EXHIBIT 99.5
Natural Health Farm Holdings, Inc.
CONTENTS
Introduction | F-1 | |
Unaudited Pro Forma Condensed Combined Balance Sheet as at December 31, 2018 | F-2 | |
Unaudited Pro Forma Condensed Combined Statements of Operations for the three months ended December 31, 2018 | F-3 | |
Unaudited Pro Forma Condensed Combined Statements of Operations for the year ended September 30, 2018 | F-4 | |
Notes to Unaudited Pro Forma Condensed Combined Financial Information | F-5 - F-7 |
F-1 |
Natural Health Farm Holdings, Inc.
Unaudited Pro Forma Condensed Combined Balance Sheets
December 31, 2018
Historical (Unaudited) | Prema Life Pty Ltd | GGLG Properties Pty Ltd | |||||||||||||||||||||||||||||||
Natural Health Farms Holdings, Inc. | Prema Life Pty Ltd | GGLG Pty | Pro Forma Adjustments | Pro Forma Adjustments | Pro Forma Adjustments | Pro Forma Adjustments | Pro Forma Combined | ||||||||||||||||||||||||||
ASSETS | Debit (Credit) | Debit (Credit) | Debit (Credit) | Debit (Credit) | |||||||||||||||||||||||||||||
Current Assets | |||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 13,044 | $ | 16,972 | $ | 4,084 | - | - | - | - | $ | 34,100 | |||||||||||||||||||||
Accounts receivable | - | 140,059 | 13,350 | - | - | - | - | 153,409 | |||||||||||||||||||||||||
Advances receivable | 85,000 | - | - | - | - | - | - | 85,000 | |||||||||||||||||||||||||
Inventories | - | 418,363 | - | - | - | - | - | 418,363 | |||||||||||||||||||||||||
Other current assets | - | 20,162 | 2,164 | - | - | - | - | 22,326 | |||||||||||||||||||||||||
Total Current Assets | 98,044 | 595,556 | 19,598 | 713,198 | |||||||||||||||||||||||||||||
Property, plant and equipment, net | - | 96,791 | 590,076 | - | - | - | (55,958 | )(4) | 630,909 | ||||||||||||||||||||||||
Computer software, net | 27,293 | - | - | - | - | - | - | 27,293 | |||||||||||||||||||||||||
Intangibles and goodwill | 1,079,746 | (3) | - | - | 1,079,746 | ||||||||||||||||||||||||||||
Investment in Prema Life Pty Ltd | - | - | - | 964,000 | (1) | (964,000 | )(3) | - | (2) | - | 4 | - | |||||||||||||||||||||
Investment in GGLG Properties Pty Ltd | - | - | - | - | - | 254,000 | (2) | (254,000) | (4) | - | |||||||||||||||||||||||
Total Assets | $ | 125,337 | $ | 692,347 | $ | 609,674 | $ | 964,000 | $ | 115,746 | $ | 254,000 | $ | (309,958 | ) | $ | 2,451,146 | ||||||||||||||||
LIABILITIES AND STOCKHOLDERS' DEFICIT | |||||||||||||||||||||||||||||||||
Current Liabilities | |||||||||||||||||||||||||||||||||
Accounts payable | $ | 52,081 | $ | 125,926 | $ | 282,156 | - | - | - | - | $ | 460,163 | |||||||||||||||||||||
Accrued expenses | 5,832 | 529,409 | 14,365 | - | - | - | - | 549,606 | |||||||||||||||||||||||||
Deferred revenue - related party | 50,758 | - | - | - | - | - | - | 50,758 | |||||||||||||||||||||||||
Deferred revenue - third party | 43,527 | - | - | - | - | - | - | 43,527 | |||||||||||||||||||||||||
Payable to affiliate | 98,837 | - | - | - | - | - | - | 98,837 | |||||||||||||||||||||||||
Note payable | 40,000 | - | - | - | - | - | - | 40,000 | |||||||||||||||||||||||||
Advance from related party - NH&E | - | 215,144 | - | - | - | - | - | 215,144 | |||||||||||||||||||||||||
Advance from director | 14,500 | - | - | - | - | - | - | 14,500 | |||||||||||||||||||||||||
Total Current Liabilities | 305,535 | 870,479 | 296,521 | 1,472,535 | |||||||||||||||||||||||||||||
Total Liabilities | 305,535 | 870,479 | 296,521 | 1,472,535 | |||||||||||||||||||||||||||||
Commitments and Contingencies | |||||||||||||||||||||||||||||||||
Stockholders' Equity (Deficit) | |||||||||||||||||||||||||||||||||
Common stock - $0.001 par value | 161,860 | 783 | 1 | (241 | ) | 783 | (63 | ) | 1 | 162,164 | |||||||||||||||||||||||
Additional paid in capital | 2,075,478 | 836,618 | 791,031 | (963,759 | ) | 836,618 | (253,937 | ) | 791,031 | 3,293,174 | |||||||||||||||||||||||
Stock subscriptions receivable | (1,218,000 | ) | - | - | - | - | - | - | (1,218,000 | ) | |||||||||||||||||||||||
Accumulated other comprehensive income (loss) | - | 7,364 | (35,091 | ) | - | 7,364 | - | (35,091 | ) | - | |||||||||||||||||||||||
Loss (profit) attributable to non-controlling interest | - | (62,386 | ) | 3,195 | - | - | - | - | (59,191 | ) | |||||||||||||||||||||||
Accumulated deficit | (1,199,536 | ) | (960,511 | ) | (445,983 | ) | - | (960,511 | ) | - | (445,983 | ) | (1,199,536 | ) | |||||||||||||||||||
Total Stockholders' Equity (Deficit) | (180,198 | ) | (178,132 | ) | 313,153 | 978,611 | |||||||||||||||||||||||||||
Total Liabilities and Stockholders' Equity (Deficit) | $ | 125,337 | $ | 692,347 | $ | 609,674 | $ | 964,000 | $ | 115,746 | $ | 254,000 | $ | (309,958 | ) | $ | 2,451,146 |
See accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Information
F-2 |
Natural Health Farm Holdings, Inc.
Unaudited Pro Forma Condensed Combined Statements of Operations
For The Three Months Ended December 31, 2018
Historical (Unaudited) | ||||||||||||||||||||
Natural Health Farms Holdings, Inc. | Prema Life Pty Ltd | GGLG Properties Pty Ltd | Pro Forma Adjustments | Pro Forma Combined | ||||||||||||||||
Debit (Credit) | ||||||||||||||||||||
Revenues - related parties | $ | 6,583 | $ | - | $ | - | $ | $ | 6,583 | |||||||||||
Revenues - non-related parties | 115,167 | 323,044 | 14,647 | 14,647 | (5) | 438,211 | ||||||||||||||
Total Revenues | 121,750 | 323,044 | 14,647 | 444,794 | ||||||||||||||||
Cost of goods sold | 28,488 | 223,836 | - | - | 252,324 | |||||||||||||||
Gross Profit | 93,262 | 99,208 | 14,647 | 192,470 | ||||||||||||||||
Operating Expenses | ||||||||||||||||||||
Selling, general and administrative | 46,313 | 226,527 | 4,916 | (14,647 | )(5) | 263,109 | ||||||||||||||
Research and development | - | - | - | |||||||||||||||||
Total Operating Expenses | 46,313 | 226,527 | 4,916 | 263,109 | ||||||||||||||||
Income (Loss) from Operations | 46,949 | (127,319 | ) | 9,731 | (70,639 | ) | ||||||||||||||
Other Income (Expense) | ||||||||||||||||||||
Interest expense | (807 | ) | - | (1,743 | ) | - | (2,550 | ) | ||||||||||||
Total Other Income (Expense) | (807 | ) | - | (1,743 | ) | (2,550 | ) | |||||||||||||
Income (Loss) before Provision For Income Tax | 46,142 | (127,319 | ) | 7,988 | (73,189 | ) | ||||||||||||||
Provision for Income Tax | - | - | - | - | - | |||||||||||||||
Net Income (Loss) | $ | 46,142 | $ | (127,319 | ) | $ | 7,988 | $ | $ | (73,189 | ) | |||||||||
Non-controlling interest | - | 62,386 | (3,195 | ) | - | 59,191 | ||||||||||||||
Net income (loss) after non-controlling interest | $ | 46,142 | $ | (64,933 | ) | $ | 4,793 | $ | (13,998 | ) | ||||||||||
Net income per common share - basic & diluted | $ | 0.00 | ||||||||||||||||||
Weighted average number of common shares outstanding - basic and diluted | 161,647,674 |
See accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Information
F-3 |
Natural Health Farm Holdings, Inc.
Unaudited Pro Forma Condensed Combined Statements of Operations
For The Year Ended September 30, 2018
Historical (Unaudited) | ||||||||||||||||||||
Natural Health Farms Holdings, Inc. | Prema Life Pty Ltd | GGLG Properties Pty Ltd | Pro Forma Adjustments | Pro Forma Combined | ||||||||||||||||
Debit (Credit) | ||||||||||||||||||||
Revenues - related parties | $ | 21,659 | $ | - | $ | 67,442 | $ | 67,442 | (6) | $ | 21,659 | |||||||||
Revenues - non-related parties | 32,106 | 2,083,771 | - | - | 2,115,877 | |||||||||||||||
Total Revenues | 53,765 | 2,083,771 | 67,442 | 2,137,536 | ||||||||||||||||
Cost of goods sold | 14,669 | 1,335,042 | - | - | 1,349,711 | |||||||||||||||
Gross Profit | 39,096 | 748,729 | 67,442 | 787,825 | ||||||||||||||||
Operating Expenses | ||||||||||||||||||||
Selling, general and administrative | 1,165,282 | 1,143,827 | 57,248 | (67,442 | )(6) | 2,298,915 | ||||||||||||||
Research and development | - | 17,366 | - | - | 17,366 | |||||||||||||||
Total Operating Expenses | 1,165,282 | 1,161,193 | 57,248 | 2,316,281 | ||||||||||||||||
Income (Loss) from Operations | (1,126,186 | ) | (412,464 | ) | 10,194 | (1,528,456 | ) | |||||||||||||
Other Income (Expense) | ||||||||||||||||||||
Interest expense | (1,026 | ) | - | (53,581 | ) | - | (54,607 | ) | ||||||||||||
Total Other Income (Expense) | (1,026 | ) | - | (53,581 | ) | (54,607 | ) | |||||||||||||
Loss before Provision For Income Tax | (1,127,212 | ) | (412,464 | ) | (43,387 | ) | (1,583,063 | ) | ||||||||||||
Provision for Income Tax | - | - | - | - | - | |||||||||||||||
Net Loss | $ | (1,127,212 | ) | $ | (412,464 | ) | $ | (43,387 | ) | $ | $ | (1,583,063 | ) | |||||||
Non-controlling interest | - | 202,107 | 17,355 | - | 219,462 | |||||||||||||||
Net Loss after non-controlling interest | $ | (1,127,212 | ) | $ | (210,357 | ) | $ | (26,032 | ) | $ | $ | (1,363,601 | ) | |||||||
Net income per common share - basic & diluted | $ | (0.01 | ) | |||||||||||||||||
Weighted average number of common shares outstanding - basic and diluted | 154,691,466 |
See accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Information
F-4 |
Natural Health Farm Holdings Inc.
Notes to Unaudited Pro Forma Condensed Combined Financial Information
December 31, 2018
Note 1 – Description of the Transaction
On December 3, 2018, the Company agreed to purchase 51% of the issued and outstanding capital stock of Prema Life Pty Ltd by issuing 241,000 shares of its common stock valued at $964,000, and 60% of the issued and outstanding capital stock of GGLG Properties PTY Ltd by issuing 63,500 shares of its common stock valued at $254,000, respectively. On December 28, 2018, the parties mutually agreed to extend the closing date of the purchase transaction on January 1, 2019. The Company issued 304,500 shares of its common stock on December 3, 2018 in good faith for consummating the purchase.
All of the securities set forth above were issued pursuant to exemptions from registration under Section 4(2) and/or Reg. S of the Securities Act of 1933, as amended, as transactions by an issuer not involving any public offering. No general advertising or solicitation was used. All issued securities were affixed with appropriate legends restricting sales and transfers.
Note 2 – Basis of Pro Forma Presentation
The unaudited pro forma condensed combined balance sheet as of December 31, 2018 combines our historical balance sheet with the historical balance sheets of Prema Life and GGLG and has been prepared as if our acquisition of Prema Life and GGLG had occurred on December 31, 2018. The unaudited pro forma condensed combined statements of operations for the three months ended December 31, 2018 and for the year ended September 30, 2018 combine our historical statements of operations with Prema Life and GGLG’s historical statements of operations and have been prepared as if the acquisition had occurred on October 1, 2017. The historical financial information is adjusted in the unaudited pro forma condensed combined financial information to give effect to pro forma events that are (1) directly attributable to the proposed acquisition, (2) factually supportable, and (3) with respect to the condensed combined statements of income, expected to have a continuing impact on the combined results.
We have accounted for the acquisition in this unaudited pro forma condensed combined financial information using the acquisition method of accounting in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 805 “Business Combinations” (“ASC 805”). In accordance with ASC 805, we use our best estimates and assumptions to assign fair value to the tangible and intangible assets acquired and liabilities assumed at the Acquisition Date. Goodwill as of the Acquisition Date is measured as the excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired.
The pro forma adjustments described below were developed based on assumptions and estimates of NHF’s management, including assumptions relating to the consideration payable and the allocation thereof to the assets acquired and liabilities assumed from Prema Life and GGLG based on preliminary estimates of fair value. The final purchase consideration and the allocation of the purchase consideration may differ from that reflected in the unaudited pro forma condensed combined financial information after final valuation procedures are performed and amounts are finalized following the completion of the acquisition.
The unaudited pro forma condensed combined financial information is provided for illustrative purposes only and does not purport to represent what the actual consolidated results of operations or the consolidated financial position of the combined company would have been had the acquisition occurred on the dates assumed, nor are they necessarily indicative of future consolidated results of operations or financial position.
The Company expects to incur costs and realize benefits associated with integrating the operations of NHF, Prema Life and GGLG. The unaudited pro forma condensed combined financial information does not reflect the costs of any integration activities or any benefits that may result from operating efficiencies, revenue synergies, asset dispositions or other restructurings that could result from the acquisition. The unaudited pro forma condensed combined statement of operations does not reflect any non-recurring charges directly related to the acquisition that the combined company may incur upon completion of the transaction.
F-5 |
Note 3 – Estimated Preliminary Purchase Price Allocation
For the purpose of these Pro Forma Financial Statements, the estimated preliminary purchase price allocation to net assets acquired and liabilities assumed is based on their estimated fair values on the assumed acquisition date of December 31, 2018. Actual amounts on the acquisition date of January 1, 2019 may differ, however the Company does not believe this will result in a materially different allocation:
Fair Value | ||||||||
Assets Acquired | Prema Life | GGLG | ||||||
Cash and cash equivalents | $ | 16,972 | $ | 4,084 | ||||
Accounts receivable | 140,059 | 13,350 | ||||||
Inventories | 418,363 | - | ||||||
Other current assets | 20,162 | 2,164 | ||||||
Goodwill | 1,079,746 | - | ||||||
Property, plant and equipment, net | 96,791 | 530,923 | ||||||
Total Assets Acquired | $ | 1,772,093 | $ | 550,521 | ||||
Liabilities Assumed | ||||||||
Accounts payable | $ | 125,926 | $ | 282,156 | ||||
Accrued expenses | 529,409 | 14,365 | ||||||
Advances from related parties | 215,144 | - | ||||||
Total Liabilities Assumed | $ | 870,479 | $ | 296,521 | ||||
Non-controlling interest | 62,386 | (3,195 | ) | |||||
Purchase Price Allocated | $ | 964,000 | $ | 254,000 |
We believe the amount of goodwill resulting from the allocation of purchase consideration is primarily attributable to expected synergies from future growth and strategic advantages. In accordance with ASC 805, goodwill will not be amortized but instead will be tested for impairment at least annually and more frequently if certain indicators of impairment are present. In the event that goodwill has become impaired, we will record an expense for the amount impaired during the fiscal quarter in which the determination is made.
F-6 |
Note 4 – Pro Forma Adjustments
The following is a description of the unaudited pro forma adjustments reflected in the unaudited pro forma condensed combined financial information:
Adjustments to the pro forma condensed combined balance sheet:
(1) The pro forma adjustment records the investment in Prema Life by issuance of 241,000 shares of common stock of NHF valued at their fair value on the date of acquisition totaling $964,000.
(2) The pro forma adjustment records the investment in GGLG by issuance of 63,500 shares of common stock of NHF valued at their fair value on the date of acquisition totaling $254,000.
(3) The pro forma adjustment to total equity includes elimination of pre-acquisition equity balances of Prema Life as used in calculating goodwill.
(4) The pro forma adjustment to total equity includes elimination of pre-acquisition equity balances of GGLG as used in calculating goodwill.
Prema Life | GGLG | |||||||
Common Shares | $ | (783 | ) | $ | (1 | ) | ||
Additional paid in capital | (836,618 | ) | (791,031 | ) | ||||
Accumulated other comprehensive income ( loss) | (7,364 | ) | 35,091 | |||||
Accumulated deficit | 960,511 | 445,983 | ||||||
Total pre-acquisition equity balances eliminated | $ | 115,746 | $ | (309,958 | ) |
Adjustments to the pro forma condensed combined statements of operations for the three months ended December 31, 2018:
(5) The pro forma adjustment records elimination of rent of $14,647 received by GGLG from Prema Life for the three months ended December 31, 2018.
Adjustments to the pro forma condensed combined statements of operations for the year ended September 30, 2018:
(6) The pro forma adjustment records elimination of rent of $14,647 received by GGLG from Prema Life for the year ended September 30, 2018.
F-7