Item 2.01 Completion of Acquisition or Disposition of Assets.
As disclosed in the current report on Form 8-K filed onOctober 7, 2020 , OnOctober 1, 2020 ,Victory Commercial Management, Inc. , aNevada corporation ("we" or the "Company") entered into a sale and purchase agreement withVictory Commercial Investment Ltd. , a BVI limited liability company and the wholly-owned subsidiary of the Company ("VCI") andSino Pride Development (HK) Limited , a private company limited by shares incorporated inHong Kong (the "Purchaser"), to sell all the equity interest inSino Pride Development Limited ("Sino Pride"), aHong Kong company and wholly-owned subsidiary of VCI, to the Purchaser, in exchange a total consideration ofHK$1.00 (the "Disposition of Sino Pride"). The Disposition of Sino Pride includes the sale all of the equity interest of Sino Pride's then subsidiaries, includingDalian Victory Plaza Development Co., Ltd. , a PRC company, andDalian Victory Business Management Co., Ltd. , a PRC company.
On
Item 9.01 Financial Statements and Exhibits.
(b) Pro forma financial information.
The Company's unaudited pro forma condensed consolidated statements below illustrates the estimated effects of the Disposition of Sino Pride and its subsidiaries referred to in Item 2.01 above as if it had occurred on such date.
These unaudited pro forma condensed consolidated financial statements should not be viewed as indicative of the Company's financial results in the future; they are derived from, and should be read in conjunction with, the Company's Annual Report on Form 10-K for the year endedDecember 31, 2019 , as initially filed with theSEC onMay 29, 2020 and amended onJuly 10, 2020 , and the Quarterly Reports on Form 10-Q for the interim periods endedJune 30, 2020 filed with theSEC onAugust 14, 2020 . VICTORY COMMERCIAL MANAGEMENT INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEETS AS OF JUNE 30, 2020 Proforma Adjustments Adjustments subsequent to to Adjustments to Remove Remove to Adjustments Proposed 2020 10Q DVPD DVBM Remove SP Adjustments Note Spinoffs (Reviewed) ASSETS CURRENT ASSETS : Cash and cash equivalents$ 176,667 $ 56,332 $ 56,827 $ 19,068 $ 160 (A)$ 44,280 Restricted cash 26,788 26,788 - Tenant and sundry receivables, net of allowance for doubtful accounts 316,005 6,692 293,760 15,553 (B) - Prepaid expenses and other assets 466,422 78,272 266,554 197 (85 ) (C) 121,484 TOTAL CURRENT ASSETS 985,882 168,084 617,141 19,265 15,628 165,764 Rental properties, net 20,543,684 20,543,684 - Property and equipment, net 339,013 30,442 302,984 3,811 1,776 Intangible assets, net 14,919 14,570 349 - ROU assets, net 348,448 348,448 SP-Investment 43,437,595 (43,437,595 ) (C) - Capital Receivable (264,940 ) 2,055 (16,115 ) (C) 279,000 Intercompany Balance-SP 10,738,930 (10,738,930 ) (C) -
Loan and interest receivable, net 4,260,697
4,304,754 (44,057 ) (D) - TOTAL ASSETS$ 26,492,643 $ 20,756,780 $ 4,960,288 $ 54,201,656 $ (54,221,069 ) $ 794,988 LIABILITIES AND DEFICIT CURRENT LIABILITIES: Bank loans payable, net (in default)$ 7,511,591 $ 7,511,591 $ - Bank loans payable, net 58,483,681 58,368,711 114,970 Accounts payable and accrued liabilities 12,232,367 6,587,727 5,284,529 186,144 173,967 Deferred revenue 3,783,314 2,082,918 1,700,396 - Lease liabilities payable-current 17,768 17,768 - TOTAL CURRENT LIABILITIES 82,028,721 74,568,715 6,984,925 186,144 - 288,937 Property financing agreements payable 72,961,523 72,961,523 $ - Lease liabilities payable-non current 361,916 361,916 Other payables 19,594,756 18,454,205 1,140,550 1 Loans payable to related parties 12,382,578 10,425,760 - 1,956,818 Due to shareholder 66,396,293 66,396,293 - Intercompany account - - Interest payable to related parties 11,603,503 26,974,828 8,109,003 (23,480,328 ) - TOTAL LIABILITIES 265,329,290 203,385,031 16,234,478 66,582,437 (23,480,329 ) 2,607,673 - - - - - DEFICIT: Common stock,$0.0001 par value, 600,000,000 shares authorized; 21,711,000 shares issued and outstanding at June 30, 2020 2,171 2,171 Paid-in capital 11,827,188 34,000,000 3,200,000 3,856,289 (30,240,000 ) (C) 1,010,899 Accumulated deficit (207,104,990 ) (172,856,421 ) (14,641,233 ) (16,217,817 ) (85 ) (C) (3,389,434 ) Accumulated other comprehensive loss (55,938 ) (266,752 ) 167,043 (19,253 ) (500,655 ) (C) 563,679 Total stockholder's deficit attributable to the Company's common shareholders (195,331,569 ) (139,123,173 ) (11,274,190 ) (12,380,781 ) (30,740,740 ) (1,812,685 ) Noncontrolling interest (43,505,078 ) (43,505,078 ) - TOTAL DEFICIT (238,836,647 ) (182,628,251 ) (11,274,190 ) (12,380,781 ) (30,740,740 ) (1,812,685 ) TOTAL LIABILITIES AND DEFICIT$ 26,492,643 $ 20,756,780 $ 4,960,288 $ 54,201,656 $ (54,221,069 ) $ 794,988 - - - - - -
Notes for Adjustments to unaudited Pro Forma Condensed Combined Balance Sheet.
(A) Cash amount of
DVBM.
(B) Amount of
on behave of DVBM. (C) Adjustments represent eliminations for intercompany transactions or
reclassification in 10Q. (D) Amount of 44,057 in DVPM represents loan payment received from ZKCZ on behave
of DVBM. VICTORY COMMERCIAL MANAGEMENT INC. AND SUBSIDIARIES AUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEETS AS OF DECEMBER 31, 2019 Proforma Adjustments Adjustments subsequent to to Adjustments to Remove Remove to Adjustments proposed 2019 10K DVPD DVBM Remove SP Adjustments Note spinoffs (Audited) ASSETS CURRENT ASSETS : Cash and cash equivalents 122,884$ 61,598 $ 41,655 $ 3,024 $ 819 (A)$ 15,788 Restricted cash 27,223 27,223 - - - Tenant and sundry receivables, net of allowance for doubtful accounts 469,317 19,467 449,850 - Prepaid expenses and other assets 526,834 88,550 301,750 16,380 (85 ) (B) 120,239 TOTAL CURRENT ASSETS 1,146,258 196,838 793,255 19,404 734 136,027 NON CURRENT ASSETS Rental properties, net$ 21,334,015 21,334,015 - - Property and equipment, net 430,063 57,885 356,672 13,336 2,170 Intangible assets, net 17,640 17,344 296 - ROU assets, net 484,178 1,095 - 60,200 422,883 Loan and interest receivable 6,087,914 - 6,105,050 - (17,136 ) (C) - SP-Investment - - 43,235,652 (43,235,652 ) (B) - Capital Receivable - - (269,236 ) 2,045 (11,809 ) (B) 279,000 Intercompany Balance-SP - - 10,141,056 (10,141,056 ) (B) - TOTAL ASSETS$ 29,500,068 $ 21,607,177 $ 6,986,037 $ 53,471,693 $ (53,404,919 ) $ 840,080 LIABILITIES AND DEFICIT CURRENT LIABILITIES: Bank loans payable, net - in default$ 7,633,412 7,633,412 - Accounts payable and accrued liabilities 8,938,941 4,431,135 4,121,396 163,429 222,981 Deferred rental income 3,882,434 2,208,236 1,674,198 - Lease liabilities payable-current 22,755 22,755 - TOTAL CURRENT LIABILITIES 20,477,542 14,295,538 5,795,594 163,429 - 222,981 NON CURRENT LIABILITIES: Bank loans payable, net 59,288,001 59,288,001 - Property financing agreements payable 77,464,781 77,464,781 - Lease liabilities payable-non current 498,509 - - 62,024 436,485 Other payables 19,906,698 18,878,081 1,028,616 1 (B) - Loans payable to related parties 11,934,791 10,594,843 - - (D) 1,339,948 Due to shareholder 65,931,644 65,931,644 - Intercompany account - - - - - Interest payable to related parties 11,520,609 22,712,554 11,739,025 - (22,930,970 ) (B) - Total Liabilities 267,022,575 203,233,798 18,563,235 66,157,097 (22,930,969 ) 1,999,414
Deficit:
Victory Commercial Management Inc. Shareholder's Deficit Common stock,$0.0001 par value, 600,000,000 shares authorized; 21,711,000 shares issued and outstanding at December 31, 2019 2,171 2,171 Paid-in capital 11,827,188 34,000,000 3,200,000 3,856,289 (30,240,000 ) (B) 1,010,899 Accumulated deficit (203,808,349 ) (169,168,605 ) (14,759,238 ) (16,581,676 ) (85 ) (B) (3,298,745 ) Accumulated other comprehensive loss (2,242,729 ) (3,157,228 ) (17,960 ) 39,983 (233,865 ) (B) 1,126,341 Total stockholder's deficit attributable to the Company's common shareholders (194,221,719 ) (138,325,833 ) (11,577,198 ) (12,685,404 ) (30,473,950 ) (1,159,334 ) Noncontrolling interest (43,300,788 ) (43,300,788 ) - Total Deficit (237,522,507 ) (181,626,621 ) (11,577,198 ) (12,685,404 ) (30,473,950 ) (1,159,334 ) TOTAL LIABILITIES AND DEFICIT$ 29,500,068 $ 21,607,177 $ 6,986,037 $ 53,471,693 $ (53,404,919 ) $ 840,080 - - - - - -
Notes for Adjustments to audited Pro Forma Condensed Combined Balance Sheet.
(A) Cash amount of
DVBM.
(B) Adjustments represent eliminations for intercompany transactions or
reclassification in 10K. (C) Amount of $17,136 in DVPM represents loan payment received from ZKCZ on behave of DVBM. (D) The ending amount of$1,339,948 in VCM represents the amount of due to related-individual as disclosed in 2019 10K footnote 15(on page F-30). VICTORY COMMERCIAL MANAGEMENT INC. AND SUBSIDIARIES VICTORY COMMERCIAL INVESTMENT INC AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2020 Proforma subsequent Adjustments Adjustments Adjustments to to proposed 2020 10Q to Remove DVPD to Remove DVBM Remove SP Adjustments Note spinoffs (Reviewed) Revenues Rental income$ 974,462 $ 974,462 $ - Management fee income 1,911,601 1,911,601 - Other income 228,343 228,343 - Total revenues 3,114,406 974,462 2,139,944 - - Operating expenses Selling expenses 1,894,867 13,252 1,881,615 -
Depreciation and amortization 553,882 496,064 47,842 9,585 391 Payroll and payroll related expenses 627,284 29,923
134,227 138,875 324,259 Business taxes 232,915 191,745 41,170 - Lease expenses 120,122 (3,525 ) 17,116 106,531 Other general and administrative expenses 342,886 (106,625 ) 194,862 15,239 239,410 Total operating expenses 3,771,956 620,834 2,299,716 180,815 670,591 Loss from operations (657,550 ) 353,628 (159,772 ) (180,815 ) (670,591 ) Other income (expense) Interest income 272,527 83 272,444 535,374 (535,374 ) (A) - Interest - loans (2,010,258 ) (2,010,258 ) - Interest - ROU and other capitalized liabilities (1,089,015 ) (1,089,015 ) - Interest - related parties (266,393 ) (801,571 ) (196 ) 535,374 (A) - Gain (loss) from foreign currency transactions (367,986 ) (367,986 ) - Other income 37,842 23,013 5,333 9,496 - Total other (expense), net (3,423,283 ) (4,245,734 ) 277,777 544,674 - Loss before provision for income taxes (4,080,833 ) (3,892,106 ) 118,005 363,859 (670,591 ) Provision for income taxes - - - - - Net Loss (4,080,833 ) (3,892,106 ) 118,005 363,859 (670,591 ) Net loss attributable to noncontrolling interest (784,192 ) (785,367 ) 1,175 - Net loss attributable to the Company's common shareholders$ (3,296,641 ) $ (3,106,739 ) $ 116,830 $ 363,859 $ (670,591 ) Per Common Share - basic and diluted: Net loss per Company's common share$ (0.15 ) $ (0.03 ) Weighted-average shares outstanding, basic and diluted 21,711,000 21,472,792 Comprehensive income (loss) Net loss$ (4,080,833 ) $ (3,892,106 ) $ 118,005 $ 363,859 $ (670,591 ) Other comprehensive income (loss) Foreign currency translation adjustments 2,766,693 2,645,230 180,697 (59,236 ) 2 Comprehensive (loss) (1,314,140 ) (1,246,876 ) 298,702 304,623 (670,589 ) Comprehensive income(loss) attributable to non-controlling interest 579,902 578,052 1,850 -
Comprehensive (loss) attributable to
the Company's common shareholders
© Edgar Online, source