Exceed World, Inc.
Unaudited Pro Forma Condensed Combined Financial Information
The following unaudited pro forma condensed combined financial information and related notes present the historical condensed combined financial information of Exceed World, Inc. (hereinafter referred to as "Exceed World", the "Company," "we," "our," "us" and similar terms unless the context indicates otherwise) and Force International Holdings Limited ("Force Holdings"), which was incorporated in Hong Kong with limited liability and its subsidiaries (collectively referred to as the “Force Holdings Group”, after giving effect to the transfer of the School TV’s stock from the Company to Force Internationale Limited (the "Deconsolidation"). The unaudited pro forma condensed combined financial information gives effect to the Deconsolidation based on the assumptions, reclassifications, and adjustments described in the accompanying notes to the unaudited pro forma condensed combined financial information.
The unaudited pro forma condensed combined balance sheet as of June 30, 2018 is presented as if the Deconsolidation had occurred on June 30, 2018. The unaudited pro forma condensed combined statement of operations for the year ended September 30, 2017 is presented as if the Deconsolidation had occurred on October 1, 2016. The pro forma condensed combined financial statements do not necessarily reflect what the combined company’s financial condition or results of operations would have been had the acquisition occurred on the dates indicated. They also may not be useful in predicting the future financial condition and results of operations of the combined company. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors.
| EXCEED WORLD, INC. | ||||||||||
| UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET | ||||||||||
| (A) | Less | Pro Forma | ||||||||
| Deconsolidation of | Pro Forma | Exceed World, Inc | ||||||||
| Exceed World, Inc | School TV Co., Ltd. | Adjustments | Consolidated | |||||||
| June 30, 2018 | June 30, 2018 | June 30, 2018 | ||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||
| ASSETS | ||||||||||
| Current assets | ||||||||||
| Cash and cash equivalents | $ | 13,773,034 | $ | 31,839 | $ | - | $ | 13,741,195 | ||
| Marketable securities | 186,083 | - | - | 186,083 | ||||||
| Accounts receivable | 1,107 | 1,107 | - | - | ||||||
| Inventories, net | 496,669 | 78,570 | - | 418,099 | ||||||
| Prepaid expenses | 1,086,339 | 1,122 | - | 1,085,217 | ||||||
| Due from related parties | 50,076 | 118,216 | (E) | 208,583 | 140,443 | |||||
| Other current assets | 285,498 | - | - | 285,498 | ||||||
| Total current assets | 15,878,806 | 230,854 | 208,583 | 15,856,535 | ||||||
| Prepaid expenses | 347,806 | - | - | 347,806 | ||||||
| Deferred income tax assets | 271,027 | - | - | 271,027 | ||||||
| Fixed assets, net | 386,037 | - | - | 386,037 | ||||||
| Intangible assets, net | 3,050,098 | 633,656 | - | 2,416,442 | ||||||
| Long-term receivable - related party | - | - | (D) | 225,917 | 225,917 | |||||
| Total assets | $ | 19,933,774 | $ | 864,510 | $ | 434,500 | $ | 19,503,764 | ||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||
| Current liabilities | ||||||||||
| Accounts payable | $ | 903,240 | $ | 5,470 | $ | - | $ | 897,770 | ||
| Due to related parties | 775,042 | 247,696 | (E) | 208,583 | 735,929 | |||||
| Accrued expenses | 55,639 | 6,794 | - | 48,845 | ||||||
| Deferred income | 3,102,770 | 807 | - | 3,101,963 | ||||||
| Other payables | 1,764,352 | - | - | 1,764,352 | ||||||
| Current portion of capital lease obligations | 9,535 | - | - | 9,535 | ||||||
| Total current liabilities | 6,610,578 | 260,767 | 208,583 | 6,558,394 | ||||||
| Capital lease obligations, long-term portion | 45,340 | - | - | 45,340 | ||||||
| Long-term note payable | 497,018 | 497,018 | - | - | ||||||
| Long-term note payable – related party | - | 225,917 | (D) | 225,917 | - | |||||
| Long term accrued interest | 5,799 | - | - | 5,799 | ||||||
| Long term deferred income | 2,396 | 2,396 | - | - | ||||||
| Total liabilities | 7,161,131 | 986,098 | 434,500 | 6,609,533 | ||||||
| Shareholders' equity (deficit) | ||||||||||
| Preferred stock | - | - | - | - | ||||||
| Common stock | 3,270 | 4,262 | (B) | 4,262 | 3,270 | |||||
| Additional paid-in capital | 149,598 | 2,330 | (B) | (4,262) | 143,383 | |||||
| (C) | 377 | |||||||||
| Accumulated earnings (deficit) | 12,318,899 | (128,798) | (C) | (377) | 12,447,320 | |||||
| Accumulated other comprehensive income | 300,876 | 618 | - | 300,258 | ||||||
| Total shareholders' equity (deficit) | 12,772,643 | (121,588) | - | 12,894,231 | ||||||
| Total liabilities and shareholders' equity | 19,933,774 | 864,510 | 434,500 | 19,503,764 | ||||||
(A) On September 26, 2018, the Company acquired 100 % of the shares of Force International Holdings Limited. The unaudited pro forma condensed combined balance sheet as of June 30, 2018 is presented as if this merger transaction had occurred on June 30, 2018.
(B) This adjustment reflects the merger reserve in relation to the disposal of School TV.
(C) This adjustment reflects the reversal of the merger reserve for the acquisition of School TV in merger transaction.
(D) This adjustment represents the loan from e-Learning Laboratory Co. Ltd. to School TV. Prior to the Deconsolidation, the loan was considered as intercompany balances and was eliminated in consolidation. Subsequent to the Deconsolidation, the loan is recorded as long term receivable due from School TV.
(E) This adjustments represents the loan from e-Communications Co. Ltd. to School TV amounted at JPY10,000,000 ($90,367) and the amount due from Exceed World amounted at $118,216. Prior to the Deconsolidation, these amounts were considered as intercompany balances and were eliminated in consolidation. Subsequent to the Deconsolidation, these amounts are recorded as balances with related parties.
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| EXCEED WORLD, INC. | |||||||||
| UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME | |||||||||
| (A) | Less | Pro Forma | |||||||
| Deconsolidation of | Pro Forma | Exceed World, Inc | |||||||
| Exceed World, Inc | School TV Co., Ltd. | Adjustments | Consolidated | ||||||
| Year ended | Year ended | Year ended | |||||||
| September 30, 2017 | September 30, 2017 | September 30, 2017 | |||||||
| (Unaudited) | (Unaudited) | ||||||||
| Revenues | $ | 36,860,282 | $ | 30,274 | $ | - | $ | 36,830,008 | |
| Cost of revenues | 22,219,015 | 42,526 | - | 22,176,489 | |||||
| Gross profit (loss) | 14,641,267 | (12,252) | - | 14,653,519 | |||||
| Operating expenses | |||||||||
| Selling, general and administrative expenses | $ | 10,841,436 | $ | 2,241 | $ | - | $ | 10,839,195 | |
| Total operating expenses | 10,841,436 | 2,241 | - | 10,839,195 | |||||
| Profit (loss) from operations | 3,799,831 | (14,493) | - | 3,814,324 | |||||
| Other income | |||||||||
| Other income | 158,856 | - | 1,871 | 160,727 | |||||
| Change in fair value of marketable securities | 130,280 | - | - | 130,280 | |||||
| Gain on disposal of a subsidiary | 56,363 | - | - | 56,363 | |||||
| Total other income | 345,499 | - | 1,871 | 347,370 | |||||
| Other expenses | |||||||||
| Interest expense | 2,801 | 3,929 | 1,871 | 743 | |||||
| Total other expense | 2,801 | 3,929 | 1,871 | 743 | |||||
| Income (loss) before taxes | 4,142,529 | (18,422) | - | 4,160,951 | |||||
| Income tax expense | 533,439 | - | - | 533,439 | |||||
| Net income (loss) | $ | 3,609,090 | $ | (18,422) | $ | - | $ | 3,627,512 | |
| Other Comprehensive Income (loss) | |||||||||
| Foreign currency translation adjustment | (1,152,687) | 183 | - | (1,152,870) | |||||
| Total comprehensive Income (loss) | 2,456,403 | (18,239) | - | 2,474,642 | |||||
| Basic and diluted net loss per common share | $ | 0.11 | $ | $ | $ | 0.11 | |||
| Weighted average number of common shares | 32,700,000 | 32,700,000 | |||||||
(A) On September 26, 2018, the Company acquired 100% of the shares of Force International Holdings Limited. The unaudited proforma condensed combined statement of operations for the year ended September 30, 2017 is presented as if this merge transaction had occurred on October 1, 2016.
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