EX-99.2 21 v093206_ex99-2.htm Unassociated Document
CHINA RUITAI INTERNATIONAL HOLDINGS CO., LTD.
AND
SUBSIDIARIES
 
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
 
AT DECEMBER 31, 2006 AND FOR SEX MONTHS ENDED JUNE 30, 2007

 
 
1
 

CHINA RUITAI INTERNATIONAL HOLDINGS CO., LTD. AND SUBSIDIARIES
 
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
 
DECEMBER 31, 2006
 
     
 Pacific Capital
 Group Co., Ltd.
    
China Ruitai International
Holdings Co., Ltd.
    
Pro Forma
Adjustments
  
Pro Forma
Consolidated
Balance Sheet
  
ASSETS
                          
Current Assets:                          
Cash and cash equivalents
  
$
6,286,289
 
$
-
      
$
6,286,289
  
Bank checks and commercial paper
    
1,191,451
   
-
       
1,191,451
 
Accounts receivable, net
    
3,364,632
   
-
       
3,364,632
 
Due from unaffiliated suppliers
    
930,213
   
-
       
930,213
 
Prepaid expenses
    
2,360,481
   
-
       
2,360,481
 
Inventory
    
5,209,747
   
-
       
5,209,747
 
Advance to employees
    
56,735
   
-
       
56,735
 
Total current assets
    
19,399,548
   
-
       
19,399,548
 
 
                  
Property and Equipment, net
    
6,592,796
   
-
       
6,592,796
 
 
                  
Land use right, net
    
4,650,814
   
-
       
4,650,814
 
 
                  
Long-term investment
    
779,200
   
-
       
779,200
 
 
                  
Due from a shareholder
    
8,804,112
   
-
       
8,804,112
 
 
                  
Restricted cash
    
12,244,750
   
-
       
12,244,750
 
 
                  
Total Assets
  
$
52,471,220
 
$
-
      
$
52,471,220
  
 
                  
LIABILITIES AND OWNERS' EQUITY
                  
 
                  
Current Liabilities:
                  
Bank loan
  
$
16,209,608
 
$
-
      
$
16,209,608
  
Bank checks payable
    
22,050,400
   
-
       
22,050,400
 
Accounts payable and accrued expenses
    
5,542,712
   
6,241
 (a)
  
(6,241
)
  
5,542,712
 
Taxes payable
    
2,221,823
   
-
       
2,221,823
 
Deferred revenue
    
493,807
   
-
       
493,807
 
Due to employees
    
890,984
   
-
       
890,984
 
Employee security deposit
    
677,949
   
-
   
 
    
677,949
 
Total Current Liabilities
    
48,087,283
   
6,241
       
48,087,283
 
 
                  
Minority Interest
    
43,839
   
-
       
43,839
 
 
                  
Owners' Equity:
                  
Common stock
    
100
   
2,055
 (b)
  
(100
)
    
 
            
22,645
   
24,700
 
Additional paid-in capital
    
2,392,071
   
2,140,310
 (b)
  
(2,142,365
)
    
       
 
 (b)
  
100
     
       
 
 (b)
  
(22,645
)
  
2,367,471
 
Unamortized shareholder services
    
-
   
 
 (a)
  
-
   
-
 
Statutory Reserves
    
270,249
   
-
       
270,249
 
Retained earnings (Accumulated deficit)
    
1,597,294
   
(2,011,964)
 (a)
  
2,011,964
   
1,597,294
 
Deficit accumulated during the development stage
    
-
   
(136,642)
 (a)
  
136,642
   
-
 
Accumulated other comprehensive income
    
80,384
   
-
   
 
    
80,384
 
Owners' Equity
    
4,340,098
   
(6,241)
      
4,340,098
 
Total Liabilities and Owners' Equity
  
$
52,471,220
 
$
-
    
 
  
$
52,471,220
  
 
See Notes to Unauidted Pro Forma Consolidated Financial Statements
 
2
CHINA RUITAI INTERNATIONAL HOLDINGS CO., LTD. AND SUBSIDIARIES
 
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
 
FOR THE YEAR ENDED DECEMBER 31, 2006
 
     


 Pacific Capital
Group Co., Ltd.
    

China Ruitai International 
Holdings Co., Ltd.
    

Pro Forma
Adjustments
    
Pro Forma
Consolidated
Statements of Operation
  
Revenues
                          
Sales
  
$
28,090,238
 
$
-
      
$
28,090,238
  
Costs of Sales
    
19,153,553
   
-
         
19,153,553
 
Gross Profit
    
8,936,685
   
-
         
8,936,685
 
                           
Operating Expenses
                          
                           
Selling expenses
                          
Sales commission
    
738,526
   
-
         
738,526
 
Freight-out
    
856,850
   
-
         
856,850
 
Travel and entertainment
    
385,360
   
-
         
385,360
 
Other selling expenses
    
147,363
   
-
         
147,363
 
Total selling expenses
    
2,128,099
   
-
         
2,128,099
 
                           
General and administrative expenses
                          
Payroll and employees benefits
    
209,242
   
-
         
209,242
 
Insurance
    
139,989
   
-
         
139,989
 
Professional fees
    
105,206
   
-
         
105,206
 
Bad debt expenses
    
88,176
   
-
         
88,176
 
Repair and maintenance
    
525,176
   
-
         
525,176
 
Travel and entertainment
    
148,569
   
-
         
148,569
 
Other general and administrative
    
274,760
   
54,514
         
329,274
 
Total Operating Expenses
    
1,491,118
   
54,514
         
1,545,632
 
                           
Total Operating Expenses
    
3,619,217
   
54,514
         
3,673,731
 
                           
Income (Loss) from Operation
    
5,317,468
   
(54,514
)
        
5,262,954
 
                           
Other Income (Expense)
                          
Interest income
    
331,259
   
-
         
331,259
 
Interest expense
    
(1,159,076
)
  
-
         
(1,159,076
)
Other income (expense)
    
(151,992
)
  
-
         
(151,992
)
Total other income (expense)
    
(979,809
)
  
-
         
(979,809
)
                           
Income (Loss) before Provision
                          
Income Tax and Minority Interest
    
4,337,659
   
(54,514
)
        
4,283,145
 
                           
Provision for Income Tax
    
1,301,297
   
-
         
1,301,297
 
                           
Income before Minority Interest
    
3,036,362
   
(54,514
)
        
2,981,848
 
                           
Minority Interest
    
(30,364
)
  
-
         
(30,364
)
                           
Net Income
    
3,005,998
   
(54,514
)
        
2,951,484
 
                           
Other Comprehensive Income (Loss)
                          
Effects of Foreign Currency Conversion
    
104,613
   
-
         
104,613
 
                           
Comprehensive Income (Loss)
  
$
3,110,611
 
$
(54,514
)
      
$
3,056,097
  
                           
Basic and Fully Diluted Earnings per Share
                    
$
0.12
  
                           
Weighted average shares outstanding
                      
24,700,000
 
                           
See Notes to Unauidted Pro Forma Consolidated Financial Statements
 
3
 
CHINA RUITAI INTERNATIONAL HOLDINGS CO., LTD. AND SUBSIDIARIES
 
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
 
JUNE 30, 2007 
 
     
Pacific Capital
Group Co., Ltd.
    
China Ruitai International
Holdings Co., Ltd.
    

Pro Forma
Adjustments
    
Pro Forma
Consolidated
Balance Sheet
  
ASSETS
                          
Current Assets:
                          
                           
Cash and cash equivalents
  
$
2,204,550
 
$
-
        
$
2,204,550
  
Bank checks and commercial paper
    
3,296,772
   
-
         
3,296,772
 
Accounts receivable, net
    
5,374,585
   
-
         
5,374,585
 
Due from unaffiliated suppliers
    
304,671
   
-
         
304,671
 
Prepaid expenses
    
4,789,255
   
-
         
4,789,255
 
Inventory
    
4,949,837
   
-
         
4,949,837
 
Advance to employees
    
126,017
   
-
         
126,017
 
Total current assets
    
21,045,687
   
-
         
21,045,687
 
                           
Property and Equipment, net
    
8,846,633
   
-
         
8,846,633
 
                           
Land use right, net
    
4,709,772
   
-
         
4,709,772
 
                           
Long-term investment
    
797,136
   
-
         
797,136
 
                           
Due from a shareholder
    
11,340,367
   
-
         
11,340,367
 
                           
Restricted cash
    
14,242,718
   
-
         
14,242,718
 
                           
Total Assets
  
$
60,982,313
 
$
-
        
$
60,982,313
  
                           
LIABILITIES AND OWNERS' EQUITY
                          
                           
Current Liabilities:
                          
Bank loan
  
$
15,861,401
 
$
-
        
$
15,861,401
  
Bank checks payable
    
23,730,458
   
-
         
23,730,458
 
Accounts payable and accrued expenses
    
7,525,899
   
1,125
 (a)
  
(1,125
)
  
7,525,899
 
Taxes payable
    
3,296,282
   
-
         
3,296,282
 
Deferred revenue
    
1,756,628
   
-
         
1,756,628
 
Due to employees
    
777,908
   
-
         
777,908
 
Employee security deposit
    
734,375
   
-
         
734,375
 
Total Current Liabilities
    
53,682,951
   
1,125
         
53,682,951
 
                           
Minority Interest
    
72,994
   
-
         
72,994
 
                           
Owners' Equity:
                          
Common stock
    
100
   
3,355
 (b)
  
(100
)
      
 
          
 
  (b)  
22,645
   
26,000
 
Additional paid-in capital
    
2,392,071
   
2,433,752
 (a)
  
(2,437,107
)
      
 
          
 
  (b)  
100
       
 
          
 
 (b)
  
(22,645
)
  
2,366,171
 
Unamortized shareholder services
    
-
   
(246,278)
 (a)
  
246,278
   
-
 
Statutory Reserves
    
270,249
   
-
         
270,249
 
Retained earnings (Accumulated deficit)
    
4,345,873
   
(2,011,964)
 (a)
  
2,011,964
   
4,345,873
 
Deficit accumulated during the development stage
    
-
   
(179,990)
 (a)
  
179,990
   
-
 
Accumulated other comprehensive income
    
218,075
   
-
         
218,075
 
Owners' Equity
    
7,226,368
   
(1,125)
 
        
7,226,368
 
Total Liabilities and Owners' Equity
  
$
60,982,313
 
$
-
        
$
60,982,313
  

See Notes to Unauidted Pro Forma Consolidated Financial Statements

4
 
5
 
 
CHINA RUITAI INTERNATIONAL HOLDINGS CO., LTD. AND SUBSIDIARIES
 
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
 
FOR THE SIX MONTHS ENDED JUNE 30, 2007
 
   
 

Pacific Capital
Group Co., Ltd.
    

China Ruitai International
Holdings Co., Ltd.
    

Pro Forma
Adjustments
    
Pro Forma
Consolidated
Statements of Operation
  
Revenues
                          
Sales
  
$
16,588,463
 
$
-
        
$
16,588,463
  
Costs of Sales
    
10,553,148
   
-
       
10,553,148
 
Gross Profit
    
6,035,315
   
-
         
6,035,315
 
                           
Operating Expenses
                          
                           
Selling expenses
                          
Sales commission
    
233,039
   
-
         
233,039
 
Freight-out
    
460,442
   
-
         
460,442
 
Travel and entertainment
    
180,940
   
-
         
180,940
 
Other selling expenses
    
122,950
   
-
         
122,950
 
Total selling expenses
    
997,371
   
-
         
997,371
 
                           
General and administrative expenses
                          
Payroll and employees benefits
    
94,336
   
-
         
94,336
 
Insurance
    
151,127
   
-
         
151,127
 
Professional fees
    
10,000
   
-
         
10,000
 
Bad debt expenses
    
-
   
-
         
-
 
Repair and maintenance
    
13,956
   
-
         
13,956
 
Travel and entertainment
    
102,376
   
-
         
102,376
 
Other general and administrative
    
206,114
   
43,348
         
249,462
 
Total Operating Expenses
    
577,909
   
43,348
         
621,257
 
                           
Total Operating Expenses
    
1,575,280
   
43,348
         
1,618,628
 
                           
Income (Loss) from Operation
    
4,460,035
   
(43,348
)
        
4,416,687
 
                           
Other Income (Expense)
                          
Interest income
    
95,575
   
-
         
95,575
 
Interest expense
    
(686,441
)
  
-
         
(686,441
)
Other income (expense)
    
97,035
   
-
         
97,035
 
Total other income (expense)
    
(493,831
)
  
-
         
(493,831
)
                           
Income (Loss) before Provision
                          
Income Tax and Minority Interest
    
3,966,204
   
(43,348
)
        
3,922,856
 
                           
Provision for Income Tax
    
1,189,862
   
-
         
1,189,862
 
                           
Income before Minority Interest
    
2,776,342
   
(43,348
)
        
2,732,994
 
                           
Minority Interest
    
(27,763
)
  
-
         
(27,763
)
                           
Net Income
    
2,748,579
   
(43,348
)
        
2,705,231
 
                           
Other Comprehensive Income (Loss)
                          
Effects of Foreign Currency Conversion
    
137,691
   
-
         
137,691
 
                           
Comprehensive Income (Loss)
  
$
2,886,270
 
$
(43,348
)
      
$
2,842,922
  
                           
Basic and Fully Diluted Earnings per Share
                    
$
0.11
  
                           
Weighted average shares outstanding
                      
26,000,000
 
 
See Notes to Unauidted Pro Forma Consolidated Financial Statements
 
6
 
CHINA RUITAI INTERNATIONAL HOLDINGS CO., LTD. AND SUBSIDIARIES
 
NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

Note 1- BASIS OF PRESENTATION 

On August 29, 2007, China Ruitai International Holdings Co., Ltd., a development stage company incorporated in Delaware (the "Company" or “China Ruitai”) entered into a Share Exchange Agreement (the “Exchange Agreement”) with Pacific Capital Group Co., Ltd., (“Pacific Capital Group”) a corporation incorporated under the laws of the Republic of Vanuatu, and the shareholders of Pacific Capital Group (the “Shareholders”).

Pursuant to the Exchange Agreement, the Shareholders agreed to transfer all of the issued and outstanding shares of common stock in Pacific Capital Group to China Ruitai in exchange for the issuance of an aggregate of 22,645,348 shares of outstanding common stock in China Ruitai to the Shareholders, thereby causing Pacific Capital Group to become a wholly-owned subsidiary of the Company.

The Share Exchange is being accounted for as a “reverse merger,” since the stockholders of Pacific Capital Group own a majority of the outstanding shares of the Company’s common stock immediately following the Share Exchange. Pacific Capital Group is deemed to be the acquirer in the reverse merger. Consequently, the assets and liabilities and the historical operations that will be reflected in the financial statements for periods prior to the Share Exchange will be those of Pacific Capital Group and its subsidiary and will be recorded at the historical cost basis of Pacific Capital Group. After completion of the Share Exchange, the Company’s consolidated financial statements will include the assets and liabilities of both China Ruitai and Pacific Capital Group, the historical operations of Pacific Capital Group and the operations of the Company and its subsidiaries from the closing date of the Share Exchange.

Audited financial statements of Pacific Capital Group and China Ruitai for the years ended December 31, 2006, and unaudited financial statements of Pacific Capital Group and China Ruitai for the six months ended June 30, 2007 have been used in the preparation of these pro forma consolidated financial statements. These pro forma consolidated financial statements should be read in conjunction with the historical financial statements of Pacific Capital Group and China Ruitai.
 
7

CHINA RUITAI INTERNATIONAL HOLDINGS CO., LTD. AND SUBSIDIARIES
 
NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
 
Note 2- PRO FORMA ASSUMPTIONS AND ADJUSTMENTS
 
(a)
The pro forma consolidated balance sheets as of December 31, 2006 and June 30, 2007 has been prepared assuming that the Share Exchange occurred on December 31, 2006 and June 30, 2007, respectively. Accordingly, the assets and liabilities of Pacific Capital Group is reflected in the pro forma consolidated balance sheets and is recorded at the historical cost basis.
 
(b)
The capital structure of the consolidated entity is that of China Ruitai, the dollar amount of the issued share capital in the pro forma consolidated balance sheet is that of China Ruitai immediately prior to the Exchange plus the value of shares issued by China Ruitai to acquire Pacific Capital Group.
 
(c)
The pro forma consolidated statements of operations for the year ended December 31, 2006 and six months ended June 30, 2007 has been prepared assuming the Share Exchange occurred at the beginning of the period presented. The pro forma consolidated statements of operations are not necessarily indicative of the results of operations that would have been attained had the acquisition taken place at the beginning of the period presented, and does not purport to be indicative of the effects that may be expected to occur in the future.
     
(d) The pro forma adjustments and elimination give effect to the acquisition of Pacific Capital Group using reverse merger accounting.
 
Note 3- PRO FORMA SHARE CAPITAL
 
     
June 30, 2007
    
December 31, 2006
  
     
No. of shares
    
Amount
    
No. of shares
    
Amount
  
Authorized:
                          
Preferred stock, $0.001 par value
    
10,000,000
  
$
10,000
    
10,000,000
  
$
10,000
  
Common stock, $0.001 par value
    
50,000,000
  
$
50,000
    
50,000,000
  
$
50,000
  
                           
Issued and outstanding
                          
Preferred stock
    
-
 
$
-
    
-
 
$
-
  
                           
Common stock
                          
Common stock prior to exchange
    
3,354,652
  
$
3,355
    
2,054,652
  
$
2,055
  
Common stock issued for acquisition
                          
of Pacific Capital (reverse merger)
    
22,645,348
    
22,645
   
22,645,348
    
22,645
 
     
26,000,000
  
$
26,000
    
24,700,000
  
$
24,700
  
 
8