EX-99.3 33 v175992_ex99-3.htm
Exhibit 99.3
 
Pro Forma Combined Financial Statements
 
The following pro forma balance sheet has been derived from the balance sheet of Remediation Services, Inc. at December 31, 2009, and adjusts such information to give the effect of the acquisition of China Liandi Clean Technology Engineering Limited, a British Virgin Island corporation, as if the acquisition had occurred at December 31, 2009.  The following pro forma EPS statement has been derived from the income statement of China Liandi Clean Technology Engineering Limited, and adjusts such information to give the effect that the acquisition by Remediation Services, Inc. at March 31, 2009 and December 31, 2009, respectively.  The pro forma balance sheet and EPS statement is presented for informational purposes only and does not purport to be indicative of the financial condition that would have resulted if the acquisition had been consummated at March 31, 2009 and December 31, 2009.

PRO FORMA CONSOLIDATED BALANCE SHEET
(Unaudited)

   
China Liandi
Clean
Technology
Engineering,
Limited
   
Remediation
Services, Inc.
         
    
December 31,
   
December 31,
             
    
2009
   
2009
   
Adjustments
   
Proforma
 
    
(unaudited)
   
(audited)
             
                         
ASSETS
                       
                         
Current assets:
                       
Cash and cash equivalents
  $ 18,153,762     $ 1,785     $ (1,785 )A   $ 43,228,762  
                    $ (275,000 )C        
                      25,350,000  E        
Restricted cash
    1,640,333                     $ 1,640,333  
Notes receivable, net of $nil allowance
    5,519,312                     $ 5,519,312  
Accounts receivable, net of $nil allowance
    8,246,985                  A      8,246,985  
Deferred costs of revenue
    1,282,365                       1,282,365  
Inventories
    66,626                       66,626  
Prepaid expenses and other current assets
    12,077,151                       12,077,151  
Inventories
                            -  
Pledged trading securities
    8,820               -       8,820  
                                 
  Total current assets
    46,995,354       1,785       25,073,215     $ 72,070,354  
                                 
Property and equipment, net
    133,129       -       -  A      133,129  
Intangible assets, net
    5,343,136       -               5,343,136  
Other long-term assets, net
    -       185,088       (185,088 )A     -  
                                 
Total assets
  $ 52,471,619     $ 186,873     $ 24,888,127     $ 77,546,619  
                                 
LIABILITIES AND STOCKHOLDERS' EQUITY
                               
                                 
Current liabilities:
                               
Accounts payable
  $ 11,922     $ 15,022       (15,022 )A   $ 11,922  
Deferred revenue
  $ 2,609,356       -               2,609,356  
Other payable and accrued expenses
    3,135,160       7,467       (7,467 )A     3,135,160  
Provision for income tax
    59,832       -       -       59,832  
Payable for intangible
    5,975,220       -          A      5,975,220  
Due to shareholders
    8,392,314       -       -       8,392,314  
Due to related parties
    -       51,407       (51,407 )A     -  
Line of credit
    -       6,000       (6,000 )A     -  
Customer Deposit
            6,950       (6,950 )A     -  
Notes payable
            41,000       (41,000 )A        
Current portion of mortgage payable
    -       3,764       (3,764 )A     -  
                                 
Total Current Liabilities
    20,183,804       131,610       (131,610 )A   $ 20,183,804  
                                 
Long term liabilities:
                               
                                 
Long-term portion of mortgage payable
    -       79,353       (79,353 )A     -  
                                 
Total Liabilities
    20,784,441       210,963       (210,963 )A   $ 20,784,441  
                                 
Stockholders' equity
                               
Common stock ($1 par value; authorized - 50,000 shares; issued and outstanding - 10,000 shares)
    50,000       5,907       27,354  B     29,358  
                      (50,000 )D        
                      (4,690 )C        
                      787  E        
Preferred stock,$0.001 par value, 25,000 authorized, none issued and outstanding
    -       -       7,086  E     7,086  
Additional paid in capital
    9,329,878       262,218       (268,125 )A     34,418,434  
                      (27,354 )B        
                      50,000  D        
                      (270,310 )C        
                      25,342,127  E        
Statutory earnings
    1,138,733                       1,138,733  
Retained earning
    21,696,085       (292,215 )     292,215  A     21,696,085  
Accumulated other comprehensive income
    73,119       -             $ 73,119  
                                 
Total stockholders' equity
  $ 32,287,815     $ (24,090 )   $ 25,099,090       57,326,371  
                                 
Total liabilities and stockholders' equity
  $ 52,471,619       186,873       24,888,127     $ 77,546,619  
 
See notes to financial statements
 
 
 

 

PRO FORMA EPS (UNAUDITED)

   
China Liandi
Clean
Technology
Engineering,
   
China Liandi
Clean Technology
Engineering,
Limited
 
    
Limited
Year Ended
   
Nine Months
Ended
 
    
March 31,
   
December 31,
 
    
2009
   
2009
 
    
(unaudited)
   
(unaudited)
 
             
Net income/(loss)
  $ 7,086,984     $ 11,303,317  
                 
Other comprehensive income (loss)
               
      Foreign currency translation gain
    43,119       17,427  
                 
Comprehensive income (loss)
  $ 7,130,103     $ 11,320,744  
                 
Net income (loss) per Share
               
      Basic
  $ 0.26     $ 0.41  
      Diluted
  $ 0.26     $ 0.41  
                 
Weighted average shares outstanding
               
      Basic
    27,354,480       27,354,480  
      Diluted
    27,354,480       27,354,480  
 
See notes to financial statements

 
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PRO FORMA CONSOLIDATED INCOME STATEMENT (UNAUDITED)

   
China Liandi Clean
Technology
Engineering, Limited
   
Remediation
Services, Inc.
         
    
Nine Months Ended
   
Nine Months Ended
             
    
December 31,
   
December 31,
             
    
2009
   
2009
   
Adjustments
   
Proforma
 
   
(unaudited)
   
(unaudited)
             
                         
Revenue
  $ 45,604,199     $ 58,301       (58,301 )A     45,604,199  
Cost of sales
    31,986,380       28,254       (28,254 )     31,986,380  
                                 
Gross profit (loss)
    13,617,819       30,047       (30,047 )A     13,617,819  
                                 
Operating expenses:
                               
      Selling
    816,281       479       (479 )A     816,281  
      General and administrative
    863,061       17,234       (17,234 )A     863,061  
      Depreciation and amortization
    -       12,318       (12,318 )A     -  
      Research and development
    40,432               -       40,432  
                                 
Total
    1,719,774       30,031       (30,031 )A     1,719,774  
                                 
Income/(loss) from operations
    11,898,045       16       (16 )     11,898,045  
                                 
Other income (expense):
                               
      Interest income (expense)
    48,121       (8,196 )     8,196  A     48,121  
      Interest and bank charges
    (402,674 )     -       -       (402,674 )
      Exchange gains (losses), net
    (479,188 )     -       -       (479,188 )
      Value added tax refund
    220,758                       220,758  
     Other
    19,072       -       -       19,072  
                                 
                Other income (expense), net
    (593,911 )     (8,196 )     8,196  A     (593,911 )
                                 
Income (loss) before income tax expense
    11,304,134       (8,180 )     8,180       11,304,134  
                                 
Income tax expense
    817       -               817  
                                 
Net income/(loss)
  $ 11,303,317     $ (8,180 )   $ 8,180  A      11,303,317  
                                 
Other comprehensive income (loss)
                               
      Foreign currency translation adjustment
    17,427       -       -       17,427  
                                 
Total comprehensive income (loss)
  $ 11,320,74     $ (8,180 )   $ 8,180       11,320,744  
                                 
Net income (loss) per Share
                               
      Basic and diluted
  $ 226.07     $ (0.00 )           $ 0.41  
      Basic and diluted
  $ 226.07     $ (0.00 )           $ 0.41  
                                 
Weighted average shares outstanding
                               
      Basic
    50,000       5,906,950       21,397,530 B,C,E      27,354,480  
      Diluted
    50,000       5,906,950       21,397,530 B,C,E      27,354,480  
 
See notes to financial statements

 
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Unaudited Notes to Pro Forma Combined Financial Statements
 
On February 26, 2010, Remediation Services, Inc., (the "Company"), entered into a Share Exchange Agreement (the “Exchange Agreement”), with (i) China Liandi Clean Technology Engineering Limited, a company organized under the laws of British Virgin Islands (“China LianDi”), (ii) China LianDi’s shareholders, SJ Asia Pacific Ltd., a company organized under the laws of the British Virgin Islands, which is a wholly-owned subsidiary of SJI Inc, a Jasdaq listed company organized under the law of Japan, China Liandi Energy Resources Engineering Technology Limited, a company organized under the laws of the British Virgin Islands, Hua Shen Trading (International) Limited, a company organized under the laws of the British Virgin Islands, Rapid Capital Holdings Limited, a company organized under the laws of the British Virgin Islands, and TriPoint Global Equities, LLC, a limited liability company organized under the laws of Maryland (collectively, the “China LianDi Shareholders”), who together own shares constituting 100% of the issued and outstanding ordinary shares of China LianDi (iii) Reed Buley, the principal stockholder of the Company (the “Remediation Principal Shareholder”). Pursuant to the terms of the Exchange Agreement, the China Liandi Shareholders transferred to us all of the China LianDi shares in exchange for the issuance of 27,354,480 shares of our common stock.  As a result of the Share Exchange, we are now a holding company, which through certain contractual arrangements with operating companies in the People’s Republic of China (“China” or the “PRC”), provides downstream flow equipment and engineering services to the leading petroleum and petrochemical companies in the PRC.
 
Immediately prior to the Share Exchange, 4,690,000 shares of our outstanding common stock were cancelled and retired.  China LianDi also deposited $275,000 into an escrow account, which amount was paid to the Remediation Principal Shareholder, who owned the 4,690,000 shares, as a result of the Share Exchange having been consummated.
 
As a result of the transactions described above, we became the record and beneficial owner of 100% of the share capital of China LianDi and therefore own 100% of the share capital of its subsidiaries and  Variable Interest Entities indirectly.
 
As a result of the Share Exchange, the cancellation of 4,690,000 shares and the closing of Series A financing, we had 29,358,772 shares of common stock and 7,086,078 shares of Series A preferred issued and outstanding.  Pursuant to the terms of the Agreement, China LianDi’s officers and directors were appointed as our officers and directors, and Reed Buley resigned as our President, CEO and sole director.  However, the change in our board of directors will not be effective until 10 days after the mailing of a Schedule 14F Information Statement to our shareholders, which we expect to do promptly after the closing of the Share Exchange.
 
The transaction was regarded as a reverse merger whereby China LianDi was considered to be the accounting acquirer as it retained control of Remediation after the Share Exchange.
 
All amounts of Remediation were reversed as the net assets assumed by China LianDi in the reverse merger were $0 after the Company satisfied the remaining portion of a $6,000 line of credit with part of the $275,000 escrow deposit (described above).
 
Hua Shen was founded by Mr. Zuo in 1999.  On January 8, 2008, China LianDi acquired 100% ownership interest in Hua Shen from Mr. Zuo. As Hua Shen and China LianDi had been under common control, the acquisition of Hua Shen by China LianDi has been accounted for using the “as if” pooling method of accounting.    In 2007, China LianDi established Petro HK and Bright Flow, as wholly-owned subsidiaries, in Hong Kong. In 2008, Petro HK established Beijing Jianxi, as a wholly-owned subsidiary, in the PRC.

 
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The consolidated financial statements reflect all predecessor statements of income and cash flow activities and include the accounts of China LianDi Clean Technology Engineering Limited, and its subsidiaries and Variable Interest Entities (VIEs). China Liandi (and its historical financial statements) is the continuing entity for financial reporting purposes.
 
The preceding unaudited pro forma combined balance sheet represents the combined financial position of China LianDi as of December 31, 2009, as if the reverse merger acquisition occurred on December 31, 2009.  The unaudited combined income statements give effect to the reverse acquisition of China LianDi by Remediation assuming that the reverse acquisition took place on January 1, 2010.
 
The unaudited pro forma combined financial information is presented for illustrative purposes only and is not necessarily indicative of the operating results that would have been achieved if the reverse acquisition of China LianDi had been consummated as of the beginning of the period indicated, nor is necessarily indicative of the resulted of future operations.
 
Assumptions and Adjustments:

A)
Per the terms of the Share Exchange, Remediation was delivered with zero assets and zero liabilities at time of closing;

B)
At closing and pursuant to the Exchange Agreement, we acquired all of the issued and outstanding capital stock of China LianDi in exchange for the issuance of 27,354,480 common stock shares; 

C)
In exchange for $275,000, the Company agreed to cancel 4,690,000 shares of common stock;

D)
At closing, common stock of China LianDi will be reclassified to additional paid-in-capital to reflect the additional shares of common stock issued as part of the Share Exchange; and

E)
Remediation issues 7,086,078 shares of convertible Series A preferred stock and 787,342 shares of common stock at $3.50 per share to investors for net proceeds of approximately $25,077,000.

 
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