EX-99.3 4 ex99_3.htm EXHIBIT 99.3

 Society Pass Incorporated and AdActive Media CA Inc. and Thoughtful (Thailand) Co. Ltd.

Notes to the unaudited pro forma combined financial information

 

Society Pass Incorporated and Adactive Media CA Inc and Thoughtful (Thailand) Co. Ltd
Unaudited Proforma Combined Consolidated Balance Sheet as of March 31, 2022
(Expressed in United States Dollars)
                               
                               
    SOPA    AdActive Media CA(F)    Thoughtful Thailand Co., Ltd    Transaction Adjustments    Note    Pro Forma Combined 
ASSETS                              
Current assets:                              
Cash and cash equivalents  $30,967,561   $5,198   $24,985   $(700,306)   A/E   $30,297,438 
Due from related parties   —                —          $—   
Accounts receivable, net   47,574    492,231    131,795    (200,654)   E   $470,946 
Inventories   267,409         —      —          $267,409 
Deposits, prepayment and other receivables   5,798,748    1,000    90,877    (1,059)   E   $5,889,566 
Total current assets   37,081,292    498,429    247,657    (902,019)        36,925,359 
Non-current assets:                              
Intangible assets, net   3,200,000    —      —                3,200,000 
Property, plant and equipment, net   81,081    —      3,442    (1,542)   E    82,981 
Right of use assets, net   807,869    34,307                   842,176 
Customer based intangible asset                  1,105,000    C    1,105,000 
Goodwill   454,519         —      730,795    D    1,185,314 
                   —             
Total non-current assets   4,543,469    34,307    3,442    1,834,253         6,415,471 
Total assets  $41,624,761   $532,736   $251,099   $932,234        $43,340,830 
LIABILITIES AND SHAREHOLDERS'                              
DEFICIT                              
Current liabilities:                              
Accounts payables  $204,577    598,167    —      (450,591)   E    352,153 
Contract liabilities   18,644    —      —      —           18,644 
Accrued liabilities and other payables   778,073    284,000    11,004    (295,004)   E    778,073 
Due to related parties   25,411    14,857    518,061    (532,918)   E    25,411 
Loan        159,539    35,856    (45,395)   E    150,000 
Operating lease liabilities   302,101    15,292         12,382    E    329,775 
Due to first insurance funding   373,653         —      —           373,653 
Total current liabilities   1,702,459    1,071,855    564,921    (1,311,526)        2,027,709 
Non-current liabilities                              
Operating lease liabilities   508,750    19,104    —      —           527,854 
TOTAL LIABILITIES   2,211,209    1,090,959    564,921    (1,311,526)        2,555,563 
COMMITMENTS AND CONTINGENCIES                              
Common shares; $0.0001 par value, 95,000,000 shares authorized; 23,761,094 and 19,732,406 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively   2,375    4,037    59,781    (63,757)   A/B/E    2,436 
Preferred stock -Series 1        —                     —   
Preferred stock -Series 2        —                     —   
Additional paid-in capital   93,557,338    501,748         1,133,228    B/E    95,192,314 
Accumulated other comprehensive loss   (96,501)   —      —                (96,501)
Accumulated deficit   (47,309,429)   (1,064,008)   (322,306)   1,122,992    E    (47,572,751)
Current year earnings   (6,591,405)        (51,297)   51,297    E    (6,591,405)
                               
Total equity attributable to Society Pass Incorporated   39,562,378    (558,223)   (313,822)   2,243,760         40,934,093 
Non-controlling interest   (148,826)                       (148,826)
Total shareholders' deficit   39,413,552    (558,223)   (313,822)   2,243,760         40,785,267 
TOTAL LIABILITIES AND                              
SHAREHOLDERS' DEFICIT  $41,624,761    532,736   $251,099    932,234        $43,340,830 

 

A Adjustment to record the cash portion of the purchase price   $ 700,000  
           
  Record the common stock and warrant portion of the purchase price        
  Par value of 609,327 common shares at $0.0001 per share   $  61  
           
  Accumulated paid-capital portion of common shares        
  Total fair value of common stock and warrant compensation   $ 1,372,512  
  Par value of 609,327 common stock and 203,109 warrant at $0.0001 per share     (61 )
  Eliminate accumulated common stock     (59,781 )
  Eliminate retained deficit     322,306  
B Net adjustment to accumulated paid-in capital   $ 1,634,976  
           
C Customer based intangible assets   $ 1,105,000  
           
D Record goodwill on the transaction (based on June result)        
  Goodwill amount   $ 730,795  
           
  Total goodwill recorded   $ 730,795  
           
E Adjustment for assets and liabilities (March vs June)        
           
  Cash and cash equivalent   $ (306 )
  Property, plant and equipment, net   $ (1,542 )
  Account receivables   $ (200,654 )
  Deposits, prepayment and other receivables   $ (1,059 )
  Account payables   $ (450,591 )
  Accrued liabilities and other payables   $ (295,004 )
  Due to related parties   $ (532,918 )
  Loan   $ (45,395 )
  Operating lease liabilities   $ 12,382  
  Common shares   $ (63,818 )
  Additional paid-in capital   $ (501,748 )
  Accumulated deficit   $ 1,122,992  
  Current year earnings   $ 51,297  
           
F The purpose of this schedule and the adjusting items is to reconcile the AdActive Media Delaware financial statements to the starting point for the pro forma balance sheet shown above. These adjustments were necessary to separate AdActive Media California from its parent company AdActive Media Delaware since Society Pass Incorporated("SoPa") only purchased the California operation from AdActive Media Delaware. The amounts shown in the AdActive Media California column in the above table are the standalone balance sheet amounts of AdActive Media California and are the starting point for making the acquisition adjustments to combine SoPa with both AdActive Media California and Thoughtful Thailand Co., Ltd in the accompanying pro forma financial statements reconciliation as of March 31, 2022.

 

 1 

 

  

AdActive Media, Inc.
(United States business)
Combined Condensed Consolidated Balance Sheet
As of March 31, 2022
          
          
   AdActive Media Delaware  Adjustments to Eliminate AdActive Media Delaware Balances  AdActive Media California
    (Unaudited)    (Unaudited)    (Unaudited) 
ASSETS               
Current Assets:               
Cash and cash equivalents  $6,976    (1,778)  $5,198 
Accounts receivable   492,231    —      492,231 
Total current assets   499,207    (1,778)   497,429 
Property plant and Equipment, net   1,542    (1,542)   —   
Security deposits   1,000    —      1,000 
Right of Use - Assets   34,307    —      34,307 
Total Assets  $536,056    (3,320)  $532,736 
LIABILITIES AND STOCKHOLDERS’ EQUITY               
Current Liabilities:               
Accounts payable  $544,778   $53,389   $598,167 
Account payable - related party   15,163    (306)   14,857 
Accrued expenses   705,537    (705,537)   —   
Accrued liabilities and other payable   733,834    (449,834)   284,000 
Accrued salaries - Related party   127,379    (127,379)   —   
Accrued interest on loans   83,926    (83,926)   —   
Convertible note   67,500    (67,500)   —   
Lease liabilities   15,292    —      15,292 
Loan from related company   284,000    (284,000)   —   
SBA Loans   300,000    (140,461)   159,539 
Total Current Liabilities   2,877,409    (1,805,554)   1,071,855 
Operating lease liabilities   19,104    —      19,104 
Total Liabilities   2,896,513    (1,805,554)  $1,090,959 
Commitments and contingencies               
Convertible preferred shares; $0.0001 par value, 28,921,732 shares authorized, Nil undesignated as of March 31, 2022 and December 31, 2021, respectively Series 1 Preferred stock, $0.0001 par value, 21,000,000 authorized, and 11,507,260 shares issued and outstanding as of March 31, 2022 and December 31, 2021   581,004    (581,004)   —   
Series 2 Preferred stock, $0.0001 par value, 7,921,732 authorized, and 7,784,678 shares issued and outstanding as of March 31, 2022 and December 31, 2021   6,534,838    (6,534,838)   —   
Stockholders' Deficit               
Common stock, $0.0001 par value, 87,000,000 authorized, 40,372,553 and 40,350,212 shares issued and outstanding as of March 31, 2022 and  December 31, 2021, respectively   4,037    —      4,037 
Additional paid-in capital   35,542,475    (35,040,727)   501,748 
Accumulated deficit   (45,022,811)   43,958,803    (1,064,008)
Total stockholders' deficit   (9,476,299)   8,918,076    (558,223)
   $536,056   $(3,320)  $532,736 

 

Adjustments to separate AdActive Media CA from AdActive Media Delaware
 
Cash  $(1,778)
Property, plant and equipment  $(1,542)
Accounts payable grouping adjustment  $53,389 
Accounts payable - related party  $(306)
Accrued expenses  $(705,537)
Accrued liaibilities and other payable  $(449,834)
Accrued salaries - related party  $(127,379)
Accrued interest on loans  $(83,926)
Convertible note  $(67,500)
Loan from related company  $(284,000)
SBA loans  $(140,461)
Series 1 convertible preferred stock  $(581,004)
Series 2 convertible preferred stock  $(6,534,838)
Additional paid-in capital  $(35,040,727)
Accumulated deficit  $43,958,803 

 

 2 

 

 

Note 1 — Description of the Acquisition

On July 07, 2022, Society Pass Incorporated (the “Company” or “SOPA”) acquired all of the outstanding capital stock of wholly owned subsidiary of AdActive Media Inc., dba Thoughtful Media Group (“TMG DE”), the Seller which is AdActive Media CA,Inc (“TMG CA”) and Thoughtful (Thailand) Co., Ltd (“TMG Thailand”) pursuant to a Share Purchase Agreement (the “Agreement”) between SOPA and TMG DE.

AdActive Media CA,Inc, a company located in the California and Thoughtful (Thailand) Co., Ltd., a company located in Thailand operates an digital marketing and social media agency.

Pursuant to the terms of the Agreement, the total purchase price paid by SOPA for the AdActive Media CA,Inc and Thoughtful (Thailand) Co., Ltd.’s shares, that was payable to the Sellers as follows:

1) 609,327 shares of the Company’s common stock valued at $1.3 million

2) a warrant, expiring one year after the Closing Date on July 7, 2023, to purchase 203,109 shares of the Company’s common stock at an exercise price of $2.1335;

3) assumption of liabilities up to $700,000 of the TMG CA and the TMG Thailand, including two assumed loans, with an aggregate principal balance of $300,000 not including interest, payable by the Seller and the TMG CA (“Assumed Liabilities”).

Note 2 — Basis of Presentation

The following unaudited pro forma condensed combined financial information of the combined company is presented to illustrate the proposed effects of the Acquisition. The unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X, as amended by Securities and Exchange Commission (“SEC”) Final Rule Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses.” Release No. 33-10786 replaced the existing pro forma adjustment criteria with simplified requirements to depict the accounting for the transaction (“Transaction Accounting Adjustments”) and present the reasonably estimable synergies and other transaction effects that have occurred or are reasonably expected to occur (“Management’s Adjustments”). The combined company has elected not to present Management’s Adjustments and will only be presenting Transaction Accounting Adjustments in the unaudited pro forma condensed combined financial information.

The Thoughtful Thailand Co Ltd.’s financial statements disclosed on Exhibit 99.2 are derived from financial statements that were originally presented in Thai Bath. For purposes of presentation in the accompanying pro forma information, the Thai Baht financial information has been translated to US dollars using the then current rate of 33.1393 Thai Baht to the US dollar.

The unaudited pro forma condensed combined financial information and explanatory notes have been prepared to illustrate the effects of the Acquisition involving the Company and AdActive Media CA Inc. and Thoughtful (Thailand) Co. Ltd. under the acquisition method of accounting in accordance with Accounting Standards Codification (ASC) 805, Business Combinations, with Company treated as the accounting acquirer. Under the acquisition method of accounting, the identifiable assets acquired, and liabilities assumed of AdActive Media CA Inc. and Thoughtful (Thailand) Co. Ltd. are recognized and measured as of the acquisition date at fair value, defined in ASC 820, Fair Value Measurement, and added to those of the Company which are based on its respective historical financial information.

ASC 820 defines the term “fair value” and sets forth the valuation requirements for any asset or liability measured at fair value, expands related disclosure requirements and specifies a hierarchy of valuation techniques based on the nature of the inputs used to develop the fair value measures. Fair value is defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” This is an exit price concept for the valuation of the asset or liability. In addition, market participants are assumed to be buyers and sellers unrelated to the Company in the principal (or the most advantageous) market for the asset or liability. Fair value measurements for an asset assume the highest and best use by these market participants. As a result of these standards, the Company may be required to record assets which are not intended to be used or sold and/or to value assets at fair value measures that do not reflect the intended use of those assets. Many of these fair value measurements can be highly subjective and it is also possible that others, applying reasonable judgment to the same facts and circumstances, could develop and support a range of alternative estimated amounts.

Management has made significant estimates and assumptions in its determination of the Transaction Accounting Adjustments. As the unaudited pro forma condensed combined financial information has been prepared based on these preliminary estimates, the final amounts recorded might differ materially from the information presented.

Upon consummation of the Acquisition, a final determination of the fair value of ’s assets acquired and liabilities assumed will be performed. Any changes in the fair values of the net assets or total consideration as compared with the information shown in the unaudited pro forma condensed combined financial information may change the amount of the total purchase consideration allocated to goodwill and other assets and liabilities and may impact the Company’s statement of operations following the consummation of the Acquisition. The final consideration allocation may be materially different than the preliminary allocation presented in the unaudited pro forma condensed combined financial information.

The unaudited pro forma condensed combined financial information is provided for illustrative and information purposes only and is not intended to represent or necessarily be indicative of the combined company’s results of operations or financial condition had the Acquisition been completed on the dates indicated, nor do they purport to project Company’s results of operations or financial condition for any future period or as of any future date. The unaudited pro forma condensed combined financial information does not include any expected cost savings or operating synergies, which may be realized subsequent to the combination or the impact of any non-recurring activity and one-time transaction-related or integration-related items. Moreover, the pro forma adjustments represent best estimates based upon the information available to date and are preliminary and subject to change after more detailed information is obtained.

Note 3 — Accounting Policies and Reclassification Adjustments

The Company has not identified all adjustments necessary to conform AdActive Media CA Inc. and Thoughtful (Thailand) Co. Ltd.’s accounting policies to the Company’s accounting policies. Upon consummation of the Acquisition, or as more information becomes available, the Company will perform a more detailed review of AdActive Media CA Inc. and Thoughtful (Thailand) Co. Ltd. ’s accounting policies. Upon consummation of the Acquisition, the Company will perform a comprehensive review of its accounting policies. The Company may, as a result, identify additional differences between the accounting policies of the two companies which, when conformed, could have a material impact on the combined consolidated financial statements.

Under the acquisition method of accounting, the identifiable assets acquired, and liabilities assumed of AdActive Media CA Inc. and Thoughtful (Thailand) Co. Ltd. are recognized and measured as of the acquisition date at fair value and added to those of the Company. The determination of fair value used in the pro forma adjustments are presented herein.

Note 4 — Acquisition Consideration

The accompanying unaudited pro forma condensed combined financial statements reflect a purchase price of approximately $ 2,072,512 (the “Acquisition Consideration”) comprised of the following:

   Fair value
Stock (609,327 Shares of SOPA common stock)   1,176,002 
Warrant (203,109 shares)   196,510 
Cash   700,000 
Total Purchase Price   2,072,512 

Note 5 — Purchase Price Allocation

SOPA has performed a preliminary allocation of the Acquisition Consideration to the identifiable assets acquired and liabilities assumed of AdActive Media CA Inc. and Thoughtful (Thailand) Co. Ltd. Using the total Acquisition Consideration for the Acquisition, the Company has valued the allocations to such assets and liabilities. The purchase price allocation is based on financial information of AdActive Media CA Inc. and Thoughtful (Thailand) Co. Ltd. as of the closing date which represents the best information available to management at the time of this filing.

The following table summarizes the allocation of the estimated preliminary Acquisition Consideration:

Assets Acquired   
Cash and cash equivalent  $29,877 
Account receivables  $423,372 
Deposits, prepayment and other receivables  $90,818 
Property, plant and equipment  $2,697 
Right of use assets  $34,307 
Total assets acquired  $581,071 
      
Liabilities assumed     
Account payables  $147,576 
Loan  $150,000 
Operating lease liabilities  $46,778 
Total liabilities assumed  $344,354 
Net tangible assets  $236,717 
      
Intangible Assets Acquired     
Customer Based  $1,105,000 
GoodWill (1)   $730,795 
Total Intangible Assets Acquired  $1,835,795 
Purchase price allocated  $2,072,512 

 

(1)Goodwill represents the excess of Acquisition Consideration over the fair value of the underlying net assets acquired. In accordance with ASC 350, Goodwill and Other Intangible Assets, goodwill will not be amortized but rather subject to annual impairment test, absent any indicators of impairment. Goodwill recorded in the Acquisitions is not expected to be deductible for tax purposes. SOPA management is still in the process of valuing any identifiable intangible assets, to which the valuation may impact the final goodwill amount.

 

This purchase price allocation has been used to prepare the Transaction Accounting Adjustments in the condensed combined pro forma balance sheet and statements of operations and is described in more detail in the explanatory notes in Note 6 — Pro Forma Adjustments.

Note 6 — Pro Forma Adjustments

The following is a description of the unaudited pro forma adjustments reflected in the unaudited pro forma condensed combined financial statements:

Adjustments to the Unaudited Pro Forma Condensed Combined Balance Sheet as of March 31, 2022

A Adjustment to record the cash portion of the purchase price  $700,000 
        
  Record the common stock and warrant portion of the purchase price     
  Par value of 609,327 common shares at $0.0001 per share  $61 
        
  Accumulated paid-capital portion of common shares     
  Total fair value of common stock and warrant compensation  $1,372,512 
  Par value of 609,327 common stock and 203,109 warrant at $0.0001 per share   (61)
  Eliminate accumulated common stock   (59,781)
  Eliminate retained deficit   322,306 
B Net adjustment to accumulated paid-in capital  $1,634,976 
        
C Customer based intangible assets  $1,105,000 
        
D Record goodwill on the transaction (based on June result)     
  Goodwill amount  $730,795 
        
  Total goodwill recorded  $730,795 
        
        
        
E Adjustment for assets and liabilities (March vs June)     
        
  Cash and cash equivalent  $(306)
  Property, plant and equipment, net  $(1,542)
  Account receivables  $(200,654)
  Deposits, prepayment and other receivables  $(1,059)
  Account payables  $(450,591)
  Accrued liabilities and other payables  $(295,004)
  Due to related parties  $(532,918)
  Loan  $(45,395)
  Operating lease liabilities  $12,382 
  Common shares  $(63,818)
  Additional paid-in capital  $(501,748)
  Accumulated deficit  $1,122,992 
  Current year earnings  $51,297 

 

 

 3 

 

 

SOCIETY PASS INCORPORATED
Unaudited Proforma Combined Consolidated Statement of Operation
FOR THE PERIOD ENDED MARCH 31, 2022
(Expressed in United States Dollars)
                             
                             
     SOPA     Consolidation AdAdctive Media    Thoughtful Thailand Co., Ltd    Transaction Adjustments    Note   Pro Forma Combined
 Revenue   445,090    1,208,485    104,502             1,758,077
                          
                          
 Cost of sales   (459,883)   (1,061,737)   (125,775)            (1,647,395)
 Gross profits   (14,793)   146,748    (21,273)            110,682
                          
                          
 Development cost   (19,548)                      (19,548)
 Marketing expense   (196,102)                      (196,102)
 Impairment loss of goodwill   (528,583)                      (528,583)
 Administrative expenses   (5,840,698)        (30,024)            (5,870,722)
 Operating expenses        (180,033)                 (180,033)
 Loss from operation   (6,599,724)   (33,285)   (51,297)            (6,684,306)
                          
 Other income (expense):                         
 Interest income   45                       45
 Other income   13,621                       13,621
  Write off unrecoverable assets        500         (500)   A    -
 Interest expense   (4,045)   (4,438)        1,664    A    (6,819)
                          
                          
 Loss before income tax   (6,590,103)   (37,223)   (51,297)            (6,677,459)
                          
 Income tax expense   (1,302)   (850)        850    A    (1,302)
 NET LOSS   (6,591,405)   (38,073)   (51,297)            (6,678,761)

 

A   
    
Being elimination of TMG DE expenses     
      
Write off unrecoverable assets  $500 
Interest expenses on convertible debts  $1,664 
Income tax expense  $850 

 

 4 

 

 

SOCIETY PASS INCORPORATED
Audited Proforma Combined Consolidated Statement of Operation
FOR THE PERIOD ENDED DECEMBER 31, 2021
(Expressed in United States Dollars)
                   
                   
   SOPA  Consolidation AdAdctive Media  Thoughtful Thailand Co., Ltd  Transaction Adjustments  Note  Pro Forma Combined
 Revenue   519,885    5,423,118    232,184             6,175,187
                          
 Cost of sales                         
                          
 Cost of sales   (710,683)   (4,683,158)   (159,022)            (5,552,863)
 Gross profits   (190,798)   739,960    73,162             622,324
                          
                            -
 Development cost   (95,809)                      (95,809)
 Marketing expense   (327,195)                      (327,195)
 Impairment loss   (200,000)                      (200,000)
 Administrative expenses   (33,398,401)        (158,395)            (33,556,796)
  Operating expenses        (1,828,243)        705,537     A    (1,051,878)
                   15,486     A  
                   1,913     A  
                   53,429     A  
 Loss from operation   (34,212,203)   (1,088,283)   (85,233)            (34,609,354)
                          
 Other income (expense):                         
 Interest income   116                       116
 Other income   8,360    75,327    494.00             84,181
 Loss on settlement of litigation   (550,000)                      (550,000)
 Warrant extension expense   (58,363)                      (58,363)
  Write off of unrecoverable assets        (16,500)        16,500     A    -
 Interest expense   (41,514)   (29,999)        12,000     A    (52,763)
                   6,750     A  
 Loss before income tax   (34,853,604)   (1,059,455)   (84,739)            (35,186,183)
 Income tax expense   (11,136)   (3,250)        2,450     A    (11,936)
 NET LOSS   (34,864,740)   (1,062,705)   (84,739)            (35,198,119)

 

A   
    
Being elimination of TMG DE expenses     
      
Litigation fee  $705,537 
Litigation related travel fee  $15,486 
Depreciation Expense  $1,913 
Consulting - Legal Services  $53,429 
Write off unrecoverable assets  $16,500 
Accrued interest on penalty on taxes  $12,000 
Interest expenses on convertible debts  $6,750 
Income tax expense  $2,450 

 

 5