8-K
FLYWHEEL ADVANCED TECHNOLOGY, INC. (FWFW)
UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION**** Washington, D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 5, 2024
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. ☐
Item1.01 Entry into a Material Definitive Agreement.
The disclosure included under Item 2.01 is incorporated by reference.
Item2.01 Completion of Acquisition or Disposition of Assets.
On July 5, 2024, Flywheel Advanced Technology, Inc., a Nevada corporation (“FWFW” or the “Seller”) executed and consummated the transactions contemplated by the Share Purchase Agreement (the “Agreement”) entered into with Mericorn Company Limited, a company incorporated under the laws of the British Virgin Islands (the “Buyer”).
Pursuant to the terms of the Agreement, FWFW disposed of all of its interests in its wholly owned subsidiary, Mega Fortune Company Limited, a Cayman Islands exempted company (the “Company”), in exchange for the acquisition of a minority interest in Elison Virtus Company Limited (“Elison”), a company incorporated under the laws of the British Virgin Islands and a wholly owned subsidiary of the Buyer. At the closing of the transaction, the Seller transferred 100,000 ordinary shares (the “Shares”) of the Company, representing all of the issued and outstanding equity securities of the Company, to the Buyer. The aggregate purchase price of the Shares was HKD56,360,000 (the “Purchase Price”). The Buyer transferred to the Seller 9.38% of the total issued and outstanding equity of Elison (938 shares) in satisfaction of the Purchase Price.
The Company is a newly formed holding company and indirectly holds all of the issued and outstanding equity interests in QBS System Limited, a limited company incorporated under the laws of Hong Kong (“QBS System”), and its wholly owned subsidiary QBS System Pty Limited, an Australian company, both of which are principally engaged in IoT solutions and technical support and maintenance.
Elison holds all of the issued and outstanding equity of Flywheel Financial Strategy (Hong Kong) Company Limited (“Flywheel Financial”) a company principally engaged in wealth management services.
In making its decision to enter into the Agreement, FWFW relied on (i) the Business Valuation report for Flywheel Financial, by Wise Tech Consulting and Appraisal Services, dated July 4, 2024, which estimated the fair value of all of the equity of Flywheel Financial as HKD601,000,000 and (ii) the Business Valuation report for QBS System, by Wise Tech Consulting and Appraisal Services, dated July 4, 2024, which estimated the fair value of all of the equity of QBS System as HKD56,360,000.
Mr. Tang Siu Fung, the beneficial owner of Sparta Universal Industrial Ltd., a significant stockholder in the Seller, and the President, Chief Executive Officer and sole director of the Seller is the spouse of Ms. Tin Sze Wai, owner of 25% of the issued and outstanding shares of the Buyer.
The Agreement contains customary representations, warranties and covenants, including certain customary operating restrictions and absence of any conflict that would adversely affect the Company to conduct its business.
A copy of the Agreement is attached as Exhibit 2.1 to this report and is incorporated herein by reference. The foregoing description of the Agreement does not purport to be complete and is qualified in its entirety by reference to the Agreement.
Item9.01. Financial Statement and Exhibits.
| (b) | Pro<br> Forma Financial Information. |
|---|
In accordance with Item 9.01(b), FWFW’s pro forma unaudited condensed consolidated financial statements for the fiscal year ended September 30, 2023, and the three months ended December 31, 2023, which reflect the disposition described in Item 2.01, are filed herewith as Exhibit 99.1 and incorporated herein by reference.
| (d) | Exhibits. |
|---|---|
| Exhibit<br> No. | Description |
| --- | --- |
| 2.1 | Share Purchase Agreement, dated July 5, 2024, by and between Flywheel Advanced Technology, Inc. and Mericorn Company Limited |
| 99.1 | Unaudited proforma condensed consolidated financial statements for the year ended September 30, 2023, and for the three months<br> ended December 31, 2023 |
| 104 | Cover<br> 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.
| FLYWHEEL ADVANCED TECHNOLOGY, INC. | ||
|---|---|---|
| Dated:<br> July 11, 2024 | By: | /s/ Tang Siu Fung |
| Name: | Tang<br> Siu Fung | |
| Title: | Chief<br> Executive Officer<br><br> <br>(Principal<br> Executive Officer and Principal Financial Officer) |
Exhibit 2.1
EXECUTION VERSION
SHARE PURCHASE AGREEMENT
This Share Purchase Agreement (this “Agreement”) is entered into as of July 5, 2024, by and between, Flywheel Advanced Technology, Inc., a Nevada corporation (the “Seller”) and Mericorn Company Limited, a company incorporated under the laws of the British Virgin Islands (the “Buyer”).
RECITALS
WHEREAS, the Seller currently owns 100,000 ordinary shares (the “Shares”) of Mega Fortune Company Limited, a Cayman Islands exempted company (the “Company”), representing all of the issued and outstanding equity securities of the Company;
WHEREAS, Elison Virtus Company Limited, a company incorporated under the laws of the British Virgin Islands (“Elison”) is a wholly-owned subsidiary of the Buyer; and
WHEREAS, the Seller desires to sell to the Buyer, and the Buyer desires to purchase from the Seller, the Shares, which Shares are to be purchased with the Consideration Shares (as defined below), upon the terms and subject to the conditions hereinafter set forth;
Now, therefore, in consideration of the premises and the mutual promises herein made, and in consideration of the representations, warranties, and covenants herein contained, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows.
SECTION
- Purchase and Sale of the Shares.
(a) Sale. Upon the terms and subject to the conditions of this Agreement, the Buyer agrees to purchase from the Seller, and the Seller agrees to sell, transfer and deliver to the Buyer free and clear of all encumbrances, the Shares for an aggregate purchase price of HKD56,360,000 (or approximately US$7,230,000) (the “Purchase Price”) such Purchase Price to be paid by the transfer of 938 shares of Elison from the Buyer to the Seller (the “Consideration Shares”). The Buyer shall pay all conveyance taxes incurred as a result of the transfer of the Consideration Shares and the Seller shall pay all conveyance taxes incurred as a result of the transfer of the Shares. The Buyer and the Seller shall cooperate with each other to execute and deliver all instruments and certificates that are necessary to comply with the foregoing payment of any conveyance taxes and the Buyer shall cause Elison to take all necessary actions in connection therewith.
(b) Closing*.* The closing of the transactions contemplated herein (the “Closing”) shall take place on the date hereof (the “Closing Date”) by the exchange of signature pages electronically or in such other place or by such other manner as the Parties may mutually agree upon.
(c) Deliveries at Closing. At the Closing,
(i) the Seller shall deliver to the Buyer duly executed instruments of transfer representing the Shares in favour of the Buyer;
(ii) the Seller shall deliver to the Buyer a copy of the resolutions of the Company’s board of directors in connection with the approval of transfer of the Shares contemplated hereby;
(iii) the Seller shall deliver copies of the resolutions and actions taken by the Seller’s board of directors and shareholders in connection with the approval of this Agreement and the transactions contemplated hereby;
(iv) the Buyer shall deliver to the Seller a copy of the resolutions of Elison’s board of directors in connection with the approval of transfer of the Consideration Shares contemplated hereby;
(v) the Buyer shall deliver copies of the resolutions and actions taken by the Buyer’s board of directors and shareholders in connection with the approval of this Agreement and the transactions contemplated hereby, and showing the names and signatures of the directors or officers of the Buyer authorized to sign this Agreement;
(vi) the Buyer shall deliver to the Seller duly executed instruments of transfer representing the Consideration Shares in favour of the Seller; and
(vii) the Seller shall deliver to the Buyer a certificate of the Secretary or an Assistant Secretary of the Seller certifying the names and signatures of the officers of the Seller authorized to sign this Agreement
(d) Post-Closing Obligations. Within five (5) business days after the Closing Date,
(i) the Seller shall procure the register agent of the Company to register the Buyer as the member of the Company in respect of the Shares and issue the corresponding share certificate(s) to the Buyer accordingly; and
(ii) the Buyer shall procure the register agent of Elison to register the Seller as the member of Elison in respect of the Consideration Shares and issue the corresponding share certificate(s) to the Seller accordingly.
SECTION 2. Representations and Warranties of the Seller. The Seller represents and warrants to the Buyer, as of the date hereof as follows:
(a) Authorization. The Seller is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all necessary power and authority to enter into this Agreement and to carry out its obligations hereunder and to consummate the transaction contemplated hereby. The Seller is duly licensed or qualified to do business and is in good standing in each jurisdiction which the operation of its business makes such licensing or qualification necessary. The execution and delivery of this Agreement by the Seller, the performance by the Seller of its obligations hereunder and the consummation by the Seller of the transaction contemplated hereby have been duly authorized by all requisite corporate action on the part of the Seller and its shareholders. This Agreement has been duly executed and delivered by the Seller, and assuming due authorization, execution and delivery by the Buyer this Agreement constitutes legal, valid and binding obligations of the Seller, enforceable against the Seller in accordance with their respective terms. All corporate actions taken by the Seller have been duly authorized, and the Seller has not taken any action that in any respect conflicts with, constitutes a default under or results in a violation of any provision of its certificate of incorporation or by laws.
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(b) Organization, Authority and Qualification of the Company. The Company and all of its subsidiaries are corporations duly organized, validly existing and in good standing under the laws of the jurisdiction of their incorporation and have all necessary power and authority to own, operate or lease the properties and assets now owned, operated or leased by then and to carry on their businesses as they have been and are currently conducted. The Company is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the operation of its business makes such licensing or qualification necessary. All corporate actions taken by the Company and its subsidiaries have been duly authorized, and the Company and its subsidiaries have not taken any action that in any respect conflicts with, constitutes a default under or results in a material violation of any provision of their respective corporate organizational documents.
(c) Capitalization. The authorized share capital of the Company is US$50,000 divided into 500,000,000 ordinary shares of US$0.0001 par value each (the “Ordinary Shares”), 100,000 of which are issued and outstanding as of the date of this Agreement. None of the issued and outstanding Ordinary Shares were issued in violation of any preemptive rights. There are no options, warrants, convertible securities or other rights, agreements, arrangements or commitments of any character relating to the Ordinary Shares or obligating either the Seller or the Company to issue or sell any Ordinary Shares, or any other interest in, the Company. There are no outstanding contractual obligations of the Company to repurchase, redeem or otherwise acquire any Common Shares or to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any other person. The Ordinary Shares constitute all of the issued and outstanding capital stock of the Company and are owned of record and beneficially by the Seller free and clear of all encumbrances. Upon consummation of the transaction contemplated by this Agreement and registration of the Ordinary Shares in the name of the Buyer in the stock records of the Company, the Buyer, assuming it shall have purchased the Ordinary Shares for value in good faith and without notice of any adverse claim, will own all the issued and outstanding capital stock of the Company free and clear of all encumbrances. Upon consummation of the transaction contemplated by this Agreement, the Ordinary Shares will be fully paid and nonassessable. There are no voting trusts, shareholder agreements, proxies or other agreements or understandings in effect with respect to the voting or transfer of any of the Ordinary Shares.
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(d) No Conflict. Assuming compliance with and obtaining of all filings, notifications, consents, approvals, authorizations and other required actions except as may result from any facts or circumstances relating solely to the Buyer, the execution, delivery and performance by the Seller of this Agreement will not (a) violate, conflict with or result in the breach of any provision of the certificate of incorporation or by laws (or similar organizational documents) of the Seller or the Company, (b) conflict with or violate any material law or governmental order applicable to the Seller or the Company or any of their respective assets, properties or businesses, or (c) conflict with, result in any breach of, constitute a default (or event which with the giving of notice or lapse of time, or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, or result in the creation of any encumbrance on any of the Ordinary Shares or any of the assets of the Seller or the Company pursuant to, any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license, permit, franchise or other instrument or arrangement to which the Company is a party or by which any of the Ordinary Shares or any of such assets or properties is bound or affected, except to the extent that such conflicts, breaches, defaults or other matters would not (i) adversely affect the ability of the Seller to carry out its obligations under, and to consummate the transaction contemplated by, this Agreement or (ii) adversely affect the ability of the Company to conduct its business.
(e) Tax Matters. Except as would not, individually or in the aggregate, have a material and adverse effect: (i) (A) the Company and its subsidiaries have filed all tax returns required to be filed by them, (B) all such tax returns are true, correct and complete, and (C) all taxes, whether or not shown as due on such tax returns, have been paid; in the case of each of clauses (A) through (C); and (ii) (A) no governmental authority has asserted any written claim, assessment or deficiency for taxes against the Company or any of its subsidiaries (and, to the knowledge of the Seller, no such claim, assessment or deficiency has been threatened or proposed in writing), except for deficiencies or proposed deficiencies that have been satisfied by payment, settled or withdrawn, and (B) no claim, audit or other proceeding by any governmental authority is pending or threatened in writing with respect to any taxes of the Company or any of its subsidiaries.
SECTION 3. Representations and Warranties of the Buyer. The Buyer represents and warrants to the Seller as of the date hereof as follows:
(a) Organization and Authority of the Buyer. The Buyer is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all necessary power and authority to enter into this Agreement and to carry out its obligations hereunder and to consummate the transaction contemplated hereby. The Buyer is duly licensed or qualified to do business and is in good standing in each jurisdiction which the operation of its business makes such licensing or qualification necessary. The execution and delivery of this Agreement by the Buyer, the performance by the Buyer of its obligations hereunder and the consummation by the Buyer of the transaction contemplated hereby have been duly authorized by all requisite corporate action on the part of the Buyer and its shareholders. This Agreement has been duly executed and delivered by the Buyer, and assuming due authorization, execution and delivery by the Seller this Agreement constitutes legal, valid and binding obligations of the Buyer, enforceable against the Buyer in accordance with their respective terms. All corporate actions taken by the Buyer have been duly authorized, and the Buyer has not taken any action that in any respect conflicts with, constitutes a default under or results in a violation of any provision of its memorandum or articles of association.
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(b) Organization, Authority and Qualification of Elison. Elison and all of its subsidiaries are corporations duly organized, validly existing and in good standing under the laws of the jurisdiction of their incorporation and have all necessary power and authority to own, operate or lease the properties and assets now owned, operated or leased by then and to carry on their businesses as they have been and are currently conducted. Elison is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the operation of its business makes such licensing or qualification necessary. All corporate actions taken by Elison and its subsidiaries have been duly authorized, and Elison and its subsidiaries have not taken any action that in any respect conflicts with, constitutes a default under or results in a material violation of any provision of their respective corporate organizational documents.
(c) Capitalization. The authorized share capital of Elison is US$50,000 divided into 50,000 ordinary shares of US$1.00 par value each, 10,000 of which are issued and outstanding as of the date of this Agreement. None of the issued and outstanding shares were issued in violation of any preemptive rights. There are no options, warrants, convertible securities or other rights, agreements, arrangements or commitments of any character relating to the Consideration Shares or obligating the Buyer or Elison to issue or sell any shares, or any other interest in, Elison. There are no outstanding contractual obligations of Eliso, or the Buyer with regards to Elison, to repurchase, redeem or otherwise acquire any shares or to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any other person. Upon consummation of the transaction contemplated by this Agreement and registration of the Consideration Shares in the name of the Seller in the stock records of Elison, the Seller, assuming it shall have purchased the Consideration Shares for value in good faith and without notice of any adverse claim, will own the Consideration Shares free and clear of all encumbrances. Upon consummation of the transaction contemplated by this Agreement, the Consideration Shares will be fully paid and nonassessable. There are no voting trusts, shareholder agreements, proxies or other agreements or understandings in effect with respect to the voting or transfer of any of the Consideration Shares.
(d) Tax Matters. Except as would not, individually or in the aggregate, have a material and adverse effect: (i) (A) Elison and its subsidiaries have filed all tax returns required to be filed by them, (B) all such tax returns are true, correct and complete, and (C) all taxes, whether or not shown as due on such tax returns, have been paid; in the case of each of clauses (A) through (C); and (ii) (A) no governmental authority has asserted any written claim, assessment or deficiency for taxes against Elison or any of its subsidiaries (and, to the knowledge of the Buyer, no such claim, assessment or deficiency has been threatened or proposed in writing), except for deficiencies or proposed deficiencies that have been satisfied by payment, settled or withdrawn, and (B) no claim, audit or other proceeding by any governmental authority is pending or threatened in writing with respect to any taxes of Elison or any of its subsidiaries.
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(e) No Conflict. Assuming compliance with and obtaining of all filings, notifications, consents, approvals, authorizations and other required actions except as may result from any facts or circumstances relating solely to the Seller, the execution, delivery and performance by the Buyer of this Agreement will not (a) violate, conflict with or result in the breach of any provision of the memorandum or articles of association of the Buyer or Elison, (b) conflict with or violate any law or governmental order applicable to the Buyer or Elison, or any of their respective assets, properties or businesses, or (c) conflict with, or result in any breach of, constitute a default (or event which with the giving of notice or lapse of time, or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license, permit, franchise or other instrument or arrangement to which the Buyer or Elison is a party, which would adversely affect the ability of the Buyer to carry out its obligations under, and to consummate the transaction contemplated by this Agreement.
SECTION 4. Indemnification. The representations and warranties of the Seller and the Buyer made pursuant to Section 2 and Section 3 shall survive the Closing until the first (1^st^) anniversary of the Closing Date; provided, however, that any representations and warranties the breach or violation of which is made the basis of a claim for indemnification will survive until such time as such claim is finally resolved in accordance with this Agreement.
(a) The Seller hereby agrees to indemnify and hold harmless the Buyer from and against any and all liabilities, losses, damages, claims, costs and expenses, interest, awards, judgments and penalties (including reasonable and documented attorneys’ and consultants’ fees and expenses) actually paid, suffered, incurred by, or imposed upon, them (including any action brought or otherwise initiated by any of them) (any of the foregoing, a “Loss”) arising out of or resulting from any breach of any of the Seller’s representations.
(b) The Buyer hereby agrees to indemnify and hold harmless the Seller from and against any and all Losses arising out of or resulting from any breach of any of the Buyer’s representations.
(c) Limits on Indemnification. The Seller and the Buyer (each, an “Indemnifying Party”) shall not be liable for any claim for indemnification pursuant to this Section 4(a) or 4(b), respectively, unless and until the aggregate amount of indemnifiable Losses which may be recovered from such Indemnifying Party equals or exceeds Twenty thousand dollars (US$20,000)] whereupon the Seller and the Buyer, respectively, shall be entitled to indemnification for the full amount of such Losses. In no event shall the aggregate indemnification actually paid by an indemnifying party for a breach of their respective representations and warranties taken together with all other indemnification actually paid by such indemnifying party exceed Seven Hundred and Twenty Thousand dollars (US$720,000).
(d) Notice of Loss. The Seller and the Buyer shall give the other party notice of any matter which they have determined has given or could give rise to a right of indemnification under this Agreement, within thirty (30) days of such determination, stating the amount of the Loss, if known, and method of computation thereof, and containing a reference to the provisions of this Agreement in respect of which such right of indemnification is claimed or arises.
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(e) Indemnification Payments. Any indemnification obligation of an Indemnifying Party under this Section 4 will be settled solely through delivery to the indemnified party of such number of Consideration Shares that are equal in value to the finally determined amount of indemnification determined. The Seller and the Buyer hereby agree to report each indemnification payment made in respect of any Losses as an adjustment to the Purchase Price for tax purposes to the extent permitted by applicable law and shall file all tax returns in a manner consistent with the foregoing. The value of the Consideration Shares shall be the same value attributable to such shares as of the Closing Date. In no event shall any indemnifying party be required to pay or reimburse its indemnification obligations with cash. Notwithstanding the foregoing, in lieu of delivering all or a portion of the Consideration Shares otherwise deliverable to an indemnified party in accordance with this Section 4, the indemnifying party may pay the value of such Consideration Shares, as determined in accordance with this Section 4(e), to the indemnified party, in cash. For the avoidance of doubt, any such payment in cash shall be counted towards the limit on the aggregate amount of all Losses for which the indemnifying party shall be liable pursuant to Section 4(d), as if the Consideration Shares themselves had been delivered.
(f) Exclusive Remedy. From and after the Closing, except with respect to fraud claims or claims seeking injunctions, specific performance or other equitable relief, or claims under covenants and agreements contained herein that by their terms expressly require performance after the Closing but only with respect to that portion of such covenant or agreement that is expressly to be performed following the Closing, indemnification pursuant to this Section 4 by the delivery of Consideration Shares (or cash in lieu thereof, at the election of the indemnifying party) as provided in Section 4(e) shall be the sole and exclusive remedy for the indemnified party with respect to matters arising under this Agreement of any kind or nature, including for any misrepresentation or breach of any warranty, covenant, or other provision contained in this Agreement or in any certificate or instrument delivered pursuant to this Agreement or otherwise relating to the subject matter of this Agreement.
SECTION 5. Miscellaneous.
(a) No Third-Party Beneficiaries. This Agreement shall not confer any rights or remedies upon any person or entity other than the parties and their respective successors and assigns.
(b) Entire Agreement. This Agreement constitutes the entire agreement between the parties and supersede any prior understandings, agreements, or representations by or between the parties hereto, written or oral, to the extent they relate in any way to the subject matter hereof.
(c) Succession and Assignment. This Agreement and any rights and obligations hereunder shall not be assigned by operation of law or otherwise without the express written consent of the other parties and any such attempted assignment without such consent shall be null and void. In the case where such consent is obtained, this Agreement shall be binding upon and inure to the benefit of, and be enforceable by, the respective assigns to the parties hereto.
(d) Disclaimer of Other Representations and Warranties. Except for the representations and warranties set forth in Section 2 and Section 3, the parties hereto expressly disclaim any and all representations or warranties of any nature (express or implied).
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(e) Notices. All notices and other communications among the parties hereto shall be in writing and shall be deemed to have been duly given (a) when delivered in person, (b) when delivered after posting in the national mail having been sent registered or certified mail return receipt requested, postage prepaid, (c) when delivered by FedEx or other internationally recognized overnight delivery service, or (d) when delivered by facsimile (solely if receipt is confirmed) or email (so long as the sender of such email does not receive an automatic reply from the recipient’s email server indicating that the recipient did not receive such email), addressed as follows:
| If<br> to the Seller: | Flywheel<br> Advanced Technology, Inc. |
|---|---|
| 23<br> West Nye Lane, Suite 455, | |
| Carson<br> City, NV 89706 | |
| Attention:<br> Tang Siu Fung | |
| President<br> and Chief Executive Officer | |
| with<br> a copy to (which shall not constitute notice): | |
| The<br> Crone Law Group P.C. | |
| 420<br> Lexington Avenue, Suite 2446 | |
| New<br> York, NY 10170 | |
| Attention:<br> Mark Crone, Esq. | |
| Email:<br> mcrone@cronelawgroup.com | |
| If<br> to the Buyer: | Ms.<br> Tin Sze Wai |
| --- | --- |
| Unit<br> 408B & C, 4/F, | |
| Lippo<br> Sun Plaza, No. 28 Canton Road, | |
| Tsim<br> Sha Tsui, Kowloon, Hong Kong |
(f) Counterparts. This Agreement may be executed in one or more counterparts (including by means of facsimile), each of which shall be deemed an original but all of which together will constitute one and the same instrument.
(g) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada applicable to contracts executed in and to be performed in that State without giving effect to any choice or conflict of law provision or rule.
(h) Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.
[Remainderof page left intentionally blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
| MERICORN<br> COMPANY LIMITED | |
|---|---|
| By: | /s/<br> Tin Sze Wai |
| Name: | Tin<br> Sze Wai |
| Title: | Director |
| FLYWHEEL<br> ADVANCED TECHNOLOGY, INC. | |
| By: | /s/<br> Tang Siu Fung |
| Name: | Tang<br> Siu Fung |
| Title: | Director |
ACKNOWLEDGED AND AGREED:
Elison, by its signature below, acknowledges and confirms the agreements, representations and warranties of the Buyer herein in respect of Elison and confirms it has taken, as will take, all necessary and appropriate actions to consummate the provisions of this Agreement.
| ELISON<br> VIRTUS COMPANY LIMITED | |
|---|---|
| By: | /s/<br> Tin Sze Wai |
| Name: | Tin<br> Sze Wai |
| Title: | Director |
| Date: | 05<br> July 2024 |
[SignaturePage to Share Purchase Agreement]
Exhibit 99.1
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated balance sheet and statements of operations are based upon the historical consolidated financial statements of Flywheel Advanced Technology, Inc. (the “Company,” “FWFW,” “we,” or “our”). The unaudited proforma condensed consolidated financial information has been prepared to illustrate the effect of the sale (the “Mega Fortune Disposition”) by the Company, of all of the equity associated with the Company’s Mega Fortune Company Limited, which is comprised of the Company’s subsidiaries Pontes Fides Company Limited, QBS System Limited and QBS System Pty Ltd, pursuant to a Share Purchase Agreement, dated as of July 5, 2023, by and among the Company and Mericorn Company Limited (the “Buyer”). The Mega Fortune Company Limited and its subsidiaries are engaged in the business of provision of IoT maintenance and support services, IoT BPO services and IoT development services in Hong Kong and Australia. For a detailed description of the Mega Fortune Company Limited and its subsidiaries please see Note 1 of the accompanying unaudited pro forma condensed consolidated financial information.
The unaudited pro forma condensed consolidated balance sheet as of December 31, 2023 has been prepared by including the unaudited historical condensed consolidated balance sheet of FWFW as of December 31, 2023, adjusted to reflect the pro forma effect as if the Mega Fortune Disposition had been occurred on that date. The unaudited pro forma condensed consolidated statement of operations for the three months ended December 31, 2023 and the unaudited pro forma condensed consolidated statement of operations for the year ended September 30, 2023 have been prepared by including the Company’s historical condensed consolidated statements of operations, adjusted to reflect the pro forma effect as if the Mega Fortune Company Limited and its subsidiaries had been occurred on March 22, 2023, the date of acquisition of subsidiaries.
The historical consolidated financial statements referred to above for FWFW were included in its Quarterly Report on Form 10-Q for the three months ended December 31, 2023 (unaudited) and Annual Report on Form 10-K for the year ended September 30, 2023, each previously filed with the Securities and Exchange Commission (the “ SEC”). The accompanying unaudited pro forma condensed consolidated financial information and the historical consolidated financial information presented herein should be read in conjunction with the historical consolidated financial statements and notes thereto of FWFW.
The unaudited pro forma condensed consolidated financial information was prepared for information purposes only and is not necessarily indicative of the financial position or results of operations that would have occurred if the Mega Fortune Disposition had been completed on the dates indicated, nor is it indicative of the future financial position or results of operations of the Company. Assumptions and estimates underlying the pro forma adjustments are described in the accompanying notes, which should be read in conjunction with the unaudited pro forma condensed consolidated financial information. The accounting for the Mega Fortune Disposition is dependent upon final balances related to the assets and liabilities at the closing date that have yet to progress to a stage where there is sufficient information for a definitive measurement. Due to the fact that the unaudited pro form condensed consolidated financial information has been prepared based upon preliminary estimates, and account balances other than those on the actual Mega Fortune Disposition closing date, the final amounts recorded for the Mega Fortune Disposition may differ materially from the pro forma condensed consolidated financial information presented.
The unaudited pro forma condensed consolidated financial information does not reflect future events that may occur after the Mega Fortune Disposition, including potential restructuring and related general and administrative cost savings. The pro forma adjustments are subject to change and are based upon currently available information.
FLYWHEELADVANCED TECHNOLOGY, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2023
| Historical | Pro Forma Adjustments | Pro Forma Consolidated | |||||||
|---|---|---|---|---|---|---|---|---|---|
| ASSETS | |||||||||
| CURRENT ASSETS | |||||||||
| Cash and equivalents | $ | 316,367 | {b} | $ | (316,367 | ) | $ | - | |
| Accounts receivable, net of | 1,731,588 | {b} | (1,731,588 | ) | - | ||||
| Due from related parties | 121,415 | {b} | (121,415 | ) | - | ||||
| Prepaid expenses and other current assets | 392,081 | {b} | (390,082 | ) | 1,999 | ||||
| Deferred taxes assets | 18,818 | {b} | (18,818 | ) | - | ||||
| Total Current Assets | 2,580,269 | (2,578,270 | ) | 1,999 | |||||
| INVESTMENTS | - | {a} | 7,230,000 | 7,230,000 | |||||
| PROPERTY, PLANT AND EQUIPMENT, | 9,763 | {b} | (9,763 | ) | - | ||||
| GOODWILL | 1,840,202 | {b} | (1,840,202 | ) | - | ||||
| ACQUISITION-RELATED INTANGIBLES | 142,263 | {b} | (142,263 | ) | - | ||||
| RIGHT-OF-USE ASSETS | 19,053 | {b} | (19,053 | ) | - | ||||
| TOTALASSETS | $ | 4,591,550 | $ | 2,640,449 | $ | 7,231,999 | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
| CURRENT LIABILITIES | |||||||||
| Bank overdraft | 127,983 | {b} | $ | (127,983 | ) | $ | - | ||
| Bank loans - current portion | 109,983 | {b} | (109,983 | ) | - | ||||
| Accounts payable | 30,482 | {b} | (30,482 | ) | - | ||||
| Accrued expenses and other current liabilities | 220,028 | {b} | (142,615 | ) | 77,413 | ||||
| Due to related parties | 776,004 | {b} | (173,937 | ) | 602,067 | ||||
| Operating leases liabilities | 22,466 | {b} | (22,466 | ) | - | ||||
| Income tax payable | 53,556 | {b} | (53,556 | ) | - | ||||
| Total current liabilities | 1,340,502 | (661,022 | ) | 679,480 | |||||
| LONG-TERM LIABILITIES | |||||||||
| Bank loans | 453,091 | {b} | (453,091 | ) | - | ||||
| Deferred tax liabilities – arising from fair value gain | 23,474 | {b} | (23,474 | ) | - | ||||
| Total long-term liabilities | 476,565 | (476,565 | ) | - | |||||
| Total Liabilities | 1,817,067 | (1,137,587 | ) | 679,480 | |||||
| COMMITMENTSAND CONTINGENCIES | - | - | - | ||||||
| STOCKHOLDERS’ EQUITY | |||||||||
| Common stock | 2,966 | - | 2,966 | ||||||
| Paid in capital | 6,677,222 | - | 6,677,222 | ||||||
| Accumulated other comprehensive income | 5,852 | {d} | (5,852 | ) | - | ||||
| Accumulated deficit | (3,911,557 | {c}{d} | 3,783,888 | (127,669 | ) | ||||
| Total Stockholders’ Equity | 2,774,483 | 3,778,036 | 6,552,519 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 4,591,550 | $ | 2,640,449 | $ | 7,231,999 |
All values are in US Dollars.
See accompanying notes to pro forma condensed consolidated financial statements.
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FLYWHEELADVANCED TECHNOLOGY, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
FORTHE THREE MONTHS ENDED DECEMBER 31, 2023
| ****<br><br>Historical | Pro Forma Adjustments | Pro Forma <br>Consolidated | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| REVENUE, NET | $ | 625,809 | {e} | $ | (625,809 | ) | $ | - | ||
| COST OF REVENUE | (414,378 | ) | {e} | 414,378 | - | |||||
| GROSS PROFIT | 211,431 | (211,431 | ) | - | ||||||
| OPERATING EXPENSES | ||||||||||
| Sales and marketing | 22,278 | {e} | (22,278 | ) | - | |||||
| General and administrative | 336,087 | {e} | (166,799 | ) | 169,288 | |||||
| Depreciation and amortization | 31,387 | {e} | (31,387 | ) | - | |||||
| Total Operating Expenses | 389,752 | (220,464 | ) | 169,288 | ||||||
| OPERATINGLOSS | (178,321 | ) | 9,033 | (169,288 | ) | |||||
| ****<br><br>OTHER INCOME (EXPENSES) | ||||||||||
| Other income | 103,801 | {e} | (103,801 | ) | - | |||||
| Interest expense, net | (5,186 | ) | {e} | 5,186 | - | |||||
| Total Other Income | 98,615 | (98,615 | ) | - | ||||||
| LOSS BEFORE INCOME TAXES | (79,706 | ) | (89,582 | ) | (169,288 | ) | ||||
| Income taxes | (8,604 | ) | {h} | 8,604 | - | |||||
| NET LOSS | $ | (88,310 | ) | **** | $ | (80,978 | ) | $ | (169,288 | ) |
| OTHER COMPREHENSIVE INCOME | ||||||||||
| Foreign currency translation gains | 8,543 | (8,543 | ) | - | ||||||
| COMPREHENSIVE LOSS | $ | (79,767 | ) | **** | $ | (89,521 | ) | $ | (169,288 | ) |
| Net loss per share, basic and diluted | $ | (0.00 | ) | $ | (0.01 | ) | ||||
| Weighted average shares outstanding, | ||||||||||
| basic and diluted | 29,662,164 | 29,662,164 |
See accompanying notes to pro forma condensed consolidated financial statements.
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FLYWHEELADVANCED TECHNOLOGY, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS
FORTHE YEAR ENDED SEPTEMBER 30, 2023
| ****<br><br>Historical | Pro Forma Adjustments | Pro Forma <br>Consolidated | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| REVENUE, NET | $ | 1,448,176 | {e} | $ | (1,448,176 | ) | $ | - | ||
| COST OF REVENUE | (961,818 | ) | {e} | 961,818 | - | |||||
| ****<br><br>GROSS PROFIT | 486,358 | (486,358 | ) | - | ||||||
| ****<br><br>OPERATING EXPENSES | ||||||||||
| Sales and marketing | 57,592 | {e} | (57,592 | ) | - | |||||
| General and administrative | 1,768,269 | {e}{g} | (417,206 | ) | 1,351,063 | |||||
| Depreciation and amortization | 74,638 | {e} | (74,638 | ) | - | |||||
| Total Operating Expenses | 1,900,499 | (549,436 | ) | 1,351,063 | ||||||
| OPERATING LOSS | (1,414,141 | ) | 63,078 | (1,351,063 | ) | |||||
| OTHER INCOME (EXPENSES) | ||||||||||
| Other income | 344,461 | {e} | (344,461 | ) | - | |||||
| Gains on disposal of subsidiaries | - | {f} | 4,101,140 | 4,101,140 | ||||||
| Interest expense, net | (10,752 | ) | {e} | 10,752 | - | |||||
| Total<br> Other Income | 333,709 | 3,767,431 | 4,101,140 | |||||||
| (LOSS)INCOME BEFORE INCOME TAXES | (1,080,432 | ) | 3,830,509 | 2,750,077 | ||||||
| Income taxes | (2,357 | ) | {h} | 2,357 | - | |||||
| NET (LOSS) INCOME | $ | (1,082,789 | ) | **** | $ | 3,832,866 | $ | 2,750,077 | ||
| OTHERCOMPREHENSIVE LOSS | ||||||||||
| Foreign currency translation (loss) | (2,691 | ) | 2,691 | - | ||||||
| COMPREHENSIVE (LOSS) INCOME | $ | (1,085,480 | ) | $ | 3,835,557 | $ | 2,750,077 | |||
| Netloss per share, basic and diluted | $ | (0.05 | ) | $ | 0.12 | |||||
| Weighted average shares outstanding, | ||||||||||
| basic and diluted | 23,549,970 | {d} | 23,549,970 |
See accompanying notes to pro forma condensed consolidated financial statements.
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FLYWHEELADVANCED TECHNOLOGY, INC.
Notesto Unaudited Pro Forma Condensed Consolidated Financial Information
| Note<br> 1 | Description<br> of Transaction |
|---|---|
| On<br> July 5, 2024, Flywheel Advanced Technology, Inc. (the “Company,” “FWFW,” “we,” or “our”)<br> and Mega Fortune Company Limited, its wholly-owned subsidiary, completed the sale (the “Mega Fortune Disposition”) to<br> Mericorn Company Limited (the “Buyer”), of all of the equity associated with the Company ‘ s Mega Fortune Company<br> Limited, which is comprised of the Company’ s subsidiaries Pontes Fides Company Limited, QBS System Limited and QBS<br> System Pty Ltd, pursuant to a Share Purchase Agreement, dated as of July 5, 2023. The Mega Fortune Company Limited and its subsidiaries<br> are engaged in the business of provision of IoT maintenance and support services, IoT BPO services and IoT development services in<br> Hong Kong and Australia. Under the terms of the Share Purchase Agreement, the Buyer paid HK56,360,000 (or approximately 7,230,000)<br> by the transfer of 938 shares of the Buyer’s wholly owned subsidiary, Elison Virtus Company Limited (“Elison”)<br> from the Buyer to the Company for the Mega Fortune Disposition. | |
| Note<br> 2 | Basis<br> of Presentation |
| The<br> unaudited pro forma condensed consolidated balance sheet and statements of operations are based upon the historical consolidated<br> financial statements of FWFW, which were included in its Annual Report on Form 10-K for the fiscal year ended September 30, 2023,<br> and its Quarterly Report on Form 10-Q for the three months ended December 31, 2023, each previously filed with the Securities and<br> Exchange Commission. The unaudited pro forma condensed consolidated balance sheet as of December 31, 2023 has been prepared by including<br> the unaudited historical condensed consolidated balance sheet of FWFW as of December 31, 2023, adjusted to reflect the pro forma<br> effect as if the Mega Fortune Disposition had been occurred on that date. The unaudited pro forma condensed consolidated statement<br> of operations for the three months ended December 31, 2023 and the unaudited pro forma condensed consolidated statement of operations<br> for the year ended September 30, 2023 have been prepared by including the Company’s historical condensed consolidated statements<br> of operations, adjusted to reflect the pro forma effect as if the Mega Fortune Disposition had been occurred on March 22, 2023, the<br> date of acquisition of subsidiaries. | |
| Note<br> 3 | Pro<br> Forma Adjustment |
| Explanations<br> of the adjustments to the pro forma balance sheets are as follows: | |
| {a} | |
| {b} | |
| {c} | |
| {d} |
All values are in US Dollars.
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FLYWHEELADVANCED TECHNOLOGY, INC.
Notesto Unaudited Pro Forma Condensed Consolidated Financial Information
| Explanations of the adjustments to the pro forma statements of operations are as follows: | |
|---|---|
| {e} | Represents<br> the elimination of Revenue, Operating Costs and Expenses including; costs of revenue, depreciation of property, plant and equipment,<br> amortization of right-of-use assets, amortization of acquisition-related intangibles and selling, marketing and administration expenses<br> as well as interest expense net of interest income and other income, attributable to the Mega Fortune and its subsidiaries for the<br> periods presented. |
| {f} | Represents<br> the estimated gain on disposal of subsidiaries of $4.1 million as of March 22, 2023 |
| {g} | Represents<br> adjustments to recognize transaction related expenses of $32,000. |
| {h} | The<br> income tax effect resulting from the pro forma effect of the Mega Fortune Disposition based on the statutory tax rates in effect. |
| Note<br> 4 | Gain<br> on Sale |
| --- | --- |
| The<br> gain on the Mega Fortune Disposition, as if the transaction had been completed on December 31, 2023, is estimated at $3.8 million.<br> The gain on disposal of subsidiaries is not considered in the pro forma condensed consolidated statements of operations as it is<br> a nonrecurring credit. The actual amount of the gain will be based on the balances as of the closing date and may differ materially<br> from the pro forma gain amount. |
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