Summary of Transaction and Basis of Presentation On November 10, 2008 (the “Closing Date”), Fresh Ideas Media, Inc. (“Fresh Ideas” or the “Company”) entered into a Share Exchange Agreement (the “Exchange Agreement”) with Ever Auspicious International...
FRESH
IDEAS MEDIA, INC.
UNAUDITED
PRO FORMA COMBINED FINANCIAL STATEMENTS
Summary
of Transaction and Basis of Presentation
On
November 10, 2008 (the “Closing Date”), Fresh Ideas Media, Inc. (“Fresh
Ideas” or the “Company”) entered into a Share Exchange Agreement (the “Exchange
Agreement”) with Ever Auspicious International Limited, a Hong Kong company
(“Ever Auspicious”) and the sole share holder of Tianjin Seashore New District
Shisheng Business Trading Group Co. Ltd (“Shisheng”), and Bright Praise
Enterprises Limited, a British Virgin Islands company and the sole shareholder
of Ever Auspicious (the “Stockholder”), pursuant to which Fresh Ideas acquired
all of the issued and outstanding capital stock of Ever Auspicious, an inactive
holding company, from the Stockholder in exchange for 11,700,000 newly-issued
shares of Fresh Ideas’ common stock, representing approximately 64.64% of Fresh
Ideas’ issued and outstanding common stock (the “Exchange”). The closing of the
Exchange (the “Closing”) occurred on the same day immediately following the
cancellation of an aggregate of 1,135,000 shares of Fresh Ideas’ common stock
held by Xxxxxxx X. Xxx and Xxxx Xxxxx, Fresh Ideas’ principal stockholders
immediately prior to the Closing, which was a condition of the Closing.
The
unaudited pro forma consolidated financial statements of the Company, in
the
opinion of management, include all material adjustments directly attributable
to
the Exchange. The unaudited pro forma consolidated balance sheet reflects
the
financial position of the Company had the Exchange occurred on September
30,
2008. The unaudited pro forma consolidated statements of income (loss) and
comprehensive income (loss) were prepared as if the Exchange was consummated
at
the beginning of the reporting periods.
These
pro
forma unaudited combined financial statements should be read in conjunction
with
the Company's historical financial statements and notes thereto and the
consolidated financial statements of Xxxxxxxx and the notes thereto included
elsewhere in this report. These unaudited pro forma consolidated financial
statements have been prepared for comparative purposes only and do not purport
to be indicative of the results of operations which actually would have resulted
had the transaction occurred on the date indicated and are not necessarily
indicative of the results that may be expected in the future.
Pro
forma Earnings per Share
The
pro
forma basic and dilutive net income per share is based on the weighted average
number of shares of pro forma Fresh Ideas as if the shares issued to acquire
Ever Auspicious and Shisheng had taken place at the beginning of each of
the
reporting periods.
-1-
FRESH
IDEAS MEDIA, INC.
UNAUDITED
PROFORMA COMBINED BALANCE SHEET
|
Fresh
Ideas as of
September 30,
2008
|
Ever
Auspicious
as of
June 30,
2008 (5)
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
||||||||||
|
ASSETS:
|
|||||||||||||
|
Current
assets:
|
|||||||||||||
|
Cash
and cash equivalent
|
$
|
125
|
$
|
1,226,567
|
$
|
-
|
$
|
1,226,692
|
|||||
|
Restricted
cash
|
-
|
3,059,157
|
-
|
3,059,157
|
|||||||||
|
Accounts
receivable-trade
|
-
|
25,222
|
-
|
25,222
|
|||||||||
|
Receivable
related to financing services
|
-
|
16,772,152
|
-
|
16,772,152
|
|||||||||
|
Inventories,
net
|
-
|
20,182,595
|
-
|
20,182,595
|
|||||||||
|
Advances
to suppliers
|
-
|
15,570,525
|
-
|
15,570,525
|
|||||||||
|
Prepaid
expenses
|
-
|
14,579
|
-
|
14,579
|
|||||||||
|
Value
added tax refundable
|
-
|
2,391,529
|
-
|
2,391,529
|
|||||||||
|
Deferred
taxes
|
-
|
2,777
|
-
|
2,777
|
|||||||||
|
Other
current assets
|
4,000
|
7,140
|
-
|
11,140
|
|||||||||
|
Total
current assets
|
4,125
|
59,252,243
|
-
|
59,256,368
|
|||||||||
|
Property
and equipment, net
|
-
|
551,934
|
-
|
551,934
|
|||||||||
|
Other
assets
|
19,154
|
10,934
|
30,088
|
||||||||||
|
Total
Assets
|
$
|
23,279
|
$
|
59,815,111
|
$
|
-
|
$
|
59,838,390
|
|||||
|
LIABILITIES
AND SHAREHOLDERS' EQUITY:
|
|||||||||||||
|
Current
liabilities:
|
|||||||||||||
|
Line
of credit related to financing services
|
-
|
$
|
16,772,152
|
-
|
16,772,152
|
||||||||
|
Bank
loan payable
|
-
|
3,207,418
|
-
|
3,207,418
|
|||||||||
|
Accounts
payable
|
2,525
|
-
|
-
|
2,525
|
|||||||||
|
Accrued
expense
|
-
|
378,081
|
-
|
378,081
|
|||||||||
|
Customer
deposits
|
-
|
17,065,679
|
-
|
17,065,679
|
|||||||||
|
Deferred
revenue
|
500
|
20,686
|
-
|
21,186
|
|||||||||
|
Due
to director
|
-
|
151,887
|
-
|
151,887
|
|||||||||
|
Due
to related party
|
52,000
|
-
|
-
|
52,000
|
|||||||||
|
Income
tax payable
|
-
|
1,545,729
|
-
|
1,545,729
|
|||||||||
|
Total
current liabilities
|
55,025
|
39,141,632
|
-
|
39,196,657
|
|||||||||
|
Deferred
revenue
|
3,674
|
-
|
-
|
3,674
|
|||||||||
|
Minority
interests in consolidated subsidiaries
|
-
|
1,293,587
|
-
|
1,293,587
|
|||||||||
|
Commitments
and contingencies
|
-
|
-
|
-
|
-
|
|||||||||
|
Shareholders'
equity (deficit):
|
|||||||||||||
|
Contributed
capital
|
-
|
12,118,776
|
(12,118,776
|
(1)
|
-
|
||||||||
|
Preferred
stock
|
-
|
-
|
-
|
||||||||||
|
Common
stock
|
7,535
|
1,282
|
9,283
|
(2)
|
18,100
|
||||||||
|
Additional
paid-in capital
|
84,139
|
-
|
11,982,399
|
(4)
|
12,066,538
|
||||||||
|
Accumulated
other comprehensive income
|
-
|
2,243,776
|
-
|
2,243,776
|
|||||||||
|
Retained
earnings (accumulated deficit)
|
(127,094
|
)
|
5,016,058
|
127,094
|
(3)
|
5,016,058
|
|||||||
|
Total
shareholders' equity (deficit)
|
(35,420
|
)
|
19,379,892
|
-
|
19,344,472
|
||||||||
|
Total
liabilities and shareholders' equity
|
$
|
23,279
|
$
|
59,815,111
|
$
|
-
|
$
|
59,838,390
|
|||||
| (1) |
Contributed
capital of $12,118,776 was reclassified as additional paid-in
capital.
|
| (2) |
Net
effects on the Par value of $0.001 of the cancellation of
1,135,000 shares
held by Fresh Ideas' principal shareholders and issuance
of 11,700,000
shares to the shareholder of Ever Auspicious and the effects
of the
consolidation of Ever
Auspicious.
|
| (3) |
Elimination
of the accumulated deficit of Fresh Ideas, the accounting
acquiree.
|
| (4) |
Net
effects of notes (1), (2) and
(3)
|
|
(5)
|
Includes
the accounts of Ever Auspicious’s wholly owned subsidiary, Shisheng and
its majority owned subsidiaries.
|
-2-
FRESH
IDEAS MEDIA, INC.
UNAUDITED
PROFORMA COMBINED STATEMENT OF INCOME (LOSS)
AND
COMPREHENSIVE INCOME (LOSS)
|
For the Ten
Months Ended
September 30,
2008
|
Ever
Auspicious
For the Six
Months
Ended June 30,
2008 (1)
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
||||||||||
|
Net revenue
|
$
|
21,481
|
$
|
81,097,084
|
-
|
$
|
81,118,565
|
||||||
|
Cost
of revenue
|
-
|
76,996,270
|
-
|
76,996,270
|
|||||||||
|
Gross
profit
|
21,481
|
4,100,814
|
-
|
4,122,295
|
|||||||||
|
Operating
expense:
|
|||||||||||||
|
Sales
and marketing
|
-
|
445,299
|
-
|
445,299
|
|||||||||
|
General
and administrative
|
67,784
|
487,670
|
-
|
555,454
|
|||||||||
|
Total
operating expenses
|
67,784
|
932,969
|
-
|
1,000,753
|
|||||||||
|
Income
(loss) from operations
|
(46,303
|
)
|
3,167,845
|
-
|
3,121,542
|
||||||||
|
Other
income (expenses):
|
|||||||||||||
|
Interest
income
|
-
|
58,092
|
-
|
58,092
|
|||||||||
|
Interest
expense
|
-
|
(129,369
|
)
|
-
|
(129,369
|
)
|
|||||||
|
Investment
income (loss)
|
-
|
-
|
-
|
-
|
|||||||||
|
Total
other expenses
|
-
|
(71,277
|
)
|
-
|
(71,277
|
)
|
|||||||
|
Income
(loss) before provision for income taxes, minority interest and
extraordinary item
|
(46,303
|
)
|
3,096,568
|
-
|
3,050,265
|
||||||||
|
Provision
for income taxes
|
-
|
711,351
|
-
|
711,351
|
|||||||||
|
Income
(loss) before minority interest and extraordinary item
|
(46,303
|
)
|
2,385,217
|
-
|
2,338,914
|
||||||||
|
Minority
interest in net income of consolidated subsidiaries
|
-
|
(231,275
|
)
|
-
|
(231,275
|
)
|
|||||||
|
Income
(loss) before extraordinary item
|
(46,303
|
)
|
2,153,942
|
-
|
2,107,639
|
||||||||
|
Extraordinary
item - gain on acquisition of controlling interest of
Zhengji
|
-
|
-
|
-
|
-
|
|||||||||
|
Net
income (loss)
|
(46,303
|
)
|
2,153,942
|
-
|
2,107,639
|
||||||||
|
Other
comprehensive income
|
-
|
1,109,461
|
-
|
1,109,461
|
|||||||||
|
Comprehensive
income (loss)
|
$
|
(46,303
|
)
|
$
|
3,263,403
|
$
|
-
|
$
|
3,217,100
|
||||
|
Weighted
average number of shares outstanding -basic and diluted
|
7,535,000
|
10,000
|
18,100,000
|
||||||||||
|
Net
(loss) income per common share - basic and diluted
|
$
|
(0.01
|
)
|
$
|
215.39
|
$
|
0.12
|
||||||
| (1) |
Includes
the accounts of Ever Auspicious’s wholly owned subsidiary, Shisheng and
its majority owned subsidiaries.
|
-3-
FRESH
IDEAS MEDIA, INC.
UNAUDITED
PROFORMA COMBINED STATEMENT OF INCOME (LOSS)
AND
COMPREHENSIVE INCOME (LOSS)
|
Fresh Ideas
For the Year
Ended
November 30,
2007
|
Ever
Auspicious
For the Year
Ended
December 31,
2007 (1)
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
||||||||||
|
Net Revenue
|
$
|
14,206
|
$
|
152,430,674
|
-
|
$
|
152,444,880
|
||||||
|
Cost
of revenue
|
8,200
|
147,270,951
|
-
|
147,279,151
|
|||||||||
|
Gross
profit
|
6,006
|
5,159,723
|
-
|
5,165,729
|
|||||||||
|
Operating
Expense:
|
|||||||||||||
|
Sales
and marketing
|
-
|
949,219
|
-
|
949,219
|
|||||||||
|
General
and administrative
|
54,046
|
477,705
|
-
|
531,751
|
|||||||||
|
Total
operating expenses
|
54,046
|
1,426,924
|
-
|
1,480,970
|
|||||||||
|
Income
(loss) from operations:
|
(48,040
|
)
|
3,732,799
|
-
|
3,684,759
|
||||||||
|
Other
income (expenses):
|
|||||||||||||
|
Interest
income
|
-
|
154,437
|
-
|
154,437
|
|||||||||
|
Interest
expense
|
(850
|
)
|
(207,271
|
)
|
-
|
(208,121
|
)
|
||||||
|
Investment
income (loss)
|
-
|
4,943
|
-
|
4,943
|
|||||||||
|
Total
other expenses
|
(850
|
)
|
(47,891
|
)
|
-
|
(48,741
|
)
|
||||||
|
Income
(loss) before provision for income taxes, minority interest and
extraordinary item
|
(48,890
|
)
|
3,684,908
|
-
|
3,636,018
|
||||||||
|
Provision
for income taxes
|
-
|
244,911
|
-
|
244,911
|
|||||||||
|
Income
(loss) before minority interest and extraordinary item
|
(48,890
|
)
|
3,439,997
|
-
|
3,391,107
|
||||||||
|
Minority
interest in net income of consolidated subsidiaries
|
-
|
(520,335
|
)
|
-
|
(520,335
|
)
|
|||||||
|
Income
(loss) before extraordinary item
|
(48,890
|
)
|
2,919,662
|
-
|
2,870,772
|
||||||||
|
Extraordinary
item – gain on acquisition of controlling interest of
Zhengji
|
-
|
251,811
|
-
|
251,811
|
|||||||||
|
Net
income (loss)
|
(48,890
|
)
|
3,171,473
|
-
|
3,122,583
|
||||||||
|
Other
comprehensive income
|
-
|
887,391
|
-
|
887,391
|
|||||||||
|
Comprehensive
income (loss)
|
$
|
(48,890
|
)
|
$
|
4,058,864
|
$
|
-
|
$
|
4,009,974
|
||||
|
Weighted
average number of shares outstanding - basic and diluted
|
4,863,500
|
10,000
|
18,100,000
|
||||||||||
|
Net
(loss) income per common share, basic and diluted
|
$
|
(0.01
|
)
|
$
|
317.15
|
$
|
0.17
|
||||||
| (1) |
Includes
the accounts of Ever Auspicious’s wholly owned subsidiary, Shisheng and
its majority owned
subsidiaries.
|
-4-
