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Business Combinations
 3 Months Ended
Mar. 31, 2012
Business Combinations:  
Mergers, Acquisitions and Dispositions Disclosures

NOTE 2- PRO-FORMA FINANCIAL INFORMATION-REVERSE ACQUISITION OF METAMINING NEVADA

 

On March 30, 2012, the Company acquired Metamining Nevada from Metamining , an unrelated third party. Pursuant to the terms of the Share Exchange Agreement between the parties, we acquired 100% of the capital stock of Metamining Nevada in exchange for 9,581,973 shares of our Series C convertible preferred stock and 3,000,000 Series C common stock purchase warrants.  As a result of the acquisition a change in ownership interest has occurred, and under the reverse acquisition accounting rules pursuant to ASC 805-40, Linkwell who is the legal acquirer becomes the accounting acquiree owning 8.9%, and Metamining Nevada becomes the accounting acquirer owning 91.1% of the total outstanding shares of common stock on an as converted basis after giving effect to the Reverse Stock Split in the transaction.

 

Metamining Nevada is an exploration state company, which was established in March, 2011. Since its inception to March 31, 2011, Metamining Nevada had no operations.

 

The table below provides the consolidation of Linkwell and Metamining Nevada in the consolidated balance sheets as of March 31, 2012:

 

 

LINKWELL

 

 

Metamining Nevada

 

 

Consolidation

 

 

 

Consolidated

 

 

 

March 31,2012

 

 

March 31,2012

 

 

Adjustments

 

 

 

March 31,2012

 

 

 

(Unaudited)

 

 

(Unaudited)

 

 

 

 

 

 

(Unaudited)

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

653,589

 

 

$

15,792

 

$

-

 

 

 

$

669,381

 

Accounts receivable, net

 

 

2,588,599

 

 

 

-

 

 

-

 

 

 

 

2,588,599

 

Accounts receivable - related parties, net

 

 

10,446,862

 

 

 

-

 

 

-

 

 

 

 

10,446,862

 

Due from related party

 

 

1,110,103

 

 

 

-

 

 

-

 

 

 

 

1,110,103

 

Other receivables, net

 

 

5,045,772

 

 

 

-

 

 

-

 

 

 

 

5,045,772

 

Prepaid expenses and other current assets

 

 

697,287

 

 

 

-

 

 

-

 

 

 

 

697,287

 

Inventories, net

 

 

2,571,269

 

 

 

-

 

 

-

 

 

 

 

2,571,269

 

        Total current assets

 

 

23,113,481

 

 

 

15,792

 

 

 

-

 

 

 

 

23,129,273

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NON-CURRENT ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred compensation

 

 

401,452

 

 

 

-

 

 

 

-

 

 

 

 

401,452

 

Investment

 

 

1,283,231

 

 

 

-

 

 

 

-

 

 

 

 

1,283,231

 

Property, plant and equipment, net

 

 

2,450,016

 

 

 

-

 

 

 

-

 

 

 

 

2,450,016

 

Real property and mineral rights

 

 

-

 

 

 

14,250,000

 

 

 

-

 

 

 

 

14,250,000

 

Prepaid for land use right

 

 

606,898

 

 

 

-

 

 

 

-

 

 

 

 

606,898

 

Intangible assets

 

 

282,506

 

 

 

-

 

 

 

-

 

 

 

 

282,506

 

        Total non-current assets

 

 

5,024,103

 

 

 

14,250,000

 

 

 

-

 

 

 

 

19,274,103

 

TOTAL ASSETS

 

$

28,137,584

 

 

$

14,265,792

 

 

$

-

 

 

 

$

42,403,376

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans payable

 

$

1,588,739

 

 

$

-

 

 

$

-

 

 

 

$

1,588,739

 

Accounts payable and accrued expenses

 

 

3,678,431

 

 

 

437

 

 

 

-

 

 

 

 

3,678,868

 

Note payable-Current due

 

 

-

 

 

 

5,625,000

 

 

 

-

 

 

 

 

5,625,000

 

Advances from customers

 

 

366,376

 

 

 

-

 

 

 

-

 

 

 

 

366,376

 

Taxes payable

 

 

175,318

 

 

 

-

 

 

 

-

 

 

 

 

175,318

 

Other payables

 

 

90,526

 

 

 

-

 

 

 

-

 

 

 

 

90,526

 

Due to related parties

 

 

1,701,712

 

 

 

42,025

 

 

 

-

 

 

 

 

1,743,737

 

        Total current liabilities

 

 

7,601,102

 

 

 

5,667,462

 

 

 

-

 

 

 

 

13,268,564

 

Put option liability

 

 

2,400,000

 

 

 

- 

 

 

 

(2,400,000

) 

(5)

(1)

 

-

 

Note payable - long term

 

 

-

 

 

 

5,625,000

 

 

 

- 

 

 

 

 

5,625,000

 

TOTAL LIABILITIES

 

 

10,001,102

 

 

 

11,292,462

 

 

 

(2,400,000

)

 

 

 

18,893,564

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 COMMITMENT AND CONTINGENCY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred Stock

 

 

4,791

 

 

 

-

 

 

 

-

 

 

 

 

4,791

 

Common Stock

 

 

59,803

 

 

 

 -

 

 

 

-

 

 

 

 

59,803

 

Additional paid-in capital

 

 

8,552,730

 

 

 

3,112,945

 

 

 

11,105,621

 

(1)

(5)

 

22,771,296

 

Statutory surplus reserve

 

 

802,749

 

 

 

-

 

 

 

(802,749

) 

(3

) 

 

-

 

Retained earnings

 

 

6,031,469

 

 

 

(139,615

)

 

 

(6,031,469

) 

(2

) 

 

(139,615

)

Accumulated other comprehensive income

 

 

1,871,403

 

 

 

-

 

 

 

(1,871,403

) 

(4

) 

 

-

 

Total Linkwell Corporation stockholder's equity

 

 

17,322,945

 

 

 

2,973,330

 

 

 

2,400,000

 

 

 

 

22,696,275

 

NONCONTROLLING INTEREST

 

 

813,537

 

 

 

-

 

 

 

-

 

 

 

 

813,537

 

TOTAL STOCKHOLDERS' EQUITY

 

 

18,136,482

 

 

 

2,973,330

 

 

 

2,400,000

 

 

 

 

23,509,812

 

TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY

 

$

28,137,584

 

 

$

14,265,792

 

 

$

-

 

 

 

$

42,403,376

 

 

Note (1): Aggregate effect of the acquisition transaction:

 

 

 

 

 

A. To eliminate Linkwell retained earnings

$

6,031,469

 

See Note (2)

B. To eliminate Linkwell statutory surplus reserve

 

802,749

 

See Note (3)

C. To eliminate Linkwell accumulated other comprehensive income (AOCI)

 

1,871,403

 

See Note (4)

D. To eliminate Linkwell put option liability

 

2,400,000

 

See Note (5)

Total APIC adjustments

$

11,105,621

 

 

 

 

 

 

 

Note (2): Represents the elimination of Linkwell retained earnings.

$

 

6,031,469

 

 

See Note (1)

 

 

 

 

 

Note (3): Represents the elimination of Linkwell statutory surplus reserve.

$

802,749

 

See Note (1)

 

 

 

 

 

Note (4): Represents the elimination of Linkwell AOCI.

$

1,871,403

 

See Note (1)

 

 

 

 

 

Note (5): Represents the elimination of Linkwell put option liability, which was cancelled by the option holder in March 2012.

$

2,400,000

 

See Note (1)

 

The table below provides the pro forma condensed financial statements of operations (unaudited) to give effect to the acquisition of Metamining Nevada as if the transaction had occurred at the beginning of the quarter ended March 31, 2012.

 

 

 

Linkwell

 

 

Metamining Nevada

 

 

Pro Forma

 Adjustments

 

 

Pro Forma

 Consolidated

 

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

 Net Sales

 

$

3,406,409

 

$

-

 

$ 

-

 

 

$

3,406,409

 

Cost of Sales

 

 

1,873,773

 

 

 -

 

 

 -

 

 

 

1,873,773

 

     Gross Profit

 

 

1,532,636

 

 

-

 

 

-

 

 

 

1,532,636

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating (expenses) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

       Total operating expenses

 

 

1,497,500

 

 

26,670

 

 

-

 

 

 

1,524,170

 

       Operating income (loss)

 

 

35,136

 

 

(26,670

)

 

-

 

 

 

8,466

 

Other (expenses) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

       Total other income

 

 

15,236

 

 

-

 

 

-

 

 

 

15,236

 

        Income (loss) before income taxes

 

 

50,372

 

 

(26,670

)

 

-

 

 

 

23,702

 

   Income tax expense

 

 

(67,569

)

 

 

 

 

 

 

 

 

(67,569

)

   Net loss

 

 

(17,197

)

 

(26,670

)

 

-

 

 

 

(43,867

)

   Net income attributable to non-controlling interests

 

 

(28,135

)

 

-

 

 

-

 

 

 

(28,135

)

      Net loss attributable to Linkwell Corp

 

 

(45,332

)

 

(26,670

)

 

-

 

 

 

(72,002

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Net loss

 

 

(17,197

)

 

(26,670

)

 

 -

 

 

 

(43,867

)

   Foreign currency translation

 

 

19,182

 

 

-

 

 

 -

 

 

 

19,182

 

Comprehensive loss

 

$

(26,150

)

$ 

(26,670

)

$ 

-

 

 

$

(52,820

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted income (loss) per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Basic

 

$

(0.09

)

 

 -

 

 

 -

 

 

$

(0.14

)

   Diluted  (2)

 

$

(0.09

)

 

 -

 

 

-

 

 

$

(0.01

)

   Basic weighted average common shares outstanding (3)

 

 

509,840

 

 

 -

 

 

 -

 

 

 

509,840

 

   Diluted weighted average common shares outstanding (3)

 

 

509,840

 

 

 -

 

 

12,581,973

(1)

 

 

13,091,813

 

 

Note (1):

Represents the dilutive effect of 9,581,973 shares of Series C convertible preferred stock and 3,000,000 Series C warrants issued by Linkwell in conjunction with the acquisition of Metamining Nevada, which is treated as reverse acquisition. The dilutive effect of these shares is after giving effect to the Reverse Stock Split in the acquisition transaction.

Note (2):

The dilutive effect impacts only the dilutive EPS in the pro forma calculation.

Note (3):

The basic and dilutive weighted average shares outstanding after giving effect to the Reverse Stock Split.

 

The tables below provide the pro forma financial condensed financial statements of operations to give effect to the acquisition for the three months ended March 31, 2011:

 

 

 

 Linkwell Corporation

 

  Metamining Nevada, Inc.

 

Pro Forma

 Adjustments

 

Pro Forma

 Consolidated

 

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

Net Sales

 

$

3,223,209

 

 

 

 

 

$

3,223,209

 

Cost of Sales

 

 

1,679,231

 

 

 

 

 

 

1,679,231

 

     Gross Profit

 

 

1,543,978

 

 

 

 

 

 

1,543,978

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating (expenses) income:

 

 

 

 

 

 

 

 

 

 

 

       Total operating expenses

 

 

984,743

 

 

 

 

 

 

984,743

 

       Operating income (loss)

 

 

559,235

 

 

 

 

 

 

559,235

 

Other (expenses) income:

 

 

 

 

 

 

 

 

 

 

 

       Total other income

 

 

(57,366

)

 

 

 

 

 

(57,366

)

        Income (loss) before income taxes

 

 

501,869

 

 

 

 

 

 

501,869

 

   Income tax expense

 

 

(100,153

)

 

 

 

 

 

(100,153

)

   Net income

 

 

401,716

 

 

 

 

 

 

401,716

 

   Net income attributable to non-controlling interests

 

 

(42,669

)

 

 

 

 

 

(42,669

)

      Net loss attributable to Linkwell Corp

 

 

359,047

 

 

 

 

 

 

359,047

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

   Net income

 

 

401,716

 

 

 

 

 

 

401,716

 

   Foreign currency translation

 

 

166,286

 

 

 

 

 

 

166,286

 

Comprehensive income

 

$

525,333

 

 

 

 

 

$

525,333

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted income (loss) per common share

 

 

 

 

 

 

 

 

 

 

 

   Basic

 

$

0.83

 

 

 

 

 

$

0.83

 

   Diluted  (2)

 

$

0.83

 

 

 

 

 

$

0.03

 

   Basic weighted average common shares outstanding (3)

 

 

433,027

 

 

 

 

 

 

433,027

 

   Diluted weighted average common shares outstanding (3)

 

 

433,027

 

 

 

12,581,973

 

 

13,015,000

 

 

Note (1):

Represents the dilutive effect of 9,581,973 shares of Series C convertible preferred stock and 3,000,000 Series C warrants issued by Linkwell in conjunction with the acquisition of Metamining Nevada, which is treated as reverse acquisition. The dilutive effect of these shares is after the Reverse Stock Split.

Note (2):

The dilutive effect impacts only the dilutive EPS in the pro forma calculation.

Note (3):

The basic and dilutive weighted average shares outstanding are based after giving effect to the Reverse Stock Split.