EX-99.2B 20 v197083_ex99-2b.htm
Exhibit 99.2(b)

 
First China Pharmaceutical Group, Inc.

Pro-Forma Consolidated Financial Statements

As of and for the periods ended June 30, 2010

 
 
 

 
First China Pharmaceutical Group, Inc.
 
INTRODUCTION AND BASIS OF PRESENTATION
FOR PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
 
The following pro forma consolidated financial statements give effect to the acquisition of First China Pharmaceutical Group Limited (“Target”) by First China Pharmaceutical Group, Inc. (“FCPG”).
 
Pursuant to a Share Exchange Agreement dated August 23, 2010, FCPG, a public corporation incorporated in Nevada on July 31, 2007, acquired 100% of the issued and outstanding shares of Target, a private company formed in Hong Kong on April 29, 2010, in exchange for 15,000,000 shares of common stock of FCPG, representing 25% of its total issued and outstanding shares at the time.
 
The share exchange transaction between Target and FCPG is considered an acquisition and was accounted for as such with FCPG being treated as the accounting and legal parent and Target being treated as the accounting and legal subsidiary. This means the consolidated results of operations of FCPG going forward will include those of FCPG for the period from its inception on July 31, 2007 and those of Target since the date of the acquisition, September 15, 2010.
 
The following pro forma consolidated balance sheet includes the balance sheets of FCPG and Target as of June 30, 2010, as if the acquisition of Target occurred on that date.
 
The pro forma consolidated balance sheet and statement of operations should be read in conjunction with the separate historical audited financial statements for FCPG and unaudited combined financial statements for Target,  as follows:
 
 
(i)
for FCPG, audited financial statements for the years ended March 31, 2010 and 2009, as filed in FCPG’s annual report on Form 10-K on May 10, 2010;

 
(ii)
for Target, unaudited combined balance sheets of Target and Kun Ming Xin Yuan Tang Pharmacies Co., Ltd. as of June 30, 2010 and December 31, 2009 and the unaudited combined statements of income and comprehensive income, and cash flows for the six months ended June 30, 2010 and 2009, as filed as Exhibit 99.1(b) of this current report on Form 8-K.
 
The fiscal year ends of FCPG and Target are March 31 and December 31, respectively.  The pro forma balance sheet and earnings (loss) per share data of FCPG and Target are indicative of their consolidated financial position, had the acquisition occurred on June 30, 2010.

 
 
 
 
 
FIRST CHINA PHARMACEUTICAL GROUP, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET

   
FCPG
June 30,
2010
    
Target
June 30,
2010
    
Pro-Forma
Adjustments
June 30, 
2010
    
Pro-Forma
Consolidated
June 30,
2010
  
   
(A)
    
(B)
    
(Note 2)
        
   
$
    
$
    
$
    
$
  
ASSETS
                        
                         
Current Assets
                        
Cash and cash equivalents
   $ 27     $ 19,417           $ 19,444  
Other receivables
     -       14,164,336             14,164,336  
Inventory
     -       5,909,293             5,909,293  
Prepaid expenses
     17       -             17  
      44       20,093,046             20,093,090  
                               
Plant and Equipment, net
     -       3,499             3,499  
Intangible assets, net
     -       2,607       8,212,461       8,215,068  
TOTAL ASSETS
   $ 44     $ 20,099,152     $ 8,212,461     $ 28,311,657  
                                 
LIABILITIES
                                
                                 
Current Liabilities
                                
Short-term borrowings
   $ -     $ 859,797             $ 859,797  
Other payable and accrued liabilities
     10,250       10,141,168               10,151,418  
Income tax payable
     -       2,310,648               2,310,648  
Due to related party
     12,752       -               12,752  
      23,002       13,311,613               13,334,615  
                                 
STOCKHOLDERS' EQUITY
                                
                                 
Capital Stock
                                
Authorized – 200,000,000 common shares $0.001 par value;
                                
60,000,000 issued and outstanding
     45,000       1,282 (a)     15,000       60,000  
           
 
(a)
     (1,282 )        
                                 
Additional Paid-in Capital
     5,000       266,101 (a)     14,718,899       14,990,000  
           
 
(a)
                
                                 
Retained Earnings (Deficit)
     (72,958 )     6,370,321 (a)     (6,370,321 )     (72,958 )
Effect of foreign currency translation adjustments
     -       149,835       (149,835 )     -  
TOTAL STOCKHOLDERS’ EQUITY
     (22,958 )     6,787,539       8,212,461       14,977,042  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
   $ 44     $ 20,099,152     $ 8,212,461     $ 28,311,657  
 
(a) – Refer to Note 2(C) to the pro forma financial statements.
 
The accompanying notes are an integral part of these pro forma financial statements

 
 
 
 
 
FIRST CHINA PHARMACEUTICAL GROUP, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

   
FCPG
Three Months
June 30,
 2010
    
Target
Six Months
June 30,
2010
    
Pro-Forma
Adjustments
June 30,
2010
    
Pro Forma
Six Months
June 30,
2010
  
                         
Sales, net of tax
   $ -     $ 13,878,888     $ -       13,878,888  
Cost of sales
     -       11,444,144       -       11,444,144  
                                 
Gross margin
     -       2,434,744       -       2,434,744  
                                 
Expenses and other items:
                                
Selling expenses
     -       8,905               8,905  
Administrative expenses
     4,347       78,657       -       83,004  
Depreciation and amortization
     -       1,202               1,202  
Other operating expenses
     -       91,977               91,977  
Interest income
     -       (4,951 )     -       (4,951 )
Interest expense
     -       21,585       -       21,585  
                                 
Total expenses and other items
     4,347       197,375       -       201,722  
                                 
Income before income taxes
     (4,347 )     2,237,369       -       2,233,022  
                                 
Income tax
     -       (559,369 )     -       (559,369 )
                                 
Net Loss
     (4,347 )     1,678,000       -       1,673,653  
                                 
Loss per Share – basic and diluted
   $ (0.000 )                   $ (0.028 )
                                 
Shares used in calculating basic and diluted loss per share
     45,000,000    
 
(a)
     15,000,000       60,000,000  
 
(a) – Refer to Note 2(C) to the pro forma financial statements.
 
The accompanying notes are an integral part of these pro forma financial statements

 
 
 
 
 
FIRST CHINA PHARMACEUTICAL GROUP, INC.
PRO FORMA CONSOLIDATED NOTES TO FINANCIAL STATEMENTS

NOTE 1 – Share Exchange Transaction
 
On September 15, 2010, FCPG, a public shell company, closed a share exchange transaction with Target, a private corporation, whereby 100% of the shares of Target were exchanged for 15,000,000 shares of FCPG common stock.  There was no change in beneficial ownership of FCPG as a result of the transaction and accordingly, the acquisition of Target by FCPG is considered a purchase and was accounted for as such.
 
The unaudited Pro Forma Combined Balance Sheet represents the combined financial position of FCPG as of June 30, 2010 and Target as of June 30, 2010.
 
The unaudited Pro Forma Combined Statements of Operations represents the combined results of operations of FCPG for the three months ended June 30, 2010 and Target for the six months ended June 30, 2010.
 
NOTE 2 - Pro Forma Adjustments
 
The pro forma adjustments to the consolidated balance sheet give effect to the acquisition of Target as if the transactions had occurred at the company’s respective balance sheet date of June 30, 2010.
 
 
A.
Derived from the unaudited balance sheet of FCPG as of June 30, 2010.

 
B.
Derived from the unaudited balance sheet of Target as of June 30, 2010.

 
C.
Pro forma adjustment to issue 15,000,000 common shares of FCPG for 100% of outstanding shares of Target valued at $15,000,000 being the consideration given in the transaction valued at the market price on the date of the transaction being $1.00 per share.