EX-99.2 6 ex99-2.htm PRO FORMA FINANCIAL STATEMENTS ex99-2.htm
Exhibit 99.2
 
 

 
PRO FORMA FINANCIAL INFORMATION PROVIDED UNDER ITEM 9.01.(b)

        PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


The following pro forma financial statements have been derived from the financial statements of Epazz, Inc. at March 31, 2008 and for the year ended December 31, 2007 and adjusts such information to give effect to its purchase of Professional Resource Management, Inc. (“PRM”) and Desk Flex, Inc. (collectively, the "Companies") as if the acquisition had occurred as of March 31, 2008 for the pro forma balance sheet and as of the beginning of the year ended December 31, 2007 for the pro forma statement of operations.  The pro forma financial statements are presented for informational purposes only and do not purport to be indicative of the financial condition that would have resulted if the acquisition had been consummated at the period-end. The pro forma financial statements should be read in conjunction with the notes thereto and the Companies’ combined financial statements and related notes thereto contained herein and in Epazz’s 10-KSB for the year ended December 31, 2007 and 10-Q for the quarter ended March 31, 2008.

Epazz purchased the Companies for $445,000 paid as follows:

 
(a)
$10,000 deposit originally paid by Epazz in connection with the letter of intent;
 
(b)
$210,000 in cash at closing; and
 
(c)
Epazz provided a promissory note in the amount of $225,000, which shall bear interest at the rate of 7% and matures on June 18, 2011.  Monthly payments of $6,947 are to begin on September 18, 2008.

Epazz obtained financing of $282,000 from a third party for the cash paid at closing and other working capital.  This loan had an origination fee of $14,100 that will be amortized over the life of the loan under the effective interest method.  The loan bears interest at 10% and matures on August 1, 2013.  Monthly payments of $6,291 are to begin on September 1, 2008.

The acquisition has been accounted for using the purchase method of accounting and, accordingly, the assets acquired and liabilities assumed have been recorded at their estimated fair values based upon estimates.
 
 
 
 
 
 
 
 
 
 

EPAZZ, INC.
UNAUDITED PRO FORMA BALANCE SHEET
As of March 31, 2008

   
Epazz
March 31, 2008
  
PRM and Desk Flex
February 29, 2008
  
Pro Forma
Adjustments
      
Pro Forma
  
ASSETS
                      
  Current Assets
                      
  Cash
   $ 619   $ 18,397   $ 282,000  
(A)
   $ 91,016  
                  (220,000 )
(B)
        
  Accounts receivable
     –     13,666               13,666  
  Deposit
     10,000     –     (10,000 )
(B)
     –  
Total current assets
     10,619     32,063     62,000         42,682  
                               
  Property and equipment
     1,574     18,980               20,554  
  Deferred loan costs
     –     –     14,100  
(A)
     14,100  
  Goodwill
     –     –     443,978  
(B)
     443,978  
                               
TOTAL ASSETS
   $ 12,193   $ 51,043   $ 520,078       $ 583,314  
                               
                               
LIABILITIES AND STOCKHOLDERS’ DEFICIT
                              
                               
LIABILITIES
                              
  Current Liabilities
                              
  Accounts payable and accrued liabilities
   $ 24,585   $ –             $ 24,585  
  Deferred revenue
     –     50,021               50,021  
  Current portion of notes payable
     3,633     –   $ 39,704  
(A)
     98,422  
                  55,085  
(B)
        
  Loans payable to related parties
     145,035     –               145,035  
Total current liabilities
     173,253     50,021     94,789         318,063  
                               
Long-term notes payable, net of current portion
     1,113     –     256,396  
(A)
     427,424  
                  169,915  
(B)
        
Long-term line of credit
     100,000     –               100,000  
TOTAL LIABILITIES
     274,366     50,021     521,100         845,487  
                               
STOCKHOLDERS’ DEFICIT
                              
  Common stock, Series A, $0.01 par value, 60,000,000 shares authorized, 39,482,940 shares issued and outstanding
     394,829     -               394,829  
  Common stock, Series B, $0.01 par value, 60,000,000 shares authorized, 2,500,000 shares issued and outstanding
     25,000     -               25,000  
  Common stock, PRM, no par value, 10,000 shares authorized, 1,000 shares issued and outstanding
     -     100     (100 )
(B)
     -  
  Common stock, DF, no par value, 100,000 shares authorized, 2,000 shares issued and outstanding
     -     2,000     (2,000 )
(B)
     -  
  Additional paid-in capital
     1,041,014     -               1,041,014  
  Accumulated deficit
     (1,723,016 )   (1,078 )   1,078  
(B)
     (1,723,016 )
Total stockholders’ deficit
     (262,173 )   1,022     (1,022 )       (262,173 )
                               
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT
   $ 12,193   $ 51,043   $ 520,078       $ 583,314  

 
 
 
 
 
 
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EPAZZ, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
Year Ended December 31, 2007


   
Epazz
Historical
December 31, 2007
  
PRM and Desk Flex
Historical
February 28, 2008
  
Pro Forma
Adjustments
      
Pro Forma
  
                       
Revenue
   $ –   $ 393,785           $ 393,785  
                             
Operating expenses:
                            
Cost of revenue
     44,335     30,170             74,505  
General & administrative
     90,701     397,658   $ (51,190 )
(C)
     437,169  
Depreciation
     621     7,170               7,791  
Total operating expenses
     135,657     434,998     (51,190 )       519,465  
                               
Operating loss
     (135,657 )   (41,213 )   51,190         (125,680 )
                               
Other income (expense):
                              
Interest income
     19     208               227  
Interest expense
     (17,020 )   (27 )   (47,409 )
(D)
     (64,456 )
Total other income (expense)
     (17,001 )   181     (47,409 )       (64,229 )
                               
Net loss
   $ (152,658 ) $ (41,032 ) $ 3,781       $ (189,909 )
                               
                               
Basic and diluted net loss per common share
   $ (0.00 )                 $ (0.00 )
                               
Weighted average common shares outstanding
     41,982,940                     41,982,940  
 
 
 
 
 
 
 
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EPAZZ, INC.
NOTES TO PRO FORMA FINANCIAL STATEMENTS

A.
Record proceeds from new $282,000 loan and $14,100 loan origination fee payable to a third party.

B.
Record purchase of Professional Resource Management, Inc. (“PRM”) and Desk Flex, Inc. for $445,000 paid as follows:
 
 
(a)
$10,000 deposit originally paid by Epazz in connection with the letter of intent;
 
(b)
$210,000 in cash at closing; and
 
(c)
Epazz provided a promissory note in the amount of $225,000, which shall bear interest at the rate of 7% and matures on June 18, 2011.  Monthly payments of $6,947 are to begin on September 18, 2008.

The fair value of the assets acquired and liabilities assumed in connection with the purchase was assumed to be approximately equal to the book value maintained by PRM and Desk Flex.  Goodwill of $443,978 as the excess of the purchase price of $445,000 over the fair value of the net assets of PRM and Desk Flex was recognized in connection with the purchase.

C.
Represents compensation paid to the prior shareholder of PRM and Desk Flex that will no longer be paid as a result of the acquisition by Epazz.

D.
Represents additional interest expense for the new loans as follows:

Interest for first year on new $282,000 loan
 $ 28,144  
Amortization of deferred loan costs
   4,876  
Interest for first year on $225,000 promissory note
   14,389  
Total
 $ 47,409  

 
 
 
 
 
 
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