World Energy Solutions (XWES) 8-K/A Financial Statements and Exhibits

EXHIBIT 99.3

Unaudited Pro Forma Combined Condensed Consolidated Financial Information

The following unaudited pro forma combined condensed consolidated statements of income of World Energy Solutions, Inc. (the “Company” or “World Energy”) for the nine-months ended September 30, 2012 and for the year ended December 31, 2011, gives effect to the September 13, 2011 acquisition of the Co-eXprise, Inc. energy procurement business (“Co-eXprise”), the October 13, 2011 acquisition of Northeast Energy Solutions, LLC (“NES”), the October 30, 2011 acquisition of GSE Consulting, LP (“GSE”) and the October 3, 2012 acquisition of Northeast Energy Partners, LLC (“NEP”), all as if the transactions had occurred on January 1, 2011. The unaudited pro forma combined condensed consolidated balance sheet at September 30, 2012 gives effect to the acquisition of NEP as if the transaction had occurred on September 30, 2012.

The accompanying unaudited pro forma combined condensed consolidated financial information reflects World Energy’s acquisitions of Co-eXprise, NES, GSE and NEP. In accordance with Accounting Standards Codification (“ASC”) No. 805 “Business Combinations”, and ASC No. 350 “Intangibles – Goodwill and Other” (“ASC No. 350”), the Company used the purchase method of accounting for a business combination to account for the acquisitions as well as the related accounting and reporting regulations for goodwill and other intangibles. Under the purchase method of accounting, the total purchase price is allocated to the net assets and liabilities acquired based upon estimates of the fair value of those assets and liabilities. Any excess purchase price is allocated to goodwill. The preliminary allocation of the purchase price was based upon estimates of the fair value of the acquired assets and liabilities in accordance with ASC No. 350. However, the final allocation of the purchase price may differ from the pro forma amounts.

The following unaudited pro forma combined condensed consolidated financial statements of the Company have been prepared by management in accordance with generally accepted accounting principles in the United States and do not reflect any operating efficiencies and cost savings that World Energy believes are achievable. There are various items in the historical consolidated financial statements that will be significantly impacted by the acquisition including: Member expenses (as two Members will not become employees of World Energy); intercompany activity (the land, building and vehicles were not part of the sale of NEP and a new fair market value lease for the building was negotiated between NEP and World Energy); and certain employees did not come over in the acquisition. No adjustments have been made to the pro forma combined condensed consolidated financial statements to reflect these changes.

The unaudited pro forma combined condensed consolidated financial information is presented for illustrative purpose only and is not necessarily indicative of the operating results that would have occurred if the acquisitions had been consummated at the beginning of the periods presented, nor is it necessarily indicative of future operating results. The pro forma adjustments are based upon available information and upon certain assumptions described in the notes to the unaudited pro forma combined condensed consolidated financial statements that World Energy’s management believes are reasonable under the circumstances. The accompanying pro forma combined condensed consolidated financial information should be read in conjunction with the historical consolidated financial statements and accompanying notes thereto of World Energy included in its Annual Report on Form 10-K for the year ended December 31, 2011 and consolidated NEP financial statements included elsewhere herein.

World Energy Solutions, Inc.

Pro Forma Combined Condensed Consolidated Balance Sheet

September 30, 2012

(Unaudited)

	World Energy Solutions			NEP		Pro Forma Adjustments			Note	Pro Forma
Assets
Current assets
Cash and cash equivalents	$	3,014,090		$	432,783	$	(432,783	)	A	$	3,014,090
Trade accounts receivable, net		6,661,605			—		774,160		A		7,435,765
Inventory		742,200			—		—				742,200
Current portion of note receivable - related party		—			18,164		(18,164	)	A		—
Prepaid expenses and other current assets		288,345			13,776		(13,776	)	A		288,345
Total current assets		10,706,240			464,723		309,437				11,480,400
Property and equipment, net		614,313			1,179,622		(1,152,856	)	A		641,079
Note receivable - related party, net of current portion		—			152,843		(152,843	)	A		—
Intangibles, net		12,102,603			—		7,820,000		A		19,922,603
Goodwill		11,817,236			—		3,744,681		A		15,561,917
Other assets, net		90,746			3,643		(3,643	)	A		90,746
Total assets	$	35,331,138		$	1,800,831	$	10,564,776			$	47,696,745
Liabilities and Stockholders’ Equity
Current liabilities
Line of credit	$	—		$	171,014	$	(171,014	)	A	$	—
Accounts payable		1,501,386			40,291		(40,291	)	A		1,501,386
Accrued commissions		1,100,856			11,420		—				1,112,276
Accrued compensation		1,864,036			330,987		(106,759	)	A		2,088,264
Accrued contingent consideration		1,608,382			—		—		A		1,608,382
Accrued expenses and other current liabilities		1,187,293			—		—		A		1,187,293
Notes payable		2,000,000			—		1,500,000		A		3,500,000
Current portion of mortgage note		—			30,330		(30,330	)	A		—
Current portion of long-term debt		641,025			270,935		588,040		A		1,500,000
Capital lease obligations		14,501			—		—				14,501
Total current liabilities		9,917,479			854,977		1,739,646				12,512,102
Capital lease obligations, net of current portion		1,275			—		—				1,275
Mortgage note, net of current portion		—			750,231		(750,231	)	A		—
Long-term debt, net of current portion		1,858,975			126,324		6,925,660		A		8,910,959
Notes payable, net of current portion		—			—		500,000		A		500,000
Accrued contingent consideration, net of current portion		956,670			—		2,219,000		A		3,175,670
Deferred income taxes		87,733			—		—				87,733
Total liabilities		12,822,132			1,731,532		10,634,075				25,187,739
Stockholders’ equity:
Preferred stock		—			—		—				—
Common stock		1,193			—		—				1,193
Additional paid-in capital		43,439,340			7,073		(7,073	)	A		43,439,340
Accumulated deficit (earnings)		(20,707,347	)		62,226		(62,226	)	A		(20,707,347	)
Treasury stock		(224,180	)		—		—				(224,180	)
Total stockholders’ equity		22,509,006			69,299		(69,299	)			22,509,006
Total liabilities and stockholders’ equity	$	35,331,138		$	1,800,831	$	10,564,776			$	47,696,745

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World Energy Solutions, Inc.

Pro Forma Combined Condensed Consolidated Statements of Income

For the Year Ended December 31, 2011

(Unaudited)

		Historical World Energy Solutions Year Ended December 31, 2011			Historical Co-eXprise Period Ended September 12, 2011			Historical NES Period Ended October 12, 2011			Historical GSE Period Ended October 30, 2011				Pro Forma Adjustments				Pro Forma Combined			Historical NEP Year Ended December 31, 2011*				Pro Forma Adjustments				Pro Forma Combined
Revenue		$	21,086,585		$	1,563,408		$	2,438,895		$	7,569,749		C	$	(133,198	)		$	32,525,439		$	5,875,056			$	—			$	38,400,495
Cost of revenue			4,009,995			52,261			1,605,585			1,078,375		D		10,670				6,756,886			1,151,542				—				7,908,428
Gross profit			17,076,590			1,511,147			833,310			6,491,374				(143,868	)			25,768,553			4,723,514				—				30,492,067
Total operating expenses			16,421,299			370,284			518,338			3,658,773		C, D		1,430,985				22,399,679			3,009,037		G		1,310,000				26,718,716
Operating income (loss)			655,291			1,140,863			314,972			2,832,601				(1,574,853	)			3,368,874			1,714,477				(1,310,000	)			3,773,351
Other expense, net			(1,526	)		(5,555	)		(17,662	)		(94,094	)	E		(324,181	)			(443,018	)		(104,609	)	H		(734,660	)			(1,282,287	)
Income (loss) before income taxes			653,765			1,135,308			297,310			2,738,507				(1,899,034	)			2,925,856			1,609,868				(2,044,660	)			2,491,064
Income tax expense			138,224			6,288			—			—		F		19,668				164,180			—				—				164,180
Net income (loss)		$	515,541		$	1,129,020		$	297,310		$	2,738,507			$	(1,918,702	)		$	2,761,676		$	1,609,868			$	(2,044,660	)		$	2,326,884
Net income per share:
Basic		$	0.05																$	0.24										$	0.20
Diluted		$	0.05																$	0.24										$	0.20
Weighted average common shares outstanding:
Basic	B		10,521,910															B		11,416,998									B		11,416,998
Diluted	B		10,583,630															B		11,478,718									B		11,478,718

* Includes several costs not assumed by World Energy as part of the October 3, 2012 acquisition of NEP

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World Energy Solutions, Inc.

Pro Forma Combined Condensed Consolidated Statements of Income

For the Nine Months Ended September 30, 2012

(Unaudited)

		Historical World Energy Solutions Nine Months Ended September 30, 2012			Historical NEP Nine Months Ended September 30, 2012*				Pro Forma Adjustments For Nine Months Ended September 30, 2012				Pro Forma Combined
Revenue		$	24,687,851		$	4,004,690			$	—			$	28,692,541
Cost of revenue			6,614,811			811,627				—				7,426,438
Gross profit			18,073,040			3,193,063				—				21,266,103
Total operating expenses			16,920,872			2,110,438		J		982,500				20,013,810
Operating income			1,152,168			1,082,625				(982,500	)			1,252,293
Other expense, net			(221,518	)		(48,625	)	H		(550,995	)			(821,138	)
Income before income taxes			930,650			1,034,000				(1,533,495	)			431,155
Income tax expense			72,500			—				—				72,500
Net income		$	858,150		$	1,034,000			$	(1,533,495	)		$	358,655
Net income per share:
Basic		$	0.07										$	0.03
Diluted		$	0.07										$	0.03
Weighted average common shares outstanding:
Basic	I		11,888,660									I		11,888,660
Diluted	I		11,945,177									I		11,945,177

* Includes several costs not assumed by World Energy as part of the October 3, 2012 acquisition of NEP

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World Energy Solutions, Inc.

Notes to Pro Forma Combined Condensed Consolidated Financial Statements

As of September 30, 2012, and For the Nine Months Ended September 30, 2012

and the Year Ended December 31, 2011

Note A: Reflects excluded assets and retained liabilities of NEP, elimination of the historical equity accounts and the allocation of total purchase price as follows:

Tangible assets acquired	$	800,926
Liabilities assumed		(235,648	)
Intangibles acquired, definite life		7,820,000
Goodwill		3,744,681
Total purchase price	$	12,129,959

The acquisition-date fair value of the consideration transferred totaled approximately $12.1 million, which consisted of the following:

	Purchase price
Cash	$	7,910,959
Notes payable to seller		2,000,000
Contingent consideration		2,219,000
Total consideration	$	12,129,959

The Company funded the initial $7.9 million cash portion of the purchase price through the issuance of long-term debt with SVB and Massachusetts Capital Resource Company (“MCRC”). On October 3, 2012, the Company, together with its wholly-owned subsidiary, World Energy Securities Corp., entered into a Fourth Loan Modification Agreement (the “Fourth Modification Agreement”) with SVB, which modifies a Loan and Security Agreement between the Company and SVB dated September 8, 2008. SVB increased the Company’s borrowing capability to $9 million, including a $6.5 million term loan (the “Term Loan”), bearing interest at prime plus 2.75% (currently 6%), that replaces the Company’s prior $2.5 million term loan. The Term Loan is interest only for the first three months followed by 39 equal principal payments commencing on January 1, 2013. Accordingly, $1.5 million of the Term Loan has been classified as current. In addition, the Company will continue to maintain a $2.5 million line of credit with SVB, which has been extended to March 14, 2014. No borrowings have been made under the line-of-credit to date. Terms of the loan modification are substantially the same as under the previous facility.

On October 3, 3012, the Company entered into a Note Purchase Agreement with MCRC, in which the Company entered into an 8-year, $4 million Subordinated Note due 2020 with MCRC (the “MCRC Note”). The MCRC Note bears interest at 10.5% and is interest only for the first four years followed by 48 equal principal payments commencing October 31, 2016. The Company must pay a premium of 5% of the total principal outstanding if it prepays the MCRC Note before October 1, 2013, a 3% premium if it prepays the MCRC Note before October 1, 2014, and a 1% premium if it prepays the MCRC Note before October 1, 2015. The MCRC Note has been classified as long-term debt.

The fair value of the Notes payable to seller was recorded at the face amount of the notes entered into at the date of acquisition due to their short-term maturity and market rate of interest. The Notes payable to seller bear interest at 4% and is due as follows:

	Amount
October 1, 2013	$	1,500,000
April 1, 2014		500,000
Total notes payable	$	2,000,000

Interest is payable on each tranche at the respective due dates. These notes are unsecured and are subordinated to the Company’s credit facility with SVB.

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Note A (continued)

As part of the total consideration, NEP can earn up to $3,180,000 in contingent consideration if certain performance criteria are met post-acquisition. This potential contingent consideration consists of $2.5 million in cash and 153,153 shares of common stock with a value of $680,000 utilizing the stock price of $4.44 at the date of acquisition. The contingent consideration, if any, is due on December 31, 2013. The fair value of the contingent consideration was based on the weighted probability of achievement of certain performance milestones. The contingent consideration is tied to the achievement of certain revenue and earnings before interest, taxes depreciation and amortization (“EBITDA”) levels for the 12-months ended September 30, 2013. The Company has valued this contingent payment at $2,219,000, which has been recorded as accrued contingent consideration, as part of long-term liabilities on the accompanying pro forma combined condensed consolidated balance sheet. In initially measuring the fair value of the contingent consideration, the Company assigned probabilities to these performance criteria, based among other things on the nature of the performance criteria and the Company’s due diligence performed at the time of the acquisition.

The purchase price was allocated to the tangible and intangible assets and liabilities assumed based on estimates of their respective fair values at the date of acquisition with the remaining unallocated purchase price recorded as goodwill. Fair value of intangible assets was determined using a combination of the multi-period excess earnings method, the comparative business valuation method and relief from royalty method. The goodwill recognized is attributable primarily to future revenue generation resulting from expected synergies, expanded product lines and new markets and is expected to be deductible for tax purposes over a period of 15 years.

Management is responsible for the valuation of net assets acquired and considered a number of factors, including valuations and appraisals, when estimating the fair values and estimated useful lives of acquired assets and liabilities. The intangible assets, excluding goodwill, are being amortized on a straight-line basis over their weighted average lives as follows:

	Fair Value		Weighted Average Lives
Customer contracts	$	2,500,000	4 years
Non-compete agreements		900,000	5 years
Customer relationships		4,000,000	10 years
Tradenames		420,000	4 years
Total intangible assets	$	7,820,000

World Energy has not yet finalized the valuation of the purchase price allocation. It is not expected that any future adjustments to the purchase price allocation will significantly impact the amounts reported in these pro forma combined consolidated financial statements.

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Note B: The following represents issuable weighted average share information:

	Historical World Energy Solutions Year Ended December 31, 2011		Pro Forma Combined w/o NEP Year Ended December 31, 2011		Pro Forma Combined w/NEP Year Ended December 31, 2011
Weighted number of common shares - basic		10,521,910		11,416,998		11,416,998
Common stock options		30,068		30,068		30,068
Common stock warrants		31,357		31,357		31,357
Unvested restricted stock		295		295		295
Weighted number of common shares - diluted		10,583,630		11,478,718		11,478,718

Note C: Reflects the elimination of intercompany revenue and expenses between the Company and GSE.

Note D: Reflects the pro forma adjustments to amortization of intangible assets related to the acquisition of Co-eXprise, NES and GSE for the year ended December 31, 2011 as if the acquisition had occurred on January 1, 2011 using the straight-line method and lives from two and one half to ten years as follows:

	Cost of Sales		Operating Expenses		Weighted Average Lives
Co-eXprise:
Customer contracts	$	—	$	284,586	2.5 years
Non-compete agreements		—		23,950	5 years
Customer relationships		—		58,366	5 years
NES:
Customer relationships		8,626		77,639	9 years
Non-compete agreements		2,044		18,392	9 years
GSE:
Customer contracts		—		458,333	3 years
Non-compete agreements		—		213,333	5 years
Customer relationships		—		290,000	10 years
Tradenames		—		139,584	4 years
	$	10,670	$	1,564,183

Note E: Reflects foregone interest income and interest expense on borrowed amounts to fund the acquisition of Co- eXprise, NES and GSE effective January 1, 2011 as follows:

Co-eXprise	$	64,104
NES		19,804
GSE		240,273
	$	324,181

Note F: Reflects the utilization of World Energy’s federal and state net operating loss carryforwards and the pro forma tax effect of the transactions outlined above and in the pro forma financial statements related to and based on net income generated from the acquisition of Co-eXprise, NES and GSE effective January 1, 2011 as follows:

Co-eXprise	$	6,000
NES		2,000
GSE		11,668
	$	19,668

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Note G: Reflects the pro forma adjustments to amortization of intangible assets related to the acquisition of NEP for the year ended December 31, 2011 as if the acquisition had occurred on January 1, 2011 using the straight-line method and lives from four to ten years as follows:

	Operating Expenses		Weighted Average Lives
Customer contracts	$	625,000	4 years
Non-compete agreements		180,000	5 years
Customer relationships		400,000	10 years
Tradename		105,000	4 years
	$	1,310,000

Note H: Reflects foregone interest income and interest expense on borrowed amounts to fund the purchase of NEP effective January 1, 2011.

Note I: The following represents issuable weighted average share information:

	Historical World Energy Solutions Year Ended September 30, 2012		Pro Forma Combined Year Ended September 30, 2012
Weighted number of common shares - basic		11,888,660		11,888,660
Common stock options		21,281		21,281
Common stock warrants		26,171		26,171
Unvested restricted stock		9,065		9,065
Weighted number of common shares - diluted		11,945,177		11,945,177

Note J: Reflects the pro forma adjustments to amortization of intangible assets related to the acquisition of NEP for the nine months ended September 30, 2012 as if the acquisition had occurred on January 1, 2011 using the straight-line method and lives from four to ten years as follows:

	Operating Expenses		Weighted Average Lives
Customer contracts	$	468,750	4 years
Non-compete agreements		135,000	5 years
Customer relationships		300,000	10 years
Tradename		78,750	4 years
	$	982,500

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