EX-99.3 4 ex993.htm WORLDWIDE BIOTECH AND PHARMACEUTICAL COMPANY AND SUBSIDIARIES PRO FORMA FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2005 (UNAUDITED). EX-99.3
 
WORLDWIDE BIOTECH AND PHARMACEUTICAL COMPANY AND SUBSIDIARIES
PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(UNAUDITED)



NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
 
The following Unaudited Pro Forma Combined Financial Statements of Worldwide Biotech and Pharmaceutical Company and Subsidiaries ("Worldwide") and Hunan Hua Yang Pharmaceutical Co., Ltd. ("Hua Yang") and Hunan Ze An Pharmaceutical Co., Ltd. ("Ze An") give effect to the merger between Worldwide and Hua Yang and Ze An under the purchase method of accounting prescribed by Financial Accounting Standards No. 141, Business Combinations. The acquisition of Hua Yang and Ze An by Worlldwide has been accounted for as acquisitions under the purchase method for business combinations. The Hua Yang acquisition was recorded on the purchase method by allocating the purchase price over the assets acquired, including intangible assets, and liabilities assumed, based on their estimated fair values at the acquisition date. The excess of the net of amounts assigned to the assets acquired and the liabilities assumed over the purchase price was recorded as proportional reduction through property and equipment, land use right and licenses. In connection with Hua Yang acquisition, Worldwide will acquire 51% of the outstanding capital stock of Hua Yang. At the effective time of the merger, Worldwide will control 51% of Hua Yang in exchange for 482,800 shares of Worldwide's common stock. The Ze An acquisition was recorded on the purchase method by allocating the purchase price over the assets acquired, including intangible assets, and liabilities assumed, based on their estimated fair values at the acquisition date. The excess of the purchase price over the net of amounts assigned to the assets acquired and the liabilities assumed was recorded as land use right and licenses based on their estimated fair values at the acquisition date. In connection with Ze An acquisition, Worldwide will acquire 65% of the outstanding capital stock of Ze An. At the effective time of the merger, Worldwide will control 65% of Ze An in exchange for (i) 217,600 shares of Worldwide's common stock and (ii) RMB3,400,000 (Equivalent to US$421,303 at the time of merger). These pro forma combined financial statements are presented for illustrative purposes only. The pro forma adjustments are based upon available information and assumptions that management believes are reasonable. The Unaudited Pro Forma Combined Financial Statements do not purport to represent what the results of operations or financial position of Worldwide would actually have been if the merger had in fact occurred on January 1, 2005, nor do they purport to project the results of operations or financial position of Worldwide for any future period or as of any date, respectively.
 
These Unaudited Pro Forma Combined Financial Statements do not give effect to any restructuring costs or to any potential cost savings or other operating efficiencies that could result from the merger between Worldwide, and Hua Yang and Ze An.

-1-
 
PRO FORMA COMBINED BALANCE SHEET
  
December 31, 2005
  
(Unaudited)
  
   
 
   
Worldwide Biotech
                                  
   
and Pharmaceutical
  
Hua Yang
  
Ze An
                          
   
Company and
  
Pharmaceutical
  
Pharmaceutical
      
Pro forma Adjustments
      
Pro Forma
  
   
Subsidiaries
  
Co., Ltd.
  
Co., Ltd.
  
 
  
Dr.
      
Cr.
      
Combined
  
                                       
                                       
ASSETS
                          
                                       
CURRENT ASSETS:
                                
Cash
  
$
94,570
  
$
1,314
  
$
12,340
    
$             -
 
$              -
$
108,224
Marketable securities
    
228,699
   
-
   
-
   
-
 
-
 
228,699
Accounts receivable
    
11,337
   
40,891
   
89,901
   
-
 
-
 
142,129
Inventories
    
5,276
   
116,640
   
235,305
   
-
 
-
 
357,221
Prepaid expenses and other current assets
    
54,770
   
79,562
   
17,949
   
-
 
-
 
152,281
                                 
Total Current Assets
    
394,652
   
238,407
   
355,495
   
-
 
-
 
988,554
                                 
ADVANCES
    
435,219
   
(271,436
)
  
(163,783
)
  
-
 
-
 
-
                                 
INVESTMENTS
                    
(1)(3)
876,563
(2)(4)
876,563
 
-
                                 
PROPERTY AND EQUIPMENT, net
    
2,279,022
   
918,434
   
1,815,244
   
-
(2)(4)
200,123
 
4,812,577
                                 
LICENSES, net
    
-
   
52,382
   
-
 
(4)
440,204
(2)(4)
11,414
 
481,172
                                 
LAND USE RIGHTS, net
    
529,498
   
266,281
   
51,464
 
(4)
608,721
(2)(4)
58,022
 
1,397,942
                                 
Total Assets
  
$
3,638,391
  
$
1,204,068
  
$
2,058,420
    $
 1,925,488
$
1,146,122
 
$ 7,680,245
                                 
                                 
LIABILITIES AND STOCKHOLDERS' EQUITY
            
                                 
CURRENT LIABILITIES:
                                
Short-term loan
  
$
867,389
  
$
8,054
  
$
619,563
    $
 -
 
$              -
$
 1,495,006
Current portion of mortgages payable
    
30,247
   
-
   
-
   
-
 
-
 
30,247
Note payable - related party
     -    
-
   
-
   
-
(4)
421,303
 
421,303
Accounts payable
    
586,697
   
108,526
   
275,517
   
-
 
-
 
970,740
Due to related parties
    
1,197,019
   
103,326
   
34,588
   
-
 
-
 
1,334,933
Other current liabilities
    
36,955
   
99,270
   
72,792
   
-
 
-
 
209,017
 
                                
Total Current Liabilities
    
2,718,307
   
319,176
   
1,002,460
   
-
 
421,303
 
4,461,246
                                 
MORTGAGES PAYABLE, net of current portion
    
237,738
   
-
   
-
   
-
 
-
 
237,738
                                 
NOTE PAYABLE
          
-
   
1,239,127
   
-
 
-
 
1,239,127
                                 
MINORITY INTEREST
    
60,553
   
-
   
-
   
-
(2)(4)
604,528
 
665,081
                                 
Total Liabilities
    
3,016,598
   
319,176
   
2,241,587
   
-
 
1,025,831
 
6,603,192
                                 
STOCKHOLDERS' EQUITY:
                                
Common stock ($.001 Par Value; 90,000,000 Shares Authorized;
                                
39,657,102 shares issued and outstanding,
                                
40,357,502 shares pro forma)
    
39,657
   
1,340,230
   
820,244
 
(2)(4)
2,160,474
(1)(3)
700
 
40,357
Additional paid-in capital
    
10,345,434
   
5,713
   
13,742
 
(2)(4)
19,455
(1)(3)
454,560
 
10,799,994
Accumulated decifit
    
(7,982,909
)
  
(484,274
)
  
(1,017,245
)
    
(2)(4)
1,501,519
 
(7,982,909)
Deferred compesenation
    
(1,373,000
)
  
-
   
-
           
(1,373,000)
Accumulated other comprehensive loss:
                              
 
    Change in unrealized loss on marketable securities
    
(437,746
)
  
-
   
-
           
(437,746)
    Foreign currency translation gains
    
30,357
   
23,223
   
92
 
(2)(4)
23,315
 
-
 
30,357
                                 
Total Stockholders' Equity
    
621,793
   
884,892
   
(183,167
)
  
2,203,244
 
1,956,779
 
1,077,053
                                 
Total Liabilities and Stockholders' Equity
  
$
3,638,391
  
$
1,204,068
  
$
2,058,420
   $
 2,203,244
$
 2,982,610
$
7,680,245
 
 
-2-
 
WORLDWIDE BIOTECH AND PHARMACEUTICAL COMPANY AND SUBSIDIARIES
  
PRO FORMA COMBINED STATEMENT OF OPERATIONS
  
For the year ended December 31, 2005
  
(Unaudited)
  
 
 
   
Worldwide Biotech
                              
   
and Pharmaceutical
  
Hua Yang
  
Ze An
                      
   
Company and
  
Pharmaceutical
  
Pharmaceutical
      
Pro forma Adjustments
  
Pro Forma
  
   
Subsidiaries
  
Co., Ltd.
  
Co., Ltd.
      
Dr.
      
Cr.
  
Combined
  
                                   
REVENUES
  
$
26,222
  
$
140,510
  
$
230,349
    
(6
)
$
26,222
        
$
-
  
$
370,859
  
                                                   
COST OF SALES
    
21,425
   
131,175
   
189,458
         
-
   
(6
)
  
26,222
   
315,836
 
                                                   
GROSS PROFIT
   
4,797
   
9,335
   
40,891
         
26,222
   
(6
)
  
(26,222
)
  
55,023
 
                                                   
OPERATING EXPENSES:
                                                 
Selling expenses
   
7,463
   
19,121
   
16,176
         
-
         
-
   
42,760
 
Research and develoment
   
57,222
   
-
   
-
         
-
         
-
   
57,222
 
Professional fees
   
166,603
   
-
   
-
         
-
         
-
   
166,603
 
Stock-based compensation
   
3,174,628
   
-
   
-
         
-
         
-
   
3,174,628
 
General and administrative
    
335,907
   
92,017
   
345,848
   
(9
)
  
59,238
   
(5
)
  
12,520
   
820,490
 
                                                   
Total Operating Expenses
    
3,741,823
   
111,138
   
362,024
         
59,238
         
12,520
   
4,261,703
 
                                                   
LOSS FROM OPERATIONS
    
(3,737,026
)
  
(101,803
)
  
(321,133
)
        
(33,016
)
        
(38,742
)
  
(4,206,680
)
                                                   
OTHER INCOME (EXPENSE):
                                                  
Interest income
    
10,257
   
-
   
-
         
-
               
10,257
 
Interest expense
    
(150,667
)
  
(1,141
)
  
(132,377
)
  
(8
)
  
50,556
               
(233,629
)
Other income (expense), net
    
192,732
   
(254
)
  
(5,765
)
                          
186,713
 
Realized gain on sale of marketable securities
    
-
   
-
    -               -               -    
-
 
                                                   
Total Other Expense
    
52,322
   
(1,395
)
  
(138,142
)
        
50,556
         
-
   
(36,659
)
                                                   
LOSS BEFORE INCOME TAXES
    
(3,684,704
)
  
(103,198
)
  
(459,275
)
        
17,540
         
(38,742
)
  
(4,243,339
)
                                                   
INCOME TAXES
    
-
         -          -          
-
         
-
   
-
 
                                                   
LOSS BEFORE MINORITY INTEREST
    
(3,684,704
)
  
(103,198
)
  
(459,275
)
        
17,540
         
(38,742
)
  
(4,243,339
)
                                                   
MINORITY INTEREST
    
(1,382
)
         -    
-
   
(7)(10
)
  
225,879
            -    
(227,261
)
                                                   
NET LOSS
    
(3,683,322
)
  
(103,198
)
  
(459,275
)
      
(208,339
)
      
(38,742
)
  
(4,016,078
)
                                                   
OTHER COMPPREHENSIVE INCOME
                                                  
Change in unrealized gain (loss) on marketable securities
                                                  
Foreign currency translation gain
    
-
   
23,223
   
92
         
-
         
-
   
23,315
 
                                                   
COMPREHENSIVE LOSS
  
$
(3,683,322
)
$
(79,975
)
$
(459,183
)
      
$
(208,339
)
      
$
(38,742
)
$
(3,992,763
)
                                                   
NET LOSS PER COMMON SHARE - BASIC AND DILUTED
                                          
Net loss per common share
  
$
(0.09
)
 
 
      
 
 
        
 
  
$
(0.10
)
                                                   
Weighted Common shares Outstanding:
                                                  
basic and diluted
    
39,657,102
                 
 
              
39,657,102
  
                                                   
                                                   
See notes to pro forma consolidated financial statements
 
 
-3-

 
WORLDWIDE BIOTECH AND PHARMACEUTICAL COMPANY AND SUBSIDIARIES
NOTES TO THE UNAUDITED PRO FORMA FINANCIAL STATEMENTS

The adjustments to the unaudited pro forma combined financial statements as of December 31, 2005 reflects the issuance of 482,800 shares of Worldwide's common stock for the acquisition of 51% of the outstanding capital stock of Hunan Hua Yang Pharmaceutical Co., Ltd. and reflects the issuance of (i) 217,600 shares of Worldwide's common stock and (ii) RMB3,400,000 (Equivalent to US$421,303 at the time of merger) for the acquisition of 65% of the outstanding capital stock of Hunan Ze An Pharmaceutical Co., Ltd. and that the transactions occurred as of January 1, 2004 and are as follows:

(1) To reflect the issuance of 482,800 shares of Worldwide's common stock for the acquisition of 51% of the outstanding capital stock of Hunan Hua Yang Pharmaceutical Co., Ltd., and

(2) To reflect the allocation of the Hua Yang purchase price based on their estimated fair values at the acquisition date, and

(3) To reflect the issuance of 217,600 shares of Worldwide's common stock for the acquisition of 65% of the outstanding capital stock of Hunan Ze An Pharmaceutical Co., Ltd., and

(4) To reflect the allocation of the Ze An purchase price based on their estimated fair value at the acquisition date, and

(5) To eliminate historical depreciation and amortization expenses related to Hua Yang’s fixed assets, land use right and licenses, and

(6) To eliminate inter-company activities between Hua Yang and Daiying, and

(7) To record Hua Yang’s 49% minority interest, and

(8) To record interest expense in connection with issuance of acquisition-related note payable from a stockholder using interest rate of 12% per annum, and

(9) To record Ze An amortization expense of land use right and licenses at fair value, and

(10) To record Ze An’s 35% minority interest.


-4-
Pro forma adjustments to unaudited pro forma combined condensed balance sheet:

 
1)
Investment
Common stock
Additional Paid-in capital
 
To reflect the issuance of 482,800 shares of common stock for the acquisition of 51% of the outstanding capital stock of Hua Yang.
 
2)
Common stock
Additional Paid-in capital
Accumulated deficit
Foreign currency translation gain
Investment
Minority interest
Property and equipment
Land use right
Licenses
Investment
Minority interest
 
To reflect the allocation of the Hua Yang purchase price based on their estimated fair values at the acquisition date.
 
3)
Investment
Note payable - related party
Common stock
Additional Paid-in capital
 
To reflect the issuance of 217,600 shares of common stock for the acquisition of 65% of the outstanding capital stock of Ze An.
 
 
Dr.
 
313,820
 
 
 
 
 
1,340,230
5,713
 
23,223
 
 
 
 
137,475
132,084
 
 
 
 
562,743
 
 
 
 
 
 
 
 
 
 
Cr.
 
 
483
313,337
 
 
 
 
 
484,274
 
451,295
433,597
200,123
58,022
11,414
 
 
 
 
 
 
421,303
217
141,222
 
 
 
 
 
 



-5-
Pro forma adjustments to unaudited pro forma combined condensed balance sheet (continued):

 
4)
Common stock
Additional Paid-in capital
Accumulated deficit
Foreign currency translation gain
Investment
Minority interest
Land use right
Licenses
Investment
Minority interest
 
To reflect the allocation of the Ze An purchase price based on their estimated fair value at the acquisition date.
Dr.
 
820,244
13,742
 
92
119,059
64,108
608,721
440,204
 
 
 
 
 
Cr.
 
 
 
1,017,245
 
 
 
 
681,802
367,123
 
 
Pro forma adjustments to unaudited pro forma combined condensed statements of operations:

5) To eliminate historical depreciation and amortization expenses related to
      
Hua Yang’s fixed assets, land use right and licenses 
  
$
(10,219
)
   
$
(1,160
)
   
$
(1,141
)
         
6) To eliminate inter-company activities between Hua Yang and Daiying 
  
$
(26,222
)
         
7) To record Hua Yang’s 49% minority interest 
  
$
44,432
  
         
8) To record interest expense in connection with issuance of acquisition-related
        
  note payable from a stockholder using interest rate of 12% per annum 
  
$
50,556
  
         
9) To record Ze An amortization expense of land use right and licenses at fair value 
  
$
15,218
  
   
$
44,020
  
         
10) To record Ze An’s 35% minority interest 
  
$
181,447
  
 
 
-6-