EX-99.3 4 v116888_ex99-3.htm Unassociated Document


CHINA SOLAR & CLEAN ENERGY SOLUTIONS, INC.
 
Unaudited Pro Forma Financial Information
 
 
 
 
PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2008
(Currency expressed in United States Dollars (“US$”))
(UNAUDITED)

The unaudited Pro Forma Condensed, Combined Statements of Operations for the three months ended March 31, 2008 gives effect to the acquisition of Shenzhen PengSangPu Solar Industrial Products Corporation (“Target”) by China Solar & Clean Energy Solutions, Inc. (“Registrant”). The transaction was valued at fair value. The unaudited Pro Forma Condensed, Combined Statements of Operations was taken from the respective financial statements of Target and Registrant for the three months ended March 31, 2008. The unaudited Pro Forma Condensed, Combined Statements of Operations was prepared assuming that the acquisition described above was consummated as of the beginning of the year presented.

The unaudited Pro Forma Condensed, Combined Statements of Operations are based upon historical financial statements of Target and Registrant. The pro forma adjustments and the resulting unaudited Pro Forma Condensed, Combined Statements of Operations have been prepared based upon available information and certain assumptions and estimates deemed appropriate by the Registrant.

The unaudited Pro Forma Condensed, Combined Statements of Operations are not necessarily indicative of the results of operations that actually would have been achieved had the acquisition been consummated as of the date indicated, or that may be achieved in the future. Furthermore, the unaudited Pro Forma Condensed, Combined Statements of Operations do not reflect changes that may occur as the result of post-combination activities and other matters.

The unaudited Pro Forma Condensed, Combined Statements of Operations and notes thereto should be read in conjunction with the accompanying unaudited financial statements of Target and Registrant.

2
 
PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2008
(Currency expressed in United States Dollars (“US$”))
(UNAUDITED)

 
    
Registrant
(Historical)
    
Target
(Historical)
 
  
Pro forma
adjustments
Increase
(Decrease)
 
 
 
Pro forma
combined
                           
Revenue, net 
  
$
8,300,076
  
$
393,920
        
$
8,693,996
  
                           
Cost of revenue 
    
5,845,016
    
218,350
          
6,063,366
  
 
Gross profit
    
2,455,060
    
175,570
          
2,630,630
  
                           
Operating expenses:
                          
Depreciation and amortization
    
149,167
    
44,673
          
193,840
  
Selling and distribution
    
502,563
    
-
          
502,563
  
General and administrative
   
601,653
    
39,681
          
641,334
  
 
Total operating expenses
    
1,253,383
    
84,354
          
1,337,737
  
                           
 
Income from operations
    
1,201,677
    
91,216
          
1,292,893
  
                           
Other income (expenses):
                          
Other income
    
41,090
    
-
          
41,090
  
Interest expense
    
(33,838
)
  
(43,087
)
        
(76,925
)
                           
Total other income (expenses)
    
7,252
    
(43,087
)
        
(35,835
)
 
Income before income taxes
    
1,208,929
    
48,129
          
1,257,058
  
 
Income tax expense
    
346,263
    
323
          
346,586
  
Income before minority interest
    
862,666
    
47,806
          
910,472
  
                           
Minority interests
    
473,015
    
-
          
473,015
  
                           
NET INCOME
  
$
389,651
  
$
47,806
        
$
437,457
  
                           
Basic income per common share
  
$
0.05
              
$
0.05
  
                           
Diluted income per common share
  
$
0.03
              
$
0.03
  
                           
Basic common shares
    
8,009,713
                
9,571,415
  
                           
Diluted common shares
    
15,284,770
                
15,675,195
  

3

 PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2007
(Currency expressed in United States Dollars (“US$”))
(UNAUDITED)
 
The unaudited Pro Forma Condensed, Combined Statements of Operations for the year ended December 31, 2007 gives effect to the acquisition of Shenzhen PengSangPu Solar Industrial Products Corporation (“Target”) by China Solar & Clean Energy Solutions, Inc. (“Registrant”). The transaction was valued at fair value. The unaudited Pro Forma Condensed, Combined Statements of Operations was taken from the respective financial statements of Target and Registrant for the year ended December 31, 2007. The unaudited Pro Forma Condensed, Combined Statements of Operations was prepared assuming that the acquisition described above was consummated as of the beginning of the year presented. The unaudited Pro Forma Condensed, Combined Statements of Operations are based upon historical financial statements of Target and Registrant. The pro forma adjustments and the resulting unaudited Pro Forma Condensed, Combined Statements of Operations have been prepared based upon available information and certain assumptions and estimates deemed appropriate by the Registrant.

The unaudited Pro Forma Condensed, Combined Statements of Operations are not necessarily indicative of the results of operations that actually would have been achieved had the acquisition been consummated as of the date indicated, or that may be achieved in the future. Furthermore, the unaudited Pro Forma Condensed, Combined Statements of Operations do not reflect changes that may occur as the result of post-combination activities and other matters.

The unaudited Pro Forma Condensed, Combined Statements of Operations and notes thereto should be read in conjunction with the accompanying audited financial statements of Target and Registrant.

4
 
PRO FORMA CONDENSED, COMBINED STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2007
(Currency expressed in United States Dollars (“US$”))
(UNAUDITED)

 
    
Registrant
(Historical)
    
Target
(Historical)
 
  
Pro forma
adjustments
Increase
(Decrease)
 
 
 
Pro forma
combined
                           
Revenue, net 
  
$
37,072,346
  
$
3,215,282
        
$
40,287,628
  
                           
Cost of revenue 
    
28,772,078
    
1,848,703
          
30,620,781
  
 
Gross profit
    
8,300,268
    
1,366,579
          
9,666,847
  
                           
Operating expenses:
                          
Depreciation and amortization
    
282,822
    
132,457
          
415,279
  
Selling and distribution
    
827,839
    
-
          
827,839
  
General and administrative
   
4,003,973
    
131,673
          
4,135,646
  
 
Total operating expenses
    
5,114,634
    
264,130
          
5,378,764
  
                           
 
Income from operations
    
3,185,634
   
1,102,449
          
4,288,083
  
                           
Other income (expense):
                          
Other income
    
220,057
    
3,982
          
224,039
  
Interest expense
    
(65,481
)
  
(73,274
)
        
(138,755
)
                           
Total other income (expense)
    
154,576
    
(69,292
)
        
85,284
  
 
Income before income taxes
    
3,340,210
   
1,033,157
          
4,373,367
  
 
Income tax expense
    
(615,325
)
  
-
          
(615,325
)
Minority interests
    
(199,744
)
  
-
          
(199,744
)
                           
NET INCOME
  
$
2,525,141
 
$
1,033,157
        
$
3,558,298
  
                           
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS
  
$
2,525,141
  
$
1,033,157
              
                           
Basic income per common share
  
$
0.25
              
$
0.46
  
                           
Diluted income per common share
  
$
0.23
              
$
0.29
  
                           
Basic common shares
    
6,205,290
                
7,766,992
  
                           
Diluted common shares
    
10,783,026
                
12,344,728
  
 
5

PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
AS OF MARCH 31, 2008
(Currency expressed in United States Dollars (“US$”))

The unaudited Pro Forma Condensed, Combined Balance Sheet as of March 31, 2008 gives effect to the acquisition of Shenzhen PengSangPu Solar Industrial Products Corporation (“Target”) by China Solar & Clean Energy Solutions, Inc. (“Registrant”). The transaction was valued at fair value. The unaudited Pro Forma Condensed, Combined Balance Sheet was taken from the respective financial statements of Target and Registrant as of March 31, 2008. The unaudited Pro Forma Condensed, Combined Balance Sheet was prepared assuming that the acquisition described above was consummated as of the balance sheet date.

The unaudited Pro Forma Condensed, Combined Balance Sheet is based upon historical financial statements of Target and Registrant. The pro forma adjustments and the resulting unaudited Pro Forma Condensed, Combined Balance Sheet has been prepared based upon available information and certain assumptions and estimates deemed appropriate by the Registrant.

The unaudited Pro Forma Condensed, Combined Balance Sheet is not necessarily indicative of the financial position that actually would have been achieved had the acquisition been consummated as of the date indicated, or that may be achieved in the future. Furthermore, the unaudited Pro Forma Condensed, Combined Balance Sheet does not reflect changes that may occur as the result of post-combination activities and other matters.

The unaudited Pro Forma Condensed, Combined Balance Sheet and notes thereto should be read in conjunction with the accompanying unaudited financial statements of Target and Registrant.

6
 
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
AS OF MARCH 31, 2008
(Currency expressed in United States Dollars (“US$”))

 
    
Registrant
(Historical)
    
Target
(Historical)
 
    
Pro forma adjustments
Increase
(Decrease)
 
    
Pro forma adjustments
Increase
(Decrease)
 
  
Pro forma
combined
  
ASSETS
                                    
Current assets:
                                    
Cash and cash equivalents
  
$
10,733,793
  
$
87,316
  
A
  
(2,087,832
)
        
$
8,733,277
  
Restricted cash
    
-
    
84,304
                    
84,304
  
Accounts receivable, net
    
7,116,825
    
510,269
                    
7,627,094
  
Inventories
    
4,065,773
    
325,429
                    
4,391,202
  
Lease receivable, current
    
-
    
143,317
                    
143,317
  
Other receivables and prepayments
    
4,959,380
    
217,606
  
A
  
(2,000,000
)
          
3,176,986
  
Investment cost
    
-
    
-
  
A
  
7,019,483
  
B
  
(7,019,483
)
  
-
  
                                     
Total current assets
   
26,875,771
    
1,368,241
                    
24,156,180
  
                                     
Non-current assets:
                                    
Goodwill
    
1,789,324
    
-
          
B
  
5,408,455
    
7,197,779
  
Intangible assets, net
    
1,651,885
    
-
                    
1,651,885
  
Net investment in sales-type leases, non-current
    
-
    
823,489
                    
823,489
  
Property, plant and equipment, net
    
9,401,021
    
1,275,287
                    
10,676,308
  
                                     
TOTAL ASSETS
  
$
39,718,001
  
$
3,467,017
                  
$
44,505,641
  
                                     
LIABILITIES AND STOCKHOLDERS’ EQUITY
                      
Current liabilities:
                                    
Short-term borrowings
  
$
-
  
$
710,668
                  
$
710,668
  
Accounts payable, trade
    
1,254,717
    
908,124
                    
2,162,841
  
Deferred Revenue
    
-
    
25,903
                    
25,903
  
Income tax payable
    
1,411,384
    
-
                    
1,411,384
  
Other payables and accrued liabilities
    
6,906,468
    
211,294
                    
7,117,762
  
                                     
Total current liabilities
    
9,572,569
    
1,855,989
                    
11,428,558
  
                                     
Long-term liabilities:
                                    
Deferred tax liabilities
    
259,612
    
-
                    
259,612
  
                                     
Minority interests
    
1,454,872
    
-
                    
1,454,872
  
                                     
Stockholders’ equity:
                                    
Preferred stock
    
1,609
    
-
                    
1,609
  
Common stock
    
11,136
    
1,598,979
  
A
  
1,562
  
B
  
(1,598,979
)
  
12,698
  
Additional paid-in capital
    
19,358,497
    
-
  
A
  
2,930,089
            
22,288,586
  
Statutory reserve
    
-
    
74,508
          
B
  
(74,508
)
  
-
  
Accumulated other comprehensive income
    
1,140,936
    
276,506
         
B
  
(276,506
)
  
1,140,936
  
Distribution to owners
    
-
    
(1,190,756
)
        
B
  
1,190,756
    
-
  
Retained earnings
    
7,918,770
    
851,791
          
B
  
(851,791
)
  
7,918,770
  
                                     
Total stockholders’ equity
    
28,430,948
    
1,611,028
                    
31,362,599
  
                                     
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
  
$
39,718,001
  
$
3,467,017
                  
$
44,505,641
  

7
 
Notes to Unaudited Pro Forma Combined Financial Statements
 
Note A    Adjustment to reflect the differences between fair values and carrying values of the Target’s assets. The allocation of the excess of the purchase price over the related net assets was determined as follows:

Cash
  
$
$4,087,832
  
Fair value of 1,419,729 common stock
   
2,839,458
  
Fair value of 141,973 warrants
   
92,193
  
 
Total purchase price
  
$
7,019,483
  
         
Net assets acquired
  
$
1,611,028
  
Purchase price:
  
$
7,019,483
  
Goodwill in the acquisition of Shenzhen Pengsangpu
  
$
5,408,455
  
 
Please note that the purchase price allocation is preliminary as the Registrant is awaiting additional information to determine the values to be assigned. The Registrant hired a valuation specialist to value the assets acquired as part of the acquisition of Target. The valuation specialist, engaged to value the assets acquired from the Target in the acquisition, has not yet completed her work. In the absence of a final valuation, management has made a preliminary allocation of the excess of the purchase price over Target’s net assets to goodwill. However, it is possible that the final valuation will include amounts allocated to limited-life intangibles (including related amortization expense) and/or unlimited-life intangibles. As a result, the allocation of $5,408,455 to goodwill in the accompanying pro forma financial information is preliminary and subject to change.
 
Note B    Adjustment to eliminate intercompany investment and equity accounts of Target at the date of business combination.
 
8