8-K/A
FLYWHEEL ADVANCED TECHNOLOGY, INC. (FWFW)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K/A
Amendment
No. 2
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 22, 2023
FLYWHEEL
ADVANCED TECHNOLOGY, INC.
(Exact Name of Registrant as Specified in Charter)
| Nevada | 333-167130 | 27-2473958 |
|---|---|---|
| (State<br> or other jurisdiction<br><br> <br>of<br> incorporation) | (Commission<br><br> <br>File<br> Number) | (IRS<br> Employer<br><br> <br>Identification<br> No.) |
| 123 West Nye Lane, Suite 455<br><br> <br>Carson City, Nevada | 89706 | |
| --- | --- | |
| (Address<br> of principal executive offices) | (Zip<br> Code) |
Registrant’s
telephone number, including area code: (852) 66860563
| N/A |
|---|
| (Former<br> name or former address, if changed since last report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written<br> communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting<br> material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement<br> communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement<br> communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Explanatory
Note
On June 2, 2023, Flywheel Advanced Technology, Inc. (the “Company”) filed a Form 8-K/A (the “Amendment”) to its Current Report on Form 8-K as originally filed with the Securities and Exchange Commission on March 24, 2023 (the “Original Filing”), solely to amend and restate the “Security Ownership of Certain Beneficial Owners and Management” and “Certain Relationships and Certain Transactions” sections contained in Item 2.01 of the Original Filing and add an Item 8.01 to reflect our majority shareholder’s sale of shares of its common stock. Said sections needed to be corrected or added to reflect the issuance of shares pursuant to agreements which were not identified in the Original Filing.
This Amendment No. 2 to the Amendment is being filed to correct the closing date of the sale of the majority shareholder’s shares of the Company. As a result of such change, the share ownership of Sparta Universal Industrial Ltd. (“Sparta”) was correctly reflected in the Original Filing; the “Security Ownership of Certain Beneficial Owners and Management” section of the Original Filing still needs to be corrected to reflect the issuance of the shares to two individuals pursuant to agreements not previously identified and to provide that the security ownership of Sparta is as provided for in the Original Filing.
This Amendment No. 2 also restates in their entirety the pro forma financial information filed with the Original Filing.
No other changes have been made to the Original Filing or to the Amendment.
Except for said sections of the Original Filing and the Amendment, this Amendment does not modify or update the disclosures presented in, or exhibits to, the Original Filing in any way. This Amendment has not been updated to reflect events that occurred after March 24, 2023, the filing date of the Original Filing. Accordingly, this Amendment should be read in conjunction with our filings made with the Securities and Exchange Commission subsequent to the filing of the Original Filing and the Amendment, including any amendments to those filings.
Section2 Financial Information
Item2.01 Completion of Acquisition or Disposition of Assets.
Item 2.01 of the Original Filing is hereby amended as follows:
The section titled “Security Ownership of Certain Beneficial Owners and Management” under Item 2.01 of the Original Filing is hereby amended and restated in its entirety as follows:
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial ownership of the Company’s common stock as of March 23, 2023, by (i) each person who is known by the Company to own beneficially more than 5% of any classes of outstanding common stock, (ii) each director of the Company, (iii) each of the Chief Executive Officers and the executive officers (collectively, the “Named Executive Officers”) and (iv) all directors and executive officers of the Company as a group based upon 29,591,164 shares outstanding as of March 23, 2023.
| Name and Address of Beneficial Owners of common stock ^1^ | Title of Class | Amount and Nature of Beneficial Ownership | % of Common Stock | |||
|---|---|---|---|---|---|---|
| Tang Siu Fung<br> ^2^ | Common Stock | 16,200,000 | 54.75 | % | ||
| Cheng Sin Yi | — | — | * | |||
| Ho Yiu Chung | — | — | * | |||
| DIRECTORS AND OFFICERS – TOTAL<br> <br>(3 persons) | 16,200,000 | 54.75 | % | |||
| 5% SHAREHOLDERS | ||||||
| Sparta Universal Industrial<br> Ltd. ^2^ | Common Stock | 16,200,000 | 54.75 | % | ||
| QBS Flywheel Limited ^3^ | Common Stock | 8,939,600 | 30.21 | % | ||
| Sau Ping Leung^4^ | Common Stock | 1,450,000 | 4.90 | % | ||
| So Ha Tsang^4^ | Common Stock | 1,450,000 | 4.90 | % |
* Less than 1%
| 1. | Unless<br> otherwise indicated, the business address of each individual or entity listed in the table is c/o: Flywheel Advanced Technology,<br> Inc., 123 West Nye Lane, Suite 455, Carson City, Nevada 83702. |
|---|---|
| 2. | Our<br> President, Chief Executive Officer and Chairman of the Board, Mr. Tang, is the controlling shareholder of Sparta Universal Industrial<br> Ltd., which holds 16,200,000 shares of the Company’s common stock. |
| 3. | The<br> business address for QBS Flywheel Limited is “GATEWAY” L36, 1 Macquarie PI, Sydney, NSW 2000, Australia. |
| 4. | Each<br> of Sau Ping Leung and So Ha Tsang are entitled to 1,450,000 shares of common stock as a result of contracts executed February and<br> October 2022.<br> See “Certain Relationships and Related Transactions”. |
Section8 – Other Events
Item8.01 Other Event
From May 3, 2023, through May 18, 2023, Sparta, our majority stockholder, consummated the offer and sale by Sparta with 29 investors pursuant to which Sparta sold 4,764,547 shares of common stock of the Company for an aggregate purchase price of $12,975,348.18. The sale was made pursuant to an exemption from securities registration provided under Regulation S of the Securities Act. Prior to the transaction, Sparta held 16,200,000 shares of the Company’s common stock. As a result of this transaction, Sparta now holds 11,435,453 shares or 38.64% of the Company’s issued and outstanding common stock.
ITEM
9.01 FINANCIAL STATEMENTS AND EXHIBITS.
| (b) | Pro<br> Forma Financial Information.<br><br> <br><br><br> <br>In<br> accordance with Item 9.01(b), the unaudited pro forma condensed consolidated financial statements for the fiscal year ended<br> September 30, 2022, and as of, and for, the three months ended December 31, 2022 and the accompanying notes are included in this<br> Current Report and attached hereto as Exhibit 99.3. |
|---|---|
| 99.3 | Unaudited Pro Forma condensed consolidated financial statements for the fiscal year ended September 30, 2022 and as of and for the three months ended December 31, 2022, and the accompanying notes* |
| --- | --- |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| FLYWHEEL ADVANCED TECHNOLOGY, INC. | ||
|---|---|---|
| Dated:<br> June 5, 2023 | By: | /s/ Tang Siu Fung |
| Tang<br> Siu Fung<br><br> <br>Chief<br> Executive Officer<br><br> <br>(Principal<br> Executive Officer and Principal Financial Officer) |
Exhibit 99.3
FLYWHEEL ADVANCED TECHNOLOGY,INC.
UNAUDITED PRO FORMA CONSOLIDATEDBALANCE SHEET
AS OF DECEMBER 31, 2022
| Flywheel <br>Advanced | QBS System | Pro Forma <br>Adjustments | Pro Forma <br>Consolidated | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ASSETS | ||||||||||||
| CURRENT ASSETS | ||||||||||||
| Cash and equivalents | $ | - | $ | 336,082 | $ | - | $ | 336,082 | ||||
| Accounts receivable, net of allowances | - | 1,332,953 | - | 1,332,953 | ||||||||
| Due from related parties | - | 123,054 | - | 123,054 | ||||||||
| Prepaid expenses and other current | 679 | 384,772 | - | 385,451 | ||||||||
| Income tax refundable | - | 31,737 | - | 31,737 | ||||||||
| Deferred taxes assets | - | 7,719 | - | 7,719 | ||||||||
| Total Current Assets | 679 | 2,216,317 | - | 2,216,996 | ||||||||
| PROPERTY, PLANT AND EQUIPMENT, | - | 9,584 | - | 9,584 | ||||||||
| RIGHT-OF-USE ASSETS | - | 67,768 | - | 67,768 | ||||||||
| GOODWILL | - | - | {b} | 2,063,075 | 2,063,075 | |||||||
| TOTAL ASSETS | $ | 679 | $ | 2,293,669 | $ | 2,063,075 | $ | 4,357,423 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
| CURRENT LIABILITIES | ||||||||||||
| Bank loans - current portion | $ | - | $ | 107,489 | $ | - | $ | 107,489 | ||||
| Accounts payable | - | 162,417 | - | 162,417 | ||||||||
| Accrued expenses and other current | 16,879 | 118,116 | - | 134,995 | ||||||||
| Due to related parties | 213,762 | 379,777 | - | 593,539 | ||||||||
| Operating leases liabilities | - | 22,524 | - | 22,524 | ||||||||
| Income tax payable | - | - | - | - | ||||||||
| Total current liabilities | 230,641 | 790,323 | - | 1,020,964 | ||||||||
| LONG-TERM LIABILITIES | ||||||||||||
| Bank loans | - | 564,169 | - | 564,169 | ||||||||
| Operating leases liabilities | - | 52,184 | - | 52,184 | ||||||||
| Total long-term liabilities | - | 616,353 | - | 616,353 | ||||||||
| Total Liabilities | 230,641 | 1,406,676 | - | 1,637,317 | ||||||||
| COMMITMENTS AND CONTINGENCIES | - | - | - | - | ||||||||
| STOCKHOLDERS’ EQUITY | ||||||||||||
| Common stock | 1,782 | 13 | {a}{c}{d} | 1 ,171 | 2,966 | |||||||
| Paid in capital | 2,534,546 | - | {a}{b}{d} | 3,905,884 | 6,440,430 | |||||||
| (Accumulated deficit)/Retained earnings | (2,766,290 | ) | 910,868 | {c}{d} | (1,867,868 | ) | (3,723,290 | ) | ||||
| Accumulated other comprehensive loss | - | (23,888) | {c} | 23,888 | - | |||||||
| Total Stockholders’ Equity | (229,962 | ) | 886,993 | 2,063,075 | 2,720,106 | |||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 679 | $ | 2,293,669 | $ | 2,063,075 | $ | 4,357,423 |
See accompanying notes to pro forma consolidated financial statements.
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FLYWHEELADVANCED TECHNOLOGY, INC.
UNAUDITEDPRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
ANDCOMPREHENSIVE LOSS
THREE MONTHS ENDED DECEMBER 31, 2022
| Flywheel<br> <br>Advanced | ****<br><br>QBS<br> System | Pro<br> Forma <br>Adjustments {f} | Pro<br> Forma <br>Consolidated | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| REVENUE, NET | $ | - | $ | 688,188 | $ | - | $ | 688,188 | ||||
| COST<br> OF REVENUE | - | (480,002 | ) | - | (480,002 | ) | ||||||
| GROSS<br> PROFIT | - | 208,186 | - | 208,186 | ||||||||
| OPERATING<br> EXPENSES | ||||||||||||
| Sales<br> and marketing | - | 15,402 | - | 15,402 | ||||||||
| General<br> and administrative | 25,832 | 150,936 | 957,000 | 1,133,768 | ||||||||
| Depreciation<br> and amortization | - | 13,591 | - | 13,591 | ||||||||
| Total<br> Operating Expenses | 25,832 | 179,929 | 957,000 | 1,162,761 | ||||||||
| OPERATING<br> (LOSS) INCOME | (25,832 | ) | 28,257 | (957,000 | ) | (954,575 | ) | |||||
| OTHER<br> INCOME (EXPENSES) | ||||||||||||
| Interest<br> income (expense), net | - | (5,843 | ) | - | (5,843 | ) | ||||||
| Other<br> income | - | 7,403 | - | 7,403 | ||||||||
| Total<br> Other Income | - | 1,560 | - | 1,560 | ||||||||
| (LOSS)<br> INCOME BEFORE INCOME TAXES | (25,832 | ) | 29,817 | (957,000 | ) | (953,015 | ) | |||||
| Income<br> taxes | - | 154 | - | 154 | ||||||||
| NET<br> INCOME (LOSS) | (25,832 | ) | 29,663 | (957,000 | ) | (953,169 | ) | |||||
| OTHER<br> COMPREHENSIVE LOSS | ||||||||||||
| Foreign<br> currency translation (loss) | - | (6,172 | ) | - | (6,172 | ) | ||||||
| COMPREHENSIVE<br> INCOME (LOSS) | $ | (25,832 | ) | $ | 23,491 | $ | (957,000 | ) | $ | (959,341 | ) | |
| Net<br> loss per share, basic and diluted | $ | (0.00 | ) | $ | 297 | $ | (0.03 | ) | ||||
| Weighted<br> average shares outstanding, <br>basic and diluted | 17,822,564 | 100 | {e} | 29,662,164 |
See accompanying notes to pro forma consolidated financial statements.
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FLYWHEELADVANCED TECHNOLOGY, INC.
UNAUDITEDPRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
ANDCOMPREHENSIVE LOSS
FOR THE YEAR ENDED SEPTEMBER 30, 2022
| Flywheel<br> <br>Advanced | ****<br><br>QBS<br> System | Pro<br> Forma <br>Adjustments {f} | Pro<br> Forma <br>Consolidated | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| REVENUE, NET | $ | - | $ | 3,682,142 | $ | - | $ | 3,682,142 | ||||
| COST<br> OF REVENUE | - | (2,765,796 | ) | - | (2,765,796 | ) | ||||||
| GROSS<br> PROFIT | - | 916,346 | - | 916,346 | ||||||||
| OPERATING<br> EXPENSES | ||||||||||||
| Sales<br> and marketing | - | 75,095 | - | 75,095 | ||||||||
| General<br> and administrative | 204,130 | 632,468 | 957,000 | 1,793,598 | ||||||||
| Provision<br> for credit losses | 55,340 | 55,340 | ||||||||||
| Depreciation<br> and amortization | - | 53,566 | - | 53,566 | ||||||||
| Total<br> Operating Expenses | 204,130 | 816,469 | 957,000 | 1,977,599 | ||||||||
| OPERATING<br> (LOSS) INCOME | (204,130 | ) | 99,877 | (957,000 | ) | (1,061,253 | ) | |||||
| OTHER<br> INCOME (EXPENSES) | ||||||||||||
| Interest<br> income (expense), net | - | (25,511 | ) | - | (25,511 | ) | ||||||
| Other<br> income | - | 147,974 | - | 147,974 | ||||||||
| Total<br> Other Income | - | 122,463 | - | 122,463 | ||||||||
| (LOSS)<br> INCOME BEFORE INCOME TAXES | (204,130 | ) | 222,340 | (957,000 | ) | (938,790 | ) | |||||
| Income<br> taxes | - | 15,124 | - | 15,124 | ||||||||
| NET<br> INCOME (LOSS) | $ | (204,130 | ) | $ | 207,216 | $ | (957,000 | ) | $ | (953,914 | ) | |
| OTHER<br> COMPREHENSIVE LOSS | ||||||||||||
| Foreign<br> currency translation (loss) | - | (19,168 | ) | - | (19,168 | ) | ||||||
| COMPREHENSIVE<br> INCOME (LOSS) | $ | (204,130 | ) | $ | 188,048 | $ | (957,000 | ) | $ | (973,082 | ) | |
| Net<br> loss per share, basic and diluted | $ | (0.03 | ) | $ | 2,072 | $ | (0.03 | ) | ||||
| Weighted<br> average shares outstanding, <br>basic and diluted | 5,874,306 | 8,939,600 | {e} | 29,662,164 |
See accompanying notes to pro forma consolidated financial statements.
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FLYWHEELADVANCED TECHNOLOGY, INC.
UNAUDITEDPRO FORMA CONSOLIDATED FINANCIAL INFORMATION
December31 and September 30, 2022
Note 1 Introduction
On December 15, 2022, Flywheel Advanced Technology, Inc., a Nevada corporation (the “ Company “or “Flywheel Advanced”), entered into a share exchange agreement (the “Share Exchange Agreement”) with QBS System Limited, a limited company incorporated under the laws of Hong Kong (“QBS System”), and QBS Flywheel Limited, a company incorporated under the laws of Australia (the “Shareholder”). Subject to the closing conditions set forth in the Share Exchange Agreement, at closing the Shareholder will transfer and assign to the Company all of the issued and outstanding shares of QBS System for 8,939,600 newly issued shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”). Following the closing of the share exchange, there will be no change in the officers and directors of the Company, and QBS System will continue its business as a wholly owned subsidiary of the Company and the Shareholder shall own 8,939,600 Common Stock, or 33.41% of the then issued and outstanding shares of Common Stock on a fully diluted basis.
The following unaudited pro forma consolidated balance sheets as of December 31, 2022 and the unaudited pro forma consolidated statements of operations for the year ended September 30, 2022 and for the three months ended December 31, 2022 are based on the historical consolidated financial statements of Flywheel Advanced and QBS System and its subsidiary, QBS System Pty Limited as adjusted to give effect to the acquisition of QBS System and its subsidiary by Flywheel Advanced (the “ Acquisition” ). The Acquisition was accounted for using the acquisition method of accounting and assuming a purchase price by the issuance of the Company’s common shares of $2,950,068.
Under the acquisition method of accounting, the total purchase price presented in the accompanying unaudited pro forma consolidated financial statements was allocated to the assets acquired based on their fair values assuming the transaction occurred on December 31, 2022 with respect to the balance sheet and as of October 1, 2021 with respect to the statements of operations for the three months ended December 31, 2022 and the year ended September 31, 2022. The excess of the purchase price over the total of estimated fair values assigned to tangible and identifiable intangible assets acquired is recognized as goodwill.
The unaudited pro forma consolidated financial statements do not necessarily reflect what the consolidated company’s financial condition or results of operations would have been had the Acquisition occurred on the dates indicated. The unaudited pro forma consolidated financial statements and the underlying pro forma adjustments are based upon currently available information and include certain estimates and assumptions made by management; accordingly, actual results could differ materially from the pro forma information. Management believes the assumptions provide a reasonable and supportable basis for presenting the estimated significant effects of the arrangement. The unaudited pro forma consolidated financial statements is provided for illustrative purposes only and may or may not provide an indication of results in the future.
The unaudited pro forma consolidated financial statements, including the notes thereto, should be read in conjunction with Flywheel Advanced’s historical financial statements for the year ended December 31, 2022 and three months ended December 31, 2022, included in our Annual Report on Form 10-K and Quarter Report on Form 10-Q.
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FLYWHEELADVANCED TECHNOLOGY, INC.
UNAUDITEDPRO FORMA CONSOLIDATED FINANCIAL INFORMATION
December31 and September 30, 2022
Note 2 Basis of Presentation
Flywheel Advanced and QBS System and its subsidiary have different fiscal quarter and year ends. Flywheel Advanced has a fiscal year ending on September 30, however, QBS System and its subsidiary has a fiscal calendar year ending on March 31. Accordingly, the unaudited pro forma consolidated statement of operations for the fiscal year ended September 30, 2022, combines the historical results of (i) Flywheel Advanced for the 12 months ended September 30, 2022, and (ii) QBS System and its subsidiary for the six months October 1, 2021, to March 31, 2022, and six months April 1, 2022, to September 30, 2022. The unaudited pro forma consolidated statement of operations for the three months ended December 31, 2022, combines the historical results of (i) Flywheel Advanced for the three months ended December 31, 2022, and (ii) QBS System and its subsidiary for the three months October 1, 2022, to December 31, 2022. We have used balance sheet at December 31, 2022 for the purpose of preparing the unaudited pro forma consolidated balance sheet as of December 31, 2022.
The unaudited pro forma consolidated balance sheet as of December 31, 2022, and the unaudited pro forma consolidated statements of operations for the year ended September 30, 2022 and for the three months ended December 31, 2022 are based on the historical financial statements of Flywheel Advanced after giving effect to the acquisition of QBS System and its subsidiary (the “Acquisition”) using the acquisition method of accounting. In conjunction with the Acquisition, we may incur future restructuring expenses and transaction costs that are not included in the pro forma consolidated financial statements.
The unaudited pro forma consolidated balance sheet as of December 31, 2022, is presented as if the Acquisition occurred on December 31, 2022. The unaudited pro forma consolidated statements of operations for the year ended September 30, 2022, and for the three months ended December 31, 2022, are presented as if the Acquisition had taken place on October 1, 2021 and October 1, 2022, respectively.
The unaudited pro forma financial statements for QBS System and its subsidiary are prepared in accordance with US GAAP and translated into USD.
The unaudited pro forma condensed consolidated financial information is based on estimates and assumptions which have been made solely for purposes of developing such pro forma information.
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FLYWHEELADVANCED TECHNOLOGY, INC.
UNAUDITEDPRO FORMA CONSOLIDATED FINANCIAL INFORMATION
December31 and September 30, 2022
Note 3 Purchase Consideration and Allocation
PurchaseConsideration
The purchase consideration is approximately $3 million, based on the closing price of Flywheel common stock on Over-the-Counter-Markets of $0.33 on December 31, 2022. The purchase consideration is as follows:
| QBS System’s ordinary shares issued and outstanding | 100 | (1) | |
|---|---|---|---|
| Exchange ratio | 89,396 | ||
| Flywheel Advanced shares issued in exchange | 8,939,600 | ||
| Flywheel Advanced closing share price | $ | 0.33 | (2) |
| Purchase consideration paid at closing | $ | 2,950,068 | |
| (1) | Represents<br> 100 shares of QBS ordinary shares issued and outstanding as of December 31, 2022. | ||
| --- | --- | ||
| (2) | Represents<br> the closing price of the Flywheel Advanced’s common stock on the Over-the-Counter- Markets on December 31, 2022. |
PurchasePrice Allocation
Under the acquisition method of accounting, the identifiable assets acquired and liabilities assumed of QBS System and its subsidiary are recorded at their fair values as of the Acquisition Date and added to those of Flywheel Advanced. The purchase price allocation shown below is based on estimates of the fair value and useful lives of the assets acquired and liabilities assumed and has been prepared to illustrate the estimated effect of the acquisition. Flywheel Advanced has performed the fair valuation of QBS System and its subsidiary’s assets and liabilities. The fair values are subject to adjustment after the close of the transaction as additional information is obtained.
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FLYWHEELADVANCED TECHNOLOGY, INC.
UNAUDITEDPRO FORMA CONSOLIDATED FINANCIAL INFORMATION
December31 and September 30, 2022
The following table sets forth the allocation of the total purchase consideration to the identifiable tangible and intangible assets acquired and liabilities assumed, based on QBS System and its subsidiary’s balance sheet at December 31, 2022, with excess recorded as goodwill:
| Purchase consideration | $ | 2,950,068 | |
|---|---|---|---|
| Cash and equivalents | $ | 336,082 | |
| Other current assets | 1,880,235 | ||
| Property and Equipment | 9,584 | ||
| Right-of-use assets | 67,768 | ||
| Total assets acquired | 2,293,669 | ||
| Bank loans | (671,658 | ) | |
| Other liabilities | (735,018 | ) | |
| Total liabilities assumed | (1,406,676 | ) | |
| Fair value of net assets acquired | 886,993 | ||
| Goodwill | $ | 2,063,075 |
Goodwill is the excess of acquisition consideration over the fair value of the underlying net assets acquired. In accordance with ASC 350, Goodwill and Other Intangible Assets, goodwill is not amortized, but instead is reviewed for impairment at least annually, absent any indicators of impairment. Goodwill recorded in the Acquisition is not deductible for tax purposes.
Note 3 Pro Forma Adjustment
The pro forma adjustments are based on our preliminary estimates and assumptions that are subject to change. The following adjustments have been reflected in the unaudited condensed consolidated financial information:
Adjustmentsto the unaudited pro forma consolidated balance sheet at December 31, 2022:
| {a} | Reflects the issuance of 8,939,600 shares at acquisition of $2,950,068. |
|---|---|
| {b} | Reflects $2,063,075 of goodwill which is the excess of the purchase price over the fair value of the assets acquired as if the Acquisition<br>occurred on December 31, 2022. |
| {c} | Represents the write-off of the QBS System and its subsidiary’s book value of equity of $886,980 and issuance of 100 shares of common<br>stock valued at $13. |
| {d} | Reflects the additional issuance of 2,900,000 shares to settle the advisory service fees upon completion of the Acquisition, based on<br>the closing price of Flywheel common stock on Over-the Counter Markets of $0.33 on December 31, 2022. |
Adjustmentsto the unaudited pro forma consolidated statement of operations for the year ended September 30, 2022 and for the three months endedDecember 31, 2022:
| {e} | Addition to basic and diluted weighted average number of shares outstanding to reflect the 8,939,600 common shares issued as part of the<br>Acquisition consideration. The calculation of weighted average shares outstanding for basic and diluted earnings per share assumes that<br>the shares issuable relating to the arrangement was outstanding for the entire year as if the Acquisition transaction occurred on October<br>1, 2021. |
|---|---|
| {f} | Reflects the additional issuance of 2,900,000 shares to settle the advisory service fees upon completion of the Acquisition, assumingthe<br>closing price of Flywheel common stock on Over-the Counter Markets of $0.33 if the Acquisition had taken place on October 1, 2021 and<br>October 1, 2022, respectively . |
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