EX-99.3 9 f8k062807ex99iii_stonemtn.htm UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIALS f8k062807ex99iii_stonemtn.htm






STONE MOUNTAIN RESOURCES INC.

UNAUDITED PRO FORMA CONDENSED

CONSOLIDATED FINANCIAL INFORMATION



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CONTENTS


 
PAGE
1
Basis of presentation
 
 
PAGE
2
Unaudited Pro Forma Condensed Consolidated Balance Sheet at March 31, 2007
 
 
PAGE
3
Unaudited Pro Forma Condensed Consolidated Statement of Income (Loss) and Comprehensive Income (Loss) for the three months ended March 31, 2007
 
 
PAGE
4
Unaudited Pro Forma Condensed Consolidated Statement of Income (Loss) and Comprehensive Income (Loss) for the year ended December 31, 2006
 
 
PAGE
5
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

 



STONE MOUNTAIN RESOURCES INC.
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION

 

Basis of Presentation

On June 29, 2007, Stone Mountain Resources, Inc. (the “Company” or “SMOU”) executed a Share Exchange Agreement (the “Share Exchange Agreement”) by and between Stone Mountain Resources Inc., Continental Development Limited, a Hong Kong corporation (the “Continental”) and Excelvantage Group Limited, a British Virgin Islands Company which owns 100% of Continental (the “Continental Shareholder”).

Under the Share Exchange Agreement, at the Closing on June 29, 2007, the Company issued 12,000,000 shares of its common stock, representing 60.12% of the Company’s issued and outstanding common stock after giving effect to the cancellation of 12,000,000 shares by Peter Dodge on June 29, 2007, to the Continental Shareholders in exchange for 100% of the common stock of Continental. After the closing of the transaction, SMOU had a total of 19,961,000 shares of common stock outstanding, with the Continental Shareholders owning 60.12%% of the total issued and outstanding shares of SMOU’s common stock, and the balance held by those who held shares of Stone Mountain’s common stock prior to the closing of the exchange. This share exchange transaction resulted in the Continental Shareholders obtaining a majority voting interest in SMOU. Generally accepted accounting principles require that the company whose shareholders retain the majority interest in a combined business be treated as the acquirer for accounting purposes, resulting in a reverse acquisition. Accordingly, the share exchange transaction has been accounted for as a recapitalization of SMOU.

The unaudited pro forma condensed consolidated statements of income (loss) combine the historical condensed consolidated statements of income (loss) of SMOU and Continental, giving effect to the share exchange and other related events as if it had occurred on January 1, 2006 and January 1, 2007. The unaudited pro forma condensed consolidated balance sheet combines the historical condensed consolidated balance sheets of SMOU and Continental, giving effect to the share exchange and other related events as if it had been consummated on March 31, 2007. These unaudited pro forma condensed consolidated financial statements have been prepared for comparative purposes only and do not purport to be indicative of the results of operations which actually would have resulted had the transaction occurred on the date indicated and are not necessarily indicative of the results that may be expected in the future.
 
 
 
 
1
 
 
STONE MOUNTAIN RESOURCES INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET AS OF MARCH 31, 2007
 
                         
   
KANDI HISTORICAL
    
SMOU HISTORICAL
    
PRO FORMA ADJUSTMENTS
    
PRO FORMA COMBINED
  
CURRENT ASSETS
                        
Cash and cash equivalents
   $
735,227
     $
396
     $
-
     $
735,623
  
  Restricted cash
    
12,024,514
                      
12,024,514
  
  Accounts receivable
    
7,686,365
      
-
      
-
      
7,686,365
  
  Notes receivable
    
5,135,329
      
-
      
-
      
5,135,329
  
  Inventories
    
4,764,052
      
-
      
-
      
4,764,052
  
  Other receivables
    
2,393,639
      
-
      
-
      
2,393,639
  
  Due from employees
    
12,613
      
-
      
-
      
12,613
  
  Prepayments and prepaid expenses
    
211,992
      
-
      
-
      
211,992
  
  Deferred taxes
    
100
      
-
      
-
      
100
  
      Total current assets
    
32,963,831
      
396
      
-
      
32,964,227
  
                                 
  Plant and equipment, net
    
9,239,091
      
-
      
-
      
9,239,091
  
  Land use right, net
    
393,512
      
-
      
-
      
393,512
  
  Construction in progress
    
458,404
      
-
      
-
      
458,404
  
  Deferred taxes
    
8,145
      
-
      
-
      
8,145
  
      Total long term assets
    
10,099,152
      
-
      
-
      
10,099,152
  
                                 
    TOTAL ASSETS
   $
43,062,983
     $
396
     $
-
     $
43,063,379
  
                                 
                                 
CURRENT LIABILITIES
                                
  Accounts payable
   $
5,877,556
     $
-
     $
-
     $
5,877,556
  
  Other payables and accrued liabilities
    
390,978
      
8,100
      
-
      
399,078
  
  Short term bank loans
    
10,753,668
      
-
      
-
      
10,753,668
  
Current portion of long-term bank loan
    
1,920,934
      
-
      
-
      
1,920,934
  
Notes payable
    
14,012,262
      
-
      
-
      
14,012,262
  
  Due to related parties
    
2,403
      
-
      
-
      
2,403
  
  Customer deposits
    
1,414,672
      
-
      
-
      
1,414,672
  
  Deferred taxes
    
345
      
-
      
-
      
345
  
          Total current liabilities
    
34,372,818
      
8,100
      
-
      
34,380,918
  
                                 
LONG-TERM LIABILITIES
                                
  Deferred taxes
    
3,309
      
-
      
-
      
3,309
  
          Total long-term liabilities
    
3,309
      
-
      
-
      
3,309
  
                                 
TOTAL LIABILITIES
    
34,376,127
      
8,100
      
-
      
34,384,227
  
                                 
SHAREHOLDERS’ EQUITY
                                
 Registered capital
    
6,645,321
      
-
       (6,645,321 )(1)    
-
  
 Common stock
    
-
      
19,961
      
-
      
19,961
  
 Additional paid-in capital
    
520,872
      
91,289
       6,645,321  (1)    
7,257,482
  
 Retained earnings (deficit)
    
1,037,142
       (118,954 )    
-
      
918,188
  
 Accumulated other comprehensive income
    
483,521
      
-
      
-
      
483,521
  
                                 
Total Shareholders’ Equity
    
8,686,856
       (7,704 )    
-
      
8,679,152
  
                                 
  TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
   $
43,062,983
     $
396
     $
-
     $
43,063,379
  
                                 
 
 

2
 
 
STONE MOUNTAIN RESOURCES INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
 STATEMENT OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
FOR THE THREE MONTHS ENDED MARCH 31, 2007
 
 
   
KANDI HISTORICAL
    
SMOU HISTORICAL
    
PRO FORMA ADJUSTMENTS
    
PRO FORMA COMBINED
  
                         
REVENUES, NET
   $
6,004,743
     $
-
     $
-
     $
6,004,743
  
                                 
COST OF GOODS SOLD
    
4,854,101
      
-
      
-
      
4,854,101
  
GROSS PROFIT
    
1,150,642
      
-
      
-
      
1,150,642
  
                                 
Research and development
    
11,978
      
-
      
-
      
11,978
  
Selling and marketing
    
163,171
      
-
      
-
      
163,171
  
General and administrative
    
170,532
      
872
      
-
      
171,404
  
TOTAL OPERATING EXPENSES
    
345,681
      
872
      
-
      
346,553
  
                                 
INCOME (LOSS) FROM OPERATIONS
    
804,961
       (872 )    
-
      
804,089
  
                                 
INTEREST EXPENSE, NET
     (89,803 )    
-
      
-
       (89,803 )
FORFEITURE ON CUSTOMER DEPOSITS
    
265,789
      
-
      
-
      
265,789
  
OTHER EXPENSE, NET
     (4,937 )    
-
      
-
       (4,937 )
                                 
INCOME (LOSS) BEFORE INCOME TAXES
    
976,010
       (872 )    
-
      
975,138
  
                                 
INCOME TAXES
    
34,892
      
-
      
-
      
34,892
  
                                 
NET INCOME (LOSS)
    
941,118
       (872 )    
-
      
940,246
  
                                 
OTHER COMPREHENSIVE INCOME
                                
Foreign currency translation gain
    
91,058
      
-
      
-
      
91,058
  
  Income tax expense related to other comprehensive income
     (30,049 )    
-
      
-
       (30,049 )
OTHER COMPREHENSIVE INCOME, NET OF TAX
    
61,009
      
-
      
-
      
61,009
  
                                 
COMPREHENSIVE INCOME (LOSS)
   $
1,002,127
     $ (872 )   $
-
     $
1,001,255
  
                                 
WEIGHTED AVERAGE SHARES OUTSTANDING, BASIC AND DILUTED
    
-
      
19,961,000
      
-
      
19,961,000
  
                                 
Net income (loss) per common share, basic and diluted
   $
-
     $ (0.00 )   $
-
     $
0.05
  
                                 
 
 
 
 
3
 
 
STONE MOUNTAIN RESOURCES INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
 STATEMENT OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
FOR THE YEAR ENDED DECEMBER 31, 2006

   
KANDI HISTORICAL
DECEMBER 31, 2006
    
SMOU
HISTORICAL
MARCH 31, 2007
    
PRO FORMA ADJUSTMENTS
    
PRO FORMA COMBINED
  
                         
REVENUES
   $
14,480,836
     $
-
     $
-
     $
14,480,836
  
                                 
COST OF GOODS SOLD
    
11,884,462
      
-
      
-
      
11,884,462
  
GROSS PROFIT
    
2,596,374
      
-
      
-
      
2,596,374
  
                                 
Research and development
    
103,785
      
-
      
-
      
103,785
  
Selling and marketing
    
289,408
      
-
      
-
      
289,408
  
General and administrative
    
411,306
      
1,990
      
-
      
413,296
  
TOTAL OPERATING EXPENSES
    
804,499
      
1,990
              
806,489
  
                                 
INCOME (LOSS) FROM OPERATIONS
    
1,791,875
       (1,990 )    
-
      
1,789,885
  
                                 
INTEREST EXPENSE, NET
     (836,056 )    
-
      
-
       (836,056 )
GOVERNMENT GRANTS
    
97,806
      
-
      
-
      
97,806
  
FORGIVENESS OF DEBT
    
29,324
      
-
      
-
      
29,324
  
OTHER EXPENSE, NET
     (3,725 )    
-
      
-
       (3,725 )
                                 
INCOME (LOSS) BEFORE INCOME TAXES
    
1,079,224
       (1,990 )    
-
      
1,077,234
  
                                 
INCOME TAXES
     (69 )    
-
      
-
       (69 )
                                 
NET INCOME (LOSS)
    
1,079,155
       (1,990 )    
-
      
1,077,165
  
                                 
OTHER COMPREHENSIVE INCOME
                                
Foreign currency translation gain
    
236,114
      
-
      
-
      
236,114
  
Income tax expense related to other comprehensive income
     (77,918 )    
-
      
-
       (77,918 )
OTHER COMPREHENSIVE INCOME, NET OF TAX
    
158,196
      
-
      
-
      
158,196
  
                                 
COMPREHENSIVE INCOME (LOSS)
   $
1,237,351
     $ (1,990 )   $
-
     $
1,235,361
  
                                 
WEIGHTED AVERAGE SHARES OUTSTANDING, BASIC AND DILUTED
    
-
      
19,961,000
      
-
      
19,961,000
  
                                 
Net income (loss) per common share, basic and diluted
   $
-
     $ (0.00 )   $
-
     $
0.06
  
                                 


4

STONE MOUNTAIN RESOURCES INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS

Notes:

The following adjustments to the unaudited pro forma condensed consolidated financial statements are based on the assumption that the share exchange was consummated on January 1, 2007 and January 1, 2006.
 
 
(1)
Adjustment to eliminate the registered capital of Kandi as if the share exchange occurred on January 1, 2007 and January 1, 2006.
 

 
 
 
 
 
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