Delta Advanced Materials Limited And CIS Acquisition Ltd. Announce The Execution Of Acquisition Agreement

Transaction Provides Delta with Access to Public Capital Markets to Support its Growth Initiatives in fine and specialty chemical industry

The Current Delta Shareholders Retain its Majority Equity Interest in Post-Acquisition Company

News provided by

CIS Acquisition Ltd.

Sep 16, 2014, 03:55 ET

NEW YORK, Sept. 16, 2014 /PRNewswire/ -- CIS Acquisition Ltd. ("CIS") has announced today the execution of a definitive agreement with Delta Technology Holdings Limited ("Delta"), a leading China based company specializing in providing fine and specialty chemicals to end application markets including Automotive, Pharmaceutical, Agrochemical, Dye & Pigments, Aerospace, Ceramics, Coating-Printing and Food Additives by producing and distributing organic compound including para-chlorotoluene ("PCT"), ortho-chlorotoluene ("OCT"), PCT/OCT downstream products, unsaturated polyester resin ("UPR"), maleic acid ("MA") and other by-product chemicals to customers. In the year ended June 30, 2014, Delta posted Revenue of $175.3 million and Net Income of $6.82 million. Comprehensive Income of Delta with foreign currency adjustment was $7.14 million. All numbers are prepared in accordance with US GAAP.

According to the agreement, 4,560,000 shares of CIS will be issued to Delta in exchange for 100% of all its equity interests. Delta is to receive a total of an additional 1,500,000 shares if it meets the net income growth targets that represent the compound growth rate of approximately 15% for the 2015, 2016 and 2017 fiscal year. The existing CIS Sponsor warrants are being amended to remove cashless exercise provisions, and certain Delta shareholders will have the right to the cash received as the result of any exercise of outstanding warrants. CIS issued warrants have a force-call price of $15.00 and CIS Sponsor warrants are being amended to have a force-call price of $17.50.

Mr. Chao, the Chairman and CEO of Delta stated: "We are very pleased to become a part of CIS and are looking forward to delivering value to shareholders by implementing Delta's business model. Being a public company is an important cornerstone in Delta's roadmap for growth. I would like to express my appreciation to our private equity partners, Kleiner Perkins Caufield & Byers and Korea Investments Partners, who have been instrumental to our growth and have been supportive of accomplishing this milestone. I and they believe that it is the right time for our public debut, as we continue to capture market share in the industry and are well positioned to meet the changing needs of customers during the global economic recovery."

About Delta Advanced

Founded in 2007, Delta is a fast-growing, leading supplier of fine and specialty chemical products based in China. The company meets the needs of its customers by manufacturing and distributing fine and specialty chemical products including PCT/OCT, PCT/OCT downstream products, UPR, MA and other by-product chemicals for used in end application markets such as Automotive, Pharmaceutical, Agrochemical, Dye & Pigments, Aerospace, Ceramics, Coating-Printing and Food Additives.

Delta has approximately 300 employees, 25% of whom are highly-qualified experts and technical personnel. The company serves more than 380 clients in various industries.

Delta is held by, among other shareholders, Mr. Xin Chao (the Chairman of the Board of Directors and CEO), Kleiner Perkins Caufield & Byers and Korea Investment Partners.

Assuming no public shareholder redemptions, upon the completion of this agreement, the shareholding structure of the post-merger company will be as below:


	# of Securities at Close	%	# of Securities on a Fully Diluted Basis^(a)	%
CIS IPO Investors	4,000,000	38.0%	4,153,846	33.6%
Delta Shareholders	4,560,000	43.3%	6,060,000	49.0%
CIS Sponsor	1,500,000	14.2%	1,673,077	13.5%
Others	473,059	4.5%	483,828	3.9%
Total shares	10,533,059	100%	12,370,751	100%
(a) Including earnout shares and calculated using treasury method at its current price of $10.40 per share

Delta Advanced Materials Limited
Consolidated Balance Sheets
as at June 30, 2014, 2013 and 2012

	2014	2013	2012
ASSETS
Current assets
Cash and cash equivalents	$ 9,045,950	$ 3,946,136	$ 7,054,228
Restricted cash	22,855,107	24,740,635	41,347,182
Trade and other receivables	77,745,875	61,460,604	40,293,613
Inventories	14,062,567	13,803,489	9,586,598
	123,709,499	103,950,864	98,281,621
Non-current assets
Property, plant and equipment	76,439,788	57,293,878	42,489,304
Land use rights	5,724,636	5,262,766	2,424,878
Deferred tax assets	657,377	531,492	449,111
	82,821,801	63,088,136	45,363,293

Total assets	$ 206,531,300	$ 167,039,000	$ 143,644,914

LIABILITIES
Current liabilities
Trade and other payables	$ 35,850,810	$ 27,336,609	$ 43,370,265
Advances from customers	1,776,624	2,428,443	1,436,529
Due to a shareholder	2,857,432	-	-
Bank borrowings	81,377,050	60,764,176	35,754,719
Income tax payables	814,051	900,627	810,196
Deferred tax liabilities	1,020,209	74,967	91,643
Convertible bonds - current portion	27,375,750	27,219,551	-
	151,071,926	118,724,373	81,463,352
Non-current liabilities
Convertible bonds - non-current portion	-	-	27,182,551

Total liabilities	$ 151,071,926	$ 118,724,373	$ 108,645,903

Commitments and contingencies	-	-	-


Capital and reserves
Share capital	$ 8,852,713	$ 5,134,788	$ 5,134,788
Additional paid-in capital	-	3,717,925	3,717,925
Statutory reserves	6,196,949	3,219,995	2,501,593
Retained earnings	34,370,050	30,518,696	19,531,362
Accumulated other comprehensive income	6,039,662	5,723,223	4,113,343
Total equity	55,459,374	48,314,627	34,999,011

Total liabilities and equity	$ 206,531,300	$ 167,039,000	$ 143,644,914


Delta Advanced Materials Limited
Consolidated Statements of Operations and Comprehensive Income
For the years ended June 30, 2014, 2013 and 2012
	2014	2013	2012

Revenue	$ 175,327,717	$124,218,213	$ 95,627,051
Cost of sales	(157,904,729)	(99,733,216)	(69,686,610)
Gross profit	17,422,988	24,484,997	25,940,441

Operating expenses:
Selling expenses	(2,306,021)	(2,374,609)	(2,442,753)
General and administrative expenses	(3,482,027)	(4,267,774)	(4,409,313)
Total operating expenses	(5,788,048)	(6,642,383)	(6,852,066)

Other income (expenses):
Interest expenses	(4,000,626)	(2,806,338)	(2,240,872)
Interest income	1,948,743	923,298	594,409
Change in fair value of convertible bonds	(156,199)	(37,000)	(2,440,283)
Other gains (loss) - net	7,929	(60,197)	(9,215)
Total other income (expenses)	(2,200,153)	(1,980,237)	(4,095,961)

Income before income taxes	9,434,787	15,862,377	14,992,414

Income taxes	(2,606,479)	(4,156,641)	(4,520,840)

Net income	$ 6,828,308	$ 11,705,736	$ 10,471,574

Other comprehensive income
Foreign currency translation adjustments	316,439	1,609,880	1,332,001
Total other comprehensive income	316,439	1,609,880	1,332,001

Comprehensive income	$ 7,144,747	$ 13,315,616	$ 11,803,575
Earnings per share attributable to
equity holders of the Company
- Basic	$ 0.17	$ 0.29	$ 0.26
- Diluted	$ 0.12	$ 0.20	$ 0.22


Weighted average shares used in calculating
earnings per ordinary share
- Basic	40,000,000	40,000,000	40,000,000
- Diluted	58,191,973	58,191,973	58,191,973

About CIS Acquisition Ltd.

CIS Acquisition Ltd. is a blank check company formed to acquire, through a merger, stock exchange, asset acquisition, stock purchase or similar acquisition transaction, one or more operating businesses.

Safe Harbor Statement

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Statements preceded or followed by or that otherwise include the words "believes," "expects," "anticipates," "intends," "projects," "estimates," "plans," and similar expressions or future or conditional verbs such as "will", "should", "would", "may" and "could" are generally forward-looking in nature and not historical facts. Forward-looking statements in this release also include statements about business and economic trends. Investors should also consider the areas of risk described under the heading "Forward Looking Statements" and those factors captioned as "Risk Factors" in CIS's periodic reports under the Securities Exchange Act of 1934, as amended, or in connection with any forward-looking statements that may be made by CIS.

CIS also disclaims any duty to comment upon or correct information that may be contained in reports published by the investment community.

SOURCE CIS Acquisition Ltd.