EX-99.1 2 f6k082718bex99-1_lianluo.htm UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2018 AND 2017

Exhibit 99.1

LIANLUO SMART LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

		June 30,				December 31,
		2018				2017
		US$				US$
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	1,073,903			$	6,809,485
Accounts receivable, net			26,797				9,705
Other receivables, net-third parties and a related party			106,022				128,423
Advance to suppliers			37,702				386,241
Inventories, net			3,225,250				2,217,802
Other taxes receivable			396,627				281,373
Loan receivable - related party			5,854,408				-
Total Current Assets			10,720,709				9,833,029
Property and equipment, net			320,672				531,467
Intangible assets, net			3,457,054				3,698,569
Non-marketable equity securities			1,500,043				1,500,043
Total assets		$	15,998,478			$	15,563,108
CURRENT LIABILITIES:
Accounts payable-third parties and a related party		$	552,470			$	47,888
Advances from customers			234,134				313,167
Accrued expenses and other current liabilities-third parties and a related party			584,829				762,873
Warranty obligation			8,283				20,234
Due to a related party - short-term borrowings			4,155,250				1,536,720
Total Current Liabilities			5,534,966				2,680,882
OTHER LIABILITIES
Warrants liability			1,839,129				1,729,111
Total Liabilities		$	7,374,095			$	4,409,993
Commitments and contingency
Shareholders' equity
Common shares, $0.002731 par value, 50,000,000 shares authorized, 17,606,586 and 17,312,586 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively		$	48,084			$	47,281
Additional paid in capital			40,252,395				39,233,137
Retained earnings			(34,691,577	)			(31,246,202	)
Accumulated other comprehensive income			3,015,481				3,118,899
Total shareholders' equity			8,624,383				11,153,115
Total liabilities and shareholders' equity		$	15,998,478			$	15,563,108

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LIANLUO SMART LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(UNAUDITED)

		For Six Months Ended
		June 30,
		2018				2017
		US$				US$
						(Restated)
Revenues - third parties		$	301,293			$	397,643
Revenues - related parties			-				17,911
Revenues			301,293				415,554
Costs of revenue - third parties			(333,995	)			(1,093,048	)
Costs of revenue - related parties			-				(37,252	)
Costs of revenue			(333,995	)			(1,130,300	)
Gross loss			(32,702	)			(714,746	)
Service incomes			-				9,689
Service expenses			-				(485	)
Selling expenses			(1,131,219	)			(299,852	)
General and administrative expenses			(2,028,028	)			(1,251,099	)
Provision for doubtful accounts			(33,621	)			(23,657	)
Operating loss			(3,225,570	)			(2,280,150	)
Financial incomes (expenses)			(8,725	)			10,269
Other incomes			23,100				138,463
Other expenses			(124,159	)			(21,028	)
Change in fair value of warrants liability			(110,021	)			360,012
Loss before provision for income tax			(3,445,375	)			(1,792,434	)
Provision for income taxes			-				-
Net loss from continuing operations			(3,445,375	)			(1,792,434	)
Discontinued operations:
Loss from disposal of discontinued operations, net of taxes			-				(9,581	)
Income from operations of operations, net of taxes			-				550
Net loss attributable to Lianluo Smart Limited		$	(3,445,375	)		$	(1,801,465	)
Net loss from continuing operations		$	(3,445,375	)		$	(1,792,434	)
Net loss from discontinued operations			-				(9,031	)
Other comprehensive income (loss):
Foreign currency translation (loss) gain			(103,418	)			156,170
Comprehensive loss		$	(3,548,793	)		$	(1,645,295	)
Loss per share
Basic and diluted		$	(0.20	)		$	(0.10	)
Weighted average number of common shares used in computation
Basic and diluted			17,501,354				17,312,586

F-2

LIANLUO SMART LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

		For Six Months Ended
		June 30,
		2018				2017
		US$				US$
						(Restated)
Cash flows from operating activities
Net loss		$	(3,445,375	)		$	(1,801,465	)
Less: net loss from discontinued operations			-				(9,031	)
Net loss from continuing operations			(3,445,375	)			(1,792,434	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense			1,001,459				231,969
Depreciation and amortization			290,667				1,073,764
Loss on disposal of equipment			122,122				-
Change in fair value of warrants liability			110,021				(360,012	)
Provision for doubtful accounts			33,621				23,657
Change in warranty obligation			(12,073	)			(146,271	)
Provision (recovery gain) from inventory obsolescence			61,253				(47,345	)
Changes in assets and liabilities:
(Increase) Decrease in accounts receivable			(18,773	)			84,885
Decrease (Increase) in advances to suppliers - third parties and a related party			348,539				(298,938	)
Increase in other receivables, net - related party			(61,363	)			(32,649	)
Decrease in other receivables, net - third parties			51,824				32,213
Increase in inventories			(1,068,701	)			(566,511	)
Increase (Decrease) in accounts payable - third parties			504,582				(26,085	)
Decrease in accounts payable - related parties			-				(146,507	)
(Decrease) Increase in advances from customers			(79,033	)			71,215
Decrease in accrued expenses and other current liabilities-third parties			(178,044	)			(175,061	)
Increase in other taxes receivable			(115,254	)			-
Net cash used in operating activities from continuing operations			(2,454,528	)			(2,074,110	)
Net cash used in operating activities from discontinued operations			-				(3,898	)
Net cash used in operating activities			(2,454,528	)			(2,078,008	)
Cash flows from investing activities
Capital expenditures and other additions			(16,127	)			(16,415	)
Loan to a related party			(6,000,000	)			(3,000,000	)
Repayment from a related party			145,592				-
Net cash used in investing activities			(5,870,535	)			(3,016,415	)
Cash flows from financing activities
Loans from a related party			2,749,250				-
Net proceeds from issuance of common stock			18,601				1,492,538
Net cash provided by financing activities			2,767,851				1,492,538
Effect of exchange rate fluctuations on cash and cash equivalents			(178,370	)			(18,128	)
Net decrease in cash			(5,735,582	)			(3,620,013	)
Cash at beginning of year			6,809,485				10,787,690
Cash at end of period			1,073,903				7,167,677
Less: cash at end of period from discontinued operations			-				-
Cash at end of period from continuing operations		$	1,073,903			$	7,167,677
Supplemental cash flow information
Income tax paid		$	-			$	-
Interest paid		$	17,991			$	219

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