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UNITED STATES
SECURITIES 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) February 20, 2025
| SIGNING DAY SPORTS, INC. |
| (Exact name of registrant as specified in its charter) |
| Delaware |
|
001-41863 |
|
87-2792157 |
(State or other jurisdiction
of incorporation) |
|
(Commission File Number) |
|
(IRS Employer
Identification No.) |
| 8355 East Hartford Rd., Suite 100, Scottsdale, AZ |
|
85255 |
| (Address of principal executive offices) |
|
(Zip Code) |
Registrant’s telephone number, including area code (480) 220-6814
| |
| (Former 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 communications pursuant
to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to
Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications
pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications
pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class |
|
Trading Symbol(s) |
|
Name of each exchange on which registered |
| Common Stock, par value $0.0001 per share |
|
SGN |
|
NYSE American LLC |
Indicate by check
mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities
Exchange Act of 1934.
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.
Item 8.01 Other Events.
As previously reported in the Current Report on
Form 8-K filed by the Company with the Securities and Exchange Commission on January 29, 2025 (the “January 2025 Form 8-K”),
on January 28, 2025, the Company entered into a Stock Purchase Agreement, dated as of January 28, 2025 (the “Purchase Agreement”),
among the Company, Dear Cashmere Group Holding Company, a Nevada corporation (“DRCR”), James Gibbons (“Gibbons”),
and Nicolas Link (together with Gibbons, the “Sellers”). The Purchase Agreement provides that, subject to the satisfaction
or waiver of the conditions set forth in the Purchase Agreement, the Company will consummate the transactions (the “Transactions”)
contemplated by the Purchase Agreement at the date of the closing of the Transactions (the “Closing”). The Transactions will
include (a) the Company’s issuance to the Sellers of (i) shares of common stock, par value $0.0001 per share, of the Company (the
“Company Common Stock”), constituting 19.99% of its outstanding shares of the Company Common Stock (the “Common Stock
Consideration”); and (ii) an aggregate of 19,782.720 shares of a Series A Convertible Preferred Stock, par value $0.0001 per share,
of the Company (the “Company Preferred Stock”), which will automatically convert, subject to the Stockholder Approval (as
defined in the January 2025 Form 8-K) and the listing clearance of The Nasdaq Stock Market LLC (“Nasdaq”), into 19,782,720
shares of Company Common Stock (the “Preferred Stock Consideration” and together with the Common Stock Consideration, the
“Company Stock Consideration”) in accordance with the Preferred Stock Certificate of Designation (as defined in the January
2025 Form 8-K) (such conversion, the “Preferred Stock Conversion”); and (b) the Sellers’ sale and transfer to the Company
of the number of shares of common stock, par value $0.001 per share, and preferred stock, par value $0.001 per share, of DRCR, that represent
in the aggregate 99.13% of the issued and outstanding capital stock of DRCR and 99.13% of the aggregate voting power of DRCR.
The Purchase Agreement contemplates that: (a)
the Company may enter into agreements with additional stockholders of DRCR to purchase their shares of DRCR, pursuant to the terms and
conditions set forth in the respective purchase agreements (the “Additional Agreements”); (b) upon the Closing, DRCR will
function as an operating subsidiary of the Company, and the Company will consolidate the financial results and information of DRCR with
its own; (c) the Company has obtained an opinion of a financial advisor to the board of directors of the Company (the “Board”)
to the effect that, as of the date of such opinion, and based on and subject to the assumptions, limitations, qualifications and other
matters set forth in such opinion, the Transactions are fair, from a financial point of view, to the stockholders of the Company, and
has provided a copy of the written opinion to DRCR, solely for informational purposes; and (d) subsequent to the Closing, subject to receipt
of any necessary stockholder, regulatory, and stock exchange consents or approvals, the Company will acquire the remaining outstanding
equity ownership of the Company through a merger of DRCR into the Company or a wholly-owned subsidiary of the Company (the “Merger”).
The Purchase Agreement provides that if, at the
effective time of the Merger, the Company has indebtedness for borrowed money or liabilities in excess of $150,000 relating to the period
prior to the Closing (the “Aggregate Company Liabilities”), then, as soon as practicable following the closing of the Merger,
the Company will issue a number of shares of Company Common Stock to the former stockholders of DRCR equal to the Aggregate Company Liabilities
divided by the quotient obtained by dividing $170,000,000 by the number of shares of the Company Common Stock outstanding at the effective
time of the Merger on a fully-diluted basis.
The Purchase Agreement provides that Maxim Partners
LLC (or its designees) (“Maxim”) will be issued a number of shares of Company Preferred Stock equal to 3.0% of the total outstanding
shares of the Company after giving effect to the Closing on a fully diluted and as converted basis, pursuant to the terms of the letter
agreement between DRCR and Maxim dated April 18, 2024.
Pursuant to the Purchase Agreement, the Board
has (a) approved and adopted the Purchase Agreement and the Transactions, (b) determined that the Purchase Agreement, the Transactions,
and the Merger are advisable and in the best interest of the stockholders of the Company, (c) approved, adopted and declared advisable
the payment of the Company Stock Consideration, (d) directed that (i) the approval of the issuance of the shares of Company Common Stock
underlying the Preferred Stock Consideration pursuant to the Preferred Stock Conversion, (ii) the third amended and restated certificate
of incorporation of the Company in form and substance mutually agreeable to the Company, the Sellers and DRCR, including the change of
the name of the Company to such name as will be designated by the Sellers (the “Amended Company Charter”), and (iii) the election
of the New Directors (as defined in the January 2025 Form 8-K) be submitted for consideration at the Stockholders Meeting (as defined
in the January 2025 Form 8-K), and (e) recommended to the stockholders of the Company that they approve the Preferred Stock Conversion,
the Amended Company Charter and the election of the New Directors.
In connection with the Purchase Agreement, the
Transactions, the Additional Agreements, and the Merger, the Company has prepared a document describing certain risk factors related to
the Purchase Agreement, the Transactions, the Additional Agreements, and the Merger, and is providing certain historical financial statements
of DRCR and certain pro forma financial information giving effect to the consummation of the Transactions, the Additional Agreements,
and the Merger which are attached hereto as Exhibit 99.1 and Exhibits 99.2, 99.3, and 99.4, respectively, and are incorporated herein
by reference.
Item
9.01 Financial Statements and Exhibits.
In connection with the Purchase Agreement, the
Transactions, the Additional Agreements, and the Merger, the following financial statements are to be filed as part of this report:
(a) Financial Statements of Probable Business
Acquisition
(i) Audited consolidated balance sheets of DRCR as of December 31,
2023 and 2022, the consolidated statements of income, other comprehensive income, stockholders’ equity, and cash flows of DRCR for
each of the two years in the period ended December 31, 2023, the notes related thereto, and the Report of Independent Registered Public
Accounting Firm Bush & Associates CPA LLC, dated February 20, 2025, are filed herewith as Exhibit 99.2 and are incorporated into this
Item 9.01(a) by reference.
(ii) Unaudited consolidated financial statements
of DRCR as of and for the nine months ended September 30, 2024 and 2023, and the notes related thereto, are filed herewith as Exhibit
99.3 and are incorporated into this Item 9.01(a) by reference.
(b) Pro Forma Financial Information.
(i) Unaudited pro forma combined condensed financial
statements of the Company and DRCR as of and for the nine months ended September 30, 2024 and for the fiscal year ended December 31, 2023,
and the notes related thereto, giving effect to the Transactions, the Additional Agreements, and the Merger, are filed herewith as Exhibit
99.4 and are incorporated into this Item 9.01(b) by reference.
(d) Exhibits
| Exhibit No. |
|
Description |
| 23.1 |
|
Consent of Bush & Associates CPA LLC |
| 99.1 |
|
Risk Factors |
| 99.2 |
|
Audited consolidated balance sheets of Dear Cashmere Group Holding Company as of December 31, 2023 and 2022, the consolidated statements of income, other comprehensive income, stockholders’ equity, and cash flows of Dear Cashmere Group Holding Company for each of the two years in the period ended December 31, 2023, the notes related thereto, and the Report of Independent Registered Public Accounting Firm Bush & Associates CPA LLC, dated February 20, 2025 |
| 99.3 |
|
Unaudited condensed consolidated financial statements of Dear Cashmere Group Holding Company as of and for the nine months ended September 30, 2024 and 2023, and the notes related thereto |
| 99.4 |
|
Unaudited pro forma combined condensed financial statements of Signing Day Sports, Inc. and Dear Cashmere Group Holding Company as of and for the nine months ended September 30, 2024 and for the fiscal year ended December 31, 2023, and the notes related thereto |
| 104 |
|
Cover Page Interactive Data File (embedded with 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 hereunto
duly authorized.
| Date: February 20, 2025 |
Signing Day Sports, Inc. |
| |
|
| |
/s/ Daniel Nelson |
| |
Name: |
Daniel Nelson |
| |
Title: |
Chief Executive Officer |
3
Exhibit 23.1
Consent of Independent Registered Public Accounting
Firm
We consent to the incorporation by reference in the
Registration Statement on Form S-3 (File No. 333-283559), Registration Statements on Form S-1 (File No. 333-281322 and 333-280700), and
Registration Statements on Form S-8 (333-282319, 333-277566, 333-275582, and 333-275581), of Signing Day Sports, Inc. of our report dated
February 20, 2025, relating to the financial statements of Dear Cashmere Group Holding Company as of and for the years ended December
31, 2023 and 2022.
Very truly yours,
/s/ Bush & Associates CPA LLC
Bush & Associates CPA LLC (PCAOB 6797)
Henderson, Nevada
February 20, 2025
Exhibit 99.1
RISK FACTORS
Unless stated otherwise or dictated by context,
all capitalized terms used herein but not defined shall have the meanings set forth in the Current Report on Form 8-K filed by Signing
Day Sports, Inc., a Delaware corporation (the “Company”), with the Securities and Exchange Commission to which this risk factors document is attached (the “Form 8-K”).
The following risks and uncertainties could
have a material adverse effect on the Company’s business, financial condition and results of operations. Additional risks and uncertainties
not presently known to the Company or that the Company currently deems immaterial may also impair the Company’s business operation,
financial condition or results.
Risks Relating to the Consummation of the Transactions,
Additional Agreements, and the Merger
Failure to complete the Transactions, any
Additional Agreements, and the Merger could negatively impact the Company.
If the Transactions, any Additional Agreements,
and the Merger are not completed for any reason, there may be various adverse consequences, and the Company may experience negative reactions
from the financial markets, as well as from its customers and employees. For example, the Company’s business may have been adversely
impacted by the failure to pursue other beneficial opportunities due to management’s focus on the Transactions, any Additional Agreements,
and the Merger, without realizing any of the anticipated benefits of completing the Transactions, any Additional Agreements, and the Merger.
Additionally, the market price of the Company Common Stock could decline to the extent that current market prices reflect a market assumption
that the Transactions, any Additional Agreements, and the Merger will be completed. The Company could also be subject to litigation related
to the failure to consummate the Transactions, any Additional Agreements, and the Merger or to proceedings commenced against the Company
to perform its obligations pursuant to the Purchase Agreement.
Additionally, the Company has incurred and may
incur substantial expenses in connection with the negotiation and completion of the transactions contemplated by the Purchase Agreement,
as well as the costs and expenses of preparing, filing, printing, and mailing any necessary joint proxy statement/prospectus, and all
filing and other fees paid in connection with the Transactions, any Additional Agreements, and the Merger. If the Transactions, any Additional
Agreements, and the Merger are not consummated, the Company would have paid these expenses without realizing the expected benefits of
the Transactions, any Additional Agreements, and the Merger.
The Company may not be able to satisfy the
requirements for the Closing under the Purchase Agreement, which may cause material adverse consequences due to the consequent failure
to complete the Transactions, any Additional Agreements, and the Merger.
The Closing is contingent upon the Company
meeting a number of conditions, including the approval of the Company’s initial listing application to list the Company Common Stock
on The Nasdaq Capital Market tier of Nasdaq; the Company’s ability to provide evidence to DRCR and the Sellers that it has satisfied
all indebtedness for borrowed money of the Company and has satisfied all material liabilities of the Company, including all accounts payables
owed to financial advisors, service providers and others; and the receipt of certain other deliverables. There is no assurance that the
Company will be able to meet Nasdaq’s minimum listing requirements, provide evidence that has satisfied all such indebtedness, or
satisfy the other conditions to the Closing. If the Company fails to satisfy the requirements of Closing by the 30th day following the
date of the Purchase Agreement, or February 27, 2025, then DRCR or the Sellers may terminate the Purchase Agreement immediately unless
they are in material breach of the Purchase Agreement and such breach proximately caused the failure, and the Company will be unable to
consummate the Transactions and the Merger, which may cause material adverse consequences.
Failure to obtain the Stockholder Approval
could result in significant disruption of business operations.
Even if the consummation of the Transactions occurs,
if the Company does not obtain the Stockholder Approval before the deadline set forth in the Purchase Agreement, then the Company will
be required to unwind the Transactions by repurchasing all of the Company Common Stock and Company Preferred Stock from the Sellers and
returning the shares of DRCR acquired from them within 15 calendar days of such deadline. This mandatory repurchase and unwinding of the
Transactions may have significant and adverse effects on the Company’s business operations and could result in the loss of key assets
and personnel, the threat of litigation over disagreements between the parties on how to implement the unwinding, and many or all of the
negative consequences discussed throughout this document that would apply to the Company if it is unable to successfully consummate the
Transactions, any Additional Agreements, and the Merger or that may apply regardless of whether the Company is able to successfully consummate
the Transactions, any Additional Agreements, and the Merger. The inability to secure the Stockholder Approval could also undermine investor
confidence, which may further negatively influence the Company’s stock price and market reputation.
The Company and DRCR will incur substantial
costs related to the Transactions, the Additional Agreements, the Merger and integration of their businesses.
The Company and DRCR have incurred and expect
to incur a number of non-recurring costs in furtherance of the consummation of the Transactions, any Additional Agreements, and the Merger,
including legal, financial advisory, accounting, consulting, and other advisory fees; regulatory filing fees; financial printing and other
transaction-related costs. Some of these costs are payable by either the Company or DRCR whether the Transactions, any Additional Agreements,
and the Merger are completed or not. Additionally, the integration costs following the Transactions and the Merger’s completion
may be substantial, and may include expenses related to facilities and systems consolidation, employment-related obligations, and efforts
to maintain employee morale and retain key personnel. These costs may stem from the complex integration of numerous processes, policies,
operations, technologies, and systems across areas such as purchasing, accounting, finance, payroll, compliance, treasury and vendor management,
risk management, business operations, pricing, and employee benefits.
While the Company and DRCR estimate a certain
level of integration costs, many factors beyond their control could increase the total amount and timing of these expenses. Additionally,
many of these costs are inherently difficult to estimate with precision. As a result, assuming that the Transactions, any Additional Agreements,
and the Merger are consummated, the combined company may need to take charges against earnings following the Transactions, any Additional
Agreements, and the Merger, and the amount and timing of such charges are uncertain. There can be no assurance that the transaction and
integration costs will not outweigh any benefits of the consummation of the Transactions, any Additional Agreements, and the Merger, assuming
that they occur.
The Company and DRCR may fail to realize
the anticipated benefits of the Transactions, any Additional Agreements, and the Merger.
Assuming that the consummation of the Transactions,
any Additional Agreements, and the Merger occurs, the result will be the combination of companies of significantly differing sizes, geographic
bases, and operations. The success of the Transactions, any Additional Agreements, and the Merger will depend, in part, on the ability
to realize the anticipated benefits from integrating the businesses of the Company and DRCR. To achieve these benefits, the Company and
DRCR must effectively merge and align their operations in a manner that permits the realization of those benefits and cost savings without
adversely affecting current revenues and future growth. If the Company and DRCR do not successfully integrate their operations, the anticipated
benefits of the consummation of the Transactions, any Additional Agreements, and the Merger may not be realized fully or at all, or they
may take longer to realize than expected. In addition, the actual cost savings achieved could be less than anticipated, and integration
may result in additional or unforeseen expenses. An inability to realize the full extent of the anticipated benefits, or any delays in
integrating the businesses, could adversely affect the revenues, expense levels, and operating results of the combined company, which
may negatively impact the value of the Company Common Stock.
It is also possible that combining the two businesses
could result in the disruption of ongoing operations or inconsistencies in standards, controls, procedures, and policies that adversely
affect the ability to maintain relationships with customers, clients, and employees, or to achieve the anticipated benefits and cost savings
of the Transactions, any Additional Agreements, and the Merger. Moreover, integration efforts may divert management’s attention
and resources, further impacting the combined company’s performance both during and after the integration period.
Furthermore, the Board and executive leadership
of the combined company will include individuals from both companies, which could require reconciling differing priorities and philosophies.
Any difficulties in effectively unifying these teams may also delay or prevent realization of the anticipated benefits of the Transactions,
any Additional Agreements, and the Merger.
Upon the Preferred Stock Conversion, existing
holders of the Company Common Stock will experience substantial dilution of their ownership interest in the Company, which could materially
reduce the value of their Company shareholdings.
Assuming that the Closing occurs, the Company
will issue the Preferred Stock Consideration to the Sellers as partial consideration for all their DRCR capital stockholdings. Thereafter,
the Preferred Stock Consideration, which carries no preferential economic, voluntary conversion, or voting rights, will automatically
convert into 19,782,720 shares of Company Common Stock upon the later of the Stockholder Approval or the clearance of the initial listing
application filed by the Company with Nasdaq, as set forth in the Company Preferred Stock Certificate of Designation and in accordance
with the Purchase Agreement. The Preferred Stock Conversion will result in an immediate and substantial increase in the number of outstanding
shares of Company Common Stock, and substantial dilution of existing Company stockholders’ ownership of and voting power in the
Company. Upon the consummation of any Additional Agreements and the Merger, the Company expects to issue additional shares of Company
Common Stock to the remaining DRCR stockholders. Following the Preferred Stock Conversion, the consummation of any Additional Agreements
and the Merger, existing Company stockholders are expected to own less than 10% of the combined company.
As such, existing stockholders should assume that
their ownership stake and influence will be severely reduced upon the Preferred Stock Conversion, and that such dilution will be compounded
upon the consummation of any Additional Agreements and the Merger.
Additionally, if the Company successfully registers
the resale of the Company Common Stock issuable upon the Preferred Stock Conversion pursuant to the Purchase Agreement, a substantial
number of shares may become freely tradable. The presence of these newly registered shares or the perception that they may be sold could
create an “overhang” in the market. Specifically, if the trading volume of the Company Common Stock cannot absorb the sales
of these newly registered shares, the price per share may decline.
The future results of the combined company
following the consummation of the Transactions, any Additional Agreements, and the Merger may suffer if it cannot effectively manage its
expanded operations.
Assuming that the consummation of the Transactions,
any Additional Agreements, and the Merger occurs, the size of the combined company’s business is expected to be significantly greater
than the current size of the Company’s business. The combined company’s future success will depend, in part, on its ability
to manage these expanded operations, which may pose challenges for management, including challenges related to oversight of new operations
and the associated increase in capital expenditures and complexity. The combined company may also face heightened scrutiny from governmental
and regulatory authorities as a result of its larger scale. However, there can be no assurance that the combined company will be successful
or that it will realize the operating efficiencies, revenue enhancements, or other benefits currently anticipated from the consummation
of the Transactions, any Additional Agreements, and the Merger.
The combined company may be unable to retain
the Company’s and/or DRCR’s personnel after the consummation of the Transactions, any Additional Agreements, and the Merger.
Assuming that the consummation of the Transactions,
any Additional Agreements, and the Merger occurs, their eventual success will depend in part on the combined company’s ability to
retain the talents and dedication of key employees currently employed by the Company and DRCR. It is possible that these employees may
decide not to remain with the Company or DRCR, as applicable, while the Transactions, any Additional Agreements, and the Merger are pending
or with the combined company after the Transactions, any Additional Agreements, and the Merger are consummated. If the Company and DRCR
are unable to retain key employees, including management, who are critical to the successful integration and future operations of the
companies, the lines of business conducted by the Company and DRCR prior to the consummation of the Transactions, any Additional Agreements,
and the Merger could face disruptions in their operations, loss of existing customers, loss of key information, expertise, or know-how,
and unanticipated recruitment costs. In addition, if key employees terminate their employment following the consummation of the Transactions,
any Additional Agreements, and the Merger, the combined company’s business activities may be adversely affected, and management’s
attention may be diverted from successfully hiring suitable replacements, all of which may cause the combined company’s business
to suffer. The combined company may be unable to locate or retain suitable replacements for any key employees who leave either company.
The unaudited pro forma combined consolidated
financial information of the Company and DRCR is preliminary and the actual consideration to be issued in the Transactions, any Additional
Agreements, and the Merger, as well as the actual financial condition and results of operations of the combined company after the Merger,
may differ materially.
The unaudited pro forma combined consolidated
financial information of the Company and DRCR is presented for illustrative purposes only and is not necessarily indicative of what the
combined company’s actual financial condition or results of operations would have been had the Transactions, any Additional Agreements,
and the Merger been completed on the dates indicated. The unaudited pro forma combined consolidated financial information reflects adjustments,
which are based upon preliminary estimates. Among other things, the actual value of the consideration that the Company receives upon the
consummation of the Transactions, any Additional Agreements, and the Merger, assuming that it occurs, may vary significantly from the
value used in preparing the unaudited pro forma combined consolidated financial information provided in tandem with these risk factors
and the Form 8-K of which they form a part. Accordingly, the final acquisition accounting adjustments may differ materially from the pro
forma adjustments reflected in the unaudited pro forma combined consolidated financial information.
The Company’s and DRCR’s directors,
executive officers and principal stockholders will have substantial control over the Company after the consummation of the Transactions,
any Additional Agreements, and the Merger, which could limit other stockholders’ ability to influence the outcome of corporate
matters and key transactions, including a change of control.
Upon the consummation of the Transactions, any
Additional Agreements, and the Merger, the Company’s executive officers, directors and principal stockholders and their affiliates
will own approximately 20.2 million shares of Company Common Stock, or approximately 91.1%
of the outstanding shares of the Company Common Stock, after giving effect to the Transactions, any Additional Agreements, and the Merger,
with the Sellers owning 20,147,561 shares, or approximately 90.9% of the outstanding shares
of the Company Common Stock, based on 1,843,765 shares of Company Common Stock outstanding as of February 19, 2025. This significant concentration of ownership may have a negative impact on the trading price of the Company Common Stock
because investors often perceive disadvantages in owning stock in companies with controlling stockholders. In addition, these
stockholders will be able to exercise a significant level of control over all matters requiring stockholder approval, including the election
of directors and the approval of mergers, acquisitions or other extraordinary transactions. They may also have interests that differ from
other stockholders of the Company and may vote in a way with which other stockholders of the Company disagree and which may be adverse
to the Company’s interests. This concentration of ownership may have the effect of delaying, preventing or deterring a change of
control of the Company, could deprive the Company’s stockholders of an opportunity to receive a premium for their common stock as
part of a sale of the Company and might ultimately affect the market price of the Company Common Stock.
Certain of the Company’s and DRCR’s
directors and executive officers may have other interests that may differ from, or are in addition to, the interests of the Company’s
stockholders.
In addition to the conflicts of interest described
above, the Company’s stockholders should be aware that some of the Company’s and DRCR’s directors and executive officers
may have other interests and arrangements that are different from, or in addition to, those of the Company’s stockholders. These
interests and arrangements may create potential conflicts of interest.
The Company’s obligation to satisfy
its outstanding indebtedness prior to the Closing could adversely affect the combined company’s financial position and stockholders.
The Company must provide evidence to DRCR and
the Sellers that it has satisfied all indebtedness for borrowed money of the Company and has satisfied all material liabilities of the
Company, including all accounts payables owed to financial advisors, service providers and others as a condition to the Closing, which
may adversely affect the Company’s stockholders by reducing available funds post-Closing. This reduction could:
| ● | Limit access to additional financing for working capital, capital expenditures, debt servicing, acquisitions,
or general corporate needs; |
| ● | Restrict strategic acquisitions or force non-strategic divestitures; |
| ● | Prohibit dividend payments to stockholders; |
| ● | Heighten vulnerability to economic and industry downturns; and |
| ● | Curtail funding for operations, capital expenditures, and future business opportunities. |
Additionally, the Company has incurred and may
continue to incur significant expenses until the consummation of the Transactions, any Additional Agreements, and the Merger, including
costs for preparing, filing, printing, and distributing any necessary joint proxy statement/prospectus, as well as regulatory fees. If
the Transactions, any Additional Agreements, and the Merger are unsuccessful, the Company would bear these costs without realizing their
intended benefits.
The Company will be subject to business
uncertainties and contractual restrictions while the Transactions, the Additional Agreements, and the Merger are pending.
Uncertainty about the success of consummation
and the effect of consummation of the Transactions, the Additional Agreements, and the Merger on employees and customers may have an adverse
effect on the Company and DRCR. These uncertainties may impair the Company’s or DRCR’s ability to attract, retain, and motivate
key personnel until the Transactions, the Additional Agreements, and the Merger are completed, and could cause suppliers, business partners,
and other parties that deal with the Company or DRCR to seek to change existing business relationships with the Company or DRCR. In addition,
subject to certain exceptions, the Company and DRCR have each agreed to operate their businesses in the ordinary course in all material
respects and to refrain from taking certain actions that may adversely affect their ability to consummate the Transactions, the Additional
Agreements, and the Merger on a timely basis without the consent of the other party. These restrictions may prevent the Company and DRCR
from pursuing attractive business opportunities that may arise prior to the completion of the Transactions, the Additional Agreements,
and the Merger. If any of the aforementioned risks were to materialize, they could lead to significant costs which may negatively impact
each party’s results of operations and financial condition if the parties are not successful in consummating the Transactions, the
Additional Agreements, and the Merger, and which may also cause material adverse effects on the Company if the Transactions, the Additional
Agreements, and the Merger are not consummated.
The market price of the Company Common Stock
may be affected by factors different from those currently affecting the shares of the Company Common Stock assuming the consummation of
the Transactions, any Additional Agreements, and the Merger.
The Company’s business differs from that
of DRCR, and certain adjustments will be made to the Company’s operations assuming that the consummation of the Transactions, any
Additional Agreements, and the Merger occurs. Accordingly, the results of operations of the combined company and the market price of the
Company Common Stock after the assumed consummation of the Transactions, any Additional Agreements, and the Merger may be affected by
factors different from those currently affecting the independent results of operations of the Company.
The Company’s stockholders will not
have appraisal rights or dissenters’ rights in the Merger.
Appraisal rights (also known as dissenters’
rights) are statutory rights that, if applicable under law, enable stockholders to dissent from an extraordinary transaction, such as
a merger, and to demand that the corporation pay the fair value for their shares as determined by a court in a judicial proceeding instead
of receiving the consideration offered to stockholders in connection with the extraordinary transaction.
Under Section 262 of the Delaware General Corporation
Law, the Company’s stockholders will not be entitled to appraisal rights in connection with the Merger. If the Merger is completed,
the Company’s stockholders will not receive any consideration, and their shares of the Company Common Stock will remain outstanding
and will constitute shares of the Company following the completion of the Merger. Accordingly, the Company’s stockholders are not
entitled to any appraisal rights in connection with the Merger.
The absence of appraisal or dissenters’
rights poses several risks to the stockholders of the Company with respect to the Merger. Specifically, stockholders dissatisfied with
the terms of the Merger cannot seek a judicial determination of fair value for their shares, limiting their ability to contest valuation.
Without these rights, minority stockholders have fewer legal tools to challenge transactions they perceive as unfair, reducing their recourse
in potentially inequitable situations. Additionally, stockholders unable to exercise appraisal or dissenters’ rights may be forced
to sell their shares on the open market, exposing them to potential losses due to market fluctuations.
6
Exhibit 99.2
DEAR CASHMERE GROUP HOLDING COMPANY
Consolidated Financial Statements
For the Years Ended December 31, 2023 and 2022
With Report of Independent Registered Public
Accounting Firm
DEAR CASHMERE GROUP HOLDING COMPANY
Table of Contents
For the Years Ended December 31, 2023 and 2022
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
To the Shareholders and the Board of Directors of
Dear Cashmere Group Holding Company.
OPINION ON THE FINANCIAL STATEMENTS
We have audited the accompanying consolidated balance sheet of Dear
Cashmere Group Holding Company. (the “Company”) as of December 31, 2023, and 2022, and the related consolidated statements
of operations and comprehensive loss, stockholders’ equity and cash flows for the years then ended, and the related notes (collectively
referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects,
the financial position of the Company as of December 31, 2023, and 2022, and the results of its operations and its cash flows for the
year then ended in conformity with accounting principles generally accepted in the United States of America.
BASIS FOR OPINION
These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these financial statements based on our audit. We are a public accounting firm
registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent
with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities
and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free
of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit
of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control
over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control
over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation
of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
CRITICAL AUDIT MATTERS
Critical audit matters are matters arising from the current period
audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to
accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex
judgements. We determined that there are no critical audit matters to communicate in our report.
SUPPLEMENTAL INFORMATION
Our audit was conducted for the purpose of forming an opinion on the
consolidated financial statements as a whole. The supplementary information included in Note 2, “Supplemental disclosure of Total
Stakes (Wagers),” is presented for purposes of additional analysis and is not a required part of the consolidated financial statements.
Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other
records used to prepare the consolidated financial statements. The information has been subjected to the auditing procedures applied in
the audit of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information
directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated financial
statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of
America. In our opinion, the supplementary information is fairly stated, in all material respects, in relation to the consolidated financial
statements as a whole.
/s/ Bush & Associates CPA LLC
We have served as the Company’s auditor since 2024.
Henderson, Nevada
February 20, 2025
PCAOB
ID Number 6797
DEAR CASHMERE GROUP HOLDING COMPANY
CONSOLIDATED
BALANCE SHEETS
AS OF DECEMBER
31, 2023 AND 2022
| | |
2023 | | |
2022 | |
| ASSETS | |
| | |
| |
| Current Assets: | |
| | |
| |
| Cash and cash equivalents | |
$ | 1,944,904 | | |
$ | 1,278,466 | |
| Accounts receivable | |
| 438,670 | | |
| 868,741 | |
| Short-term advances | |
| 477,802 | | |
| - | |
| Advances to related parties | |
| 57,497 | | |
| 747,080 | |
| Contract assets | |
| 234,882 | | |
| - | |
| Other current assets | |
| 466,765 | | |
| 107,136 | |
| Total Current Assets | |
| 3,620,520 | | |
| 3,001,423 | |
| | |
| | | |
| | |
| Property and equipment, net | |
| 40,649 | | |
| 18,182 | |
| Intangible assets, net of amortization | |
| 2,833,854 | | |
| 2,006,280 | |
| Contract assets, less current portion | |
| 704,646 | | |
| - | |
| Due from officers | |
| 222,346 | | |
| 157,924 | |
| | |
| 3,801,495 | | |
| 2,182,386 | |
| Total Assets | |
$ | 7,422,015 | | |
$ | 5,183,809 | |
| | |
| | | |
| | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |
| | | |
| | |
| Current Liabilities: | |
| | | |
| | |
| Convertible note payable | |
$ | 136,529 | | |
$ | 175,000 | |
| Accounts payable | |
| 274,361 | | |
| 658,616 | |
| Accrued expenses | |
| 144,437 | | |
| 216,769 | |
| Accrued payroll and bonuses | |
| 382,511 | | |
| 303,121 | |
| Client balance | |
| 534,579 | | |
| 100,919 | |
| Advances from related parties | |
| 476,399 | | |
| 1,175,611 | |
| Total Current Liabilities | |
| 1,948,816 | | |
| 2,630,036 | |
| | |
| | | |
| | |
| Commitments and contingencies | |
| | | |
| | |
| Stockholders’ Equity | |
| | | |
| | |
| Preferred Stock: 50,000,000 authorized, $0.001 par value, 49,999,900 and 50,000,000 shares issued and outstanding, at December 31, 2023 and 2022, respectively | |
| 50,000 | | |
| 50,000 | |
| Common Stock: 100,000,000 shares authorized, $0.001 par value,53,513,611 and 47,786,516 issued and outstanding at December 31, 2023 and 2022, respectively | |
| 53,513 | | |
| 47,786 | |
| Additional paid in capital | |
| 2,389,148 | | |
| 1,978,359 | |
| Retained Earnings | |
| 2,914,087 | | |
| 471,285 | |
| Accumulated other comprehensive income | |
| 66,451 | | |
| 6,343 | |
| Total Stockholders’ Equity | |
| 5,473,199 | | |
| 2,553,773 | |
| Total Liabilities and Stockholders’ Equity | |
$ | 7,422,015 | | |
$ | 5,183,809 | |
See the Notes to the Consolidated Financial Statements.
DEAR CASHMERE GROUP HOLDING COMPANY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2023 AND
2022
| | |
2023 | | |
2022 | |
| Net Gaming Revenue | |
$ | 8,728,942 | | |
$ | 2,413,939 | |
| | |
| | | |
| | |
| Operating Expenses | |
| | | |
| | |
| Sales and marketing | |
| 74,247 | | |
| 78,585 | |
| General and administrative | |
| 5,702,613 | | |
| 1,940,012 | |
| Depreciation and amortization | |
| 92,155 | | |
| 7,832 | |
| Total Operating Expenses | |
| 5,869,015 | | |
| 2,026,429 | |
| | |
| | | |
| | |
| Income from Operations | |
| 2,859,927 | | |
| 387,510 | |
| | |
| | | |
| | |
| Other Income (Expense) | |
| | | |
| | |
| Interest expense | |
| - | | |
| (12,834 | ) |
| Unrealized foreign exchange loss | |
| (137,871 | ) | |
| (74,813 | ) |
| Other (expense) income | |
| (279,254 | ) | |
| 78,781 | |
| Total Other Expense, net | |
| (417,125 | ) | |
| (8,866 | ) |
| | |
| | | |
| | |
| Net Income before Income Taxes | |
| 2,442,802 | | |
| 378,644 | |
| Provision for Income Taxes | |
| - | | |
| - | |
| Net Income | |
$ | 2,442,802 | | |
$ | 378,644 | |
| | |
| | | |
| | |
| Net Income per Share: | |
| | | |
| | |
| Basic | |
$ | 0.05 | | |
$ | 0.01 | |
| Diluted | |
$ | 0.00 | | |
$ | 0.00 | |
| | |
| | | |
| | |
| Weighted Average Shares Outstanding: | |
| | | |
| | |
| Basic | |
| 48,321,666 | | |
| 57,172,662 | |
| Diluted | |
| 5,050,706,913 | | |
| 5,057,964,135 | |
See the Notes to the Consolidated Financial Statements.
DEAR CASHMERE GROUP HOLDING COMPANY
CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE
INCOME
FOR THE YEARS ENDED DECEMBER 31, 2023 AND
2022
| | |
2023 | | |
2022 | |
| Net Income | |
$ | 2,442,802 | | |
$ | 378,644 | |
| Other comprehensive Income: | |
| | | |
| | |
| Foreign currency translation adjustments | |
| 60,108 | | |
| 6,343 | |
| Comprehensive Income | |
$ | 2,502,910 | | |
$ | 384,987 | |
See the Notes to the
Consolidated Financial Statements.
DEAR CASHMERE GROUP HOLDING COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2023 AND
2022
| | |
Preferred Stock | | |
Common Stock | | |
Additional
Paid in | | |
Accumulated
Other
Comprehensive | | |
Retained | | |
Total
Stockholders' | |
| | |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Income | | |
Earnings | | |
Equity | |
| Balance as at December 31, 2022 | |
| 50,000,000 | | |
$ | 50,000 | | |
| 47,786,516 | | |
$ | 47,786 | | |
$ | 1,978,359 | | |
$ | 6,343 | | |
$ | 471,285 | | |
$ | 2,553,773 | |
| Common stock issued for conversion of note payable and accrued interest | |
| - | | |
| - | | |
| 5,247,095 | | |
| 5,247 | | |
| 328,468 | | |
| - | | |
| - | | |
| 333,715 | |
| Common stock issued for services and compensation | |
| - | | |
| - | | |
| 480,000 | | |
| 480 | | |
| 82,321 | | |
| - | | |
| - | | |
| 82,801 | |
| Cancellation of preferred stock | |
| (100 | ) | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
| Foreign currency translation gain | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 60,108 | | |
| - | | |
| 60,108 | |
| Net income | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 2,442,802 | | |
| 2,442,802 | |
| Balance as at December 31, 2023 | |
| 49,999,900 | | |
$ | 50,000 | | |
| 53,513,611 | | |
$ | 53,513 | | |
$ | 2,389,148 | | |
$ | 66,451 | | |
$ | 2,914,087 | | |
$ | 5,473,199 | |
| | |
Preferred Stock | | |
Common Stock | | |
Additional
Paid in | | |
Accumulated
Other
Comprehensive | | |
Retained | | |
Total
Stockholders' | |
| | |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Income | | |
Earnings | | |
Equity | |
| Balance as at December 31, 2021 | |
| 50,000,000 | | |
$ | 50,000 | | |
| 56,035,000 | | |
$ | 56,035 | | |
$ | 784,413 | | |
$ | - | | |
$ | 61,105 | | |
$ | 951,553 | |
| Cancellation of common stock | |
| - | | |
| - | | |
| (10,666,666 | ) | |
| (10,667 | ) | |
| 10,667 | | |
| - | | |
| - | | |
| - | |
| Common stock issued for services and compensation | |
| - | | |
| - | | |
| 600,000 | | |
| 600 | | |
| 185,097 | | |
| - | | |
| - | | |
| 185,697 | |
| Common stock issued for acquisition of intellectual property | |
| | | |
| | | |
| 1,818,182 | | |
| 1,818 | | |
| 998,182 | | |
| - | | |
| - | | |
| 1,000,000 | |
| Foreign currency translation gain | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 6,343 | | |
| - | | |
| 6,343 | |
| Retained earnings of acquired entities | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 31,536 | | |
| 31,536 | |
| Net income | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 378,644 | | |
| 378,644 | |
| Balance as at December 31, 2022 | |
| 50,000,000 | | |
$ | 50,000 | | |
| 47,786,516 | | |
$ | 47,786 | | |
$ | 1,978,359 | | |
$ | 6,343 | | |
$ | 471,285 | | |
$ | 2,553,773 | |
See the Notes to the Consolidated Financial Statements.
DEAR CASHMERE GROUP HOLDING COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND
2022
| | |
2023 | | |
2022 | |
| CASH FLOWS FROM OPERATING ACTIVITIES | |
| | |
| |
| Net Income | |
$ | 2,442,802 | | |
$ | 378,644 | |
| Adjustments to reconcile net cash provided by operating activities: | |
| | | |
| | |
| Depreciation and amortization | |
| 92,155 | | |
| 7,832 | |
| Common stock issued for services and compensation | |
| 82,801 | | |
| 185,697 | |
| Unrealized foreign exchange loss | |
| 137,871 | | |
| 74,813 | |
| Loss on conversion of convertible note payable and accrued interest | |
| 281,244 | | |
| - | |
| Changes in Assets and Liabilities, net | |
| | | |
| | |
| Accounts receivable | |
| 430,071 | | |
| (729,293 | ) |
| Contract assets | |
| (939,528 | ) | |
| - | |
| Accounts payable | |
| (522,126 | ) | |
| 574,306 | |
| Accrued expenses | |
| (58,332 | ) | |
| 185,558 | |
| Accrued payroll and related | |
| 79,390 | | |
| 303,121 | |
| Customer deposits | |
| 433,660 | | |
| 100,919 | |
| Other current assets | |
| (359,629 | ) | |
| (68,493 | ) |
| Net cash provided operating activities | |
| 2,100,379 | | |
| 1,013,104 | |
| | |
| | | |
| | |
| CASH FLOWS FROM INVESTING ACTIVITIES | |
| | | |
| | |
| Purchases property and equipment | |
| (42,661 | ) | |
| (6,610 | ) |
| Purchases of intangible assts | |
| (899,535 | ) | |
| (455,385 | ) |
| Repayments on advances to related parties, net | |
| 689,583 | | |
| 33,082 | |
| Advances to officers | |
| (64,422 | ) | |
| (157,924 | ) |
| Short-term advances provided | |
| (477,802 | ) | |
| - | |
| Net cash used in investing activities | |
| (794,837 | ) | |
| (586,837 | ) |
| | |
| | | |
| | |
| CASH FLOWS FROM FINANCING ACTIVITIES | |
| | | |
| | |
| Repayments on advances from related parties, net | |
| (699,212 | ) | |
| 814,614 | |
| Net cash (used in) provided by financing activities | |
| (699,212 | ) | |
| 814,614 | |
| | |
| | | |
| | |
| Foreign currency translation gain | |
| 60,108 | | |
| 6,343 | |
| | |
| | | |
| | |
| Net change in cash and cash equivalents | |
| 666,438 | | |
| 1,247,224 | |
| | |
| | | |
| | |
| Cash and cash equivalents, beginning of the year | |
| 1,278,466 | | |
| 31,242 | |
| Cash and cash equivalents, end of the year | |
$ | 1,944,904 | | |
$ | 1,278,466 | |
| | |
| | | |
| | |
| SUPPLEMENT DISCLOSURE OF CASH FLOW INFORMATION: | |
| | | |
| | |
| Cash paid for interest | |
$ | - | | |
$ | - | |
| Cash paid for income taxes | |
$ | - | | |
$ | - | |
| | |
| | | |
| | |
| SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | |
| | | |
| | |
| Conversion of convertible note payable and accrued interest to common stock | |
$ | 52,471 | | |
$ | - | |
| Intellectual property acquired with shares of common stock | |
$ | - | | |
$ | 1,000,000 | |
| Increase in net assets and retained earnings for entity transferred by related party | |
$ | - | | |
$ | 31,536 | |
See the Notes to the Consolidated Financial Statements.
DEAR
CASHMERE GROUP HOLDING
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND
2022
Note 1: Organization,
Nature of Business and Principles of Consolidation
Dear Cashmere was
incorporated in Nevada on September 30, 2010 as a limited liability company.
On February 25, 2021, Dear Cashmere
Group Holding Company (“Dear Cashmere”) completed a reverse merger with Swifty Global (“SWIFTY”), a technology
company operating out of London, New York, and Dubai developing ground-breaking gambling technology solutions driving shareholder value
by accelerating innovation and usability. SWIFTY has already released its swiped based betting app called Swifty Predictions in the UK,
Swifty Sportsbook, Casino platform and a wallet application. The holding Company, Dear Cashmere also known as SWIFTY, lacks independent
revenue sources and primarily generates its revenue through its operating wholly owned subsidiaries, Swifty UK, Swifty Global FZ LLE,
and Swifty NV.
SWIFTY holds UK
and Curacao gambling licenses, with further licenses under partnerships in Ireland, South Africa and a pending license in Malta. The company
has also received certification from GLI. The GLI certification is a requirement to operate in the highly regulated gambling market as
it confirms that the product has been successfully tested and is certified to be compliant according to the relevant country regulations
.
On April 1st, 2022,
James Gibbons, the Company’s, Chief Executive Officer (“CEO”) and a controlling stockholder transferred 100% of the
shares held by him as an individual in Swifty Global FZ LLE (“Swifty FZ”) to Dear Cashmere pursuant to a Share Transfer Agreement
(“STA”) at which time Swifty FZ became a wholly owned subsidiary of Dear Cashmere.
On July 1st, 2022,
James Gibbons, the Company’s, CEO and a controlling stockholder transferred 100% of the shares held by him as an individual in Swifty
NV to Dear Cashmere pursuant to a Share Transfer Agreement at which time Swifty NV became a wholly owned subsidiary of Dear Cashmere.
When Swifty NV was transferred to Dear Cashmere it had not commenced operations.
DEAR CASHMERE GROUP HOLDING
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND
2022
Note 2: Basis of Preparation
and Summary of significant Accounting Policies
Basis of Presentation
The consolidated financial
statements include the financial statements of Dear Cashmere as well-known as SWIFTY and its wholly owned subsidiaries;
Swifty UK
Swifty FZ
Swifty NV
The entities above are collectively
referred to as the “Company”, “we”, “us”, or “our”
The accompanying consolidated financial
statements have been prepared in conformity with generally accepted accounting principles in the United States (“US GAAP”).
All intercompany accounts and transactions have been eliminated upon consolidation.
Foreign Currency Transactions and
Functional Currency
The Company’s functional and reporting
currency is the United States dollar (“USD”). Transactions in foreign currencies are recorded at the exchange rate prevailing
on the date of the transaction. Foreign currency transaction gains and losses resulting from remeasurement are recognized in other income,
net within the consolidated statements of operations. The resulting monetary assets and liabilities are translated into U.S. dollars at
exchange rates prevailing on the balance sheet date. Revenue and expense components are translated to U.S. dollars at weighted-average
exchange rates in effect during the period.
Comprehensive income (loss) consists
of foreign currency translation adjustments related to the effect of translating the accounts and transactions of the Company’s
subsidiaries whose functional currency is something other than the United Stated Dollar (“USD”). Swifty UK, Swifty NV and
Swifty FZ’s functional currency has been determined to be the Great British Pound (“GBP”), the Euro (“EUR”),
and the Emirati Dirham (“AED”), respectively. The financial statements of Swifty UK, Swifty NV, and Swifty FZ are translated
into USD in accordance with ASC 830, using period-end rates of exchange for assets and liabilities, and average rates of exchange for
the period for revenues, costs, and expenses and historical rates for equity. Translation adjustments resulting from the process of translating
the local currency financial statements into the USD are included in determining other comprehensive income (loss). Cumulative translation
gains or losses are presented in the consolidated statements of operations and comprehensive income.
Concentration of Credit Risk
The Company primarily transacts its
business with one financial institution. The amount on deposit in that one institution may from time to time exceed the federally- insured
limit of $250,000. Any loss incurred or a lack of access to such funds above the FDIC limit
could have a significant adverse impact on the Company’s financial condition, results of operations and cash flows.
Use of Estimates
The preparation of these consolidated
financial statements in conformity with US GAAP requires the Company to make estimates and assumptions that affect the reported amounts
of assets and liabilities and the related disclosure of contingent assets and liabilities at the date of these consolidated financial
statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical
experience and on various other assumptions that are believed to be reasonable under the circumstances. Accordingly, actual results may
differ from these estimates. Significant estimates include the useful lives of property and equipment assumptions used in assessing impairment
for long-term assets, and the fair value of equity-based compensation.
DEAR CASHMERE GROUP HOLDING
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND
2022
Cash and Cash Equivalents
Cash and cash equivalents consist of
all cash balances and highly liquid investments with an original maturity of three months or less. Because of the short maturity of these
investments, the carrying amounts approximate their fair value. The Company maintained cash and cash equivalents with various third-party
payment providers and wallets.
Accounts Receivable
Accounts receivable are stated at cost,
net of an allowance for credit losses. The Company maintains allowances for doubtful accounts for estimated losses resulting from the
failure of customers to make required payments. The Company reviews the accounts receivable on a periodic basis and makes allowances where
there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the
Company considers many factors, including the age of the balance, the customer’s payment history, its current creditworthiness and
current economic trends. As of December 31, 2023 and 2022, management did not deem an allowance for credit losses to be necessary based
on their evaluation.
Contract Assets
In accordance with ASC 340-40-25-1,
the Company capitalizes the incremental contract costs incurred to acquire customer contracts which generally consist of commissions paid
to agents. The customer contract agreement typically includes a contractual period of five years, with potential extensions. We capitalize
the commissions paid to agents as contract costs and amortize these costs into sales and marketing on the straight-line basis over five
years (the anticipated period of benefit). These capitalized costs are presented on the consolidated balance sheets as contract assets
and are included in both current and long-term.
Property and Equipment
The Company states property and equipment
at cost less accumulated depreciation. Expenditures for maintenance and repairs are charged to operations as incurred; additions, renewals
and betterments are capitalized. When property and equipment assets are retired or otherwise disposed of, the related cost and accumulated
depreciation are removed from the respective accounts, and any resulting gain or loss is recorded as an operating expense. The Company
computes depreciation using the straight-line method over the estimated useful lives of the assets with no residual value of property
and equipment (see Note 4).
Intangible Assets
Intangible assets consist of intellectual
property (“IP”) and software development costs associated with our proprietary platform. The capitalized IP reflects the costs
we incurred to acquire the IP. The IP was acquired with shares of common stock with an estimated fair value of $1,000,000 based on the
OTC market price of our stock on the date acquired.
Costs associated with internally developed
software are expensed as incurred unless they meet generally accepted accounting criteria for deferral and subsequent amortization. Software
development costs incurred prior to the application development stage are expensed as incurred. For costs that are capitalized, the subsequent
amortization is the straight-line method over the remaining economic life of the product, which is estimated to be ten years, and
begins once software is ready for its intended use.
Impairment of Long-lived Assets
The Company reviews the carrying value
of its long-lived assets, including property equipment and finite-lived intangible assets, for impairment whenever events and circumstances
indicate that the carrying value of an asset may not be recoverable from the estimate future cash flows expected to result from its use
and eventual disposition. In cases where undiscounted cash flows are less than the carrying value of an asset group, an impairment loss
is recognized equal to an amount by which the asset group’s carrying value exceeds the fair value of assets. The factors considered
by management in performing this assessment include current operating results, trends and prospects, the manner in which the property
is used, and the effects of customer loss, obsolescence, demand, competition, and other economic factors. For the years ended December
31, 2023 and 2022, the Company did not record impairment charges against its long-lived assets.
DEAR CASHMERE GROUP HOLDING
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND
2022
Client Balance
Our customers maintain digital wallets
on our gaming platform. Cash related to these accounts may be drawn at the customer’s request. The cash residing in the digital
wallets at a reporting period is after withdrawals and winnings. These balances have been classified within current liabilities and presented
as client balance.
Revenue Recognition
The Company recognizes revenue
in accordance with Accounting Standard Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, and
the related amendments, which requires revenue to be recognized in a manner that depicts the transfer of goods
or services to customers in amounts that reflect the consideration to which the entity expects to be entitled in exchange for those goods
or services. We determine revenue recognition through the following steps:
| ● | identification
of the contract, or contracts, with a customer; |
| ● | identification
of the performance obligations in the contract; |
| ● | determination
of the transaction price; |
| ● | allocation
of the transaction price to the performance obligations in the contract; and |
| ● | recognition
of revenue when, or as, we satisfy a performance obligation. |
The Company’s revenue consists
of its percentage of net gaming revenue (“NGR”) generated through its gaming platform through users playing (i) online gambling
or (ii) sportsbook betting. The Company’s proprietary gaming platform processes all player payments and determines the players winnings
and the Company’s NGR. Therefore, the Company recognizes revenue upon the five revenue recognition criteria being met which occurs
when all gaming and betting events have concluded and the amount of consideration or the transaction price to be received is known. The
Company presents revenue on a net basis which represents the amount of monies retained by the Company after player payouts.
The majority of NGR is generated outside
of the United States.
Supplemental disclosure of Total
Stakes (Wagers):
The following table presents the Company’s
total stakes, representing the full amount wagered by customers. These amounts are not recognized as revenue under our revenue recognition
policy. Additionally, the table includes net gaming revenue as reported in the accompanying consolidated statements of income for the
years ended December 31, 2023, and 2022, as follows:
| | |
2023 | | |
2022 | |
| Total Stakes (Wagers) | |
$ | 128,886,432 | | |
$ | 25,231,937 | |
| Less: Client Payouts | |
| (120,157,490 | ) | |
| (22,817,998 | ) |
| Net Gaming Revenue | |
$ | 8,728,942 | | |
$ | 2,413,939 | |
Stock Based Compensation
The Company accounts for stock-based
payments to employees and non-employees in accordance with ASC 718, “Stock Compensation” (“ASC 718”). Stock-based
payments to employees and non-employees can include grants of stocks, grants of stock options and issuance of warrants that are recognized
in the consolidated statement of operations based on their fair values at the date of grant. To date, we have only granted shares of common
stock for services.
The Company calculates the fair
value of option grants and warrant issuances utilizing the Binomial pricing model. The amount of stock-based compensation recognized
during a period is based on the value of the portion of the awards that are ultimately expected to vest.
DEAR CASHMERE GROUP HOLDING
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND
2022
The resulting stock-based compensation
expense for both employee and non-employee awards is generally recognized on a straight-line basis over the period in which the Company
expects to receive the services or benefit, which is generally the vesting period.
The
Company accounts for forfeitures as they occur.
Advertising Expense
Advertising costs are expensed in the
period incurred and totaled $74,247 and $78,585, respectively, during the years ended December 31, 2023 and 2022, respectively, and are
included in sales and marketing expenses on the consolidated statements of operations.
Fair Value of Financial Instruments
The Company defines fair value as the
exchange price that would be received from the sale of an asset or paid to transfer a liability in the principal or most advantageous
market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques
used to measure fair value must maximize the use of observable inputs and minimize
the use of unobservable inputs. The authoritative guidance describes three levels of inputs that may be used to measure fair value:
| ● | Level
I—Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities
in active markets; |
| ● | Level
II—Observable inputs other than Level I prices, such as unadjusted quoted prices for
similar assets or liabilities in active markets, unadjusted quoted prices for identical or
similar assets or liabilities in markets that are not active, or other inputs that are observable
or can be corroborated by observable market data for substantially the full term of the assets
or liabilities; and |
| ● | Level
III—Unobservable inputs that are supported by little or no market activity and that
are significant to the fair value of the assets or liabilities. These inputs are based on
the Company’s own assumptions used to measure assets and liabilities at fair value
and require significant management judgment or estimation. |
The
categorization of a financial instrument within the fair value hierarchy is based upon the lowest level of input that is significant
to its fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement
in its entirety requires management to make judgments and consider factors specific to the assets or liabilities.
The Company did not identify any assets
and liabilities that are required to be presented on the consolidated balance sheets at fair value in accordance with the relevant accounting
standards. The carrying values of cash, trade payables, and short-term payables approximate their fair values due to the short maturities
of these instruments.
Related Parties
Parties are considered to be related
to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common
control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families
of principal owners of the Company and its management and other parties with which the Company may deal with if one party controls or
can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be
prevented from fully pursuing its own separate interests. The Company discloses all related party transactions (see Note 9).
Segment Reporting
The Company operates in one reportable
segment, generating net gaming revenue from its digital platforms. The Company’s chief operating decision makers, the Company’s
chief executive officer and chief financial officer, manage the Company’s operations as a whole.
DEAR CASHMERE GROUP HOLDING
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND
2022
Income Taxes
The Company uses the asset and liability
method in accounting for income taxes. Under this method, deferred income tax assets and liabilities are determined based on the difference
between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse. A valuation allowance is provided to offset any net deferred tax assets for which
management believes it is more likely than not that the net deferred asset will not be realized.
The
Company applies the provisions of ASC Topic 740-10-25, Income Taxes – Overall – Recognition (“ASC Topic 740-10-25”)
with respect to the accounting for uncertainty of income tax positions. ASC Topic 740-10-25 clarifies the accounting for uncertainty in
income taxes recognized in a company’s consolidated financial statements and prescribes a recognition threshold and measurement
attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC
Topic 740-10-25 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure,
and transition. We are currently not subject to income taxes in the United States.
Leases
The Company
accounts for leases under ASC Topic 842, Leases. Operating leases are included in operating lease right-of-use (“ROU”)
assets and operating lease liabilities on the consolidated balance sheets. The Company leases
an office and warehouse to conduct business. The Company has elected not to recognize right-of-use assets and lease liabilities for short-term
leases that have a term of 12 months or less.
Operating lease
ROU assets represent the right to use the leased asset for the lease term and operating
lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date.
As most leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the
adoption date in determining the present value of future payments. Operating lease expense is recognized on a straight-line basis over
the lease term and is included in general and administrative expenses in the consolidated statements of operations.
The Company
does not currently have any leases that meet the criteria of ASC Topic 842.
Recent Accounting Pronouncements
Adopted
In
September 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), which provides guidance on
how an entity should measure credit losses on financial instruments. The ASU is effective for smaller reporting and non-public entities
for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Effective January 1, 2023, the
Company adopted this ASU which did not have a material impact on its consolidated financial statements.
Other pronouncements issued by the FASB
or other authoritative accounting standards groups with future effective dates are either not applicable or are not expected to be significant
to the Company’s financial position, results of operations or cash flows.
Reclassification
Certain prior year balances were reclassified to conform
to the current year’s presentation. These reclassifications had no impact on net income or earnings per share.
Note 3: Short-Term Advances
The Company has provided advances to
unrelated entities for working capital needs. These advances have no specific repayment terms and do not bear interest. As of December
31, 2023 and 2022, balances remaining outstanding on these advances totaled $477,802 and $0, respectively, as presented on the consolidated
balance sheets within current assets.
DEAR CASHMERE GROUP HOLDING
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND
2022
Note 4: Property and Equipment
The following table presents property
and equipment as of December 31, 2023 and 2022:
| | |
Useful Life
in Years | |
December 31,
2023 | | |
December 31,
2022 | |
| Computer Equipment | |
3 | |
$ | 47,858 | | |
$ | 28,469 | |
| Furniture | |
3 | |
| 24,174 | | |
| - | |
| Total Property and Equipment | |
| |
| 72,032 | | |
| 28,469 | |
| Less: Accumulated Depreciation | |
| |
| (31,383 | ) | |
| (10,287 | ) |
| Property and Equipment, net | |
| |
$ | 40,649 | | |
$ | 18,182 | |
Depreciation expense for the
years ended December 31, 2023 and 2022 was $20,194 and $10,287, respectively.
Note 5: Intangible Assets
Intangible assets consist
of acquired IP and costs incurred to develop software for internal use.
The following table presents
intangible assets as of December 31, 2023 and 2022:
| | |
Useful Life
in Years | |
December 31,
2023 | | |
December 31,
2022 | |
| Intellectual Property | |
10 | |
$ | 1,000,000 | | |
$ | 1,000,000 | |
| Intellectual Property - Software Development | |
10 | |
| 1,015,496 | | |
| 1,006,280 | |
| Intellectual Property - Software Development (Whitelabel) | |
10 | |
| 890,319 | | |
| - | |
| Total Intangible Assets | |
| |
| 2,905,815 | | |
| 2,006,280 | |
| Less: Accumulated Amortization | |
| |
| (71,961 | ) | |
| - | |
| Intangible Assets, Net of Amortization | |
| |
$ | 2,833,854 | | |
$ | 2,006,280 | |
Amortization expense for the
years ended December 31, 2023 and 2022 was $71,961 and $0, respectively. As of December 31,2023, the $1,000,000 IP and the Whitelabel
IP were not yet in use. Therefore, these assets are not yet being amortized.
Future expected amortization expense of intangible
assets, in use, is as follows:
| Years Ended December 31, | |
| |
| 2024 | |
$ | 101,550 | |
| 2025 | |
| 101,550 | |
| 2026 | |
| 101,550 | |
| 2027 | |
| 101,550 | |
| 2028 | |
| 101,550 | |
| Thereafter | |
| 507,746 | |
| | |
$ | 1,015,496 | |
DEAR CASHMERE GROUP HOLDING
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND
2022
Note 6: Convertible Note Payable
The
Company has promised to pay to the order of AES CAPITAL MANAGEMENT, LLC and its authorized successors and permitted assignors (“Holder”),
the aggregate principal face amount of One Hundred Seventy Five Thousand Dollars (U.S. $175,000) on November 30, 2022 (“Maturity
Date”) and to pay interest on the principal amount outstanding hereunder at the rate of 8% per annum commencing on November 30,
2021 (“Issuance Date”). However, as of December 31, 2023, the Holder has converted principal and interest of $38,471 and
$14,000, respectively, into 5,247,095 shares of common stock. At the time of conversion, the fair value of the shares was $.0636 per
share or $333,715 based on the OTC market price. Therefore, we recognized a loss of $281,244 on the partial settlement of this convertible
note payable which was been included in other expenses on the accompanying consolidated statements of income.
Payment
Conditions
1) Principal Amount
| ● | The
holder may elect to settle the principal amount of convertible note by check or wire transfer;
or |
| ● | The
holder may also elect to settle the principal amount of the convertible note by conversion
into shares of common stock of Dear Cashmere in following manner: |
During
the first 6 months the Note is in effect, the Holder of this Note is entitled, at its option, to convert all or any amount of the principal
face amount of this Note then outstanding into shares of the Company’s common stock (the “Common Stock”) at a price (“Conversion
Price”) of $0.75 per share (the “Fixed Price”). In the event, the Company does not have a registration statement qualified
within the 6th monthly anniversary of the Issuance Date of the Note under which all the shares issuable upon conversion of this Note
are registered, the Fixed Price shall be reduced to $0.50 per share. In no event shall the Holder be allowed to effect a conversion if
such conversion, along with all other shares of Company Common Stock beneficially owned by the Holder and its affiliates would exceed
4.99% of the outstanding shares of the Common Stock of the Company (which may be increased up to 9.9% upon 60 days’ prior written
notice by the Investor). The conversion discount, look back period and other terms will be adjusted on a ratchet basis if the Company
offers a more favorable conversion discount, prepayment rate, interest rate, (whether through a straight discount or in combination with
an original issue discount), look back period or other more favorable term to another party for any financings while this Note is in
effect, including but not limited to defaults, penalties and the remedy for such defaults or penalties.
2) Interest Amount
Interest on any
unpaid principal balance of this Note shall be paid at the rate of 8% per annum. Interest shall be paid by the Company in shares of common
stock (“Interest Shares”) or cash at the holder’s option. The dollar amount converted into Interest Shares shall be all
or a portion of the accrued interest calculated on the unpaid principal balance of this Note to the date of such notice.
Note 7: Stockholders’ Equity
The Company is authorized to issue 50,000,000
shares of preferred stock at $0.001 par value, as of December 31, 2023 and 2022, 49,999,900 and 50,000,000 shares were issued and outstanding,
respectively. One share of preferred stock is convertible into 100 shares of common stock. Each share of preferred stock provides for
500 votes. Therefore, preferred stockholders hold super voting rights.
The Company is authorized to issue 100,000,000
shares of common stock, $0.001 par value, as of December 31, 2023 and 2022, 53,513,611 and 47,786,516 shares were issued and outstanding,
respectively.
DEAR CASHMERE GROUP HOLDING
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND
2022
Note 8: Earning Per Share
Basic
net income per share is computed by dividing the net income by the weighted-average number of common shares outstanding for the period.
Diluted earnings per share is computed by adjusting the weighted-average number of common shares outstanding to include common stock issuable
upon the conversion of convertible preferred stock and convertible notes. For periods in which the Company reports net losses, diluted
net loss per share is the same as basic net loss per share because dilutive common shares are not assumed to have been issued if their
effect is anti-dilutive.
| | |
December 31,
2023 | | |
December 31,
2022 | |
| Basic EPS | |
| | |
| |
| Numerator | |
| | |
| |
| Net Income attributable to common stockholders | |
$ | 2,442,802 | | |
$ | 378,644 | |
| Denominator | |
| | | |
| | |
| Weighted average shares outstanding | |
| 48,321,666 | | |
| 57,172,662 | |
| Basic earnings per share | |
$ | 0.05 | | |
$ | 0.01 | |
| | |
| | | |
| | |
| Diluted EPS | |
| | | |
| | |
| Numerator | |
| | | |
| | |
| Net income attributable to common stockholders | |
$ | 2,442,802 | | |
$ | 378,644 | |
| Denominator | |
| | | |
| | |
| Number of shares used for basic earnings per share | |
| 48,321,666 | | |
| 57,172,662 | |
| Shares of common stock issuable upon conversion of convertible note payable | |
| 2,395,247 | | |
| 791,473 | |
| Shares of common stock issuable upon conversion of preferred stock | |
| 4,999,990,000 | | |
| 5,000,000,000 | |
| Number of shares used for diluted EPS computation | |
| 5,050,706,913 | | |
| 5,057,964,135 | |
| Diluted earnings per share | |
$ | 0.00 | | |
$ | 0.00 | |
Note 9: Related Party Transactions
During the years ended December 31,
2023 and 2022, the Company had the following related party transactions:
Advances to Related Parties
The Company provided a short-term advance
to an entity owned and controlled by the Company’s CEO and a controlling stockholder. The advance has no specific repayment terms
and bears no interest.
During 2022, the Company provided advances
totaling $747,282 to several related entities in which our CFO and stockholder, holds a controlling interest. These advances were repaid
by the related party entities in full during 2023.
As of December 31, 2023 and 2022, the
balance due on the advances was $57,497 and $747,282, respectively, and is presented on the consolidated balance sheets as “advances
to related parties” within current assets.
DEAR CASHMERE GROUP HOLDING
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND
2022
Due From Officers
During 2023 and 2022, the Company
provided its CEO and CFO, who also hold all of the issued and outstanding preferred stock, advances aggregating $64,822 and $157,924,
respectively. The advances have no specific repayment terms and bear no interest. As of December 31, 2023 and 2022, the balance due on
the advances was $222,346 and $157,924, respectively, and is presented on the consolidated balance sheets as “due from officers”
within long-term assets.
Due to Related Party
During the year ended December 31, 2022,
the Company received working capital advances from entities that our CFO holds substantial control in and is an officer and director.
During 2023, we paid $699,212 of these advances. The advances have no specific repayment terms and bear no interest. As of December 31,
2023 and 2022, the total advances outstanding were $476,399 and $1,175,611, respectively.
Note 10: Contingencies
From time to time, claims are made against
the Company in the ordinary course of business, which could result in litigation. Claims and associated litigation are subject to inherent
uncertainties and unfavorable outcomes could occur, such as monetary damages, fines, penalties, or injunctions prohibiting the Company
from selling one or more products or engaging in other activities. The occurrence of an unfavorable outcome in any specific period could
have a material adverse effect on the Company’s results of operations for that period or future periods. The Company is not presently
a party to any pending or threatened legal proceedings.
Note 11: Subsequent Events
No events have occurred subsequent to
the balance sheet date and through the date of these consolidated financial statements that would require adjustment to or disclosure
in the financial information referred to above.
Exhibit
99.3
Dear
Cashmere Group Holding Company
For
the Nine Months Ended September 30th, 2024
(Unaudited)
INDEX
| 1) | Condensed Consolidated Balance sheet as of September 30th, 2024, and December 31st, 2023. |
2 |
| 2) | Condensed Consolidated Income Statement for nine months ended September 30th, 2024, and 2023. |
3 |
| 3) | Condensed Consolidated Statement of other comprehensive Income for nine months ended September 30th, 2024, and 2023. |
4 |
| 4) | Condensed Consolidated Statement of Stockholders’ Equity for nine months ended September 30th, 2024, and 2023. |
5 |
| 5) | Condensed Consolidated Statement of Cash flows for nine months ended September 30th, 2024, and 2023. |
6 |
| 6) | Notes to Condensed Consolidated Financial Statements for the nine months ended September 30th, 2024. |
7 |
Dear
Cashmere Group Holding Company
CONDENSED
CONSOLIDATED BALANCE SHEET
| | |
September
30,
2024 | | |
December
31,
2023 | |
| | |
(Unaudited) | | |
(Audited) | |
| ASSETS | |
| | |
| |
| Current
Assets | |
| | |
| |
| Cash
and Cash Equivalents | |
$ | 2,094,662 | | |
$ | 1,944,904 | |
| Accounts
Receivable | |
| 471,775 | | |
| 438,670 | |
| Short
Term Loans and Advances | |
| 488,755 | | |
| 477,802 | |
| Advances
to related parties | |
| - | | |
| 57,497 | |
| Contract
assets | |
| 294,707 | | |
| 234,882 | |
| Other
Current Assets | |
| 421,300 | | |
| 466,765 | |
| Total
Current Assets | |
| 3,771,199 | | |
| 3,620,520 | |
| | |
| | | |
| | |
| Non-Current
Assets | |
| | | |
| | |
| Property,
Plant and Equipment, net of depreciation | |
| 29,886 | | |
| 40,649 | |
| Intangible
Assets, net of amortization | |
| 3,307,036 | | |
| 2,833,854 | |
| Contract
assets, less current portion | |
| 736,335 | | |
| 704,646 | |
| Due
from Officers | |
| 165,144 | | |
| 222,346 | |
| Total
Non-Current Assets | |
| 4,238,401 | | |
| 3,801,495 | |
| | |
| | | |
| | |
| Total
Assets | |
$ | 8,009,600 | | |
$ | 7,422,015 | |
| | |
| | | |
| | |
| LIABILITIES
AND STOCKHOLDERS’ EQUITY | |
| | | |
| | |
| Current
Liabilities | |
| | | |
| | |
| Convertible
Note Payable | |
$ | 136,529 | | |
$ | 136,529 | |
| Accounts
Payable | |
| 236,937 | | |
| 274,361 | |
| Accrued
liabilities | |
| 217,990 | | |
| 144,437 | |
| Accrued
payroll and bonuses | |
| 406,391 | | |
| 382,511 | |
| Client
balance | |
| 303,479 | | |
| 534,579 | |
| Advances
from related parties | |
| 476,400 | | |
| 476,399 | |
| Other
Current Liabilities | |
| 52,337 | | |
| - | |
| Total
Current Liabilities | |
| 1,830,062 | | |
| 1,948,816 | |
| | |
| | | |
| | |
| Non-Current
Liabilities | |
| - | | |
| - | |
| | |
| | | |
| | |
| Total
Liabilities | |
| 1,830,062 | | |
| 1,948,816 | |
| | |
| | | |
| | |
| Stockholders’
Equity | |
| | | |
| | |
| Common
Stock: 100,000,000 shares authorized, $0.001 par value, 53,763,611 and 53,513,611 issued and outstanding, at September 30, 2024 and
December 31, 2023. | |
| 53,764 | | |
| 53,513 | |
| Preferred
Stock: 50,000,000 authorized, $0.001 par value, 49,999,900 issued and outstanding, at September 30, 2024 and December 31, 2023. | |
| 50,000 | | |
| 50,000 | |
| Additional
Paid-Up Capital | |
| 2,414,024 | | |
| 2,389,148 | |
| Retained
Earnings | |
| 3,489,651 | | |
| 2,914,087 | |
| Other
Comprehensive Income | |
| 172,100 | | |
| 66,451 | |
| Total
Stockholders’ Equity | |
| 6,179,538 | | |
| 5,473,199 | |
| Total
Liabilities and Stockholders’ Equity | |
$ | 8,009,600 | | |
$ | 7,422,015 | |
Dear
Cashmere Group Holding Company
CONDENSED
CONSOLIDATED INCOME STATEMENT (Unaudited)
| | |
Nine
months ended,
September 30,
2024 | | |
Nine
months ended,
September 30,
2023 | |
| Net
Gaming Revenue | |
$ | 5,117,583 | | |
$ | 6,859,019 | |
| | |
| | | |
| | |
| Operating
Expenses | |
| | | |
| | |
| Sales
and marketing | |
| 13,697 | | |
| 55,029 | |
| General
and Administrative | |
| 4,401,239 | | |
| 6,291,221 | |
| Depreciation
and amortization | |
| 71,552 | | |
| 14,050 | |
| Total
Operating Expense | |
| 4,486,487 | | |
| 6,360,300 | |
| Income
from Operations | |
| 631,096 | | |
| 498,719 | |
| | |
| | | |
| | |
| Other
Income / (Expense) | |
| | | |
| | |
| Foreign
Exchange Gain/(Loss) | |
| 7,413 | | |
| (53,281 | ) |
| Other
expense, net | |
| (62,944 | ) | |
| (96 | ) |
| Total
Other Income / (Expense) | |
| (55,532 | ) | |
| (53,377 | ) |
| | |
| | | |
| | |
| Net
Income before Income Taxes | |
| 575,564 | | |
| 445,342 | |
| Provision
for Income Taxes | |
| - | | |
| - | |
| Net
Income | |
$ | 575,564 | | |
$ | 445,342 | |
| | |
| | | |
| | |
| Net
Income per Share: | |
| | | |
| | |
| Basic | |
$ | 0.01 | | |
$ | 0.01 | |
| Diluted | |
$ | 0.00 | | |
$ | 0.00 | |
| | |
| | | |
| | |
| Weighted
Average Shares Outstanding: | |
| | | |
| | |
| Basic | |
| 53,593,101 | | |
| 47,961,797 | |
| Diluted | |
| 5,055,067,113 | | |
| 5,049,435,809 | |
Dear
Cashmere Group Holding Company
CONSOLIDATED
STATEMENT OF OTHER COMPREHENSIVE INCOME
| | |
Nine
months ended,
September 30,
2024 | | |
Nine
months ended,
September 30,
2023 | |
| Net
Income | |
$ | 575,564 | | |
$ | 445,342 | |
| Other
comprehensive Income: | |
| | | |
| | |
| Foreign
currency translation adjustments | |
| 105,649 | | |
| (44,534 | ) |
| Comprehensive
Income | |
$ | 681,213 | | |
$ | 400,808 | |
Dear
Cashmere Group Holding Company
CONDENSED
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (Unaudited)
| |
|
Preferred
Stock |
|
Common
Stock |
|
|
Additional
Paid in |
|
|
Accumulated
Other
Comprehensive |
|
|
Retained |
|
|
Total
Stockholders’ |
|
| |
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Income |
|
|
Earnings |
|
|
Equity |
|
| Balance
as at December 31, 2023 |
|
|
49,999,900 |
|
|
$ |
50,000 |
|
|
|
53,513,611 |
|
|
$ |
53,513 |
|
|
$ |
2,389,148 |
|
|
$ |
66,451 |
|
|
$ |
2,914,087 |
|
|
$ |
5,473,199 |
|
| Common
stock issued for services and compensation |
|
|
- |
|
|
|
- |
|
|
|
250,000 |
|
|
|
250 |
|
|
|
24,876 |
|
|
|
- |
|
|
|
- |
|
|
|
25,126 |
|
| Foreign
currency translation gain |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
105,649 |
|
|
|
- |
|
|
|
105,649 |
|
| Net
income for the nine months ended September 30,2024 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
575,564 |
|
|
|
575,564 |
|
| Balance
as at September 30, 2024 |
|
|
49,999,900 |
|
|
$ |
50,000 |
|
|
|
53,763,611 |
|
|
$ |
53,763 |
|
|
$ |
2,414,024 |
|
|
$ |
172,100 |
|
|
$ |
3,489,651 |
|
|
$ |
6,179,538 |
|
| |
|
Preferred
Stock |
|
Common
Stock |
|
|
Additional
Paid in |
|
|
Accumulated
Other
Comprehensive |
|
|
Retained |
|
|
Total
Stockholders’ |
|
| |
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Income |
|
|
Earnings |
|
|
Equity |
|
| Balance
as at December 31, 2022 |
|
|
50,000,000 |
|
|
$ |
50,000 |
|
|
|
47,786,516 |
|
|
$ |
47,786 |
|
|
$ |
1,978,359 |
|
|
$ |
6,343 |
|
|
$ |
471,285 |
|
|
$ |
2,553,773 |
|
| Common
stock issued against Bonus |
|
|
- |
|
|
|
- |
|
|
|
480,000 |
|
|
|
480 |
|
|
|
82,321 |
|
|
|
- |
|
|
|
- |
|
|
|
82,801 |
|
| Foreign
currency translation Loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(44,534 |
) |
|
|
- |
|
|
|
(44,534 |
) |
| Net
income for the nine months ended September 30, 2023 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
445,342 |
|
|
|
445,342 |
|
| Balance
as at September 30, 2023 |
|
|
50,000,000 |
|
|
$ |
50,000 |
|
|
|
48,266,516 |
|
|
$ |
48,266 |
|
|
$ |
2,060,680 |
|
|
$ |
(38,191 |
) |
|
$ |
916,627 |
|
|
$ |
3,037,383 |
|
Dear
Cashmere Group Holding Company
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
| |
|
Nine
months ended,
September 30,
2024 |
|
|
Nine
months ended,
September 30,
2023 |
|
| CASH
FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
| Net
Profit |
|
$ |
575,564 |
|
|
$ |
445,342 |
|
| Adjustment
to reconcile net gain (loss) to net cash |
|
|
|
|
|
|
|
|
| Depreciation
and amortization |
|
|
71,552 |
|
|
|
14,050 |
|
| Stock-based
compensation |
|
|
25,126 |
|
|
|
82,802 |
|
| |
|
|
|
|
|
|
|
|
| Changes
in Assets and Liabilities, net |
|
|
|
|
|
|
|
|
| Accounts
receivable |
|
|
(33,104 |
) |
|
|
(82,487 |
) |
| Contract
assets |
|
|
(91,514 |
) |
|
|
|
|
| Accounts
payable |
|
|
(37,424 |
) |
|
|
83,816 |
|
| Accrued
Expenses |
|
|
73,553 |
|
|
|
629,033 |
|
| Accrued
payroll and related |
|
|
23,880 |
|
|
|
435,239 |
|
| Customer
deposits |
|
|
(231,100 |
) |
|
|
149,195 |
|
| Other
current assets |
|
|
45,465 |
|
|
|
(22,411 |
) |
| Other
current Liabilities |
|
|
52,337 |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| Net
cash provided by operating activities |
|
|
474,333 |
|
|
|
1,734,580 |
|
| CASH
FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
| Purchases
property and equipment |
|
|
(7,309 |
) |
|
|
(41,514 |
) |
| Purchases
of intangible assts |
|
|
(526,661 |
) |
|
|
(185,722 |
) |
| Repayments
on advances to related parties, net |
|
|
57,497 |
|
|
|
(47,688 |
) |
| Advances
to officers |
|
|
57,202 |
|
|
|
(63,871 |
) |
| Short-term
advances provided |
|
|
(10,953 |
) |
|
|
(518,770 |
) |
| Proceeds
from loans & investments |
|
|
- |
|
|
|
- |
|
| Net
cash used in investing activities |
|
|
(430,224 |
) |
|
|
(857,566 |
) |
| CASH
FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
| Repayments
on advances from related parties, net |
|
|
1 |
|
|
|
1,655 |
|
| Net
cash (used in) provided by financing activities |
|
|
1 |
|
|
|
1,655 |
|
| |
|
|
|
|
|
|
|
|
| Changes
in Foreign currency translation |
|
|
105,649 |
|
|
|
(44,534 |
) |
| Net
change in cash, cash equivalents and restricted cash |
|
|
149,758 |
|
|
|
834,135 |
|
| Cash,
cash equivalents and restricted cash, beginning of the year |
|
|
1,944,904 |
|
|
|
1,278,466 |
|
| Cash,
cash equivalents and restricted cash, end of the year |
|
$ |
2,094,662 |
|
|
$ |
2,112,601 |
|
| |
|
|
|
|
|
|
|
|
| SUPPLEMENT
DISCLOSURE OF CASH FLOW INFORMATION: |
|
|
|
|
|
|
|
|
| Cash
paid for interest |
|
$ |
- |
|
|
$ |
- |
|
| Cash
paid for income taxes |
|
$ |
- |
|
|
$ |
- |
|
| SUPPLEMENTAL
DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
| Conversion
of convertible note payable and accrued interest to common stock |
|
$ |
- |
|
|
$ |
- |
|
| Intellectual
property acquired with shares of common stock |
|
$ |
- |
|
|
$ |
- |
|
| Increase
in net assets and retained earnings for entity transferred by related party |
|
$ |
- |
|
|
$ |
- |
|
DEAR
CASHMERE GROUP HOLDING COMPANY
Notes
to Condensed Consolidated Financial Statements for the nine months ended September 30th, 2024
Note
1: Organization, Nature of Business and Principles of Consolidation
Dear
Cashmere was incorporated in Nevada on September 21, 2010 as a limited liability company.
On
February 25, 2021, Dear Cashmere Group Holding Company (“Dear Cashmere”) completed a reverse merger with Swifty Global (“SWIFTY”),
a technology company operating out of London, New York, and Dubai developing ground-breaking gambling technology solutions driving shareholder
value by accelerating innovation and usability. SWIFTY operates its swiped based betting app called Swifty Predictions, Swifty Sportsbook
and Casino platform. The holding company, Dear Cashmere also known as SWIFTY, primarily generates its revenue through its operating wholly
owned subsidiaries, Swifty Global UK Ltd, Swifty Technologies LLE-FZ, and Swifty NV.
SWIFY
holds UK and Curacao gambling licenses, with further licenses under partnerships in Ireland, South Africa and a pending license in Malta.
The company has also received certification from GLI. The GLI certification is a requirement to operate in the highly regulated gambling
market as it confirms that the product has been successfully tested and is certified to be compliant according to the relevant country
regulations.
On
April 1, 2022, James Gibbons, the Company’s Chief Executive Officer (“CEO”) and a controlling stockholder, transferred
100% of his individual shares in Swifty Global FZ LLE (“Swifty FZ”) to Dear Cashmere under a Share Transfer Agreement (“STA”),
thereby making Swifty FZ a wholly owned subsidiary of Dear Cashmere. Due to location-related issues in Fujairah, UAE, Swifty FZ was subsequently
shut down. The CEO then established a new entity, Swifty Technologies LLE-FZ (“Swifty Technologies”), in Dubai, UAE, and
transferred all operations of Swifty FZ to this entity. On January 1, 2024, the CEO transferred 100% of his individual shares in Swifty
Technologies to Dear Cashmere through an STA, making Swifty Technologies a wholly owned subsidiary of Dear Cashmere.
On
July 1st, 2022, James Gibbons, the Company’s, CEO and a controlling stockholder transferred 100% of the shares held by him as an
individual in Swifty NV to Dear Cashmere pursuant to a Share Transfer Agreement at which time Swifty NV became a wholly owned subsidiary
of Dear Cashmere. When Swifty NV was transferred to Dear Cashmere it had not commenced operations.
Note
2: Basis of Preparation and Summary of significant Accounting Policies
Basis
of Presentation
The consolidated financial statements include the financial statements of Dear Cashmere as wells known as SWIFTY and its wholly owned
subsidiaries;
Swifty
UK
Swifty
Technologies
Swifty
NV
The
entities above are collectively referred to as the “Company”, “we”, “us”, or “our”
The
accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the
United States (“US GAAP”). All intercompany accounts and transactions have been eliminated upon consolidation.
Foreign
Currency Transactions and Functional Currency
The
Company’s functional and reporting currency is the United States dollar (“USD”). Transactions in foreign currencies
are recorded at the exchange rate prevailing on the date of the transaction. Foreign currency transaction gains and losses resulting
from remeasurement are recognized in other income, net within the consolidated statements of operations. The resulting monetary assets
and liabilities are translated into U.S. dollars at exchange rates prevailing on the balance sheet date. Revenue and expense components
are translated to U.S. dollars at weighted-average exchange rates in effect during the period.
Comprehensive
income (loss) consists of foreign currency translation adjustments related to the effect of translating the accounts and transactions
of the Company’s subsidiaries whose functional currency is something other than the United Stated Dollar (“USD”). Swifty
UK, Swifty NV and Swifty FZ’s functional currency has been determined to be the Great British Pound (“GBP”), the Euro
(“EUR”), and the Emirati Dirham (“AED”), respectively. The financial statements of Swifty UK, Swifty NV, and
Swifty FZ are translated into USD in accordance with ASC 830, using period-end rates of exchange for assets and liabilities, and average
rates of exchange for the period for revenues, costs, and expenses and historical rates for equity. Translation adjustments resulting
from the process of translating the local currency financial statements into the USD are included in determining other comprehensive
income (loss). Cumulative translation gains or losses are presented in the consolidated statements of operations and comprehensive income.
Concentration
of Credit Risk
The
Company primarily transacts its business with one financial institution. The amount on deposit in that one institution may from time
to time exceed the federally- insured limit of $250,000. Any loss incurred or a lack of
access to such funds above the FDIC limit could have a significant adverse impact on the Company’s financial condition, results
of operations and cash flows.
Use
of Estimates
The
preparation of these consolidated financial statements in conformity with US GAAP requires the Company to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the related disclosure of contingent assets and liabilities at the date
of these consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company
bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances.
Accordingly, actual results may differ from these estimates. Significant estimates include the useful lives of property and equipment
assumptions used in assessing impairment for long-term assets, and the fair value of equity-based compensation.
Cash
and Cash Equivalents
Cash
and cash equivalents consist of all cash balances and highly liquid investments with an original maturity of three months or less. Because
of the short maturity of these investments, the carrying amounts approximate their fair value. The Company maintained cash and cash equivalents
with various third-party payment providers and wallets.
Accounts
Receivable
Accounts
receivables are stated at cost, net of an allowance for credit losses. The Company maintains allowances for doubtful accounts for estimated
losses resulting from the failure of customers to make required payments. The Company reviews the accounts receivable on a periodic basis
and makes allowances where there is doubt as to the collectability of individual balances. In evaluating the collectability of individual
receivable balances, the Company considers many factors, including the age of the balance, the customer’s payment history, its
current creditworthiness and current economic trends. As of September 30th, 2024 and December 31st, 2023, management
did not deem an allowance for credit losses to be necessary based on their evaluation.
Contract
Assets
In
accordance with ASC 340-40-25-1, the Company capitalizes the incremental contract costs incurred to acquire customer contracts which
generally consist of commissions paid to agents. The customer contract agreement typically includes a contractual period of five years,
with potential extensions. We capitalize the commissions paid to agents as contract costs and amortize these costs into sales and marketing
on the straight-line basis over five years (the anticipated period of benefit). These capitalized costs are presented on the consolidated
balance sheets as contract assets and are included in both current and long-term.
Property
and Equipment
The
Company states property and equipment at cost less accumulated depreciation. Expenditures for maintenance and repairs are charged to
operations as incurred; additions, renewals and betterments are capitalized. When property and equipment assets are retired or otherwise
disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any resulting gain or loss is
recorded as an operating expense. The Company computes depreciation using the straight-line method over the estimated useful lives of
the assets with no residual value of property and equipment.
Intangible
Assets
Intangible
assets consist of intellectual property (“IP”) and software development costs associated with our proprietary platform. The
capitalized IP reflects the costs we incurred to acquire the IP. The IP was acquired with shares of common stock with an estimated fair
value of $1,000,000 based on the OTC market price of our stock on the date acquired.
Costs
associated with internally developed software are expensed as incurred unless they meet generally accepted accounting criteria for deferral
and subsequent amortization. Software development costs incurred prior to the application development stage are expensed as incurred.
For costs that are capitalized, the subsequent amortization is the straight-line method over the remaining economic life of the product,
which is estimated to be ten years, and begins once software is ready for its intended use.
Impairment
of Long-lived Assets
The
Company reviews the carrying value of its long-lived assets, including property equipment and finite-lived intangible assets, for impairment
whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimate future cash flows
expected to result from its use and eventual disposition. In cases where undiscounted cash flows are less than the carrying value of
an asset group, an impairment loss is recognized equal to an amount by which the asset group’s carrying value exceeds the fair
value of assets. The factors considered by management in performing this assessment include current operating results, trends and prospects,
the manner in which the property is used, and the effects of customer loss, obsolescence, demand, competition, and other economic factors.
For the quarter ended September 30, 2024 and year ended December 31, 2023, the Company did not record impairment charges against its
long-lived assets.
Client
Balance
Our
customers maintain digital wallets on our gaming platform. Cash related to these accounts may be drawn at the customer’s request.
The cash residing in the digital wallets at a reporting period is after withdrawals and winnings. These balances have been classified
within the other current liabilities.
Revenue
Recognition
The
Company recognizes revenue in accordance with Accounting Standard Codification (“ASC”) Topic 606, Revenue from Contracts
with Customers, and the related amendments, which requires revenue to be recognized in a manner that depicts the transfer
of goods or services to customers in amounts that reflect the consideration to which the entity expects to be entitled in exchange for
those goods or services. We determine revenue recognition through the following steps:
| ● | identification
of the contract, or contracts, with a customer; |
| ● | identification
of the performance obligations in the contract; |
| ● | determination
of the transaction price; |
| ● | allocation
of the transaction price to the performance obligations in the contract; and |
| ● | recognition
of revenue when, or as, we satisfy a performance obligation. |
The
Company’s revenue consists of its percentage of net gaming revenue (“NGR”) generated through its gaming platform through
users playing (i) online gambling or (ii) sportsbook betting. The Company’s proprietary gaming platform processes all player payments
and determines the players winnings and the Company’s NGR. Therefore, the Company recognizes revenue upon the five revenue recognition
criteria being met which occurs when all gaming and betting events have concluded and the amount of consideration or the transaction
price to be received is known. The Company presents revenue on a net basis which represents the amount of monies retained by the Company
after player payouts.
The
majority of NGR is generated outside of the United States.
Stock
Based Compensation
The
Company accounts for stock-based payments to employees and non-employees in accordance with ASC 718, “Stock Compensation”
(“ASC 718”). Stock-based payments to employees and non-employees can include grants of stocks, grants of stock options and
issuance of warrants that are recognized in the consolidated statement of operations based on their fair values at the date of grant.
To date, we have only granted shares of common stock for services.
The
Company calculates the fair value of option grants and warrant issuances utilizing the Binomial pricing model. The amount of stock-based
compensation recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest.
The
resulting stock-based compensation expense for both employee and non-employee awards is generally recognized on a straight-line basis
over the period in which the Company expects to receive the services or benefit, which is generally the vesting period.
The
Company accounts for forfeitures as they occur.
Advertising
Expense
Advertising
costs are expensed in the period incurred and totaled $13,697 and $55,029, respectively, during the nine months ended September 30, 2024
and 2023, respectively, and are included in sales and marketing expenses on the consolidated statements of operations.
Fair
Value of Financial Instruments
The
Company defines fair value as the exchange price that would be received from the sale of an asset or paid to transfer a liability in
the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement
date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable
inputs. The authoritative guidance describes three levels of inputs that may be used to measure fair value:
| ● | Level
I—Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets; |
| ● | Level
II—Observable inputs other than Level I prices, such as unadjusted quoted prices for similar assets or liabilities in active markets,
unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable
or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and |
| ● | Level
III—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets
or liabilities. These inputs are based on the Company’s own assumptions used to measure assets and liabilities at fair value and
require significant management judgment or estimation. |
The
categorization of a financial instrument within the fair value hierarchy is based upon the lowest level of input that is significant
to its fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement
in its entirety requires management to make judgments and consider factors specific to the assets or liabilities.
The
Company did not identify any assets and liabilities that are required to be presented on the consolidated balance sheets at fair value
in accordance with the relevant accounting standards. The carrying values of cash, trade payables, and short-term payables approximate
their fair values due to the short maturities of these instruments.
Related
Parties
Parties
are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are
controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management,
members of the immediate families of principal owners of the Company and its management and other parties with which the Company may
deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one
of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all related party
transactions (see Note 9).
Segment
Reporting
The Company operates in one reportable segment, generating gross gaming revenue from its digital platforms. The Company’s chief
operating decision makers, the Company’s chief executive officer and chief financial officer, manage the Company’s operations
as a whole.
Income
Taxes
The
Company uses the asset and liability method in accounting for income taxes. Under this method, deferred income tax assets and liabilities
are determined based on the difference between financial reporting and tax bases of assets and liabilities and are measured using the
enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is provided to
offset any net deferred tax assets for which management believes it is more likely than not that the net deferred asset will not be realized.
The
Company applies the provisions of ASC Topic 740-10-25, Income Taxes – Overall – Recognition (“ASC Topic 740-10-25”)
with respect to the accounting for uncertainty of income tax positions. ASC Topic 740-10-25 clarifies the accounting for uncertainty
in income taxes recognized in a company’s consolidated financial statements and prescribes a recognition threshold and measurement
attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC
Topic 740-10-25 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure,
and transition. We are currently not subject to income taxes in the United States.
Leases
The
Company accounts for leases under ASC Topic 842, Leases. Operating leases are included in operating lease right-of-use (“ROU”)
assets and operating lease liabilities on the consolidated balance sheets. The Company leases
an office and warehouse to conduct business. The Company has elected not to recognize right-of-use assets and lease liabilities for short-term
leases that have a term of 12 months or less.
Operating
lease ROU assets represent the right to use the leased asset for the lease term and
operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement
date. As most leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available
at the adoption date in determining the present value of future payments. Operating lease expense is recognized on a straight-line basis
over the lease term and is included in general and administrative expenses in the consolidated statements of operations.
The
Company does not currently have any leases that meet the criteria of ASC Topic 842.
Recent
Accounting Pronouncements Adopted
In
September 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), which provides guidance
on how an entity should measure credit losses on financial instruments. The ASU is effective for smaller reporting and non-public entities
for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Effective January 1, 2023, the
Company adopted this ASU which did not have a material impact on its consolidated financial statements.
Other
pronouncements issued by the FASB or other authoritative accounting standards groups with future effective dates are either not applicable
or are not expected to be significant to the Company’s financial position, results of operations or cash flows.
Reclassification
Certain
prior year balances were reclassified to conform to the current year’s presentation. These reclassifications had no impact on net income
or earnings per share.
Note
3: Short-Term Advances
The Company has provided advances to affiliated companies for working capital needs. These advances have no specific repayment terms
and do not bear interest. As of September 30, 2024, and as of December 31,2023, balances remaining outstanding on these advances totaled
$488,755 and $477,802 respectively, as presented on the consolidated balance sheets within Short Term Loans and Advances.
Note
4: Property and Equipment
The
following table presents property and equipment as of September 30, 2024 and December 31, 2023:
| | |
Useful Life in Years | | |
September 30,
2024 | | |
December 31,
2023 | |
| Computer Equipment | |
3 | | |
$ | 56,501 | | |
$ | 47,858 | |
| Furniture | |
3 | | |
| 24,175 | | |
| 24,174 | |
| Total Property and Equipment | |
| | |
| 80,676 | | |
| 72,032 | |
| | |
| | |
| | | |
| | |
| Less: Accumulated Depreciation | |
| | |
| (50,790 | ) | |
| (31,383 | ) |
| Property and Equipment, net | |
| | |
$ | 29,886 | | |
$ | 40,649 | |
Depreciation
expense for the nine months ended September 30, 2024 and year ended December 31, 2023 was $18,072 and $20,194, respectively.
Note
5: Intangible Assets
Intangible
assets consist of acquired IP and costs incurred to develop software for internal use.
The
following table presents intangible assets as of September 30, 2024, and December 31, 2023:
| | |
Useful Life in Years | | |
September 30,
2024 | | |
December 31,
2023 | |
| Intellectual Property | |
10 | | |
$ | 1,000,000 | | |
$ | 1,000,000 | |
| Intellectual Property - Software Development | |
10 | | |
| 1,030,361 | | |
| 1,015,496 | |
| Intellectual Property - Software Development (Whitelabel) | |
10 | | |
| 1,455,365 | | |
| 890,319 | |
| Total Intangible Assets | |
| | |
| 3,485,726 | | |
| 2,905,815 | |
| Less: Accumulated Amortization | |
| | |
| (178,690 | ) | |
| (71,961 | ) |
| Intangible Assets, Net of Amortization | |
| | |
$ | 3,307,036 | | |
$ | 2,833,854 | |
Amortization
expense for nine months ended September 30, 2024 and the year ended December 31, 2023 was $53,479 and $71,961, respectively and also
there is a R&D credit of $48,307 for the nine months ended September 30, 2024. As of September 30,2024, the $1,000,000 IP and the
Whitelabel IP were not yet in use. Therefore, these assets are not yet being amortized.
Note
6: Convertible Note Payable
The
Company has promised to pay to the order of AES CAPITAL MANAGEMENT, LLC and its authorized successors and permitted assignors (“Holder”),
the aggregate principal face amount of One Hundred Seventy Five Thousand Dollars (U.S. $175,000) on November 30, 2022 (“Maturity
Date”) and to pay interest on the principal amount outstanding hereunder at the rate of 8% per annum commencing on November 30,
2021 (“Issuance Date”). However, as of September 30, 2024 the holder holds principal value of $136,529 and as of December
31, 2023, the Holder has converted principal and interest of $38,471 and $14,000, respectively, into 5,247,095 shares of common stock.
At the time of conversion, the fair value of the shares was $.0636 per share or $333,715 based on the OTC market price. Therefore, we
recognized a loss of $281,244 on the partial settlement of this convertible note payable which was been included in other expenses on
the accompanying consolidated statements of income.
Payment
Conditions
| ● | The
holder may elect to settle the principal amount of convertible note by check or wire transfer; or |
| ● | The
holder may also elect to settle the principal amount of the convertible note by conversion into shares of common stock of Dear Cashmere
in following manner: |
During
the first 6 months the Note is in effect, the Holder of this Note is entitled, at its option, to convert all or any amount of the principal
face amount of this Note then outstanding into shares of the Company’s common stock (the “Common Stock”) at a price (“Conversion
Price”) of $0.75 per share (the “Fixed Price”). In the event, the Company does not have a registration statement qualified
within the 6th monthly anniversary of the Issuance Date of the Note under which all the shares issuable upon conversion of this Note
are registered, the Fixed Price shall be reduced to $0.50 per share. In no event shall the Holder be allowed to effect a conversion if
such conversion, along with all other shares of Company Common Stock beneficially owned by the Holder and its affiliates would exceed
4.99% of the outstanding shares of the Common Stock of the Company (which may be increased up to 9.9% upon 60 days’ prior written
notice by the Investor). The conversion discount, look back period and other terms will be adjusted on a ratchet basis if the Company
offers a more favorable conversion discount, prepayment rate, interest rate, (whether through a straight discount or in combination with
an original issue discount), look back period or other more favorable term to another party for any financings while this Note is in
effect, including but not limited to defaults, penalties and the remedy for such defaults or penalties.
Interest
on any unpaid principal balance of this Note shall be paid at the rate of 8% per annum. Interest shall be paid by the Company in shares
of common stock (“Interest Shares”) or cash at the holder’s option. The dollar amount converted into Interest Shares
shall be all or a portion of the accrued interest calculated on the unpaid principal balance of this Note to the date of such notice
Note
7: Stockholders’ Equity
The
Company is authorized to issue 50,000,000 shares of preferred stock at $0.001 par value, as of September 30, 2024 and December 31, 2023,
49,999,900 and 49,999,900 shares were issued and outstanding, respectively. One share of preferred stock is convertible into 100 shares
of common stock. Each share of preferred stock provides for 500 votes. Therefore, preferred stockholders hold super voting rights.
The
Company is authorized to issue 100,000,000 shares of common stock, $0.001 par value, as of September 30, 2024 and December 31, 2023,
53,763,611 and 53,513,611 shares were issued and outstanding, respectively.
Note
8: Earning Per Share
Basic
net income per share is computed by dividing the net income by the weighted-average number of common shares outstanding for the period.
Diluted earnings per share is computed by adjusting the weighted-average number of common shares outstanding to include common stock
issuable upon the conversion of convertible preferred stock and convertible notes. For periods in which the Company reports net losses,
diluted net loss per share is the same as basic net loss per share because dilutive common shares are not assumed to have been issued
if their effect is anti-dilutive.
| | |
September 30,
2024 | | |
September 30,
2023 | |
| Basic EPS | |
| | |
| |
| Numerator | |
| | |
| |
| Net Income attributable to common stockholders | |
$ | 575,564 | | |
$ | 445,342 | |
| Denominator | |
| | | |
| | |
| Weighted average shares outstanding | |
| 53,593,101 | | |
| 47,961,797 | |
| Basic earnings per share | |
$ | 0.01 | | |
$ | 0.01 | |
| | |
| | | |
| | |
| Diluted EPS | |
| | | |
| | |
| Numerator | |
| | | |
| | |
| Net income attributable to common stockholders | |
$ | 575,564 | | |
$ | 445,342 | |
| Denominator | |
| | | |
| | |
| Number of shares used for basic earnings per share | |
| 53,593,101 | | |
| 47,961,797 | |
| Shares of common stock issuable upon conversion of convertible note payable | |
| 1,484,012 | | |
| 1,484,012 | |
| Shares of common stock issuable upon conversion of preferred stock | |
| 4,999,990,000 | | |
| 4,999,990,000 | |
| Number of shares used for diluted EPS computation | |
| 5,055,067,113 | | |
| 5,049,435,809 | |
| Diluted earnings per share | |
$ | 0.00 | | |
$ | 0.00 | |
Note
9: Related Party Transactions
During
the nine months ended September 30, 2024 and year ended December 31, 2023 the Company had the following related party transactions:
Advances
to Related Parties
The
Company provided a short-term advance to an entity owned and controlled by the Company’s CEO and a controlling stockholder. The
advance has no specific repayment terms and bears no interest.
As
of September 30, 2024 and December 31, 2023 the balance due on the advances was $0 and $57,497, respectively, and is presented on the
consolidated balance sheets as “advances to related parties” within current assets.
Due
From Officers
The
Company provided its CEO and CFO, who also hold all of the issued and outstanding preferred stock, advances. The advances have no specific
repayment terms and bear no interest. As of September 30, 2024 and December 31, 2023, the balance due on the advances was $165,144 and
$222,346, respectively, and is presented on the consolidated balance sheets as “due from officers” within long-term assets.
Due
to Related Party
The
Company received working capital advances from entities that our CFO holds substantial control in and is an officer and director. The
advances have no specific repayment terms and bear no interest. As of September 30, 2024 and December 31, 2023, the total advances outstanding
were $476,400 and $476,399, respectively.
Note
10: Contingencies
From
time to time, claims are made against the Company in the ordinary course of business, which could result in litigation. Claims and associated
litigation are subject to inherent uncertainties and unfavorable outcomes could occur, such as monetary damages, fines, penalties, or
injunctions prohibiting the Company from selling one or more products or engaging in other activities. The occurrence of an unfavorable
outcome in any specific period could have a material adverse effect on the Company’s results of operations for that period or future
periods. The Company is not presently a party to any pending or threatened legal proceedings.
Note
11: Subsequent Events
No
events have occurred subsequent to the balance sheet date and through the date of these consolidated financial statements that would
require adjustment to or disclosure in the financial information referred to above.
17
Exhibit 99.4
SIGNING DAY SPORTS, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS
The following unaudited pro forma condensed combined
financial information combines the historical consolidated financial position and results of operations of Signing Day Sports, Inc. (“Signing
Day Sports” or “SGN”) and Dear Cashmere Group Holding Company d/b/a Swifty Global (“Swifty Global”). On
January 28, 2025, Signing Day Sports entered into a Stock Purchase Agreement (“SPA”) to acquire 99.13% of the issued and outstanding
capital stock of Swifty Global. Under the terms of the SPA, James Gibbons and Nicolas Link (the “Sellers”) will transfer all
of their Swifty Global capital stock to Signing Day Sports, and in exchange, they will receive (i) 364,841 shares of Signing Day Sports
common stock, equal to 19.99% of the issued and outstanding common stock as of the date of the SPA (1,825,119 shares), and (ii) the balance
in the form of 19,782.720 shares of convertible preferred stock that will have no voting or dividend rights, and which will automatically
convert into 19,782,720 shares of SGN common stock upon obtaining stockholder approval and the clearance of an initial listing application
by The Nasdaq Stock Market LLC (the “Automatic Conversion”).
The unaudited pro forma condensed combined financial
information has been prepared to give effect to the following:
| ● | Business Combination Accounting: The acquisition of Signing
Day Sports by Swifty Global in accordance with Financial Accounting Standard Boards (“FASB”) Accounting Standards Codification
(“ASC”) Topic 805, Business Combinations (“ASC 805”). The transaction will be accounted
for as a reverse acquisition with Swifty Global being deemed the acquiring company and Signing Day Sports being deemed the
acquiree for accounting purposes. Under ASC 805, Swifty Global, as the accounting acquirer, will record the assets acquired and liabilities
assumed of Signing Day Sports in the transaction at their fair values as of the acquisition date. |
| ● | Share Distribution: The issuance of Signing Day Sports
common stock and convertible preferred stock to the Sellers in exchange for Swifty Global capital stock, resulting in post-transaction
shareholdings of approximately 8.24% by legacy Signing Day Sports shareholders and approximately 91.76% by the Sellers on a fully-diluted
basis based on the number of shares of Signing Day Sports common stock outstanding on the date of the SPA (1,825,119 shares). However,
since the preferred stock have no voting or voluntary conversion rights, the legacy SGN stockholders will retain voting control until
the conditions for the Automatic Conversion have occurred. |
| ● | Reclassifications: Adjustments and reclassifications
necessary to conform the historical financial statement presentations of Swifty Global to those of Signing Day Sports. Such reclassification
adjustments had no effect on net loss or net loss per share of Swifty Global. |
| ● | Transaction Costs: The incorporation of certain transaction
costs related to the acquisition. |
The accompanying unaudited pro forma condensed
combined balance sheets as of September 30, 2024 were prepared as if the acquisition of Signing Day Sports, as the accounting acquiree,
pursuant to the SPA had occurred as of September 30, 2024, and the unaudited pro forma condensed combined statements of operations for
the nine months ended September 30, 2024 and for the fiscal year ended 2023 were prepared as if the transaction had occurred as of January
1, 2023. The unaudited pro forma condensed combined financial information has been derived from and should be read in conjunction with
the following:
| ● | The audited consolidated financial statements of Signing Day
Sports included in its Annual Report on Form 10-K for the year ended December 31, 2023. |
| ● | The unaudited financial statements of Signing Day Sports for
the nine months ended September 30, 2024, as presented in the Company’s Quarterly Report on Form 10-Q for the quarter ended September
30, 2024. |
| ● | The audited consolidated financial statements of Swifty Global
for the year ended December 31, 2023. |
| ● | The unaudited financial statements of Swifty Global for the
nine months ended September 30, 2024. |
| ● | The sections entitled “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” included in Signing Day Sports’ Annual Report on Form 10-K for
the year ended December 31, 2023, and in the Quarterly Report on Form 10-Q for the quarter ended September 30, 2024. |
The unaudited pro forma condensed combined financial
information is provided for illustrative purposes only. It is not necessarily, and should not be assumed to be, indicative of the actual
results that would have been achieved had the acquisition been completed as of the dates indicated or that may be achieved in the future.
In addition, the pro forma combined financial information does not consider potential effects of changes in market conditions, anticipated
synergies, operating efficiencies, tax benefits, or other factors. The preliminary allocation of the pro forma purchase price is subject
to adjustment and may vary significantly from the actual purchase price allocation that will be recorded upon the consummation of the
transaction.
UNAUDITED PRO FORMA CONDENSED
COMBINED BALANCE SHEETS AS OF SEPTEMBER 30, 2024
| | |
Signing Day
Sports, Inc. | | |
Dear
Cashmere
Group
Holding
Company | | |
Transaction
Accounting
Adjustments | | |
Pro Forma
Combined | |
| ASSETS | |
| | |
| | |
| | |
| |
| Current assets | |
| | |
| | |
| | |
| |
| Cash and cash equivalents | |
$ | 1,408 | | |
$ | 2,094,662 | | |
$ | - | | |
$ | 2,096,070 | |
| Accounts receivable | |
$ | 23,668 | | |
$ | 471,775 | | |
$ | - | | |
$ | 495,443 | |
| Prepaid expenses | |
$ | 113,520 | | |
$ | - | | |
$ | - | | |
$ | 113,520 | |
| Short term loans and advances | |
$ | - | | |
$ | 488,755 | | |
$ | - | | |
$ | 488,755 | |
| Contract assets | |
$ | - | | |
$ | 294,707 | | |
$ | - | | |
$ | 294,707 | |
| Other current assets | |
$ | 106,389 | | |
$ | 421,300 | | |
$ | - | | |
$ | 527,689 | |
| Total current assets | |
$ | 244,985 | | |
$ | 3,771,199 | | |
$ | - | | |
$ | 4,016,184 | |
| | |
| | | |
| | | |
| | | |
| | |
| Non-current assets | |
| | | |
| | | |
| | | |
| | |
| Property and equipment, net | |
$ | 19,231 | | |
$ | 29,886 | | |
$ | - | | |
$ | 49,117 | |
| Intangible assets, net of amortization | |
$ | 10,725 | | |
$ | 3,307,036 | | |
$ | (10,725 | ) | |
$ | 3,307,036 | |
| Internally developed software, net | |
$ | 712,442 | | |
$ | - | | |
$ | - | | |
$ | 712,442 | |
| Contract assets, less current portion | |
$ | - | | |
$ | 736,335 | | |
$ | - | | |
$ | 736,335 | |
| Operating lease right of use asset, net | |
$ | 150,008 | | |
$ | - | | |
$ | - | | |
$ | 150,008 | |
| Due from officers | |
| | | |
$ | 165,144 | | |
$ | - | | |
$ | 165,144 | |
| Other non-current assets | |
$ | 24,000 | | |
$ | - | | |
$ | - | | |
$ | 24,000 | |
| Goodwill | |
$ | - | | |
$ | - | | |
$ | 6,357,636 | | |
$ | 6,357,636 | |
| Total non-current assets | |
$ | 916,406 | | |
$ | 4,238,401 | | |
$ | 6,346,911 | | |
$ | 11,501,718 | |
| | |
| | | |
| | | |
| | | |
| | |
| Total assets | |
$ | 1,161,391 | | |
$ | 8,009,600 | | |
$ | 6,346,911 | | |
$ | 15,517,902 | |
| | |
| | | |
| | | |
| | | |
| | |
| Current liabilities | |
| | | |
| | | |
| | | |
| | |
| Convertible note payable | |
$ | - | | |
$ | 136,529 | | |
$ | - | | |
$ | 136,529 | |
| Accounts payable | |
$ | 2,011,127 | | |
$ | 236,937 | | |
$ | - | | |
$ | 2,248,064 | |
| Accrued liabilities | |
$ | 219,974 | | |
$ | 217,990 | | |
$ | 568,500 | | |
$ | 1,006,464 | |
| Accrued payroll and bonuses | |
| | | |
$ | 406,391 | | |
| | | |
$ | 406,391 | |
| Client balance | |
$ | - | | |
$ | 303,479 | | |
$ | - | | |
$ | 303,479 | |
| Loans payable | |
$ | 281,030 | | |
$ | - | | |
$ | - | | |
$ | 281,030 | |
| Deferred revenue | |
$ | 4,576 | | |
$ | - | | |
$ | - | | |
$ | 4,576 | |
| Advances from related parties | |
$ | - | | |
$ | 476,400 | | |
$ | - | | |
$ | 476,400 | |
| Current operating lease right of use liability | |
$ | 87,994 | | |
$ | - | | |
| | | |
$ | 87,994 | |
| Other current liabilities | |
$ | - | | |
$ | 52,337 | | |
$ | - | | |
$ | 52,337 | |
| Total current liabilities | |
$ | 2,604,701 | | |
$ | 1,830,062 | | |
$ | 568,500 | | |
$ | 5,003,263 | |
| | |
| | | |
| | | |
| | | |
| | |
| Non-current liabilities | |
| | | |
| | | |
| | | |
| | |
| Noncurrent operating lease liability | |
$ | 77,761 | | |
$ | - | | |
$ | - | | |
$ | 77,761 | |
| Total Liabilities | |
$ | 2,682,462 | | |
$ | 1,830,062 | | |
$ | 568,500 | | |
$ | 5,081,024 | |
| | |
| | | |
| | | |
| | | |
| | |
| Stockholders’ equity | |
| | | |
| | | |
| | | |
| | |
| Common stock | |
$ | 2,175 | | |
$ | 53,764 | | |
$ | (53,764 | ) | |
$ | 2,175 | |
| Preferred Stock | |
$ | - | | |
$ | 50,000 | | |
$ | (50,000 | ) | |
$ | - | |
| Additional paid-in capital | |
$ | 20,848,483 | | |
$ | 2,414,024 | | |
$ | 9,543,926 | | |
$ | 32,806,433 | |
| Subscription receivable | |
$ | (11 | ) | |
$ | - | | |
| | | |
$ | (11 | ) |
| Members equity | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | |
| Retained earnings (accumulated deficit) | |
$ | (22,371,717 | ) | |
$ | 3,489,651 | | |
$ | (3,489,651 | ) | |
$ | (22,371,717 | ) |
| Other Comprehensive Income | |
$ | - | | |
$ | 172,100 | | |
$ | (172,100 | ) | |
$ | - | |
| Total stockholders’ equity (deficit) | |
$ | (1,521,070 | ) | |
$ | 6,179,538 | | |
$ | 5,778,411 | | |
$ | 10,436,880 | |
| Total liabilities and stockholders’ equity (deficit) | |
$ | 1,161,391 | | |
$ | 8,009,600 | | |
$ | 6,346,911 | | |
$ | 15,517,902 | |
The accompanying notes are an
integral part of these unaudited pro forma condensed combined financial statements.
UNAUDITED PRO FORMA CONDENSED
COMBINED STATEMENTS OF OPERATIONS FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 2024
| | |
Signing Day
Sports, Inc. | | |
Dear
Cashmere
Group
Holding
Company | | |
Transaction
Accounting
Adjustments | | |
Pro
Forma
Combined | |
| | |
| | |
| | |
| | |
| |
| Revenues, net | |
$ | 494,952 | | |
$ | - | | |
$ | - | | |
$ | 494,952 | |
| Net gaming revenues | |
$ | - | | |
$ | 5,117,583 | | |
$ | - | | |
$ | 5,117,583 | |
| Total revenues, net | |
$ | 494,952 | | |
$ | 5,117,583 | | |
$ | - | | |
$ | 5,612,535 | |
| | |
| | | |
| | | |
| | | |
| | |
| Cost of revenues | |
$ | 161,454 | | |
$ | - | | |
$ | - | | |
$ | 161,454 | |
| | |
| | | |
| | | |
| | | |
| | |
| Gross profit | |
$ | 333,498 | | |
$ | 5,117,583 | | |
$ | - | | |
$ | 5,451,081 | |
| Operating cost and expenses | |
| | | |
| | | |
| | | |
| | |
| Advertising and marketing | |
$ | 92,290 | | |
$ | 13,697 | | |
$ | - | | |
$ | 105,987 | |
| General and administrative | |
$ | 4,774,689 | | |
$ | 4,401,239 | | |
$ | - | | |
$ | 9,175,928 | |
| Depreciation and amortization | |
$ | - | | |
$ | 71,552 | | |
$ | - | | |
$ | 71,552 | |
| Total operating expense | |
$ | 4,866,979 | | |
$ | 4,486,487 | | |
$ | - | | |
$ | 9,353,466 | |
| Net income (loss) from operations | |
$ | (4,533,481 | ) | |
$ | 631,096 | | |
$ | - | | |
$ | (3,902,385 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Other income (expense) | |
| | | |
| | | |
| | | |
| | |
| Interest expense | |
$ | (199,982 | ) | |
$ | - | | |
$ | - | | |
$ | (199,982 | ) |
| Interest income | |
$ | 13,165 | | |
$ | - | | |
$ | - | | |
$ | 13,165 | |
| Deferred tax income | |
$ | 32,571 | | |
$ | - | | |
$ | - | | |
$ | 32,571 | |
| Foreign exchange gain | |
$ | - | | |
$ | 7,413 | | |
$ | - | | |
$ | 7,413 | |
| Other income (expense), net | |
$ | (725,054 | ) | |
$ | (62,944 | ) | |
$ | - | | |
$ | (787,998 | ) |
| Total other income (expense) | |
$ | (879,300 | ) | |
$ | (55,532 | ) | |
$ | - | | |
$ | (934,832 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Net income (loss) | |
$ | (5,412,781 | ) | |
$ | 575,564 | | |
$ | - | | |
$ | (4,837,217 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Weighted average shares outstanding | |
| | | |
| | | |
| | | |
| | |
| Basic | |
| 323,656 | | |
| 53,593,101 | | |
| | | |
| 323,656 | |
| Diluted | |
| 336,265 | | |
| 5,055,067,113 | | |
| | | |
| 336,265 | |
| | |
| | | |
| | | |
| | | |
| | |
| Net income (loss) per common share | |
| | | |
| | | |
| | | |
| | |
| Basic | |
$ | (16.72 | ) | |
$ | 0.01 | | |
| | | |
$ | (14.95 | ) |
| Diluted | |
$ | (16.10 | ) | |
$ | 0.00 | | |
| | | |
$ | (14.39 | ) |
The accompanying notes are an
integral part of these unaudited pro forma condensed combined financial statements.
UNAUDITED PRO FORMA CONDENSED
COMBINED STATEMENTS OF OTHER COMPREHENSIVE INCOME (LOSS)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024
| | |
Signing Day
Sports, Inc. | | |
Dear
Cashmere
Group
Holding
Company | | |
Transaction
Accounting
Adjustments | | |
Pro
Forma
Combined | |
| Net income (loss) | |
$ | (5,412,781 | ) | |
$ | 575,564 | | |
$ | - | | |
$ | (4,837,217 | ) |
| Other comprehensive income: | |
| | | |
| | | |
| | | |
| | |
| Foreign currency translation adjustments | |
$ | - | | |
$ | 105,649 | | |
$ | - | | |
$ | 105,649 | |
| Comprehensive income (loss) | |
$ | (5,412,781 | ) | |
$ | 681,213 | | |
$ | - | | |
$ | (4,731,568 | ) |
The accompanying notes are an
integral part of these unaudited pro forma condensed combined financial statements.
UNAUDITED PRO FORMA
CONDENSED COMBINED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2023
| | |
Signing Day
Sports, Inc. | | |
Dear
Cashmere
Group
Holding
Company | | |
Transaction
Accounting
Adjustments | | |
Pro
Forma
Combined | |
| Revenues, net | |
$ | 307,578 | | |
$ | - | | |
$ | - | | |
$ | 307,578 | |
| Net gaming revenues | |
$ | - | | |
$ | 8,728,942 | | |
$ | - | | |
$ | 8,728,942 | |
| Total revenues, net | |
$ | 307,578 | | |
$ | 8,728,942 | | |
$ | - | | |
$ | 9,036,520 | |
| Cost of revenues | |
$ | 40,387 | | |
$ | - | | |
$ | - | | |
$ | 40,387 | |
| | |
| | | |
| | | |
| | | |
| | |
| Gross profit | |
$ | 267,191 | | |
$ | 8,728,942 | | |
$ | - | | |
$ | 8,996,133 | |
| Operating cost and expenses | |
| | | |
| | | |
| | | |
| | |
| Advertising and marketing | |
$ | 439,700 | | |
$ | 74,247 | | |
$ | - | | |
$ | 513,947 | |
| General and administrative | |
$ | 4,575,672 | | |
$ | 5,702,613 | | |
$ | - | | |
$ | 10,278,285 | |
| Depreciation and amortization | |
$ | - | | |
$ | 92,155 | | |
$ | - | | |
$ | 92,155 | |
| Total operating expense | |
$ | 5,015,372 | | |
$ | 5,869,015 | | |
$ | - | | |
$ | 10,884,387 | |
| Net income (loss) from operations | |
$ | (4,748,181 | ) | |
$ | 2,859,927 | | |
$ | - | | |
$ | (1,888,254 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Other income (expense) | |
| | | |
| | | |
| | | |
| | |
| Interest expense | |
$ | (856,573 | ) | |
$ | - | | |
$ | - | | |
$ | (856,573 | ) |
| Deferred tax income | |
$ | 65,000 | | |
$ | - | | |
$ | - | | |
$ | 65,000 | |
| Unrealized foreign exchange loss | |
$ | - | | |
$ | (137,871 | ) | |
$ | - | | |
$ | (137,871 | ) |
| Other income, net | |
$ | 61,634 | | |
$ | (279,254 | ) | |
$ | - | | |
$ | (217,620 | ) |
| Total other income (expense) | |
$ | (729,939 | ) | |
$ | (417,125 | ) | |
$ | - | | |
$ | (1,147,064 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Net income (loss) | |
$ | (5,478,120 | ) | |
$ | 2,442,802 | | |
$ | - | | |
$ | (3,035,318 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Weighted average shares outstanding | |
| | | |
| | | |
| | | |
| | |
| Basic | |
| 276,012 | | |
| 48,321,666 | | |
| | | |
| 276,012 | |
| Diluted | |
| 276,012 | | |
| 5,050,716,914 | | |
| | | |
| 276,012 | |
| | |
| | | |
| | | |
| | | |
| | |
| Net income (loss) per common share | |
| | | |
| | | |
| | | |
| | |
| Basic | |
$ | (19.85 | ) | |
$ | 0.05 | | |
| | | |
$ | (11.00 | ) |
| Diluted | |
$ | (19.85 | ) | |
$ | 0.00 | | |
| | | |
$ | (11.00 | ) |
The accompanying notes are an integral
part of these unaudited pro forma condensed combined financial statements.
UNAUDITED PRO FORMA CONDENSED
COMBINED STATEMENTS OF OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31, 2023
| | |
Signing Day
Sports, Inc. | | |
Dear
Cashmere
Group
Holding
Company | | |
Transaction
Accounting
Adjustments | | |
Pro
Forma
Combined | |
| Net income (loss) | |
$ | (5,478,120 | ) | |
$ | 2,442,802 | | |
$ | - | | |
$ | (3,035,318 | ) |
| Other comprehensive income: | |
| | | |
| | | |
| | | |
| | |
| Foreign currency translation adjustments | |
$ | - | | |
$ | 60,108 | | |
$ | - | | |
$ | 60,108 | |
| Comprehensive income (loss) | |
$ | (5,478,120 | ) | |
$ | 2,502,910 | | |
$ | - | | |
$ | (2,975,210 | ) |
The accompanying notes are an integral
part of these unaudited pro forma condensed combined financial statements
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRO FORMA PRESENTATION
On January 28, 2025,
Signing Day Sports, Inc. (“Signing Day Sports” or “SGN”) entered into a Stock Purchase Agreement (“SPA”)
to acquire 99.13% of the issued and outstanding capital stock of Dear Cashmere Group Holding Company d/b/a Swifty Global (“Swifty
Global”). The transaction will be accounted for as a reverse acquisition in accordance with ASC 805, Business Combinations,
using the acquisition method of accounting, where Swifty Global being deemed the acquiring company and Signing Day Sports is deemed the
acquiree for accounting purposes.
The unaudited pro forma condensed combined balance
sheets as of September 30, 2024 were prepared as if the acquisition had occurred as of September 30, 2024, and the unaudited pro forma
condensed combined statements of operations for the nine months ended September 30, 2024 and for the fiscal year ended 2023 were prepared
as if the transaction had occurred as of January 1, 2023. These unaudited pro forma condensed combined financial statements do not include
adjustments for potential synergies, restructuring activities, or other anticipated cost savings.
The transaction is contingent upon obtaining stockholder
approval and the clearance of an initial listing application by The Nasdaq Stock Market LLC. As of the date of this filing, the up listing
has not yet occurred, and therefore, the acquisition is not yet finalized. Additionally, purchase consideration and the fair value of
the net assets acquired have not been fully determined. The amounts reflected in the pro-forma financial statements for the purchase consideration
and fair value of net assets acquired are preliminary and subject to adjustment upon the completion of the fair value measurement process.
The final determination of fair values may result in significant changes to goodwill, depreciation expense and amortization expense for
the periods presented.
Effective
November 18, 2024, Signing Day Sports effected a 1-for-48 reverse stock split of its outstanding common stock (the “Reverse
Stock Split”). Pursuant to the Reverse Stock Split, every 48 shares of issued and outstanding common stock were automatically combined
into one share of common stock, without any change in the par value per share. Signing Day Sports did not issue any fractional shares
in the Reverse Stock Split. The number of authorized shares of common stock and preferred under Signing Day Sports’s Second Amended
and Restated Certificate of Incorporation, as amended, remained unchanged at 150,000,000 shares and 15,000,000 shares, respectively.
Unless otherwise indicated, share numbers, per share data and earnings per share data throughout this document have been recast retroactively
to reflect the Reverse Stock Split.
NOTE 2. PURCHASE PRICE ALLOCATION
The preliminary purchase price for Signing Day
Sports is as follows:
| | |
February 11,
2025 | |
| Number of shares outstanding owned by Signing Day Sports sharholders | |
| 1,825,119 | |
| Multiplied by the price per share of Signing Day Sports common stock | |
$ | 2.65 | |
| Total preliminary purchase price | |
$ | 4,836,565 | |
When accounting for a reverse merger the consideration
transferred is measured using the most reliably measured fair value. As a publicly traded company on the NYSE American LLC (“NYSE
American”), Signing Day Sports shares are more reliably measurable than Swift Global’s held shares, which are traded on the
OTC Markets; accordingly, a stock price of approximately $2.65 per share was used in accounting for the acquisition based on the last
reported sale price of Signing Day Sports’s common stock on the NYSE American on February 11, 2025. The preliminary fair values
of the assets acquired, and liabilities assumed as of the acquisition date are as follows:
| Preliminary allocation of purchase consideration | |
September 30,
2024 | |
| Cash and cash equivalents | |
$ | 1,408 | |
| Accounts receivable | |
| 23,668 | |
| Prepaid expense | |
| 113,520 | |
| Other current assets | |
| 106,389 | |
| Property and equipment, net | |
| 19,231 | |
| Internally developed software, net | |
| 712,442 | |
| Operating lease right of use asset, net | |
| 150,008 | |
| Intangible assets, net | |
| 10,725 | |
| Other non-current assets | |
| 24,000 | |
| Goodwill | |
| 6,357,636 | |
| Total assets acquired | |
$ | 7,519,027 | |
| | |
| | |
| Accounts payable | |
$ | 2,011,127 | |
| Accrued liabilities | |
| 219,974 | |
| Deferred revenue | |
| 4,576 | |
| Current operating lease right of use liability | |
| 87,994 | |
| Loans payable | |
| 281,030 | |
| Noncurrent operating lease liability | |
| 77,761 | |
| Total liabilities assumed | |
$ | 2,682,462 | |
| | |
| | |
| Net assets acquired | |
$ | 4,836,565 | |
NOTE 3. PRO FORMA ADJUSTMENTS
The pro forma adjustments included in the unaudited
pro forma condensed combined financial statements reflect the following:
(a) Transaction Accounting Adjustments
– Adjustments to reflect the issuance of Signing Day Sports common and convertible preferred stock in exchange for Swifty Global
equity, and the elimination of Swifty Global’s historical equity balances.
(b) Transaction Costs – Transaction
cost is estimated to be approximately $6.4 million includes legal, advisory, audit and other professional service provider expenses that
will be paid in partly in cash and partly issue of equity. Transaction expenses incurred after September 30, 2024 of $0.6 million has
been included as accrued liabilities on the pro forma balance sheet as of September 30, 2024.
NOTE 4. LOSS PER SHARE
The unaudited pro forma net loss per share calculations
are based on the historical weighted average shares outstanding of Signing Day Sports, adjusted to reflect the issuance of shares in connection
with the acquisition. The pro forma calculations do not reflect potential dilution from convertible preferred stock or other securities.
NOTE 5. ACCOUNTING POLICIES
Management has performed a preliminary review
of the accounting policies of Signing Day Sports and Swifty Global and has determined that no material adjustments are necessary at this
time. However, finalization of the purchase accounting may result in certain adjustments upon further analysis.
8
v3.25.0.1
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Feb. 20, 2025 |
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