EXHIBIT 99.3

 

CLOUDCOMMERCE, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following unaudited pro forma condensed combined financial information is based on the historical financial statements of CloudCommerce, Inc. (the "Company") and Indaba Group, LLC ("Indaba") after entering into an agreement on June 26, 2015, giving effect to the Company's acquisition of Indaba which was consummated on October 1, 2015. The notes to the unaudited pro forma condensed financial information describes the reclassifications and adjustments to the financial information presented.

The unaudited pro forma condensed combined balance sheet and the statement of operations as of and for the year ended June 30, 2015, and as of and for the three months ended September 30, 2015 are presented as if the acquisition of Indaba had occurred on July 1, 2014 and were carried forward through the periods presented.

The allocation of the purchase price used in the unaudited pro forma condensed combined financial information is based upon the respective fair values of the assets and liabilities of Indaba as of the date of acquisition.

The unaudited pro forma condensed combined financial information is not intended to represent or be indicative of the Company's consolidated results of operations or financial position that the Company would have reported had the Indaba acquisition been completed as of the dates presented, and should not be taken as a representation of the Company's future consolidated results of operation or financial position.

 The unaudited pro forma condensed consolidated financial statements do not give effect to the potential impact of current financial conditions, regulatory matters or any anticipated synergies, operating efficiencies or cost savings that may be associated with the acquisition. The unaudited pro forma condensed consolidated financial data also do not include any integration costs, cost overlap or estimated future transaction costs.

The historical financial information has been adjusted to give effect to events that are directly attributable to the Acquisition, factually supportable and, with respect to the statements of operations, expected to have a continuing impact on the results of the combined company. These unaudited pro forma consolidated financial statements should be read in conjunction with the historical financial statements and;

The unaudited pro forma condensed combined financial information should be read in conjunction with the historical consolidated financial statements and accompanying notes of the Company and Indaba included in the annual report on form 10-K for the year ended June 30, 2015 and contained elsewhere in this Form 8-K/A.



CLOUDCOMMERCE, INC. (FORMERLY WARP 9, INC.)

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF SEPTEMBER 30, 2015

 

    CloudCommerce, Inc.   Indaba Group, LLC   Pro Forma Adjustments   Pro Forma
    (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
                 
ASSETS                
CURRENT ASSETS                
     Cash     $                       28,075    $                   22,772    $                        -    $              50,847
     Accounts receivable, net                              111,726                          318,360                                 -                     430,086
     Prepaid and other current assets                                  3,334                              3,000                                 -                         6,334
TOTAL CURRENT ASSETS                              143,135                          344,132                                 -                     487,267
                 
PROPERTY & EQUIPMENT, at cost                
Furniture, fixtures & equipment                                10,533                            18,216                                 -                       28,749
Computer equipment                                16,941                            88,968                                 -                     105,909
Computer software                                  1,904                              1,698                                 -                         3,602
Leasehold improvements                                          -                              9,025                                 -                         9,025
                                 29,378                          117,907                                 -                     147,285
Less accumulated depreciation                              (21,447)                           (47,839)                                 -                     (69,286)
NET PROPERTY AND EQUIPMENT                                  7,931                            70,068                                 -                       77,999
                 
OTHER ASSETS                
      Lease deposit                                  5,955                              3,500                                 -                         9,455
      Internet domain                                20,202                                      -                           20,202
      Intangible assets                                10,000                                      -                                 -                       10,000
      Goodwill                                          -                                      -                   1,701,764 A                1,701,764
               TOTAL OTHER ASSETS                                36,157                              3,500                   1,701,764                  1,741,421
                 
  TOTAL ASSETS    $                     187,223    $                 417,700    $          1,701,764    $         2,306,687
                 
LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT)                
                 
CURRENT LIABILITIES                
Accounts payable    $                     147,746    $                 111,019    $                        -    $            258,765
Accrued expenses                                72,987                              8,445                                 -                       81,432
Convertible notes and interest payable, current, net                              654,960                                      -                                 -                     654,960
Derivative liability                           6,311,091                                      -                                 -                  6,311,091
Customer deposit                                  3,998                                      -                                 -                         3,998
TOTAL CURRENT LIABILITIES                           7,190,782                          119,464                                 -                  7,310,246
                 
LONG TERM LIABILITIES                
Convertible notes and interest payable, net                              246,305                                      -                                 -                     246,305
Accrued expenses, long term                              216,903                                      -                                 -                     216,903
TOTAL LONG TERM LIABILITIES                              463,208                                      -                                 -                     463,208
                 
TOTAL LIABILITIES                           7,653,990                          119,464                                 -                  7,773,454
                 
SHAREHOLDERS' EQUITY/(DEFICIT)                
Preferred stock, $0.001 par value;                 
5,000,000 authorized shares; no shares issued and outstanding                                          -                                      -                                 -                                -
Series A preferred stock, $0.001 par value;                 
10,000 shares authorized, issued and outstanding                                          -                                      -                   2,000,000 B                2,000,000
Common stock, $0.001 par value;                 
2,000,000,000 authorized shares;                
105,790,195 and 100,878,825 shares issued and outstanding, respectively                               105,790                                      -                                 -                     105,790
Additional paid in capital                           7,784,326                                      -                                 -                  7,784,326
Members' equity                                          -                          298,236                    (298,236) C                              -
Accumulated deficit                       (15,356,883)                                      -                                 -              (15,356,883)
TOTAL SHAREHOLDERS'  EQUITY/(DEFICIT)                         (7,466,767)                          298,236                   1,701,764                (5,466,767)
                 
  TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT)    $                     187,223    $                 417,700    $          1,701,764    $         2,306,687

See notes to unaudited pro forma condensed combined financial information.



CLOUDCOMMERCE, INC.(FORMERLY WARP 9, INC.)

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED JUNE 30, 2015

 

          Pro Forma Adjustments   Pro Forma
  CloudCommerce, Inc.   Indaba Group, LLC   (Unaudited)   (Unaudited)
               
REVENUE    $                    598,345    $                 2,419,932    $          -    $  3,018,277
               
OPERATING EXPENSES                
  Selling, general and administrative expenses                          1,284,165                          2,106,121                   -           3,390,286
  Stock option expense                             150,610                                         -                   -              150,610
  Depreciation and amortization                                 6,073                               22,490                   -                28,563
               
TOTAL OPERATING EXPENSES                          1,440,848                          2,128,611                   -           3,569,459
               
INCOME (LOSS) FROM OPERATIONS BEFORE OTHER INCOME AND TAXES                            (842,503)                             291,321                   -             (551,182)
               
OTHER INCOME/(EXPENSE)                 
   Other income (expense)                                    300                                       (7)                   -                    293
   Gain on insurance settlement                                         -                               19,194                   -                19,194
   Gain/(Loss) on extinguishment of debt                             118,492                                         -                   -              118,492
   Gain/(Loss) on changes in derivative liability                             892,614                                         -                   -              892,614
Interest expense                            (570,037)                                (9,242)                   -             (579,279)
               
TOTAL OTHER INCOME (EXPENSE)                             441,369                                 9,945                   -              451,314
               
INCOME (LOSS) FROM OPERATIONS BEFORE PROVISION FOR TAXES                            (401,134)                             301,266                   -               (99,868)
               
PROVISION FOR INCOME (TAXES)/BENEFIT                
   Income taxes paid                                (3,076)                                         -                   -                (3,076)
               
PROVISION FOR INCOME (TAXES)/BENEFIT                                (3,076)                                         -                   -                (3,076)
               
NET INCOME (LOSS)    $                   (404,210)    $                    301,266    $          -    $    (102,944)
                 
LOSS PER SHARE                
    BASIC AND DILUTED    $                         (0.00)    $                                -    $          -    $         (0.00)
                 
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING                 
    BASIC AND DILUTED   104,363,874                                         -                   -        104,363,874

 

See notes to unaudited pro forma condensed combined financial information.



CLOUDCOMMERCE, INC. (FORMERLY WARP 9, INC.)

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2015

 

          Pro Forma Adjustments   Pro Forma
  CloudCommerce, Inc.   Indaba Group, LLC   (Unaudited)   (Unaudited)
               
REVENUE    $                  113,559    $                  661,342    $                -    $           774,901
               
OPERATING EXPENSES                
  Selling, general and administrative expenses                           394,934                           709,974                         -                 1,104,908
  Stock option expense                           105,293                                      -                         -                    105,293
  Depreciation and amortization                                  737                               6,343                         -                        7,080
               
TOTAL OPERATING EXPENSES                           500,964                           716,317                         -                 1,217,281
               
LOSS FROM OPERATIONS BEFORE OTHER INCOME AND TAXES                         (387,405)                           (54,975)                         -                   (442,380)
               
OTHER INCOME/(EXPENSE)                 
   Other income                                       -                                  868                         -                           868
   Other expense                                       -                                (982)                         -                          (982)
   Loss on changes in derivative liability                      (4,166,890)                                      -                         -                (4,166,890)
   Loss on disposal of fixed assets                                       -                             (1,004)                         -                       (1,004)
Interest expense                         (200,382)                             (2,737)                         -                   (203,119)
               
TOTAL OTHER INCOME (EXPENSE)                      (4,367,272)                             (3,855)                         -                (4,371,127)
               
LOSS FROM OPERATIONS BEFORE PROVISION FOR TAXES                      (4,754,677)                           (58,830)                         -                (4,813,507)
               
PROVISION FOR INCOME (TAXES)/BENEFIT                
   Income taxes paid                                       -                                      -                         -                                -
   Income tax (provision)/benefit                                       -                                      -                         -                                -
               
PROVISION FOR INCOME (TAXES)/BENEFIT                                       -                                      -                         -                                -
               
NET LOSS    $             (4,754,677)    $                  (58,830)    $                -    $       (4,813,507)
                 
LOSS PER SHARE                
    BASIC AND DILUTED    $                      (0.04)    $                             -    $                -    $                (0.04)
                 
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING                 
    BASIC AND DILUTED   105,790,195                                      -                         -             105,790,195

 

See notes to unaudited pro forma condensed combined financial information.



CLOUDCOMMERCE, INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

1. BASIS OF PRO FORMA PRESENTATION

The unaudited pro forma condensed combined balance sheet and the unaudited pro forma condensed statements of operations as of and for the year ended June 30, 2015, and as of and for the three months ended September 30, 2015, are based on the historical financial statements of the Company and Indaba after giving effect to the Company's acquisition that was consummated on October 1, 2015 and adjustments described in the accompanying notes to the unaudited pro forma condensed combined financial information.

The Company accounts for business combinations pursuant to Accounting Standards Codification ASC 805, Business Combinations.  In accordance with ASC 805, the Company uses it best estimates and assumptions to accurately assign fair value to the assets acquired and the liabilities assumed at the acquisition date. Goodwill as of the acquisition date is measured as the excess of the purchase consideration over the fair value of the assets acquired and the liabilities assumed.

The fair values assigned to Indaba's assets acquired and liabilities assumed are based on management's estimates and assumptions. The estimated fair values of these assets acquired and liabilities assumed are considered preliminary and are based on the information that was available as of the date of acquisition. The Company believes that the information provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed.

The unaudited pro forma condensed combined financial information is not intended to represent or be indicative of the Company's consolidated results of operations or financial position that the Company would have reported had the Indaba acquisition been completed as of the dates presented, and should not be taken as a representation of the Company's future consolidated results of operation or financial position.

The unaudited pro forma condensed combined financial information should be read in conjunction with the historical consolidated financial statements and accompanying notes of the Company and Indaba included in the annual report on form 10-K for the year ended June 30, 2015 and contained elsewhere in this Form 8-K/A.

Accounting Periods Presented

For purposes of these unaudited pro forma condensed combined financial information, Indaba's historical financial statements for the year ended June 30, 2015, have been aligned to more closely conform to the Company's financial information, as explained below. Certain pro forma adjustments were made to conform Indaba's accounting policies to the Company's accounting policies as noted below.

The unaudited pro forma condensed combined balance sheet and statement of operations as of and for year ended June 30, 2015, and as of and for the three months ended September 30, 0215 are presented as if the acquisition of Indaba had occurred on July 1, 2014 and were carried forward through each of the period presented.

Reclassifications

The Company reclassified certain accounts in the presentation of Indaba's historical financial statements in order to conform to the Company's presentation.

2. ACQUISITION OF INDABA GROUP, LLC

On October 1, 2015, the Company acquired 100% of the tangible and intangible assets of Indaba in a transaction accounted for under ASC 805, for the total purchase price of two million dollars ($2,000,000.00), paid in the form of the issuance of ten thousand (10,000) shares of the Company's Series A Convertible Preferred Stock, at a liquidation preference of two hundred dollars ($200.00) per share.   Indaba is engaged in the business of providing technology services and solutions specializing in enterprise software development, ecommerce, creative services, and customer



2. ACQUISITION OF INDABA GROUP, LLC (continued)

experience management.  The acquisition is designed to enhance our services for ecommerce solutions.  Indaba is now a wholly-owned subsidiary of the Company.

Under the purchase method of accounting, the transactions will be valued for accounting purposes at $2,000,000, which will be the estimated fair value of the Company at date of acquisition. The assets and liabilities of Indaba will be recorded at their respective fair values as of the date of acquisition, and the following table summarizes these values.

Purchase Price Allocation

September 30, 2015

Assets acquired

                    

 

Current assets

                   

 

     Cash

$             22,772

 

     Accounts receivable, net

318,360

 

     Prepaid and other current assets

3,000

 

          Total current assets

344,132

 

 

Tangible assets subject to depreciation

 

     Property and equipment, net of depreciation

70,068

 

 

Other assets

 

     Lease deposits

3,500

 

     Goodwill

1,701,764

 

          Total Other assets

1,705,264

 

 

Total Assets acquired

$        2,119,464

 

 

Liabilities assumed

 

     Accounts payable

$           111,019

 

     Accrued expenses

8,445

 

Total Liabilities assumed

 

$           119,464

 

Net assets acquired

$        2,000,000

 

3. PRO FORMA ADJUSTMENTS

The following pro forma adjustments are included in the Company's unaudited pro forma condensed combined financial information:

(A) To record the preliminary estimate of goodwill for the Company's acquisition of Indaba. The preliminary estimate of goodwill represents the excess of the purchase consideration over the estimated fair value of the assets acquired and the liabilities assumed.

(B) Record the purchase of 100% of Indaba's members' interest through the issuance of the Series A Preferred stock, valued at $2,000,000

(C) To eliminate Indaba's historical members' interest.