Attached files
Exhibit 99.3
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
On July 1, 2016, Newgioco Group, Inc. ("Newgioco Group" or the "Company")
completed its acquisition of Odissea Betriebsinformatik Beratung Gmbh
("Odissea") by purchasing all of the issued and outstanding equity of Odissea
for approximately $4,386,100, funded by the issuance of 4,386,100 shares of
common stock of Newgioco Group (referred to herein as the "Acquisition").
Odissea is a software development company engaged in the design, development and
operation of a proprietary betting operating system and online gaming products.
The following unaudited pro forma condensed combined financial information and
related notes present the historical condensed combined financial information of
Newgioco Group and Odissea, after giving effect to the Acquisition on July 1,
2016. Unless otherwise indicated, information in this report is presented in
U.S. dollars ("USD" or "$").
The unaudited pro forma condensed combined statements of earnings for the six
months ended June 30, 2016 and the year ended December 31, 2015 have been
prepared to reflect the Acquisition as if it occurred on January 1, 2016 and
January 1, 2015, respectively.
The pro forma condensed combined financial information is presented for
illustrative purposes only and is not necessarily indicative of the 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 corporation. 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 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 accompanying unaudited pro forma condensed combined financial information
should be read in conjunction with the historical consolidated financial
statements of Newgioco Group included in the Company's annual report on Form
10-K for the year ended December 31, 2015 and quarterly report on Form 10-Q for
the quarter ended June 30, 2016, filed with the SEC, and the historical combined
financial statements of Odissea, included herein.
NEWGIOCO GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
DECEMBER 31, 2015
Newgioco Pro Forma Pro Forma
Group, Inc. Odissea Adjustments Balance Sheet
Assets
Current assets
Cash and cash equivalents $ 157,363 $ 54,869 $ 212,232
Accounts receivable - 80,418 80,418
Gaming accounts receivable, net 178,151 178,151
Prepaid expenses 315,666 9,185 324,851
Other current assets 36,725 9,900 46,625
-----------------------------------------------------------
Total Current Assets 687,905 154,372 842,277
Non-current assets
Restricted cash 232,013 232,013
Property, Plant and Equipment 88,705 24,986 113,691
Intangible assets 2,376,540 12,042 4,300,000 6,688,582
Goodwill 260,318 61,662 321,980
Investment in non-consolidated entities 6,729 6,729
-----------------------------------------------------------
Total non-current assets 2,964,305 37,028 4,361,662 7,362,995
-----------------------------------------------------------
Total Assets $3,652,210 $ 191,400 $4,361,662 $ 8,205,272
===========================================================
Liabilities and Stockholders' Equity
Current
Line of credit - bank $ 312,483 $ 312,483
Accounts payable and accrued liabilities 571,501 205,086 776,587
Gaming accounts balances 274,942 274,942
Taxes payable 165,166 67,795 232,961
Advances from stockholders 191,675 191,675
Liability in connection with acquisition 327,536 327,536
Debentures, net of discount 112,848 112,848
Derivative liability 28,375 28,375
Promissory notes payable - other 294,368 294,368
Other current liabilities 1,450 1,450
-----------------------------------------------------------
Total Current Liabilities 2,280,344 272,881 - 2,553,225
Long term liabilities 67,532 67,532
-----------------------------------------------------------
Total Liabilities 2,347,876 272,881 - 2,620,757
Stockholders' Equity (Deficiency)
Common stock 2,413 38,269 37,830) 2,852
Additional Paid-in Capital 10,472,501 4,399,492 14,871,993
Accumulated Other Comprehensive income 124,265 (982) 123,283
Accumulated deficit (9,294,845) (118,768) (9,413,613)
-----------------------------------------------------------
Total Stockholders' Equity 1,304,334 (81,481) 4,361,662 5,584,515
Total Liabilities and
Stockholders' Equity $3,652,210 $ 191,400 $4,361,662 $8,205,272
===========================================================
See accompanying notes to combined financial information
NEWGIOCO GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2015
Newgioco Pro Forma Pro Forma
Group, Inc. Odissea Adjustments Statement of Operations
Revenue $ 4,872,902 $ 506,303 $ - $ 5,379,205
Costs and expenses
Selling expenses 3,663,165 3,663,165
General and administrative expenses 2,837,800 437,895 3,275,695
-------------------------------------------------------------
Total Costs and Expenses 6,500,965 437,895 6,938,860
-------------------------------------------------------------
Loss from operations (1,628,063) 68,408 (1,559,655)
Other expenses (Income)
Interest expense, net of interest income 205,355 4 205,359
Changes in fair value of
derivative liabilities 22,808 22,808
Imputed interest on related party advances 5,309 5,309
Allowance for deposit on acquisition 94,952 94,952
Impairment on investment 30,185 30,185
-------------------------------------------------------------
Total other expenses 358,609 4 358,613
-------------------------------------------------------------
Loss before income taxes (1,986,672) 68,404 (1,918,268)
Income taxes (35,991) 2,715 (33,276)
-------------------------------------------------------------
Net Loss (2,022,663) 65,689 (1,884,992)
Other Comprehensive Income (loss)
Foreign currency translation adjustment 84,385 (982) 83,403
-------------------------------------------------------------
Total Comprehensive loss for
the period $ (1,938,278) $ 64,707 $ - $ (1,801,589)
=============================================================
Basic and fully diluted loss
per common share (0.08) (0.06)
Weighted average number of shares
outstanding
Basic and diluted 23,412,131 27,786,214
See accompanying notes to combined financial information
NEWGIOCO GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
JUNE 30, 2016
Newgioco Pro Forma Pro Forma
Group, Inc. Odissea Adjustments Balance Sheet
Assets
Current assets
Cash and cash equivalents $ 121,130 $ 61,968 $ 183,098
Accounts recievable 129,907 129,907
Gaming accounts receivable, net 252,898 252,898
Prepaid expenses 221,683 9,348 231,031
Other current assets 30,944 9,282 40,226
-------------------------------------------------------------
Total Current Assets 626,655 210,505 837,160
Non-current assets
Restricted cash 263,877 263,877
Property, Plant and Equipment 85,710 21,499 107,209
Intangible assets 2,139,321 9,139 (b) 4,300,000 6,448,460
Goodwill 260,318 (b) 61,662 321,980
Investment in non-consolidated entities 6,848 6,848
-------------------------------------------------------------
Total non-current assets 2,756,074 30,638 4,361,662 7,148,374
-------------------------------------------------------------
Total Assets $3,382,729 $ 241,143 $ 4,361,662 $ 7,985,534
=============================================================
Liabilities and Stockholders' Equity
Current
Line of credit - bank $ 289,614 $ 289,614
Accounts payable and accrued liabilities 446,731 132,418 579,149
Gaming accounts balances 252,174 252,174
Taxes payable 175,441 83,517 258,958
Advances from stockholders 92,572 92,572
Liability in connection with acquisition 131,931 131,931
Debentures, net of discount 240,931 240,931
Derivative liability 269,415 269,415
Promissory notes payable - other 115,980 115,980
Promissory notes payable - related party 318,078 318,078
-------------------------------------------------------------
Total Current Liabilities 2,332,867 215,935 2,548,802
Long term liabilities 82,478 82,478
-------------------------------------------------------------
Total Liabilities 2,415,345 215,935 2,631,280
Stockholders' Equity (Deficiency)
Common stock 2,438 38,948 (a) (38,509) 2,877
Additional Paid-in Capital 10,803,077 (a)(b) 4,400,171 15,203,248
Accumulated Other Comprehensive income 113,988 (330) 113,658
Accumulated deficit (9,952,119) (13,410) (9,965,529)
-------------------------------------------------------------
Total Stockholders' Equity 967,384 25,208 4,361,662 5,354,254
-------------------------------------------------------------
Total Liabilities and
Stockholders' Equity $3,382,729 $ 241,143 $ 4,361,662 $ 7,985,534
=============================================================
See accompanying notes to combined financial information
NEWGIOCO GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2016
Newgioco Pro Forma Pro Forma
Group, Inc. Odissea Adjustments Statement of Operations
Revenue $ 3,272,844 $ 446,230 $ - $ 3,719,074
Costs and expenses
Selling expenses 2,314,460 2,314,460
General and administrative expenses 1,647,948 330,440 1,978,388
-----------------------------------------------------------------
Total Costs and Expenses 3,962,408 330,440 4,292,848
Loss from operations (689,564) 115,790 (573,774)
Other expenses (Income)
Interest expense, net of interest income 305,495 305,495
Changes in fair value of derivative liabilities (368,216) (368,216)
Imputed interest on related party advances 2,568 2,568
-----------------------------------------------------------------
Total other expenses (60,153) 60,153)
-----------------------------------------------------------------
Income (loss) before income taxes (629,411) 115,790 (513,621)
Income taxes 27,863 7,325 35,188
-----------------------------------------------------------------
Net income (loss) (657,274) 108,465 (548,809)
Other Comprehensive Loss
Foreign currency translation adjustment (10,277) (330) (10,607)
-----------------------------------------------------------------
Total Comprehensive loss for the period $(667,551) $ 108,135 $ - $(559,416)
=================================================================
Basic and fully diluted loss per common share (0.03) (0.02)
Weighted average number of shares outstanding
Basic and diluted 24,244,264 28,630,364
See accompanying notes to combined financial information
NEWGIOCO GROUP, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
1. Description of Acquisition and Basis of Presentation
The unaudited pro forma condensed combined financial statements have been
compiled from underlying financial information of Newgioco Group, Inc. and
Odissea and reflect the acquisition on July 1, 2016 of 100% of the outstanding
stock of Odissea in consideration for a total of 4,386,100 restricted shares of
the Company's common stock. The Company issued 4,386,100 upon the closing of
acquisition.
The business combination was accounted for using the acquisition method of
accounting, which requires an acquirer to recognize assets acquired and
liabilities assumed at the acquisition date fair value. The estimated fair value
of assets acquired and liabilities assumed is preliminary and differences
between the preliminary and final estimated fair value could be material.
The unaudited pro forma condensed combined financial statements have been
developed from the audited records of Newgioco Group for the year ended December
31, 2015 and the unaudited financial statements for the period ended June 30,
2016, and the audited records of Odissea for the year ended December 31, 2015
and the unaudited financial records for the period ended June 30, 2016.
The unaudited pro forma condensed combined statement of operations is based upon
the historical financial statements of Newgioco Group and Odissea, after giving
effect to the acquisition. The unaudited pro forma condensed combined statement
of operations is presented as if the acquisition had occurred at the beginning
of the period.
The historical financial information of Odissea was prepared using accounting
principles generally accepted in Austria (Austrian GAAP) and is presented in
Euros. Accordingly, Odissea amounts are translated to U.S. dollars.
2. Pro Forma Adjustments
The unaudited pro forma condensed combined financial statements for the fiscal
year ended December 31, 2015 and six months ended June 30, 2016 are presented as
if the acquisition had occurred on January 1, 2015, the first day of that fiscal
year. The pro forma adjustments give effect to the events that are directly
attributable to the transaction and are expected to have a continuing impact on
the financial results of the combined company. The pro forma adjustments are
based on available information and certain assumptions that the Company believes
are reasonable.
The pro forma adjustments included in the unaudited pro forma combined
statements of income are as follows:
(a) Issuance of the 4,386,100 shares of Newgioco Group in exchange for 100% of
the issued common shares of Odissea.
(b) Reflects the allocation of the purchase price of U.S. $ 4,386,870 in shares
of Newgioco Group common stock to the fair value of the assets acquired. The
allocation of the purchase price is preliminary and therefore subject to
change. The allocation of the purchase price to the fair value of the assets
acquired is as follows:
Total Purchase Price $ 4,386,870
Less: Net assets acquired (25,208)
Less: Intangible assets (4,300,000)
---------
Goodwill $ 61,662
