China Advanced (NASDAQ:CADC)

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All CFO Trail Comments & Business Outlook Deal Flow Financial Target Agreements GeoSpecial Notes Going Private News Investor Alert Liquidity Requirements

Sunday, February 1, 2009

Key financial targets in connection with a recent Private Placement.

In connection with a private placement agreement on January 2, 2009, management entered into a 'make good agreement' and has placed 3,500,000 of its shares in escrow to secure its obligations to meet specific 'Earnings per Share' targets for 2008 and 2009. If the targets are not achieved, a number of shares derived from a formula will be transferred pro-rata to the investors in the private placement.

Financial Targets:

Date	*After-Tax Net Income Targets	** Implied EPS Based on Current Fully Diluted Outstanding shares
June 30, 2008	$5,200,000	$0.37
June 30, 2009	$9,000,000	$0.63
June 30, 2010	Greater than $9,000,000	Greater than $0.63

**The GeoTeam assumed that the above targets utilized the company's current tax rate of 16%. In 2008 the company earned net income of $5,130,797 and EPS of $0.57.

**The GeoTeam® is attempting to verify the outstanding share count.

Source: SEC Form S-1/A ( January 2, 2009)

Financial Targets Adjusting for a standard tax rate of 36%:

Date	After-Tax Net Income Targets	Implied EPS Based on Current Fully Diluted Outstanding shares
June 30, 2008	$4,160,000	$0.29
June 30, 2009	$7,200,000	$0.51
June 30, 2010	Greater than $7,200,000	Greater than $0.51

Adjusting 2007 financials for a standard tax rate:

Net iincome: $4,104,6376
EPS: $0.46

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