Attached files
Exhibit 99.1
Pro Forma Financial Statements:
CANG BAO TIAN XIA INTERNATIONAL ART TRADE CENTER INC.
PRO FORMA CONSOLIDATED BALANCE SHEETS
As of June 30, 2020
(Unaudited)
|
| Zhi Yuan Limited and Subsidiaries |
|
| Cang Bao |
|
| Adjustments |
|
| Pro Forma |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 2,715,689 |
|
| $ | |
|
|
|
|
|
| $ | 2,715,689 |
|
Inventory |
|
| 319,031 |
|
|
| |
|
|
|
|
|
|
| 319,031 |
|
Advance to suppliers |
|
| 2,425,359 |
|
|
| |
|
|
|
|
|
|
| 2,425,359 |
|
Advance to suppliers - related parties |
|
| 69,355 |
|
|
| |
|
|
|
|
|
|
| 69,355 |
|
Due from related party |
|
| 41,502 |
|
|
| |
|
|
|
|
|
|
| 41,502 |
|
Prepayment and other current assets, net |
|
| 42,841 |
|
|
| |
|
|
|
|
|
|
| 42,841 |
|
Total current assets |
|
| 5,613,777 |
|
|
| |
|
|
|
|
|
|
| 5,613,777 |
|
Non-current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
| 11,706 |
|
|
| |
|
|
|
|
|
|
| 11,706 |
|
Intangible assets |
|
| 322,557 |
|
|
| |
|
|
|
|
|
|
| 322,557 |
|
Operating lease right of use asset, net |
|
| 638,023 |
|
|
| |
|
|
|
|
|
|
| 638,023 |
|
Total non-current assets |
|
| 972,286 |
|
|
| |
|
|
|
|
|
|
| 972,286 |
|
Total Assets |
| $ | 6,586,063 |
|
| $ | |
|
|
|
|
|
| $ | 6,586,063 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expense |
| $ | 5,694,519 |
|
| $ | 16,000 |
|
|
|
|
|
| $ | 5,710,519 |
|
Advance from customers |
|
| 451,193 |
|
|
| |
|
|
|
|
|
|
| 451,193 |
|
Due to related party |
|
| |
|
|
| 95,045 |
|
|
|
|
|
|
| 95,045 |
|
Operating lease liabilities - current |
|
| 585,831 |
|
|
| |
|
|
|
|
|
|
| 585,831 |
|
Total current liabilities |
|
| 6,731,543 |
|
|
| 111,045 |
|
|
|
|
|
|
| 6,842,588 |
|
Non-current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating lease liabilities - noncurrent |
|
| 235,811 |
|
|
| |
|
|
|
|
|
|
| 235,811 |
|
Total liabilities |
|
| 6,967,354 |
|
|
| 111,045 |
|
|
|
|
|
|
| 7,078,399 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series A Preferred Stock |
|
| |
|
|
| 9,920 |
|
|
|
|
|
|
| 9,920 |
|
Common stock |
|
| 1 |
|
|
| 35,319 |
|
|
| 74,999 |
|
|
| 110,319 |
|
Additional paid-in capital |
|
| 6,264,147 |
|
|
| 20,509,840 |
|
|
| (75,000 | ) |
|
| 26,698,987 |
|
Registered capital subscription receivable |
|
| (6,264,148 | ) |
|
| |
|
|
| 1 |
|
|
| (6,264,147 | ) |
Accumulated deficit |
|
| (415,312 | ) |
|
| (20,666,124 | ) |
|
|
|
|
|
| (21,081,436 | ) |
Accumulated other comprehensive income |
|
| 34,021 |
|
|
| |
|
|
|
|
|
|
| 34,021 |
|
Total shareholders' equity |
|
| (381,291 | ) |
|
| (111,045 | ) |
|
|
|
|
|
| (492,336 | ) |
Total Liabilities and Shareholders' Equity |
| $ | 6,586,063 |
|
| $ | |
|
|
|
|
|
| $ | 6,586,063 |
|
CANG BAO TIAN XIA INTERNATIONAL ART TRADE CENTER INC.
PRO FORMA CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
For the year ended June 30, 2020
(Unaudited)
|
| Zhi Yuan Limited and Subsidiaries |
|
| Cang Bao |
|
| Adjustments |
|
| Pro Forma |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net revenues |
| $ | 6,919,614 |
|
| $ | |
|
|
|
|
|
| $ | 6,919,614 |
|
Cost of revenues |
|
| 1,836,728 |
|
|
| |
|
|
|
|
|
|
| 1,836,728 |
|
Gross margin |
|
| 5,082,886 |
|
|
| |
|
|
|
|
|
|
| 5,082,886 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling expense |
|
| 1,652,557 |
|
|
| |
|
|
|
|
|
|
| 1,652,557 |
|
General and administrative |
|
| 2,693,361 |
|
|
| 84,539 |
|
|
|
|
|
|
| 2,777,900 |
|
Total operating expenses |
|
| 4,345,918 |
|
|
| 84,539 |
|
|
|
|
|
|
| 4,430,457 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
| 736,968 |
|
|
| (84,539 | ) |
|
|
|
|
|
| 652,429 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income/(loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
| 9,091 |
|
|
| |
|
|
|
|
|
|
| 9,091 |
|
Other income (expense) |
|
| (61,695 | ) |
|
| |
|
|
|
|
|
|
| (61,695 | ) |
Total other income(loss) |
|
| (52,604 | ) |
|
| |
|
|
|
|
|
|
| (52,604 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) before income taxes |
|
| 684,364 |
|
|
| (84,539 | ) |
|
|
|
|
|
| 599,825 |
|
Provision for income taxes expense |
|
| 12,675 |
|
|
| |
|
|
|
|
|
|
| 12,675 |
|
Net income (loss) |
|
| 671,689 |
|
|
| (84,539 | ) |
|
|
|
|
|
| 587,150 |
|
Other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
| 671,689 |
|
|
| (84,539 | ) |
|
|
|
|
|
| 587,150 |
|
Foreign currency translation adjustment |
|
| 27,271 |
|
|
| |
|
|
|
|
|
|
| 27,271 |
|
Total comprehensive income (loss) |
| $ | 698,960 |
|
| $ | (84,539 | ) |
|
|
|
|
| $ | 614,421 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 0.01 |
|
Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 0.00 |
|
Weighted average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 110,319,245 |
|
Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 4,078,319,245 |
|
CANG BAO TIAN XIA INTERNATIONAL ART TRADE CENTER INC.
PRO FORMA CONSOLIDATED BALANCE SHEETS
As of June 30, 2019
(Unaudited)
|
| Zhi Yuan Limited and Subsidiaries |
|
| Cang Bao |
|
| Adjustments |
|
| Pro Forma |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 4,677,454 |
|
| $ | |
|
|
|
|
|
| $ | 4,677,454 |
|
Inventory |
|
| 415,029 |
|
|
| |
|
|
|
|
|
|
| 415,029 |
|
Advance to suppliers |
|
| 705,787 |
|
|
| |
|
|
|
|
|
|
| 705,787 |
|
Prepayment and other current assets, net |
|
| 15,947 |
|
|
| |
|
|
|
|
|
|
| 15,947 |
|
Total current assets |
|
| 5,814,217 |
|
|
| |
|
|
|
|
|
|
| 5,814,217 |
|
Non-current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
| 6,042 |
|
|
| |
|
|
|
|
|
|
| 6,042 |
|
Intangible assets |
|
| 429,269 |
|
|
| |
|
|
|
|
|
|
| 429,269 |
|
Operating lease right of use asset, net |
|
| 874,255 |
|
|
| |
|
|
|
|
|
|
| 874,255 |
|
Total non-current assets |
|
| 1,309,566 |
|
|
| |
|
|
|
|
|
|
| 1,309,566 |
|
Total Assets |
| $ | 7,123,783 |
|
| $ | |
|
|
|
|
|
| $ | 7,123,783 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expense |
| $ | 4,904,130 |
|
| $ | 10,650 |
|
|
|
|
|
| $ | 4,914,780 |
|
Accounts payable - related parties |
|
| 138,321 |
|
|
| |
|
|
|
|
|
|
| 138,321 |
|
Advance from customers |
|
| 2,258,241 |
|
|
| |
|
|
|
|
|
|
| 2,258,241 |
|
Due to related party |
|
| 539 |
|
|
| 15,856 |
|
|
|
|
|
|
| 16,395 |
|
Operating lease liabilities - current |
|
| 346,757 |
|
|
| |
|
|
|
|
|
|
| 346,757 |
|
Total current liabilities |
|
| 7,647,988 |
|
|
| 26,506 |
|
|
|
|
|
|
| 7,674,494 |
|
Non-current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating lease liabilities - noncurrent |
|
| 556,046 |
|
|
| |
|
|
|
|
|
|
| 556,046 |
|
Total liabilities |
|
| 8,204,034 |
|
|
| 26,506 |
|
|
|
|
|
|
| 8,230,540 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series A Preferred Stock |
|
| |
|
|
| 9,920 |
|
|
|
|
|
|
| 9,920 |
|
Common stock |
|
| |
|
|
| 35,319 |
|
|
| 75,000 |
|
|
| 110,319 |
|
Additional paid-in capital |
|
| |
|
|
| 20,509,840 |
|
|
| (75,000 | ) |
|
| 20,434,840 |
|
Shares Subscription Receivable |
|
| |
|
|
| |
|
|
|
|
|
|
| |
|
Accumulated deficit |
|
| (1,086,998 | ) |
|
| (20,581,585 | ) |
|
|
|
|
|
| (21,668,583 | ) |
Accumulated other comprehensive income |
|
| 6,747 |
|
|
| |
|
|
|
|
|
|
| 6,747 |
|
Total shareholders' equity |
|
| (1,080,251 | ) |
|
| (26,506 | ) |
|
|
|
|
|
| (1,106,757 | ) |
Total Liabilities and Shareholders' Equity |
| $ | 7,123,783 |
|
| $ | |
|
|
|
|
|
| $ | 7,123,783 |
|
CANG BAO TIAN XIA INTERNATIONAL ART TRADE CENTER INC.
PRO FORMA CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
For the year ended June 30, 2019
(Unaudited)
|
| Zhi Yuan Limited and Subsidiaries |
|
| Cang Bao |
|
| Adjustments |
|
| Pro Forma |
| ||||
Net revenues |
| $ | 1,766,705 |
|
| $ | |
|
|
|
|
|
| $ | 1,766,705 |
|
Cost of revenues |
|
| 1,279,665 |
|
|
| |
|
|
|
|
|
|
| 1,279,665 |
|
Gross margin |
|
| 487,040 |
|
|
| |
|
|
|
|
|
|
| 487,040 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling expense |
|
| 926,059 |
|
|
| |
|
|
|
|
|
|
| 926,059 |
|
General and administrative |
|
| 650,747 |
|
|
| 48,856 |
|
|
|
|
|
|
| 699,603 |
|
Total operating expenses |
|
| 1,576,806 |
|
|
| 48,856 |
|
|
|
|
|
|
| 1,625,662 |
|
Loss from operations |
|
| (1,089,766 | ) |
|
| (48,856 | ) |
|
|
|
|
|
| (1,138,622 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income/(loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
| 2,768 |
|
|
| |
|
|
|
|
|
|
| 2,768 |
|
Total other income(loss) |
|
| 2,768 |
|
|
| |
|
|
|
|
|
|
| 2,768 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss before income taxes |
|
| (1,086,998 | ) |
|
| (48,856 | ) |
|
|
|
|
|
| (1,135,854 | ) |
Provision for income taxes expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Net loss |
|
| (1,086,998 | ) |
|
| (48,856 | ) |
|
|
|
|
|
| (1,135,854 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
| (1,086,998 | ) |
|
| (48,856 | ) |
|
|
|
|
|
| (1,135,854 | ) |
Foreign currency translation adjustment |
|
| 6,837 |
|
|
| |
|
|
|
|
|
|
| 6,837 |
|
Total comprehensive loss |
| $ | (1,080,161 | ) |
| $ | (48,856 | ) |
|
|
|
|
| $ | (1,129,017 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | (0.01 | ) |
Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 110,319,245 |
|
Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 110,319,245 |
|
NOTE 1 PRO FORMA AND BASIS OF PRESENTATION
The unaudited pro forma financial statements are based on historical financial statements of Cang Bao Tian Xia International Art Trade Center Inc. (Cang Bao) and its subsidiaries, Zhi Yuan Limited and its subsidiaries and variable interest entities, as if the Share Exchange transaction below had closed at the beginning of the year.
On July 27, 2020 (the Closing Date), beneficial shareholders of Zhi Yuan Limited (the Shareholders) entered into a Share Exchange Agreement (the Exchange Agreement) with Can Bao Tian Xia International Art Trade Center, Inc. (Cang Bao). Pursuant to the terms of the Exchange Agreement, the Shareholders agreed to sell to Cang Bao, and Cang Bao agreed to purchase, all shares of Zhi Yuan Limited held by them, which shares represent 100% of the issued and outstanding shares of Zhi Yuan Limited. In exchange, Cang Bao agreed to issue to the Shareholders an aggregate of 75,000,000 shares of Cang Bao common stock, representing approximately 67.98% of Cang Baos total issued and outstanding common stock (the Share Exchange).
The entities operate an online and offline cultural exchange service platform, through which dedicated to create industry standards for art investment and creating a model of online art exchanges and transactions, which allows collectors, artists, art dealers and owners to access a much larger art trading market, allowing them to engage with a wide range of collectibles or artwork investors.
For financial reporting purpose, the transaction is classified as a business combination under common control is a business combination in which all of the combining entities or businesses are ultimately controlled by the same party or parties both before and after the Share Exchange, and that control is not transitory.
NOTE 2 ADJUSTMENTS
(a) Cang Bao issued 75,000,000 shares of its common stock in exchange for all of the outstanding shares in ZhiYuan.
(b) To eliminate ZhiYuan and subsidiaries historical shares capital amounts, assuming the ZhiYuan 's original stockholders will exchange their shares in ZhiYuan for the Cangbao US shares.