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Gulf Resources, Inc. (Nasdaq:GURE) a leading manufacturer of bromine, crude salt and specialty chemical products in China, has announced that it has filed its Pro Forma 8-K for the acquisition of Shouguang City Rongyuan Chemical Co., Ltd. (SCRC).
Gulf Resources signed the Equity Interest Transfer Agreement with SCRC on Jan. 12, 2015. The transaction was closed on Feb. 4, 2015. Gulf is required to file the Pro Forma 8-K with the SEC by April 20, 2015. Based on the agreement, the former shareholders of SCRC guaranteed SCRC’s audited 2014 net income would not be less than RMB70 million (approximately $11.4 million).
The audited financial statements show that in 2014 SCRC reported:
– Sales of $52,382,605, and increase of 23.1% from $42,562,392 in 2013
– Income from operations of $15,987,202, an increase of 28.3% from $12,459,050 in 2013.
– Net Income of $12,047,478, an increase of 28.6% from $9,371,590 in 2013, exceeding the guarantee of $11.4 million.
– Cash of $24,484,964, working capital of $34,873,709 and shareholders’ equity of $54,169,792.
On a pro-forma basis, Gulf Resources would have ended 2014 with
– Revenues of $160,625,493, 41% higher than the $113,660,331 reported in the 10-K.
– Net Income of $29,675,079, 66% higher than the $17,871,795 reported in the 10-K.
– Basic Pro-Forma Earnings Per Share of $0.65, 41% higher than the $0.46 reported in the 10-K.
– Cash of $104,764,959
– Stockholders’ equity of $325,446,553.
Gulf Resources CEO Xiaobin Liu Stated, “We are very pleased with SCRC’s strong performance. We believe this transaction will lead Gulf Resources into a downstream business that should help GURE increase its profit margins, improve its return on investment, and produce more consistent and reliable earnings.”
“With this major downstream acquisition,” Liu continued, “major international price increases in bromine, and the discovery of natural gas in Sichuan; we are optimistic about our future and believe we are on the right path to significantly increasing shareholder value.”
