EX-99.2 3 s110476_ex99-2.htm EXHIBIT 99.2

 

Exhibit 99.2

 

Gopher Protocol, Inc.,

and ECS Prepaid, LLC and Electronic Check Services, Inc.

Pro Forma Consolidated Financial Statements

(unaudited)

  

Contents

 

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

 

1

 

 

Gopher Protocol, Inc.,

and ECS Prepaid, LLC and Electronic Check Services, Inc.

Pro Forma Consolidated Balance Sheet

December 31, 2017

(unaudited)

                 
ASSETS  Gopher   ECS Prepaid and   Pro forma   Pro forma 
   Protocol   Electronic Check   Adjustments   Consolidated 
    (historical)    (historical)           
                     
Current Assets:                    
   Cash  $1,305,062   $42,613   $(175,000)a  $1,172,675 
   Accounts receivable   41,947    774,888         816,835 
   Inventory   262,749              262,749 
   Prepaid expenses       106         106 
      Total current assets   1,609,758    817,607    (175,000)   2,252,365 
                     
Property and equipment, net   263,082    36,250    65,000a   364,332 
Intangible assets, net   6,666,667         1,050,000a   7,716,667 
Other assets   1,979              1,979 
Goodwill   950,619         3,440,877a   4,391,496 
                    
         Total assets  $9,492,105   $853,857   $4,380,877   $14,726,839 
                     
LIABILITIES AND STOCKHOLDERS’ EQUITY                    
                     
Current Liabilities:                    
   Accounts payable and accrued expenses  $1,199,215   $715,569   $   $1,914,784 
   Due to Guardian LLC   1,350,262              1,350,262 
   Convertible notes payable, net of discount of $54,377   25,623              25,623 
   Derivative liability   95,164              95,164 
   Note payable             1,000,000a   1,000,000 
      Total current liabilities   2,670,264    715,569    1,000,000    4,385,833 
                     
Convertible note payable, net of debt discount                   
Note payable   2,600,000            2,600,000 
      Total liabilities   5,270,264    715,569    1,000,000    6,985,833 
                     
Stockholders’ Equity                    
  Series B Preferred stock                  
  Series C Preferred stock                  
  Series D Preferred stock   1              1 
  Series G Preferred stock   20              20 
  Common stock   2,582    38,576    (38,568)a   2,590 
   Treasury stock   (643,059)             (643,059)
   Additional paid in captial   19,243,959         3,519,157a   22,763,116 
   Retained earnings (accumulated deficit)   (14,381,662)   99,712    (99,712)a   (14,381,662)
      Total stockholders’ equity   4,221,841    138,288    3,380,877    7,741,006 
         Total liabilities and stockholders’ equity  $9,492,105   $853,857   $4,380,877   $14,726,839 

 

See accompanying footnotes to pro forma consolidated financial statements.

 

2

 

 

Gopher Protocol, Inc.,

and ECS Prepaid, LLC and Electronic Check Services, Inc.

Pro Forma Consolidated Statement of Operations

For the Year Ended December 31, 2017

             
   Gopher   ECS Prepaid and   Pro forma   Pro forma 
   Protocol   Electronic Check   Adjustments   Consolidated 
   (historical)   (historical)           
                     
Sales:                    
   Sales  $9,012,354   $27,897,265   $    $36,909,619 
   Related party sales   180,000              180,000 
      Total sales   9,192,354    27,897,265        37,089,619 
                     
Cost of goods sold   8,651,804    27,042,816        35,694,620 
                     
Gross profit   540,550    854,449        1,394,999 
                     
Operating expenses:                    
   General and administrative expenses   3,574,296    815,991    150,000b   4,540,287 
   Marketing expenses   220,229              220,229 
   Acquisition costs   4,050,819              4,050,819 
      Total operating expenses   7,845,344    815,991    150,000    8,811,335 
                     
Loss from operations   (7,304,794)   38,458    (150,000)   (7,416,336)
                     
Other income (expense):                    
   Amortization of debt discount   (1,195,755)             (1,195,755)
   Change in fair value of derivative liability   374,230              374,230 
   Interest expense and financing costs   (2,160,971)             (2,160,971)
      Total other income (expense)   (2,982,496)           (2,982,496)
                     
Loss before income taxes   (10,287,290)   38,458    (150,000)   (10,398,832)
                     
Income tax expense                  
                     
Net loss  $(10,287,290)  $38,458   $(150,000)  $(10,398,832)
                     
Weighted average common shares outstanding:                    
   Basic and diluted   46,256,807              47,006,807 
                     
Net loss per share:                    
   Basic and diluted  $(0.22)  $         $(0.22)

 

See accompanying footnotes to pro forma consolidated financial statements.

 

3

 

 

Gopher Protocol, Inc.,

and ECS Prepaid, LLC and Electronic Check Services, Inc.

Notes to Pro Forma Consolidated Financial Statements

 

NOTE 1 - BASIS OF PRESENTATION

 

On March 16, 2018, Gopher Protocol, Inc. (the “Company”) entered into and closed an asset purchase agreement dated March 1, 2018 with ECS Prepaid LLC (“ECS”), a Missouri limited liability company, pursuant to which the Company purchased certain assets from ECS, including, but not limited to, the processing prepaid platform, servers, POS terminals, customer list, a processing software program and goodwill, in consideration of $1,100,000 of which $100,000 was paid on the closing date and the balance is to be paid pursuant to a secured promissory note in the amount of $1,000,000. In addition, the Company issued 500,000 shares of common stock of the Company and warrants to purchase 500,000 shares of common stock that are exercisable for a period of five years at a fixed exercise price of $1.85 per share.

 

On April 2, 2018, the Company entered into and closed an asset purchase agreement with Electronic Check Services Inc. (“Electronic Check”), a Missouri corporation, pursuant to which the Company purchased certain assets from Electronic Check, including, but not limited to, assets associated with software that validates written check authenticity, in consideration of $75,000 paid on the closing date. In addition, the Company issued 250,000 shares of common stock of the Company and warrants to purchase 250,000 shares of common stock. The warrants are exercisable for a period of five years at a fixed exercise price of $2.70 per share.

 

ECS and Electronic Check are owned by the same individual.

 

The accompanying pro forma consolidated balance sheet presents the accounts of Gopher, and ECS and Electronic Check as if the transactions occurred December 31, 2017. The accompanying pro forma consolidated statement of operations presents the accounts of Gopher, and ECS and Electronic Check for the year ended December 31, 2017 as if the transactions occurred on January 1, 2017.

 

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

 

a)To record the purchase price allocation and to eliminate the common stock and retained earnings of ECS and Electronic Check.

 

b)To record amortization expense for the software purchased in the transactions.

 

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.

 

4