Exhibit 99.3
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The following unaudited pro forma combined financial information presents the unaudited pro forma combined balance sheet and statement of operations based upon the combined historical financial statements of CFN Enterprises and RAN CoPacking Solutions LLC (“Ranco”) after giving effect to the business combinations and adjustments described in the accompanying notes.
The unaudited pro forma combined balance sheets of CFN and Ranco as of June 30, 2023 has been prepared to reflect the effects of the acquisition as if it occurred on June 30, 2023. The unaudited pro forma combined statements of operations for six months ended June 30, 2023 combine the historical results and operations of CFN and Ranco giving effect to the transaction as if it occurred on January 1, 2023. The unaudited pro forma combined statements of operations for the period ended December 31, 2022 combine the historical results and operations of CFN and Ranco giving effect to the transactions as if they occurred on July 1, 2022.
The unaudited pro forma combined financial information should be read in conjunction with the audited and unaudited historical financial statements of CFN and Ranco and the notes thereto. Additional information about the basis of presentation of this information is provided in Note 2 below.
The unaudited pro forma combined financial information was prepared in accordance with Article 11 of Regulation S-X. The unaudited pro forma adjustments reflecting the transaction have been prepared in accordance with business combination accounting guidance as provided in Accounting Standards Codification Topic 805, Business Combinations and reflect the preliminary allocation of the purchase price to the acquired assets and liabilities based upon the preliminary estimate of fair values, using the assumptions set forth in the notes to the unaudited pro forma combined financial information.
The unaudited pro forma combined financial information is provided for informational purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the transaction had been completed as of the dates set forth above, nor is it indicative of the future results or financial position of the combined company. In connection with the pro forma financial information, CFN allocated the purchase price using its best estimates of fair value. Accordingly, the pro forma acquisition price adjustments are preliminary and subject to further adjustments as additional information becomes available and as additional analyses are performed. The unaudited pro forma combined financial information also does not give effect to the potential impact of current financial conditions, any anticipated synergies, operating efficiencies or cost savings that may result from the transaction or any integration costs.
Furthermore, the unaudited pro forma combined statements of operations do not include certain nonrecurring charges and the related tax effects which result directly from the transaction as described in the notes to the unaudited pro forma combined financial information.
Exhibit 99.3
CFN Enterprises, Inc.
Unaudited Pro Forma Combined Balance Sheets
As of June 30, 2023
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| Pro Forma |
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| Combined |
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| CFN |
| Ranco |
| Adjustments |
| Notes |
| Pro Forma |
ASSETS |
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Current assets: |
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Cash |
| $1,048,166 |
| $134,060 |
| $5,000,000 |
| (c) |
| $6,182,226 |
Restricted cash |
| 20,284 |
| - |
| - |
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|
| 20,284 |
Accounts receivable, net |
| 36,100 |
| 175,340 |
| - |
|
|
| 211,440 |
Total current assets |
| 1,104,550 |
| 309,400 |
| 5,000,000 |
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|
| 6,413,950 |
Property and equipment, net |
| 47,907 |
| - |
| - |
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|
| 47,907 |
Goodwill |
| - |
| - |
| 9,694,243 |
| (a) |
| 9,694,243 |
Deposits |
| 268,696 |
| 297,269 |
| - |
|
|
| 565,965 |
Right of use asset |
| - |
| 2,272,059 |
| - |
|
|
| 2,272,059 |
Other assets |
| 55,676 |
| - |
| - |
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|
| 55,676 |
Total assets |
| $1,476,829 |
| $2,878,728 |
| $14,694,243 |
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| $19,049,800 |
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LIABILITIES AND STOCKHOLDERS' / MEMBERS' DEFICIT |
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Current liabilities: |
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Accounts payable |
| $2,318,201 |
| $43,272 |
| $- |
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| $2,361,473 |
Accrued liabilities |
| 2,436,785 |
| - |
| - |
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| 2,436,785 |
Due to related party |
| 501,140 |
| 1,022,972 |
| - |
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|
| 1,524,112 |
Deferred revenue |
| 16,327 |
| - |
| - |
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| 16,327 |
Due to seller |
| - |
| - |
| 1,000,000 |
| (a) |
| 1,000,000 |
Contingent consideration |
| - |
| - |
| 208,000 |
| (a) |
| 208,000 |
Current portion of notes payable |
| 3,794,914 |
| - |
| - |
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| 3,794,914 |
Current portion of right of use liability |
| 312,033 |
| 538,243 |
| - |
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| 850,276 |
Current liabilities of discontinued operations |
| 79,823 |
| - |
| - |
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| 79,823 |
Total current liabilities |
| 9,459,223 |
| 1,604,486 |
| 1,208,000 |
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| 12,271,709 |
Right of use liability |
| 223,822 |
| 1,760,485 |
| - |
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| 1,984,307 |
Long-term note payable, net of current portion and discounts |
| 746,180 |
| - |
| 5,000,000 |
| (b) |
| 5,746,180 |
Total liabilities |
| 10,429,225 |
| 3,364,971 |
| 6,208,000 |
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| 20,002,196 |
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Stockholders' / members' deficit: |
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Preferred stock |
| 4 |
| - |
| - |
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| 4 |
Common stock |
| 41,710 |
| - |
| 40,000 |
| (a) |
| 81,710 |
Additional paid-in capital |
| 52,128,924 |
| - |
| 7,960,000 |
| (a) |
| 60,088,924 |
Accumulated deficit |
| (61,123,034) |
| - |
| - |
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|
| (61,123,034) |
Members' deficit |
| - |
| (486,243) |
| 486,243 |
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|
| - |
Total stockholders' / members' deficit |
| (8,952,396) |
| (486,243) |
| 8,486,243 |
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| (952,396) |
Total liabilities and stockholders' / members' deficit |
| $1,476,829 |
| $2,878,728 |
| $14,694,243 |
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| $19,049,800 |
Exhibit 99.3
CFN Enterprises, Inc.
Unaudited Pro Forma Combined Statements of Operations
Six Months Ended June 30, 2023
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| Pro Forma |
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| Combined |
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| CFN |
| Ranco |
| Adjustments |
| Notes |
| Pro Forma |
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Net revenues |
| $265,259 |
| $2,193,741 |
| $- |
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| $2,459,000 |
Cost of revenues |
| 223,675 |
| 1,804,746 |
| - |
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| 2,028,421 |
Gross profit |
| 41,584 |
| 388,995 |
| - |
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| 430,579 |
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Operating expenses: |
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Selling, general and administrative |
| 2,125,148 |
| 659,216 |
| - |
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| 2,784,364 |
Total operating expenses |
| 2,125,148 |
| 659,216 |
| - |
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| 2,784,364 |
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Loss from operations |
| (2,083,564) |
| (270,221) |
| - |
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| (2,353,785) |
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Other income (expense): |
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Interest expense |
| (103,501) |
| - |
| (1,000,000) |
| (b) |
| (1,103,501) |
Gain on property and equipment |
| 9,253 |
| - |
| - |
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| 9,253 |
Gain on extinguishment of debt |
| 13,219 |
| - |
| - |
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| 13,219 |
Other income |
| 157,502 |
| - |
| - |
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| 157,502 |
Interest income |
| 157 |
| - |
| - |
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| 157 |
Total other income (expense), net |
| 76,630 |
| - |
| (1,000,000) |
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| (923,370) |
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Provision for income taxes |
| - |
| - |
| - |
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| - |
Net loss |
| $(2,006,934) |
| $(270,221) |
| $(1,000,000) |
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| $(3,277,155) |
Preferred stock interest |
| 120,000 |
| - |
| - |
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| 120,000 |
Net loss available to common shareholders |
| $(2,126,934) |
| $(270,221) |
| $(1,000,000) |
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| $(3,397,155) |
Net loss attributable to non-controlling interest |
| - |
| - |
| - |
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| - |
Net loss available to CFN Enterprises common shareholders |
| $(2,126,934) |
| $(270,221) |
| $(1,000,000) |
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| $(3,397,155) |
Weighted average common shares outstanding - |
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basic and diluted |
| 40,255,331 |
| - |
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| 40,255,331 |
Net loss per common share - basic and diluted |
| $(0.05) |
| $- |
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| $(0.08) |
Exhibit 99.3
CFN Enterprises, Inc.
Unaudited Pro Forma Combined Statements of Operations
Period Ended December 31, 2022
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| Pro Forma |
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| Combined |
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| CFN |
| Ranco |
| Adjustments |
| Notes |
| Pro Forma |
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Net revenues |
| $4,317,490 |
| $1,775,883 |
| $- |
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| $6,093,373 |
Cost of revenues |
| 6,512,109 |
| 1,402,610 |
| - |
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| 7,914,719 |
Gross profit (loss) |
| (2,194,619) |
| 373,273 |
| - |
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| (1,821,345) |
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Operating expenses: |
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Impairment expense |
| 3,615,961 |
| - |
| - |
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| 3,615,961 |
Selling, general and administrative |
| 2,641,842 |
| 400,296 |
| - |
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| 3,042,138 |
Total operating expenses |
| 6,257,803 |
| 400,296 |
| - |
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| 6,658,099 |
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Income (loss) from operations |
| (8,452,422) |
| (27,022) |
| - |
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| (8,479,444) |
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Other income (expense): |
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Loss on conversion of debt |
| (563,220) |
| - |
| - |
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| (563,220) |
Unrealized loss on marketable securities |
| (46,516) |
| - |
| - |
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| (46,516) |
Impairment of investments |
| (200,000) |
| - |
| - |
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| (200,000) |
Interest expense |
| (694,380) |
| - |
| (2,000,000) |
| (b) |
| (2,694,380) |
Other income |
| 34,206 |
| - |
| - |
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| 34,206 |
Interest income |
| 113 |
| - |
| - |
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| 113 |
Total other income (expense), net |
| (1,469,797) |
| - |
| (2,000,000) |
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| (3,469,797) |
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Provision for income taxes |
| - |
| - |
| - |
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| - |
Net income (loss) |
| $(9,922,219) |
| $(27,022) |
| $(2,000,000) |
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| $(11,949,241) |
Preferred stock interest |
| 240,000 |
| - |
| - |
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| 240,000 |
Net income (loss) available to common shareholders |
| $(10,162,219) |
| $(27,022) |
| $(2,000,000) |
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| $(12,189,241) |
Net loss attributable to non-controlling interest |
| (19,826) |
| - |
| - |
|
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| (19,826) |
Net income (loss) available to CFN Enterprises common shareholders |
| $(10,142,393) |
| $(27,022) |
| $(2,000,000) |
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| $(12,169,415) |
Weighted average common shares outstanding - |
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basic and diluted |
| 34,258,898 |
| - |
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| 34,258,898 |
Net loss per common share - basic and diluted |
| $(0.29) |
| $- |
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| $(0.35) |
Exhibit 99.3
CFN Enterprises, Inc.
Notes to Unaudited Pro Forma Financial Statements
1.Description of Transactions
On July 1, 2023, CFN Enterprises, Inc. and its wholly owned subsidiary, RANCO, LLC, a Delaware limited liability company (“Ranco”), entered into an asset purchase agreement (the “Asset Purchase Agreement”) with RAN CoPacking Solutions LLC, a California limited liability company (the “Seller”) and the members of the Seller (collectively, the “Founders”). The assets of the Seller acquired by Ranco consist of assets for co-packing and white label manufacturing services, including comprehensive solutions for third party logistics (3PL) related areas such as storage, order fulfillment, solutions for custom packaging and hardware needs for many different industries, and media and design services, along with strategic marketing support, to help clients establish and enhance their brand presence in the market (the “Purchased Assets”). Ranco acquired the Purchased Assets and assumed certain liabilities of the Seller (the “Acquisition”) in exchange for an aggregate of 40 million shares of Company common stock (the “Acquisition Shares”), and $1 million in cash consideration, payable in quarterly installments in an amount equal to the lesser of (i) Ranco’s gross revenues attributable to the Purchased Assets from and after the closing, net of all accrued debts, liabilities, and obligations of the Ranco and all amounts necessary or advisable to reserve, designate, or set aside for actual or anticipated costs, payments, liabilities, obligations, and claims with respect to the Purchased Assets, all as determined in good faith by Ranco, and (ii) $250,000, until paid in full (the “Cash Consideration”). The Asset Purchase Agreement also contains an earn out provision providing for the issuance of (i) 8 million shares of Company common stock to be issued upon Ranco achieving $19 million in gross revenue attributable to the Purchased Assets and a net profit of $3.9 million within the twelve month period beginning three months from the closing of the Acquisition (the “First Earnout Period”), and (ii) 8 million shares of Company common stock to be issued upon Ranco achieving $29 million in gross revenue attributable to the Purchased Assets and a net profit of $5.9 million within the twelve month period beginning on the day immediately following the end of the First Earnout Period. The Buyer also agreed to assume the Seller’s lease for property related to the Purchased Assets in Los Angeles, California, consisting of approximately 46,000 square feet, a current monthly rent of $77,286.14 with four years remaining on the term (increasing annually to $86,936.85 for the last year of the term) with a three-year option to extend, including the Seller’s security deposit of approximately $297,000. The Company agreed to enter into employment agreements with the Founders and to guarantee the Cash Consideration portion of the purchase price.
Also on July 1, 2023, Ranco entered into promissory notes with certain lenders to borrow an aggregate of $5 million(the “Notes”). The Notes have a 15 month term and are subject to mandatory equal repayments commencing on the fourth month following issuance, for an aggregate repayment of $7.5 million. The Notes are secured by the assets of Ranco and guaranteed by the Company. Two of the lenders, Isaac Shehebar 2008 AIJJ Grantor Retained Annuity Trust and Ezra A. Chehebar, are existing shareholders of, and advisors to, the Company.
2.Basis of Presentation
The historical financial information has been adjusted to give pro forma effect to events that are directly attributable to the transaction, (ii) factually supportable, and (iii) with respect to the unaudited pro forma combined balance sheets and unaudited pro forma combined statements of operations, expected to have a continuing impact on the combined results.
The transaction was accounted for as a business acquisition whereas Ranco is the accounting acquiree and CFN is the accounting acquirer.
Exhibit 99.3
3.Consideration Transferred
Cash (due to seller) | $1,000,000 |
Common stock | 8,000,000 |
Contingent consideration | 208,000 |
Purchase price consideration | $9,208,000 |
The following table shows the preliminary allocation of the purchase price for Ranco to the acquired net identifiable assets and pro forma goodwill:
Assets acquired | $2,878,728 |
Goodwill | 9,694,243 |
Liabilities assumed | (3,364,971) |
Purchase price consideration | $9,208,000 |
a)To record the purchase price allocation of the Ranco pro forma acquisition, including the recognition of goodwill, purchase price consideration by Ranco, and elimination of Ranco’s equity.
b)To record the promissory note entered into by Ranco on July 1, 2023 and related pro forma interest expense.