Attached files
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| 8-K/A - FORM 8-K/A - Solar Power, Inc. | d92038d8ka.htm |
Exhibit 99.3
Pro Forma Condensed Combined Financial Statements
(Unaudited)
(in thousands, unless otherwise noted)
The following unaudited pro forma condensed combined financial statements give effect to the acquisition by Solar Power, Inc., of Gonghe County Xinte Photvoltaic Co., Ltd. (“Xinte”). On November 6, 2014, Solar Power, Inc. and its indirectly wholly-owned subsidiary, SPI Solar Power (Suzhou) Co., Ltd., entered into an equity interest purchase agreement with TBEA Xinjiang Sunoasis Co., Ltd. (“TBEA Sunoasis”) and Xinjiang Sang Ou Solar Equipment Co., Ltd. for the acquisition of the 100% equity interest in Xinte. The acquisition was completed on December 31, 2014.
The historical financial information of Xinte included elsewhere in this Form 8-K/A has been prepared in accordance with International Financial Reporting Standards (“IFRSs”) as issued by the International Accounting Standards Board (“IASB”) and presented in CNY. IFRSs include International Accounting Standards (“IAS”) and related interpretations. The unaudited pro forma financial statements presented herein include adjustments to convert the basis of the financial statements of Xinte from IFRSs to U.S. generally accepted accounting principles (“U.S. GAAP”) and to translate the CNY amounts into U.S. dollars.
The pro forma condensed combined balance sheet as of September 30, 2014, and the pro forma condensed combined statement of operations for the nine-month period ended September 30, 2014, and the notes thereto are included herein. No pro forma combined statement of operation for the year ended December 31, 2013 is presented as Xinte was only incorporated on April 28, 2013 and no revenue was generated since its date of incorporation to December 31, 2013.
The unaudited pro forma condensed combined statement of operations is based on the individual historical consolidated statement of operations of Solar Power, Inc. and Xinte for the nine-month period ended September 30, 2014 giving effect to the acquisition of Xinte as if it had occurred on January 1, 2014. The pro forma statement of operations reflects only pro forma adjustments expected to have a continuing impact on the combined results. The unaudited pro forma condensed combined balance sheet is based on the individual historical consolidated balance sheet of Solar Power, Inc. and Xinte as at September 30, 2014 giving effect to the acquisition of Xinte as if it had occurred on September 30, 2014. The unaudited pro forma condensed combined financial statements reflects adjustments to give effect to pro forma events that are (1) directly attributable to the acquisition, (2) factually supportable, and (3) expected to have a continuing impact on the combined results. The unaudited pro forma condensed combined financial information should be read in conjunction with the accompanying notes to the unaudited pro forma condensed combined financial statements. In addition, the unaudited pro forma condensed combined financial statements and notes thereto should be read in conjunction with (1) Solar Power, Inc.’s annual report on Form 10-K, for the year ended December 31, 2013, including the audited consolidated financial statements and the notes relating thereto, for the year ended December 31, 2013, (2) Xinte’s audited financial statements for the period from April 28, 2013 (date of incorporation) to December 31, 2013, and the notes relating thereto, (3) the Solar Power, Inc. Form 10-Q for the third quarter ended September 30, 2014, including the unaudited interim condensed consolidated financial statements for the nine-months ended September 30, 2014, and (4) Xinte unaudited interim condensed financial statements for the six-months ended June 30, 2014.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
Nine-month period ended September 30, 2014
( In thousands, except for share data)
| Solar Power, Inc. |
Xinte (U.S. |
Pro Forma Adjustments |
Pro Forma Combined |
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(3) |
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| Net sales: |
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| Net sales |
$ | 32,588 | $ | 1,698 | — | $ | 34,286 | |||||||||
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| Total net sales |
32,588 | 1,698 | — | 34,286 | ||||||||||||
| Cost of goods sold: |
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| Cost of goods sold |
26,964 | 887 | (57 | ) | 27,794 | |||||||||||
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| Total cost of goods sold |
26,964 | 887 | (57 | ) | 27,794 | |||||||||||
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| Gross profit |
5,624 | 811 | 57 | 6,492 | ||||||||||||
| Operating expenses: |
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| General and administrative |
4,190 | 4 | — | 4,194 | ||||||||||||
| Sales, marketing and customer service |
1,025 | — | — | 1,025 | ||||||||||||
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| Total operating expenses |
5,215 | 4 | — | 5,219 | ||||||||||||
| Operating income |
409 | 807 | 57 | 1,273 | ||||||||||||
| Other income (expense): |
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| Interest expense |
(2,090 | ) | — | — | (2,090 | ) | ||||||||||
| Interest income |
967 | 1 | — | 968 | ||||||||||||
| Loss on extinguishment of convertible bonds |
(8,907 | ) | — | — | (8,907 | ) | ||||||||||
| Change in market value of derivative liability |
310 | — | — | 310 | ||||||||||||
| Other (expense)/income, net |
(197 | ) | — | — | (197 | ) | ||||||||||
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| Total other expense |
(9,917 | ) | 1 | — | (9,916 | ) | ||||||||||
| (Loss)/profit before income taxes |
(9,508 | ) | 808 | 57 | (8,643 | ) | ||||||||||
| Provision for income taxes |
945 | 202 | — | 1,147 | ||||||||||||
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| Net (loss)/profit |
$ | (10,453 | ) | $ | 606 | 57 | $ | (9,790 | ) | |||||||
| Net loss per common share |
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| Basic and diluted |
(0.04 | ) | (0.04 | ) | ||||||||||||
| Weighted average number of common shares used in computing per share amounts |
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| Basic and diluted |
246,240,974 | 246,240,974 | ||||||||||||||
See accompanying notes to the pro-forma condensed combined financial statements.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
As of September 30, 2014
( In thousands, except for share data)
| Solar Power, Inc. |
Xinte (U.S. GAAP) |
Pro Forma Adjustments |
Pro Forma Combined |
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| (1) | ||||||||||||||||
| ASSETS | ||||||||||||||||
| Current assets: |
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| Cash and cash equivalents |
$ | 12,789 | $ | 4 | $ | — | $ | 12,793 | ||||||||
| Accounts receivable, net of allowance for doubtful accounts |
7,020 | 1,998 | — | 9,018 | ||||||||||||
| Accounts receivable, related party |
3,662 | — | — | 3,662 | ||||||||||||
| Costs and estimated earnings in excess of billings on uncompleted contracts |
18,700 | — | — | 18,700 | ||||||||||||
| Inventories, net |
2,719 | — | — | 2,719 | ||||||||||||
| Construction in progresss |
3,429 | — | — | 3,429 | ||||||||||||
| Prepaid expenses and other current assets |
2,191 | — | — | 2,191 | ||||||||||||
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| Total current assets |
50,510 | 2,002 | — | 52,512 | ||||||||||||
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| Intangible asset |
703 | — | — | 703 | ||||||||||||
| Goodwill |
— | — | 86 | 86 | ||||||||||||
| Restricted cash |
160 | — | — | 160 | ||||||||||||
| Accounts recivable, noncurrent |
9,194 | — | — | 9,194 | ||||||||||||
| Notes receivable, noncurrent |
13,416 | — | — | 13,416 | ||||||||||||
| Construction in progress |
27,306 | — | — | 27,306 | ||||||||||||
| Property, plant and equipment at cost, net |
10,991 | 28,438 | (1,374 | ) | 38,055 | |||||||||||
| Land use rights |
— | 411 | — | 411 | ||||||||||||
| Deferred tax assets-non-current portion |
— | — | 358 | 358 | ||||||||||||
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| Total assets |
$ | 112,280 | $ | 30,851 | $ | (930 | ) | $ | 142,201 | |||||||
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| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||
| Current liabilities: |
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| Accounts payable |
$ | 11,859 | $ | 6,919 | $ | 18,778 | ||||||||||
| Accounts payable, related party |
34,372 | 23,032 | — | 57,404 | ||||||||||||
| Accrued liabilities |
813 | — | 813 | |||||||||||||
| Income taxes payable |
911 | 203 | — | 1,114 | ||||||||||||
| Derivative liability |
673 | — | — | 673 | ||||||||||||
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| Total current liabilities |
48,628 | 23,235 | 6,919 | 78,782 | ||||||||||||
| Loans payable and capital lease obligations, net of current portion |
10,970 | — | — | 10,970 | ||||||||||||
| Other liabilities |
1,584 | — | — | 1,584 | ||||||||||||
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| Total liabilities |
61,182 | 23,235 | 6,919 | 91,336 | ||||||||||||
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| Commitments and contingencies |
— | — | — | — | ||||||||||||
| Stockholders’ equity |
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| Common stock |
43 | 7,006 | (7,006 | ) | 43 | |||||||||||
| Additional paid in capital |
117,917 | — | (233 | ) | 117,684 | |||||||||||
| Accumulated other comprehensive loss |
(335 | ) | — | — | (335 | ) | ||||||||||
| Accumulated (losses)/profits |
(66,527 | ) | 610 | (610 | ) | (66,527 | ) | |||||||||
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| Total stockholders’ equity |
51,098 | 7,616 | (7,849 | ) | 50,865 | |||||||||||
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| Total liabilities and stockholders’ equity |
$ | 112,280 | $ | 30,851 | $ | (930 | ) | $ | 142,201 | |||||||
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See accompanying notes to the pro-forma condensed combined financial statements.
Notes to Unaudited Pro Forma Condensed Combined Financial Statements
(in thousands, unless otherwise noted)
Note 1 — Basis of Presentation
On November 6, 2014, Solar Power, Inc. and its indirectly wholly-owned subsidiary, SPI Solar Power (Suzhou) Co., Ltd., entered into an equity interest purchase agreement (Purchase Agreement) with TBEA Xinjiang Sunoasis Co., Ltd. and Xinjiang Sang Ou Solar Equipment Co., Ltd. for the acquisition of the 100% equity interest in Xinte. Under the Purchase Agreement, Solar Power, Inc. acquired all the equity interest from Xinte in exchange for RMB43 million (U.S.$6.9 million) to be settled in cash and additionally RMB147 million (U.S.$23.7 million) to TBEA Sunoasis on behalf of Xinte for the EPC service rendered by TBEA Sunoasis to Xinte.
The acquisition was completed on December 31, 2014.
In accordance with guidance for pro forma financial statements, we are presenting the pro forma combined balance sheet of Solar Power, Inc. and Xinte as if they were combined on September 30, 2014.
Note 2 — IFRS to U.S. GAAP Adjustments and Foreign Currency Translation
There is no adjustment made to the Xinte statement of operations for the nine-month period ended September 30, 2014 to convert from IFRS to U.S. GAAP. In addition, the CNY based income statement for Xinte for the nine-month period ended September 30, 2014 has been translated to U.S. dollars using a historic exchange rate. The average historic spot rate for the nine-month period ended September, 2014 was $6.176 per CNY and the historic spot rate as of September 30, 2014 was $6.138 per CNY. A reader of this pro forma financial information should not construe this translation as representations by the Company that the real amounts actually represent these U.S. dollar amounts or could be converted into U.S. dollars at the rate indicated.
| Xinte (IFRS) (CNY) |
U.S. GAAP Adjustments (CNY) |
Xinte (U.S. GAAP) (CNY) |
Translation Adjustment (CNY/ 6.176) |
Xinte (U.S. GAAP) (U.S. |
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| Net sales: |
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| Net sales |
10,484 | — | 10,484 | (8,786 | ) | 1,698 | ||||||||||||||
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| Total net sales |
10,484 | — | 10,484 | (8,786 | ) | 1,698 | ||||||||||||||
| Cost of goods sold: |
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| Cost of goods sold |
5,476 | — | 5,476 | (4,589 | ) | 887 | ||||||||||||||
| Total cost of goods sold |
5,476 | — | 5,476 | (4,589 | ) | 887 | ||||||||||||||
| Gross profit |
5,008 | — | 5,008 | (4,197 | ) | 811 | ||||||||||||||
| Operating expenses: |
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| General and administrative |
22 | — | 22 | (18 | ) | 4 | ||||||||||||||
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| Total operating expenses |
22 | — | 22 | (18 | ) | 4 | ||||||||||||||
| Operating income |
4,986 | — | 4,986 | (4,179 | ) | 807 | ||||||||||||||
| Other income (expense): |
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| Interest income |
6 | — | 6 | (5 | ) | 1 | ||||||||||||||
| Other (expense), net |
0 | — | 0 | 0 | 0 | |||||||||||||||
| Total other expense |
6 | — | 6 | (5 | ) | 1 | ||||||||||||||
| Profit before income taxes |
4,992 | — | 4,992 | (4,184 | ) | 808 | ||||||||||||||
| Provision for income taxes |
1,248 | — | 1,248 | (1,046 | ) | 202 | ||||||||||||||
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| Net profit |
$ | 3,744 | — | 3,744 | (3,138 | ) | $ | 606 | ||||||||||||
Pro forma condensed combined balance sheet
As of September 30, 2014
| Xinte | U.S. GAAP | Xinte | Translation | Xinte | ||||||||||||||||
| (IFRS) | Adjustments | (U.S. GAAP) |
Adjustment | (U.S. GAAP) | ||||||||||||||||
| (CNY) | (CNY) | (CNY) | (CNY / 6.138) | (U.S. Dollars) | ||||||||||||||||
| ASSETS: |
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| Property, plant and equipment |
174,550 | — | 174,550 | (146,112 | ) | 28,438 | ||||||||||||||
| Land use rights |
2,522 | — | 2,522 | (2,111 | ) | 411 | ||||||||||||||
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| TOTAL NON-CURRENT ASSETS |
177,072 | — | 177,072 | (148,223 | ) | 28,849 | ||||||||||||||
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| CURRENT ASSETS: |
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| Trade and other receivables |
12,266 | — | 12,266 | (10,268 | ) | 1,998 | ||||||||||||||
| Cash and cash equivalents |
24 | — | 24 | (20 | ) | 4 | ||||||||||||||
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| TOTAL CURRENT ASSETS |
12,290 | — | 12,290 | (10,288 | ) | 2,002 | ||||||||||||||
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| TOTAL ASSETS |
189,362 | — | 189,362 | (158,511 | ) | 30,851 | ||||||||||||||
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| LIABILITIES AND EQUITY |
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| CURRENT LIABILITIES: |
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| Income tax payables |
1,248 | — | 1,248 | (1,045 | ) | 203 | ||||||||||||||
| Trade and other payables |
141,370 | — | 141,370 | (118,338 | ) | 23,032 | ||||||||||||||
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| TOTAL CURRENT LIABILITIES |
142,618 | — | 142,618 | (119,383 | ) | 23,235 | ||||||||||||||
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| TOTAL LIABILITIES |
142,618 | — | 142,618 | (119,383 | ) | 23,235 | ||||||||||||||
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| EQUITY: |
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| Paid-in Capital |
43,000 | — | 43,000 | (35,994 | ) | 7,006 | ||||||||||||||
| Retained earnings |
3,744 | — | 3,744 | (3,134 | ) | 610 | ||||||||||||||
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| TOTAL EQUITY |
46,744 | — | 46,744 | (39,128 | ) | 7,616 | ||||||||||||||
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| TOTAL LIABILITIES AND EQUITY |
189,362 | — | 189,362 | (158,511 | ) | 30,851 | ||||||||||||||
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Note 3 —Pro Forma Adjustment (3)
It represented the effect of fair value adjustment made on December 31, 2014 as a result of Solar Power, Inc.’s acquisition over the Xinte as if the acquisition had been consummated on January 1, 2014.
The valuation was based on a valuation report provided by a third party valuation firm. The valuation report utilizes and considers generally accepted valuation methodologies such as the income, market, cost and actual transaction of shares approach. We have incorporated certain assumptions which include projected cash flows and replacement costs.