Exhibit 99.3

 

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

Introduction

 

On February 9, 2023, Tingo Group, Inc., a Delaware corporation (“Tingo Group”, the “Company” or the “Buyer”) and MICT Fintech Ltd., an indirect wholly-owned subsidiary of the Company organized under the laws of the British Virgin Islands (“MICT Fintech”) purchased from Dozy Mmobuosi (the “Seller”) 100% of the ordinary shares of Tingo Foods PLC (“Tingo Foods”) (the “Acquisition”). Mr. Mmobuosi is the majority shareholder, Chairman and Chief Executive Officer of Tingo, Inc., a Nevada corporation. Tingo, Inc. currently owns (i) 25,783,675 shares of Tingo Group common stock equal to approximately 19.9% of the total issued and outstanding Tingo Group common stock; (ii) 2,604.28 shares of Tingo Group Series A Preferred Stock convertible upon certain conditions into 26,042,808 shares of Tingo Group common stock equal to approximately 20.1% of the total issued and outstanding Tingo Group common stock; and (iii) 33,687.21 shares of Tingo Group Series B Preferred Stock convertible upon certain conditions into 336,872,138 shares of Tingo Group common stock equal to approximately 35% of the total issued and outstanding Tingo Group common stock.

 

As consideration for the Acquisition, Tingo Group agreed to pay Mr. Mmobuosi, a purchase price equal to the cost value of Tingo Foods’ stock, which will be satisfied by the issuance of a secured promissory note (the “Promissory Note”) in the amount of US$204,000,000 and certain undertakings and obligations of the Tingo Group. The Promissory Note is for a term of two years with an interest rate of 5%. MICT Fintech agreed to certain covenants with respect to its ability to incur additional debt or create additional liens. The Acquisition will not result in any new issuance of Tingo Group common stock, nor of any instruments convertible into shares of Tingo Group.

 

Additionally, Tingo Foods has agreed to enter into a joint venture with Mr. Mmobuosi to construct a state-of-the-art $1.6 billion food processing facility in the Delta State of Nigeria, which is expected to multiply the size of the processing capacity and revenues of Tingo Foods, following its expected completion by the end of the first half of 2024. Mr Mmobuosi, as the owner of the land on which the food processing facility is to be located, has committed to finance the construction of the property shells, whereas Tingo Foods has agreed to undertake the fit out and the installation of the mechanized equipment for the specialized operations of the food processing facility. Mr. Mmobuosi has committed to provide Tingo Foods with a long-term lease with respect to the land and property and at the same time Tingo Foods has committed to operate the food processing facility.

 

The unaudited pro forma condensed combined balance sheet as of December 31, 2022 and the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2022, combine the historical financial statements of Tingo Group with the historical financial statements of Tingo Foods to give effect to the Business Combination. The Business Combination is reflected as if it had occurred on January 1, 2022 with respect to the unaudited pro forma condensed combined statement of operations and on December 31, 2022 with respect to the unaudited pro forma condensed combined balance sheet.

 

 

 

 

Accounting for the Merger

 

The financial statements of Tingo Group and Tingo Foods were prepared in accordance with United States generally accepted accounting principles. Notwithstanding the legal form of the Securities Purchase Agreement, the business combination will be accounted for under the acquisition method in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 805 “Business Combinations” (“ASC 805”)

 

In accordance with ASC 805, the Company has determined that (a) both Tingo Group and Tingo Foods represent businesses; (b) Tingo Group is the accounting acquirer, meaning the transaction is a forward acquisition; (c) Tingo Foods is subject to acquisition accounting, with a write-up of its net assets to fair value; and (d) the difference between the fair value of the purchase consideration and the fair value of Tingo Foods’ net assets represents goodwill.

 

Tingo Group has been determined to be the accounting acquirer based on evaluation of the following facts and circumstances:

 

Tingo Group’s existing shareholders will retain their full equity interests in the combined entity, because the Seller will not receive any additional equity interests.

 

Tingo Group will retain their full Board of Director representation; and

 

Tingo Group’s senior management team, consisting of Darren Mercer, CEO and Kevin Chen, CFO, will be the senior management of the combined entity following the consummation of the Business Combination.

 

The unaudited pro forma condensed combined financial information should be read in conjunction with the audited financial statements of both Tingo Group and Tingo Foods.

 

The unaudited pro forma adjustments give effect to events that are directly attributable to the proposed transaction and are based on available data and certain assumptions that management believes are factually supportable.

 

The unaudited pro forma condensed combined financial information is presented for informational purposes only, in order to aid you in your analysis of the financial aspects of the proposed transaction. The unaudited pro forma condensed combined financial information described above has been derived from the historical audited financial statements of Tingo Group and Tingo Foods. The unaudited pro forma condensed combined financial information is based on Tingo Group’s accounting policies. Further review may identify additional differences between the accounting policies of Tingo Group and Tingo Foods. The unaudited pro forma adjustments and the pro forma condensed combined financial information do not reflect the impact of synergies or post-transaction management actions and are not necessarily indicative of the financial position or results of operations that may have occurred had the transactions taken place on the dates noted, or of Tingo Group’s future financial position or operating results.

 

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 TINGO GROUP, INC

Unaudited Pro Forma Condensed Combined Balance Sheet

As of December 31, 2022

(In Thousands)

 

   Tingo Group,
Inc.
   Tingo Foods,
PLC
   Transaction
Accounting
Adjustments
     Pro Forma
Combined
 
   Note A   Note B   Note C       
Assets                  
Current Assets:                  
Cash and cash equivalents  $500,316   $54,733   $(100) (c)  $554,949 
Trade accounts receivable, net   11,541    -    -      11,541 
Inventories   -    201,100    -      201,100 
Related party receivables   13,491    -    -      13,491 
Other current assets   5,828    264    -      6,092 
                       
Total Current Assets   531,176    256,097    (100)     787,173 
                       
Property and equipment, net   855,125    12,803    -      867,928 
Intangible assets, net   185,407    -    147,767  (a)   333,174 
Goodwill   101,247    -    61,840  (a)   163,087 
Right-of-use assets under operating lease   2,260    -    -  (d)   2,260 
Long-term deposit and other non-current assets   514    -    -      514 
Deferred tax assets   3,661    -    -      3,661 
Restricted cash escrow   2,233    -    -      2,233 
Micronet Ltd. equity method investment   735    -    -      735 
Total long-term assets   1,151,182    12,803    209,607      1,373,592 
                       
Total Assets  $1,682,358   $268,900   $209,507     $2,160,765 
                       
Liabilities, Temporary Equity and Stockholders’ Equity                      
Current Liabilities:                      
Short-term loan  $460   $-   $-     $460 
Trade accounts payable   11,092    201,100    -      212,192 
Deposit held on behalf of clients   2,528    -    -      2,528 
Related party payables   57,506    -    -      57,506 
Current operating lease liability   1,215    -    -  (d)   1,215 
Other current liabilties   192,594    29,077    -      221,671 
                       
Total current liabilities   265,395    230,177    -      495,572 
                       
Long term loan   377    -    204,000  (a)   204,377 
Long term operating lease liability   905    -    -  (d)   905 
Deferred tax liabilities   89,597    -    44,330  (a)   133,927 
Accrued severance pay   50    -    -      50 
Total long-term liabilities   90,929    -    248,330      339,259 
                       
Total liabilities   356,324    230,177    248,330      834,831 
                       
Preferred stock Series B subject to redemption   553,035    -    -      553,035 
                       
Stockholders’ Equity:                      
Preferred stock Series A   3    -    -      3 
Common stock   158    2,000    (2,000) (b)   158 
Additional paid in capital   889,579    2,718    (2,718) (b)   889,579 
Accumulated other comprehensive income(loss)   4,367    (1,068)   1,068  (b)   4,367 
Accumulated earnings (deficit)   (123,463)   35,073    (35,173) (b)(c)   (123,563)
Sub-total   770,644    38,723    (38,823)    770,544 
                       
Non-controlling interests   2,355    -    -      2,355 
                       
Total Stockholders’ Equity   772,999    38,723    (38,823)    772,899 
                       
Total Liabilities, Temporary Equity and Stockholders’ Equity  $1,682,358   $268,900   $209,507     $2,160,765 

 

See notes to unaudited pro forma condensed combined financial information.

 

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TINGO GROUP, INC.

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Year Ended December 31, 2022

(In Thousands, Except Share and Loss Per Share Data)

 

   Tingo Group,
   Tingo Foods,
   Transaction
Accounting
   Pro Forma 
   Inc.   PLC   Adjustments   Combined 
   Note A   Note B   Note C     
                 
Net Revenues  $146,035   $466,171   $-   $612,206 
Cost of revenues   81,243    269,743    -    350,986 
Gross profit   64,792    196,428    -    261,220 
                     
Operating Expenses:                    
Research and development   1,689    -    -    1,689 
Selling and marketing   11,140    140,298    -    151,438 
General and administrative   58,165    5,472    -    63,637 
Amortization of intangible assets   5,590    -    18,471(a)   24,061 
Total operating expenses   76,584    145,770    18,471    240,825 
                     
Profit (loss) from operations   (11,792)   50,658    (18,471)   20,395 
                     
Other Income (Expense):                    
Other income, net   2,151    -    -    2,151 
Finance income (expense), net   (750)   (554)   (10,200)(c)   (11,504)
Total other income (expense)   1,401    (554)   (10,200)   (9,353)
                     
Profit (loss) before income tax expense (benefit)   (10,391)   50,104    (28,671)   11,042 
Income tax expense (benefit)   37,474    15,031    (5,541)(b)   46,964 
                     
Net profit (loss)   (47,865)   35,073    (23,130)   (35,922)
Loss from equity investment   (746)   -    -    (746)
Net loss attributable to non-controlling stockholders   (1,542)   -    -    (1,542)
Net profit (loss) attributable to TINGO GROUP  $(47,069)  $35,073   $(23,130)  $(35,126)
                     
Net Profit (Loss) Per Share - Basic and Diluted  $(0.36)            $(0.27)
Weighted Average Common Shares Outstanding: - Basic and Diluted   129,345,764              129,345,764 

 

See notes to the unaudited pro forma condensed combined financial information

 

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Basis of Presentation

 

The unaudited pro forma condensed combined financial information set forth herein is based upon the historical audited financial statements of Tingo Group and Tingo Foods. The unaudited pro forma condensed combined financial information is presented as if the Business Combination had been completed on January 1, 2022 with respect to the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2022 and on December 31, 2022 in respect of the unaudited pro forma condensed combined balance sheet.

 

The unaudited pro forma condensed combined financial information is presented for informational purposes only and is not necessarily indicative of the combined financial position or results of operations had the business combination occurred as of the date indicated, nor is it meant to be indicative of any anticipated combined financial position or future results of operations that the combined company will experience after the completion of the business combination.

 

Pro forma adjustments reflected in the unaudited pro forma condensed combined balance sheet are based on items that are factually supportable and are directly attributable to the Business Combination. Pro forma adjustments reflected in the pro forma condensed combined statement of income are based on items that are factually supportable and directly attributable to the Business Combination. The unaudited pro forma condensed combined financial information does not reflect the cost of any integration activities or benefits from the Business Combination, including potential synergies that may be generated in future periods.

 

Transaction Accounting Adjustments (USD in thousands)

 

Unaudited Pro Forma Condensed Combined Balance Sheet – As of December 31, 2022

 

The following pro forma adjustments give effect to the business combination.

 

Note ADerived from the audited consolidated balance sheet of Tingo Group as of December 31, 2022, which is incorporated by reference into this filing.

 

Note BDerived from the audited balance sheet of Tingo Foods as of December 31, 2022, which is included in this filing.

 

Adjustments to balance sheet:

 

Note C

(a)  

It was determined that Tingo Group was the accounting acquirer and Tingo Foods was the accounting acquiree. The preliminary purchase price allocation is as follows:  

 

Merger consideration      $204,000 
           
Less: Acquired tangible net assets        38,723 
Excess purchase price        165,277 
           
Fair value adjustments:          
Intangible - customer relationships  $125,670      
Intangible - trade names and trade marks   22,097      
Intangibles - total   147,767      
Deferred tax liabilities   (44,330)     
Total fair value adjustments        103,437 
           
Goodwill       $61,840 

 

The merger consideration represents a secured two-year Promissory Note issued by the Buyer to the Seller whose $204,000 principal amount was deemed to approximate their fair value, assuming for the purpose of the pro forma, its issuance with a market rate of interest.

 

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The pro forma adjustments give effect to the forward acquisition accounting, and specifically (a) to recognize $147,767 of Tingo Foods’ identified intangible assets (including $125,670 of customer relationships with an 8-year useful life and $22,097 of trade names and trademarks with an 8-year useful life; (b) to recognize $44,330 of Tingo Foods’ deferred tax liabilities (associated with the identified intangible assets); (c) to recognize Tingo Foods’ goodwill of $61,840; and (d) to recognize the issuance of the $204,000 Promissory Note to the accounting acquiree.

 

(b)To derecognize Tingo Foods’ historical equity.

 

(c)To give effect to the approximately $100 of Tingo Group post-December 31, 2022 merger expenses that were incurred, by (1) crediting cash; and (2) debiting accumulated earnings (deficit).

 

(d)The Securities Purchase Agreement calls for Tingo Foods to execute a long-term lease with the Seller of the real property and improvements on approximately 400 hectares in the Delta State of Nigeria, including the facilities being constructed thereupon, utilized by Tingo Foods. However, the long-term lease agreement has yet to be drawn up and agreed. Upon execution, the long-term lease will be accounted for in accordance with ASC 842 and will result in the recording of a right-of-use asset and the corresponding operating lease liabilities.

 

Unaudited Pro Forma Condensed Combined Statement of Operations For The Year Ended December 31, 2022

 

Note ADerived from the audited consolidated statement of operations of Tingo Group for the year ended December 31, 2022, which is incorporated by reference into this filing.

 

Note BDerived from the audited statement of operations of Tingo Foods for the year ended December 31, 2022, which is included in this filing.

 

Adjustments to Statement of Operations:

 

  Note C a) The increase of the identified Tingo Foods intangible assets to fair value (based on the preliminary purchase price allocation) resulted in $18,471 of amortization of such definite-lived intangible assets over their useful lives for the year ended December 31, 2022.
       

 

 

  b) The identified definite-lived intangible assets of Tingo Foods resulted in the recognition of deferred tax liabilities.  Such deferred tax liabilities resulted in the recognition of $5,541 of deferred tax benefits for the year ended December 31, 2022, which is directly associated with the recognition of the incremental amortization of Tingo Foods’ intangible assets.
       
    c) To give effect to $10,200 of pro forma annual interest expense that is payable in connection with the Promissory Note that was issued by the Buyer as merger consideration.

 

 

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