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EX-10.1 - Cang Bao Tian Xia International Art Trade Center, Inc.v187810_ex10-1.htm


UNITED STATES
 
SECURITIES AND EXCHANGE COMMISSION
 
Washington, D.C.  20549
 
_____________________________
 
FORM 8-K
 
CURRENT REPORT
 
PURSUANT TO SECTION 13 OR 15(d) OF THE
 
SECURITIES EXCHANGE ACT OF 1934
 
Date of Report:
 
(Date of earliest event reported)
 
June 7, 2010
 
____________________________
 

ZHONGCHAI MACHINERY, INC.
(formerly Equicap, Inc.)
 
(Exact name of registrant as specified in charter)
 
NEVADA
(State or other Jurisdiction of Incorporation or Organization)
 

000-31091
224 Tianmushan  Road, 
33-0652593 
 
Zhongrong Chengshi  Huayuan 5-1-602,
Hangzhou, P.R. China 310007
 
(Commission File Number)
(Address of Principal Executive Offices and zip code)
(IRS Employer Identification No.)

904-418-9133
(Registrant’s telephone number, including area code)
 

N/A
 (Former Name or Former Address, if Changed Since Last Report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of registrant under any of the following provisions:
 
r
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
r
Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR 240.14a-12(b))
r
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
r
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 


 
 

 
 
Item 2.01 — Completion of Acquisition or Disposition of Assets
 
On June 7, 2010, Zhongchai Machinery, Inc. (“Registrant”) has received the new business license from Industrial and Commercial Management Bureau, and through its subsidiaries, completed the acquisition of the 25% minority interest of Zhejiang Zhongchai Machinery Co., Ltd (“ZhongChai JV”). ZhongChai JV is a Sino-foreign equity joint venture established in the Peoples Republic of China (the “PRC”) by the Registrant through its Hong Kong subsidiary, and a local party in the PRC, Xinchang Keyi Machinery Co., Ltd., the successor in interest to Xinchai Holding Group Co., Ltd. (“Xinchang Keyi”). ZhongChai JV manufacturers and sells gears and transmission in the PRC. The gears are sold to engine and transmission manufacturers for their engine and gearbox products. ZhongChai JV’s transmissions are sold primarily to forklift truck manufacturers.

In connection with the acquisition, the Articles of Association of ZhongChai JV were changed to eliminate the right of Xinchang Keyi to designate one director and the related obligation to have all significant matters put to the board of directors approved by the full board.  With these changes, ZhongChai JV will be operated as a wholly owned subsidiary with full control held by the Registrant.

The purchase price for the 25% minority interest of ZhongChai JV was $2,600,000.  The acquisition was approved by the agency of Ministry of Commerce in the PRC on May 4.  The source of funds for the purchase price came from _the working capital and borrowings. The acquisition agreement is attached as Exhibit 10.1 to this Form 8-K report.

Item 9.01 — Financial Statements and Exhibits

(a)
Financial Statements of the Business Acquired

Pursuant to SFAS No. 141 paragraph 11, the acquisition of some or all of the non-controlling interest in a subsidiary is not a business combination.  Therefore, the acquisition of 25% interest in ZhongChai JV by the Registrant is not treated as a business combination and as such, Rules 8-04 and 8-05 of Regulation S-X relating to financial statements of the acquired business and pro forma financial information are not required to be provided under Item 9.01 of this Current Report on Form 8-K.  The Registrant, however, is providing pro forma financial statements reflecting the acquisition for the convenience of investors.  Notwithstanding this pro forma statement, the prior financial statements of the Registrant have consolidated the full results of ZhongChai.


(b)
Pro Forma Financial Information

Included commencing at page 4 of this Current Report on Form 8-K.  See the explanation provided under Item 9.01(a) above.

(c)
Shell Company Transactions

Not applicable

(d)
Exhibits

Number
Description
   
10.1
Form of Acquisition Agreement for 25% Interest in ZhongChai JV.

 
 
 
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SIGNATURES

 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.
 
          
       
 
Equicap, Inc.
(Registrant)
 
 
 
       
Date: June 9, 2010
By:
/s/ Peter Wang  
    Peter Wang,  
   
Chairman, President and
Chief Financial Officer
 
       

 
 
 
 
 
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Unaudited Pro Forma Condensed Financial Statements





The following unaudited pro forma consolidated financial statements of Equicap, Inc (the “Company”) have been prepared to indicate how the financial statements of the Company might have looked if the acquisition of 25% minority interest of Zhejiang Zhongchai Machinery Co., Ltd.(“Zhongchai”) had occurred as of the beginning of the period presented.

The pro forma consolidated financial statements should be read in conjunction with a reading of the historical financial statements of the Company. The pro forma consoidated financial statements are presented for illustrative purposes only and are not intended to be indicative of actual financial condition or results of operations had the acquisition of 25% minority interest of Zhongchai been in effect during the periods presented, or of financial condition or results of operations that may be reported in the future.









 
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Equicap, Inc.
 Unaudited Pro Forma Condensed Balance Sheet
March 31, 2010
 
 
   
Historical
   
Pro Forma
 
   
Equicap, Inc.
               
   
Consolidated
   
Adjustments
 
Notes
 
Combined
 
                     
ASSETS
                   
Current assets
                   
     Cash & cash equivalents
  $ 539,914     $ -       $ 539,914  
     Restricted cash
    90,441       -         90,441  
     Accounts receivable, net of allowance
    2,426,475       -         2,426,475  
     Inventory
    2,207,522       -         2,207,522  
     Notes receivable
    1,058,565       -         1,058,565  
     Advance payments
    5,329,020       -         5,329,020  
     Other receivables
    597,275       -         297,228  
                           
Total current assets
    12,249,212       -         12,249,165  
                           
Property and equipment, net
    2,962,393       -         2,962,393  
                           
Goodwill
    3,411,913       -         3,411,913  
                           
Other assets
    708       -         708  
                           
         Total assets
  $ 18,624,226     $ -       $ 18,624,226  
                           
LIABILITIES
                         
Current liabilities
                         
     Accounts payable and accrued expenses
  $ 3,121,790     $ -       $ 3,121,790  
     Notes payable
    90,441       -         90,441  
     Short-term bank loans
    1,422,990       -         1,422,990  
     Taxes payable
    178,256       -         178,256  
     Other current liabilities
    667,453       2,600,000  
(a)
    3,267,453  
                           
         Total current liabilities
    5,480,930       2,600,000         8,080,930  
                           
         Total liabilities
    5,480,930       2,600,000         8,080,930  
                           
EQUITY
                         
Stockholders’ equity
                         
     Common stock, $0.001 par value, 500,000,000
                         
        shares authorized, 27,613,019 shares issued and
                         
        Outstanding at March 31, 2010
    27,613       -         27,613  
     Stock subscriptions receivable
    (33,120 )     -         (33,120 )
     Additional paid-in capital
    16,484,097       -         16,484,097  
     Statutory reserves
    124,460       -         124,460  
     Accumulated deficit
    (8,158,417 )     372,571  
(c) (d)
    (7,785,846 )
     Accumulated Other comprehensive income
    1,431,995       -         1,431,995  
                           
         Total stockholders' equity
    9,876,628       372,571         10,249,199  
                           
Noncontrolling interest
    3,266,668       (2,972,571 )
(b)
    294,097  
                           
         Total liabilities and equity
  $ 18,624,226     $ -       $ 18,624,226  

 
 
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Equicap, Inc.
 Unaudited Pro Forma Condensed Statements of Operations
 For the Nine Months Ended March 31, 2010
 
   
Historical
       
 Pro Forma
     
   
Equicap, Inc.
   
Adjustments
 
Notes
 
Combined
 
                     
Sales
  $ 7,040,579     $ -       $ 7,040,579  
                           
Cost of sales
    5,481,480       -         5,481,480  
                           
Gross profit
    1,559,099       -         1,559,099  
                           
Operating expenses
                         
     Selling, general and administrative
    916,530       -         916,530  
                           
Income from operations
    642,569       -         642,569  
                           
Other income (expenses)
                         
     Interest income (expenses), net
    (63,364 )     -         (63,364 )
     Other income, net
    56,598       159,844  
         (c)
    216,442  
          Total other income (expenses)
    (6,766 )     159,844         153,078  
                           
Income before provision for income taxes
    635,803       159,844         795,647  
                           
Provision for income taxes
    140,541       -         140,541  
                           
Net income
    495,262       159,844         655,106  
                           
Less: Net income attributable to noncontrolling interest
    213,424       (212,727 )
         (d)
    697  
                           
Net income attributable to Equicap
    281,838       372,571         654,409  
                           
Other comprehensive income
                         
     Foreign currency translation adjustment
    16,521       -         16,521  
                           
Comprehensive income
  $ 298,359     $ 372,571       $ 670,930  
                           
Basic and diluted earnings per share
  $ 0.01               $ 0.02  
                           
Weighted average number of common shares
                         
     outstanding:
                         
        Basic and Diluted
    27,613,019                 27,613,019  

 
 
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Equicap, Inc.
Notes to Pro Forma Adjustments

a) 
Ajustment to record the cash that will be paid to purchase 25% ownership of Zhongchai.
b) 
Ajustment to eliminate minority interest in Zhongchai.
c) 
Ajustment to record minority interest over the purchase price.  
d) 
Ajustment to add 25% net income of Zhongchai in nine months ended March 2010.

















 
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