HOTAPP BLOCKCHAIN INC. (FORMERLY KNOWN AS HOTAPP INTERNATIONAL, INC.)
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
On January 14, 2019, HotApp Blockchain Inc. (the “Company”) completed the sale of its subsidiary HotApps Information Technology Co. Ltd., also known as Guangzhou HotApps Technology Ltd. (“Guangzhou HotApps”) to DSS Asia Limited, and DSS Asia Limited assumed certain related liabilities (the “Transaction”). The following unaudited pro forma consolidated financial information is based on the Company’s historical consolidated financial statements adjusted to give the effect of the Transaction.
The Unaudited Pro Forma Consolidated Balance sheet as of September 30, 2018 is presented as if the Transaction occurred on September 30, 2018. The Unaudited Pro Forma Consolidated Statement of Operations and Comprehensive Loss for the nine months ended September 30, 2018 and for the year ended December 31, 2017 are presented as if the Transaction occurred January 1, 2017.
The pro forma consolidated financial statements are based on information currently available including certain assumptions and adjustments that the Company believes are reasonable. They are presented for informational purposes only and do not necessarily represent what our financial position and results of operations would have been if the Transaction occurred on the dates above, or to project our financial performance for any future period. The unaudited pro forma consolidated financial information and the related notes should be read in conjunction with the Company’s audited financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year-ended December 31, 2017 and the Company’s Quarterly Report on Form 10-Q for the nine months ended September 30, 2018.
HOTAPP BLOCKCHAIN INC. (FORMERLY KNOWN AS HOTAPP INTERNATIONAL, INC.)
UNAUDITED PROFORMA CONSOLIDATED BALANCE SHEET (EXCEPT SHARE AMOUNTS AND PAR VALUE) AS OF SEPTEMBER 30, 2018
| | HotApp Blockchain Inc. As Reported | | | Pro Forma HotApp Blockchain Inc. |
| ASSETS | | | | |
| | | | | |
| CURRENT ASSETS: | | | | |
| Cash | $74,311 | $(7,399) | $- | $66,912 |
| Accounts receivable-related parties | 39,427 | - | 100,000[a] | 139,427 |
| Accounts receivable-trade | 13,133 | (2,913) | - | 10,220 |
| Prepaid expenses | 3,870 | - | - | 3,870 |
| Deposit and other receivable | 13,234 | (5,058) | - | 8,176 |
| TOTAL CURRENT ASSETS | 143,975 | (15,370) | 100,000 | 228,605 |
| | | | | |
| Fixed assets, net | 10,633 | (2,320) | - | 8,313 |
| TOTAL ASSETS | $154,608 | $(17,690) | $100,000 | $236,918 |
| | | | | |
| LIABILITIES AND STOCKHOLDERS' DEFICIT | | | | |
| | | | | |
| CURRENT LIABILITIES: | | | | |
| Accounts payable and accrued expenses | $200,198 | $(164,485) | $- | $35,713 |
| Accrued taxes and franchise fees | 7,742 | - | - | 7,742 |
| Amount due to related parties | 987,206 | - | - | 987,206 |
| TOTAL CURRENT LIABILITIES | 1,195,146 | (164,485) | - | 1,030,661 |
| | | | | |
| TOTAL LIABILITIES | 1,195,146 | (164,485) | - | 1,030,661 |
| | | | | |
| STOCKHOLDERS' (DEFICIT): | | | | |
| Preferred stock | - | | | - |
| Common stock | 50,690 | - | - | 50,690 |
| Accumulated other comprehensive loss | (198,836) | - | - | (198,836) |
| Additional paid-in capital | 4,604,191 | - | - | 4,604,191 |
| Accumulated deficit | (5,496,583) | 146,795 | 100,000 | (5,249,788) |
| TOTAL STOCKHOLDERS' DEFICIT | (1,040,538) | 146,795 | 100,000 | (793,743) |
| TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $154,608 | $(17,690) | $100,000 | $236,918 |
See accompanying notes to the Unaudited Pro Forma Consolidated Financial Information.
HOTAPP BLOCKCHAIN INC. (FORMERLY KNOWN AS HOTAPP INTERNATIONAL, INC.)
UNAUDITED PROFORMA CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018
| | Historical HotApp Blockchain Inc. Reported | | Pro Forma HotApp Blockchain Inc. |
| | | | |
| Revenues | $142,952 | (7,437) | 135,515 |
| | | | |
| Cost of revenues | 78,707 | (4,596) | 74,111 |
| | | | |
| Gross profit | $64,245 | $(2,841) | $61,404 |
| | | | |
| Research and product development, general and administrative expenses | 375,396 | (74,402) | 300,994 |
| | | | |
| (Loss) from operations | (311,151) | 71,561 | (239,590) |
| | | | |
| Other income (expenses), net | (58,468) | 8,702 | (49,766) |
| | | | |
| Loss before taxes | (369,619) | 80,263 | (289,356) |
| | | | |
| Income tax provision | - | - | - |
| | | | |
| Net loss applicable to common shareholders | $(369,619) | $80,263 | $(289,356) |
| | | | |
| Other Comprehensive Income Loss | 90,562 | - | 90,562 |
| | | | |
| Total comprehensive loss | $(279,057) | $80,263 | $(198,794) |
See accompanying notes to the Unaudited Pro Forma Consolidated Financial Information.
HOTAPP BLOCKCHAIN INC. (FORMERLY KNOWN AS HOTAPP INTERNATIONAL, INC.)
UNAUDITED PROFORMA CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS FOR THE YEAR ENDED DECEMBER, 2017
| | Historical HotApp Blockchain Inc. Reported | | Pro Forma HotApp Blockchain Inc. |
| | | | |
| Revenues | $247,989 | (50,916) | 197,073 |
| | | | |
| Cost of revenues | 81,516 | (13,964) | 67,552 |
| | | | |
| Gross profit | $166,473 | $(36,952) | $129,521 |
| | | | |
| Research and product development, general and administrative expenses | 841,204 | (253,146) | 588,058 |
| | | | |
| (Loss) from operations | (674,731) | 216,194 | (458,537) |
| | | | |
| Other income (expenses), net | 176,743 | 4,824 | 181,567 |
| | | | |
| Loss before taxes | (497,988) | 221,018 | (276,970) |
| | | | |
| Income tax provision | - | - | - |
| | | | |
| Net loss applicable to common shareholders | $(497,988) | $221,018 | $(276,970) |
| | | | |
| Other comprehensive Income Loss | (216,068) | - | (216,068) |
| | | | |
| Total comprehensive loss | $(714,056) | $221,018 | $(493,038) |
See accompanying notes to the Unaudited Pro Forma Consolidated Financial Information.
Note 1. Basis of Presentation
The following notes relate to the pro forma adjustments included in the Unaudited Pro forma Consolidated Balance Sheet for September 30, 2018, which is presented as if the Transaction occurred on September 30, 2018, and the Unaudited Pro Forma Consolidated Statement of Operations and Comprehensive Loss for the year ended December 31, 2017, which are presented as if the Transaction occurred January 1, 2017.
(a)
This adjustment represents the consideration of $100,000 from the disposal of a subsidiary, Guangzhou HotApps, to DSS Asia Limited.
(b)
These adjustments represent the elimination of the historical results of Guangzhou HotApps sold to DSS Asia Limited.
