EX-99.1 3 ea166558ex99-1_codechain.htm PRO FORMA FINANCIAL STATEMENTS OF THE COMPANY

Exhibit 99.1

 

CODE CHAIN NEW CONTINENT LIMITED AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED DECONSOLIDATED BALANCE SHEETS

AT JUNE 30, 2022

 

   CCNC   less:       CCNC 
   CONS   WUGE   ADJUSTMENTS   DECONS 
ASSETS                
CURRENT ASSETS                
Cash and cash equivalents  $13,283,031    13,080,250    -   $202,781 
Other receivables, net   845,858    2,700,627    1,925,919    71,150 
Other receivable - related party   391,347    391,347    -    - 
Inventories   6,494    6,494    -    - 
Prepayments   1,639,131    1,639,131    -    - 
Total current assets   16,165,861    17,817,849    1,925,919    273,931 
                     
PLANT AND EQUIPMENT, NET   244,094    244,094    -    - 
                     
RIGHT-OF-USE ASSETS   13,740    13,740    -    - 
                     
OTHER ASSETS                    
Prepayments for purchases of equipment   12,949,328    -    -    12,949,328 
Intangible assets, net   145    145    -    - 
Deferred tax assets   -    -    -    - 
Total other assets   12,949,473    145         12,949,328 
                     
Total assets  $29,373,168    18,075,828    1,925,919   $13,223,259 
                     
LIABILITIES AND SHAREHOLDERS’ EQUITY                    
                     
CURRENT LIABILITIES                    
Accounts payable  $3,304,867    3,304,867    -   $- 
Other payables and accrued liabilities   5,076,310    3,045,879    3,120,288    5,150,719 
Other payables - related parties   466,407    -    -    466,407 
Customer deposits   4,699,464    4,699,464    -    - 
Lease liabilities - current   7,098    7,098    -    - 
Taxes payable   2,971,979    2,971,979    -    - 
Total current liabilities   16,526,125    14,029,287    3,120,288    5,617,126 
                     
OTHER LIABILITIES                    
Lease liabilities - noncurrent   5,530    5,530    -    - 
Total other liabilities   5,530    5,530    -    - 
                     
Total liabilities   16,531,655    14,034,817    3,120,288    5,617,126 
                     
COMMITMENTS AND CONTINGENCIES                    
                     
SHAREHOLDERS’ EQUITY                    
Preferred stock, $0.0001 par value, 20,000,000 shares authorized, no shares issued and outstanding as of  June 30, 2022 and December 31, 2021, respectively   -              - 
Common stock, $0.0001 par value, 200,000,000 shares authorized, 46,109,617 and 46,077,110 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively   4,611    -    (400)   4,211 
Subscription receivable                    
Additional paid-in capital   74,272,259         (947,600)   73,324,659 
Stock subscriptions receivable   (16,403,618)             (16,403,618)
Accumulated deficit   (45,401,397)   3,721,166    (246,369)   (49,368,932)
Accumulated other comprehensive income   369,658    319,845    -    49,813 
Total shareholders’ equity   12,841,513    4,041,011    (1,194,369)   7,606,133 
                     
Total liabilities and shareholders’ equity  $29,373,168    18,075,828    1,925,919   $13,223,259 

  

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CODE CHAIN NEW CONTINENT LIMITED AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED DECONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

FOR THE SIX MONTHS ENDED JUNE 30, 2022

 

   CCNC   less:       CCNC 
   CONS   WUGE   ADJUSTMENTS   DECONS 
REVENUES                
Wuge digital door signs  $7,616,615   $7,616,615   $-   $- 
    -    -    -    - 
TOTAL REVENUES   7,616,615    7,616,615    -    - 
                     
COST OF REVENUES                    
Wuge digital door signs   5,527,950    5,527,950    -    - 
TOTAL COST OF REVENUES   5,527,950    5,527,950    -    - 
                     
GROSS PROFIT   2,088,665    2,088,665    -    - 
                     
OPERATING EXPENSES (INCOME)                    
Selling, general and administrative   8,341,973    1,605,935    -    6,736,038 
Provision for (recovery of) doubtful accounts   12,949,329    -    -    12,949,329 
TOTAL OPERATING EXPENSES (INCOME)   21,291,302    1,605,935    -    19,685,367 
                     
INCOME FROM OPERATIONS   (19,202,637)   482,730    -    (19,685,367)
                     
OTHER INCOME (EXPENSE)                    
Interest income   65,251    65,251    -    - 
Interest expense   (935)   (935)   -    - 
Investment income   -    -    -      
Other income (expense), net   70,830    70,830    -    - 
                     
Total other income (expense), net   135,146    135,146    -    - 
                     
LOSS BEFORE INCOME TAXES FROM CONTINUING OPERATIONS   (19,067,491)   617,876    -    (19,685,367)
                     
PROVISION FOR INCOME TAXES   314,787    314,787    -    - 
                     
LOSS (INCOME) FROM CONTINUING OPERATIONS   (19,382,278)   303,089    -    (19,685,367)
                     
Discontinued operations:                    
Income from discontinued operations, net of taxes   -    -    -    - 
Loss on disposal, net of taxes   -    -    (246,369)   (246,369)
                     
Net Loss (income)   (19,382,278)   303,089    (246,369)   (19,931,736)
                     
OTHER COMPREHENSIVE INCOME                    
Foreign currency translation adjustment   (935)   204,195    -    (205,130)
                     
COMPREHENSIVE LOSS (INCOME)  $(19,383,213)  $507,284    (246,369)  $(20,136,866)
                     
WEIGHTED AVERAGE NUMBER OF COMMON SHARES                    
Basic and diluted on proforma basis   41,065,559    -    (4,000,000)   37,065,559 
                     
Earnings per share from continuing operations                    
Basic and diluted   (0.47)   -    -    (0.53)
                     
Earnings per share from discontinued operations                    
Basic and diluted   -    -    -    - 
                     
Earnings per share available to common shareholders                    
Basic and diluted on a proforma basis  $(0.47)  $-    -   $(0.54)

  

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CODE CHAIN NEW CONTINENT LIMITED AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

FOR THE SIX MONTHS ENDED JUNE 30, 2021

 

   CCNC   less:       CCNC 
   CONS   WUGE   ADJUSTMENTS   DECONS 
REVENUES                
Wuge digital door signs  $6,876,290   $6,876,290   $-   $- 
                     
TOTAL REVENUES   6,876,290    6,876,290    -    - 
                     
COST OF REVENUES                    
Wuge digital door signs   158,686    158,686    -    - 
                     
TOTAL COST OF REVENUES   158,686    158,686    -    - 
                     
GROSS PROFIT   6,717,604    6,717,604    -    - 
                     
OPERATING EXPENSES (INCOME)                    
Selling, general and administrative   26,896,267    5,647,171    -    21,249,096 
TOTAL OPERATING EXPENSES   26,896,267    5,647,171    -    21,249,096 
                     
LOSS FROM OPERATIONS   (20,178,663)   1,070,433    -    (21,249,096)
                     
OTHER INCOME (EXPENSE)                    
Interest income   19,362    18,867    -    495 
Interest expense   -    -    -    - 
Investment income   -    -    -    - 
Other income (expense), net   1,816,443    6,120    -    1,810,323 
Total other (expense), net   1,835,805    24,987    -    1,810,818 
                     
LOSS BEFORE INCOME TAXES FROM CONTINUING OPERATIONS   (18,342,858)   1,095,420    -    (19,438,278)
                     
PROVISION FOR INCOME TAXES   -    -    -    - 
                     
LOSS FROM CONTINUING OPERATIONS   (18,342,858)   1,095,420    -    (19,438,278)
                     
Discontinued operations:                    
Income（loss） from discontinued operations, net of taxes   23,571    -    (246,369)   (222,798)
Loss on disposal, net of taxes   (11,234,496)   -    -    (11,234,496)
                     
Net loss (income)   (29,553,783)   1,095,420    (246,369)   (30,895,572)
                     
OTHER COMPREHENSIVE LOSS                    
Foreign currency translation adjustment   (739,444)   172,498    -    (911,942)
                     
COMPREHENSIVE LOSS (INCOME)  $(30,293,227)  $1,267,918   $(246,369)  $(31,807,514)
                     
WEIGHTED AVERAGE NUMBER OF COMMON SHARES                    
Basic and diluted on a proforma basis   34,681,765    -    (4,000,000)   30,681,765 
                     
Earnings per share from continuing operations                    
Basic and diluted   (0.53)   -    -    (0.63)
                     
Earnings per share from discontinued operations   (0.32)   -    -    (0.37)
Basic and diluted                    
                     
Earnings per share available to common shareholders                    
Basic and diluted on a proforma basis  $(0.85)  $-   $-   $(1.01)

  

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CODE CHAIN NEW CONTINENT LIMITED AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Note 1 – Summary of significant accounting policies

 

Basis of presentation

 

These proforma financial statements, accompanying notes, and related disclosures have been prepared on an as-if basis assuming that the disposition transaction between the Company, Wuge, and Wei Xu has been in effect since the beginning of the period presented. The financial position and results of operations are deconsolidated using historical financial statements. Actual deconsolidated results may have differed from those presented herein. The information included in this Form 8-K should be read in conjunction with information included in the Company’s annual report on Form 10-Q for the six months ended June 30, 2022, filed with the Securities and Exchange Commission on August 22, 2022.

 

Use of estimates and assumptions

 

The preparation of the accompanying proforma financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. Significant accounting estimates reflected in the Company’s proforma financial statements include the useful lives of intangible assets, deferred revenues and plant and equipment, impairment of long-lived assets, collectability of receivables, inventory valuation allowance, present value of lease liabilities and realization of deferred tax assets. Actual results could differ from these estimates.

 

Foreign currency translation and transaction

 

The reporting currency of the Company is the U.S. dollar. The Company’s subsidiaries and VIEs in China conduct businesses in the local currency, Renminbi (RMB), as its functional currency. Assets and liabilities are translated at the unified exchange rate as quoted by the People’s Bank of China at the end of the period. The statement of income accounts is translated at the average translation rates and the equity accounts are translated at historical rates. Translation adjustments resulting from this process are included in accumulated other comprehensive income. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.

 

The PRC government imposes significant exchange restrictions on fund transfers out of the PRC that are not related to business operations. These restrictions have not had a material impact on the Company because it has not engaged in any significant transactions that are subject to the restrictions.

 

NOTE 2 – PROFORMA ADJUSTMENTS

 

Entry No.  Description  Dr.   Cr. 
1  Common stock   400     
   Additional paid in capital  $947,600      
   Other receivables, net  $1,925,919      
   Loss on disposal, net of taxes   246,369      
   Other payables and accrued liabilities      $3,120,288 
   De-consolidation adjustment including removal of  loss on inter-company balances written off between CCNC and Wuge.          

 

 

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