8-K/A

UNITED STATES  

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): September 1, 2017

GOPHER PROTOCOL INC.

(Exact name of registrant as specified in its charter)

(Former Name of Registrant)

Nevada	000-54530	27-0603137
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification Number)

2500 Broadway, Suite F-125, Santa Monica, CA 90404

(Address of principal executive offices) (zip code)

424-238-4589

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 1.01	Entry Into A Material Definitive Agreement
Item 2.01	Completion or Acquisition or Disposition of Assets
Item 2.03	Creation of Direct Financial Obligation
Item 3.02	Unregistered Sales of Equity Securities
Item 5.02	Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

On September 1, 2017, Gopher Protocol Inc. (the “Company”) entered into and closed an Asset Purchase Agreement (the “Purchase Agreement”) with RWJ Advanced Marketing, LLC (“RWJ”), a Georgia corporation, pursuant to which the Company purchased certain assets from RWJ, including inventory, terminals, licenses and permits and intangible assets, in consideration of $400,000, an aggregate 5,000,000 shares of common stock of the Company (the “RWJ Shares”), secured promissory note in the amount of $2,600,000 (the “RWJ Note”), warrants to purchase 9,000,000 shares of common stock (the “RWJ Warrants”) and the assumption of certain liabilities incurred by RWJ after the effective date as set forth in the RWJ Agreement (the “RWJ Assumed Liabilities”). RWJ assigned 3,000,000 RWJ Shares and 5,000,000 RWJ Warrants to Robert Warren Jackson and 2,000,000 RWJ Shares and 4,000,000 RWJ Warrants to Gregory Bauer.

The RWJ Warrants are exercisable for a period of five years at a fixed exercise price of $0.50 per share and non-dilutive anti-dilution protection. If, prior to the exercise of the RJW Warrants, the Company (i) declares, makes or issues, or fixes a record date for the determination of holders of common stock entitled to receive, a dividend or other distribution payable in shares of its capital stock, (ii) subdivides the outstanding shares, (iii) combines the outstanding shares (including a reverse stock split), (iv) issues any shares of its capital stock by reclassification of the shares, capital reorganization or otherwise (including any such reclassification or reorganization in connection with a consolidation or merger or and sale of all or substantially all of the Company’s assets to any person), then, notwithstanding any such action the exercise price, and the number and kind of shares receivable upon exercise, in effect at the time of the record date for such dividend or of the effective date of such subdivision, combination or reclassification shall remain fixed so that the holder of the RJW Warrants exercised after such time shall be entitled to receive the number and kind of shares which, if the RJW Warrants had been exercised immediately prior to such time, the holder would have owned upon such exercise and been entitled to receive.

The RWJ Note accrues interest at the rate of 3.5% interest per annum and is payable in full on December 31, 2019. The Company may prepay this note at any time without penalty. The RWJ Note is a long-term debt obligation that is material to the Company.

The Company is incorporating a wholly-owned subsidiary, UGopherServices Corp., to hold the acquired assets. The Company is required to provide $100,000 in working capital for the new subsidiary.

At closing, the Company and Mr. Bauer entered into an Employment Agreement pursuant to which Mr. Bauer was retained as Chief Executive Officer for a term of one year, subject to an automatic extension, unless terminated, in consideration of a base salary of $250,000 and a bonus of 10% of net profit generated by the assets acquired. Mr. Bauer was also appointed to the Board of Directors of the Company. As of the closing date, Mr. Murray resigned as Chief Executive Officer of the Company but will remain as a director of the Company.

Mr. Bauer, since 2004 through present, has served as executive director with W.L. Petrey Wholesale, Inc. where he was in charge of the UGO/Preway operations. Mr. Bauer holds a Bachelor of Science degree from University of Maryland College Park. Mr. Bauer is veteran of the United States Navy and was honorably discharged in 1983. He held the title of United States Navy Surface Warfare Qualified.

The Company and Guardian Patch, LLC (“Guardian”), which assisted structuring and negotiating the Purchase Agreement and related asset purchase, entered into a Consulting Agreement dated September 1, 2017. In consideration for the services, the Company issued Guardian 2,000,000 shares of common stock and warrants to purchase 9,000,000 shares of common stock. The warrants contain identical terms to the RJW Warrants. If and when the assets acquired under the Purchase Agreement generate revenues of $10,000,000, the Company shall issue Guardian an additional 3,000,000 shares of common stock. The consulting agreement was effective August 1, 2017 and terminates November 30, 2017. Guardian, pursuant to its existing joint venture agreement, agreed to provide the $400,000 in funding needed for the cash purchase price under the Purchase Agreement. Guardian also agreed to provide the needed $100,000 working capital designated to UGopherServices Corp. The parties have agreed to negotiate and finalize the terms of such loans in the near future. In order to transition the Company, the Company and Michael Murray agreed to enter into an employment agreement and to serve as Executive Vice President in charge of business development, which agreement is presently being finalized. In consideration for services, the Company issued a warrant to acquire 4,000,000 shares of common stock to Mr. Murray. The warrants contain identical terms to the RJW Warrants.

The shares of common stock and the warrants were issued pursuant to exemptions from registration provided by Section 4(2) and/or Regulation D of the 1933 Securities Act, as amended.

The foregoing information is a summary of each of the agreements involved in the transactions described above, is not complete, and is qualified in its entirety by reference to the full text of those agreements, each of which is attached an exhibit to this Current Report on Form 8-K. Readers should review those agreements for a complete understanding of the terms and conditions associated with this transaction.

Item 9.01 Financial Statements and Exhibits

(a) Financial Statements

Audited Financial Statements for Preway Communications, a division of W.L. Petrey Wholesale Company, Inc. for the periods ended August 26, 2017, January 28, 2017 and January 30, 2016

(b) Pro-Forma Financial Information

Pro Forma Financial Information for Gopher Protocol Inc. and UGopherServices Corp., Inc.

(d) List of Exhibits

Exhibit No.	Description of Exhibit
4.1	Form of Warrant issued to Robert Warren Jackson, Gregory Bauer, Michael Murray and Guardian Patch, LLC dated September 1, 2017 (1)
4.2	Balloon Note payable by Gopher Protocol Inc. to RWJ Advanced Marketing, LLC dated September 1, 2017 (1)
10.1	Asset Purchase Agreement between Gopher Protocol Inc. and RWJ Advanced Marketing, LLC dated September 1, 2017 (1)
10.2	Addendum to Asset Purchase Agreement between Gopher Protocol Inc. and RWJ Advanced Marketing, LLC dated September 1, 2017 (1)
10.3	Employment Agreement between Gopher Protocol Inc. and Gregory Bauer dated September 1, 2017 (1)
10.4	Consulting Agreement between Gopher Protocol Inc. and Guardian Patch, LLC dated September 1, 2017 (1)
99.1	Audited Consolidated Financial Statements for Preway Communications, a division of W.L. Petrey Wholesale Company, Inc. for the periods ended August 26, 2017, January 28, 2017 and January 30, 2016
99.2	Pro Forma Financial Information for Gopher Protocol Inc. and UGopherServices Corp., Inc.

(1) Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on September 7, 2017.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Gopher Protocol Inc.
By:	/s/ Gregory Bauer
Name: Gregory Bauer
Title: CEO
Date: December 4, 2017

EX-99.1

Exhibit 99.1

PREWAY COMMUNICATIONS 

A DIVISION OF W.L. PETREY WHOLESALE COMPANY, INC.

FINANCIAL STATEMENTS

AUGUST 26, 2017, JANUARY 28, 2017, AND JANUARY 30, 2016

PREWAY COMMUNICATIONS 

A DIVISION OF W.L. PETREY WHOLESALE COMPANY, INC. 

TABLE OF CONTENTS 

AUGUST 26, 2017, JANUARY 28, 2017, AND JANUARY 30, 2016

INDEPENDENT AUDITORS’ REPORT	1
FINANCIAL STATEMENTS
Balance Sheets	3
Statements of Operations	5
Statements of Cash Flows	6
Notes to the Financial Statements	7

3815 Interstate Court
Montgomery, AL 36109
334.271.2200
warrenaverett.com

INDEPENDENT AUDITORS’ REPORT

To the Board of Directors

Gopher Protocol, Inc. and W.L. Petrey Wholesale Company, Inc.

We have audited the accompanying financial statements for Preway Communications, a division of W.L. Petrey Wholesale Company, Inc., which comprise the balance sheets as of August 26, 2017, January 28, 2017, and January 30, 2016, and the related statements of operations and cash flows for the period ended August 26, 2017, and for the years ended January 28, 2017 and January 30, 2016, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibilities

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our audit opinion.

1 

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Preway Communications, a division of W.L. Petrey Wholesale Company, Inc. as of August 26, 2017, January 28, 2017, and January 30, 2016, and the results of its operations and its cash flows for the period ended August 26, 2017, and for the years ended January 28, 2017 and January 30, 2016, in conformity with accounting principles generally accepted in the United States of America.

 

Montgomery, Alabama

October 31, 2017

2 

PREWAY COMMUNICATIONS 

A DIVISION OF W.L. PETREY WHOLESALE COMPANY, INC. 

BALANCE SHEETS 

AUGUST 26, 2017, JANUARY 28, 2017, AND JANUARY 30, 2016

ASSETS

	August 26,		January 28,		January 30,
	2017		2017		2016
CURRENT ASSETS
Accounts receivable – trade (net of allowance of $0, $5,197, and $379, respectively)	$	924,844	$	1,194,714	$	1,246,897
Inventories		408,825		572,985		660,698
Total current assets		1,333,669		1,767,699		1,907,595
EQUIPMENT – NET		204,471		245,357		320,912
OTHER ASSETS
Goodwill		—		—		96,949
Prepaid expenses		9,328		24,922		43,871
Total other assets		9,328		24,922		140,820
TOTAL ASSETS	$	1,547,468	$	2,037,978	$	2,369,327

See notes to the consolidated financial statements.

3

PREWAY COMMUNICATIONS 

A DIVISION OF W.L. PETREY WHOLESALE COMPANY, INC. 

BALANCE SHEETS 

AUGUST 26, 2017, JANUARY 28, 2017, AND JANUARY 30, 2016

LIABILITIES AND OWNERS’ EQUITY

	August 26,		January 28,		January 30,
	2017		2017		2016
CURRENT LIABILITIES
Accounts payable	$	—	$	13,732	$	10,931
Accrued expenses		692,170		899,988		931,274
Total current liabilities		692,170		913,720		942,205
TOTAL LIABILITIES		692,170		913,720		942,205
TOTAL OWNERS’ EQUITY		855,298		1,124,258		1,427,122
TOTAL LIABILITIES AND OWNERS’ EQUITY	$	1,547,468	$	2,037,978	$	2,369,327

See notes to the consolidated financial statements.

4

PREWAY COMMUNICATIONS 

A DIVISION OF W.L. PETREY WHOLESALE COMPANY, INC. 

STATEMENTS OF OPERATIONS 

FOR THE PERIOD ENDED AUGUST 26, 2017 AND 

FOR THE YEARS ENDED JANUARY 28, 2017 AND JANUARY 30, 2016

	August 26,			January 28,			January 30,
	2017			2017			2016
SALES	$	32,329,172		$	66,610,847		$	80,826,825
COST OF GOODS SOLD		30,807,714			63,497,703			76,763,482
GROSS PROFIT		1,521,458			3,113,144			4,063,343
OPERATING EXPENSES		1,672,826			3,489,191			4,473,603
LOSS FROM OPERATIONS		(151,368	)		(376,047	)		(410,260	)
OTHER EXPENSES
Interest expense		19,268			29,335			50,301
NET LOSS	$	(170,636	)	$	(405,382	)	$	(460,561	)

See notes to the consolidated financial statements.

5

PREWAY COMMUNICATIONS 

A DIVISION OF W.L. PETREY WHOLESALE COMPANY, INC. 

STATEMENTS OF CASH FLOWS 

FOR THE PERIOD ENDED AUGUST 26, 2017 AND 

FOR THE YEARS ENDED JANUARY 28, 2017 AND JANUARY 30, 2016

INCREASE (DECREASE) IN CASH

	August 26,			January 28,			January 30,
	2017			2017			2016
NET LOSS	$	(170,636	)	$	(405,382	)	$	(460,561	)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
Depreciation and amortization		62,664			244,176			421,608
Changes in assets and liabilities:
Accounts receivable		269,870			52,183			413,604
Inventories		164,160			87,713			583,480
Prepaid expenses		15,594			18,949			17,613
Accounts payable		(13,732	)		2,801			6,876
Accrued expenses		(207,818	)		(31,286	)		(320,438	)
Net cash provided by (used in) operating activities		120,102			(30,846	)		662,182
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(21,778	)		(71,672	)		(99,882	)
CASH FLOWS FROM FINANCING ACTIVITIES
Contributions from owner		—			102,518			—
Distributions to owner		(98,324	)		—			(562,300	)
Net cash provided by (used in) financing activities		(98,324	)		102,518			(562,300	)
NET INCREASE (DECREASE) IN CASH		—			—			—
CASH AT BEGINNING OF YEAR		—			—			—
CASH AT END OF YEAR	$	—		$	—		$	—
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid	$	19,268		$	29,335		$	50,301

See notes to the consolidated financial statements.

6

PREWAY COMMUNICATIONS

A DIVISION OF W.L. PETREY WHOLESALE COMPANY, INC.

NOTES TO THE FINANCIAL STATEMENTS

AUGUST 26, 2017, JANUARY 28, 2017, AND JANUARY 30, 2016

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

The operations of Preway Communications, a division of W.L. Petrey Wholesale Company, Inc. (the Company) consist primarily of the sale of phones and phone card products. Phone card products are comprised of PINS for cell minutes, SIM cards for cell minutes, as well as gift cards.

Fiscal Year

The Company operates on a 52/53 week fiscal year. The period ended August 26, 2017 was comprised of 30 weeks, and the years ended January 28, 2017 and January 30, 2016 were comprised of 52 weeks and 53 weeks, respectively.

Basis of Accounting

The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.

Major Customers and Suppliers

The Company’s primary customers are convenience stores located throughout the continental United States. Five of these customers represent approximately 2% of sales and 1% of accounts receivable for the period ended August 26, 2017, compared to approximately 2% of sales and 2% of accounts receivable for the years ended January 28, 2017 and January 30, 2016, respectively.

Accounts Receivable – Trade

The Company reports trade receivables at net realizable value. The Company determines past due status for trade accounts receivable based on contractual terms, and charges off accounts deemed uncollectible when further collection is considered unlikely. Generally, the Company requires no collateral from its customers. The allowance for doubtful accounts is determined by management based on the specific identification of past due accounts or individual accounts deemed potentially uncollectible.

Inventories

The inventory of phones and phone card products is valued at cost. Cost is determined based on the lower of cost or market.

Equipment

Equipment is stated at cost less accumulated depreciation. Depreciation has been provided for using the straight-line and accelerated methods over the estimated useful life of 3 to 15 years for furniture, fixtures and equipment. Expenditures for maintenance and repairs are charged to operations while expenditures which significantly alter the asset or increase its useful life are capitalized. The cost and accumulated depreciation of assets sold or retired are removed from the respective accounts. Any gain or loss from the sale or retirement of property is reflected in income.

7

PREWAY COMMUNICATIONS

A DIVISION OF W.L. PETREY WHOLESALE COMPANY, INC.

NOTES TO THE FINANCIAL STATEMENTS

AUGUST 26, 2017, JANUARY 28, 2017, AND JANUARY 30, 2016

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

Revenue Recognition

The Company recognizes revenue on arrangements in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 605, Revenue Recognition. Under FASB ASC 605, revenue is recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured. The Company recognizes revenue from the sale of phones and phone card products at the time of sale to the customer.

Income Taxes

The financial statements do not include a provision for income taxes because the Company does not incur federal or state income taxes. Instead its earnings and losses are reported in the tax return of its owner, W.L. Petrey Wholesale Company, Inc.

Advertising

Advertising costs are expensed as incurred. Advertising expense was approximately $9,317, $3,201 and $7,326 for the period ended August 26, 2017, and for the years ended January 28, 2017 and January 30, 2016, respectively.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingencies at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from those estimates.

Shipping and Handling

Costs incurred for shipping and handling of goods sold to customers are included in operating expenses in the statements of income. Shipping and handling costs totaled $25,664, $42,834, and $44,380 for the period ended August 26, 2017 and for the years ended January 28, 2017 and January 30, 2016, respectively.

Goodwill

Goodwill represents the excess of the purchase price over fair value of the assets purchased. The Company amortizes goodwill on a straight-line basis over a period of ten years or less, and tests goodwill for impairment at least annually for recoverability.

Fair Value Measurement

The Company applies, when appropriate, the provisions of FASB ASC 820, Fair Value Measurement, to its financial assets and liabilities and certain of its nonfinancial assets and liabilities that are measured and/or disclosed at fair value on a recurring basis. Fair value for financial reporting purposes is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly market transaction between market participants at the measurement date (reporting date).

8

PREWAY COMMUNICATIONS

A DIVISION OF W.L. PETREY WHOLESALE COMPANY, INC.

NOTES TO THE FINANCIAL STATEMENTS

AUGUST 26, 2017, JANUARY 28, 2017, AND JANUARY 30, 2016

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

Fair Value Measurement – Continued

Under FASB ASC 820, fair value is based on an exit price in the primary market or most advantageous market in which the reporting entity could transact. As of August 26, 2017, January 28, 2017, and January 30, 2016 there were no significant assets or liabilities for which these provisions are applicable.

Impairment of Long-Lived Assets

In accordance with FASB ASC 360, Property, Plant and Equipment, the Company on an ongoing basis reviews long-lived assets for impairment whenever adverse events or changes in circumstances indicate that the carrying amounts may not be recoverable. An impairment loss is recognized when a long-lived asset’s carrying value is not recoverable and exceeds estimated fair value. Fair values are determined based on an estimate of discounted future cash flows or external appraisals in certain circumstances.

Subsequent Events

The Company has evaluated subsequent events through October 31, 2017, the date which the financial statements were available to be issued.

2.       GOODWILL

The Company follows the provisions of FASB ASC 350, Intangibles – Goodwill and Other, which permits a private company to amortize goodwill on a straight-line basis over a period of ten years or less.

Amortization expense of $0, $96,949, and $180,232 was included in operating expenses as of August 26, 2017, January 28, 2017, and January 30, 2016, respectively.

3.       EMPLOYEE BENEFIT PLAN

The Company participates in the 401(k) plan of W.L. Petrey Wholesale Company, Inc. Employees who meet a one-year length of service requirement and are at least 21 years of age are eligible to participate. A participant will be 100% vested under the plan upon completing seven years of service, or upon obtaining normal retirement age of 65. Employees can elect to make pre-tax contributions to the 401(k) plan in 1% increments up to 15% of eligible payroll. Company contributions are discretionary and are determined annually by the Board of Directors. Total contributions are limited to 15% of eligible payroll and the limit allowed under provisions of the Internal Revenue Code.

The Company matched 20% of the first 6% of employee contributions to the 401(k) plan for the period ended August 26, 2017 and for the years ended January 28, 2017 and January 30, 2016.

9

PREWAY COMMUNICATIONS

A DIVISION OF W.L. PETREY WHOLESALE COMPANY, INC.

NOTES TO THE FINANCIAL STATEMENTS

AUGUST 26, 2017, JANUARY 28, 2017, AND JANUARY 30, 2016

4.       CHANGES IN OWNERS’ EQUITY

The specific components of the change in equity are as follows:

	August 26, 2017			January 28, 2017			January 30, 2016
Beginning balance	$	1,124,258		$	1,427,122		$	2,449,983
Net loss		(170,636	)		(405,382	)		(460,561	)
Contributions from owner		—			102,518			—
Distributions to owner		(98,324	)		—			(562,300	)
Ending balance	$	855,298		$	1,124,258		$	1,427,122

5.       CONCENTRATION OF CREDIT RISK

The Company grants credit to customers, substantially all of which are commercial establishments, located throughout the United States. Its customers are primarily convenience stores and grocery stores. Consequently, the Company’s ability to collect its accounts receivable may be affected by fluctuations in those industries. The Company maintains allowances for potential credit losses, which, when realized, have been within the range of management’s expectations.

There are currently four primary suppliers of phone card products for the Company. Even though phone card products comprise the entirety of the Company’s sales, management anticipates no adverse impact to operating results for this concentration of suppliers.

6.       LITIGATION

The Company is involved in litigation and regulatory investigations arising in the ordinary course of business. While the ultimate outcome of these matters is not presently determinable, it is the opinion of management that the resolution of outstanding claims will not have a material adverse effect on the financial position or results of operations of the Company.

10

EX-99.2

Exhibit 99.2

Gopher Protocol, Inc., 

and UGopherServices Corp., Inc.  

Pro Forma Consolidated Financial Statements 

(unaudited)

Contents

	Page
Pro Forma Consolidated Financial Statements:
Pro Forma Consolidated Balance Sheet as of June 30, 2017 (unaudited)	2
Pro Forma Consolidated Statements of Operations for the six months ended June 30, 2017 (unaudited)	3
Pro Forma Consolidated Statements of Operations for the year ended December 31, 2016 (unaudited)	4
Notes to Pro Forma Consolidated Financial Statements (unaudited)	5

Gopher Protocol, Inc., 

and UGopherServices Corp., Inc. 

Pro Forma Consolidated Balance Sheet 

June 30, 2017 

(unaudited)

ASSETS	Gopher Protocol			UGopherServices		Pro forma Adjustments			Pro forma Consolidated
	(historical)			(historical)
Current Assets:
Cash	$	50,046		$		$			$	50,046
Accounts receivable		—			924,844					924,844
Inventory		—			408,825					408,825
Prepaid expenses		1,750			9,328					11,078
Total current assets		51,796			1,342,997		—			1,394,793
Property and equipment, net		—			204,471					204,471
Other assets		103,005								103,005
Goodwill		—					7,305,521	a		7,305,521
Total assets	$	154,801		$	1,547,468	$	7,305,521		$	9,007,790
LIABILITIES AND STOCKHOLDERS’DEFICIT
Current Liabilities:
Accounts payable and accrued expenses	$	398,798		$	692,170	$	400,000	a	$	1,490,968
Derivative liability		1,981,296								1,981,296
Total current liabilities		2,380,094			692,170		400,000			3,472,264
Convertible note payable, net of debt discount		101,589								101,589
Note payable		—					2,600,000	a		2,600,000
Total liabilities		2,481,683			692,170		3,000,000			6,173,853
Stockholders’ Deficit:
Series B Preferred stock		—								—
Series C Preferred stock		—								—
Series D Preferred stock		1								1
Common stock		2,447					50	a		2,497
Treasury stock		(643,059	)							(643,059	)
Additional paid in captial		3,983,668					5,160,769	a		9,144,437
Accumulated deficit		(5,669,939	)		855,298		(855,298	)a		(5,669,939	)
Total stockholders’ deficit		(2,326,882	)		855,298		4,305,521			2,833,937
Total liabilities and stockholders’ deficit	$	154,801		$	1,547,468	$	7,305,521		$	9,007,790

 See accompanying notes to pro forma consolidated financial statements.

2

Gopher Protocol, Inc., 

and UGopherServices Corp., Inc. 

Pro Forma Consolidated Statement of Operations 

For the Six Months Ended June 30, 2017 

(unaudited)

	Gopher Protocol			UGopherServices			Pro forma Adjustments			Pro forma Consolidated
	(historical)			(historical)
Sales	$	90,000		$	28,018,616		$			$	28,108,616
Cost of goods sold		—			26,700,019						26,700,019
Gross profit		90,000			1,318,597			—			1,408,597
Operating expenses:
General and administrative expenses		473,658			1,449,783						1,923,441
Marketing expenses		117,914									117,914
Total operating expenses		591,572			1,449,783			—			2,041,355
Loss from operations		(501,572	)		(131,186	)		—			(632,758	)
Other income (expense):
Amortization of debt discount		(50,213	)								(50,213	)
Change in fair value of derivative liability		496,037									496,037
Interest expense and financing costs		(1,519,819	)		(16,699	)		(45,500	)b		(1,582,018	)
Total other income (expense)		(1,073,995	)		(16,699	)		(45,500	)		(1,136,194	)
Loss before income taxes		(1,575,567	)		(147,885	)		(45,500	)		(1,768,952	)
Income tax expense		—									—
Net loss	$	(1,575,567	)	$	(147,885	)	$	(45,500	)	$	(1,768,952	)
Weighted average common shares outstanding:
Basic and diluted		37,816,078									42,816,078
Net loss per share:
Basic and diluted	$	(0.04	)	$						$	(0.04	)

 See accompanying notes to pro forma consolidated financial statements.

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Gopher Protocol, Inc., 

and UGopherServices Corp., Inc. 

Pro Forma Consolidated Statement of Operations 

For the Year Ended December 31, 2016

	Gopher Protocol			UGopherServices			Pro forma Adjustments			Pro forma Consolidated
	(historical)			(historical)
Sales	$	165,000		$	66,610,847		$			$	66,775,847
Cost of goods sold		—			63,497,703						63,497,703
Gross profit		165,000			3,113,144			—			3,278,144
Operating expenses:
General and administrative expenses		1,401,338			3,489,191						4,890,529
Marketing expenses		126,838									126,838
Total operating expenses		1,528,176			3,489,191			—			5,017,367
Loss from operations		(1,363,176	)		(376,047	)		—			(1,739,223	)
Other income (expense):
Amortization of debt discount		(39,726	)								(39,726	)
Change in fair value of derivative liability		(177,062	)								(177,062	)
Interest expense and financing costs		(6,262	)		(29,335	)		(91,000	)b		(126,597	)
Total other income (expense)		(223,050	)		(29,335	)		(91,000	)		(343,385	)
Loss before income taxes		(1,586,226	)		(405,382	)		(91,000	)		(2,082,608	)
Income tax expense		—									—
Net loss	$	(1,586,226	)	$	(405,382	)	$	(91,000	)	$	(2,082,608	)
Weighted average common shares outstanding:
Basic and diluted		19,902,077									24,902,077
Net loss per share:
Basic and diluted	$	(0.08	)	$						$	(0.08	)

 See accompanying notes to pro forma consolidated financial statements.

4

Gopher Protocol, Inc., 

and UGopherServices Corp., Inc. 

Notes to Pro Forma Consolidated Financial Statements

NOTE 1 - BASIS OF PRESENTATION

On September 1, 2017, the Gopher Protocol, Inc. (“Gopher”) entered into and closed an Asset Purchase Agreement (the “Purchase Agreement”) with RWJ Advanced Marketing, LLC (“RWJ”), a Georgia corporation, pursuant to which the Gopher purchased certain assets from RWJ, including inventory, terminals, licenses and permits and intangible assets, in consideration of $400,000, an aggregate 5,000,000 shares of common stock of the Company, secured promissory note in the amount of $2,600,000, and warrants to purchase 9,000,000 shares of common stock and the assumption of certain liabilities incurred by RWJ after the effective date as set forth in the RWJ Agreement. Gopher incorporated a wholly-owned subsidiary, UGopherServices Corp. (“UGopherServices”), to operate the acquired assets.

The accompanying pro forma consolidated balance sheet presents the accounts of Gopher and UGopherServices as if the Merger occurred June 30, 2017. The accompanying pro forma consolidated statement of operations presents the accounts of Gopher and UGopherServices for the six months ended June 30, 2017, and the years ended December 31, 2016 as if the Merger occurred on January 1, 2016.

The following adjustments would be required if the acquisition occurred as indicated above:

a) To record the purchase price allocation and to eliminate the retained earnings of UGopherServices.

b) To record interest expense on the $2.6 million acquisition note payable.

The unaudited consolidated pro forma financial information is presented for informational purposes only and is subject to a number of uncertainties and assumptions and do not purport to represent what the company’s actual performance or financial position would have been had the transaction occurred on the dates indicated and does not purport to indicate the financial position or results of operations as of any future date or for any future period.

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