PRER14C 1 prer14c1118_orancoinc.htm PRELIMINARY REVISED INFORMATION STATEMENT

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

SCHEDULE 14C

 

INFORMATION REQUIRED IN INFORMATION STATEMENT

SCHEDULE 14C INFORMATION

 

Information Statement Pursuant to Section 14(c) of the

Securities Exchange Act of 1934

(Amendment No. 1)

 

Check the appropriate box:

 

  ☒ Preliminary information statement (Amendment No. 1) ☐ Confidential, for use of the Commission only (as permitted by Rule 14c-5(d)(2))
         
  ☐ Definitive information statement    

 

ORANCO, INC.

(Name of Registrant as Specified in Charter)

 

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ORANCO, INC.

One Liberty Plaza

Suite 2310 PMB# 21

New York, NY 10006

 

To the holders of common stock of Oranco, Inc.:

 

Oranco, Inc., a Nevada corporation (the “Company”), on August 30, 2018, obtained the written consent of the stockholder holding a majority of the Company’s issued and outstanding shares of common stock, par value $0.001 (the “Common Stock”), to approve an amendment of the Company’s articles of incorporation, as amended, to increase the number of authorized shares of Common Stock from 100,000,000 to 500,000,000. One share of Common Stock entitles the holder thereof to one non-cumulative vote. 

 

The details of the foregoing action and other important information are set forth in the accompanying Information Statement. The board of directors of the Company has unanimously approved the above action.

 

Under Section 78.320 of the Nevada Revised Statutes, action by stockholders may be taken without a meeting, without prior notice, by written consent of the holders of outstanding capital stock having not less than the minimum number of votes that would be necessary to authorize the action at a meeting at which all shares entitled to vote thereon were present and voted. On that basis, the stockholder holding a majority of the outstanding shares of voting stock of the Company approved the foregoing actions. No other vote or stockholder action is required. You are hereby being provided with notice of the approval of the foregoing action by less than unanimous written consent of the stockholders of the Company.

 

WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.

 

  By Order of the Board of Directors,
   
  /s/ Peng Yang
  Peng Yang
  President, Secretary, and Director

 

Date: November 29, 2018

  

 

 

 

ORANCO, INC.

 

INFORMATION STATEMENT

 

CONCERNING CORPORATE ACTION AUTHORIZED BY WRITTEN

CONSENT OF STOCKHOLDERS

 

WE ARE NOT ASKING YOU FOR A PROXY AND

YOU ARE REQUESTED NOT TO SEND US A PROXY

 

General Information

 

This Information Statement is being furnished to the stockholders of Oranco, Inc., a Nevada corporation (“ORNC”, “Company,” “we,” “us” or “our”), to advise them of the corporate action described herein, which has been authorized by the written consent of the stockholder owning a majority of the Company’s voting stock, in accordance with the requirements of the Nevada Revised Statutes.

 

The Company is engaged in alcohol wholesale in China through its operating subsidiary, Fenyang Huaxin Wine Industry Development Co., Ltd. (“Huaxin”), a People’s Republic of China company located in Shanxi Province, that is 100% held by Fujian Jin’ou Trading Co., Ltd.  

 

 

This Information Statement will first be mailed to stockholders on or about December 15, 2018 and is being furnished for informational purposes only.

 

 1 

 

 

Our board of directors has determined that the close of business on August 30, 2018 was the record date (“Record Date”) for the stockholders entitled to notice about the actions authorizing the amendment of our articles of incorporation to increase the number of authorized shares of common stock, par value $0.001 (“Common Stock”) from 100,000,000 to 500,000,000.  The foregoing amendment is referred to herein as the “Action.”

 

Under Section 78.320 of the Nevada Revised Statutes, any action required or permitted by the Nevada Revised Statutes to be taken at a meeting of stockholders of a Nevada corporation may be taken without a meeting, without prior notice and without a vote, if consents in writing, setting forth the action so taken, are signed by stockholders holding at least a majority of the voting power.

 

On August 15, 2018, our board of directors approved an amendment of our articles of incorporation to increase the number of authorized shares of Common Stock from 100,000,000 to 500,000,000 and authorized our officers to deliver this Information Statement.

 

As of the Record Date, Peng Yang, who then owned of record approximately 74,681,530 shares of Common Stock, representing 76.05% of the outstanding shares of Common Stock as of the Record Date, executed and delivered to us a written consent authorizing and approving the Action.

 

Accordingly, the Action has been approved by the holders of a majority of our issued and outstanding shares of Common Stock and no further vote or further action of our stockholders is required to approve the Action. You are hereby being provided with notice of the approval of the Action by less than unanimous written consent of our stockholders. However, under federal law, the Action will not be effective until at least 20 days after this Information Statement has first been sent to stockholders. Stockholders do not have any dissenter or appraisal rights in connection with the Action.

 

As the Action was approved by written consent of the holder of a majority of the Company’s voting stock as of the Record Date, there will be no stockholders’ meeting, and representatives of the principal accountants for the current year and for the most recently completed fiscal year will not have the opportunity to make a statement if they desire to do so and will not be available to respond to appropriate questions from our stockholders. 

 

Our executive offices are located at One Liberty Plaza, Suite 2310 PMB# 21, New York, NY 10006, and our telephone number is (646) 7593614. 

 

The Purpose and Effect of the Action 

 

Our current articles of incorporation authorizes us to issue up to a total of 100,000,000 shares of Common Stock. As of the Record Date, there were 98,191,480 shares of Common Stock outstanding. Once the Action is complete, we will be authorized to issue up to a total of 500,000,000 shares of Common Stock.

 

On June 29, 2018, we completed and closed a share exchange (the “Share Exchange”) under a Share Exchange Agreement (the “Share Exchange Agreement”), entered into by and among (i) the Company; (ii) Reliant Galaxy International Limited, a British Virgin Islands company with limited liability (“Reliant”); (ii) and the shareholders of Reliant (“Sellers”) pursuant to which Reliant became a wholly owned subsidiary of ours. Pursuant to the Share Exchange Agreement, the Company acquired from the Sellers all of the issued and outstanding equity interests of Reliant as consideration in exchange for 349,296,000 newly-issued shares of Common Stock of the Company to Sellers, of which 28,000,000 were issued on June 29, 2018, the closing date of the Share Exchange, and the remaining 321,296,000 shares (“Remaining Shares”) to be issued upon the completion of the increase of the Company’s authorized shares. As a result of the Share Exchange, the Sellers, as the former shareholders of Reliant, became the controlling shareholders of the Company. The Share Exchange was accounted for under the business combination under common control of accounting.  

 

Our board of directors has determined that in order to issue the Remaining Shares to the Sellers pursuant to the Share Exchange Agreement, it is necessary for the Company to increase the number of authorized shares of Common Stock to ensure that the Company has enough authorized shares of Common Stock. Mr. Yang, our sole director, is one of the Shareholders to whom the Remaining Shares would be issued.

 

 2 

 

 

Although the increase in the authorized number of shares of Common Stock will not, in and of itself, have any immediate effect on the rights of our shareholders, the upcoming issuance of the Remaining Shares could affect our shareholders in a number of respects, including by diluting the voting power of the current holders of our Common Stock and by diluting the earnings per share and book value per share of outstanding shares of our Common Stock at such time. Once effective, the board of directors will have the authority to issue any remaining authorized shares of Common Stock without requiring any further approval from our Common Stock shareholders. The issuance of additional shares of Common Stock could adversely affect the market price of our Common Stock.

 

The Action will effect a change in the number of authorized shares of Common Stock. The Action will not result in any change in our business, assets, liabilities or net worth (other than as a result of the costs incident to the amendment, which is immaterial) and it will not affect the rights of existing shareholders. The rights and preferences of the outstanding shares of the Common Stock will remain the same. However, the issuance of additional shares of Common Stock may result in substantial dilution to our existing stockholders, and such issuances may not require stockholder approval. Our management, including our director and officers, will remain the same after the Action.

 

Our board of directors considers the Action to be in the best interests of the Company and its stockholders. Other than the issuance of the Remaining Shares, we do not currently have any agreements or other commitments to issue any shares of Common Stock.

 

Interest of Persons in Matters to be Acted Upon

 

As discussed above, our officer, director and principal stockholder Mr. Peng Yang has a substantial material interest in the favorable outcome of the Action. 

 

Effect on Outstanding Shares

 

The rights and preferences of the outstanding shares of the Common Stock will remain the same should the Action occur. The ownership percentages of the holders of the Company’s issued and outstanding Common Stock will not change as a result of the Amendment.

 

The increase in the number of authorized shares of our Common Stock will permit the Board to issue authorized and unissued shares without further stockholder action (except as may be required by applicable laws or the rules of any stock exchange or national securities association trading system on which our securities may be listed or traded). The issuance in the future of additional authorized shares may have the effect of diluting the earnings per share and book value per share, as well as the stock ownership and voting rights, of the then outstanding shares of our Common Stock. Currently, the Company intends to issue 321,296,000 shares of the Company’s Common  Stock pursuant to the Share Exchange. The Company does not have any other specific agreements or arrangements to acquire any business or engage in a similar transaction or otherwise to issue additional shares of the Company’s Common Stock.

 

VOTING SECURITIES

 

At the time of the stockholder action, our issued and outstanding voting securities consisted of shares of Common Stock. There were 98,191,480 shares of Common Stock issued and outstanding as of the Record Date.

 

Each share of Common Stock is entitled to one non-cumulative vote on all matters submitted to the holders of Common Stock for their approval. The written consent of a majority of the outstanding shares of Common Stock was necessary to authorize the Action described herein.

 

 3 

 

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The following table sets forth information with respect to the beneficial ownership of our Common Stock as of August 30, 2018, by (i) each stockholder known by us to be the beneficial owner of more than 5% of our Common Stock (our only class of voting securities), (ii) each of our directors and executive officers, and (iii) all of our directors and executive officers as a group. To the best of our knowledge, except as otherwise indicated, each of the persons named in the table has sole voting and investment power with respect to the shares of our Common Stock beneficially owned by such person, except to the extent such power may be shared with a spouse. To our knowledge, none of the shares listed below are held under a voting trust or similar agreement, except as noted. To our knowledge, there is no arrangement, including any pledge by any person of securities of the Company or any of its parents, the operation of which may at a subsequent date result in a change in control of the Company.

 

Name and address of beneficial owner  Amount
and nature of
beneficial ownership		    Percent of
class (1)		 
Peng Yang
One Liberty Plaza, Suite 2310 PMB# 21, New York, NY 10006		   74,681,530 shares (1)(2)   76.05%
Ronald Zhang
One Liberty Plaza, Suite 2310 PMB# 21, New York, NY 10006		   0     0%
            
All directors and executive officers as a group (2 persons)   74,681,530 shares     76.05%

 

(1) Percentage is calculated upon the 98,191,480 shares of Common Stock outstanding as of August 30, 2018

 

(2) Includes 53,121,530 shares of Common Stock held by Million Success Business Limited, an entity 100% controlled by Peng Yang.

 

INCREASE IN AUTHORIZED COMMON STOCK

 

We are currently authorized by our articles of incorporation to issue 100,000,000 shares of Common Stock. As of the Record Date, there were 98,191,480 shares of Common Stock issued and outstanding.

 

We are increasing our authorized shares of Common Stock so that we have a sufficient number of authorized shares of Common Stock to permit the issuance of the Remaining Shares.

 

Accordingly, our board of directors believes it is in our best interests and the best interests of our stockholders to increase the number of authorized shares of Common Stock to provide a sufficient number of authorized shares to allow for the issuance of the Remaining Shares and such other purposes as our board of directors determines.

 

The increase in the number of authorized shares of Common Stock to a level that continues to provide a meaningful number of authorized shares will permit our board of directors to issue additional shares of Common Stock without further approval of our stockholders, and our board of directors does not intend to seek stockholder approval prior to any issuance of the authorized capital stock unless stockholder approval is required by applicable law or stock market or exchange requirements.

 

Although from time to time we review various transactions that could result in the issuance of shares of Common Stock, other than shares of Common Stock issuable pursuant to the Share Exchange, we have not reviewed any specific transaction to date that we presently anticipate will result in a further issuance of shares of Common Stock.

 

On August 15, 2018, our board of directors approved an amendment of our articles of incorporation to increase the number of authorized shares of Common Stock from 100,000,000 to 500,000,000 and authorized our officers to deliver this Information Statement.

 

As of the Record Date, Peng Yang, who then owned of record approximately 74,681,530 shares of Common Stock, representing 76.05% of the outstanding shares of Common Stock as of the Record Date, executed and delivered to us a written consent authorizing and approving the Action.

 

 4 

 

 

The approval of the amendment of our articles of incorporation, as amended, to authorize the increase of the number of authorized shares of Common Stock to 500,000,000 required such board approval and the affirmative vote of the stockholder representing a majority of the issued and outstanding shares of Common Stock. Such requirements have been met, so no vote or further action of our stockholders is required to approve the amendment to our articles of incorporation to authorize the increase of the number of authorized shares of Common Stock to 500,000,000 . You are hereby being provided with notice of the approval of such amendment by less than unanimous written consent of our stockholders. The Certificate of Amendment to Articles of Incorporation of Oranco, Inc. setting forth the amendment is attached to this Information Statement as Exhibit A.

 

Promptly after the twentieth day after the date this Information Statement has first been sent to stockholders, we intend to take all other required actions to complete the amendment of our articles of incorporation to increase the number of authorized shares of Common Stock to 500,000,000 consistent with the foregoing. 

 

TRANSACTION INFORMATION

 

Summary Term Sheet 

 

The following summarizes the information contained in this Preliminary Schedule 14C and Form 8-K/A filed on October 4, 2018, but does not contain all of the information that may be important to you. You should read carefully this Preliminary Schedule 14C and the Form 8-K/A filed on October 4, 2018, along with their respective exhibits, for a complete discussion of the Share Exchange.

 

  ● Oranco, Inc. was incorporated under the laws of the State of Nevada, on June 10, 1977. The purposes for which the corporation was organized were: (1) to engage in any lawful business from time to time authorized by the board of directors, (2) to act as principal, agent, partner or joint venturer or in any other capacity in any transaction, (3) to do business anywhere in the world, and (4) to have and exercise all rights and powers from time to time granted to the corporation by law.
     
  ● Reliant Galaxy International Limited is a British Virgin Islands company with limited liability, which is engaged in alcohol wholesale in China through its operating subsidiary, Fenyang Huaxin Wine Industry Development Co., Ltd. (“Huaxin”). Huaxin currently focuses on the sale of Chinese Fenjiu liquor and imported wines catering to Chinese people’s ever-evolving tastes in alcohols through creative marketing strategies and innovative product designs.
     
  ● On June 29, 2018, Oranco, Reliant, and the shareholders of Reliant entered into the Share Exchange Agreement, which closed on June 29, 2018. Pursuant to the terms of the Share Exchange Agreement, Oranco will, in exchange for all of the outstanding capital stock of Reliant, issue an aggregate of 349,296,000 new shares of Common Stock, par value $0.001 per share, to the Shareholders of Reliant, of which 28,000,000 were issued on at the closing of the Share Exchange, and the remaining 321,296,000 shares are to be issued at the completion of the increase of Oranco’s authorized shares. Upon the closing of the Share Exchange, Reliant became a wholly owned subsidiary of Oranco.
     
  ● Pursuant to the Share Exchange, we acquired the business of Reliant, which is to engage in the sale and distribution of wines and spirits in China. As a result, we have ceased to be a shell company.
     
  ● The Share Exchange Agreement contained customary representations and warranties and pre- and post-closing covenants of each party and customary closing conditions. The Share Exchange is intended to be treated as a tax-free reorganization under the Internal Revenue Code.
     
  ● The issuance of shares of our Common Stock to the shareholders of Reliant in connection with the Share Exchange was not registered under the Securities Act, in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act, which exempts transactions by an issuer not involving any public offering, Regulation D promulgated by the SEC under that section and Regulation S promulgated by the SEC. These securities may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirement, and some of these securities are subject to further contractual restrictions on transfer.

 

 5 

 

 

Regulatory Approvals 

 

None.

 

Reports, Opinions, Appraisals 

 

None.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations 

 

The disclosure contained in the Form 8-K/A filed on October 4, 2018 under the section entitled “Management’s Discussion And Discussion and Analysis of Financial Condition And Results of Operations” beginning on page 14 is incorporated herein by reference.

 

Past Contacts, Transactions or Negotiations 

 

The exhibits contained in Form 10-K filed on October 4, 2018 and the exhibits contained in Form 8-K/A filed on September 14, 2018 are incorporated herein by reference.

 

Selected Financial Data And Pro Forma Information  

 

In accordance with Item 13(a) and Item 14(b) of Schedule 14A, Reliant’s audited financial statements as of, and for the years ended June 30, 2017 and 2016, Reliant’s unaudited financial statements as of, and for the nine months ended March 31, 2018, and the accompanying notes, are included in this Preliminary Schedule 14C beginning on page 10.

 

In accordance with Item 14(b) of Schedule 14A, the following unaudited pro forma financial information with respect to the Share Exchange reported in this Preliminary Schedule 14C begins on page 13.

 

  ● Unaudited Pro Forma Consolidated Balance Sheet as of March 31, 2018, and
     
  ● Notes to the Unaudited Pro Forma Consolidated Financial Statements.

 

Supplementary Financial Information

 

Not applicable to a smaller reporting company.

 

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 

 

None.

 

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
 

Not applicable to a smaller reporting company.

 

INFORMATION INCORPORATED BY REFERENCE

 

The SEC allows us to “incorporate by reference” into this Preliminary 14C the information we file with the SEC. This means that we can disclose important information to you by referring you to those documents. Any statement contained in a document incorporated by reference in this Preliminary 14C shall be deemed to be modified or superseded for purposes of this Preliminary 14C to the extent that a statement contained herein, or in any subsequently filed document, which also is incorporated by reference herein, modifies or supersedes such earlier statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Preliminary 14C. 

 

We hereby incorporate by reference into this Preliminary 14C the following documents that we have filed with the SEC under the Exchange Act: 

 

  ● the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2018, filed with the SEC on September 28, 2018, and
     
  ● the Company’s Current Reports on Form 8-K, filed with the SEC on October 4, 2018, September 14, 2018 and July 6, 2018.

 

 6 

 

 

DELIVERY OF DOCUMENTS TO SECURITY HOLDERS

 

We are delivering this Information Statement, along with the Annual Report on Form 10-K for the fiscal year ended June 30, 2018 and Current Report on Form 8-K filed with the SEC on July 6, 2018, as amended on September 14, 2018 and October 4, 2018, to all stockholders of record as of the Record Date.

 

Stockholders residing in the same household who hold their shares in the name of a bank, broker or other holder of record may receive only one Information Statement if previously notified by their bank, broker or other holder. This process, by which only one Information Statement is delivered to multiple security holders sharing an address, unless contrary instructions are received from one or more of the security holders, is called “householding.” Householding may provide convenience for stockholders and cost savings for companies. Once begun, householding may continue unless instructions to the contrary are received from one or more of the stockholders within the household.

 

Copies of this Information Statement are available promptly by calling (646) 759-3614, or by writing to Oranco, Inc., Attn: Peng Yang, One Liberty Plaza, Suite 2310 PMB# 21, New York, NY 10006. If you are receiving multiple copies of this Information Statement, you also may request orally or in writing to receive a single copy of this Information Statement by calling (646) 759-3614, or by writing to Oranco, Inc., Attn: Peng Yang, One Liberty Plaza, Suite 2310 PMB# 21, New York, NY 10006.

 

ORANCO, INC.

 

November 29, 2018

 

 7 

 

 

EXHIBIT A

CERTIFICATE OF AMENDMENT

TO THE

ARTICLES OF INCORPORATION

OF

ORANCO, Inc.

 

 

 

 8 

 

 

SURE RICH INVESTMENT (GROUP) LIMITED 

CONSOLIDATED STATEMENTS OF OPERATIONS 

( Chinese Renminbi )

 

   Unaudited         
  

March 31,

2018

  

June 30,

2017

  

June 30,

2016

 
Revenue   83,258,237    91,144,666    24,249,106 
    83,258,237    91,144,666    24,249,106 
                
Cost of sales   23,002,777    24,065,113    6,125,410 
Selling and distribution expenses   3,338,043    2,521,950    352,887 
Administrative expenses   3,686,062    5,516,707    2,897,075 
    30,026,882    32,103,770    9,375,336 
                
Other income   131,447    227,552    135,833 
Interest and other financial charges   1,768,720    3,420,272    1,976,614 
Income before income taxes   51,594,082    55,848,176    13,032,953 
                
Income taxes   12,623,911    14,121,343    3,441,782 
Net Income   38,970,171    41,726,833    9,591,171 
                
Attributable to:               
Equity holders of the Company   37,862,781    34,091,734    6,428,743 
Non-controlling interests   1,107,390    7,635,099    3,162,464 
    38,970,171    41,726,833    9,591,171 
                
Earnings per share   38,970,171    41,726,833    9,591,171 
Book value per share   94,106,363    55,136,192    15,459,359 
Cash dividends declared   Nil    Nil    Nil 

 

9

 

 

SURE RICH INVESTMENT (GROUP) LIMITED 

CONSOLIDATED BALANCE SHEETS 

( Chinese Renminbi )

 

  

Unaudited

Nine months

Ended

  

Year

ended

  

Year

ended

 
  

March 31,

2018

  

June 30,

2017

  

June 30,

2016

 
ASSETS:            
Current assets            
Cash and cash equivalents   23,857,239    6,607,407    427,691 
Inventories   8,581,472    8,597,710    5,226,421 
Trade receivables   48,745,286    47,517,200    20,844,588 
Deposits, prepayments and other receivables   28,303,405    31,404,225    42,371,128 
Prepaid land lease   109,680    109,680    109,680 
    109,597,082    94,236,222    68,979,508 
                
Non-current assets               
Property, plant and equipment   3,340,057    3,120,166    3,321,635 
Prepaid land lease   4,936,840    5,019,100    5,128,780 
    8,276,897    8,139,266    8,450,415 
Total assets   117,873,979    102,375,488    77,429,923 
                
LIABILITIES AND SHAREHOLDERS’ EQUITY               
Current liabilities               
Trade payables   528,608    118,115    2,303,656 
Receipts in advance, accruals and other payables   18,463,215    17,493,902    21,482,787 
Current tax liabilities   4,775,793    2,627,279    534,121 
Bank borrowings   -    27,000,000    10,650,000 
    23,767,616    47,239,296    34,970,564 
                
Non-current liabilities               
Bank borrowings   -    -    27,000,000 
    -    -    27,000,000 
                
Share capital   1    1    1 
Statutory reserve   4,249,871    4,249,871    1,325,763 
Acquisition reserve   12,151,843    12,151,843    - 
Retained earnings   73,714,502    35,851,721    4,684,095 
Equity attributable to equity holders of the Company   90,116,217    52,253,436    6,009,859 
Non-controlling interest   3,990,146    2,882,756    9,449,500 
Total equity   94,106,363    55,136,192    15,459,359 
Total liabilities and shareholders’ equity   117,873,979    102,375,488    77,429,923 

 

The accompanying notes are an integral part of the consolidated financial statements. 

 

10

 

 

SURE RICH INVESTMENT (GROUP) LIMITED 

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY 

( Chinese Renminbi )

 

  

Share

capital

  

Statutory

reserve

  

Acquisition

reserve

  

Retained

Earnings/
(loss)

   Attributable
to the
Company		  

Non-

controlling

interests

  

Total

Equity

 
Balance at June 30, 2015   1    438,786    -    (857,635)   (418,848)   6,287,036    5,868,188 
Total comprehensive income for the year   -    -    -    6,428,707    6,428,707    3,162,464    9,591,171 
Appropriation   -    886,977    -    (886,977)   -    -    - 
Balance at June 30, 2016   1    1,325,763    -    4,684,095    6,009,859    9,449,500    15,459,359 
                                    
Total comprehensive income for the year   -    -    -    34,091,734    34,091,734    7,635,099    41,726,833 
Acquisition reserve   -    -    12,151,843    -    12,151,843    (14,201,843)   (2,050,000)
Appropriation   -    2,924,108    -    (2,924,108)   -    -    - 
Balance at June 30, 2017   1    4,249,871    12,151,843    35,851,721    52,253,436    2,882,756    55,136,192 
                                    
Unaudited                                   
                                    
Balance at June 30, 2017   1    4,249,871    12,151,843    35,851,721    52,253,436    2,882,756    55,136,192 
Total comprehensive income for the period   -    -    -    37,862,781    37,862,781    1,107,390    38,970,171 
Appropriation   -    -    -    -    -    -    - 
Balance at March 31, 2018   1    4,249,871    12,151,843    73,714,502    90,116,217    3,990,146    94,106,363 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

11

 

 

SURE RICH INVESTMENT (GROUP) LIMITED 

CONSOLIDATED STATEMENTS OF CASH FLOWS 

( Chinese Renminbi )

 

  

Unaudited

Nine months

ended

  

Restated

Year ended

   Year ended 
   March 31,   June 30,   June 30, 
   2018   2017   2016 
Operating activities            
Net income   38,970,171    41,726,833    9,591,171 
Adjustments to reconcile net income to cash generated by operating activities:               
Depreciation and amortization   255,635    342,042    278,854 
Changes in working capital:               
Inventories   16,238    (3,371,289)   (138,286)
Trade receivables   (1,228,086)   (26,672,612)   (12,103,188)
Deposits, prepayments and other receivables   16,495,853    10,966,903    3,364,210 
Trade payables   410,493    (2,185,541)   854,641 
Receipts in advance, accruals and other payables   (10,277,206)   (1,895,727)   (35,372,907)
Cash generated by/(used in) operating activities   44,643,098    18,910,609    (33,525,505)
                
Investing activities               
Payments for acquisition of property, plant and equipment   (393,266)   (30,893)   (143,781)
Cash used in investing activities   (393,266)   (30,893)   (143,781)
                
Cash flows from financing activities               
Acquisition of additional interest in subsidiary        (2,050,000)     
Proceeds from bank borrowings   -    -    32,950,000 
Repayment of bank borrowings   (27,000,000)   (10,650,000)   - 
Cash (used in)/generated from financing activities   (27,000,000)   (12,700,000)   32,950,000 
                
Increase/(decrease) in cash and cash equivalents   17,249,832    6,179,716    (719,286)
Cash and cash equivalents, beginning of the period   6,607,407    427,691    1,146,977 
Cash and cash equivalents, end of the period   23,857,239    6,607,407    427,691 
                
Supplemental disclosure of cash flows information               
Cash paid during the year for interest   (1,768,720)   (3,431,027)   (1,976,614)
Cash paid during the year for income taxes   (10,475,397)   (12,028,185)   (3,035,941)

 

12

 

 

 

 

 

 

 

 

 

 

 

 

 

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13

 

 

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

  

On June 29, 2018, Oranco Inc. (the “Company”) completed and closed a share exchange under a Share Exchange Agreement, entered into with the shareholders of Reliant Galaxy International Limited (“Reliant Galaxy”) to acquire their 100% of the issued and outstanding common shares in Reliant Galaxy by issuance of 349,296,000 shares of the Company’s common stock with par value of USD 0.001 each.

 

To rationalize the group structure for the purpose of share exchange with the Company, on 20 June 2018, Reliant Galaxy acquired 100% equity interest in Sure Rich Investment (Group) Limited (“Sure Rich”). Upon completion of this acquisition, Reliant Galaxy became the holding company of Sure Rich.

 

No financial information of Reliant Galaxy is filed on this Form 8-K as Reliant Galaxy is only an investment holding company with immaterial administrative costs incurred and the management considered that they have no material impacts on the unaudited pro forma condensed combined financial statements.

 

The following unaudited pro forma condensed combined financial statements are based on our historical financial statements and Sure Rich’s historical consolidated financial statements as adjusted to give effect to Oranco Inc.’s acquisition of Sure Rich Investment (Group) Limited and the related financing transactions.

 

The unaudited pro forma condensed combined statements of operations for the 9 months ended March 31, 2018 and the year ended June 30, 2017 give effect to these transactions as if they had occurred on July 1, 2016. The unaudited pro forma condensed combined balance sheet as of March 31, 2018 gives effect to these transactions as if they had been consummated at the end of the 9 months period ended March 31, 2018.

 

The assumptions and estimates underlying the unaudited adjustments to the pro forma condensed combined financial statements are described in the accompanying notes, which should be read together with the pro forma condensed combined financial statements.

 

The unaudited pro forma condensed combined financial statements should be read together with Oranco Inc.’s historical financial statements, which are included in Oranco Inc.’s latest annual report on Form10-K and quarterly report on Form 10-Q, and Sure Rich Investment (Group) Limited’s historical information included herein.

  

14

 

 

Unaudited Pro Forma Condensed Combined Statements of Operations

Nine Months Ended March 31, 2018

(Chinese Renminbi)

 

   Oranco Inc.
Historical		   Sure Rich
Investment
(Group)
Limited
Historical		   Pro forma
adjustments		   Notes  Pro forma
Combined		 
Revenue   -    83,258,237    -       83,258,237 
    -    83,258,237    -       83,258,237 
                        
Cost of sales   -    23,002,777    -       23,002,777 
Selling and distribution expenses   -    3,338,043    -       3,338,043 
Administrative expenses   201,380    3,686,062    1,041,803   2a   4,929,245 
    201,380    30,026,882    1,041,803       30,867,306 
                        
Other income   -    (131,447)   -       (131,447)
Interest and other financial charges   2,781    1,768,720    -       1,771,501 
Income before income taxes   (204,161)   51,594,082    (1,041,803)      50,348,118 
                        
Income taxes   -    12,623,911    -       12,623,911 
Net Income/(Loss)   (204,161)   38,970,171    -       37,724,207 
                        
Earnings per share                     0.09 
                        
Book value per share                     0.22 
                        
Cash dividends declared                     Nil 

  

See accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Information

  

15

 

 

Unaudited Pro Forma Condensed Combined Balance Sheets

As of March 31, 2018

(Chinese Renminbi)

  

   Oranco Inc
Historical		   Sure Rich
Investment
(Group)
Limited
Historical		   Pro forma
adjustment
Note 2a		   Pro forma
adjustment
Note 2b		   Pro forma
adjustment
Note 2c		   Pro forma
adjustment
Note 2d		   Pro forma
combined		 
Cash and cash equivalents   25,245    23,857,239    (1,041,803)   -    667,606    -    23,508,287 
Inventories   -    8,581,472    -    -    -    -    8,581,472 
Trade receivables   -    48,745,286    -    -    -    -    48,745,286 
Deposits, prepayments and other receivables   162,352    27,093,069    -    -    -    -    28,465,512 
Prepaid land lease   -    109,680    -    -    -    -    109,680 
Total current assets   187,352    108,386,746    (1,041,803)   -    667,606    -    109,410,237 
                                  - 
Property, plant and equipment   -    3,340,057    -    -    -    -    3,340,057 
Prepaid land lease   -    4,936,840    -    -    -    -    4,936,840 
Total assets   187,352    117,153,643    (1,041,803)   -    667,606    -    117,687,134 
                                    
Trade payables   26,356    528,608    -    -    -    -    554,940 
Receipts in advance, accruals and other payables   255,457    18,463,215    -    (260,796)   -    -    18,457,876 
Current tax liabilities   -    4,775,793    -    -    -    -    4,775,793 
Total liabilities   281,813    23,767,616    -    (260,796)   -    -    23,788,633 
                                    
Common stock   264,763    1    -    94,749    83,451    2,311,791    2,754,755 
Additional paid-in capital   2,195,680    -    -    166,047    584,155    -    2,945,882 
Statutory reserve   -    4,249,871    -    -    -    -    4,249,871 
Acquisition reserve   -    12,151,843    -    -    -    -    12,151,843 
Reverse acquisition reserve   -    -    -    -    -    (2,311,791)   (2,311,791)
Accumulated (deficit)/surplus   (2,554,904)   78,194,648    (1,041,803)   -    -    -    74,107,941 
Total shareholders’ equity   (94,461)   94,596,363    (1,041,803)   260,796    667,606    -    93,898,501 
                                    
Total liabilities and shareholders’ equity   187,182    117,153,643    (1,041,803)   260,796    667,606    -    117,687,134 

 

See accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Information

  

16

 

 

Unaudited Pro Forma Condensed Combined Statements of Operations

year ended JUNE 30, 2017

(Chinese Renminbi)

  

   Oranco Inc.
Historical		   Sure Rich
Investment
(Group)
Limited
Historical		   Pro forma
adjustments		   Notes  Pro forma
Combined		 
Revenue   -    91,144,666    -       91,144,666 
    -    91,144,666    -       91,144,666 
                        
Cost of sales   -    24,065,113    -       24,065,113 
Selling and distribution expenses   -    2,521,950    -       2,521,950 
Administrative expenses   200,916    5,516,707    2,050,023   2a   7,767,646 
    200,916    32,103,770    2,050,023       34,354,709 
                        
Other income   (20)   (227,552)   -       (227,572)
Interest and other financial charges   3,446    3,420,272    -       3,423,718 
Income/(Loss) before income taxes   (204,342)   55,848,176    (2,050,023)      53,593,811 
                        
Income taxes   -    14,121,343    -       14,121,343 
Net Income/(Loss)   (204,342)   41,726,833    (2,050,023)      39,472,468 
                        
Earnings per share                 3   0.09 
                                     
Book value per share                                 0.13  
                                     
Cash dividends declared                                 Nil  

 

See accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Information

 

17

 

 

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

(Chinese Renminbi)

 

1. Basis of presentation

 

The historical consolidated financial statements have been adjusted in the pro forma condensed combined financial statements to give effect to pro forma events that are (1) directly attributable to the business combination, (2) factually supportable and (3) with respect to the pro forma condensed combined statements of operations, expected to have a continuing impact on the combined results following the business combination.

 

The business combination was accounted for under the business combination under common control of accounting in accordance with ASC Topic 805, Business Combinations. All the assets and liabilities of the Company and Sure Rich were combined using their book values.

 

The pro forma combined financial statements do not necessarily reflect what the combined company’s financial condition or results of operations would have been had the acquisition occurred on the dates indicated. They also may not be useful in predicting the future financial condition and results of operations of the combined company. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors.

 

The combined pro forma financial information does not reflect the realization of any expected cost savings or other synergies from the acquisition of Sure Rich Investment (Group) Limited as a result of restructuring activities and other planned cost savings initiatives following the completion of the business combination.

 

2. Pro forma adjustments

 

The pro forma adjustments are based on our preliminary estimates and assumptions that are subject to change.

 

  (a) These adjustments relate to the costs as following:

 

     USD   RMB 
  For the nine months ended March 31, 2018        
  Listing costs – legal fees   90,000    600,867 
  Salaries   132,000    1,040,411 
  Public Relation fees   6,000    408,746 
  Total   228,000    2,050,023 
             
  For the year ended June 30, 2017          
  Salaries   99,000    747,112 
  Public Relation fees   45,000    294,691 
  Total   144,000    1,041,803 

 

  (b) This adjustment relates to the issue of 15,000,000 shares of nominal value of USD 0.001 to settle debt of RMB 260,796 (USD 41,287) owed to a Director on April 25, 2018.

 

  (c) This adjustment relates to the issue of 13,000,000 shares of nominal value of USD 0.001 for cash consideration of RMB 667,606 (USD 104,000) to 3 shareholders on May 30, 2018.

 

  (d) This adjustment relates to the issue of 349,296,000 shares of nominal value of USD 0.001 to the shareholders of Reliant Galaxy International Limited for exchange of 100% share capital of Reliant Galaxy International Limited on June 29, 2018.

 

3. Pro forma earnings per share

  

There would be 419,487,480 shares of nominal value of USD 0.001 each in issue should these transactions had occurred on July 1, 2016.

  

 

17