Attached files
| file | filename |
|---|---|
| EX-23.1 - Biostar Pharmaceuticals, Inc. | ex23-1.htm |
| EX-99.1 - Biostar Pharmaceuticals, Inc. | ex99-1.htm |
| 8-K/A - Biostar Pharmaceuticals, Inc. | biostarpharma8ka122111.htm |
Exhibit 99.2
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
On October 11, 2011, Biostar Pharmaceuticals, Inc. (NASDAQ GM: BSPM) (“Biostar” or the “Company”), through its wholly owned variable interest entity, Shaanxi Aoxing Pharmaceutical Co., Ltd., acquired 100% equity interest (the “Acquisition”) of Shaanxi Weinan Aoxing Pharmaceutical, LLC (formerly Shaanxi Weinan Huaren Pharmaceutical, Ltd.) (“Shaanxi Weinan”) at a cash purchase consideration of RMB61 million (approximately $9.5 million).
The accompanying unaudited pro forma condensed combined financial statements are presented to illustrate the estimated effects of the Acquisition. The accompanying unaudited pro forma condensed combined balance sheet presents the historical financial information of the Company as of September 30, 2011, as adjusted for the Acquisition, as if the Acquisition had occurred on September 30, 2011. The accompanying unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2011 and for the year ended December 31, 2010, combine the historical operations of the Company with the historical operations of Shaanxi Weinan as if the Acquisition had occurred on January 1, 2010.
The pro forma adjustments are based upon available information and certain assumptions that we believe are reasonable under the circumstances. The Acquisition was accounted for under the acquisition method of accounting whereby the total purchase consideration is allocated to the assets acquired and the liabilities assumed in connection with the Acquisition based on their estimated fair values as of the effective date of the Acquisition.
These unaudited pro forma condensed combined financial statements have been prepared by the Company’s management based upon the historical financial statements of the Company and Shaanxi Weinan and preliminary estimates of fair values, which are subject to change pending a final analysis of the fair values and useful lives, as applicable. These unaudited pro forma condensed combined financial statements is presented for illustrative purposes only and is not necessarily indicative of the operating results that would have occurred if the Acquisition had been consummated as on the dates indicated, nor is it necessarily indicative of future results. These unaudited pro forma condensed combined financial statements should be read in conjunction with the accompanying notes and assumptions and the historical financial statements and related notes of Biostar and Shaanxi Weinan. The historical financial data of Biostar for the year ended December 31, 2010 and nine months ended September 30, 2011 were derived from Biostar’s audited financial statements contained on Form 10-K and unaudited financial statements contained on Form 10-Q as filed with the Securities and Exchange Commission. Shannxi Weinan’s audited financial statements for the year ended December 31, 2010 and unaudited financial statements for the nine months ended September 30, 2011 were derived from those information contained elsewhere in this Form 8-K/A.
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BIOSTAR PHARMACEUTICALS, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF SEPTEMBER 30, 2011
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Historical
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Biostar
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Shaanxi
Weinan
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Pro-forma
Adjustments
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Note
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Unaudited
Pro-forma
Combined
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ASSETS
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Current Assets:
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Cash and cash equivalents
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$ | 24,006,839 | $ | 3,020 | (3,020 | ) | 4 | $ | 24,006,839 | |||||||||||
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Accounts receivable
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32,465,054 | 1,029,934 | (1,029,934 | ) | 4 | 32,465,054 | ||||||||||||||
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Inventories
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1,812,468 | 397,442 | 2,209,910 | |||||||||||||||||
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Prepaid expenses and other receivables
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1,309,895 | - | 1,309,895 | |||||||||||||||||
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Total Current Assets
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59,594,256 | 1,430,396 | 59,991,698 | |||||||||||||||||
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Deposits
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10,174,532 | - | (4,695,938 | ) | 1 | 5,478,594 | ||||||||||||||
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Property and equipment, net
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5,899,938 | 1,103,385 | 486,815 | 2 | 7,490,138 | |||||||||||||||
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Intangible assets, net
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10,832,510 | 5,190,781 | 2,351,319 | 2 | 18,374,610 | |||||||||||||||
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Deferred tax assets
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- | 2,027,262 | (709,534 | ) | 2 | 1,317,728 | ||||||||||||||
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Total Assets
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$ | 86,501,236 | $ | 9,751,824 | $ | 92,652,768 | ||||||||||||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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Current Liabilities:
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Accounts and other payables
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$ | 6,129,668 | $ | 620,631 | (620,631 | ) | 4 | $ | 6,129,668 | |||||||||||
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Payable to former stockholders of Shaanxi Weinan
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- | - | 4,852,469 | 1 | 4,852,469 | |||||||||||||||
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Value-added tax payables
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851,051 | 93,658 | (93,658 | ) | 4 | 851,051 | ||||||||||||||
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Income tax payable
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3,521,981 | 2,123 | (2,123 | ) | 4 | 3,521,981 | ||||||||||||||
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Short term bank loan
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782,656 | - | 782,656 | |||||||||||||||||
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Total Current Liabilities
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11,285,356 | 716,412 | 16,137,825 | |||||||||||||||||
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Commitments and contingencies
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Stockholders’ Equity
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Common stock / Paid-in capital
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28,196 | 748,960 | (748,960 | ) | 3 | 28,196 | ||||||||||||||
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Additional paid-in capital
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22,348,271 | 8,343,039 | (8,343,039 | ) | 3 | 22,348,271 | ||||||||||||||
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Statutory reserve
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4,666,381 | 361,679 | (361,679 | ) | 3 | 4,666,381 | ||||||||||||||
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Retained earnings / Accumulated losses
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44,464,424 | (2,245,435 | ) | 2,245,435 | 3 | 45,763,487 | ||||||||||||||
| 1,299,063 | 4 | |||||||||||||||||||
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Accumulated other comprehensive income
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3,708,608 | 1,827,169 | (1,827,169 | ) | 3 | 3,708,608 | ||||||||||||||
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Total Stockholders’ Equity
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75,215,880 | 9,035,412 | 76,514,943 | |||||||||||||||||
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Total Liabilities and Stockholders’ Equity
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$ | 86,501,236 | $ | 9,751,824 | $ | 92,652,768 | ||||||||||||||
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BIOSTAR PHARMACEUTICALS, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011
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Historical
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Biostar
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Shaanxi
Weinan
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Pro-forma
adjustments
|
Note
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Unaudited
Pro-forma
combined
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Sales, net
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$ | 65,980,481 | $ | 4,835,882 | $ | 70,816,363 | ||||||||||||||
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Cost of sales
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19,352,264 | 2,611,016 | 21,963,280 | |||||||||||||||||
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Gross profit
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46,628,217 | 2,224,866 | 48,853,083 | |||||||||||||||||
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Operating expenses:
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Selling expenses
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26,908,239 | 1,617,283 | 28,525,522 | |||||||||||||||||
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General and administrative expenses
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4,103,154 | 244,828 | 50,084 | 5 | 4,417,663 | |||||||||||||||
| 19,597 | 6 | |||||||||||||||||||
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Total operating expenses
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31,011,393 | 1,862,111 | 32,943,185 | |||||||||||||||||
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Income from operations
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15,616,824 | 362,755 | 15,909,898 | |||||||||||||||||
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Other income (expenses)
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| Interest income | 271,737 | 13,223 | 284,960 | |||||||||||||||||
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Other income
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821 | 162 | 983 | |||||||||||||||||
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Finance costs
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(10,371 | ) | (38,969 | ) | (49,340 | ) | ||||||||||||||
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Other expenses
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- | (98,359 | ) | (98,359 | ) | |||||||||||||||
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Total other income (expenses)
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262,187 | (123,943 | ) | 138,244 | ||||||||||||||||
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Income before income taxes
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15,879,011 | 238,812 | 16,048,142 | |||||||||||||||||
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Provision for income taxes
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4,539,127 | 62,477 | (12,521 | ) | 5 | 4,584,184 | ||||||||||||||
| (4,899 | ) | 6 | ||||||||||||||||||
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Net income
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$ | 11,339,884 | $ | 176,335 | $ | 11,463,958 | ||||||||||||||
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Net income per common stock
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Basic
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$ | 0.41 | $ | 0.41 | ||||||||||||||||
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Diluted
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$ | 0.41 | $ | 0.41 | ||||||||||||||||
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Weighted average number of common stock outstanding
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Basic
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27,792,312 | 27,792,312 | ||||||||||||||||||
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Diluted
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27,792,312 | 27,792,312 | ||||||||||||||||||
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BIOSTAR PHARMACEUTICALS, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2010
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Historical
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Biostar
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Shaanxi Weinan
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Pro-forma
adjustments
|
Note
|
Unaudited
Pro-forma
combined
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||||||||||||||||
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Sales, net
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$ | 80,214,873 | $ | 5,889,713 | $ | 86,104,586 | ||||||||||||||
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Cost of sales
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20,079,377 | 2,864,758 | 22,944,135 | |||||||||||||||||
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Gross profit
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60,135,496 | 3,024,955 | 63,160,451 | |||||||||||||||||
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Operating expenses:
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Selling expenses
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32,313,284 | 1,732,170 | 34,045,454 | |||||||||||||||||
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General and administrative expenses
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4,211,938 | 237,625 | 64,093 | 5 | 4,538,788 | |||||||||||||||
| 25,132 | 6 | |||||||||||||||||||
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Total operating expenses
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36,525,222 | 1,969,795 | 38,584,242 | |||||||||||||||||
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Income from operations
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23,610,274 | 1,055,160 | 24,576,209 | |||||||||||||||||
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Other Income (expenses)
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| Interest income | 34,020 | 130 | 34,150 | |||||||||||||||||
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Other income
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380 | 5,770 | 6,150 | |||||||||||||||||
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Finance costs
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- | (148,310 | ) | (148,310 | ) | |||||||||||||||
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Other expenses
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(193,131 | ) | (148 | ) | (193,279 | ) | ||||||||||||||
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Foreign exchange gain
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3,154 | - | 3,154 | |||||||||||||||||
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Total other income (expenses)
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(155,577 | ) | (142,558 | ) | (298,135 | ) | ||||||||||||||
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Income before income taxes
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23,454,697 | 912,602 | 24,278,074 | |||||||||||||||||
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Provision for income taxes
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6,073,137 | 232,469 | (16,023 | ) | 5 | 6,283,300 | ||||||||||||||
| (6,283 | ) | 6 | ||||||||||||||||||
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Net income
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$ | 17,381,560 | $ | 680,133 | $ | 17,994,774 | ||||||||||||||
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Net income per common stock
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Basic
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$ | 0.66 | $ | 0.68 | ||||||||||||||||
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Diluted
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$ | 0.63 | $ | 0.66 | ||||||||||||||||
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Weighted average number of common stock outstanding
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Basic
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26,357,954 | 26,357,954 | ||||||||||||||||||
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Diluted
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27,468,724 | 27,468,724 | ||||||||||||||||||
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Notes to unaudited pro forma condensed combined financial statements:
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1.
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Record the amount of purchase consideration payable to the former stockholders of Shaanxi Weinan and eliminate the total purchase consideration (deposits paid and amount payable) upon combination.
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2.
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Record the fair value adjustments on intangible assets and plant and equipment with related deferred tax adjustments.
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3.
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Eliminate the paid-in capital, additional paid-in capital, pre-acquisition retained earnings and other reserves of Shaanxi Weinan upon combination.
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4.
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Record the gain from bargain purchase, details as below:
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Net assets of Shaanxi Weinan
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$ | 9,035,412 | ||
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Less: excluded assets and liabilities*
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(316,542 | ) | ||
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Net assets acquired, before fair value adjustments
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8,718,870 | |||
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Fair value adjustments
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2,128,600 | |||
| 10,847,470 | ||||
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Purchase consideration (RMB61,000,000)
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9,548,407 | |||
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Gain from bargain purchase
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$ | 1,299,063 |
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* As agreed between the management of the Company and the then stockholders of Shaanxi Wainan (the “Stockholdes”), the Stockholders shall be entitled to the cash and cash equivalents as well as accounts receivable and be responsible for the liabilities of Shaanxi Wainan upon completion of the Acquisition.
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5.
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Record the additional amortization and adjust the related deferred tax movement resulted from the fair value adjustments of intangible assets.
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6.
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Record the additional depreciation and adjust the deferred tax movement resulted from the fair value adjustments of plant and equipment.
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7.
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Except for the pro forma adjustments (3) and (4) above, there were no material difference between the carrying amounts and fair values of the assets and liabilities of Shaanxi Weinan during the periods covered by the pro forma condensed combined financial statements.
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8.
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There were no inter-company transactions and balances between Biostar and Shaanxi Weinan during the periods covered by the unaudited pro forma condensed combined financial statements.
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