EXHIBIT 99.2
FDCTECH, INC
UNAUDITED PROFORMA CONDENSED COMBINED BALANCE SHEET AS OF DECEMBER 31, 2020
(Currency expressed in United States Dollars)
FDCTech | AD Advisory Services | Total | Pro Forma Adjustments (Note 3) | Pro Forma Combined | ||||||||||||||||
(USD) | (USD) | (USD) | (USD) | |||||||||||||||||
Assets | ||||||||||||||||||||
Current assets: | ||||||||||||||||||||
Cash | $ | 22,467 | $ | 99,353 | $ | 121,820 | - | $ | 121,820 | |||||||||||
Accounts receivable, net | 16,541 | - | 16,541 | - | 16,541 | |||||||||||||||
Other current assets | 27,878 | 45,614 | 73,492 | - | 73,492 | |||||||||||||||
Total Current assets | 66,886 | 144,967 | 211,853 | 211,853 | ||||||||||||||||
Capitalized software, net | 632,324 | - | 632,324 | - | 632,324 | |||||||||||||||
Prepaid and other acquired identifiable intangible assets | 2,918,303 | - | 2,918,303 | (77,510 | ) | 2,840,793 | ||||||||||||||
Total non-current assets | 3,550,627 | - | 3,550,627 | 3,473,117 | ||||||||||||||||
Total assets | $ | 3,617,513 | $ | 144,967 | $ | 3,762,480 | $ | 3,684,970 | ||||||||||||
Liabilities and Stockholders’ Deficit | ||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||
Accounts payable & other current liabilities | $ | 116,500 | $ | 67,457 | $ | 183,957 | - | $ | 183,957 | |||||||||||
Line of credit | 39,071 | - | 39,071 | - | 39,071 | |||||||||||||||
Payroll tax payable | 125,387 | - | 125,387 | - | 125,387 | |||||||||||||||
Related-party convertible notes payable - current | 1,000,000 | - | 1,000,000 | - | 1,000,000 | |||||||||||||||
Related-party accrued interest - current | 256,908 | - | 256,908 | - | 256,908 | |||||||||||||||
Cares act- paycheck protection program advance | 29,412 | - | 29,412 | - | 29,412 | |||||||||||||||
Total Current liabilities | 1,567,278 | 67,457 | 1,634,735 | 1,634,735 | ||||||||||||||||
SBA loan – non-current | 144,900 | - | 144,900 | - | 144,900 | |||||||||||||||
Cares act- paycheck protection program advance – non-current | 21,220 | - | 21,220 | - | 21,220 | |||||||||||||||
Accrued interest – non-current | 3,856 | - | 3,856 | - | 3,856 | |||||||||||||||
Total liabilities | 1,737,254 | 67,457 | 1,804,711 | - | 1,804,711 | |||||||||||||||
Commitments and Contingencies (Note 9) | - | - | - | |||||||||||||||||
Stockholders’ Deficit: | ||||||||||||||||||||
Preferred stock, par value $0.0001 | 400 | - | 400 | - | 400 | |||||||||||||||
Common stock, par value $0.0001 | 11,387 | - | 11,387 | - | 11,387 | |||||||||||||||
Additional paid-in capital | 1,972,018 | 15,403 | 1,987,421 | (15,403 | ) | 1,972,018 | ||||||||||||||
Accumulated deficit | (1,493,984 | ) | 62,107 | (1,431,877 | ) | (62,107 | ) | (1,493,984 | ) | |||||||||||
Total FDCTech stockholders’ equity | 489,821 | 77,510 | 567,330 | 489,821 | ||||||||||||||||
Non-controlling interest | 1,390,438 | - | 1,390,438 | 1,390,438 | ||||||||||||||||
Total liabilities and stockholders’ deficit | $ | 3,617,513 | $ | 144,967 | $ | 3,762,480 | $ | 3,684,970 |
See accompanying notes to unaudited proforma condensed combined financial statements
FDCTECH INC.
UNAUDITED PROFORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2020
(Currency expressed in United States Dollars)
FDCTech | AD Advisory Services | Total | Proforma Adjustments (Note 3) | Proforma Combined | ||||||||||||||||
(USD) | (USD) | (USD) | (USD) | |||||||||||||||||
Revenues | $ | 215,409 | $ | 4,663,632 | 4,879,041 | - | 4,879,041 | |||||||||||||
Cost of sales | 251,959 | 4,228,417 | 4,480,376 | - | 4,480,376 | |||||||||||||||
Gross Profit | (36,550 | ) | 435,214 | 398,664 | 398,664 | |||||||||||||||
Operating expenses: | ||||||||||||||||||||
General and administrative | 337,634 | 415,836 | 753,470 | - | 753,470 | |||||||||||||||
Sales and marketing | 24,526 | - | 24,526 | - | 24,526 | |||||||||||||||
Total operating expenses | 362,160 | 415,836 | 777,996 | 777,996 | ||||||||||||||||
Operating loss | (398,710 | ) | 19,379 | (379,331 | ) | (379,331 | ) | |||||||||||||
Other income (expense): | ||||||||||||||||||||
Related-party interest expense | (60,000 | ) | - | (60,000 | ) | - | (60,000 | ) | ||||||||||||
Other interest expense | (3,856 | ) | - | (3,856 | ) | - | (3,856 | ) | ||||||||||||
Other income (expense) | 4,076 | 60,906 | 64,982 | - | 64,982 | |||||||||||||||
Total other expense | (59,780 | ) | 60,906 | 1,126 | 1,126 | |||||||||||||||
Loss before provision for income taxes | (458,490 | ) | 80,285 | (378,205 | ) | (378,205 | ) | |||||||||||||
Provision for income taxes | - | - | - | - | - | |||||||||||||||
Net loss | $ | (458,490 | ) | $ | 80,285 | (378,205 | ) | (378,205 | ) | |||||||||||
Net loss per common share, basic and diluted | $ | (0.01 | ) | $ | (0.01 | ) | (0.01 | ) | ||||||||||||
Weighted average number of common shares outstanding basic and diluted | 69,312,787 | 69,312,787 | 69,312,787 |
See accompanying notes to unaudited proforma condensed combined financial statements
FDCTECH, INC
UNAUDITED PROFORMA CONDENSED COMBINED BALANCE SHEET AS OF SEPTEMBER 30, 2021
(Currency expressed in USD)
FDCTech | AD Advisory Services | Total | Pro Forma Adjustments (Note 3) | Pro Forma Combined | ||||||||||||||||
(USD) | (USD) | (USD) | (USD) | |||||||||||||||||
Assets | ||||||||||||||||||||
Current assets: | ||||||||||||||||||||
Cash | $ | 4,251 | $ | 106,618 | $ | 110,869 | - | $ | 110,869 | |||||||||||
Accounts receivable, net | 49,498 | - | 49,498 | - | 49,498 | |||||||||||||||
Other current assets | 702,430 | 45,283 | 747,713 | 747,713 | ||||||||||||||||
Total Current assets | 756,179 | 151,901 | 908,080 | 908,080 | ||||||||||||||||
Capitalized software, net | 632,177 | - | 632,177 | - | 632,177 | |||||||||||||||
Prepaid and other acquired identifiable intangible assets | 3,004,621 | - | 3,004,621 | (91,847 | ) | 2,912,774 | ||||||||||||||
Total non-current assets | 3,636,798 | - | 3,636,798 | 3,544,951 | ||||||||||||||||
Total assets | $ | 4,392,977 | $ | 151,901 | $ | 4,544,878 | $ | 4,453,030 | ||||||||||||
Liabilities and Stockholders’ Deficit | ||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||
Accounts payable & other current liabilities | $ | 351,015 | $ | 60,053 | $ | 411,068 | - | $ | 411,068 | |||||||||||
Line of credit | 39,614 | - | 39,614 | - | 39,614 | |||||||||||||||
Payroll tax payable | 155,203 | - | 155,203 | - | 155,203 | |||||||||||||||
Related-party advances | 95,000 | - | 95,000 | - | 95,000 | |||||||||||||||
Cares act- paycheck protection program advance | 46,393 | - | 46,393 | - | 46,393 | |||||||||||||||
Total Current liabilities | 687,226 | 60,053 | 747,279 | 747,279 | ||||||||||||||||
SBA loan – non-current | 141,826 | - | 141,826 | - | 141,826 | |||||||||||||||
Cares act- paycheck protection program advance – non-current | 4,239 | - | 4,239 | - | 4,239 | |||||||||||||||
Accrued interest – non-current | 7,799 | - | 7,799 | - | 7,799 | |||||||||||||||
Total liabilities | 841,090 | 60,053 | 901,143 | - | 901,143 | |||||||||||||||
Commitments and Contingencies (Note 9) | - | - | - | |||||||||||||||||
Stockholders’ Deficit: | ||||||||||||||||||||
Preferred stock, par value $0.0001 | 400 | - | 400 | - | 400 | |||||||||||||||
Common stock, par value $0.0001 | 13,391 | - | 13,391 | - | 13,391 | |||||||||||||||
Additional paid-in capital | 4,619,575 | 14,465 | 4,634,040 | (14,465 | ) | 4,619,575 | ||||||||||||||
Accumulated deficit | (2,471,917 | ) | 77,382 | (2,394,535 | ) | (77,382 | ) | (2,471,917 | ) | |||||||||||
Total FDCTech stockholders’ equity | 2,161,449 | 91,847 | 2,253,296 | (91,847 | ) | 2,161,449 | ||||||||||||||
Non-controlling interest | 1,390,438 | - | 1,390,438 | 1,390,438 | ||||||||||||||||
Total liabilities and stockholders’ deficit | $ | 4,392,977 | $ | 151,901 | $ | 4,544,878 | $ | 4,453,030 |
See accompanying notes to unaudited proforma condensed combined financial statements
FDCTECH INC.
UNAUDITED PROFORMA CONDENSED C3OMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(Currency expressed in United States Dollars)
FDCTech | AD Advisory Services | Total | Proforma Adjustments (Note 3) | Proforma Combined | ||||||||||||||||
(USD) | (USD) | (USD) | (USD) | |||||||||||||||||
Revenues | $ | 221,003 | $ | 4,577,866 | 4,798,869 | - | 4,798,869 | |||||||||||||
Cost of sales | 205,847 | 4,101,305 | 4,307,152 | - | 4,307,152 | |||||||||||||||
Gross Profit | 15,156 | 476,561 | 491,717 | 491,717 | ||||||||||||||||
Operating expenses: | ||||||||||||||||||||
General and administrative | 487,320 | 451,630 | 938,950 | - | 938,950 | |||||||||||||||
Sales and marketing | 499,320 | - | 499,320 | - | 499,320 | |||||||||||||||
Total operating expenses | 986,640 | 451,630 | 1,438,270 | 1,438,270 | ||||||||||||||||
Operating loss | (971,484 | ) | 24,931 | (946,553 | ) | (946,553 | ) | |||||||||||||
Other income (expense): | ||||||||||||||||||||
Related-party interest expense | (10,399 | ) | - | (10,399 | ) | - | (10,399 | ) | ||||||||||||
Other interest expense | (2,942 | ) | - | (2,942 | ) | - | (2,942 | ) | ||||||||||||
Other income (expense) | 6,892 | 2 | 6,894 | - | 6,894 | |||||||||||||||
Total other expense | (6,449 | ) | 2 | (6,447 | ) | (6,447 | ) | |||||||||||||
Loss before provision for income taxes | (977,933 | ) | 24,933 | (953,000 | ) | (953,000 | ) | |||||||||||||
Provision for income taxes | - | - | - | - | - | |||||||||||||||
Net loss | $ | (977,933 | ) | $ | 24,933 | (953,000 | ) | (953,000 | ) | |||||||||||
Net loss per common share, basic and diluted | $ | (0.01 | ) | $ | (0.01 | ) | (0.01 | ) | ||||||||||||
Weighted average number of common shares outstanding basic and diluted | 83,150,225 | 83,150,225 | 83,150,225 |
See accompanying notes to unaudited proforma condensed combined financial statements
FDCTECH, INC
NOTES TO UNAUDITED PROFORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars)
(Unaudited)
We have based the following unaudited proforma condensed combined financial statements on the historical financial statements of FDCTech, Inc. (“FDCTech” or the “Company”) and AD Advisory Services Pty Ltd. (“AD “) after giving effect to our Acquisition of AD (“the Acquisition”) and the assumptions and adjustments described in the accompanying notes to the unaudited proforma condensed combined financial statements.
Note 1. Basis of Proforma Presentation
The unaudited proforma condensed combined financial statements are not intended to represent or indicate the results of operations or financial position of FDCTech that would have been reported had FDCtech completed the Acquisition as of the dates presented. You should not take the proforma as representative of the future results of operations or the Company’s financial position.
The unaudited proforma financial statements, including its notes, do not reflect any potential operating efficiencies and cost savings that FDCTech may achieve concerning the combined companies. The unaudited proforma condensed combined financial statements and corresponding notes should be read in conjunction with the historical financial statements of FDCTech included in the annual report on Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission (the “SEC “) on March 3, 2021, and the subsequent quarterly report on Form 10-Q for the nine months ended September 30, 2021, filed with the SEC on November 05, 2021, and in conjunction with the historical financial statements of AD Advisory Services Pty Ltd. included in this Form 8-K/A.
We present the unaudited proforma condensed combined balance sheet as of December 31, 2020, as if the Acquisition occurred on December 31, 2020. The unaudited proforma condensed combined statement of operations and comprehensive income/(loss) of the FDCTech and AD for the year ended December 31, 2020, has been prepared by combining the FDCTech and ADs historical consolidated results for the year ended December 31, 2020. The Company estimates the preliminary purchase price on the intrinsic value of AD instead of the share price of $0.034 on December 31, 2020. As a result, we estimated the implied value of AD to be $2,995,813 based on the Management discounted cash flow model.
The unaudited proforma combined statement of operations and comprehensive loss for the nine months ended September 30, 2021, has been prepared by combining the FDCTech and ADs historical consolidated results for the nine months ended September 30, 2021.
Note 2. Acquisition of AD Advisory Services Pty Ltd. (AD.)
On December 22, 2021, the Company entered into a Share Exchange Agreement (the “Agreement”) with AD. Financial Services Pty Ltd ACN 628 331 117 of Level 38/71 Eagle St, Brisbane, Queensland, Australia, 4000 (“ADFP” or “Target”). According to the Agreement, the Company acquired 51% of ADFP’s issued and outstanding shares of capital stock in exchange for 45,000,000 (the “Consideration”) newly issued “restricted” common shares. The operating and licensed entity of ADFP is AD Advisory Services Pty Ltd. ADFP owns one hundred percent (100%) equity interest in AD. As a result, the Company is 51% owner of AD.
Our wealth management business is subject to enhanced regulatory scrutiny and is regulated by multiple regulators in Australia. The Australian Securities and Investments Commission (ASIC) administers a licensing regime for ‘financial services’ providers where AD holds an Australian Financial Services Licence (AFSL) and meets various compliance, conduct, and disclosure obligations. AD is an Australian-regulated wealth management company with 20 offices, 28 advisors, and $530+ million funds under advice.
The Company completed the acquisitions of AD on December 22, 2021 (“the Acquisition Date”).
Note 3. Proforma Adjustments
Foreign Currency Translation and Re-measurement
The Company translates its foreign operations to US dollar following ASC 830, “Foreign Currency Matters.”
Translation of amounts from the local currency, Australia Dollar (“AUD”) of AD into US$1.00 has been made at the following exchange rates for the respective dates:
Exchange rate at the reporting end date:
September 30, 2021 | December 31, 2020 | |||||||
USD: AUD | $ | 1.3831 | $ | 1.2989 |
Average exchange rate for the period:
January 1, 2021, to September 30, 2021 | January 1, 2020, to December 31, 2020 | |||||||
USD: AUD | $ | 1.3182 | $ | 1.4480 |
The Company subsidiary’s functional currency is AUD and reporting currency is the US dollar.
The Company translates its records into US dollar as follows:
● | Assets and liabilities at the rate of exchange in effect at the balance sheet date | |
● | Equities at historical rate | |
● | Revenue and expense items at the average rate of exchange prevailing during the period |
The Purchase Price Allocation
The Company estimates the preliminary purchase price to be based on the intrinsic value of AD instead of the Company’s share price of $0.44 on December 31, 2020. As a result, we estimate the implied value of AD to be $2,995,813 based on the Management discounted cash flow model. The Company used Lever 3 Fair Value analysis adjusted for other reasonably available information, including liquidity discount, the Company’s size, historical negative cash flow, and other risks.
The book value of AD on December 31, 2020, was $77,510. Therefore, the implied difference between the implied value and book value of AD was $2,918,303. The Company attributed the implied difference to acquired identifiable intangible assets based on AD’s assets under management and regulatory licenses. The Company did not record impairment for the fiscal year ended December 31, 2020, and nine months ended September 30, 2021.
Adjustments
I. | We have included the following pro forma adjustments in the unaudited pro forma condensed combined balance sheet and combined statement of operations for the year ended December 31, 2020: |
A) | To record the following adjustments to shareholders’ equity: |
i) | Adjustments to FDCTech stockholders’ equity |
Balance before pro forma adjustments | $ | (567,330 | ) | |
Elimination of pre-acquisition equity account of AD Advisory Services Pty Ltd. | (77,510 | ) | ||
Pro Forma Combined as of December 31, 2020 | $ | (489,821 | ) |
B) | To record the following adjustments to current assets: |
i) | Adjustments to prepaid and other acquired identifiable intangible assets |
Balance before pro forma adjustments | $ | 2,918,303 | ||
Decrease in acquired identifiable intangible assets | (77,510 | ) | ||
Pro Forma Combined as of December 31, 2020 | $ | 2,840,793 |
There are no intercompany transactions.
II. | The following pro forma adjustments are included in the unaudited pro forma condensed combined balance sheet and combined statement of operations for the year ended September 30, 2021: |
C) | To record the following adjustments to shareholders’ equity: |
i) | Adjustments to stockholders’ equity |
Balance before pro forma adjustments | $ | 2,253,296 | ||
Elimination of pre-acquisition equity account of AD Advisory Services Pty Ltd. | (91,847 | ) | ||
Pro Forma Combined as of September 30, 2021 | $ | 2,161,449 |
D) | To record the following adjustments to current assets: |
i) | Adjustments to prepaid and other acquired identifiable intangible assets |
Balance before pro forma adjustments | $ | 3,004,621 | ||
Decrease in acquired identifiable intangible assets | (91,847 | ) | ||
Pro Forma Combined as of September 30, 2021 | $ | 2,912,774 |
There are no intercompany transactions.