EX-99.9 30 v055516_ex99-9.htm Unassociated Document
Exhibit 99.9

Pro Forma Financial Information

INDEX TO PRO FORMA FINANCIAL INFORMATION

Unaudited Pro Forma Combined Financial Statements (Introductory Note)
2
Unaudited Pro Forma Combined Balance Sheets as of June 30, 2006
3
Unaudited Pro Forma Combined Statement of Operations for the Year Ended December 31, 2005
4
Unaudited Pro Forma Combined Statement of Operations for the Six Months Ended June 30, 2006
5
Notes to Unaudited Pro Forma Combined Financial Statements
6

1
 

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

The following unaudited pro forma condensed combined financial statements are presented to illustrate the estimated effects of our acquisition of Hangson Limited (“Hangson”) contemplated under the Agreement and Plan of Share Exchange which was closed on October 20, 2006 (“Exchange Transaction”) on our historical financial position and our results of operations. We have derived our historical consolidated financial data as of and for the twelve months ended December 31, 2005 from our audited consolidated financial statements and unaudited condensed consolidated financial statements incorporated by reference herein. We have derived our historical consolidated financial data as of and for the six months ended June 30, 2006 from our audited consolidated financial statements and unaudited condensed consolidated financial statements incorporated by reference herein. We have derived Hangson’s historical consolidated financial data for the year ended December 31, 2005 from Hangson’s audited consolidated financial statements, and have derived Hangson’s historical consolidated financial data as of and for the six months ended June 30, 2006 from Hangson’s unaudited condensed consolidated financial statements, in each case, which are included elsewhere in this Form 8-K.

The unaudited pro forma combined statements of operations for the year ended December 31, 2005 and the six months ended June 30, 2006 assume that the Exchange Transaction was consummated on January 1, 2005. The unaudited pro forma combined balance sheet as of June 30, 2006 assumes the Exchange Transaction was consummated on that date. The information presented in the unaudited pro forma condensed combined financial statements does not purport to represent what our financial position or results of operations would have been had the Exchange Transaction occurred as of the dates indicated, nor is it indicative of our future financial position or results of operations for any period. You should not rely on this information as being indicative of the historical results that would have been achieved had the companies always been combined or the future results that the combined company will experience after the Exchange Transaction.

The pro forma adjustments are based upon available information and certain assumptions that we believe are reasonable under the circumstances.

These unaudited pro forma condensed combined financial statements should be read in conjunction with the accompanying notes and assumptions and the historical consolidated financial statements and related notes of us and Hangson.

2
 
 
ENDO NETWORKS, INC AND SUBSIDIARIES
- SUCCESSOR TO HANGSON LIMITED
PRO FORMA COMBINED BALANCE SHEET (UNAUDITED)
AS OF JUNE 30, 2006

   
ENDO
  
Hangson
  
Pro Forma Adjustments [1]
  
Pro Forma
  
   
(Unaudited)
  
(Unaudited)
  
[2]
  
[3]
  
[4]
  
[5]
  
[6]
 
[7]
  
[8]
  
(Unaudited)
  
ASSETS
                                                              
CURRENT ASSETS:
                                                              
Cash and cash equivalents
  
$
331
  
$
6,278,493
                
(425,000
)
  
(75,000
)
        
(331
)
      
$
5,778,493
  
Accounts receivable, net
    
134,030
   
708,168
                                 
(134,030
)
        
708,168
 
Inventories
    
-
   
18,058
                                             
18,058
 
Amount due from a director
    
-
   
114,543
                                             
114,543
 
Deposits and prepaid expenses
    
63,018
   
98,139
                                 
(63,018
)
        
98,139
 
Other receivables
    
-
   
382,523
                                             
382,523
 
Total current assets
    
197,379
   
7,599,924
                                             
7,099,924
 
NON-CURRENT ASSETS
                                                              
Prepaid rental
    
-
   
22,263
                                             
22,263
 
Long-term loan to a related party
    
-
   
375,600
                                             
375,600
 
Intangible assets, net
    
-
   
587,682
                                             
587,682
 
Property, plant and equipment, net
    
333,961
   
349,033
                                 
(333,961
)
        
349,033
 
Property held for sale
    
-
   
2,325,330
                                             
2,325,330
 
                                                               
Total non-current assets
    
333,961
   
3,659,908
                                             
3,659,908
 
TOTAL ASSETS
  
$
531,340
  
$
11,259,832
                                            
$
10,759,832
  
LIABILITIES AND STOCKHOLDERS' (DEFICIT) / EQUITY
                                                              
CURRENT LIABILITIES
                                                              
Current maturities of capital lease payable
  
$
178,365
  
$
-
                                  
(178,365
)
        
-
 
Accounts payable, other payables and Accrued liabilities
    
902,503
   
503,658
               
(425,000
)
              
(477,503
)
        
503,658
 
Deposit receipt
    
-
   
500,800
                                             
500,800
 
Taxes payable
    
-
   
40,924
                                             
40,924
 
Total current liabilities
    
1,080,868
   
1,045,382
                                             
1,045,382
 
MINORITY INTEREST, net of $37,560 amount due from the minority interest
    
-
   
-
                                             
-
 
COMMITMENTS AND CONTINGENCIES
          
 
                                              
 
  
STOCKHOLDERS' EQUITY
                                                              
Common stock
    
13,557
   
10,000
   
(5,772
)
  
(5,559
)
              
2,007
   
23,993
   
(10,000
)
  
28,226
 
Additional paid-in capital
    
429,263
   
8,650,116
   
5,772
   
5,559
               
(2,007
)
  
(891,813
)
  
10,000
   
8,206,890
 
Statutory reserves
    
-
   
159,371
                                             
159,371
 
Accumulated other comprehensive income
    
116,480
   
206,090
                                 
(116,480
)
        
206,090
 
(Accumulated deficit) Retained earnings
   
(1,108,828
)
  
1,188,873
                     
(75,000
)
        
1,108,828
         
1,113,873
 
Total stockholders' (deficit) / equity
    
(549,528
)
  
10,214,450
                                             
9,714,450
 
Total liabilities and stockholders' equity
  
$
531,340
  
$
11,259,832
                                            
$
10,759,832
  
 
3
 
ENDO NETWORKS, INC AND SUBSIDIARIES
- SUCCESSOR TO HANGSON LIMITED
PRO FORMA COMBINED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 2005

   
Endo
      
Hangson
  
Pro Forma Adjustments [1]
  
Pro Forma
  
   
(Unaudited)
      
(Unaudited)
  
[7]
  
(Unaudited)
  
REVENUE
  
$
1,504,557
        
$
5,426,591
    
(1,504,557
)
$
5,426,591
  
COST OF GOOD SOLD
    
(724,910
)
        
(4,417,584
)
  
724,910
   
(4,417,584
)
GROSS PROFIT
    
779,647
         
1,009,007
         
1,009,007
 
OPERATING EXPENSES
                                
Selling expenses
    
-
         
(143,231
)
        
(143,231
)
General and administrative expenses
    
(926,300
)
        
(475,938
)
  
926,300
   
(475,938
)
Total operating expenses
    
(926,300
)
        
(619,169
)
        
(619,169
)
(LOSS) / INCOME FROM OPERATIONS
    
(146,653
)
        
389,838
         
389,838
 
OTHER INCOME, net
    
-
         
452,854
         
452,854
 
(LOSS) / INCOME BEFORE INCOME TAXES
    
(146,653
)
        
842,692
         
842,692
 
PROVISION FOR INCOME TAXES
    
-
         
-
         
-
 
NET (LOSS) / INCOME
   
(146,653
)
        
842,692
         
842,692
 
OTHER COMPREHENSIVE INCOME
                                
Foreign currency translation adjustment
    
-
         
125,594
         
125,594
 
COMPREHENSIVE (LOSS) / INCOME
  
$
(146,653
)
      
$
968,286
        
$
968,286
  
Basic (loss)/ earnings per share
  
$
(0.01
)
  
[9]
 
            
$
0.04
  
Weighted average number of common share outstanding    
23,993,080
   
[10]
 
              
23,993,080
 
 
4
 
ENDO NETWORKS, INC AND SUBSIDIARIES
- SUCCESSOR TO HANGSON LIMITED
PRO FORMA COMBINED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 2006
   
Endo
      
Hangson
  
Pro Forma Adjustments [1]
  
Pro Forma
  
   
(Unaudited)
      
(Unaudited)
  
[5]
  
[7]
  
(Unaudited)
  
REVENUE
  
$
384,597
        
$
3,913,102
          
(384,597
)
$
3,913,102
  
COST OF GOOD SOLD
    
(154,417
)
        
(2,929,615
)
        
154,417
   
(2,929,615
)
GROSS PROFIT
    
230,180
         
983,487
               
983,487
 
OPERATING EXPENSES
                                      
Selling expenses
    
-
         
(154,314
)
              
(154,314
)
General and administrative expenses
    
(607,984
)
        
(171,317
)
        
607,984
   
(171,317
)
Total operating expenses
    
(607,984
)
        
(325,631
)
              
(325,631
)
(LOSS) / INCOME FROM OPERATIONS
    
(377,804
)
        
657,856
               
657,856
 
MERGER COST
    
-
         
-
   
(75,000
)
        
(75,000
)
OTHER INCOME, net
    
-
         
187,339
               
187,339
 
(LOSS) / INCOME BEFORE INCOME TAXES
    
(377,804
)
        
845,195
               
770,195
 
PROVISION FOR INCOME TAXES
    
-
         
(104,304
)
              
(104,304
)
NET (LOSS) / INCOME
   
(377,804
)
        
740,891
               
665,891
 
OTHER COMPREHENSIVE INCOME
                                      
Foreign currency translation adjustment
    
-
         
80,496
               
80,496
 
COMPREHENSIVE (LOSS) / INCOME
  
$
(377,804
)
      
$
821,387
              
$
746,387
  
Basic (loss)/ earnings per share
  
$
(0.02
)
  
[9]
 
                  
$
0.03
  
                                       
Weighted average number of common share outstanding
    
23,993,080
   
[10]
 
                    
23,993,080
 

5
 

NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS

1.  
Because Hangson’s former owners have received the majority voting rights in the combined entity and Hangson’s senior management has been appointed to represent the majority of the senior management of the combined entity following the Exchange Transaction, the Exchange Transaction is deemed to be a reverse acquisition. In accordance with the Accounting and Financial Reporting Interpretations and Guidance prepared by the staff of the U.S. Securities and Exchange Commission, Endo Networks, Inc. (“Endo”, the legal acquirer) is considered the accounting acquiree and Hangson (the legal acquiree) is considered the accounting acquirer. The consolidated financial statements of the combined entity will in substance be those of Hangson, with the assets and liabilities, and revenues and expenses, of Endo being included effective from the date of consummation of the Exchange Transaction. Endo is deemed to be a continuation of the business of Hangson. The outstanding stock of Endo prior to the Exchange Transaction will be accounted for at their net book value and no goodwill will be recognized.

2.  
Reflects the share cancellation of 5,771,750 shares of Common Stock of the existing shareholders of Endo.

3.  
Reflects the one-for-five reverse stock split of Common Stock of the existing shareholders of Endo.

4.  
Reflects the payment of $425,000 by Hangson to Endo’s creditors to satisfy the obligations as set forth in the Exchange Agreement.

5.  
Reflects the payment of $75,000 by Hangson to Viking Partners Inc. (“Viking”) as further compensation for Viking’s services.

6.  
Reflects the issuance of 2,006,920 shares of Common Stock by Endo to Viking.

7.  
Reflects the issuance of 23,993,080 shares of Common Stock by Endo (as legal acquirer) for the reverse acquisition of all issued and outstanding shares of capital stock of Hangson (as legal acquiree, but accounting acquirer), and the elimination of the pre-acquisition losses of Endo.

8.  
Reflects the elimination of all issued and outstanding shares of capital stock of Hangson.
 
9.  
The historical earnings per share is computed based on the historical income of Hangson as Hangson is considered the accounting acquirer and thus the predecessor.

10.  
The weighted average number of shares used for computing the historical earnings per share is based on the number of shares issued in the reverse acquisition of Hangson by Endo.
 
6