Attached files
| file | filename |
|---|---|
| EX-99.1 - AUDITED FINANCIAL STATEMENTS OF GUANGZHOU CITY HEDU INFORMATION TECHNOLOGY CO., - Technovative Group, Inc. | f8k122717ex99-1_technovative.htm |
| 8-K/A - AMENDMENT TO FORM 8-K - Technovative Group, Inc. | f8k122717a1_technovative.htm |
Exhibit 99.2
Technovative Group, Inc.
Unaudited Pro-Forma Financial Statements
CONTENTS
| PAGE | ||
| Unaudited Pro-Forma Consolidated Balance Sheet as of September 30, 2017 | 2 | |
| Unaudited Pro-Forma Consolidated Statements of Operations for the Year Ended December 31, 2016 and for the Nine Months Ended September 30, 2017 | 3-4 | |
| Notes to the Unaudited Pro-Forma Financial Statements | 5-6 |
| 1 |
Technovative Group, Inc.
Unaudited Pro-Forma Consolidated Balance Sheet
As of September 30, 2017
| Technovative | Hedu | Pro-Forma Adjustments | Pro-Forma Consolidation | |||||||||||||
| ASSETS | ||||||||||||||||
| Cash and cash equivalents | $ | 333,220 | $ | 7,398 | $ | - | $ | 340,618 | ||||||||
| Deposits, prepayments and other receivables | 23,386 | 493 | - | 23,879 | ||||||||||||
| Short-term investments | - | 293,074 | - | 293,074 | ||||||||||||
| Total current assets | 356,606 | 300,965 | - | 657,571 | ||||||||||||
| Property and equipment, net | 159,691 | 13,902 | - | 173,593 | ||||||||||||
| Total assets | $ | 516,297 | $ | 314,867 | $ | - | $ | 831,164 | ||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||||||||||
| Due to directors | $ | 257,317 | $ | - | $ | - | $ | 257,317 | ||||||||
| Promissory note – related party | 256,410 | - | - | 256,410 | ||||||||||||
| Due to a related company | 66,710 | - | - | 66,710 | ||||||||||||
| Other payables and accrued liabilities | 86,117 | 34,218 | - | 120,335 | ||||||||||||
| Total liabilities | 666,554 | 34,218 | - | 700,772 | ||||||||||||
| Stockholders’ equity (deficit) | ||||||||||||||||
| Common stock | 62,724 | - | (A) | 41,816 | 104,540 | |||||||||||
| Paid-in capital | - | 210,947 | (B) | (210,947 | ) | - | ||||||||||
| Additional paid-in capital | 2,688,402 | 141,806 | (B) | 169,131 | 2,999,339 | |||||||||||
| Accumulated losses | (2,914,733 | ) | (86,096 | ) | - | (3,000,829 | ) | |||||||||
| Accumulated other comprehensive loss - | ||||||||||||||||
| foreign exchange adjustment | 13,350 | 13,992 | - | 27,342 | ||||||||||||
| Total stockholders’ equity (deficit) | (150,257 | ) | 280,649 | - | 130,392 | |||||||||||
| Total liabilities and shareholders’ (deficit)/equity | $ | 516,297 | $ | 314,867 | $ | - | $ | 831,164 | ||||||||
See accompanying notes to the Unaudited Pro Forma Consolidated Financial Statements
| 2 |
Technovative Group, Inc.
Unaudited Pro-Forma Consolidated Statement of Operations
For the Year Ended December 31, 2016
| Technovative | Hedu | Pro-Forma Adjustments | Pro-Forma Consolidation | |||||||||||||
| Revenue, net | $ | - | $ | - | $ | - | $ | - | ||||||||
| General and administrative expenses | (1,330,714 | ) | - | - | (1,330,714 | ) | ||||||||||
| Loss from operations | (1,330,714 | ) | - | - | (1,330,714 | ) | ||||||||||
| Interest income | 174 | - | - | 174 | ||||||||||||
| Total other income | 174 | - | 174 | |||||||||||||
| Loss before income tax expenses | (1,330,540 | ) | - | - | (1,330,540 | ) | ||||||||||
| Income tax benefit | 7,207 | - | - | 7,207 | ||||||||||||
| Net loss | (1,323,333 | ) | - | (1,323,333 | ) | |||||||||||
| Other comprehensive income | ||||||||||||||||
| Foreign currency translation adjustment | 5,672 | - | - | 5,672 | ||||||||||||
| Comprehensive loss | $ | (1,317,661 | ) | $ | - | $ | - | $ | (1,317,661 | ) | ||||||
| Basic and diluted loss per common share | $ | (0.02 | ) | $ | - | $ | - | $ | (0.02 | ) | ||||||
| Weighted average number of common shares outstanding - basic and diluted | 54,723,820 | - | (A) | 41,815,880 | 96,539,700 | |||||||||||
See accompanying notes to the Unaudited Pro Forma Consolidated Financial Statements
| 3 |
Technovative Group, Inc.
Unaudited Pro-Forma Consolidated Statement of Operations
For the Nine Months Ended September 30, 2017
| Technovative | Hedu | Pro-Forma Adjustments | Pro-Forma Consolidation | |||||||||||||
| Revenue, net | $ | 2,161 | $ | - | $ | - | $ | 2,161 | ||||||||
| General and administrative expenses | (628,110 | ) | (86,704 | ) | - | (714,814 | ) | |||||||||
| Loss from operations | (625,949 | ) | (86,704 | ) | - | (712,653 | ) | |||||||||
| Other expenses | (8,141 | ) | - | - | (8,141 | ) | ||||||||||
| Interest income | 28 | 608 | - | 636 | ||||||||||||
| Total other income (expenses) | (8,113 | ) | 608 | - | (7,505 | ) | ||||||||||
| Loss before income tax expenses | (634,062 | ) | (86,096 | ) | - | (720,158 | ) | |||||||||
| Income tax expenses | - | - | - | - | ||||||||||||
| Net loss | (634,062 | ) | (86,096 | ) | - | (720,158 | ) | |||||||||
| Other comprehensive income | ||||||||||||||||
| Foreign currency translation adjustment | (1,657 | ) | 13,992 | - | 12,335 | |||||||||||
| Comprehensive loss | $ | (635,719 | ) | $ | (72,104 | ) | $ | - | $ | (707,823 | ) | |||||
| Basic and diluted loss per common share | $ | (0.01 | ) | $ | - | $ | - | $ | (0.01 | ) | ||||||
| Weighted average number of common shares outstanding - basic and diluted | 61,170,706 | - | (A) | 41,815,880 | 102,986,586 | |||||||||||
See accompanying notes to the Unaudited Pro Forma Consolidated Financial Statements
PRO FORMA ADJUSTMENTS
The pro forma adjustments are based on the Company’s preliminary estimates and assumptions that are subject to change. The following adjustments have been reflected in the unaudited pro forma Consolidated Financial Statements:
| A. | These adjustments reflect the common shares issued for the acquisition of Hedu. |
| B. | These adjustments reflect the consolidation of Hedu to the Company. |
| 4 |
Technovative Group, Inc.
Notes to the Unaudited Pro-Forma Financial Statements
Note 1. Basis of Presentation
On December 27, 2017, Technovative Group, Inc., a Delaware corporation (the “Company” or “Technovative”) has entered into a Share Transfer Agreement with several individuals, who are Shareholders of Guangzhou City Hedu Information Technology Co., Ltd (“Hedu”), a PRC company, in exchange for entering into entering into a loan agreement and a series of contractual agreements (the “VIE Agreements”), through the Company’s wholly owned foreign entity. Pursuant to the VIE Agreements, Hedu becomes a Variable Interest Entity (the “VIE”) of the Company, via the Company’s wholly owned foreign entity, and as such, the Company shall control all of Hedu’s business affairs and economic interests through its wholly-owned foreign entity. Hedu specializes in blockchain and big data analytics technologies.
These unaudited pro-forma financial statements (“pro-forma financial statements”) have been prepared in accordance with generally accepted accounting principles (“GAAP”). These pro-forma financial statements do not contain all of the information required for annual financial statements. Accordingly, they should be read in conjunction with the most recent annual and interim financial statements of the Company.
These pro-forma financial statements have been compiled from and include:
| (a) | an unaudited pro-forma balance sheet combining the unaudited balance sheets of the Company and Hedu as of September 30, 2017, giving effect to the transaction as if it occurred on September 30, 2017. |
| (b) | an unaudited pro-forma statement of operations combining the unaudited statements of operations of the Company and Hedu for the year ended December 31, 2016, giving effect to the transaction as if it occurred on January 1, 2016. |
| (c) | an unaudited pro-forma statement of operations combining the unaudited statement of operations of the Company and Hedu for the nine months ended September 30, 2017, giving effect to the transaction as if it occurred on January 1, 2017. |
The unaudited pro-forma financial statements have been compiled using significant accounting policies as set out in the audited financial statements of the Company and unaudited financial statements of Hedu for the period from March 23 2017 (date of incorporation) to September 30, 2017. Based on the review of the accounting policies of the Company and Hedu, there are no material accounting differences between the accounting policies of the companies. The unaudited pro-forma financial statements should be read in conjunction with the historical financial statements and notes thereto of the Company.
It is management’s opinion that these pro-forma financial statements include all adjustments necessary for the fair presentation, in all material respects, of the proposed transaction described above in accordance with GAAP applied on a basis consistent with the Company’s accounting policies. No adjustments have been made to reflect potential cost savings that may occur subsequent to completion of the transaction. The pro-forma statement of operations does not reflect non-recurring charges or credits directly attributable to the transaction, of which none are currently anticipated.
| 5 |
Technovative Group, Inc.
Notes to the Unaudited Pro-Forma Financial Statements
The unaudited pro-forma financial statements are not intended to reflect the results of operations or the financial position of the Company which would have actually resulted had the proposed transaction been effected on the dates indicated. Further, the unaudited pro-forma Financial Statements is not necessarily indicative of the result of operations that may be obtained in the future. The pro-forma adjustments and allocations of the purchase price are based in part on provisional estimates of the fair value of the assets acquired and of the liabilities assumed. Any final adjustments may change the allocation of purchase price which could affect the fair value assigned to the assets and liabilities and could result in a change to the unaudited pro-forma financial statements.
Note 2. Securities Exchange Agreement between Technovative Group, Inc. and Guangzhou City Hedu Information Technology Co., Ltd
On December 27, 2017, the “Company has entered into a Share Transfer Agreement with several individuals, who are Shareholders of Hedu, a PRC company, in exchange for entering into entering into the VIE Agreements, through the Company’s wholly owned foreign entity. Pursuant to the VIE Agreements, Hedu becomes the VIE of the Company, via the Company’s wholly owned foreign entity, and as such, the Company shall control all of Hedu’s business affairs and economic interests through its wholly-owned foreign entity. Hedu specializes in blockchain and big data analytics technologies.
The fair value of the 41,815,880 common shares issued as part of the consideration paid for Hedu ($4,185,880) was determined on the basis of the closing market price of the Company’s common shares on the acquisition date.
Note 3. Pro-Forma Assumptions and Adjustments
The unaudited pro-forma financial statements incorporate the following pro-forma assumptions and adjustments:
| (a) | Hedu shareholders exchanged Hedu all equity for 41,815,880 common shares of Company stock. |
Note 4. Pro-forma Earnings Per Share
Pro-forma basic and diluted loss per share for the year ended December 31, 2016 and the nine months ended September 30, 2017 have been calculated based on weighted average number of Technovative’s common shares outstanding add the common shares issued for the acquisition of Hedu.
| Nine Months Ended September 30, 2017 | Year Ended December 31, 2016 | |||||||
| Basic pro-forma loss per share computation | ||||||||
| Numerator: | ||||||||
| Pro-forma net loss available to shareholders | $ | (707,823 | ) | $ | (1,317,661 | ) | ||
| Denominator: | ||||||||
| Weighted average issued and outstanding common shares | 61,170,706 | 54,723,820 | ||||||
| Common shares issued for acquisition of Hedu | 41,815,880 | 41,815,880 | ||||||
| Pro-forma weighted average shares outstanding | 102,986,586 | 96,539,700 | ||||||
| Basic and diluted pro-forma loss per share | $ | (0.01 | ) | $ | (0.01 | ) | ||
6