SPINDLE, INC. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
Exhibit 99.1
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
__________________________________________________________
On June 4, 2015 (the “Closing Date”), Spindle, Inc., a Nevada corporation (“Spindle”), entered into an Asset Purchase Agreement (the “Agreement”) with C&H Financial Services, Inc., an Illinois corporation (“C&H”), pursuant to which Spindle agreed to sell all of the assets, which primarily include the rights and obligations to Spindle’s high risk merchant services portfolio revenue derived from the residual contract revenue asset (the “Asset Sale”) that Spindle acquired from Parallel Solutions Inc. in December 2012, which have been used in connection with Spindle’s business of facilitating electronic payment processing services to merchants (the “Assets”). In connection with the Asset Sale, C&H agreed to assume payment obligations of certain residual fees connected to such Assets.
The unaudited pro forma condensed consolidated statement of operations for the three months ended March 31, 2015 and for the year ended December 31, 2014, assumes that the Asset Sale was consummated on January 1, 2014. The unaudited pro forma condensed consolidated balance sheet as of March 31, 2015, assumes the Asset Sale was consummated on March 31, 2015.
The unaudited pro forma financial information is based on available information and assumptions that we believe are reasonable. The pro forma financial information is for illustrative and informational purposes only and is not intended to represent or be indicative of what our financial condition or results of operations would have been had the transactions described above occurred on the dates indicated. The pro forma financial information also should not be considered representative of our future financial condition or results of operations.
The unaudited pro forma condensed consolidated financial statements along with the assumptions underlying the pro forma adjustments are described in the accompanying notes and should be read in conjunction with the historical consolidated financial statements contained in the Company’s annual report on Form 10-K for the year ended December 31, 2014 and as of the three months ended March 31, 2015, as contained in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015.
Pro Forma Condensed Consolidated Statements of Operations (Unaudited)
|
|
| THE THREE MONTHS ENDED | |||||||
|
|
| MARCH 31, 2015 | |||||||
|
|
|
| Adjustment |
| Pro Forma | ||||
| Revenue: |
|
|
|
|
|
| |||
| Sales income |
| $ | 165,047 |
| $ | (124,279) | (a) | $ | 40,768 |
| Cost of sales |
|
| 47,482 |
|
| (22,403) | (b) | $ | 25,079 |
|
|
|
|
|
|
|
|
|
|
|
| Gross profit |
|
| 117,565 |
|
| (101,876) |
|
| 15,689 |
|
|
|
|
|
|
|
|
|
|
|
| Expenses: |
|
|
|
|
|
|
|
|
|
| Depreciation and amortization |
|
| 147,959 |
|
| (36,830) | (c) |
| 111,129 |
| Promotional and marketing |
|
| 26,505 |
|
| - |
|
| 26,505 |
| Consulting |
|
| 84,293 |
|
| - |
|
| 84,293 |
| Salaries and wages (including share-based compensation) |
|
| 761,430 |
|
| - |
|
| 761,430 |
| Directors fees |
|
| 45,000 |
|
| - |
|
| 45,000 |
| Professional fees |
|
| 150,718 |
|
| - |
|
| 150,718 |
| General and administrative |
|
| 48,588 |
|
| - |
|
| 48,588 |
| Total operating expenses |
|
| 1,264,493 |
|
| (36,830) |
|
| 1,227,663 |
|
|
|
|
|
|
|
|
|
|
|
| Net operating loss |
|
| (1,146,928) |
|
| (65,046) |
|
| (1,211,974) |
|
|
|
|
|
|
|
|
|
|
|
| Other expense: |
|
|
|
|
|
|
|
|
|
| Interest expense |
|
| (561) |
|
| - |
|
| (561) |
| Interest expense - related party |
|
| (28) |
|
| - |
|
| (28) |
| Total other expense |
|
| (589) |
|
| - |
|
| (589) |
|
|
|
|
|
|
|
|
|
|
|
| Loss before provision for income taxes |
|
| (1,147,517) |
|
| (65,046) |
|
| (1,212,563) |
| Provision for income taxes |
|
| - |
|
| - |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| Net loss |
| $ | (1,147,517) |
| $ | (65,046) |
| $ | (1,212,563) |
| Preferred stock, $0.001 par value, 50,000,000 shares authorized , no shares issued and outstanding as of March 31, 2015 and December 31, 2014, respectively |
|
|
|
|
|
|
|
|
|
| Weighted average number of common shares outstanding - basic and diluted |
|
| 42,173,217 |
|
| - |
|
| 42,173,217 |
|
|
|
|
|
|
|
|
|
|
|
| Net (loss) per share - basic and fully diluted |
| $ | (0.03) |
|
|
|
| $ | (0.03) |
|
|
| THE YEAR ENDED | |||||||
|
|
| DECEMBER 31, 2014 | |||||||
|
|
|
| Adjustment |
| Pro Forma | ||||
| Revenue: |
|
|
|
|
|
| |||
| Sales income |
| $ | 868,462 |
| $ | (713,346) | (a) | $ | 155,116 |
| Cost of sales |
|
| 311,364 |
|
| (213,688) | (b) | $ | 97,676 |
|
|
|
|
|
|
|
|
|
|
|
| Gross profit |
|
| 557,098 |
|
| (499,658) |
|
| 57,440 |
|
|
|
|
|
|
|
|
|
|
|
| Expenses: |
|
|
|
|
|
|
|
|
|
| Depreciation and amortization |
|
| 592,137 |
|
| (147,324) | (c) |
| 444,813 |
| Promotional and marketing |
|
| 126,215 |
|
| - |
|
| 126,215 |
| Consulting |
|
| 2,377,212 |
|
| - |
|
| 2,377,212 |
| Salaries and wages (including share-based compensation) |
|
| 3,050,064 |
|
| - |
|
| 3,050,064 |
| Directors fees |
|
| 174,839 |
|
| - |
|
| 174,839 |
| Professional fees |
|
| 1,100,240 |
|
| - |
|
| 1,100,240 |
| General and administrative |
|
| 566,618 |
|
| - |
|
| 566,618 |
| Total operating expenses |
|
| 7,987,325 |
|
| (147,324) |
|
| 7,840,001 |
|
|
|
|
|
|
|
|
|
|
|
| Net operating loss |
|
| (7,430,227) |
|
| (352,334) |
|
| (7,782,561) |
|
|
|
|
|
|
|
|
|
|
|
| Other expense: |
|
|
|
|
|
|
|
|
|
| Interest income |
|
| - |
|
| - |
|
| - |
| Interest expense |
|
| - |
|
| - |
|
| - |
| Interest expense - related party |
|
| (1,994) |
|
| - |
|
| (1,994) |
| MeNetwork earnout settlement |
|
| (750,000) |
|
| - |
|
| (750,000) |
| Loss on settlement |
|
| - |
|
| - |
|
| - |
| Gain on settlement - related party |
|
| - |
|
| - |
|
| - |
| Loss on impairment of goodwill |
|
| (669,993) |
|
| - |
|
| (669,993) |
| Loss on impairment of long-lived asset |
|
| (69,808) |
|
| - |
|
| (69,808) |
| Total other expense |
|
| (1,491,795) |
|
| - |
|
| (1,491,795) |
|
|
|
|
|
|
|
|
|
|
|
| Loss before provision for income taxes |
|
| (8,922,022) |
|
| (352,334) |
|
| (9,274,356) |
| Provision for income taxes |
|
| - |
|
| - |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| Net loss from continuing operations |
| $ | (8,922,022) |
| $ | (352,334) |
| $ | (9,274,356) |
|
|
|
|
|
|
|
|
|
|
|
| Gain on sale of discontinued operation |
|
| - |
|
| 348,600 | (g) |
| 348,600 |
|
|
|
|
|
|
|
|
|
|
|
| Net loss |
| $ | (8,922,022) |
| $ | (3,734) |
| $ | (8,925,756) |
|
|
|
|
|
|
|
|
|
|
|
| Preferred stock, $0.001 par value, 50,000,000 shares authorized, no shares issued and outstanding as of September 30, 2014 and December 31, 2013, respectively |
|
|
|
|
|
|
|
|
|
| Weighted average number of common shares outstanding - basic and diluted |
|
| 38,349,031 |
|
| - |
|
| 38,349,031 |
|
|
|
|
|
|
|
|
|
|
|
| Net (loss) per share - basic and fully diluted |
| $ | (0.23) |
|
|
|
| $ | (0.24) |
Pro Forma Condensed Consolidated Balance Sheet (Unaudited)
As of March 31, 2015
|
|
| Adjustment |
| Proforma | ||||
| ASSETS |
|
|
|
|
| |||
| Current assets: |
|
|
|
|
| |||
| Cash | $ | 127,637 |
| $ | 678,366 | (d) | $ | 806,003 |
| Restricted cash |
| 20,000 |
|
| - |
|
| 20,000 |
| Accounts receivable, net of allowance of $11,250 |
| 68,313 |
|
| 75,374 | (e) |
| 143,687 |
| Prepaid expenses and deposits |
| 138,135 |
|
| - |
|
| 138,135 |
| Inventory |
| 106,246 |
|
| - |
|
| 106,246 |
| Total current assets |
| 460,331 |
|
| 753,740 |
|
| 1,214,071 |
|
|
|
|
|
|
|
|
|
|
| Fixed assets, net of accumulated depreciation of $11,007 |
| 20,839 |
|
| - |
|
| 20,839 |
|
|
|
|
|
|
|
|
|
|
| Other assets: |
|
|
|
|
|
|
|
|
| License agreements, net of accumulated amortization of $0 |
| 30,000 |
|
| - |
|
| 30,000 |
| Domain names, net of accumulated amortization of $14,556 |
| 70,444 |
|
| - |
|
| 70,444 |
| Capitalized software costs, net of accumulated amortization of $689,169 |
| 1,602,446 |
|
| - |
|
| 1,602,446 |
| Residual contract revenue, net of accumulated amortization of $184,154 |
| 405,140 |
|
| (405,140) | (f) |
| 0 |
| Deposits |
| 2,882 |
|
| - |
|
| 2,882 |
| Xxxxxxxx, net of accumulated impairment loss of $669,993 |
| 5,306,205 |
|
| - |
|
| 5,306,205 |
| Total other assets |
| 7,417,117 |
|
| (405,140) |
|
| 7,011,977 |
| TOTAL ASSETS | $ | 7,898,287 |
| $ | 348,600 |
| $ | 8,246,887 |
|
|
|
|
|
|
|
|
|
|
| LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
| Current liabilities: |
|
|
|
|
|
|
|
|
| Accounts payable and accrued liabilities | $ | 629,517 |
| $ | - |
| $ | 629,517 |
| Advances |
| 215,000 |
|
| - |
|
| 215,000 |
| Deferred revenue |
| 3,291 |
|
| - |
|
| 3,291 |
| Accrued liabilities – related party |
| 985,815 |
|
| - |
|
| 985,815 |
| Notes payable – related party, net of discount of $27 |
| 172,135 |
|
| - |
|
| 172,135 |
| Total current liabilities |
| 2,005,758 |
|
| - |
|
| 2,005,758 |
| Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Stockholders’ equity: |
|
|
|
|
|
|
|
|
| Preferred stock, $0.001 par value, 50,000,000 shares authorized, no shares issued and outstanding as of March 31, 2015 |
| - |
|
| - |
|
| - |
| Common stock, $0.001 par value, 300,000,000 shares authorized, 42,268,773 shares issued and outstanding as of March 31, 2015 |
| 42,269 |
|
| - |
|
| 42,269.00 |
| Common stock authorized and unissued, 472,853 shares as of March 31, 2015 |
| 473 |
|
| - |
|
| 473.00 |
| Additional paid-in capital |
| 22,171,722 |
|
| - |
|
| 22,171,722.00 |
| Additional paid-in capital - stock warrants |
| 78,000 |
|
| - |
|
| 78,000.00 |
| Accumulated deficit |
| (16,399,935) |
|
| 348,600 | (g) |
| (16,051,335.00) |
| Total stockholders’ equity |
| 5,892,529 |
|
| 348,600 |
|
| 6,241,129 |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 7,898,287 |
| $ | 348,600 |
| $ | 8,246,887 |
(a) Reflects an adjustment of $124,279 and $713,346 for the three and twelve months ended March 31, 2015 and December 31, 2014, respectively for the recognized income related to the Asset.
(b) Reflects an adjustment of $22,403 and $213,688 for the three and twelve months ended March 31, 2015 and December 31, 2014, respectively for the cost of sales related to the Asset.
(c) Reflects an adjustment of $36,830 and $147,324 for the three and twelve months ended March 31, 2015 and December 31, 2014, respectively for the depreciation related to the Asset.
(d) Reflects $678,366 for the cash consideration not subject to Earn-Out for the Asset.
(e) Reflects $75,374 for the Earn-Out due in 12 months related to the Asset.
(f) Reflects $405,140 for the sale and removal of the Asset.
(g) Reflects $348,600 for the gain on the sale of the Asset.
