EX-99.3 5 v093287_ex99-3.htm Unassociated Document

Agfeed Industries, Inc.
and Lushan Breeder Pig Farm Co., Ltd.
Pro Forma Combined Financial Statements
(unaudited)









Contents
 

   
 
Page
Pro Forma Combined Financial Statements:
  
   
Pro Forma Combined Balance Sheet as of September 30, 2007 (unaudited)
F-1
   
Pro Forma Combined Statements of Operations for the Nine Months Ended September 30, 2007 (unaudited)
F-2
   
Pro Forma Combined Statements of Operations for the Year Ended December 31, 2006 (unaudited)
F-3
   
Notes to Pro Forma Combined Financial Statements (unaudited)
F-4






Agfeed Industries, Inc.
and Lushan Breeder Pig Farm Co., Ltd.
Pro Forma Combined Balance Sheet
September 30, 2007
(unaudited)
 
                                 
                                 
 
    
Agfeed
          
Pro forma
          
Pro forma
  
 
    
Industries (1) 
    
Lushan (2)
 
  
Adjustments
          
Combined
  
 
    
(historical)
    
(historical)
 
                  
                                 
ASSETS
                                
                                 
CURRENT ASSETS
                                
Cash and cash equivalents 
  
$
10,007,903
  
$
120,990
  
$
(3,109,880
)
  
a,b
 
$
7,019,013
 
Accounts receivable, net 
    
6,346,163
   
1,188
   
(82,185
)
  
c
   
6,265,166
 
Advances to supplier 
    
75,352
                     
75,352
 
Other receivables 
    
307,008
   
4,405
               
311,413
 
Due from related parties 
          
6,575
               
6,575
 
Inventory 
    
1,230,528
   
112,489
               
1,343,017
 
Prepaid expenses and other current assets 
    
907,545
   
716
               
908,261
 
                                 
TOTAL CURRENT ASSETS
    
18,874,499
   
246,363
   
(3,192,065
)
        
15,928,797
 
                                 
PROPERTY AND EQUIPMENT, net
    
1,419,649
   
390,085
               
1,809,734
 
CONSTRUCTION IN PROGRESS
          
594,295
               
594,295
 
INTANGIBLE ASSETS
    
554,584
                     
554,584
 
GOODWILL
                
2,111,786
   
a
   
2,111,786
 
                                 
                                 
TOTAL ASSETS
  
$
20,848,732
  
$
1,230,743
  
$
(1,080,279
)
      
$
20,999,196
 
                                 
                                 
LIABILITIES AND STOCKHOLDERS' EQUITY
                                
                                 
CURRENT LIABILITIES
                                
Accounts payable 
  
$
1,567,214
  
$
86,075
  
$
(82,185
)
  
c
 
$
1,571,104
 
Other payables 
    
44,158
   
64,961
               
109,119
 
Unearned revenue 
    
71,073
                     
71,073
 
Accrued expenses 
    
290,245
                     
290,245
 
Accrued payroll 
    
162,215
   
3,011
               
165,226
 
Notes payable 
    
1,718,978
                     
1,718,978
 
Advances from related parties 
          
410,280
   
(410,280
)
  
b
   
-
 
Due to related party 
          
10,218
               
10,218
 
Tax and welfare payable 
    
214,092
   
3,071
               
217,163
 
                                 
TOTAL CURRENT LIABILITIES
    
4,067,975
   
577,616
   
(492,465
)
        
4,153,126
 
                                 
                                 
MINORITY INTEREST
    
-
   
-
   
65,313
   
a
   
65,313
 
                                 
STOCKHOLDERS' EQUITY
                            
-
 
Common Stock 
    
27,027
   
766,239
   
(766,239
)
  
a
   
27,027
 
Additional paid in capital 
    
10,063,855
                     
10,063,855
 
Other comprehensive income 
    
438,916
   
18,066
   
(18,066
)
  
a
   
438,916
 
Statutory reserve 
    
547,650
                     
547,650
 
Retained earnings 
    
5,703,309
   
(131,178
)
  
131,178
   
a
 
  
5,703,309
 
                                 
TOTAL STOCKHOLDERS' EQUITY
    
16,780,757
   
653,127
   
(653,127
)
        
16,780,757
 
                                 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
  
$
20,848,732
  
$
1,230,743
  
$
(1,080,279
)
      
$
20,999,196
 
 
(1) Source: unaudited financial statements of AgFeed Industries, Inc. and Subsidiaries as of September 30, 2007 as filed in Quarterly Report on Form 10QSB filed with the SEC on October 31, 2007.
(2) Source: unaudited financial statements of Lushan Breeder Pig Farm Co., Ltd. as of June 30, 2007 included at Exhibit 99.2 of this Current Report on Form 8-K.
 
See accompanying notes to pro forma combined financial statements

F-1
 
Agfeed Industries, Inc.
and Lushan Breeder Pig Farm Co., Ltd.
Pro Forma Combined Statement of Operations
For the Nine Months Ended September 30, 2007
(unaudited)
 
 
    
Agfeed
          
Pro forma
          
Pro forma
  
 
    
Industries (1) 
    
Lushan (2)
 
  
Adjustments
          
Combined
  
 
    
(historical)
    
(historical)
 
                  
                                 
Net Revenue
  
$
23,757,731
  
$
25,033
  
$
-
       
$
23,782,764
 
                                 
Cost of Revenue
    
16,961,534
   
32,391
   
-
         
16,993,925
 
                                 
Gross Profit (Loss)
    
6,796,197
   
(7,358
)
  
-
         
6,788,839
 
                                 
Operating expenses:
                                
Selling expenses
    
1,587,168
   
352
   
-
         
1,587,520
 
General and administrative expenses
    
953,250
   
44,181
               
997,431
 
                                 
Total operating expenses
    
2,540,418
   
44,533
   
-
         
2,584,951
 
                                 
Income from operations
    
4,255,779
   
(51,891
)
  
-
         
4,203,888
 
                                 
Non-operating income (expense):
                                
Other income (expense)
    
14,011
   
(398
)
              
13,613
 
Interest income
    
99,473
   
74
               
99,547
 
Interest expense
    
(94,662
)
  
(11,173
)
  
-
         
(105,835
)
                                 
Total non-operating income (expense)
    
18,822
   
(11,497
)
  
-
         
7,325
 
                                 
Income before income tax and minority interest
    
4,274,601
   
(63,388
)
  
-
         
4,211,213
 
                                 
Income tax benefit
    
(40,756
)
  
-
   
-
         
(40,756
)
                                 
Income before minority interest
    
4,315,357
   
(63,388
)
  
-
         
4,251,969
 
                                 
Minority interest in subsidiary loss
    
-
   
-
   
6,388
   
d
   
6,388
 
                                 
Net income
  
$
4,315,357
  
$
(63,388
)
$
6,388
       
$
4,258,357
 
                                 
                                 
Earnings per share
    
0.17
                   
$
$0.17
 
                                 
Weighted average shares outstanding
    
25,778,831
                     
25,778,831
 
                                 
                                 
                                 
 
(1) Source: unaudited financial statements of AgFeed Industries, Inc. and Subsidiaries for the nine months ended September 30, 2007 as filed in Quarterly Report on Form 10QSB filed with the SEC on October 31, 2007.
(2) Source: unaudited financial statements of Lushan Breeder Pig Farm Co., Ltd. for six months ended of June 30, 2007 included at Exhibit 99.2 of this Current Report on Form 8-K.
 
See accompanying notes to pro forma combined financial statements

F-2
 
Agfeed Industries, Inc.
and Lushan Breeder Pig Farm Co., Ltd.
Pro Forma Combined Statement of Operations
For the Year Ended December 31, 2006
(unaudited)
                                 
 
                
Pro forma
          
Pro forma
  
 
    
Agfeed
          
Adjustments
          
Combined
  
 
    
Industries (1)
    
Lushan (2)
 
                  
                                 
Net Revenue
  
$
8,594,876
  
$
-
  
$
-
       
$
8,594,876
  
                                 
Cost of Revenue
    
5,446,332
   
-
   
-
         
5,446,332
 
                                 
Gross Profit
    
3,148,544
   
-
   
-
         
3,148,544
 
                                 
Operating expenses:
                                
Selling expenses
    
1,287,110
         
-
         
1,287,110
 
General and administrative expenses
    
827,540
   
39,913
               
867,453
 
                                 
Total operating expenses
    
2,114,650
   
39,913
   
-
         
2,154,563
 
                                 
Income from operations
    
1,033,894
   
(39,913
)
  
-
         
993,981
 
                                 
Non-operating income (expense):
                                
Other income (expense)
    
35,681
   
(943
)
              
34,738
 
Interest income
    
28,851
   
58
               
28,909
 
Interest expense
    
(23,532
)
  
(7,594
)
  
-
         
(31,126
)
                                 
Total non-operating income (expense)
    
41,000
   
(8,479
)
  
-
         
32,521
 
                                 
Income before income tax
    
1,074,894
   
(48,392
)
  
-
         
1,026,502
 
                                 
Income tax benefit
    
(100,386
)
  
-
   
-
         
(100,386
)
                                 
Income before minority interest
    
1,175,280
   
(48,392
)
  
-
         
1,126,888
 
                                 
Minority interest in subsidiary loss
    
-
   
-
   
4,839
   
d
   
4,839
 
                                 
Net income
  
$
1,175,280
  
$
(48,392
)
$
4,839
       
$
1,131,727
  
                                 
                                 
Earnings per share
    
0.07
 
$
                
$
0.06
 
                                 
Weighted average shares outstanding
    
17,911,296
                     
17,911,296
 
                                 
                                 
                                 
 
(1) Source: audited financial statements of AgFeed Industries, Inc. and Subsidiaries for the year ended December 31, 2006 as filed in Annual Report on Form 10KSB filed with the SEC on March 31, 2007.
(2) Source: audited financial statements of Lushan Breeder Pig Farm Co., Ltd. for the year ended December 31, 2006 included at Exhibit 99.2 of this Current Report on Form 8-K.

F-3
 
Agfeed Industries, Inc.
and Lushan Breeder Pig Farm Co., Ltd.
Notes to Pro forma Combined Financial Statements



NOTE 1 - BASIS OF PRESENTATION
 
On November 6, 2007, Agfeed Industries, Inc., (“Agfeed”), Lushan Breeder Pig Farm Co., Ltd. (“Lushan”) and Huaping Yang and Hongyun Luo being the holders of 90% of the issued and outstanding shares of Lushan entered into a stock purchase agreement whereby Agfeed agreed to purchase the shares of Lushan owned by Huaping Yang and Hongyun Luo for RMB 20,112,020 (equivalent of $2,699,600 at an exchange rate of $1.00 = RMB 7.45) in cash. The agreement also provided that upon the closing of the Lushan shares, Agfeed would also pay off certain third-party debt owed by Lushan in the amount of RMB 4,919,980 (equivalent to $660,400 at the same exchange rate). The accompanying pro forma combined balance sheet presents the accounts of Agfeed and Lushan as if the acquisition of the Lushan shares by Agfeed occurred on September 30, 2007. The accompanying pro forma combined statements of operations present the accounts of Agfeed and Lushan for the nine months ended September 30, 2007 and for the year ended December 31, 2006 as if the acquisition occurred on January 1, 2006.
 
The following adjustments would be required if the acquisition occurred as indicated above:

a.  
Allocation of the purchase price to the assets acquired and liabilities assumed. The excess purchase price is being allocated to goodwill;

b.  
To show the repayment of Lushan debt by Agfeed upon the closing of the transaction;

c.  
Eliminate intercompany receivables and payables;

d.  
Record minority interest for 10% of Lushan not owned by Agfeed.
 
 
 
F-4