Exhibit 99.2

 

QINGDAO QUANYAO SPORTS CONSULTING CO., LTD

 

UNAUDITED CONDENSED FINANCIAL STATEMENTS

 

SEPTEMBER 30, 2017 AND 2016

 

(Stated in US Dollars)

 

INDEX TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

 

	PAGES
UNAUDITED CONDENSED BALANCE SHEETS	1
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS	2
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS	3
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS	4 – 8

 

 

QINGDAO QUANYAO SPORTS CONSULTING CO., LTD

 

UNAUDITED CONDENSED BALANCE SHEETS

(Stated in US Dollars)

 

		As of
		September 30, 2017				December 31, 2016
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	1,870			$	1
Prepayment and deposit			10,992				-
Other receivables			160,503				-
Total current assets			173,365				1
Property and equipment, net			4,315				4,176
TOTAL ASSETS		$	177,680			$	4,177
LIABILITIES AND INVESTOR’S EQUITY
Current liabilities:
Trade payables		$	435,198			$	-
Other payables			2,287,024				727,791
Deferred income			-				34,556
TOTAL LIABILITIES		$	2,722,222			$	762,347
INVESTOR’S EQUITY
Paid-in capital		$	-			$	-
Accumulated losses			(2,541,650	)			(821,431	)
Accumulated other comprehensive income			(2,892	)			63,261
Total investor’s equity			(2,544,542	)			(758,170	)
TOTAL LIABILITIES AND INVESTOR’S EQUITY		$	177,680			$	4,177

  

See accompanying notes to unaudited condensed financial statements

 

 

QINGDAO QUANYAO SPORTS CONSULTING CO., LTD

 

UNAUDITED CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Stated in US Dollars)

 

		For the nine months ended September 30,
		2017				2016
		(Unaudited)				(Unaudited)
Revenues, net		$	66,338			$	-
Cost and expenses:
Cost of sales			(1,371,916	)			-
Depreciation expenses			(6,371	)			(3,306	)
General and administrative expenses			(406,503	)			(25,818	)
Loss from operations			(1,718,452	)			(29,124	)
Other expense:
Share of results of an equity investee			(1,767	)			(139,047	)
Total other expenses			(1,767	)			(139,047	)
Income before income expenses			(1,720,219	)			(168,171	)
Income taxes			-				-
Net loss			(1,720,219	)			(168,171	)
Other comprehensive loss
Foreign currency translation adjustments			(66,153	)			51,766
Comprehensive loss		$	(1,786,372	)		$	(116,405	)

  

See accompanying notes to unaudited condensed financial statements

 

 

QINGDAO QUANYAO SPORTS CONSULTING CO., LTD

 

UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS

(Stated in US Dollars)

 

		For the nine months ended September 30,
		2017				2016
		(Unaudited)				(Unaudited)
Cash flows from operating activities:
Net loss		$	(1,720,219	)		$	(168,171	)
Adjustments to reconcile net income before tax to net cash provided by (used in) operating activities:
Depreciation expense			6,371				3,306
Share of results of an equity investee			1,767				139,047
Changes in operating assets and liabilities:
Prepayment and deposit			(10,748	)			-
Other receivables			(92,806	)			-
Trade payables			425,532				-
Other payables			1,433,525				25,787
Net cash provided by (used in) operating activities			43,422				(30	)
Cash flows from investing activities:
Purchase of equipment			(6,329	)			-
Net cash used in investing activities			(6,329	)			-
Effect of exchange rate changes on cash and cash equivalents			(35,224	)			(1	)
Net increase (decrease) in cash and cash equivalents			1,869				(31	)
Cash and cash equivalents at beginning of period			1				32
Cash and cash equivalents at end of period		$	1,870			$	1
Supplemental Cash Flow Information:
Cash paid for interest expense		$	-			$	-
Cash paid for income tax		$	-			$	-

  

See accompanying notes to unaudited condensed financial statements

 

 

QINGDAO QUANYAO SPORTS CONSULTING CO., LTD

 

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

(Stated in US Dollars)

 

1.

Organization and nature of operations

 

Qingdao Quanyao Sports Consulting Company Limited (“the Company”) is a company established under the laws of the People’s Republic of China (“PRC”) on December 4, 2014 consist of 1 PRC individual. The Company organizes, promotes and hosts mixed martial arts (“MMA”) events featuring up level athletic talent. Revenues were mainly derived from sponsorship and ticket sales. The Company operates through itself and holds 50% equity position of Qingdao Leibo Sports Culture Company Limited (“Leibo”), a PRC company.

 

Leibo was incorporated on January 8, 2015 which organizes, promotes and hosts MMA events since 2016.

 

2.

Summary of principal accounting policies

 

Basis of presentation

 

The unaudited condensed financial statements of the Company are prepared and presented in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”).

 

The Company's unaudited condensed financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The fiscal year end is December 31.

 

Revenue recognition

 

Revenue is recognized when persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; the price is fixed or determinable; and collectability is reasonably assured.

 

Use of estimates

 

The preparation of the combined unaudited condensed financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the combined unaudited condensed financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Cash and cash equivalents

 

Cash and cash equivalents consist of bank deposits with original maturities of three months or less, which are unrestricted as to withdrawal and use the Company maintained accounts at banks and have not experienced any losses from such concentrations.

 

  

QINGDAO QUANYAO SPORTS CONSULTING CO., LTD

 

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

(Stated in US Dollars)

 

2.

Summary of principal accounting policies (Continued)

 

Foreign currency translation and transactions

 

The Company’s unaudited condensed financial statements are presented in the U.S. dollar (US$), which is the Company’s reporting currency. The Company use Renminbi Yuan (“RMB”) as their functional currency. Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the date of transaction. Any differences between the initially recorded amount and the settlement amount are recorded as a gain or loss on foreign currency transaction in the statements of income. Monetary assets and liabilities denominated in foreign currency are translated at the functional currency rate of exchange ruling at the balance sheet date. Any differences are taken to profit or loss as a gain or loss on foreign currency translation in the statements of income.

 

In accordance with ASC 830, Foreign Currency Matters, the Company translated the assets and liabilities into US dollars using the rate of exchange prevailing at the applicable balance sheet date and the statements of income and cash flows are translated at an average rate during the reporting period.  Adjustments resulting from the translation are recorded in investors’ equity as part of accumulated other comprehensive income. The exchange rates used to translate amounts in RMB into US$ for the purposes of preparing the financial statements were as follows:

 

			September 30, 2017				September 30, 2016
	Closing rate			6.6536				6.6676
	Average rate – nine months ended			6.8047				6.5798

 

Income taxes

 

The Company utilizes FASB Accounting Standard Codification Topic 740 (“ASC 740”) “Income taxes” (formerly known as SFAS No. 109, “Accounting for Income Taxes”), which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the combined unaudited condensed financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

 

ASC 740 “Income taxes” (formerly known as Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of Statement of Financial Accounting Standards No. 109 (“FIN 48”)) clarifies the accounting for uncertainty in tax positions. This interpretation requires that an entity recognizes in the audited consolidated unaudited condensed financial statements the impact of a tax position, if that position is more likely than not of being sustained upon examination, based on the technical merits of the position. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company has elected to classify interest and penalties related to unrecognized tax benefits, if and when required, as part of income tax expense in the statements of operations. The adoption of ASC 740 did not have a significant effect on the audited consolidated unaudited condensed financial statements.

 

 

QINGDAO QUANYAO SPORTS CONSULTING CO., LTD

 

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

(Stated in US Dollars)

 

2.	Summary of principal accounting policies (Continued)

 

Plant and equipment

 

Plant and equipment are recorded at cost. Significant additions or improvements extending useful lives of assets are capitalized. Maintenance and repairs are charged to expense as incurred. Depreciation is computed using the straight-line method over the estimated useful lives as follows:

 

	Equipment	3 - 5 years
	Computer	3 - 5 years

  

Investment in an equity investee

The equity method of accounting was used to account for the Company’s investment in an equity investee for which the Company did not have controlling equity interest. A non-controlling equity interest for the Company is typically a position of less than 50% beneficial ownership.

The statement of income includes the Company’s share of the results of the investment’s performance for the year. In the balance sheet, investment in an equity investee are stated at the Company’s share of the net assets of the investment less any identified impairment loss.

 

Comprehensive income

 

The Company has adopted FASB Accounting Standard Codification Topic 220 (“ASC 220”) “Comprehensive income” (formerly known as SFAS No. 130, “Reporting Comprehensive Income”), which establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Accumulated other comprehensive income represents the accumulated balance of foreign currency translation adjustments of the Company.

 

Recently Issued Accounting Guidance

 

The Company does not believe other recently issued but not yet effective accounting standards from ASU 2017-14, if currently adopted, would have a material effect of the condensed consolidated financial position, results of operation and cash flows.

 

3.

Other receivables

 

			As of
			September 30, 2017				December 31, 2016
			(Unaudited)
	Amount due from Leibo		$	65,589			$	-
	Sundry receivables			94,914				-
	Total other receivables		$	160,503			$	-

 

 

QINGDAO QUANYAO SPORTS CONSULTING CO., LTD

 

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

(Stated in US Dollars)

 

4.

Property and equipment

 

			As of
			September 30, 2017				December 31, 2016
			(Unaudited)
	Equipment		$	19,548			$	12,528
	Less:  accumulated depreciation			(15,233	)			(8,352	)
	Total property and equipment, net		$	4,315			$	4,176

 

The depreciation expenses for the nine months ended September 30, 2017 and 2016 were $6,371 and $3,306, respectively.

 

5.

Other payables

 

			As of
			September 30, 2017				December 31, 2016
			(Unaudited)
	Payable to Pure Heart		$	2,146,777			$	589,311
	Share of results of an equity investee			140,247				138,480
	Total other payable		$	2,287,024			$	727,791

  

6.

Equity investment

 

The Company holds 50% equity position in Leibo.  Leibo is a company established under the laws of the PRC on January 8, 2015 and its investors as of September 30, 2017 consists of the Company and 1 PRC individual. The registered capital of Leibo was RMB 1,000,000 (or approximately $160,899). The paid-in capital of Leibo was nil as at September 30, 2017 and December 31, 2016. Leibo organizes, promotes and hosts MMA events. As of September 30, 2017 and December 31, 2016, the investment consisted of the share of loss attributed to Leibo's operation results. 

 

7.

Paid-in capital

 

The Company was established on December 4, 2014, the registered capital was RMB 80,000 (or approximately $12,997). The paid-in capital of the Company was nil as at September 30, 2017 and December 31, 2016.

 

 

QINGDAO QUANYAO SPORTS CONSULTING CO., LTD

 

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

(Stated in US Dollars)

 

8.

Income taxes

 

The Company was incorporated in the PRC, was governed by the income tax law of the PRC and is subject to PRC enterprise income tax (“EIT”). The EIT rate of PRC is 25%.

 

Leibo was incorporated in the PRC, was governed by the income tax law of the PRC and is subject to PRC enterprise income tax (“EIT”). The EIT rate of PRC is 25%.

 

Effective from January 1, 2008, the PRC’s statutory income tax rate is 25%. The Company’s PRC subsidiaries are subject to income tax rate of 25%, unless otherwise specified. The Company did not generate taxable income in the PRC for the nine months ended September 30, 2017 and 2016.

 

Because of the uncertainty regarding the Company’s ability to realize its deferred tax assets, a 100% valuation allowance has been established as of September 30, 2017 and December 31, 2016.

 

As of September 30, 2017 and December 31, 2016, the valuation allowance was approximately $600,351 and $170,738, respectively. For the nine months ended December 31, 2016 and for the year ended December 31, 2015, there was an increase of $429,613 and $8,496, respectively in valuation allowance.

 

9.

Commitments and contingencies

 

Operating Lease

 

There has been no commitment as at September 30, 2017.

 

Legal Proceeding

 

There has been no legal proceeding in which the Company is a party for the nine months ended September 30, 2017.

 

10.

Subsequent events

 

On October 1, 2017, Rebel Group, Inc., a Florida corporation (“Rebel Group”) and Pure Heart Entertainment Pte Ltd., a wholly owned subsidiary of Rebel and a company incorporated under the laws of Singapore (“Pure Heart”) entered into a Share Transfer Agreement (the “Share Transfer”) with Naixin Qi, an individual, the sole shareholder of the Company.

 

Pursuant to the Transfer Agreement, Pure Heart, through Rebel Shanghai Limited, a wholly foreign owned entity (“Rebel Shanghai”) agreed to acquire 100% of the outstanding equity interests of the Company from the Shareholder with the purchase price valued at approximately $7,000,000 consisting of the following: (i) the forgiveness of debt owed by the Company to Pure Heart as of October 1, 2017, in the amount of approximately $2,825,000 and (ii) 12,000,000 shares of the common stock of Rebel, par value $.0001 per share.

 

Effective from November 21, 2017, the Company became the wholly owned subsidiary of Rebel Shanghai.