eMARINE Global Inc.

(Formerly Known as e-Marine Co., Ltd.)

 

UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

 

JUNE 30, 2017 AND DECEMBER 31, 2016

 

Index to Financial Statements

 

Unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2017		F-2
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of December 31, 2016		F-3
Unaudited Pro Forma Condensed Consolidated Statement of Operations and Comprehensive Loss for the Six months Ended June 30, 2017		F-4
Unaudited Pro Forma Condensed Consolidated Statement of Operations and Comprehensive Loss for the Year Ended December 31, 2016		F-5
Notes to Unaudited Pro Forma Consolidated Condensed Financial Statements		F-6

 

 

eMARINE Global Inc. (Formerly Known as e-Marine Co., Ltd.)

Unaudited Pro Forma Condensed Consolidated Balance Sheet

As of June 30, 2017

 

		e-Marine				Pollex				Pro Forma Adjustments				Notes				Pro Forma Combined
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		￦	52,635,625				9,816,607				(9,816,607	)			a				52,635,625
Short-term financial instruments			30,000,657				-												30,000,657
Accounts receivable, net of of allowance for doubtful accounts			168,615,884				-												168,615,884
Inventories			9,850,000				-												9,850,000
Loans to related parties			175,485,000				-												175,485,000
Other current assets			55,329,382				-												55,329,382
Total Current Assets			491,916,548				9,816,607												491,916,548
Property and equipment, net			40,229,947				-												40,229,947
Goodwill			1,930,625,000				-												1,930,625,000
Intangible assets, net			3,502,327				-												3,502,327
Deposits			100,147,660				1,487,018				(1,487,018	)			a				100,147,660
Total Assets		￦	2,566,421,482				11,303,625												2,566,421,482
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable		￦	968,855,055				-												968,855,055
Nontrade payables			1,067,990,173				-												1,067,990,173
Other current liabilities			414,938,452				11,636,488				(11,636,488	)			a				414,938,452
Due to affiliates			-				-												-
Advances from affiliate			-				-												-
Short-term borrowings			3,210,000,000				-												3,210,000,000
Current portion of long-term debt			-				-												-
Total Current Liabilities			5,661,783,680				11,636,488												5,661,783,680
Long-term debt			1,046,880,718				-												1,046,880,718
Loans from related parties			-				-												-
Accrued benefit pension liability			737,201,109				-												737,201,109
Total Liabilities			7,445,865,507				11,636,488												7,445,865,507
Temporary Equity - Redeemable convertible preferred stock			-
STOCKHOLDERS' EQUITY :
Common stock			2,582,860,000				1,142,716				(1,142,716	)			c				18,301,760
											(2,582,860,000	)			c
											18,301,760				c
Additional paid-in capital			1,380,580,628				161,662,429,267				(161,662,429,267	)			c				3,945,138,868
											(1,380,580,628	)			c
											3,945,138,868				c
Other comprehensive loss			25,707,165				-												25,707,165
Accumulated deficit			(8,868,591,818	)			(161,663,904,846	)			161,663,904,846								(8,868,591,818	)
Total Stockholders' Deficit			(4,879,444,025	)			(332,863	)											(4,879,444,025	)
Total Liabilities and Stockholders' Deficit		￦	2,566,421,482				11,303,625												2,566,421,482

 

The accompanying notes are an integral part of these unaudited proforma condensed consolidated combined financial statements.

 

 

eMARINE Global Inc. (Formerly Known as e-Marine Co., Ltd.)

Unaudited Pro Forma Condensed Consolidated Balance Sheet

As of December 31, 2016

 

		e-Marine				Pollex				Pro Forma Adjustments				Notes				Pro Forma Combined
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		￦	157,970,617				11,058,502				(11,058,502	)			a				157,970,617
Short-term financial instruments			65,000,000				-												65,000,000
Accounts receivable, net of of allowance for doubtful accounts			307,115,838				-												307,115,838
Inventories			231,290,000				-												231,290,000
Loans to related parties			164,000,000				-												164,000,000
Other current assets			68,971,660				-												68,971,660
Total Current Assets			994,348,115				11,058,502												994,348,115
Property and equipment, net			24,987,166				-												24,987,166
Goodwill			1,930,625,000				-												1,930,625,000
Intangible assets, net			7,239,382				-												7,239,382
Deposits			87,797,660				1,569,438				(1,569,438	)			a				87,797,660
Total Assets		￦	3,044,997,323				12,627,940												3,044,997,323
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable		￦	956,395,420				142,618,453				(142,618,453	)			a				956,395,420
Nontrade payables			1,167,346,765				-												1,167,346,765
Other current liabilities			287,615,107				750,187,742				(750,187,742	)			a				287,615,107
Due to affiliates			-				1,738,921,610				(1,738,921,610	)			a				-
Advances from affiliate			-				854,445,509				(854,445,509	)			a				-
Short-term borrowings			2,632,724,576				1,467,785,501				(1,467,785,501	)			a				2,632,724,576
Current portion of long-term debt			120,000,000				-												120,000,000
Total Current Liabilities			5,164,081,868				4,953,958,814												5,164,081,868
Long-term debt			730,000,000				-												730,000,000
Loans from related parties			221,505,317				-												221,505,317
Accrued benefit pension liability			880,655,584				-												880,655,584
Total Liabilities			6,996,242,769				4,953,958,814												6,996,242,769
Temporary Equity - Redeemable convertible preferred stock			636,007,020				-				(636,007,020	)			b				-
STOCKHOLDERS' EQUITY :
Common stock			2,454,860,000				6,181,171				(6,181,171	)			c				19,316,160
											(2,454,860,000	)			c
											19,316,160				c
Additional paid-in capital			872,573,608				165,533,287,091				(165,533,287,091	)			c				3,944,124,468
											(872,573,608	)			c
											3,944,124,468				c
Other comprehensive loss			(73,137,934	)			-												(73,137,934	)
Accumulated deficit			(7,841,548,140	)			(170,480,799,136	)			170,480,799,136								(7,841,548,140	)
Total Stockholders' Deficit			(4,587,252,466	)			(4,941,330,874	)											(3,951,245,446	)
Total Liabilities and Stockholders' Deficit		￦	3,044,997,323				12,627,940												3,044,997,323

 

The accompanying notes are an integral part of these unaudited proforma condensed consolidated combined financial statements.

 

 

eMARINE Global Inc. (Formerly Known as e-Marine Co., Ltd.)

Unaudited Pro Forma Condensed Consolidated Statement of Operations and Comprehensive Loss

For the 6 month period ended June 30, 2017

 

		e-Marine				Pollex				Pro Forma Adjustments				Notes		Pro Forma Combined
Revenue
Product		￦	898,800,843														898,800,843
Service			1,071,321,600				114,746,512				(114,746,512	)		a			1,071,321,600
Total revenue			1,970,122,443				114,746,512										1,970,122,443
Cost of revenue
Product			842,289,562														842,289,562
Service			1,082,670,207				114,194,951				(114,194,951	)		a			1,082,670,207
Total cost of revenue			1,924,959,769				114,194,951										1,924,959,769
Gross margin			45,162,674				551,562										45,162,674
Selling, general and administrative expenses			311,357,706				124,713,448				(124,713,448	)		a			311,357,706
Loss from operations			(266,195,032	)			(124,161,886	)									(266,195,032	)
Other expense:
Interest expense, net			(103,484,351	)			(34,461,752	)			34,461,752			a			(103,484,351	)
Other income (expense), net			(9,478,240	)			-										(9,478,240	)
Total other expense			(112,962,591	)			(34,461,752	)									(112,962,591	)
Loss before provision for income taxes			(379,157,623	)			(158,623,638	)									(379,157,623	)
Income tax expense (benefit)			(27,879,386	)			-										(27,879,386	)
Net loss		￦	(351,278,237)				(158,623,638	)									(351,278,237	)
Net loss per common share, basic and diluted		￦	(1,418.69)				(1,204.61	)									(23.46	)
Weighted average common shares outstanding - basic and diluted			247,608				131,681										14,975,000
Net loss		￦	(351,278,237)				(158,623,638	)									(351,278,237	)
Other comprehensive income (loss):
Remeasurement of pension liabilities			98,845,099				-										98,845,099
Comprehensive loss		￦	(252,433,138)				(158,623,638	)									(252,433,138	)

 

The accompanying notes are an integral part of these unaudited proforma condensed consolidated combined financial statements.

 

 

eMARINE Global Inc. (Formerly Known as e-Marine Co., Ltd.)

Unaudited Pro Forma Condensed Consolidated Statement of Operations and Comprehensive Loss

For the year ended December 31, 2016

 

		e-Marine				Pollex				Pro Forma Adjustments				Notes				Pro Forma Combined
Revenue
Product		￦	2,321,425,357				-											2,321,425,357
Service			2,543,714,731				186,292,985				(186,292,985	)			a			2,543,714,731
Total revenue			4,865,140,088				186,292,985											4,865,140,088
Cost of revenue
Product			1,959,183,691				-											1,959,183,691
Service			1,731,370,048				278,693,970				(278,693,970	)			a			1,731,370,048
Total cost of revenue			3,690,553,739				278,693,970											3,690,553,739
Gross margin			1,174,586,349				(92,400,986	)										1,174,586,349
Selling, general and administrative expenses			2,286,684,595				255,661,075				(255,661,075	)			a			2,286,684,595
Loss from operations			(1,112,098,246	)			(348,062,061	)										(1,112,098,246)
Other expense:
Interest expense, net			(198,555,730	)			(84,941,277	)			84,941,277				a			(198,555,730)
Other income (expense), net			11,069,107				-											11,069,107
Total other expense			(187,486,623	)			(84,941,277	)										(187,486,623)
Loss before provision for income taxes			(1,299,584,869	)			(433,003,338	)										(1,299,584,869)
Income tax expense (benefit)			(16,204,615	)			-											(16,204,615)
Net loss		￦	(1,283,380,254	)			(433,003,338	)										(1,283,380,254)
Net loss per common share, basic and diluted		￦	(5,232	)			(85	)										(85.70)
Weighted average common shares outstanding - basic and diluted			245,286				5,121,689											14,975,000
Net loss		￦	(1,283,380,254	)			(433,003,338	)										(1,283,380,254)
Other comprehensive income (loss):
Remeasurement of pension liabilities			57,452,724				-											57,452,724
Comprehensive loss		￦	(1,225,927,530	)			(433,003,338	)										(1,225,927,530)

 

The accompanying notes are an integral part of these unaudited proforma condensed consolidated combined financial statements.

 

 

eMARINE Global Inc.

Formerly Known as e-Marine Co., Ltd.

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2017 AND DECEMBER 31, 2016

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

1.

Overview

 

On July 25, 2017, eMARINE Global Inc. (then known as e-Marine Co., Ltd.) (“the Company”) entered into a share exchange agreement (the “Exchange Agreement”) with Pollex, Inc., a Nevada corporation (“Pollex”), and the shareholders of the Company (the “Shareholders”), pursuant to which the Shareholders assigned, transferred and delivered, free and clear of all liens, 100% of the issued and outstanding shares of common stock of the Company, representing 100% of the equity interest in the Company (the “Shares”) to Pollex in exchange for 14,975,000 restricted shares of common stock of Pollex (the “Exchange Shares”). The transaction closed on July 25, 2017 (the “Closing Date”).

 

As a result, the Company became a wholly-owned subsidiary of Pollex, and the Shareholders acquired a controlling interest in Pollex (the “Share Exchange”). For accounting purposes, the Share Exchange was treated as an acquisition of Pollex and a recapitalization of the Company. The Company is the accounting acquirer, and the results of its operations carryover. Accordingly, the operations of Pollex are not carried over and have been adjusted to $0. The assets and liabilities of the Company have been brought forward at its book value and no goodwill has been recognized.

 

On August 15, 2017, Pollex, entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which Pollex merged with its wholly-owned subsidiary (the “Merger Sub” and, the transaction, the “Merger”). Upon consummation of the Merger, the separate existence of Merger Sub ceased.

 

The purpose of the Merger was to effect a change of the corporate name from Pollex, Inc., to eMARINE Global Inc. Upon the filing of Articles of Merger, Pollex’s Articles of Incorporation were deemed amended to reflect the name change.

 

2.

Pro Forma Information

 

The unaudited pro forma consolidated condensed financial statements of the Company is prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The unaudited pro forma financial information is presented in an abbreviated form and therefore does not comply with all presentation and disclosure requirements of GAAP.

 

Foreign Currency Translation

 

The Company has a reporting currency of Korean Won, and the functional currency for the Company and Pollex is Korean Won and U.S. dollars, respectively. In preparing the Company’s consolidated financial statements, financial statements denominated in U.S. dollars have been converted to Korean Won for the pro forma at the spot rate of the balance sheet date for accounts in the balance sheets, and at the average rate for the period ended for accounts in the statements of operations and comprehensive loss.

 

 

Pro Forma Adjustments and Assumptions

 

The unaudited pro forma consolidated condensed balance sheets as of June 30, 2017 and December 31, 2016 are prepared as if the reverse merger and recapitalization had occurred on June 30, 2017 and December 31, 2016, respectively. The unaudited pro forma consolidated condensed statement of operations and comprehensive loss for the 6 month period ended June 30, 2017 and the year ended December 31, 2016, were prepared as if the reverse merger and recapitalization had occurred on January 1, 2017 and 2016, respectively.

 

The unaudited pro forma condensed consolidated combined financial statements have been developed from and should be read in conjunction with:

 

	●	separate audited financial statements of e-Marine Co., Ltd. as of and for the year ended December 31, 2016 and the and the related notes;
	●	separate unaudited financial statements of e-Marine Co., Ltd. as of and for the six months ended June 30, 2017 and the related notes;
	●	separate audited financial statements of Pollex, Inc. as of and for the year ended December 31, 2016 and the related notes, included in Pollex, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2016;
	●	separate unaudited financial statements of Pollex, Inc. as of and for the six months ended June 30, 2017 and the related notes, included in Pollex, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017; and
	●	the accompanying notes to the unaudited pro forma consolidated condensed financial statements

 

Unaudited Pro Forma Consolidated Condensed Financial Statements Adjustments

 

The unaudited pro forma consolidated condensed financial statements have been presented for illustrative purposes only and are not necessarily indicative of the operating results and financial position that would have been achieved had the reverse merger and recapitalization and the other related transactions occurred on the dates indicated. The unaudited pro forma adjustments represent management’s estimates based on information available as of the date of these unaudited pro forma condensed consolidated combined financial statements and are subject to change as additional information becomes available and analyses are performed.

 

Pro Forma Adjustments to the Balance Sheet:

 

a. Represents Pollex’s historical balance sheet as of June 30, 2017 and December 31, 2016 to carve out Pollex’s assets and liabilities prior to the reverse merger.

b. Represents the conversion of convertible preferred shares to common shares as a result of the reverse merger.

c. Represents the recapitalization as a result of the share exchanges.

 

Pro Forma Adjustments to the Statement of Operations and Comprehensive Loss:

 

a. Represents Pollex’s historical statement of operations for the 6 month period ended June 30, 2017 and the year ended December 31, 2016 to carve out Pollex’s income and expenses prior to the reverse merger.