EX-99.3 15 microcloudholo_ex99-3.htm EXHIBIT 99.3

 

Exhibit 99.3

 

UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION

 

Defined terms included below have the same meanings as terms defined and included elsewhere in the Current Report on Form 8-K and if not defined in the Form 8-K, the definitive proxy statement filed with the Securities and Exchange Commission on August 12, 2022.

 

Introduction

 

On September 16, 2022 (the “Transaction Close”), MC completed its previously announced de-SPAC merger transaction (the “Transaction”) with Golden Path pursuant to the terms of a Merger Agreement dated as of September 10, 2021 (as amended on August 5,2022 and August 10, 2022, the “Merger Agreement”), by and among Golden Path, Golden Path Merger Sub, and MC.

 

Prior to the Transaction Close, holders of ordinary shares of Golden Path had the right to redeem all or a portion of their Golden Path ordinary shares for a per share price calculated in accordance with Golden Path’s governing documents. The following unaudited pro forma condensed combined financial is based on the historical financial statements of MC and Golden Path after giving effect to the Transaction and reflected the actual redemption of 2,178,172 Golden Path ordinary shares.

 

The unaudited pro forma combined balance sheet as of June 30, 2022 gives pro forma effect to the Business Combination as if it had been consummated as of that date. The unaudited pro forma combined statements of operations for the six months ended June 30, 2022 and for the year ended December 31, 2021 give pro forma effect to the Business Combination as if it had occurred as of January 1, 2021. This information should be read together with MC’s, and Golden Path’s respective audited and unaudited financial statements and related notes, “Management’s Discussion and Analysis of Financial Condition and Results of Operations of MC,”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Golden Path” and other financial information included elsewhere in definitive proxy statement.

 

The unaudited pro forma combined balance sheet as of June 30, 2022 has been prepared using the following:

 

● MC’s unaudited consolidated balance sheet as of June 30, 2022, as included in this Form 8-K; and

 

● Golden Path’s unaudited consolidated balance sheet as of June 30, 2022, as included in Form 10-Q.

 

The unaudited pro forma combined statement of operations for the period ended June 30, 2022 has been prepared using the following:

 

● MC’s unaudited consolidated statements of income and comprehensive income for the six months ended June 30, 2022, as included in this Form 8-K; and

 

● Golden Path’s unaudited consolidated statement of operations and comprehensive loss for the six months ended June 30, 2022, as included in Form 10-Q.

 

The unaudited pro forma combined statement of operations for the year ended December 31, 2021 has been prepared using the following:

 

● MC’s audited consolidated statements of income and comprehensive income for the year ended December 31, 2021, as included in definitive proxy statement;

 

● Golden Path’s audited statement of operations and comprehensive loss for the year ended December 31, 2021, as included in definitive proxy statement.

 

Description of the Transactions

 

On July 1, 2020, Shenzhen Mengyun entered into an acquisition agreement to acquire 100% equity interests of Shenzhen Bowei, a provider of holographic PCBA solutions, for a total consideration of RMB 20,000,000 (approximately USD 3.1 million). On October 1, 2020, Shenzhen Mengyun entered into an acquisition agreement to acquire 100% equity interests of Shenzhen Tianyuemeng, an entity focused on holographic advertising services, for a total consideration of RMB 30,000,000 (approximately USD 4.6 million). On September 10, 2021, Golden Path entered into the Merger Agreement with the Golden Path Merger Sub and MC. Pursuant to the terms of the Merger Agreement, the Golden Path Merger Sub will merge with and into MC, with MC being the surviving entity and becoming a wholly owned subsidiary of Golden Path. New Golden Path refers to Golden Path after the consummation of the Business Combination. The aggregate consideration for the Business Combination is $450,000,000, payable in the form of 44,554,455 newly issued Golden Path ordinary shares valued at $10.10 per share to MC and its shareholders. At the closing of the Business Combination, the issued and outstanding shares in MC held by the former MC shareholders will be cancelled and ceased to exist, in exchange for the issue of an aggregate of 44,554,455 Golden Path Ordinary.

 

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Accounting for the Transactions

 

The Business Combination will be accounted for as a reverse merger in accordance with U.S. GAAP. Under this method of accounting, Golden Path will be treated as the “acquired” company for financial reporting purposes. This determination was primarily based on the holders of MC expecting to have a majority of the voting power of the post-combination company, MC senior management comprising substantially all of the senior management of the post-combination company, the relative size of MC compared to Golden Path, and MC operations comprising the ongoing operations of the post-combination company. Accordingly, for accounting purposes, the Business Combination will be treated as the equivalent of MC issuing shares for the net assets of Golden Path, accompanied by a recapitalization. The net assets of Golden Path will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination will be those of MC.

 

Basis of Pro Forma Presentation

 

The unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X. The adjustments in the unaudited pro forma condensed combined financial information have been identified and presented to provide relevant information necessary for an illustrative understanding of Combined Company upon consummation of the Business Combination in accordance with GAAP. Further, the unaudited pro forma condensed combined financial information does not purport to project the future operating results or financial position of Combined Company following the consummation of the Business Combination. The unaudited pro forma adjustments represent management’s estimates based on information available as of the date of these unaudited pro forma condensed combined financial information and are subject to change as additional information becomes available and analyses are performed.

 

The unaudited pro forma combined financial information is for illustrative purposes only. The financial results may have been different had the companies always been combined. You should not rely on the unaudited pro forma combined financial information as being indicative of the historical financial position and results that would have been achieved had the companies always been combined or the future financial position and results that the post-combination company will experience. MC and Golden Path have not had any historical relationship prior to the Business Combination. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.

 

Included in the shares outstanding and weighted average shares outstanding as presented in the pro forma combined financial statements are 44,554,455 ordinary shares to be issued to MC shareholders and 380,000 ordinary shares to be issued to Peace Asset Management Ltd.

 

Prior to the Transaction Close, the holders of Golden Path ordinary shares had the right to redeem all or a portion of their Golden Path ordinary shares calculated in accordance with Golden Path’s governing documents. The following unaudited pro forma condensed combined financial information is based on the historical financial statements of MC and Golden Path giving effect to the Transaction and reflects the actual redemption of 2,178,172 Golden Path ordinary shares.

 

As a result of the Business Combination and immediately following the closing of the Business Combination, after reflecting the actual redemption of 2,178,172 shares by Golden Path shareholders, MC will own approximately 87.68% of the outstanding Golden Path ordinary shares, the former shareholders of Golden Path will own approximately 11.57% of the outstanding Golden Path ordinary shares, and Peace Asset Management, a private held entity who facilitated the business combination, will own approximately 0.75 % as of June 30, 2022 (, not giving effect to any shares issuable to them upon the exercise of any Golden Path warrants).

 

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PRO FORMA COMBINED BALANCE SHEET
AS OF JUNE 30, 2022
(UNAUDITED)

 

   (A)
MC
(Historical)		   (B)
Golden Path
(Historical)		   Transaction
Accounting
Adjustments		   Pro Forma
Combined
Balance Sheet		 
ASSETS                    
CURRENT ASSETS                    
Cash and cash equivalents   12,174,049    -    58,356,044(1)   45,890,159 
              (634,778)(2)     
              (2,005,619)(3)     
              (21,999,537)(5)     
Short-term Investment   -    -    -    - 
Accounts receivable, net   12,940,064    -    -    12,940,064 
Prepayments and other current assets   1,368,395    167    -    1,368,562 
Loan receivable   13,163    -    -    13,163 
Due from related parties   8,997    -    -    8,997 
Inventory   204,681    -    -    204,681 
Total current assets   26,709,349    167    33,716,110    60,425,626 
                     
PROPERTY AND EQUIPMENT, NET   295,181    -    -    295,181 
                     
NON-CURRENT  ASSETS                    
Cash and marketable securities held in trust account   -    58,356,044    (58,356,044)(1)   - 
Investments   238,813    -    -    238,813 
Prepayments and deposits   77,703    -    -    77,703 
Intangible assets, net   2,771,087    -    -    2,771,087 
Right-of-use assets, net   727,026    -    -    727,026 
Goodwill   3,157,691    -    -    3,157,691 
Total non-current assets   6,972,320    58,356,044    (58,356,044)   6,972,320 
                     
Total assets   33,976,850    58,356,211    (24,639,934)   67,693,127 
LIABILITIES AND SHAREHOLDERS’ EQUITY                    
CURRENT LIABILITIES                    
Accrued liabilities   -    21,000    (21,000)(2)   - 
Accounts payable   8,278,945    -    -    8,278,945 
Advance from customers   409,500    -    -    409,500 
Other payables and accrued liabilities   1,514,922    -    -    1,514,922 
Due to related parties   395,800    422,111    (422,111)(2)   395,800 
Note payable to related parties   -    191,667    (191,667)(2)   - 
Operating lease liability - current   232,846    -    -    232,846 
Loan payable - current   70,151    -    -    70,151 
Taxes payable   197,835    -    -    197,835 
Total current liabilities   11,099,999    634,778    (634,778)   11,099,999 

 

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PRO FORMA COMBINED BALANCE SHEET — Continued
AS OF JUNE 30, 2022
(UNAUDITED)

 

   (A)
MC
(Historical)		   (B)
Golden Path
(Historical)		   Transaction
Accounting
Adjustments		   Pro Forma
Combined
Balance Sheet		 
NON-CURRENT LIABILITIES                    
Deferred underwriting compensation   -    1,437,500    (1,437,500)(3)   - 
Deferred tax liabilities   44,963    -    -    44,963 
Operating lease liabilities - noncurrent   503,832    -         503,832 
Warrant liabilities   -    717,873    -    717,873 
Total non-current  liabilities   548,795    2,155,373    (1,437,500)   1,266,668 
                     
Total liabilities   11,648,794    2,790,151    (2,072,278)   12,366,667 
                     
COMMITMENTS AND CONTINGENCIES                    
Ordinary shares subject to redemption   -    58,356,044    (58,356,044)(5)   - 
                     
SHAREHOLDERS’ EQUITY                    
Ordinary shares, $0.0001 par value   12,850    171    (8,357)(7)   4,725 
              60(8)     
                     
Additional paid-in capital   4,464,326    -    36,356,507(5)   37,996,802 
              (2,832,328)(6)     
              8,357(7)     
              (60)(8)     
Retained earnings (accumulated deficit)   16,243,854    (2,832,328)   (568,119)(3)   15,675,735 
              2,832,328(6)     
 Statutory reserves   1,531,990    -    -    1,531,990 
Accumulated other comprehensive loss   84,454    42,173    -    126,627 
Total shareholders’ equity to parent   22,337,474    (2,789,984)   35,788,388    55,335,878 
Non-controlling interest   (9,418)   -    -    (9,418)
Total equity   22,328,056    (2,789,984)   

35,788,388

    55,326,460 
                     
Total liabilities and shareholders’ equity   33,976,850    58,356,211    (24,639,934)   67,693,127 
Shares outstanding as of June 30, 2022        1,708,000         50,816,333 
Book value per share or Pro Forma book value per share as of June 30, 2022       $(1.63)       $1.09 

 

 
(A) Derived from the unaudited consolidated balance sheet of MC as of June 30, 2022. See MC’s unaudited consolidated financial statements and the related notes appearing elsewhere in this Form 8-K.
(B) Derived from the unaudited consolidated balance sheet of Golden Path as of June 30, 2022. See Golden Path’s consolidated financial statements and the related notes in Form 10-Q.
(1) Reflects the release of cash from marketable securities held in the trust account.
(2) Reflects the payment of Golden Path’s accrued liabilities, due to related parties, and note payable to related parties.
(3) Reflects the preliminary estimated transaction costs of $4.2 million to be incurred by Golden Path and MC at the close of the Business Combination. Of that amount, approximately $2.2 million was already included in the historical retained earnings (accumulated deficit) of MC and Golden Path, approximately $0.6 million which are expected to be incurred was adjusted in accumulated deficit, $1.4 million relates to deferred underwriting compensation to be paid upon the consummation of the business combination, which was included in historical balance sheet of Golden Path. Transaction costs expensed include legal, accounting, advisory, and other miscellaneous fees associated with the merger. Such cost will not recur beyond 12 months following the merger.
(4)

(Intentionally left blank)
(5) Reflects 2,178,172 shares are redeemed for cash by the Golden Path shareholders, $21.9 million would be paid out in cash after giving effect to payments to redeeming shareholders based on a consummation of the Business Combination on June 30, 2022.
(6) Reflects the reclassification of Golden Path’s historical accumulated deficit to additional paid-in capital.
(7) Reflects the recapitalization of Golden Path through (a) the contribution of all the share capital in MC to Golden Path, and (b) the issuance of 44,554,455 ordinary shares to MC shareholders and 380,000 shares to Peace Asset Management.
(8) Reflects upon consummation of the Business Combination, 6,020,500 rights would convert into 602,050 ordinary shares.

 

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PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2022
(UNAUDITED)

 

   (A)
MC
(Historical)		   (B)
Golden Path
(Historical)		   Pro Forma
Accounting
Adjustments		   Pro Forma
Combined
Income Statement		 
OPERATING REVENUES  $37,634,950   $-   $-   $37,634,950 
COST OF REVENUES   (18,862,693)   -    -    (18,862,693)
GROSS PROFIT   18,772,257    -    -    18,772,257 
                     
OPERATING EXPENSES                    
Provision for doubtful accounts   (184,674)   -    -    (184,674)
Selling expenses   (501,955)   -    -    (501,955)
General and administrative expenses   (1,673,843)   (381,326)   -    (2,055,169)
Research and development expenses   (11,315,590)   -    -    (11,315,590)
Total operating expenses   (13,676,062)   (381,326)   -    (14,057,388)
                     
INCOME (LOSS) FROM OPERATIONS   5,096,195    (381,326)   -    4,714,869 
                     
NON-OPERATING INCOME (EXPENSES)                    
Finance expenses, net   41,417    -    -    41,417 
Other income, net   86,547    (32,321)   -    54,226 
Total other expenses, net   127,964    (32,321)   -    95,643 
INCOME (LOSS) BEFORE INCOME TAXES   5,224,159    (413,647)   -    4,810,512 
Income tax expense   249,225    -    -    249,225 
                     
NET INCOME (LOSS)   5,473,384    (413,647)   -    5,059,737 
LESS: NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST   (9,408)   -         (9,408)
NET INCOME ATTRIBUTABLE TO MC SHAREHOLDERS   5,482,792    (413,647)        5,069,145 
                     
OTHER COMPREHENSIVE INCOME (LOSS)                    
Change in unrealized gain on available-for sales securities   -    45,920         45,920 
Change in realized gain on available-for sales securities   -    (4,168)   -    (4,168)
Foreign currency translation adjustment   93,084    -    -    93,084 
COMPREHENSIVE INCOME (LOSS)  $5,566,468   $(371,895)   -   $5,194,573 
LESS: COMPREHENSIVE (LOSS) ATTRIBUTABLE TO NON-CONTROLLING INTEREST  $(9,408)  $-        $(9,408)
COMPREHENSIVE INCOME ATTRIBUTABLE TO MC SHAREHOLDERS  $5,575,876   $(371,895)       $5,203,981 
                     
WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES                    
Basic and diluted        1,708,000    49,108,333(9)   50,816,333 
EARNINGS (LOSS) INCOME PER SHARE                    
Basic and diluted       $(0.24)       $0.10 

 

 
(A) Derived from the unaudited consolidated statement of income and comprehensive loss of MC for the six months ended June 30, 2022. See MC’s unaudited consolidated financial statements and the related notes appearing elsewhere in this Form 8-K.
(B) Derived from the unaudited consolidated statement of operations and comprehensive loss of Golden Path for the six months ended June 30, 2022. See Golden Path’s consolidated financial statements and the related notes in Form 10-Q.
(9) The calculation of weighted average shares outstanding for basic and diluted net earnings (loss) per share assumes that Golden Path’s initial public offering occurred as of January 1, 2021. In addition, as the Business Combination is being reflected as if it had occurred on this date, the calculation of weighted average shares outstanding for basic and diluted net earnings per share assumes that the shares have been outstanding for the entire period presented. This calculation is retroactively adjusted to eliminate the number of shares redeemed in the Business Combination for the entire period.

 

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PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2021
(UNAUDITED)

 

   (A)
MC
(Historical)		   (B)
Golden Path
(Historical)		   Pro Forma
Accounting
Adjustments		   Pro Forma
Combined
Income Statement		 
OPERATING REVENUES  $56,284,317   $-   $-   $56,284,317 
COST OF REVENUES   (17,046,664)   -    -    (17,046,664)
GROSS PROFIT   39,237,653    -    -    39,237,653 
                     
OPERATING EXPENSES                    
Provision for doubtful accounts   (80,875)   -    -    (80,875)
Selling expenses   (825,055)   -    -    (825,055)
General and administrative expenses   (3,147,858)   (726,949)   -    (3,874,807)
Research and development expenses   (22,809,775)   -    -    (22,809,775)
Total operating expenses   (26,863,563)   (726,949)   -    (27,590,512)
                     
INCOME (LOSS) FROM OPERATIONS   12,374,090    (726,949)   -    11,647,141 
                     
NON-OPERATING INCOME (EXPENSES)                    
Finance expenses, net   98,366    -    -    98,366 
Other income, net   152,843    (13,350)   -    139,493 
Total other expenses, net   251,209    (13,350)   -    237,859 
INCOME (LOSS) BEFORE INCOME TAXES   12,625,299    (740,299)   -    11,885,000 
Income tax expense   124,732    -    -    124,732 
                     
NET INCOME (LOSS)   12,750,031    (740,299)   -    12,009,732 
LESS: NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST   (10)   -         (10)
NET INCOME ATTRIBUTABLE TO MC SHAREHOLDERS   12,750,041    (740,299)        12,009,742 
                     
OTHER COMPREHENSIVE INCOME (LOSS)                    
Change in unrealized gain on available-for sales securities   -    421         421 
Foreign currency translation adjustment   (5,025)   -    -    (5,025)
COMPREHENSIVE INCOME (LOSS)  $12,745,006   $(739,878)   -   $12,005,128 
LESS: COMPREHENSIVE (LOSS) ATTRIBUTABLE TO NON-CONTROLLING INTEREST  $(10)  $-        $(10)
COMPREHENSIVE INCOME ATTRIBUTABLE TO MC SHAREHOLDERS  $12,745,016   $(739,878)       $12,005,138 
                     
WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES                    
Basic and diluted        1,578,308    45,666,197(9)   47,244,505 
EARNINGS (LOSS) INCOME PER SHARE                    
Basic and diluted       $(0.47)       $0.25 

 

 
(A) See MC’s audited consolidated financial statements and the related notes in definitive proxy statement.
(B) Derived from the audited consolidated statement of operations and comprehensive loss of Golden Path for the year ended December 31, 2021. See Golden Path’s consolidated financial statements and the related notes in definitive proxy statement.
(9) The calculation of weighted average shares outstanding for basic and diluted net earnings (loss) per share assumes that Golden Path’s initial public offering occurred as of January 1, 2021. In addition, as the Business Combination is being reflected as if it had occurred on this date, the calculation of weighted average shares outstanding for basic and diluted net earnings per share assumes that the shares have been outstanding for the entire period presented. This calculation is retroactively adjusted to eliminate the number of shares redeemed in the Business Combination for the entire period.

 

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   Pro Forma 
   Combined 
   Actual Redemption 
Weighted average shares calculation, basic and diluted     
Golden Path public shares   3,571,828 
Golden Path shares converted from rights   602,050 
Golden Path Sponsor shares   1,708,000 
Golden Path shares issued in the Business Combination   44,934,455 
Weighted average shares outstanding   50,816,333 
Percent of shares owned by MC shareholders   87.68%
Percent of shares owned by Golden Path   11.57%
Percent of Shares owned by Peace Asset Management   0.75%

 

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