment advances
     410,135       -       -       -                     410,135  
    Restricted cash
     -       39,549       -       -                     39,549  
    Loan to shareholders
     -       88,881       1,655,624       -                     1,744,505  
    Deposits on biological assets
     988,718       -       -       -                     988,718  
    Deposits on land and equipment
     9,520,991       -       -       -                     9,520,991  
    Intangible assets, net
     4,462,142       648,687       -       675,702       4,882,234     d       10,668,765  
                                                       
        Total other assets
     15,381,986       777,117       1,655,624       675,702                     23,372,663  
                                                       
        Total Assets
   $ 27,018,115     $ 24,421,395     $ 3,159,713     $ 5,526,581                   $ 64,579,265  
                                                       
LIABILITIES AND STOCKHOLDERS' EQUITY
                                                      
                                                       
Current liabilities:
                                                      
    Accounts payable
   $ 1,518,958     $ 1,557,837     $ 31,320     $ 48,675                   $ 3,156,789  
    Short-term loan
     -       1,259,700       -       -                     1,259,700  
    Other payable
     290,149       86,992       3,548       -                     380,689  
    Accrued expenses
     70,248       526,866       20,400       4,251                     621,765  
    Advance from customers
     -       2,585,971       -       10,283                     2,596,254  
    Loan from shareholders
     -       -       -       1,933,845                     1,933,845  
    Due to related parties
     1,185,054       -       951,055       462,567       (1,413,622 )   b       1,185,054  
                                                       
        Total current liabilities
     3,064,409       6,017,366       1,006,322       2,459,621                     11,134,096  
                                                       
Temporary equity - series A preferred stock, $0.0001 par value, 30,000,000 shares authorized, 2,000,000 shares issued and outstanding as of December 31, 2009
     -       -       -       -       4,100,000     e       4,100,000  
                                                       
Stockholders' equity
                                                      
Common stock, $0.0001 par value, 200,000,000 shares authorized, 26,892,614 shares  issued and outstanding as of December 31, 2009
     1,629       -       -       -       1,060     f       2,689  
Registered capital
     -       72,494       60,412       129,206       (262,112 )   g       -  
Additional paid in capital
     13,936,367       11,023,102       2,325,484       2,983,183       7,517,171     f, g       37,785,307  
Additional paid in capital - warrants
     971,788       -       -       -                     971,788  
Subscription receivable
     (50,000 )     -       -       -                     (50,000 )
Retained earnings
     8,250,895       5,988,514       (399,253 )     (188,111 )     (3,859,688 )   h       9,792,357  
Accumulated other comprehensive income
     843,027       1,319,919       166,747       142,682       (1,629,348 )   i       843,027  
                                                       
        Total stockholders' equity
     23,953,706       18,404,029       2,153,390       3,066,960                     49,345,168  
                                                       
        Total Liabilities and Stockholders' Equity
   $ 27,018,115     $ 24,421,395     $ 3,159,713     $ 5,526,581                   $ 64,579,265  

The accompanying notes are an integral part of these financial statements
 
1

 
 
 
RODOBO INTERNATIONAL, INC.
UNAUDITED PRO FROMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2009

                                           
                                       
                                           
                                           
                           
Pro Forma
          
Pro Forma
  
   
Rodobo
    
Hailaer
    
Ewenkeqi
    
Hulunbeier
    
Adjustments
    
Notes
    
Combined
  
                                           
                                           
Net sales
   $ 10,075,445     $ 4,242,294     $ -     $ -    
 
    
 
     $ 14,147,888  
Cost of goods sold
     4,780,299       3,605,391       -       -    
 
    
 
       8,215,838  
                                                     
     Gross profit     5,295,146       636,903       -       -                   5,932,050  
                                                     
Operating expenses:
                                                    
Distribution expenses
     2,586,173       18,040       -       -                   2,604,213  
General and administrative expenses
     722,880       104,415       1,509       -       402,437     l       1,231,240  
                                                       
     Total operating expenses     3,309,053       122,455       1,509       -                     3,835,453  
                                                       
Operating income
     1,986,094       514,448       (1,509 )     -                     2,096,596  
                                                       
Subsidy income
     273,897       -       -       -                     273,897  
Interest expenses
     -       (141,737 )     -       -                     (141,737 )
Other income / (expenses)
     2,390       -       -       23,533                     25,923  
                                                       
Income before income taxes
     2,262,381       372,711       (1,509 )     23,533                     2,254,679  
                                                       
Provision for income taxes
     -       -       -       -                     -  
                                                       
Net income
   $ 2,262,381     $ 372,711     $ (1,509 )   $ 23,533                   $ 2,254,679  
                                                       
Other comprehensive income:
                                                      
Foreign currency translation adjustment
     (2,184 )     (1,803 )     (218 )     (307 )                   (4,511 )
                                                       
Comprehensive income
   $ 2,260,197     $ 370,909     $ (1,727 )   $ 23,226                   $ 2,250,168  
                                                       
Earnings per share
                                                      
Basic
   $ 0.15     $ 0.62     $ (0.00 )   $ 0.02                   $ 0.15  
Diluted
   $ 0.13     $ 0.62     $ (0.00 )   $ 0.02                   $ 0.13  
                                                       
Weighted average shares outstanding
                                                      
Basic
     15,212,690       600,000       500,000       1,000,000                     15,212,690  
Diluted
     16,914,508       600,000       500,000       1,000,000                     16,914,508  
 
The accompanying notes are an integral part of these financial statements
 
2

 
 
 
RODOBO INTERNATIONAL, INC.
UNAUDITED PRO FROMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 2009

                                           
                           
Pro Forma
          
Pro Forma
  
   
Rodobo
    
Hailaer
    
Ewenkeqi
    
Hulunbeier
    
Adjustments
    
Notes
    
Combined
  
                                           
                                           
Net sales
   $ 34,690,987     $ 22,456,948     $ 63,133     $ 424,798     $ (63,133 )   j     $ 55,796,551  
Cost of goods sold
     17,089,006       19,565,073       89,933       586,387       (63,133 )   k       35,491,085  
                                                       
      Gross profit     17,601,981       2,891,875       (26,800 )     (161,589 )                   20,305,467  
                                                       
Operating expenses:
                                                      
Distribution expenses
     9,790,602       184,231       -       5,242                     9,980,075  
General and administrative expenses
     1,454,994       373,796       5,252       27,339       1,609,747     l       3,471,127  
                                                       
      Total operating expenses     11,245,596       558,027       5,252       32,581                     13,451,202  
                                                       
Operating income
     6,356,385       2,333,848       (32,052 )     (194,170 )                   6,854,265  
                                                       
Subsidy income
     439,208       -       -       -                     439,208  
Interest expenses
     -       (348,444 )     -       -                     (348,444 )
Other income / (expenses)
     -       -       (13,444 )     (9,672 )                   (23,116 )
                                                       
Income before income taxes
     6,795,593       1,985,404       (45,496 )     (203,842 )                   6,921,912  
                                                       
Provision for income taxes
     -       -       -       -                     -  
                                                       
Net income
   $ 6,795,593     $ 1,985,404     $ (45,496 )   $ (203,842 )                 $ 6,921,912  
                                                       
Other comprehensive income:
                                                      
Foreign currency translation adjustment
     (42,274 )     (48,852 )     (880 )     (63,806 )                   (155,812 )
                                                       
Comprehensive income
   $ 6,753,319     $ 1,936,552     $ (46,376 )   $ (267,648 )                 $ 6,766,100  
                                                       
Earnings per share
                                                      
Basic
   $ 1.01     $ 3.31     $ (0.09 )   $ (0.20 )                 $ 1.03  
Diluted
   $ 0.42     $ 3.31     $ (0.09 )   $ (0.20 )                 $ 0.43  
                                                       
Weighted average shares outstanding
                                                      
Basic
     6,708,121       600,000       500,000       1,000,000                     6,708,121  
Diluted
     16,026,645       600,000       500,000       1,000,000                     16,026,645  

The accompanying notes are an integral part of these financial statements
 
3
 
 
 
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

Note 1: Description of transaction and basis of presentation

On February 5, 2010, Rodobo International, Inc. (the “Company” or “Rodobo”), through its wholly-owned subsidiary, Tengshun Technology and Development Co., Ltd., acquired 100% of the equity interest in Hulunbeier Hailaer Beixue Dairy Factory (“Hailaer Beixue”), Ewenkeqi Beixue Dairy, Ltd. (“Ewenkeqi Beixue”), and Hulunbeier Beixue Dairy Co., Ltd (“Hulunbeier Beixue”). The acquisition has been accounted for as a purchase under accounting principles generally accepted in the United States (GAAP). Under the purchase method of accounting, in accordance with Statement of Financial Accounting Standards No. 141(R), Business Combinations, the assets and liabilities of Hailaer Beixue, Ewenkeqi Beixue and Hulunbeier Beixue are recorded as of the acquisition date at their respective fair values, and consolidated with the Company’s assets and liabilities.

Note 2: Purchase Price

For the purposes of this pro forma analysis, the purchase price has been allocated based on an estimate of the fair value of assets and liabilities acquired as of the date of acquisition. The determination of estimated fair value requires management to make significant estimates and assumptions.

Hailaer Beixue:

Cash paid
   $ 87,884  
Fair value of common stock issued
     19,800,000  
Fair value of Series A preferred stock issued
     4,100,000  
Total purchase price
   $ 23,987,884  
         
Assets
        
Cash and cash equivalents
   $ 1,339,645  
Accounts receivable, net
     4,009,453  
Other receivable
     3,202,939  
Inventories
     1,829,438  
Prepaid expenses
     3,331,526  
Property, plant and equipment, net
     12,525,546  
Restricted cash
     39,548  
Intangible assets, net
     5,411,337  
    Total assets
   $ 31,689,432  
         
Liabilities
        
Accounts payable
   $ 2,376,376  
Short-term loan
     1,127,856  
Other payables
     106,130  
Accrued expenses
     477,001  
Advances from customers
     2,585,937  
    Total liabilities
   $ 6,673,300  
         
Gain on bargin purchase*
   $ 1,028,248  
Estimated purchase price
   $ 23,987,884  
 
 
4
 
Ewenkeqi Beixue:
 
Cash paid
   $ 73,236  
Fair value of common stock issued
     1,800,000  
Total purchase price
   $ 1,873,236  
         
Assets
        
Cash and cash equivalents   $  15,762  
Other receivable
     1,655,603  
Inventories
     26,470  
Property, plant and equipment, net
     1,237,614  
    Total assets
   $ 2,935,449  
Liabilities
        
Accounts payable
   $ 31,319  
Other payables
     954,591  
Accrued expenses
     20,399  
    Total liabilities
   $ 1,006,309  
         
Gain on bargin purchase*
   $ 55,904  
Estimated purchase price
   $ 1,873,236  

Hulunbeier Beixue:
 
Cash paid
   $ 146,473  
Fair value of common stock issued
     2,250,000  
Total purchase price
   $ 2,396,473  
         
Assets
        
Cash and cash equivalents
   $ 8,194  
Accounts receivable
     164,487  
Inventories
     979  
Prepaid expenses
     21,139  
Property, plant and equipment, net
     4,457,264  
Intangible assets, net
     795,286  
Total assets
   $ 5,447,349  
         
Liabilities
        
Accounts payable
   $ 48,675  
Other payables
     2,398,873  
Accrued expenses
     176  
Advances from customers
     10,284  
Total liabilities
   $ 2,458,008  
         
Gain on bargin purchase*
   $ 592,868  
Estimated purchase price
   $ 2,396,473  
 
 
 
5

 
 
 

* The gain on bargain purchase will be recorded as a separate component of revenues in the Company’s Form 10-Q for the quarter ended March 31, 2010.

Note 3: Pro Forma Adjustments

Adjustments included in the column under the heading “Pro Forma Adjustments” primarily relate to the following:

a:  Represents cash payment in connection with the acquisitions of Hailaer Beixue, Ewenkeqi Beixue and Hulunbeier Beixue.

b: Represents the elimination of intercompany due to and due from between Hailaer Beixue, Ewenkeqi Beixue and Hulunbeier Beixue.

c: Represents an adjustment to fixed assets at costs to bring them to their fair value for purchase accounting purposes.

d: Represents an adjustment to intangible assets to bring them to their fair value for purchase accounting purposes.

e: Represent issuance of Series A preferred stock for acquisition.

f: Represent issuance of common stock for acquisition.

g: Represent an adjustment to eliminate the registered capital of Hailaer Beixue, Ewenkeqi Beixue and Hulunbeier Beixue upon acquisition and consolidation into the Company’s financial statements.

h: Represent the elimination of the historical balance of retained earnings (accumulated deficits) of Hailaer Beixue, Ewenkeqi Beixue and Hulunbeier Beixue and the extraordinary gain on bargain purchase recognized
on the acquisition date.

i: Represent the elimination of the historical balance of accumulated other comprehensive income of Hailaer Beixue, Ewenkeqi Beixue and Hulunbeier Beixue.

j: Represent the elimination of intercompany sales between Hailaer Beixue, Ewenkeqi Beixue and Hulunbeier Beixue.

k: Represent the elimination of cost of goods sold due to intercompany sales between Hailaer Beixue, Ewenkeqi Beixue and Hulunbeier Beixue. All products purchased through intercompany sales were sold in the same period.

l: Represent an adjustment of depreciation expense of fixed assets and amortization expense of intangible assets as historically reported by Hailaer Beixue, Ewenkeqi Beixue and Hulunbeier Beixue on a fair value basis for purchase accounting purposes.
 
 
 
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