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8-K/A - AMENDMENT NO. 1 TO CURRENT REPORT - LOGIQ, INC. | ea121153-8ka1_weylandtech.htm |
EX-99.1 - THE AUDITED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2018 - LOGIQ, INC. | ea121153ex99-1_weyland.htm |
Exhibit 99.2
UNAUDITED PRO FORMA
COMBINED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The unaudited pro forma combined condensed consolidated balance sheet as of September 30, 2019 is presented as if the proposed acquisition had occurred as of September 30, 2019. The unaudited pro forma combined condensed consolidated statements of operations for the nine months ended September 30, 2019 and for the year ended December 31, 2018 are presented as if the acquisition had occurred on January 1, 2018. The unaudited pro forma consolidated financial statements of Weyland Tech, Inc. (“Weyland”) and Push Holdings, Inc. (“Push”) have been adjusted to reflect certain reclassifications in order to conform Push’s historical financial statement presentation to Weyland’s financial statement presentation for the combined company.
The unaudited pro forma combined condensed consolidated financial statements give effect to the acquisition under the acquisition method of accounting in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 805, Business Combinations, which we refer to as ASC 805, with Weyland treated as the acquirer. As of the date of this document, Weyland has not identified all adjustments necessary to conform Push’s accounting policies to Weyland’s accounting policies. A final determination of the estimated fair value of Push’s assets and liabilities, including intangible assets with both indefinite or finite lives, will be based on the actual net tangible and intangible assets and liabilities of Push that exist as of the closing date of the acquisition and, therefore, cannot be made prior to the completion of the acquistion. In addition, the value of the consideration was determined based on the closing price per share of Weyland common stock on the closing date of the acquisition. The preliminary pro forma adjustments have been made solely for the purpose of presenting the unaudited pro forma combined condensed consolidated financial statements.
Assumptions and estimates underlying the unaudited adjustments to the pro forma combined condensed consolidated financial statements are described in the accompanying notes, which should be read in conjunction with the unaudited pro forma combined condensed consolidated financial statements. The historical consolidated financial statements have been adjusted in the unaudited pro forma combined condensed consolidated financial statements to give effect to pro forma events that are: (1) directly attributable to the acquisition; (2) factually supportable; and (3) with respect to the unaudited pro forma combined condensed consolidated statements of operations, expected to have a continuing impact on the combined results of Weyland and Push following the acquisition.
In connection with the plan to integrate the operations of Weyland and Push, Weyland anticipates that non-recurring charges, such as costs associated with systems implementation, relocation expenses, severance and other costs related to closing the transaction, will be incurred. Weyland is not able to determine the timing, nature and amount of these charges as of the date of this prospectus. However, these charges could affect the combined results of operations of Weyland and Push, as well as those of the combined company following the acquisition, in the period in which they are recorded. The unaudited pro forma combined condensed consolidated financial statements do not include the effects of the costs associated with any restructuring or integration activities resulting from the transaction, as they are non-recurring in nature and not factually supportable at the time that the unaudited pro forma combined condensed consolidated financial statements were prepared. Additionally, these adjustments do not give effect to any synergies that may be realized as a result of the acquisition, nor do they give effect to any nonrecurring or unusual restructuring charges that may be incurred as a result of the integration of the two companies.
The pro forma information presented is for illustrative purposes only and is not necessarily indicative of the financial position or results of operations that would have been realized if the acquisitions had been completed on the dates indicated, nor is it indicative of future operating results or financial position. The pro forma adjustments represent Weyland’s management’s best estimate and are based upon currently available information and certain assumptions that Weyland believes are reasonable under the circumstances. The final valuation may materially change the allocation of the purchase consideration, which could materially affect the fair values assigned to the assets and liabilities and could result in a material change to the unaudited pro forma condensed combined financial information. Refer to footnote 1 to the unaudited pro forma condensed combined financial information for more information on the basis of preparation.
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED BALANCE SHEETS OF
WEYLAND TECH INC. AND PUSH HOLDINGS, INC.
AS OF SEPTEMBER 30, 2019
Historical Weyland Tech Inc. | Historical Push Holdings, Inc. | Pro Forma Adjustments (a) | Pro Forma Adjustments (b) | Pro Forma Amounts | ||||||||||||||||
Property and equipment, net | – | 240,837 | – | – | 240,837 | |||||||||||||||
Intangible assets, net | 637,081 | 4,670,315 | 3,579,685 | – | 8,887,081 | |||||||||||||||
Goodwill | – | 13,305,968 | (7,324,672 | ) | – | 5,981,296 | ||||||||||||||
Total non-current assets | 637,081 | 18,217,120 | (3,744,987 | ) | – | 15,109,214 | ||||||||||||||
Amount due from associate | 2,025,250 | – | – | – | 2,025,250 | |||||||||||||||
Prepayment, deposit and other receivables | 3,216,151 | 7,065 | – | – | 3,223,216 | |||||||||||||||
Accounts receivable, net | – | 567,716 | – | – | 567,716 | |||||||||||||||
Cash and cash equivalents | 5,820,629 | 130,553 | – | – | 5,924,182 | |||||||||||||||
Total current assets | 11,062,030 | 678,334 | – | – | 11,740,364 | |||||||||||||||
Total Assets | 11,699,111 | 18,895,454 | (3,744,987 | ) | – | 26,849,578 | ||||||||||||||
Accounts payable | 73,350 | 661,926 | – | – | 735,276 | |||||||||||||||
Accruals and other payables | 149,029 | 165,427 | – | – | 314,456 | |||||||||||||||
Deferred revenue | – | 37,400 | – | – | 37,400 | |||||||||||||||
Deposits received for shares to be issued | 1,898,726 | – | – | – | 1,898,726 | |||||||||||||||
Loan from director | 19,000 | – | – | – | 19,000 | |||||||||||||||
Amount due to director | 77,500 | – | – | – | 77,500 | |||||||||||||||
Total current liabilities | 2,217,605 | 864,753 | – | – | 3,082,358 | |||||||||||||||
Due to Parent Company | – | 12,451,797 | (12,451,797 | ) | – | – | ||||||||||||||
Total Liabilities | 2,217,605 | 13,316,550 | (12,451,797 | ) | – | 3,082,358 | ||||||||||||||
Common stock | 9,682 | – | – | 3,571 | 13,253 | |||||||||||||||
Additional paid-in capital | 53,322,418 | 20,039,145 | (5,753,431 | ) | (3,571 | ) | 67,604,561 | |||||||||||||
Accumulated deficit | (43,850,594 | ) | (14,460,241 | ) | 14,460,241 | – | (43,850,594 | ) | ||||||||||||
Total Stockholders’ Equity | 9,481,506 | 5,578,904 | 8,706,810 | – | 23,767,220 | |||||||||||||||
Total Liabilities and Stockholders’ Equity | 11,699,111 | 18,895,454 | (3,744,987 | ) | – | 26,849,578 |
The accompanying notes are an integral part of these unaudited pro forma combined condensed consolidated financial statements
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UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS OF
WEYLAND TECH INC. AND PUSH HOLDINGS, INC.
For the nine months ended September 30, 2019
Historical Weyland Tech Inc. | Historical Push Holdings, Inc. | Pro Forma Adjustments (d) | Notes | Pro Forma Amounts | ||||||||||||||
Service revenues | $ | 24,630,065 | $ | 5,795,762 | $ | – | $ | 30,425,827 | ||||||||||
Cost of revenues | 20,258,258 | 4,937,285 | – | 25,195,543 | ||||||||||||||
Gross profit | 4,371,807 | 858,477 | – | 5,230,284 | ||||||||||||||
Other income, net | 32,094 | (234 | ) | – | 31,860 | |||||||||||||
Operating expenses: | ||||||||||||||||||
General and administrative | 3,479,752 | 4,668,858 | – | (c) | 8,148,610 | |||||||||||||
Research and development | 3,236,713 | – | – | 3,236,713 | ||||||||||||||
Sales and marketing | 389,610 | 264,575 | – | 654,185 | ||||||||||||||
Depreciation and amortization | 76,450 | 1,271,987 | (34,487 | ) | (d) | 1,313,950 | ||||||||||||
Total operating expenses | 7,182,525 | 6,205,420 | (34,487 | ) | 13,353,458 | |||||||||||||
Loss from operations | (2,778,624 | ) | (5,347,177 | ) | 34,487 | (8,091,314 | ) | |||||||||||
Income tax expense (benefit) | – | 5,180 | – | (e) | 5,180 | |||||||||||||
Net loss from continuing operations | (2,778,624 | ) | (5,352,357 | ) | 34,487 | (8,096,494 | ) | |||||||||||
Net income (loss) from discontinued operations | – | – | – | – | ||||||||||||||
Net loss | $ | (2,778,624 | ) | $ | (5,352,357 | ) | $ | 34,487 | $ | (8,096,494 | ) | |||||||
Net loss per share, basic and diluted | $ | (0.0627 | ) | $ | (0.1012 | ) | ||||||||||||
Weighted-average shares outstanding, basic and diluted | 44,308,447 | 80,022,732 |
The accompanying notes are an integral part of these unaudited pro forma combined condensed consolidated financial statements
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UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS OF
WEYLAND TECH INC. AND PUSH HOLDINGS, INC.
For the year ended December 31, 2018
Historical Weyland Tech Inc. | Historical Push Holdings, Inc. | Pro Forma Adjustments (f) | Notes | Pro Forma Amounts | ||||||||||||||
Service revenues | $ | 22,667,325 | $ | 17,766,581 | $ | – | $ | 40,433,906 | ||||||||||
Cost of revenues | 18,643,914 | 15,579,632 | – | 34,223,546 | ||||||||||||||
Gross profit | 4,023,411 | 2,186,949 | – | 6,210,360 | ||||||||||||||
Other income, net | 250 | (77 | ) | – | 173 | |||||||||||||
Operating expenses: | ||||||||||||||||||
General and administrative | 2,880,387 | 11,516,416 | – | (c) | 14,396,803 | |||||||||||||
Research and development | 4,773,349 | – | – | 4,773,349 | ||||||||||||||
Sales and marketing | – | 368,870 | – | 368,870 | ||||||||||||||
Depreciation and amortization | 268,600 | 1,993,813 | (343,813 | ) | (f) | 1,918,600 | ||||||||||||
Total operating expenses | 7,922,336 | 13,879,099 | (343,813 | ) | 21,457,622 | |||||||||||||
Loss from operations | (3,898,675 | ) | (11,692,227 | ) | 343,813 | (15,247,089 | ) | |||||||||||
Impairment loss on associate | (200,000 | ) | – | – | (200,000 | ) | ||||||||||||
Loss from continuing operations before taxes | (4,098,675 | ) | (11,692,227 | ) | 343,813 | (15,447,089 | ) | |||||||||||
Income tax expense (benefit) | – | (1,871,479 | ) | – | (e) | (1,871,479 | ) | |||||||||||
Net loss from continuing operations | (4,098,675 | ) | (9,820,748 | ) | 343,813 | (13,575,610 | ) | |||||||||||
Net income (loss) from discontinued operations | – | – | – | – | ||||||||||||||
Net loss | $ | (4,098,675 | ) | $ | (9,820,748 | ) | $ | 343,813 | $ | (13,575,610 | ) | |||||||
Net loss per share, basic and diluted | $ | (0.1423 | ) | $ | (0.2104 | ) | ||||||||||||
Weighted-average shares outstanding, basic and diluted | 28,809,276 | 64,523,561 |
The accompanying notes are an integral part of these unaudited pro forma combined condensed consolidated financial statements
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NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. | Basis of Presentation |
The unaudited pro forma combined condensed consolidated financial statements are prepared under the acquisition accounting method in accordance with ASC 805, with Weyland treated as the acquirer. Under the acquisition accounting method, the total estimated purchase price allocation is calculated as described in Note 4. In accordance with ASC 805, the assets acquired and the liabilities assumed have been measured at fair value based on various preliminary estimates, and these estimates are subject to change pending further review of the fair value of assets acquired and liabilities assumed. The final amounts recorded for the acquisition may differ materially from the information presented herein.
The unaudited pro forma combined condensed consolidated financial statements were prepared in accordance with GAAP, and present the pro forma financial position and results of operations of the combined companies based upon the historical information after giving effect to the acquisition and adjustments described in these Notes to the unaudited pro forma combined condensed consolidated financial statements. The unaudited pro forma combined condensed consolidated balance sheet is presented as if the acquisition had occurred on September 30, 2019; and the unaudited pro forma combined condensed consolidated statement of operations for the nine months ended September 30, 2019 and for the year ended December 31, 2018 are presented as if the acquisition had occurred on January 1, 2018.
Certain reclassifications have been made relative to Push’s historical financial statements to conform to the financial statement presentation of Weyland. Such reclassifications are described in further detail in Note 5 to the unaudited pro forma combined condensed consolidated financial statements.
2. | Accounting Policies |
As a result of the continuing review of Push’s accounting policies, Weyland may identify differences between the accounting policies of the two businesses that, when conformed, could have a material impact on the combined financial statements. The unaudited pro forma combined condensed consolidated financial statements do not assume any differences in accounting policies other than the allocation of certain expenses allocated from parent company in Push’s operating expenses (see Note 5).
3. | Preliminary Purchase Price Consideration |
Subject to the terms and conditions of the acquisition agreement, Weyland will issue 35,714,285 common shares to seller at a price per share of $0.40, which was its price per share at the time of closing the acquisition.
The requirement to determine the final purchase price using the number of Weyland shares to be issued as part of the closing and the closing price of Weyland’s common stock as of the closing date could result in a total purchase price different from the price assumed in these unaudited pro forma combined condensed consolidated financial statements, and that difference may be material. Therefore, the estimated consideration expected to be transferred reflected in these unaudited pro forma combined condensed consolidated financial statements does not purport to represent what the actual consideration transferred will be when the acquisition is completed.
For purposes of these unaudited pro forma combined condensed consolidated financial statements, the estimated purchase price has been allocated among Push’s tangible and intangible assets and liabilities assumed based on their estimated fair value as of September 30, 2019. The final determination of the allocation of the purchase price will be based on the estimated fair value of such assets and assumed liabilities as of the date of closing of the acquisition. Such final determination of the purchase price allocation may be significantly different from the preliminary estimates used in these unaudited pro forma combined condensed consolidated financial statements.
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4. | Preliminary Estimated Purchase Price Allocation |
The following allocation of the preliminary estimated purchase price assumes, with the exception of goodwill and other identifiable intangible assets, carrying values approximate estimated fair value. The calculation of the purchase price consideration to acquire Push is as follows:
Weyland common stock consideration | 35,714,285 | |||
Estimated Weyland common stock price at closing | $ | 0.40 | ||
Total purchase price consideration | $ | 14,285,714 |
Based upon these assumptions, the total purchase price consideration was allocated to Push’s assets and assumed liabilities, as of September 30, 2019, as follows:
Estimated Fair Value | ||||
Cash and cash equivalents | $ | 103,553 | ||
Accounts receivable, net | 574,781 | |||
Prepaid expenses and other current assets | – | |||
Total current assets | 678,334 | |||
Property and equipment, net | 240,837 | |||
Identifiable intangible assets, net | 8,250,000 | |||
Goodwill | 5,981,296 | |||
Total Assets Acquired | 15,150,467 | |||
Accounts payable | $ | 661,926 | ||
Accrued expenses and other current liabilities | 165,427 | |||
Deferred revenue | 37,400 | |||
Total current liabilities | 864,753 | |||
Total Liabilities Assumed | 864,753 | |||
Net Assets Acquired | 14,285,714 | |||
Total Estimated Purchase Price | $ | 14,285,714 |
The preliminary amounts assigned to identifiable intangible assets and estimated weighted average useful lives are as follows:
Range of Useful Life (in years) | Estimated Fair Value as of September 30, 2019 | |||||||
Technology | 5 | $ | 8,250,000 | |||||
Identifiable intangible assets, net | $ | 8,250,000 |
The identifiable intangible assets are amortized using a straight-line method.
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The final determination of the purchase price allocation will be based on the actual net tangible and intangible assets of Push that will exist on the date of the acquisition and completion of the valuation of the fair value of such net assets. Weyland anticipates that the ultimate purchase price allocation of balance sheet accounts such as current assets and assumed liabilities, property and equipment, intangible assets and long-term assets and assumed liabilities will differ from the preliminary assessment outlined above. Any changes to the initial estimates of the fair value of the acquired assets and assumed liabilities will be recorded as adjustments to those assets and liabilities.
5. | Preliminary Pro Forma Financial Statement Adjustments |
Adjustments included in the column under the heading “Pro Forma Adjustments” represent the following:
Unaudited Pro Forma Combined Condensed Consolidated Balance Sheet
a) | To record the preliminary purchase price allocation. |
b) | To record the stockholders’ equity balances at the time the acquisition take place. |
Unaudited Pro Forma Combined Condensed Consolidated Statement of Operations
Conforming Reclassifications Between Weyland and Push:
The following adjustments have been made to the presentation of Push’s historical consolidated financial statements to conform to US GAAP presentation:
c) | The general and administrative for the nine months ended September 30, 2019 and for the year ended December 31, 2018 for Push Holdings includes $2,993,465 and $5,295,208, respectively, of allocated expenses from the parent company. |
Pro Forma Adjustments
d) | Represents estimated decrease in depreciation and amortization of $34,487 related to the fair value adjustment of intangible assets acquired. |
e) | No net income tax benefit because of the full valuation allowance. |
f) | Represents estimated decrease in depreciation and amortization of $343,813 related to the fair value adjustment of intangible assets acquired. |
6. | Pro Forma Combined Net Income (Loss) per Share |
The pro forma basic and diluted net income (loss) per share presented in the unaudited pro forma combined condensed consolidated statements of operations is computed based on the weighted-average number of shares outstanding:
Nine Months Ended September 30, 2019 | Year Ended December 31, 2018 | |||||||
Pro Forma net loss available to common stockholders, as combined | $ | (8,096,494 | ) | $ | (13,575,610 | ) | ||
Weyland’s weighted-average shares, Basic and Diluted | 44,308,447 | 28,809,276 | ||||||
Shares expected to be issued upon acquisition of Push | 35,714,285 | 35,714,285 | ||||||
Pro Forma weighted-average shares, Basic and Diluted | 80,022,732 | 64,523,561 | ||||||
Pro Forma net loss per share, Basic and Diluted | $ | (0.1012 | ) | $ | (0.2104 | ) |
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