EX-99.2 4 gmgi_ex992.htm PRO FORMA FINANCIAL STATEMENTS gmgi_ex992.htm

EXHIBIT 99.2

 

UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION

 

The following unaudited pro forma combined balance sheet combines the historical consolidated balance sheet of Golden Matrix Group, Inc. (and together with its subsidiaries, the “Company,” or “GMGI”) as of October 31, 2021 with the historical balance sheet of RKingsCompetitions Ltd, a private limited company formed and registered in and under the laws of Northern Ireland (“RKings”) as of October 31, 2021, giving effect to the acquisition of 80% of RKings by the Company (the “Acquisition”), pursuant to that certain Sale and Purchase Agreement of Ordinary Issued Share Capital dated November 29, 2021 (the “Purchase Agreement”), on a pro forma basis as if they had been completed on October 31, 2021.

 

The following unaudited pro forma combined statements of operations for the twelve months ended October 31, 2021 combines the Company’s historical consolidated statements of operations for the periods then ended with the historical statements of operations of RKings for the twelve months ended October 31, 2021, and gives effect to the Purchase Agreement on a pro forma basis as if they had been completed on November 1, 2020.

 

The unaudited pro forma combined financial statements show the impact of the Purchase Agreement on the Company’s historical consolidated financial positions and results of operations under the acquisition method of accounting, in accordance with Accounting Standards Codification Topic (“ ASC ”) 805 “Business Combinations,” with the Company treated as the acquirer of RKings.

 

The pro forma combined financial statements are unaudited, are presented for informational purposes only, and are not necessarily indicative of the financial position or results of operations that would have occurred had the Purchase Agreement actually been completed as of the dates or at the beginning of the periods presented. In addition, the unaudited pro forma combined financial statements do not purport to project the future consolidated financial position or operating results of the combined company. The unaudited pro forma combined financial statements and the accompanying notes should be read together with:

 

·

the audited historical consolidated financial statements of the Company as of October 31, 2021, for the nine month transition period ended October 31, 2021, and the year ended January 31, 2021, included in the Company’s Transition Report on Form 10-KT for the nine month transition period ended October 31, 2021, which was filed with the Securities and Exchange Commission on January 13, 2022; and

 

 

·

the audited historical financial statements of RKings as of and for the two fiscal years ended October 31, 2021 and 2020 included in this Current Report on Form 8-K/A (the “Current Report”)

 

 
1

 

 

 

Golden Matrix Group, Inc. and Subsidiaries

 Unaudited Pro Forma Combined Balance Sheet

October 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 GMGI

 

 

 Rkings

 

 

Trax

 

 

 Transaction 

 

 

 

 

 

 

 

 

 

As of

 

 

As of

 

 

Acctg

 

 

 Accounting

 

 

Pro Forma

 

 

 Pro Forma

 

 

 

 

 

October 31,

 

 

October 31,

 

 

Note

 

 

 Adjustments

 

 

Note

 

 

 Adjustments

 

 

 Pro Forma 

 

 

 

2021

 

 

2021

 

 

Ref

 

 

Dr (Cr)

 

 

Ref

 

 

Dr (Cr)

 

 

Balances

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 16,797,656

 

 

 

 758,047

 

 

 

(1)

 

 

 (4,099,500 )

 

 

 

 

 

 -

 

 

 

 13,456,203

 

Account receivable, net

 

 

 1,762,725

 

 

 

 -

 

 

 

 

 

 

 

 -

 

 

 

 

 

 

 -

 

 

 

 1,762,725

 

Account receivable-related party

 

 

 1,306,896

 

 

 

 -

 

 

 

 

 

 

 

 -

 

 

 

 

 

 

 -

 

 

 

 1,306,896

 

Prepayment

 

 

 114,426

 

 

 

 -

 

 

 

 

 

 

 

 -

 

 

 

 

 

 

 -

 

 

 

 114,426

 

Short-term deposit

 

 

 61,799

 

 

 

 -

 

 

 

 

 

 

 

 -

 

 

 

 

 

 

 -

 

 

 

 61,799

 

Inventory, prizes

 

 

 -

 

 

 

 906,018

 

 

 

 

 

 

 

 -

 

 

 

 

 

 

 -

 

 

 

 906,018

 

Total current assets

 

 

 20,043,502

 

 

 

 1,664,065

 

 

 

 

 

 

 

 (4,099,500 )

 

 

 

 

 

 -

 

 

 

 17,608,067

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

 

 -

 

 

 

 -

 

 

 

 

 

 

 

 10,613,824

 

 

 

 

 

 

 -

 

 

 

 10,613,824

 

Property, plant & equipment

 

 

 -

 

 

 

 27,613

 

 

 

 

 

 

 

 -

 

 

 

(5)

 

 

 (7,379 )

 

 

 20,234

 

Intangible assets

 

 

 135,263

 

 

 

 13,901

 

 

 

 

 

 

 

 -

 

 

 

(3)(6)

 

 

 (61,754 )

 

 

 87,410

 

Operating lease right-of-use assets

 

 

 280,183

 

 

 

 

 

 

 

 

 

 

 

 -

 

 

 

(4)

 

 

 (136,638 )

 

 

 143,545

 

Total Non-current assets:

 

 

 415,446

 

 

 

 41,514

 

 

 

 

 

 

 

 10,613,824

 

 

 

 

 

 

 

 (205,771 )

 

 

 10,865,013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

 

 20,458,948

 

 

 

 1,705,579

 

 

 

 

 

 

 

 6,514,324

 

 

 

 

 

 

 

 (205,771 )

 

 

 28,473,080

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

 

 1,074,786

 

 

 

 71,057

 

 

 

 

 

 

 

 -

 

 

 

(4)

 

 

 (151,672 )

 

 

 1,297,515

 

Accounts payable-related party

 

 

 105,062

 

 

 

 -

 

 

 

 

 

 

 

 -

 

 

 

 

 

 

 

 -

 

 

 

 105,062

 

Deferred tax liability

 

 

 -

 

 

 

 5,242

 

 

 

 

 

 

 

 -

 

 

 

 

 

 

 

 -

 

 

 

 5,242

 

Accured income tax liability

 

 

 -

 

 

 

 602,628

 

 

 

 

 

 

 

 -

 

 

 

 

 

 

 

 -

 

 

 

 602,628

 

Accrued interest

 

 

 123

 

 

 

 

 

 

 

 

 

 

 

 -

 

 

 

 

 

 

 

 -

 

 

 

 123

 

Customer deposit

 

 

 68,635

 

 

 

 

 

 

 

 

 

 

 

 -

 

 

 

 

 

 

 

 -

 

 

 

 68,635

 

Deferred revenue

 

 

 -

 

 

 

 281,826

 

 

 

 

 

 

 

 -

 

 

 

 

 

 

 

 -

 

 

 

 281,826

 

Current porton of operating lease liabilities

 

 

 100,209

 

 

 

 

 

 

 

 

 

 

 

 -

 

 

 

 

 

 

 

 -

 

 

 

 100,209

 

Total Current liabilities

 

 

 1,348,815

 

 

 

 960,753

 

 

 

 

 

 

 

 -

 

 

 

 

 

 

 

 (151,672 )

 

 

 2,461,240

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non- Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-current operating lease liabilities

 

 

 182,024

 

 

 

 -

 

 

 

 

 

 

 

 -

 

 

 

(4)

 

 

 132,798

 

 

 

 49,226

 

Total non-current liabilities

 

 

 182,024

 

 

 

 -

 

 

 

 

 

 

 

 -

 

 

 

 

 

 

 

 132,798

 

 

 

 49,226

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contingent liabilities

 

 

 -

 

 

 

 -

 

 

 

(1)

 

 

 (1,929,150 )

 

 

 

 

 

 

 -

 

 

 

 1,929,150

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

 1,530,839

 

 

 

 960,753

 

 

 

 

 

 

 

 (1,929,150 )

 

 

 

 

 

 

 (18,874 )

 

 

 4,439,616

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholder's equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

 272

 

 

 

 130

 

 

 

(1)

 

 

 (7 )

 

 

(2)

 

 

 26

 

 

 

 383

 

Additional paid in capital

 

 

 43,354,366

 

 

 

 -

 

 

 

(1)

 

 

 (4,585,167 )

 

 

 

 

 

 

 -

 

 

 

 47,939,533

 

Accumulated other comprehensive loss

 

 

 (1,720 )

 

 

 (13,421 )

 

 

 

 

 

 

 -

 

 

 

 

 

 

 

 -

 

 

 

 (15,141 )

Accumulated earnings (deficit)

 

 

 (24,424,809 )

 

 

 758,117

 

 

 

 

 

 

 

 -

 

 

 

(2)(3)(4)(5)(6)

 

 

 376,268

 

 

 

 (24,042,960 )

Total shareholders' equity

 

 

 18,928,109

 

 

 

 744,826

 

 

 

 

 

 

 

 (4,585,174 )

 

 

 

 

 

 

 376,294

 

 

 

 23,881,815

 

Noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2)

 

 

 (151,649 )

 

 

 151,649

 

Total equity

 

 

 18,928,109

 

 

 

 744,826

 

 

 

 

 

 

 

 (4,585,174 )

 

 

 

 

 

 

 224,645

 

 

 

 24,033,464

 

Total liabilities and equity

 

 

 20,458,948

 

 

 

 1,705,579

 

 

 

 

 

 

 

 (6,514,324 )

 

 

 

 

 

 

 205,771

 

 

 

 28,473,080

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to unaudited pro forma combined financial statements.

   

 
2

 

 

Golden Matrix Group, Inc. and Subsidiaries

 Unaudited Pro Forma Combined Statement of Operations

October 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GMGI

 

 

Rkings

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve Months

 

 

Twelve Months

 

 

Trax

 

 

 Transaction 

 

 

 

 

 

 

 

 

 

Ended

 

 

Ended

 

 

Acctg

 

 

 Accounting

 

 

Pro Forma

 

 

 Pro Forma

 

 

 

 

 

October 31,

 

 

October 31,

 

 

Note

 

 

 Adjustments

 

 

Note

 

 

 Adjustments

 

 

 Pro Forma 

 

 

 

2021

 

 

2021

 

 

Ref

 

 

Dr (Cr)

 

 

Ref

 

 

Dr (Cr)

 

 

Balances

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales

 

 

 9,144,632

 

 

 

 32,510,412

 

 

 

 

 

 

 -

 

 

 

 

 

 

 -

 

 

 

 41,655,044

 

Sales-Related Party

 

 

 2,140,266

 

 

 

 -

 

 

 

 

 

 

 -

 

 

 

 

 

 

 -

 

 

 

 2,140,266

 

 

 

 

 11,284,898

 

 

 

 32,510,412

 

 

 

 

 

 

 -

 

 

 

 

 

 

 -

 

 

 

 43,795,310

 

Cost of goods sold

 

 

 (7,005,290 )

 

 

 (26,025,239 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 (33,030,529 )

Gross profit (loss)

 

 

 4,279,608

 

 

 

 6,485,173

 

 

 

 

 

 

 -

 

 

 

 

 

 

 -

 

 

 

 10,764,781

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

 1,779,377

 

 

 

 3,275,769

 

 

 

 

 

 

 -

 

 

 

(3)(4)(5)(6)

 

 

 224,645

 

 

 

 5,279,791

 

G&A expenses - related party

 

 

 1,719,621

 

 

 

 -

 

 

 

 

 

 

 -

 

 

 

 

 

 

 

 -

 

 

 

 1,719,621

 

Total operating expenses

 

 

 3,498,998

 

 

 

 3,275,769

 

 

 

 

 

 

 -

 

 

 

 

 

 

 

 224,645

 

 

 

 6,999,412

 

Gain (Loss) from operations

 

 

 780,610

 

 

 

 3,209,404

 

 

 

 

 

 

 -

 

 

 

 

 

 

 

 (224,645 )

 

 

 3,765,369

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

 (955 )

 

 

 -

 

 

 

 

 

 

 -

 

 

 

 

 

 

 

 -

 

 

 

 (955 )

Interest earned

 

 

 242

 

 

 

 -

 

 

 

 

 

 

 -

 

 

 

 

 

 

 

 -

 

 

 

 242

 

Foreign exchange gain (loss)

 

 

 (39,667 )

 

 

 -

 

 

 

 

 

 

 -

 

 

 

 

 

 

 

 -

 

 

 

 (39,667 )

Other expense

 

 

 (40,000 )

 

 

 -

 

 

 

 

 

 

 -

 

 

 

 

 

 

 

 -

 

 

 

 (40,000 )

Total other income (expense)

 

 

 (80,380 )

 

 

 -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 (80,380 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 -

 

Net income before taxes

 

 

 700,230

 

 

 

 3,209,404

 

 

 

 

 

 

 -

 

 

 

 

 

 

 

 (224,645 )

 

 

 3,684,989

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 -

 

Income tax expense

 

 

 -

 

 

 

 (609,747 )

 

 

 

 

 

 -

 

 

 

 

 

 

 

 -

 

 

 

 (609,747 )

Net income

 

 

 700,230

 

 

 

 2,599,657

 

 

 

 

 

 

 -

 

 

 

 

 

 

 

 (224,645 )

 

 

 3,075,242

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less: net income attributable to noncontrolling interest

 

 

 -

 

 

 

 -

 

 

 

 20 %

 

 

 (519,931 )

 

 

 

 

 

 

 -

 

 

 

 (519,931 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to GMGI shareholders

 

 

 700,230

 

 

 

 2,599,657

 

 

 

 

 

 

 

 (519,931 )

 

 

 

 

 

 

 (224,645 )

 

 

 2,555,311

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 -

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 -

 

Foreign currency translation adjustment

 

 

 (742 )

 

 

 (16,794 )

 

 

 20 %

 

 

 3,359

 

 

 

 

 

 

 

 -

 

 

 

 (14,177 )

Total comprehensive income

 

 

 699,488

 

 

 

 2,582,863

 

 

 

 

 

 

 

 3,359

 

 

 

 

 

 

 

 (224,645 )

 

 

 3,061,065

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 -

 

Net earnings per common share - basic

 

 

 0.03

 

 

 

 25,996.57

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 0.11

 

Net earnings per common share - diluted

 

 

 0.02

 

 

 

 25,996.57

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 0.08

 

Weighted average number of common shares outstanding - basic

 

 

 24,023,677

 

 

 

 100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 24,023,777

 

Weighted average number of common shares outstanding - diluted

 

 

 32,333,685

 

 

 

 100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 32,333,785

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to unaudited pro forma combined financial statements.

  

 
3

 

   

Golden Matrix Group, Inc.

Notes to Unaudited Pro Forma Condensed Consolidated Financial Information

 

Description of the Acquisition and Basis of Presentation

 

On November 29, 2021, we entered into a Sale and Purchase Agreement of Ordinary Issued Share Capital (the “Purchase Agreement”), with Mark Weir and Paul Hardman, individuals (the “Sellers”), who were the sole shareholders of RKingsCompetitions Ltd, a private limited company formed and registered in and under the laws of Northern Ireland (“RKings”).

 

RKings is a United Kingdom based online competition company offering business-to-consumer tournaments whereby individuals can purchase entries for online prize drawings.

 

Pursuant to the Purchase Agreement, the Sellers agreed to sell the Company 80% of the outstanding capital stock of RKings (the “Purchase” and the “RKings Stock”).

 

In consideration for the RKings Stock, we agreed to pay the Sellers, pro rata with their ownership of RKings:

 

(1)

a cash payment of GBP £3,000,000;

 

 

(2)

666,250 restricted shares of the Company’s common stock, with an agreed value of GBP £4,000,000, or $8.00 per share of Company common stock (the “Company Share Value” and such aggregate shares of Company Common Stock, the “Closing Shares”); and

 

 

(3)

within seven days after the receipt of the audit of RKings (as required by Securities and Exchange Commission (“SEC”) rules and regulations), an additional number (rounded to the nearest whole share) of restricted shares of Company common stock, equal to (i) 80% of RKings’ net asset value (inventory on hand (minus allowances for reserve inventory and allocated goods and materials) plus RKings’ total cash and cash equivalents on hand; less (B) RKings’ current and accrued liabilities, as described in greater detail in the Purchase Agreement) as of October 31, 2021, divided by (ii) the Company Share Value (the “Post-Closing Shares”).

 

A total of GBP £1,000,000 (the “Holdback Amount”) is to be retained by the Company following closing and will be released to the Sellers, within six months after the closing date only to the extent that RKings has achieved revenue of at least USD $7,200,000 during the six full calendar months immediately following the closing date; and (B) the Sellers do not default in any of their obligations, covenants or representations under the Purchase Agreement or other transaction documents. 

 

Additionally, in the event the (A) the Company determines, on or before the date on which the Company files its Annual Report on Form 10-K with the SEC for the Company’s fiscal year ending October 31, 2022 (the “Filing Date”), that the increase (if any) between (1) RKings’ twelve-month trailing EBITDA for the year ended October 31, 2022, less (2) RKings’ twelve-month trailing EBITDA for the year ended October 31, 2021, is at least GBP £1,250,000 during the twelve-month period ending October 31, 2022; and (B) the Sellers do not default in any of their obligations, covenants or representations under the Purchase Agreement or other transaction documents, then the Company is required to pay the Sellers GBP £4,000,000 (the “Earn-Out Consideration”), which is payable at the option of Company in either (a) cash; or (b) shares of Company common stock valued at $8.00 per share of Company common stock (subject to equitable adjustment in accordance with dividends payable in stock on such Company Common Stock, stock splits, stock combinations, and other similar events affecting the Company Common Stock) (such shares of Company Common Stock, if any, the “Earn-Out Shares”). 

 

On December 6, 2021, the Company closed the Purchase, which had an effective date of November 1, 2021.

 

 
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The Purchase Agreement also required that the Sellers and the Company enter into a Shareholders Agreement (the “Shareholders Agreement”), which was entered into and became effective on November 29, 2021, and is described in greater detail in the Current Report on Form 8-K filed by the Company on December 3, 2021.

 

In accordance with Financial Accounting Standards Board Accounting Standards Codification section 805, “Business Combinations”, the Company will account for the Purchase Agreement transaction as a business combination using the acquisition method. Due to the continuity of operations that will remain after the acquisition, the acquisition is considered the acquisition of a “business”.

 

For accounting purposes, the purchase price for the 80 shares of RKings (representing 80% of RKings) was estimated to be approximately $11,358,650. The difference between the purchase price of $11,358,650 and the recorded fair value of RKings assets acquired net of liabilities assumed of $744,826 amounted to $10,613,824 of goodwill which was allocated to a non-current intangible asset.

 

The Company accounts for business combinations in accordance with Financial Accounting Standards Board Accounting Standards Codification 805, Business Combinations. The preliminary fair value of purchase consideration for the acquisition has been allocated to the assets acquired and liabilities assumed based on a preliminary valuation of their respective fair values and may change when the final valuation of the assets acquired and liabilities assumed is determined.

 

Accounting Policies

 

The accounting policies used in the preparation of this unaudited pro forma condensed combined financial information are those set out in the Company’s audited consolidated financial statements as of and for the year ended October 31, 2021. The Company performed a preliminary review of RKing’s accounting policies to determine whether any adjustments were necessary to ensure comparability in the unaudited pro forma condensed combined financial information. The Company identified differences and certain amounts that have been reclassified to conform to the Company’s financial statement presentation. At this time, the Company is not aware of any other differences that would have a material effect on the unaudited pro forma condensed combined financial information, including any differences in the timing of adoption of new accounting standards. However, the Company will continue to perform its detailed review of RKing’s accounting policies and, upon completion of that review, differences may be identified between the accounting policies of the companies that, when conformed, could have a material impact on the unaudited pro forma condensed combined financial information.

 

Calculation of Purchase Price and Preliminary Estimated Purchase Price Allocation

 

 

 

Consideration

 

RKings

 

Cash paid at closing

 

 $ 4,099,500

 

Fair value of contingent cash consideration to be paid in six months

 

 

 1,366,500

 

Fair value of common shares issued

 

 

 5,330,000

 

Fair value of contingent shares consideration to be paid in seven days after 10K filing

 

 

 562,650

 

Total consideration

 

 $ 11,358,650

 

 

 

 

 

 

Cash and cash equivalents acquired

 

 

 758,047

 

Inventory, prizes

 

 

 906,018

 

Net tangible assets acquired

 

 

 27,613

 

Right of use assets acquired

 

 

 13,901

 

Net identifiable intangible assets acquired

 

 $ 1,705,579

 

 

 

 

 

 

Accounts payable and other liabilities

 

 

 71,057

 

Deferred revenue

 

 

 281,826

 

Accrued income tax liability

 

 

 602,628

 

Deferred tax liabilities

 

 

 5,242

 

 

 

 $ 960,753

 

 

 

 

 

 

Estimated fair value of net assets acquired

 

 $ 744,826

 

 

 

 

 

 

Goodwill

 

 $ 10,613,824

 

  

 
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Transaction Accounting Adjustments

 

Debit

 

 

 Credit

 

Note (1)

 

 

 

 

 

 

Goodwill

 

 

 10,613,824

 

 

 

 

Additional paid in capital

 

 

 744,826

 

 

 

 

Cash paid at closing

 

 

 

 

 

 

 4,099,500

 

Contingent liability

 

 

 

 

 

 

 1,929,150

 

Common stock (666,250 + 70,332 shares)

 

 

 

 

 

 

 7

 

Additional paid in capital

 

 

 

 

 

 

 5,329,993

 

 

Adjustment recorded to reflect the preliminary amount of goodwill resulting from the excess of purchase consideration paid over the fair value of the net assets acquired. The purchase consideration may be subject to future adjustments, such as Holdback Amount and Earn-out Consideration.

 

Pro Forma Adjustments

 

Debit

 

 

 Credit

 

Note (2)

 

 

 

 

 

 

Common stock

 

 

 26

 

 

 

 

Accumulated earnings

 

 

 151,623

 

 

 

 

Noncontrolling interest in net assets of RKings

 

 

 

 

 

 

 151,649

 

To recognize non-controlling interest claim on the assets of RKings

 

 

 

 

 

 

 

 

 

Note (3)

 

 

 

 

 

 

 

 

GMGI Intangible asset amortization expense

 

 

 57,947

 

 

 

 

 

Accumulated amortization intangible asset

 

 

 

 

 

 

 57,947

 

To record one year of amortization of intangible asset

 

 

 

 

 

 

 

 

 

Note (4)

 

 

 

 

 

 

 

 

Lease expense

 

 

 155,512

 

 

 

 

 

Lease liability

 

 

 132,798

 

 

 

 

 

Accrued expenses

 

 

 

 

 

 

 151,672

 

Right of use asset

 

 

 

 

 

 

 136,638

 

To record one year of ROU expense

 

 

 

 

 

 

 

 

 

Note (5)

 

 

 

 

 

 

 

 

RKings property plant & equipment depreciation expense

 

 

 7,379

 

 

 

 

 

Accumulated depreciation

 

 

 

 

 

 

 7,379

 

To record one year of depreciation of property, plant & equipment

 

 

 

 

 

 

 

 

 

Note (6)

 

 

 

 

 

 

 

 

RKings Intangible asset Amortization expense

 

 

 3,807

 

 

 

 

 

Accumulated amortization of website

 

 

 

 

 

 

 3,807

 

To record one year of amortization of intangible asset

 

The information presented in the unaudited pro forma combined financial statements does not purport to represent what the financial position or results of operations of the Company would have been had the Purchase Agreement and all related transactions occurred as of the dates indicated, nor is it indicative of our future combined financial position or combined results of operations for any period. You should not rely on this information as being indicative of the historical results that would have been achieved had the companies always been combined or the future results that the combined company will experience after the Purchase Agreement and all related transactions.

 

These unaudited pro forma combined financial statements should be read in conjunction with the accompanying notes and assumptions and the historical financial statements and related notes of the Company and RKings.

 

 
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