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 Ulisse Gmbh ("Ulisse") by purchasing all of the
issued and outstanding equity of Odissea for approximately $1,665,600, funded by
the issuance of 1,665,600 shares of common stock of Newgioco Group (referred to
herein as the "Acquisition"). Ulisse is a gaming operator engaged in the retail
distribution of gaming services and products through its contracts with 107
locations in Italy.
The following unaudited pro forma condensed combined financial information and
related notes present the historical condensed combined financial information of
Newgioco Group and Ulisse, after giving effect to the Acquisition on July 1,
2016. Unless otherwise indicated, information in this report is presented in
U.S. dollars ("USD" or "$").
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 information 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 Ulisse, included herein.
NEWGIOCO GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
DECEMBER 31, 2015
Newgioco Pro Forma Pro Forma
Group, Inc. Ulisse Adjustments Balance Sheet
<c> <c> <c> <c>
Assets
Current assets
Cash and cash equivalents $ 157,363 $ 111,326 $ 268,689
Accounts receivable - 153,256 153,256
Gaming accounts receivable, net 178,151 178,151
Prepaid expenses 315,666 315,666
Other current assets 36,725 36,725
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Total Current Assets 687,905 264,582 952,487
Non-current assets
Restricted cash 232,013 232,013
Property, Plant and Equipment 88,705 2,607 91,312
Intangible assets 2,376,540 900,000 3,276,540
Goodwill 260,318 32,011 292,329
Investment in non-consolidated entities 6,729 6,729
-----------------------------------------------------------
Total non-current assets 2,964,305 2,607 932,011 3,898,923
-----------------------------------------------------------
Total Assets $ 3,652,210 $ 267,189 $ 932,011 $ 4,851,410
===========================================================
Liabilities and Stockholders' Equity
Current
Line of credit - bank $ 312,483 $ 312,483
Accounts payable and accrued liabilities 571,501 9,798 581,299
Gaming accounts balances 274,942 274,942
Taxes payable 165,166 53,755 218,921
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 63,553 2,343,897
Long term liabilities 67,532 67,532
-----------------------------------------------------------
Total Liabilities 2,347,876 63,553 2,411,429
Stockholders' Equity (Deficiency)
Common stock 2,413 38,269 (38,102) 2,580
Additional Paid-in Capital 10,472,501 970,113 11,442,614
Accumulated Other Comprehensive income 124,265 (2,511) 121,754
Accumulated deficit (9,294,845) 167,878 (9,126,967)
-----------------------------------------------------------
Total Stockholders' Equity 1,304,334 203,636 932,011 2,439,981
-----------------------------------------------------------
Total Liabilities and
Stockholders' Equity $ 3,652,210 $ 267,189 $ 932,011 $ 4,851,410
===========================================================
See accompanying notes to combined financial statements
NEWGIOCO GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2015
Newgioco Pro Forma Pro Forma
Group, Inc. Ulisse Adjustments Statement of Operations
<c> <c> <c> <c>
Revenue $ 4,872,902 $ 317,016 $ - $ 5,189,918
Costs and expenses
Selling expenses 3,663,165 3,663,165
General and administrative expenses 2,837,800 93,157 2,930,957
---------------------------------------------------------
Total Costs and Expenses 6,500,965 93,157 6,594,122
---------------------------------------------------------
Loss from operations (1,628,063) 223,859 (1,404,204)
Other expenses (Income)
Interest expense, net of interest income 205,355 22 205,377
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
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Total other expenses 358,609 22 358,631
Loss before income taxes (1,986,672) 223,837 (1,762,835)
---------------------------------------------------------
Income taxes (35,991) 55,959 19,968
---------------------------------------------------------
Net Loss (2,022,663) 167,878 (1,782,803)
Other Comprehensive Income (loss)
Foreign currency translation adjustment 84,385 (2,511) 81,874
---------------------------------------------------------
Total Comprehensive loss for
the period $(1,938,278) $ 165,367 $ (1,700,929)
=========================================================
Basic and fully diluted loss
per common share (0.08) (0.07)
Weighted average number of shares
outstanding Basic and diluted 23,412,131 25,073,167
See accompanying notes to combined financial statements
NEWGIOCO GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
JUNE 30, 2016
Newgioco Pro Forma Pro Forma
Group, Inc. Ulisse Adjustments Balance Sheet
<c> <c> <c> <c>
Assets
Current assets
Cash and cash equivalents $ 121,130 $ 741,514 $ 862,644
Accounts recievable - 243,133 243,133
Gaming accounts receivable, net 252,898 252,898
Prepaid expenses 221,683 221,683
Other current assets 30,944 30,944
-------------------------------------------------------
Total Current Assets 626,655 984,647 1,611,302
Non-current assets
Restricted cash 263,877 263,877
Property, Plant and Equipment 85,710 2,917 88,627
Intangible assets 2,139,321 (b) 900,000 3,039,321
Goodwill 260,318 (b) 32,011 292,329
Investment in non-consolidated entities 6,848 6,848
Total non-current assets 2,756,074 2,917 932,011 3,691,002
-------------------------------------------------------
Total Assets $ 3,382,729 $ 987,564 $ 932,011 $ 5,302,304
=======================================================
Liabilities and Stockholders' Equity
Current
Line of credit - bank $ 289,614 $ 289,614
Accounts payable and accrued liabilities 446,731 24,118 470,849
Gaming accounts balances 252,174 252,174
Taxes payable 175,441 229,557 404,998
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 2,332,867 253,675 2,586,542
Long term liabilities 82,478 82,478
-------------------------------------------------------
Total Liabilities 2,415,345 253,675 2,669,020
Stockholders' Equity (Deficiency)
Common stock 2,438 38,948 (a) (38,781) 2,605
Additional Paid-in Capital 10,803,077 (a)(b)970,792 11,773,869
Accumulated Other Comprehensive income 113,988 (1,609) 112,379
Accumulated deficit (9,952,119) 696,550 (9,255,569)
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Total Stockholders' Equity 967,384 733,889 932,011 2,633,284
-------------------------------------------------------
Total Liabilities and
Stockholders' Equity $ 3,382,729 $ 987,564 $ 932,011 $ 5,302,304
=======================================================
See accompanying notes to combined financial statements
NEWGIOCO GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2016
Newgioco Pro Forma Pro Forma
Group, Inc. Ulisse Adjustments Statement of Operations
<c> <c> <c> <c>
Revenue $ 3,272,844 $ 796,990 $ - $ 4,069,834
Costs and expenses
Selling expenses 2,314,460 2,314,460
General and administrative expenses 1,647,948 92,671 1,740,619
--------------------------------------------------------------
Total Costs and Expenses 3,962,408 92,671 4,055,079
--------------------------------------------------------------
Loss from operations (689,564) 704,319 14,755
Other expenses (Income)
Interest expense, net of interest income 305,495 (14) 305,481
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) (14) (60,167)
--------------------------------------------------------------
Loss before income taxes (629,411) 704,333 74,922
Income taxes 27,863 176,083 203,946
--------------------------------------------------------------
Net Loss (657,274) 528,250 (129,024)
Other Comprehensive Income (loss)
Foreign currency translation adjustment (10,277) (1,609) (11,886)
--------------------------------------------------------------
Total Comprehensive loss for the period $ (667,551) $ 526,641 $ (140,910)
==============================================================
Basic and fully diluted loss per common share (0.03) (0.01)
Weighted average number of shares outstanding
Basic and diluted 24,244,264 25,909,864
See accompanying notes to combined financial statements
NEWGIOCO GROUP, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
1. Description of Acquisition and Basis of Presentation
Description of Acquisition
The unaudited pro forma condensed combined financial statements have been
compiled from underlying financial information of Newgioco Group, Inc. and
Ulisse and reflect the acquisition on July 1, 2016 of 100% of the outstanding
stock of Ulisse in consideration for a total of 1,665,600 restricted shares of
the Company's common stock. The Company issued 1,665,600 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 Ulisse 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 Ulisse, 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 Ulisse was prepared using accounting
principles generally accepted in Austria (Austrian GAAP) and is presented in
Euros. Accordingly, Ulisse 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 condensed combined
statements of income are as follows:
(a) Issuance of the 1,665,600 shares of Newgioco Group in exchange for 100%
of the issued common shares of Ulisse.
(b) Reflects the allocation of the purchase price of U.S. $ 1,665,900 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 $ 1,665,900
Less: Net assets acquired (733,889)
Less: Intangible assets (900,000)
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Goodwill $ 32,011