Unaudited Pro Forma Condensed Combined Financial Information
The unaudited pro forma condensed combined balance sheet as of June 30, 2021 and the unaudited pro forma condensed combined statements of income for the six months ended June 30, 2021 and for the year ended December 31, 2020 combine the financial statements of iCoreConnect Inc. (“iCoreConnect”), and Spectrum Technology Solutions, LLC (“STS”) giving effect to the transaction described in the Agreement, as if they had occurred on January 1, 2020 in respect of the unaudited pro forma condensed combined statements of operations and on June 30, 2021 in respect of the unaudited pro forma condensed combined balance sheet.
The unaudited pro forma condensed combined financial information should be read in conjunction with:
·
iCoreConnect’s audited consolidated financial statements and accompanying notes as of and for the year ended December 31, 2020, as contained in the Form 10-K filed on April 15, 2021 with the United States Securities and Exchange Commission (the “SEC”).
·
iCoreConnect’s unaudited condensed consolidated financial statements and accompanying notes as of and for the six months ended June 30, 2021, as contained in its Quarterly Report on Form 10-Q filed on August 23, 2021 with the SEC.
·
STS’s audited financial statements as of and for the years ended December 31, 2020 and 2019, contained elsewhere herein.
·
STS’s unaudited condensed financial statements as of June 30, 2021 and for the six months ended June 30, 2021, contained elsewhere herein.
·
the other information contained in or incorporated by reference into this filing.
The final purchase consideration and the allocation of the purchase consideration may materially differ from that reflected in the unaudited pro forma condensed combined financial information after final valuation procedures are performed and amounts are finalized following the completion of the acquisition.
The unaudited pro forma adjustments give effect to events that are directly attributable to the transaction and are based on available data and certain assumptions that management believes are factually supportable. In addition, with respect to the unaudited condensed combined statements of operations, the unaudited pro forma adjustments are expected to have a continuing impact on the combined results.
The unaudited pro forma condensed combined financial information is presented for informational purposes only and to aid you in your analysis of the financial aspects of the acquisition. The unaudited pro forma condensed combined financial information described above has been derived from the historical financial statements of iCoreConnect and STS and the related notes included elsewhere in this Form 8-K. The unaudited pro forma condensed combined financial information is based on iCoreConnect’s accounting policies. Further review may identify additional differences between the accounting policies of iCoreConnect and STS. The unaudited pro forma adjustments and the pro forma condensed combined financial information do not reflect the impact of synergies or post-transaction management actions and are not necessarily indicative of the financial position or results of operations that may have actually occurred had the transaction taken place on the dates noted, or of iCoreConnect’s future financial position or operating results.
iCoreConnect Inc.
Unaudited Pro Forma Condensed Combined Statements of Operations
For the Six Months Ended June 30, 2021
iCoreConnect Inc.
Spectrum Technology Solutions LLC
Adjustment(s)
Consolidated
Revenue
$
1,685,379
$
1,036,237
$
-
$
2,721,616
Cost of sales
507,761
647,446
-
1,155,207
Gross profit
1,177,618
388,791
-
1,566,409
Expenses
Selling, general and administrative
1,860,258
322,275
-
2,182,533
Depreciation and amortization
503,412
-
-
503,412
Total operating expenses
2,363,670
322,275
-
2,685,945
Income (Loss) from operations
(1,186,052
)
66,516
-
(1,119,536
)
Other income (expense)
Interest expense
(260,323
)
(336
)
(112,500
)(D)
(373,159
)
Other income
-
-
-
-
Gain on cancellation of liabilities
331,404
183,900
-
515,304
Total other income (expense)
71,081
183,564
(112,500
)
142,145
Net income (loss)
$
(1,114,971
)
$
250,080
$
(112,500
)
$
(977,391
)
Net loss per share available to common stockholders, basic and diluted
$
(0.01
)
-
-
$
(0.01
)
Weighted average number of shares, basic and diluted
128,456,113
-
4,046,617
132,502,730
2
iCoreConnect Inc.
Unaudited Pro Forma Condensed Combined Statements of Operations
For the Year Ended December 31, 2020
iCoreConnect Inc.
Spectrum Technology Solutions LLC
Adjustment(s)
Consolidated
Revenue
$
2,123,587
$
2,002,757
$
-
$
4,126,344
Cost of sales
1,008,843
1,155,143
-
2,163,986
Gross profit
1,114,744
847,614
-
1,962,358
Expenses
Selling, general and administrative
3,447,014
723,269
-
4,170,283
Depreciation and amortization
906,060
36,817
-
942,877
Total operating expenses
4,353,074
760,086
-
5,113,160
Income (Loss) from operations
(3,238,330
)
87,528
-
(3,150,802
)
Other income (expense)
Interest expense
(238,820
)
(6,130
)
(225,000
)(D)
(469,950
)
Other income (expense)
(50,733
)
-
-
(50,733
)
Gain on cancellation of liabilities
36,642
-
-
36,642
Total other income (expense)
(252,911
)
(6,130
)
(225,000
)
(484,041
)
Net income (loss)
$
(3,491,241
)
$
81,398
$
(225,000
)
$
(3,634,843
)
Net loss per share available to common stockholders, basic and diluted
$
(0.05
)
-
-
$
(0.05
)
Weighted average number of shares, basic and diluted
76,459,645
-
4,046,617
80,506,262
3
iCoreConnect Inc.
Unaudited Pro Forma Condensed Combined Balance Sheets
June 30, 2021
iCoreConnect Inc.
Spectrum Technology Solutions LLC
Adjustment(s)
Consolidated
ASSETS
Cash and cash equivalents
$
846,039
$
118,366
$
31,634
(A)
$
996,039
Accounts receivable, net
233,915
100,765
(65,542
)(A)
269,138
Loans receivable
-
352,200
(352,200
)(A)
-
Inventory
-
13,789
(13,789
)(A)
-
Prepaid expenses and other current assets
132,019
135,535
(135,535
)(A)
132,019
Total current assets
1,211,973
720,655
(535,432
)
1,397,196
Property and equipment, net
15,090
58,628
(26,628
)(A)
47,090
Right of use lease asset - operating
118,182
-
-
118,182
Software development costs, net
698,349
-
-
698,349
Acquired technology, net
517,929
23,940
(23,940
)(A)
517,929
Customer relationships, net
1,855,664
-
-
1,855,664
Goodwill
1,291,109
-
1,782,777
(C)
3,073,886
Total long-term assets
4,496,323
82,568
1,732,209
6,311,100
TOTAL ASSETS
$
5,708,296
$
803,223
$
1,196,777
$
7,708,296
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses
$
833,416
$
82,807
$
(82,807
)(A)
$
833,416
Operating lease liability, current portion
47,035
-
-
47,035
Notes payable
2,372,271
356,568
(356,568
)(A)
2,372,271
Deferred revenue, current portion
31,586
-
-
31,586
Total current liabilities
3,284,308
439,375
(439,375
)
3,284,308
Operating lease liability, net of current portion
53,699
-
-
53,699
Deferred revenue, net of current portion
20,743
-
-
20,743
Notes payable, net of current portion
-
-
1,500,000
(B)
1,500,000
Total long-term liabilities
74,442
-
1,500,000
1,574,442
TOTAL LIABILITIES
3,358,750
439,375
1,060,625
4,858,750
STOCKHOLDERS' EQUITY
Common Stock par value $0.001; 600,000,000 shares authorized; Issued and Outstanding: 151,613,399 as of June 30, 2021 and 90,081,336 as of December 31, 2020
151,613
-
-
151,613
Additional paid-in-capital
81,143,985
-
282,777
(B)
81,426,762
Accumulated equity (deficit)
(78,946,052
)
363,848
(146,625
)(A)
(78,728,829
)
TOTAL STOCKHOLDERS' EQUITY
2,349,546
363,848
136,152
2,849,546
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
5,708,296
$
803,223
$
1,196,777
$
7,708,296
4
iCoreConnect Inc.
Notes to Unaudited Pro Forma Condensed Combined Financial Information
Note 1. Basis of Presentation
The unaudited pro forma condensed combined financial information set forth herein is based upon the consolidated financial statements of iCoreConnect Inc. and Spectrum Technology Solutions, LLC. The unaudited pro forma condensed combined financial information is presented as if the transaction had been completed on January 1, 2020 with respect to the unaudited pro forma condensed combined statements of operations for each of the six months ended June 30, 2021 and for the year ended December 31, 2020 and on June 30, 2021 in respect of the unaudited pro forma condensed combined balance sheet.
The unaudited pro forma condensed combined financial information is presented for informational purposes only and is not necessarily indicative of the combined financial position or results of operations had the transaction occurred as of the dates indicated, nor is it meant to be indicative of any anticipated combined financial position or future results of operations that the combined company will experience after the completion of the transactions.
We have accounted for the acquisition in this unaudited pro forma condensed combined financial information using the acquisition method of accounting, in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 805 “Business Combinations” (“ASC 805”). In accordance with ASC 805, we use our best estimates and assumptions to assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date. Goodwill as of the acquisition date is measured as the excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired.
Pro forma adjustments reflected in the unaudited pro forma condensed combined balance sheet are based on items that are factually supportable and directly attributable to the transaction. Pro forma adjustments reflected in the pro forma condensed combined statements of operations are based on items that are factually supportable, directly attributable to the transaction and expected to have a continuing impact on the combined results. The unaudited pro forma condensed combined financial information does not reflect the cost of any integration activities or benefits from the transaction, including potential synergies that may be generated in future periods.
Note 2. Description of the Transaction
On September 1, 2021, iCoreConnect Inc. (the “Company”) consummated the Asset Purchase Agreement with Spectrum Technology Solutions, LLC. The aggregate purchase price of $2,000,000 is comprised of cash and stock in iCoreConnect, Inc.
Note 3. Purchase Price Allocation
The fair value of the consideration transferred was valued as of the date of the acquisition as follows. The source of the cash that funded the purchase was debt taken out by iCoreConnect Inc. prior to the acquisition.
STS Purchase Consideration
Cash
$
1,500,000
Stockholders Equity
500,000
Total Purchase Consideration
$
2,000,000
5
The preliminary allocation for the consideration recorded for the acquisition is as follows if the acquisition had taken place as of June 30, 2021:
Current Assets
$
185,223
Property and Equipment
32,000
Goodwill
1,782,777
Total
$
2,000,000
The purchase price allocation is preliminary. The purchase price allocation will continue to be preliminary until a third-party valuation is finalized and the fair value and useful life of the assets acquired is determined. The amounts from the final valuation may significantly differ from the preliminary allocation.
Note 4. Pro Forma Adjustments
The following pro forma adjustments give effect to the transaction.
Unaudited Pro Forma Condensed Combined Balance Sheet – As of June 30, 2021
Note A
To remove STS assets, liabilities, and equity not purchased pursuant to the asset purchase agreement.
Note B
To record purchase consideration and transaction financing. The purchase consideration included cash and common stock in iCoreConnect. The transaction financing consisted of promissory notes.
Note C
To record assets acquired and liabilities assumed from STS at preliminary estimated fair value. The Company has not completed its purchase price allocation and the amounts noted are preliminary.
Unaudited Pro Forma Condensed Combined Statement of Operations – For the Six Months Ended June 30, 2021
Note D
To record interest on promissory notes.
Unaudited Pro Forma Condensed Combined Statement of Operations – For the Year Ended December 31, 2020
Note D
To record interest on promissory notes.
6
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