Everest Resources Corp. - FORM 8-K - EX-99.4 - UNAUDITED PRO-FORMA COMBINED FINANCIAL STATEMENTS OF COVENANT HOLDINGS AND EVEREST AS OF SEPTEMBER 30, 2009 AND DECEMBER 31, 2008 - December 31, 2009

Attached files

file filename
8-K - FORM 8-K - Everest Resources Corp.f8k1209_convenant.htm
EX-2.1 - SHARE EXCHANGE AGREEMENT - Everest Resources Corp.f8k1209ex2i_convenant.htm
EX-2.2 - ARTICLES OF EXCHANGE - Everest Resources Corp.f8k1209ex2ii_convenant.htm
EX-4.1 - SPECIMEN STOCK CERTIFICATE - Everest Resources Corp.f8k1209ex4i_convenant.htm
EX-3.(II).2 - AMENDMENT TO THE BYLAWS - Everest Resources Corp.f8k1209ex3ii_convenant.htm
EX-10.5 - RESIGNATION LETTER FROM MOHAN SINGH - Everest Resources Corp.f8k1209ex10v_convenant.htm
EX-10.1 - TERMINATION AGREEMENT - Everest Resources Corp.f8k1209ex10i_convenant.htm
EX-16.1 - LETTER FROM MANNING ELLIOTT LLP - Everest Resources Corp.f8k1209ex16i_convenant.htm
EX-3.(I).2 - CERTIFICATE OF AMENDMENT TO THE ARTICLES OF INCORPORATION - Everest Resources Corp.f8k1209ex3i2_convenant.htm
EX-10.6 - PROMISSORY NOTE - Everest Resources Corp.f8k1209ex10vi_convenant.htm
EX-10.2 - SHARE CANCELLATION AND LOAN AGREEMENT - Everest Resources Corp.f8k1209ex10ii_convenant.htm
EX-10.4 - STOCK ACQUISITION AND REORGANIZATION AGREEMENT - Everest Resources Corp.f8k1209ex10iv_convenant.htm
EX-99.1A - AUDITED FINANCIAL STATEMENTS, TOGETHER WITH NOTES TO FINANCIAL STATEMENTS, OF CHONGQING SYSWAY FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007 - Everest Resources Corp.f8k1209ex99ia_convenant.htm
EX-99.1B - AUDITED FINANCIAL STATEMENTS, TOGETHER WITH NOTES TO FINANCIAL STATEMENTS, OF HAINAN JIEN FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007 - Everest Resources Corp.f8k1209ex99ib_convenant.htm
EX-99.3 - UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS, TOGETHER WITH NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, OF COVENANT HOLDINGS FOR THE PERIOD FROM INCEPTION THROUGH SEPTEMBER 30, 2009 - Everest Resources Corp.f8k1209ex99iii_convenant.htm
EX-99.2A - UNAUDITED CONDENSED FINANCIAL STATEMENTS, TOGETHER WITH NOTES TO CONDENSED FINANCIAL STATEMENTS, OF CHONGQING SYSWAY FOR THE SIX MONTHS ENDED JUNE 30, 2009 AND 2008 - Everest Resources Corp.f8k1209ex99iia_convenant.htm
EX-99.2B - UNAUDITED CONDENSED FINANCIAL STATEMENTS, TOGETHER WITH NOTES TO CONDENSED FINANCIAL STATEMENTS, OF HAINAN JIEN FOR THE SIX MONTHS ENDED JUNE 30, 2009 AND 2008 - Everest Resources Corp.f8k1209ex99iib_convenant.htm
EX-10.3 - STOCK ACQUISITION AND REORGANIZATION AGREEMENT - Everest Resources Corp.f8k1209ex10iii_convenant.htm
 
Exhibit 99.4
 
Everest Resources Corp. and
Covenant Group Holdings Inc.
Pro Forma Combined Financial Statements
(Unaudited)
 
 
Contents
 

 
     Page
     
Pro Forma Combined Financial Statements:    
     
Pro Forma Combined Balance Sheet
as of September 30, 2009 (unaudited)
   1
     
Pro Forma Combined Statements of Operations
for the year ended December 31, 2008 
   2
     
Pro Forma Combined Statements of Operations
nine months ended September 30, 2009 (unaudited)
   3
     
Notes to Pro Forma Combined Financial Statements (unaudited)   4
 
 
 
 

 
COVENANT GROUP HOLDINGS, INC.
  
AND EVEREST RESOURCES CORP.
  
Pro forma Combined Balance Sheet
  
As of September 30, 2009
  
(unaudited)
  
                           
   
Everest
    
Covenant
    
Pro forma
      
Pro forma
  
     (1)      (2)    
Adjustments
      
Combined
  
   
(historical)
    
(historical)
                
                           
ASSETS
                          
                           
CURRENT ASSETS
                          
    Cash and cash equivalents
   $ 4,668     $ 1,004,006     $ 205,332  
 ( B )
 ( C ) ( D )
   $ 1,214,006  
    Accounts receivable, net
     -       4,508,514       -         4,508,514  
    Retentions receivable
     -       1,173,292       -         1,173,292  
    Advances to suppliers
     -       688       -         688  
    Prepayment
     -       125,766       -         125,766  
    Other receivables
     -       372,217       -         372,217  
    Inventory
     -       295,189       -         295,189  
    Intangible Assets
     -       144,705       -         144,705  
                                   
TOTAL CURRENT ASSETS
     4,668       7,624,377       205,332         7,834,377  
                                   
NON-CURRENT ASSETS
                               -  
    Retentions receivable
     -       190,921       -         190,921  
    Property and equipment, net
     -       68,387       -         68,387  
    Goodwill
     -       2,134,323       -         2,134,323  
                                   
TOTAL NONCURRENT ASSETS
     -       2,393,631       -         2,393,631  
                                   
TOTAL ASSETS
   $ 4,668       10,018,008     $ 205,332       $ 10,228,008  
                                   
                                   
LIABILITIES AND STOCKHOLDERS' EQUITY
                                  
                                   
CURRENT LIABILITIES
                                  
    Accounts payable
   $ 3,328     $ 3,052,343     $ (3,328 )
 ( B )
   $ 3,052,343  
    Unearned revenue
     -       35,621       -         35,621  
    Tax payable
     -       645,782       -         645,782  
    Accrued liabilities and other payables
     7,754       192,116       (7,754 )
 ( B )
     192,116  
    Dividend Payable
     -       346,293       -         346,293  
    Short term loan
     -       485,973       (399,870 )  ( E )      86,103  
    Short term note payable
     -       -       100,000  
 ( C )
     100,000  
                                   
TOTAL CURRENT LIABILITIES
     11,082       4,758,128       (310,952 )       4,458,258  
                                   
STOCKHOLDERS' EQUITY
                                  
    Common Stock
     66       62       (13 )
 ( A )
     115  
    Additional paid in capital
     79,984       5,170,401       719,833  
 ( A ) ( D ) ( E )
     5,970,218  
    Donated Capital
     30,000       -       (30,000 )
 ( B )
     -  
    Statutory reserve
     -       87,915       -         87,915  
    Accumulated other comprehensive income
     -       1,502       -         1,502  
    Accumulated Deficit
    (116,464 )     -       (173,536 )
 ( B ) ( C )
     (290,000 )
                                   
TOTAL STOCKHOLDERS' EQUITY
     (6,414 )     5,259,880       516,284         5,769,750  
                                   
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
   $ 4,668     $ 10,018,008     $ 205,332       $ 10,228,008  
                                   
 
(1)
Source:  unaudited financial statements of  Everest Resources Corp. as of September 30, 2009 as filed in Quarterly Report on Form 10QSB filed with the SEC on November 13, 2009.
(2)
Source:  unaudited consolidated financial statements of Covenant Group Holdings, Inc. as of September 30, 2009 included in this Form 8-K.
(A)
 
After cancellation of 4,500,000 shares by the former shareholder of Everest; and Everest issuance and transfer of its shares to Covenant shareholders, on one-for-one basis, total shares outstanding after the reverse merge is 11,480,909, including 500,000 shares held by a former shareholder as collateral for the note payable.
(B)
Elimination of Everest's capital accounts and accumulated deficit  as  result of recapitalization, and reflection of payment of all liabilities of Everest prior to closing.
(C)
Recording of $190,000 cash payment and $100,000 note issued for the total cost of the shell company of $290,000.
(D)
Recording cash received from issuance of Covenant shares through private placement.
(E) Recording cancellation of the bridge loan of $399,870 for the issuance of 200,909 Covenants shares to a lender.
 
See accompanying notes to pro forma combined financial statements
 
1
 
COVENANT GROUP HOLDINGS, INC.
AND EVEREST RESOURCES CORP.
Pro forma Combined Statement of Operations
For the Year Ended December 31, 2008
   
Everest
    
Jien
    
Chongqing Sysway
    
Covenant
    
Pro forma
    
Pro forma
  
      (1)       (2)       (3)          
Adjustments
    
Combined
  
   
(historical)
    
(historical)
    
(historical)
    
(historical)
              
                                             
Net Revenue
   $ -     $ 5,554,357     $ 4,924,438     $ -     $ -     $ 10,478,795  
                                                 
Cost of Revenue
     -       (4,403,810 )     (3,826,264 )     -       -       (8,230,074 ) 
                                                 
Gross Profit
     -       1,150,547       1,098,174       -       -       2,248,721  
                                                 
Operating expenses:
                                                
Selling expenses
     -       (103,774 )     (159,949 )     -       -       (263,723 )
General and administrative expenses
     (46,943 )     (385,486 )     (456,040 )     -       -       (888,469 )
                                                 
Total operating expenses
     (46,943 )     (489,260 )     (615,989 )     -       -       (1,152,192 ) 
                                                 
Income from operations
     (46,943 )     661,287       482,185       -       -       1,096,529  
                                                 
Non-operating income (expenses):
                                                
Interest income
     -       189       -       -       -       189  
Interest expense
     -       (2,937 )     (1,011 )     -       -       (3,948 )
Other income
     -       547       6,838       -       -       7,385  
Other expenses
     -       (1,648 )     -       -       -       (1,648 )
Subsidy income
     -       -       1,872       -       -       1,872  
Reversal of provision for bad debt
     -       -       161,805       -       -       161,805  
Tax rebate
     -       -       26,245       -       -       26,245  
   Acquisition costs     -       -       -       -       (290,000 )  (C)    (290,000 )
                                                 
Total non-operating expenses
     -       (3,849 )     195,749       -       (290,000 )      (98,100 ) 
                                                 
Income before income tax
     (46,943 )     657,438       677,934       -       (290,000 )     998,429  
                                                 
Income tax expense
     -       -       (181,060 )     -       -       (181,060 )
                                                 
Net income
   $ (46,943 )   $ 657,438     $ 496,874     $ -     $ (290,000 )   $ 817,369  
                                                 
                                                 
Earnings per share
                                           $ 0.07  
                                                 
Weighted average shares outstanding
                                             11,480,909  (4)
 
(1) Source:  unaudited financial statements of  Everest Resources Corp. as of December 31, 2008 as filed in Quarterly Report on Form 10QSB filed with the SEC on February 11, 2009.
(2) Source:  audited financial statements of Hainan Jien Intelligent Engineering Co., Ltd. as of December 31, 2008 included in this form 8K.
(3) Source:  audited financial statements of Chongqing Sysway Information Technology Co., Ltd as of December 31, 2008 included in this Form 8K.
(4) These include shares of 1,600,000, being Everest public float before the Share Exchange and 500,000 shares held by a former shareholder held as collateral for the note payable.
(C) Transaction cost representing cost of acquisition of shell for $290,000, which is  non-recurring expense.

See accompanying notes to pro forma combined financial statements
 
2
 
COVENANT GROUP HOLDINGS, INC.
AND EVEREST RESOURCES CORP.
Pro forma Combined Statement of Operations
For the Nine Months Ended September 30, 2009

 
   
Everest
    
Jien
    
Chongqing Sysway
    
Covenant
    
Pro forma
    
Pro forma
  
      (1)       (2)       (3)       (4)    
Adjustments
    
Combined
  
   
(historical)
    
(historical)
    
(historical)
    
(historical)
              
                                             
Net Revenue
   $ -     $ 4,835,625     $ 3,484,480     $ -     $ -     $ 8,320,105  
                                                 
Cost of Revenue
     -       (3,741,573 )     (2,727,147 )     -       -       (6,468,720 )
                                                 
Gross Profit
     -       1,094,052       757,333       -       -       1,851,385  
                                                 
Operating expenses:
                                                
Selling expenses
     -       (4,197 )     (112,141 )     -       -       (116,338 )
General and administrative expenses
     (18,100 )     (392,952 )     (337,560 )     (144,466 )     -       (893,078 )
                                                 
Total operating expenses
     (18,100 )     (397,149 )     (449,701 )     (144,466 )     -       (1,009,416 )
                                                 
Income from operations
     (18,100 )     696,903       307,632       (144,466 )     -       841,969  
                                                 
Non-operating income (expenses):
                                                
Interest income
     -       170       43       -       -       212  
Interest expense
     -       (710 )     (104 )     -       -       (814 )
Other income
     -       1,058       164       -       -       1,222  
Other expenses
     -       (4,475 )     -       -       -       (4,475 )
Financial expense
     -       -       (192 )     -       -     (192 )
    Acquisition cost                                     (290,000 )
 (C)
   (290,000 )
                                                 
Total non-operating expenses
     -       (3,957 )     (89 )     -       290,000       (294,047 )
                                                 
Income before income tax
     (18,100 )     692,946       307,543       (144,466 )     (290,000 )     547,922  
                                                 
Income tax expense
     -       -       (90,724 )     -       -       (90,724 )
                                                 
Net income
   $ (18,100 )   $ 692,946     $ 216,819     $ (144,466 )   $ (290,000 )   $ 457,198  
                                                 
                                                 
Earnings per share
                                           $ 0.04  
                                                 
Weighted average shares outstanding                                             11,480,909  (5)
 
(1) Source:  unaudited financial statements of  Everest Resources Corp. as of September 30, 2009 as filed in Quarterly Report on Form 10QSB filed with the SEC on November 13, 2009.
(2) Source:  unaudited financial statements of Hainan Jien Intelligent Engineering Co., Ltd. as of September 30, 2009
(3) Souce:   unaudited financial statements of Chongqing Sysway Information Technology Co., Ltd as of September 30, 2009.
(4) Source:  unaudited financial statements of Covenant Group Holdings, Inc. as of September 30, 2009.
(5) These include shares of 1,600,000, being Everest's public float before the share exchange, and 500,000 shares held by a former shareholder as collateral for the note payable.
(C) Transaction cost representing cost of acquisition of shell for $290,000, which is a non-recurring expense.
 
See accompanying notes to pro forma combined financial statements
 
3
 
Everest Resources Corp. and
Covenant Group Holdings, Inc.
Notes to Pro forma Combined Financial Statements
 
NOTE 1 - BASIS OF PRESENTATION
 
Pursuant to a share exchange agreement dated December 24, 2009, between Everest Resources Corp. (Everest or the Company) and Covenant Group Holdings, Inc. (Covenant or Covenant Holdings), Everest agreed to exchange 9,380,909 shares of its common stock, on a one-for-one basis, for each share of Covenant shares held of record on the date of the closing. Concurrent with the share exchange agreement, one of Everest’s shareholders agreed to cancel 4,500,000 shares out of 6,600,000 of total issued and outstanding shares of Everest in exchange for immediate payment of $100,000; and to cancel additional 500,000 shares upon Covenant paying the principal due to the Note issued of $190,000 for the acquisition of the shell company.  As of December 24, 2009, $90,000 of the note payable of $190,000 was paid.
 
The accompanying pro forma combined balance sheet presents the accounts of Everest and Covenant as if the acquisition of Covenant by Everest occurred on September 30, 2009.  The accompanying pro forma combined statements of operations present the accounts of Everest and Covenant including its subsidiaries Jien and Chongqing Sysway for the nine months ended September 30, 2009 and for the year ended December 31, 2008 as if the acquisition occurred on January 1, 2009 and January 1, 2008 for statements of operations purpose, respectively. For accounting purposes, the transaction is being accounted for as a recapitalization of Covenant as Covenant’s shareholders will own the majority of the shares and will exercise significant influence over the operating and financial policies of the consolidated entity and Everest is a non-operating shell prior to the acquisition.

The following adjustments would be required if the acquisition occurred as indicated above:

a.  
Recapitalization of Covenant to account for issuance of an aggregate of 9,380,909 shares of Everest to the shareholders of Covenant, on one-for-one basis, in exchange for each share of Covenant, plus Everest's public float of 1,600,000 shares before the share exchange, and 500,000 shares held by a former shareholder as collateral for the note payable;

b.  
Elimination of Everest's capital accounts and accumulated deficit  as  result of recapitalization, and reflection of payment of all liabilities of Everest prior to closing;

c.  
Recording $290,000 for the cost of the shell which is reflected in the pro forma statements of operations as a non-recurring acquisition cost;

d.  
Recording cash received from issuance of Covenant shares through private placement;
 
e.  
Recording cancellation of the bridge loan of $399,870 for the issuance of 200,909 Covenant’s shares to lender.

 
4

 

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