Exhibit 99.2
CHINA XIANGTAI FOOD CO., LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, | June 30, | |||||||
2020 | 2020 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash and cash equivalents | $ | 124,231 | $ | 1,533,237 | ||||
Restricted cash | 35,980 | - | ||||||
Accounts receivable, net of $12,150,082 and $3,932,343 allowance for doubtful accounts | ||||||||
as of December 31, 2020 and June 30, 2020, respectively | 66,898,535 | 40,572,757 | ||||||
Other receivables, net of $134,982 and $50,363 allowance for doubtful accounts | ||||||||
as of December 31, 2020 and June 30, 2020, respectively | 146,354 | 148,894 | ||||||
Inventories | 132,992 | - | ||||||
Prepayments, net of $1,084,318 and $1,002,221 allowance for doubtful accounts | ||||||||
as of December 31, 2020 and June 30, 2020, respectively | 5,662,225 | 7,720,452 | ||||||
Security deposits, net of $773,595 and $715,024 allowance for doubtful accounts | ||||||||
as of December 31, 2020 and June 30, 2020, respectively | 153,496 | 237,409 | ||||||
Current assets of discontinued operations | 18,845 | 63,185 | ||||||
Total current assets | 73,172,658 | 50,275,934 | ||||||
OTHER ASSETS | ||||||||
Plant and equipment, net of $3,166,330 and $4,307,253 accumulated depreciation | ||||||||
as of December 31, 2020 and June 30, 2020, respectively | 2,585,410 | 3,455,993 | ||||||
Intangible assets, net of $91,164 and $148,806 accumulated amortization | ||||||||
as of December 31, 2020 and June 30, 2020, respectively | 314,009 | 437,989 | ||||||
Goodwill | 5,185,866 | 5,185,866 | ||||||
Operating lease right-of-use assets | 2,833,075 | 2,725,747 | ||||||
Deferred tax assets | 1,154,840 | 648,768 | ||||||
Other receivables | 41,595 | 39,685 | ||||||
Other assets of discontinued operations | 571,469 | 579,452 | ||||||
Total other assets | 12,686,264 | 13,073,500 | ||||||
Total assets | $ | 85,858,922 | $ | 63,349,434 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
CURRENT LIABILITIES | ||||||||
Short-term loans - banks | $ | 3,031,904 | $ | 4,359,210 | ||||
Loans from third parties | 5,423,436 | 5,013,117 | ||||||
Current maturities of long-term loan - bank | 1,308,165 | 777,558 | ||||||
Convertible debenture, net of issuance cost and discount of $6,958 and $131,688 | ||||||||
as of December 31, 2020 and June 30, 2020, respectively | 2,993,042 | 4,768,312 | ||||||
Accounts payable | 12,225,389 | 7,510,432 | ||||||
Customer deposits | 12,023,772 | 1,266,073 | ||||||
Customer deposits - related party | 29,653 | 27,395 | ||||||
Other payables and accrued liabilities | 3,911,864 | 1,942,014 | ||||||
Other payables - related parties | 3,355,418 | 2,234,980 | ||||||
Operating lease liabilities | 79,798 | 49,171 | ||||||
Taxes payable | 4,151,064 | 3,342,127 | ||||||
Current liabilities of discontinued operations | 1,320,409 | 1,445,201 | ||||||
Total current liabilities | 49,853,914 | 32,735,590 | ||||||
OTHER LIABILITIES | ||||||||
Loans from third parties | 2,044,238 | 2,074,871 | ||||||
Long-term loans - related parties | 771,757 | 713,325 | ||||||
Operating lease liabilities - noncurrent | 600,044 | 581,083 | ||||||
Other liabilities of discontinued operations | 456,005 | 417,729 | ||||||
Total other liabilities | 3,872,044 | 3,787,008 | ||||||
Total liabilities | 53,725,958 | 36,522,598 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
SHAREHOLDERS' EQUITY | ||||||||
Ordinary shares, $0.01 par value, 50,000,000 shares authorized, 35,878,927 and 23,971,084 | ||||||||
shares issued and outstanding as of December 31, 2020 and June 30, 2020, respectively | 358,790 | 239,711 | ||||||
Additional paid-in capital | 28,284,081 | 15,765,411 | ||||||
Deferred share compensation | (134,000 | ) | (47,708 | ) | ||||
Statutory reserves | 1,736,780 | 1,670,367 | ||||||
(Accumulated deficit) retained earnings | (2,615,953 | ) | 7,034,899 | |||||
Accumulated other comprehensive income (loss) | 1,059,439 | (856,218 | ) | |||||
Total China Xiangtai Food Co., Ltd. shareholders' equity | 28,689,138 | 23,806,462 | ||||||
NONCONTROLLING INTERESTS | 3,443,826 | 3,020,374 | ||||||
Total equity | 32,132,964 | 26,826,836 | ||||||
Total liabilities and shareholders' equity | $ | 85,858,922 | $ | 63,349,434 |
1 |
CHINA XIANGTAI FOOD CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
For the Six Months Ended December 31, | ||||||||
2020 | 2019 | |||||||
REVENUES | ||||||||
Supermarket and grocery store | $ | 1,728,036 | $ | 2,330,996 | ||||
Farmers' market | 35,928,082 | 47,705,799 | ||||||
Feed raw material | 62,394,357 | - | ||||||
Total revenues | 100,050,475 | 50,036,795 | ||||||
COST OF REVENUES | ||||||||
Supermarket and grocery store | 1,866,799 | 1,816,996 | ||||||
Farmers' market | 35,341,081 | 44,238,678 | ||||||
Feed raw material | 59,387,919 | - | ||||||
Total cost of revenues | 96,595,799 | 46,055,674 | ||||||
GROSS PROFIT | 3,454,676 | 3,981,121 | ||||||
OPERATING EXPENSES: | ||||||||
Selling | 637,101 | 321,447 | ||||||
General and administrative | 1,990,622 | 1,170,460 | ||||||
Provision for doubtful accounts | 7,647,728 | 1,260,451 | ||||||
Stock compensation expense | 212,198 | 741,471 | ||||||
Impairment of long-lived assets | 1,003,641 | - | ||||||
Total operating expenses | 11,491,290 | 3,493,829 | ||||||
(LOSS) INCOME FROM OPERATIONS | (8,036,614 | ) | 487,292 | |||||
OTHER INCOME (EXPENSE) | ||||||||
Interest income | 956 | 13,980 | ||||||
Interest expense | (980,694 | ) | (478,344 | ) | ||||
Other finance expenses | (147,357 | ) | (115,893 | ) | ||||
Other income, net | 109,668 | 15,364 | ||||||
Total other expense, net | (1,017,427 | ) | (564,893 | ) | ||||
LOSS BEFORE INCOME TAXES | (9,054,041 | ) | (77,601 | ) | ||||
PROVISION FOR INCOME TAXES | 117,363 | - | ||||||
NET LOSS FROM CONTINUING OPERATIONS | (9,171,404 | ) | (77,601 | ) | ||||
NET LOSS FROM DISCONTINUED OPERATIONS | (87,613 | ) | (539,451 | ) | ||||
NET LOSS | (9,259,017 | ) | (617,052 | ) | ||||
Less: Net income attributable to non-controlling interest from continuing operations | 325,422 | - | ||||||
NET LOSS ATTRIBUTABLE TO CHINA XIANGTAI FOOD CO., LTD. | $ | (9,584,439 | ) | $ | (617,052 | ) | ||
NET LOSS | $ | (9,259,017 | ) | $ | (617,052 | ) | ||
OTHER COMPREHENSIVE INCOME (LOSS) | ||||||||
Foreign currency translation adjustment | 2,013,687 | (264,187 | ) | |||||
TOTAL COMPREHENSIVE LOSS | (7,245,330 | ) | (881,239 | ) | ||||
Less: Comprehensive income attributable to non-controlling interests from continuing operations | 423,452 | - | ||||||
COMPREHENSIVE LOSS ATTRIBUTABLE TO CHINA XIANGTAI FOOD CO., LTD. | $ | (7,668,782 | ) | $ | (881,239 | ) | ||
WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES | ||||||||
Basic | 28,438,854 | 22,065,766 | ||||||
Diluted | 28,438,854 | 22,065,766 | ||||||
LOSS PER SHARE - BASIC | ||||||||
Continuing operations | $ | (0.33 | ) | $ | (0.01 | ) | ||
Discontinued operations | $ | (0.00 | ) | $ | (0.02 | ) | ||
LOSS PER SHARE - DILUTED | ||||||||
Continuing operations | $ | (0.33 | ) | $ | (0.01 | ) | ||
Discontinued operations | $ | (0.00 | ) | $ | (0.02 | ) |
2 |
CHINA XIANGTAI FOOD CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Accumulated | ||||||||||||||||||||||||||||||||||||
Additional | Deferred | Retained earnings (accumulated deficit) | other | |||||||||||||||||||||||||||||||||
Ordinary shares | paid-in | share | Statutory | comprehensive | Noncontrolling | |||||||||||||||||||||||||||||||
Shares | Par value | capital | compensation | reserves | Unrestricted | income (loss) | interests | Total | ||||||||||||||||||||||||||||
BALANCE, June 30, 2019 | 21,964,027 | $ | 219,640 | $ | 11,031,937 | $ | - | $ | 1,496,642 | $ | 12,085,566 | $ | (308,571 | ) | $ | - | $ | 24,525,214 | ||||||||||||||||||
Issuance of ordinary shares for services | 130,000 | 1,300 | 648,700 | - | - | - | - | - | 650,000 | |||||||||||||||||||||||||||
Fair value of beneficial conversion feature of convertible debenture | - | - | 259,540 | - | - | - | - | - | 259,540 | |||||||||||||||||||||||||||
Options issued to directors | - | - | 91,471 | - | - | - | - | - | 91,471 | |||||||||||||||||||||||||||
Net loss | - | - | - | - | - | (617,052 | ) | - | - | (617,052 | ) | |||||||||||||||||||||||||
Statutory reserves | - | - | - | - | 135,289 | (135,289 | ) | - | - | - | ||||||||||||||||||||||||||
Foreign currency translation | - | - | - | - | - | - | (264,187 | ) | - | (264,187 | ) | |||||||||||||||||||||||||
BALANCE, December 31, 2019 (Unaudited) | 22,094,027 | $ | 220,940 | $ | 12,031,648 | $ | - | $ | 1,631,931 | $ | 11,333,225 | $ | (572,758 | ) | $ | - | $ | 24,644,986 | ||||||||||||||||||
BALANCE, June 30, 2020 | 23,971,084 | $ | 239,711 | $ | 15,765,411 | $ | (47,708 | ) | $ | 1,670,367 | $ | 7,034,899 | $ | (856,218 | ) | $ | 3,020,374 | $ | 26,826,836 | |||||||||||||||||
Issuance of ordinary shares for compensation | 200,000 | 2,000 | 266,000 | (268,000 | ) | - | - | - | - | - | ||||||||||||||||||||||||||
Amortization of deferred share compensation | - | - | - | 181,708 | - | - | - | - | 181,708 | |||||||||||||||||||||||||||
Options issued to directors | - | - | 30,490 | - | - | - | - | - | 30,490 | |||||||||||||||||||||||||||
Sales of ordinary shares | 8,623,762 | 86,239 | 8,905,926 | - | - | - | - | - | 8,992,165 | |||||||||||||||||||||||||||
Conversion of convertible debenture into ordinary shares | 3,084,081 | 30,841 | 3,316,254 | - | - | - | - | - | 3,347,095 | |||||||||||||||||||||||||||
Net (loss) income | - | - | - | - | - | (9,584,439 | ) | - | 325,422 | (9,259,017 | ) | |||||||||||||||||||||||||
Statutory reserves | - | - | - | - | 66,413 | (66,413 | ) | - | - | - | ||||||||||||||||||||||||||
Foreign currency translation | - | - | - | - | - | - | 1,915,657 | 98,030 | 2,013,687 | |||||||||||||||||||||||||||
BALANCE, December 31, 2020 (Unaudited) | 35,878,927 | $ | 358,790 | $ | 28,284,081 | $ | (134,000 | ) | $ | 1,736,780 | $ | (2,615,953 | ) | $ | 1,059,439 | $ | 3,443,826 | $ | 32,132,964 |
3 |
CHINA XIANGTAI FOOD CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Six Months Ended December 31, | ||||||||
2020 | 2019 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net loss | $ | (9,259,017 | ) | $ | (617,052 | ) | ||
Net loss from discontinued operations | (87,613 | ) | (539,451 | ) | ||||
Net loss from continuing operations | (9,171,404 | ) | (77,601 | ) | ||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization | 263,574 | 311,970 | ||||||
Provision for doubtful accounts | 7,647,728 | 1,260,451 | ||||||
Stock compensation expense | 212,198 | 741,471 | ||||||
Impairment of long-lived assets | 1,003,641 | 318,357 | ||||||
Amortization of operating lease right-of-use assets | 123,177 | 8,816 | ||||||
Amortization of convertible debenture issuance cost and discount | 124,730 | 60,148 | ||||||
Deferred tax benefit | (436,955 | ) | - | |||||
Change in operating assets and liabilities | ||||||||
Accounts receivable | (29,808,203 | ) | (5,921,092 | ) | ||||
Other receivables | (16,319 | ) | (118,207 | ) | ||||
Inventories | (128,302 | ) | (648,778 | ) | ||||
Prepayments | 2,591,386 | (528,767 | ) | |||||
Security deposits | - | (271,924 | ) | |||||
Accounts payable | 3,955,154 | 2,326,115 | ||||||
Customer deposits | 10,278,252 | (25,047 | ) | |||||
Customer deposits - related party | - | (28,950 | ) | |||||
Other payables and accrued liabilities | 1,927,037 | 396,810 | ||||||
Operating lease liabilities | (13,283 | ) | (5,457 | ) | ||||
Taxes payable | 516,293 | 64,918 | ||||||
Net cash used in operating activities from continuing operations | (10,931,296 | ) | (2,136,767 | ) | ||||
Net cash used in operating activities from discontinued operations | (131,872 | ) | (550,042 | ) | ||||
Net cash used in operating activities | (11,063,168 | ) | (2,686,809 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchases of plant and equipment | - | (410,444 | ) | |||||
Loan to third party | - | (199,116 | ) | |||||
Net cash used in investing activities from continuing operations | - | (609,560 | ) | |||||
Net cash provided by investing activities from discontinued operations | - | 374,538 | ||||||
Net cash used in investing activities | - | (235,022 | ) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from (repayments of) other payables - related parties, net | 473,164 | (1,280,273 | ) | |||||
Proceeds from issuance of ordinary shares through private placements | 8,992,165 | - | ||||||
Repayments of short-term loans - banks | (1,624,987 | ) | (711,037 | ) | ||||
Proceeds from short-term loans - third parties | 521,402 | 735,445 | ||||||
Repayments of short-term loans - third parties | (482,208 | ) | (1,124,724 | ) | ||||
Repayments of short-term loans - related parties | - | (76,802 | ) | |||||
Repayments of long-term loan - banks | - | (18,422 | ) | |||||
Proceeds from long-term loans - third parties | 256,925 | 504,903 | ||||||
Proceeds from long-term loans - related parties | - | 358,410 | ||||||
Proceeds from convertible debentures, net of issuance costs | 1,300,000 | 3,830,000 | ||||||
Changes in security deposits | 99,715 | 9,819 | ||||||
Net cash provided by financing activities from continuing operations | 9,536,176 | 2,227,319 | ||||||
Net cash used in financing activities from discontinued operations | (85,894 | ) | (179,106 | ) | ||||
Net cash provided by financing activities | 9,450,282 | 2,048,213 | ||||||
EFFECT OF EXCHANGE RATE ON CASH | 239,306 | (84,116 | ) | |||||
CHANGES IN CASH | (1,373,580 | ) | (957,734 | ) | ||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period | 1,535,760 | 3,216,005 | ||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period | 162,180 | 2,258,271 | ||||||
LESS: CASH, CASH EQUIVALENTS AND RESTRICTED CASH FROM DISCONTINUED OPERATIONS | 1,969 | 3,611 | ||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH FROM CONTINUING OPERATIONS | $ | 160,211 | $ | 2,254,660 | ||||
SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||
Cash paid for income tax | $ | - | $ | - | ||||
Cash paid for interest | $ | 419,190 | $ | 241,813 | ||||
NON-CASH TRANSACTIONS OF INVESTING AND FINANCING ACTIVITIES | ||||||||
Operating lease right-of-use assets obtained in exchange for operating lease liabilities | $ | 11,315 | $ | 1,314,991 | ||||
Conversion of convertible debenture into ordinary shares | $ | 3,347,095 | $ | - |
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the balance sheets that sum to the total of the same amounts shown in the statements of cash flows:
December 31, | June 30, | |||||||
2020 | 2020 | |||||||
(Unaudited) | ||||||||
Cash and cash equivalents | $ | 124,231 | $ | 1,533,237 | ||||
Restricted cash | 35,980 | - | ||||||
Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows | $ | 160,211 | $ | 1,533,237 |
4 |