Action Acquisition CORP - FORM 8-K/A - EX-99.3 - March 9, 2011

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8-K/A - Action Acquisition CORPv214047_8ka.htm
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EX-99.1 - Action Acquisition CORPv214047_ex99-1.htm
 
ORB AUTOMOTIVE CORPORATION (FORMERLY: ACTION ACQUISITION CORPORATION) AND
HEBEI XINHUA RUBBER SEALING GROUP LIUZHOU SEALING CO., LTD
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2010

   
ORB
    
Liuzhou Sealing
    
Pro Forma
          
Pro Forma
  
    (1)     (2)    
Adjustments
          
Consolidated
  
  
 
(historical)
    
(historical)
                    
                                   
ASSETS
                                  
                                   
CURRENT ASSETS
                                  
Cash & cash equivalents
   $ 364,226     $ 902,380                 $ 1,266,606  
Accounts receivable, net
     1,270,218       12,417                   1,282,635  
Notes receivable
     278,871       533,825                   812,696  
Prepaid expenses and other receivables, net
     1,664,041       1,484,062                   3,148,103  
Deposit
     10,540       314,274                   324,814  
Due from related party
     -       107,035                   107,035  
Deferred expense
     -       1,988                   1,988  
Inventory
     399,476       2,221,584                   2,621,060  
                                     
TOTAL CURRENT ASSETS
     3,987,372       5,577,565       -             9,564,937  
                                       
NONCURRENT ASSETS
                                      
Plant, property & equipment, net
     422,094       2,015,405       (35,054 )   B       2,402,445  
Construction in progress
     -       24,510                     24,510  
Intangible assets, net
     -       5,849                     5,849  
Deferred tax assets
     -       -       7,011     C       7,011  
                                       
TOTAL NONCURRENT ASSETS
     422,094       2,045,764       (28,043 )           2,439,815  
                                       
TOTAL ASSETS
   $ 4,409,466     $ 7,623,329     $ (28,043 )         $ 12,004,752  
                                       
LIABILITIES AND SHAREHOLDERS' EQUITY
                                      
                                       
CURRENT LIABILITIES
                                      
Accounts payable
   $ 16,659     $ 670,599                   $ 687,258  
Bill payable
     -       842,684                     842,684  
Accrued liabilities and other payables
     18,812       302,510                     321,322  
Short-term loans
     -       2,984,584                     2,984,584  
Taxes payable
     817,374       479,602                     1,296,976  
Other payable to Shenzhen ORB original shareholders
     398,875       -                     398,875  
                                       
TOTAL CURRENT LIABILITIES
     1,251,720       5,279,979       -             6,531,699  
                                       
SUBSIDY RECEIVED IN ADVANCE
             182,806       -             182,806  
                                       
TOTAL LIABILITIES
     1,251,720       5,462,785       -             6,714,505  
                                       
SHAREHOLDER'S EQUITY
                                      
                                       
Convertible preferred stock, $0.000128 par value, 781,250 shares authorized, 98,885 shares issued and outstanding as of September 30, 2010 and December 31, 2009, respectively
     13       -       -             13  
                                       
Common stock, $0.000384 par value, 100,000,000 shares authorized, 4,883,974 and 3,376,575 shares issued and outstanding as of September 30, 2010 and December 31, 2009, respectively
     1,875       -       791     D       2,666  
Additional paid in capital
     (1,888 )     635,219       1,349,940    
A, B C
       1,983,271  
Statutory reserve
     140,590       146,551                     287,141  
Accumulated other comprehensive income
     174,498       137,081       (137,081 )           174,498  
Retained earnings
     2,842,658       1,241,693       (1,241,693 )           2,842,658  
                                       
TOTAL SHAREHOLDERS' EQUITY
     3,157,746       2,160,544       (28,043 )           5,290,247  
                                       
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
   $ 4,409,466     $ 7,623,329     $ (28,043 )         $ 12,004,752  

(1)
Source: unaudited financial statements of ORB Automotive Corporation for the nine months ended September 30, 2010 as filed in Quarterly Report filed with the SEC on November 23, 2010.
(2)
Source: unaudited financial statements of Hebei Xinhua Rubber Sealing Group Liuzhou Sealing Co., Ltd. included in this Form 8-K/A.
A.
Allocation of the purchase price to the fair value of assets acquired and liabilities assumed. The excess of the fair value of net assets acquired over purchase price of $405,387 is recorded as bargain purchase gain.
B.
Record the write-down of fixed assets to fair value.
C.
Record deferred tax asset as a result of book and tax basis difference of fixed assets.
D.
Record 2,060,000 common shares issued for the acquisition at par.
  
See accompanying notes to pro forma consolidated financial statements

 
F-2
 
 
ORB AUTOMOTIVE CORPORATION (FORMERLY: ACTION ACQUISITION CORPORATION) AND
HEBEI XINHUA RUBBER SEALING GROUP LIUZHOU SEALING CO., LTD
PRO FORMA CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010
(UNAUDITED)

   
ORB
    
Liuzhou Sealing
    
Pro forma
    
Pro Forma
  
    (1)     (2)    
Adjustments
    
Consolidated
  
   
(historical)
    
(historical)
              
                             
Net Revenue
   $ 3,515,277     $ 7,059,454           $ 10,574,731  
                               
Cost of Revenue
     1,901,734       5,254,903             7,156,637  
                               
Gross Profit
     1,613,543       1,804,551       -       3,418,094  
                                 
Operating expenses:
                                
Selling expenses
     162,549       135,137               297,686  
General and administrative expenses
     273,680       574,209               847,889  
                                 
Total operating expenses
     436,229       709,346       -       1,145,575  
                                 
Income from operations
     1,177,314       1,095,205       -       2,272,519  
                                 
Non-operating income (expenses):
                                
Interest income (expense)
     1,872       (226,574 )             (224,702 )
Other income
     -       10,575               10,575  
Other expenses
     -       (8,977 )             (8,977 )
                                 
Total non-operating expenses
     1,872       (224,976 )     -       (223,104 )
                                 
Income before income tax
     1,179,186       870,229       -       2,049,415  
                                 
Income tax
     259,552       217,557               477,109  
                                 
Net income
     919,634       652,672       -       1,572,306  
                                 
Other comprehensive item
                                
Foreign currency translation
     63,321       38,170       -       101,491  
                                 
Comprehensive Income
   $ 982,955     $ 690,842     $ -     $ 1,673,797  
                                 
Earnings per share - basic
     0.26                       0.28  
Earnings per share - diluted
     0.07                       0.12  
                                 
Weighted average shares outstanding
     3,492,529               2,060,000       5,552,529  
Diluted average shares outstanding
     13,381,066               -       13,381,066  

(1)
Source: unaudited financial statements of ORB Automotive Corporation for the nine months ended September 30, 2010 as filed in Quarterly Report filed with the SEC on November 23, 2010.
(2)
Source: unaudited financial statements of Hebei Xinhua Rubber Sealing Group Liuzhou Sealing Co., Ltd. included in this Form 8-K/A.

See accompanying notes to pro forma consolidated financial statements

 
F-3
 
 
ORB AUTOMOTIVE CORPORATION (FORMERLY: ACTION ACQUISITION CORPORATION) AND
HEBEI XINHUA RUBBER SEALING GROUP LIUZHOU SEALING CO., LTD
PRO FORMA CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31, 2009
(UNAUDITED)

   
ORB
    
Liuzhou Sealing
    
Pro forma
    
Pro Forma
  
     (1)     (2)    
Adjustments
    
Consolidated
  
   
(historical)
    
(historical)
              
                             
Net Revenue
   $ 4,306,946     $ 5,782,491           $ 10,089,437  
                               
Cost of Revenue
     2,287,228       4,235,781             6,523,009  
                               
Gross Profit
     2,019,718       1,546,710       -       3,566,428  
                                 
Operating expenses:
                                
Selling expenses
     221,182       148,190               369,372  
General and administrative expenses
     196,897       391,238               588,135  
Research and development expense
     89,766       -               -  
                                 
Total operating expenses
     507,845       539,428       -       957,507  
                                 
Income from operations
     1,511,873       1,007,282       -       2,608,921  
                                 
Non-operating income (expenses):
                                
Interest income (expense)
     683       (123,419 )             (122,736 )
Other income
     286       5,035       405,387 A     410,708  
Other expenses
     (2,092 )     (1,069 )             (3,161 )
                                 
Total non-operating expenses
     (1,123 )     (119,453 )     405,387       284,811  
                                 
Income before income tax
     1,510,750       887,829       405,387       2,893,732  
                                 
Income tax
     306,626       221,957               528,583  
                                 
Net income
     1,204,124       665,872       405,387       2,365,149  
                                 
Other comprehensive item
                                
Foreign currency translation
     1,777       1,025       -       2,802  
                                 
Comprehensive Income
   $ 1,205,901     $ 666,897     $ 405,387     $ 2,367,951  
                                 
Earnings per share - basic
     0.36                       0.44  
Earnings per share - diluted
     -                       -  
                                 
Weighted average shares outstanding
     3,376,575               2,060,000       5,436,575  
Diluted average shares outstanding
     -               -       -  

(1)
Source: Audited financial statements of Grand Power Capital Inc. and Shenzhen ORB-FT New Material Co., Ltd combined statements of operations and comprehensive income for the year ended December 31, 2009 and 2008 as filed in 8-K/A filed with the SEC on January 11, 2011.
(2)
Source: Audited financial statements of Hebei Xinhua Rubber Sealing Group Liuzhou Sealing Co., Ltd. included in this Form 8-K/A.
A.
Allocation of the purchase price to the fair value of assets acquired and liabilities assumed. The excess of the fair value of net assets acquired over purchase price of $405,387 is recorded as bargain purchase gain.

See accompanying notes to pro forma consolidated financial statements
 
 
F-4
 
 
ORB AUTOMOTIVE CORPORATION (FORMERLY: ACTION ACQUISITION CORPORATION)
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BASIS OF PRESENTATION

On November 3, 2010, ORB Automotive Corporation (formerly Action Acquisition Corporation, the “Company” or “ORB” ), completed the acquisition of 100% of the equity interest in Hebei Xinhua Rubber Sealing Group Liuzhou Sealing Co., Ltd., a company registered in the People’s Republic of China (“Liuzhou Sealing”), from Liuzhou Sealing’s shareholders. The purchase agreement of this acquisition was entered on October 22, 2010. Pursuant to the terms of the stock purchase agreement among the parties (the “Stock Purchase Agreement”), all of the issued and outstanding shares of Liuzhou Sealing were exchanged for 2.06 million ordinary shares of the Company. The Stock Purchase Agreement contained such representations, warranties, obligations and conditions as are customary for transactions of the type governed by such agreements.

The fair value of the stock price for the shares issued for the Liuzhou Sealing acquisition was determined by multiplying the earnings per share based on ORB’s estimated 2010 net income (excluding the net income of Liuzhou Sealing), by the average P/E ratios of 5 comparable companies, which was $1.01 per share.

The accompanying pro forma consolidated balance sheet presents the accounts of ORB and Liuzhou Sealing as if the acquisition of Liuzhou Sealing by ORB occurred on September 30, 2010 for balance sheet purposes. The accompanying pro forma consolidated statements of income and comprehensive income present the accounts of ORB and Liuzhou Sealing for the nine months ended September 30, 2010 and for the year ended December 31, 2009 as if the acquisition occurred on January 1, 2009. The fair values of the assets acquired and liabilities assumed at acquisition date are used for the purpose of purchase price allocation. The excess of the fair value of nets assets acquired over purchase price of $405,387 is recorded as bargain purchase gain.

The following adjustments would be required if the acquisition of Liuzhou Sealing by ORB occurred as indicated above:

 
A)
Allocation of the net purchase price to the fair value of assets acquired and liabilities assumed.  The excess of the fair value of nets assets acquired over purchase price of $405,387 is recorded as bargain purchase gain.

 
B)
Record the fair value of fixed assets at acquisition date.

 
C)
Record deferred tax asset as a result of book and tax basis difference of fixed assets.

 
D)
Record 2,060,000 common shares issued for the acquisition at par.
 
 
F-5
 

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