UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): November 11, 2020

 

VICTORY COMMERCIAL MANAGEMENT INC.

(Exact name of registrant as specified in its charter)

 

Nevada		333-228242		37-1865646
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

424 Madison Ave. Suite 1002,

New York, NY, 10017

(Address of Principal Executive Offices)

 

(212)-922-2199

Registrant’s telephone number, including area code

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

[  ]	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company [X]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
N/A

 

 

 

Item 2.01 Completion of Acquisition or Disposition of Assets.

 

As disclosed in the current report on Form 8-K filed on October 7, 2020, On October 1, 2020, Victory Commercial Management, Inc., a Nevada corporation (“we” or the “Company”) entered into a sale and purchase agreement with Victory Commercial Investment Ltd., a BVI limited liability company and the wholly-owned subsidiary of the Company (“VCI”) and Sino Pride Development (HK) Limited, a private company limited by shares incorporated in Hong Kong (the “Purchaser”), to sell all the equity interest in Sino Pride Development Limited (“Sino Pride”), a Hong Kong company and wholly-owned subsidiary of VCI, to the Purchaser, in exchange a total consideration of HK$1.00 (the “Disposition of Sino Pride”). The Disposition of Sino Pride includes the sale all of the equity interest of Sino Pride’s then subsidiaries, including Dalian Victory Plaza Development Co., Ltd., a PRC company, and Dalian Victory Business Management Co., Ltd., a PRC company.

 

On November 11, 2020, we completed the disposition of Sino Pride to the Purchaser pursuant to the terms of the sale and purchase agreement.

 

Item 9.01 Financial Statements and Exhibits.

 

(b) Pro forma financial information.

 

The Company’s unaudited pro forma condensed consolidated statements below illustrates the estimated effects of the Disposition of Sino Pride and its subsidiaries referred to in Item 2.01 above as if it had occurred on such date.

 

These unaudited pro forma condensed consolidated financial statements should not be viewed as indicative of the Company’s financial results in the future; they are derived from, and should be read in conjunction with, the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, as initially filed with the SEC on May 29, 2020 and amended on July 10, 2020, and the Quarterly Reports on Form 10-Q for the interim periods ended June 30, 2020 filed with the SEC on August 14, 2020.

 

 

VICTORY COMMERCIAL MANAGEMENT INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEETS

AS OF JUNE 30, 2020

 

																										Proforma
						Adjustments to				Adjustments to				Adjustments												subsequent to
						Remove				Remove				to								Adjustments				Proposed
		2020 10Q				DVPD				DVBM				Remove SP				Adjustments				Note				Spinoffs
		(Reviewed)
ASSETS
CURRENT ASSETS :
Cash and cash equivalents		$	176,667			$	56,332			$	56,827			$	19,068			$	160				(A)			$	44,280
Restricted cash			26,788				26,788																				-
Tenant and sundry receivables, net of allowance for doubtful accounts			316,005				6,692				293,760								15,553				(B)				-
Prepaid expenses and other assets			466,422				78,272				266,554				197				(85	)			(C)				121,484
TOTAL CURRENT ASSETS			985,882				168,084				617,141				19,265				15,628								165,764
Rental properties, net			20,543,684				20,543,684																				-
Property and equipment, net			339,013				30,442				302,984				3,811												1,776
Intangible assets, net			14,919				14,570				349																-
ROU assets, net			348,448																								348,448
SP-Investment															43,437,595				(43,437,595	)			(C)				-
Capital Receivable											(264,940	)			2,055				(16,115	)			(C)				279,000
Intercompany Balance-SP															10,738,930				(10,738,930	)			(C)				-
Loan and interest receivable, net			4,260,697								4,304,754								(44,057	)			(D)				-
TOTAL ASSETS		$	26,492,643			$	20,756,780			$	4,960,288			$	54,201,656			$	(54,221,069	)						$	794,988
LIABILITIES AND DEFICIT
CURRENT LIABILITIES:
Bank loans payable, net (in default)		$	7,511,591			$	7,511,591																			$	-
Bank loans payable, net			58,483,681				58,368,711																				114,970
Accounts payable and accrued liabilities			12,232,367				6,587,727				5,284,529				186,144												173,967
Deferred revenue			3,783,314				2,082,918				1,700,396																-
Lease liabilities payable-current			17,768				17,768																				-
TOTAL CURRENT LIABILITIES			82,028,721				74,568,715				6,984,925				186,144				-								288,937
Property financing agreements payable			72,961,523				72,961,523																			$	-
Lease liabilities payable-non current			361,916																								361,916
Other payables			19,594,756				18,454,205				1,140,550																1
Loans payable to related parties			12,382,578				10,425,760												-								1,956,818
Due to shareholder			66,396,293												66,396,293												-
Intercompany account																			-								-
Interest payable to related parties			11,603,503				26,974,828				8,109,003								(23,480,328	)							-
TOTAL LIABILITIES			265,329,290				203,385,031				16,234,478				66,582,437				(23,480,329	)							2,607,673
			-				-				-				-				-
DEFICIT:
Common stock, $0.0001 par value, 600,000,000 shares authorized; 21,711,000
shares issued and outstanding at June 30, 2020			2,171																								2,171
Paid-in capital			11,827,188				34,000,000				3,200,000				3,856,289				(30,240,000	)			(C)				1,010,899
Accumulated deficit			(207,104,990	)			(172,856,421	)			(14,641,233	)			(16,217,817	)			(85	)			(C)				(3,389,434	)
Accumulated other comprehensive loss			(55,938	)			(266,752	)			167,043				(19,253	)			(500,655	)			(C)				563,679
Total stockholder’s deficit attributable to the Company’s common shareholders			(195,331,569	)			(139,123,173	)			(11,274,190	)			(12,380,781	)			(30,740,740	)							(1,812,685	)
Noncontrolling interest			(43,505,078	)			(43,505,078	)																			-
TOTAL DEFICIT			(238,836,647	)			(182,628,251	)			(11,274,190	)			(12,380,781	)			(30,740,740	)							(1,812,685	)
TOTAL LIABILITIES AND DEFICIT		$	26,492,643			$	20,756,780			$	4,960,288			$	54,201,656			$	(54,221,069	)						$	794,988
			-				-				-				-				-								-

 

Notes for Adjustments to unaudited Pro Forma Condensed Combined Balance Sheet.

 

(A)	Cash amount of $160 in DVPM represents cash collection on behave of DVPD and DVBM.
(B)	Amount of $15,553 in DVPM represents management fees collected through WeChat on behave of DVBM.
(C)	Adjustments represent eliminations for intercompany transactions or reclassification in 10Q.
(D)	Amount of 44,057 in DVPM represents loan payment received from ZKCZ on behave of DVBM.

 

 

VICTORY COMMERCIAL MANAGEMENT INC. AND SUBSIDIARIES

AUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEETS

AS OF DECEMBER 31, 2019

 

																										Proforma
						Adjustments to				Adjustments to				Adjustments												subsequent to
						Remove				Remove				to								Adjustments				proposed
		2019 10K				DVPD				DVBM				Remove SP				Adjustments				Note				spinoffs
		(Audited)
ASSETS
CURRENT ASSETS :
Cash and cash equivalents			122,884			$	61,598			$	41,655			$	3,024			$	819				(A)			$	15,788
Restricted cash			27,223				27,223				-				-												-
Tenant and sundry receivables, net of allowance for doubtful accounts			469,317				19,467				449,850																-
Prepaid expenses and other assets			526,834				88,550				301,750				16,380				(85	)			(B)				120,239
TOTAL CURRENT ASSETS			1,146,258				196,838				793,255				19,404				734								136,027
NON CURRENT ASSETS
Rental properties, net		$	21,334,015				21,334,015				-																-
Property and equipment, net			430,063				57,885				356,672				13,336												2,170
Intangible assets, net			17,640				17,344				296																-
ROU assets, net			484,178				1,095				-				60,200												422,883
Loan and interest receivable			6,087,914				-				6,105,050				-				(17,136	)			(C)				-
SP-Investment			-				-								43,235,652				(43,235,652	)			(B)				-
Capital Receivable			-				-				(269,236	)			2,045				(11,809	)			(B)				279,000
Intercompany Balance-SP			-				-								10,141,056				(10,141,056	)			(B)				-
TOTAL ASSETS		$	29,500,068			$	21,607,177			$	6,986,037			$	53,471,693			$	(53,404,919	)						$	840,080
LIABILITIES AND DEFICIT
CURRENT LIABILITIES:
Bank loans payable, net - in default		$	7,633,412				7,633,412																				-
Accounts payable and accrued liabilities			8,938,941				4,431,135				4,121,396				163,429												222,981
Deferred rental income			3,882,434				2,208,236				1,674,198																-
Lease liabilities payable-current			22,755				22,755																				-
TOTAL CURRENT LIABILITIES			20,477,542				14,295,538				5,795,594				163,429				-								222,981
NON CURRENT LIABILITIES:
Bank loans payable, net			59,288,001				59,288,001																				-
Property financing agreements payable			77,464,781				77,464,781																				-
Lease liabilities payable-non current			498,509				-				-				62,024												436,485
Other payables			19,906,698				18,878,081				1,028,616								1				(B)				-
Loans payable to related parties			11,934,791				10,594,843				-								-				(D)				1,339,948
Due to shareholder			65,931,644												65,931,644												-
Intercompany account			-				-				-				-												-
Interest payable to related parties			11,520,609				22,712,554				11,739,025				-				(22,930,970	)			(B)				-
Total Liabilities			267,022,575				203,233,798				18,563,235				66,157,097				(22,930,969	)							1,999,414
Deficit:
Victory Commercial Management Inc. Shareholder’s Deficit
Common stock, $0.0001 par value, 600,000,000 shares authorized; 21,711,000
shares issued and outstanding at December 31, 2019			2,171																								2,171
Paid-in capital			11,827,188				34,000,000				3,200,000				3,856,289				(30,240,000	)			(B)				1,010,899
Accumulated deficit			(203,808,349	)			(169,168,605	)			(14,759,238	)			(16,581,676	)			(85	)			(B)				(3,298,745	)
Accumulated other comprehensive loss			(2,242,729	)			(3,157,228	)			(17,960	)			39,983				(233,865	)			(B)				1,126,341
Total stockholder’s deficit attributable to the Company’s common shareholders			(194,221,719	)			(138,325,833	)			(11,577,198	)			(12,685,404	)			(30,473,950	)							(1,159,334	)
Noncontrolling interest			(43,300,788	)			(43,300,788	)																			-
Total Deficit			(237,522,507	)			(181,626,621	)			(11,577,198	)			(12,685,404	)			(30,473,950	)							(1,159,334	)
TOTAL LIABILITIES AND DEFICIT		$	29,500,068			$	21,607,177			$	6,986,037			$	53,471,693			$	(53,404,919	)						$	840,080
			-				-				-				-				-								-

 

Notes for Adjustments to audited Pro Forma Condensed Combined Balance Sheet.

 

(A)	Cash amount of $819 in DVPM represents cash collection on behave of DVPD and DVBM.
(B)	Adjustments represent eliminations for intercompany transactions or reclassification in 10K.
(C)	Amount of $17,136 in DVPM represents loan payment received from ZKCZ on behave of DVBM.
(D)	The ending amount of $1,339,948 in VCM represents the amount of due to related-individual as disclosed in 2019 10K footnote 15(on page F-30).

 

 

VICTORY COMMERCIAL MANAGEMENT INC. AND SUBSIDIARIES

VICTORY COMMERCIAL INVESTMENT INC AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

 

																										Proforma
																										subsequent
						Adjustments				Adjustments				Adjustments												to
		2020 10Q				to Remove DVPD				to Remove DVBM				to Remove SP				Adjustments				Note				proposed spinoffs
		(Reviewed)
Revenues
Rental income		$	974,462			$	974,462																			$	-
Management fee income			1,911,601								1,911,601																-
Other income			228,343								228,343																-
Total revenues			3,114,406				974,462				2,139,944				-												-
Operating expenses
Selling expenses			1,894,867				13,252				1,881,615																-
Depreciation and amortization			553,882				496,064				47,842				9,585												391
Payroll and payroll related expenses			627,284				29,923				134,227				138,875												324,259
Business taxes			232,915				191,745				41,170																-
Lease expenses			120,122				(3,525	)							17,116												106,531
Other general and administrative expenses			342,886				(106,625	)			194,862				15,239												239,410
Total operating expenses			3,771,956				620,834				2,299,716				180,815												670,591
Loss from operations			(657,550	)			353,628				(159,772	)			(180,815	)											(670,591	)
Other income (expense)
Interest income			272,527				83				272,444				535,374				(535,374	)			(A)				-
Interest - loans			(2,010,258	)			(2,010,258	)																			-
Interest - ROU and other capitalized liabilities			(1,089,015	)			(1,089,015	)																			-
Interest - related parties			(266,393	)			(801,571	)							(196	)			535,374				(A)				-
Gain (loss) from foreign currency transactions			(367,986	)			(367,986	)																			-
Other income			37,842				23,013				5,333				9,496												-
Total other (expense), net			(3,423,283	)			(4,245,734	)			277,777				544,674												-
Loss before provision for income taxes			(4,080,833	)			(3,892,106	)			118,005				363,859												(670,591	)
Provision for income taxes			-				-				-				-												-
Net Loss			(4,080,833	)			(3,892,106	)			118,005				363,859												(670,591	)
Net loss attributable to noncontrolling interest			(784,192	)			(785,367	)			1,175																-
Net loss attributable to the Company’s common shareholders		$	(3,296,641	)		$	(3,106,739	)		$	116,830			$	363,859											$	(670,591	)
Per Common Share - basic and diluted:
Net loss per Company’s common share		$	(0.15	)																						$	(0.03	)
Weighted-average shares outstanding, basic and diluted			21,711,000																								21,472,792
Comprehensive income (loss)
Net loss		$	(4,080,833	)		$	(3,892,106	)		$	118,005			$	363,859											$	(670,591	)
Other comprehensive income (loss)
Foreign currency translation adjustments			2,766,693				2,645,230				180,697				(59,236	)											2
Comprehensive (loss)			(1,314,140	)			(1,246,876	)			298,702				304,623												(670,589	)
Comprehensive income(loss) attributable to non-controlling interest			579,902				578,052				1,850																-
Comprehensive (loss) attributable to the Company’s common shareholders		$	(1,894,042	)		$	(1,824,928	)		$	296,852			$	304,623											$	(670,589	)

 

Notes for Adjustments to unaudited Pro Forma Condensed Combined Balance Sheet.

 

(A)

Adjustments represent eliminations for intercompany transactions or reclassification in 10Q.

 

 

VICTORY COMMERCIAL MANAGEMENT INC. AND SUBSIDIARIES VICTORY COMMERCIAL INVESTMENT INC AND SUBSIDIARIES

AUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2019

 

																										Proforma
																										subsequent
						Adjustments				Adjustments				Adjustments												to
		2019 10K				to Remove DVPD				to Remove DVBM				to Remove SP				Adjustments				Note				proposed spinoffs
		(Audited)
Revenues
Rental income		$	2,977,880			$	2,977,880																				-
Management fee income			4,470,061							$	4,470,061																-
Other income			743,189								743,189																-
Total revenues			8,191,130				2,977,880				5,213,250				-												-
Operating expenses
Selling expenses			4,262,763				109,915				4,152,848																-
Depreciation and amortization			1,231,787				1,071,274				120,556				39,174											$	783
Lease expenses			2,712				2,712																				-
Payroll and payroll related expenses			1,954,530				66,503				395,899				818,492												673,636
Business taxes			476,211				381,386				94,775																50
Operating lease expenses			599,054												420,549												178,505
Other general and administrative expenses			4,051,445				91,442				3,148,141				153,242												658,620
Total operating expenses			12,578,502				1,723,232				7,912,219				1,431,457												1,511,594
Income Loss from operations			(4,387,372	)			1,254,648				(2,698,969	)			(1,431,457	)											(1,511,594	)
Other income (expense)
Interest income			725,778				169				725,607				1,079,874				(1,079,874	)			(A)				2
Interest - loans			(4,147,614	)			(4,147,614	)																			-
Interest - ROU and other capitalized liabilities			(2,773,739	)			(2,773,739	)																			-
Interest - related parties			(537,210	)			(1,616,247	)							(837	)			1,079,874				(B)				-
Gain (loss) from foreign currency transactions			(271,447	)			(271,447	)																			-
Gain (loss) on disposal of fixed assets			119								1,924				(1,805	)											-
Other income			276,564				261,493				15,071																-
Total other income (expense), net			(6,727,549	)			(8,547,385	)			742,602				1,077,232												2
Loss from operations before provision for income tax			(11,114,921	)			(7,292,737	)			(1,956,367	)			(354,225	)											(1,511,592	)
Provision for income tax
Net Loss			(11,114,921	)			(7,292,737	)			(1,956,367	)			(354,225	)											(1,511,592	)
Net loss attributable to noncontrolling interest			(1,495,208	)			(19,829	)			(1,475,379	)															-
Net loss attributable to the Company’s common shareholders			(9,619,713	)			(7,272,908	)			(480,988	)			(354,225	)											(1,511,592	)
Per Common Share - basic and diluted:		$	(0.45	)																						$	(0.07	)
Net loss per Company’s common share			21,472,792																								21,472,792
Weighted-average shares outstanding, basic and diluted *
Comprehensive income (loss)
Net loss		$	(11,114,921	)		$	(7,292,737	)		$	(1,956,367	)		$	(354,225	)										$	(1,511,592	)
Other comprehensive loss
Change in foreign currency translation adjustments			1,933,769				1,865,343				141,708				(73,282	)											-
Total other comprehensive income (loss)		$	(9,181,152	)		$	(5,427,394	)		$	(1,814,659	)		$	(427,507	)										$	(1,511,592	)
Comprehensive income (loss) attributable to non-controlling interest			(1,058,691	)			415,153				(1,473,844	)															-
Comprehensive income (loss) attributable to the Company’s common shareholders		$	(8,122,461	)		$	(5,842,547	)		$	(340,815	)		$	(427,507	)										$	(1,511,592	)

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	Victory Commercial Management Inc.
Date: November 12, 2020	By:	/s/ Alex Brown
		Alex Brown
		Chief Executive Officer and Interim Chief Financial Officer